From initial seed money to expansion, you need funding at various stages during the life of your business, so it’s worth discussing your options and how Tax Agility can help.
The first person most entrepreneurs look to for help is themselves. They use personal savings, or they sell some assets to generate cash for their business. Because they believe passionately in what they are doing, many even go into debt willingly (getting a second mortgage or maxing out their credit cards) to fund the business. This doesn’t need to be the case, however.
Here are some suggestions on how to acquire funds for your business.
‘Love money’ is another source many entrepreneurs consider after consulting their personal savings. They turn to family and friends as a source of money – banks refer to this as ‘patient capital,’ because of its lenient repayment terms. As helpful as this may be, remember that family and friends usually won’t have large capital to offer.
Angel investors, or individuals who can afford to provide money to start-ups in exchange for convertible debt or ownership equity, are another source of funds. Hugely popular during the dot-com years, angel investors are still around today to provide funding. However, the process of accessing the right angel investor holds a number of challenges, including the time it demands to find the right people, negotiate with them and build long-term relationships.
In comparison, crowdfunding is a highly effective way for small business owners to get necessary funding from thousands of potential investors around the world. Today’s technological day and age allows for the availability of hundreds of crowdfunding platforms, making it easier to raise the capital you need.
As accountants, we are very familiar with several government grants available to help small business owners. Instead of going to the bank and asking for funding on, for example, a proposal that aims to change behaviour and leads to more walking and cycling, talk to us and we will explore any available government grants that are designed to improve wellbeing.
Taking on a new partner can be a great source of funding. Due diligence is key to ensuring that your new partner can benefit the business, and part of the due diligence process may be looking at the hard numbers. If the potential partner has a significant amount of outstanding debts, the partnership may not be as beneficial as it first seemed.
Get Advice from Tax Agility
Regardless of which route you choose, it is worth noting that the entities deciding on whether or not to fund your business will make their decision based on your business case. Having a comprehensive business plan with an intelligible strategy is key. By working with chartered accountants like Tax Agility, you can produce a solid business proposal with a sound accountancy framework that will make your business shine.
Talk to us before sending out funding applications. Our mission is to help small business owners across London every step of the way in their journey towards success.