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Business Funding

If you aren't fortunate enough to have a pot of gold to invest in your own business - then you are going to have to get some kind of funding investment.

Okay so how exactly are you going to get the money you require in order to start your new business.

The very first thing you should do if you haven't done already is write a business plan for your business...because this will tell you how much money you are going to need for start up costs and how much money you are going to need in running costs. The business plan should give you a date where you do not need any more money to support it. This is different from the break even point - that is the date when you've paid everything back and you are now running at a profit (or rather no loss).

By having a plan - you will know the points in your business you need cash injections, these might be for premises, stock, staff, licences and all manner of things - your business plan should tell you how much money you need and when you need it. It should also highlight the kind of returns you are going to make on the investment.

By having these figures (hopefully good figures that are honest) you are easier to invest in. So armed with your plan where do you get the money from.

Family - Your first port of call might be your family, although if your business all goes down the pan - you might end up falling out with your family - do you want to do that? It maybe that your family can help get a loan for you by using their assets as insurance - usually their house - again this is a difficult one if it all goes wrong.

Get a bank loan - if you have a solid plan and a good credit rating then you can get a business bank loan - you will need to invest 20-30% of the money yourself - the bank will be more likely to give you a business loan under these circumstances.

Peer to Peer Lending - There are now lots of websites offering this service. In a nutshell the Peer to Peer website puts borrowers and savers together and then they take a small commission for doing that...everybody wins.

Home Equity - If you have money in real estate yourself then this can be used as collateral against the loan.

Business grants - Governments are always handing out business grants which don't need to be paid back. The downside is usually you have to jump through a few hoops to get the grant and also you will have to do certain things within your business practices which you don't want to do.

Lottery Funding - Usually this will be for charitable organisations but it can be for other things as well - such as keeping a tradition alive.

Social Investment - By asking small amounts of money - you can get large amounts of people to invest in your business...in return they might get some kind of small recognition, or discount or anything you can think of - first products off the production line.

Angel Investor - This is one or two people who have pots of money to invest in start up companies. They'll be looking at getting a large slice of the future profits. As well as the money they will want to have a large say in how the company goers forward - this can be both an advantage or disadvantage. Angel investors will have lots of business connections which could also help your business grow.

Leasing Equipment - This doesn't actually raise any money - but saves you having to fork out large initial sums of money. Instead of buying your $10,000 machine - lease it instead.

Asset Financing - Using balance sheet assets to obtain a loan or borrow money - the borrower provides a security interest in the assets to the lender.

Factoring - Factoring companies buy your future invoices from you less there fee. Obviously this gives you your money earlier - but you are going to make less money.

Public Offering - Selling shares in your company to the public. For small businesses this is difficult to do if you want to raise massive amounts of capital, and to raise small amounts of money it will cost you a lot in administration fees.

Consignment - Rather than paying for stock - it is given to you and you only have to pay for it once you have sold it. Obviously you are liable for the stock so if it goes up in flames or is stolen then you are going to have to pay for it or your insurance is - you have got business insurance haven't you?

These are just a few ways to get business funding - you could also sell your body as the last straw!

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