If you are about to turn your idea into an exciting new business, you’ll be in the midst of planning all manner of things. What about finance though? Here are our top 6 ways of securing and managing business finance for you to consider.
You may feel getting finance for your business is a little daunting. It needn’t be. There are a number of options available to you. What’s best will depend on your specific business needs.
It’s not just about getting upfront capital either, it’s about how you most effectively use your money too, ensuring you make your money work most efficiently for your business.
1. A Loan
Arranging the correct and most suitable finance solution for your business can be a difficult and time-consuming process. There are a number of factors to consider, such as the size of your business, the nature of your business, and your personal financial situation.
It is important to seek professional advice to ensure that you arrange the most suitable business finance solution for your needs. There are a number of different business finance solutions available, such as loans, overdrafts, and business credit cards.
Each option has its own advantages and disadvantages, so it is important to compare different options before making a decision. Seeking professional advice from a business finance specialist can help you to save time and money by ensuring that you arrange the most suitable business finance solution for your needs.
2. Public Funding
You can apply for a grant from the government, the European Union, local councils and charities.
On the plus side, you won’t need to pay a grant back or pay interest on it, however, you’ll face a lot of competition and you need to accept that grants are almost always awarded for a specific purpose or project.
This is a credit facility you can agree with your bank which enables you to temporarily spend more than you have in your account to cover short-term financing needs.
This is not an option if you need long-term finance .
You’ll usually be charged interest on any money you use within your overdraft facility, and may also have to pay a fee.
4. Investment Finance
This is also known as equity finance and involves selling part of your business (‘shares’) to an investor. The investor will then take a share of any profits or losses that the company makes.
Quite a complicated option and one which you’d certainly benefit from getting professional advice on.
5. Leasing and Asset Finance
Leasing or renting assets such as office equipment can save you the initial costs of buying them outright.
This is widely available and the interest rates on monthly instalments are usually fixed.
6. Make your Money Work for You.
Once you get your business underway, if you regularly have credit balances on your bank account, business savings account to make your money work harder for you. Don’t just leave it in your current account.
Most business current accounts only pay a very low interest rate but if you set up a suitable savings account you can usually get a much better rate. This is particularly so if you can invest your money for a longer period of time, perhaps up to a year. Even if you can’t commit for this length of time, using an instant access or notice period account will help.