Looking for finance

If you are looking for funding for your business then, in order to increases your chances of successfully gaining that funding, there are a number of actions you need to take – before you start to apply.
As a start-up you won’t have any previous accounts to draw upon, so it’s important that you prepare fully before applying; you need to convince them that you will be able to repay any loans, or offer a genuine return on investment or, if you are going for a grant, that you will fulfil the conditions of the funding.
So here are some tips to get you started:
1) Finance providers need to understand why you need the money, how it is going to be spent, what contribution you and the company are making and most importantly how they will be paid back and over what period.
The key issues you need to address are:
• What do you need the money for? how will it benefit the company?
• Can you afford the interest payments each month?
• Can you afford the capital repayments?
• What security is available?
• What other sources of finance are available?
2) Decide what is the most appropriate form of finance for your business so you don’t waste time chasing inappropriate avenues. Consider the following:
• If it is to buy a piece of equipment that is going to be used in the business then consider a medium term loan or hire purchase (a hire purchase agreement involves making monthly payments in order to lease an item of equipment and the equipment will only be “owned” once the full amount of the contract is paid)
• If it is to fund a growing business, to buy stock, etc. then an overdraft or even invoice discounting (generally aimed at larger businesses and allows the business to use its unpaid sales invoices as collateral, i.e the business will be able receive funds for its sales invoices before they have been paid) or factoring (the business sells its “future sales” invoices to a third party at a discount and the third party/factor collects the full amount from the customer paying over a proportion of the invoice to the business minus costs and commission) might be the most suitable
• If it is to develop a building project then project finance that can be drawn down at key stages of the project should be considered
3) You will need to write a business plan when applying for funding, and it should include the following:
• What does the company do
• Who owns the company and what are their expectations
• Who runs the company and what is their experience and loyalty
• Who are the company’s main competitors – why are you better/how will you become better/get a larger share of the market
• What are the historical financial results of the company (if any)
• What are the projected financial results of the company
• How are you going to get there (to the projected results)
• What could go wrong and what would be the effect if it did and how are you planning to minimise this risk?
You must do this yourself – it is a hard soul searching exercise but by the end of it you will know your business in more detail and, in particular, you’ll understand its strengths, its weaknesses and their trigger points. This will help you when applying for funding and prepare you for the tough questions that funders so often ask

The reality of reality shows

Surely by now, gentle reader, all but the sadistic, or completely brainless, must realise that TV reality shows are all, without exception, designed for one thing (apart from making some people a lot of money) and that is providing a section of the viewing public, voyeurs, with the opportunity to watch misguided wannabes being humiliated. Why do they do it, we may well ask? For the non-celebrities it must be either their fifteen minutes of fame, or the slim chance that they will be spotted by some lower division talent scout who might just spot a glimmer of talent.

As far as celebrities (what are they, by the way?) are concerned, they fall mainly into two camps – those who are participating for fun and/or supporting a particular charity, and those whose sun has set and they are disappearing over the horizon, and are desperately hoping that there might be a comeback into the limelight.

Let’s briefly look at two examples, without having to touch the sheer garbage of Big Brother or BGT.

What would be the motivation for having John Sargeant, Ann Widdicombe, Lisa Riley and Russell Grant on Strictly Come Dancing? It can only be that they were expected to make fools of themselves and become a laughing stock. Two of them did just that, whilst the other two did far better than expected. Incidentally, it’s also interesting to observe how the judges remarks are rehearsed and/or scripted in order to provide some controversy.

With The Apprentice, it is transparently obvious that an entrepreneurial mind is the last thing the wannabes have. The pre-broadcast publicity is the giveaway. They have been groomed to whet the viewers’ appetites for confrontation, in-fighting and betrayal in the boardroom, all designed to provide a bigger spotlight for Alan Sugar to bask in. Note for example how each contestant is obliged to refer to him as Lord Sugar with a certain stage managed deference. How Alan Sugar’s two sidekicks keep a straight face is beyond me. As for starting and running a successful business, the wannabes are a million miles away. Genuine entrepreneurs and business owners must find the whole thing beyond humour and an insult to their craft.

It is just a pity, in my humble view, gentle reader, that there are so many gullible people in the UK who are taken in by these shows.

Stimulating the economy

There is a brilliant letter in today’s Daily Mail, by Duncan Barnes, from Croydon, who has been an independent retailer for 35 years. I would like to endorse all that he says, which, briefly is:

David Cameron is claiming that the Coalition is ‘delivering’ yet the GDP forecast has been downgraded to ZERO!

The only way to get the economy going is to stimulate consumer confidence to get spending moving. (You don’t achieve it by creating jobs. That comes later. [my words]) Every purchase by everyone increases demand right down the supply chain. Infrastructure projects are too long term. Any funding via the banks is doomed – it just won’t happen, except in a few cases, again mainly long term projects. Quantatitive easing has not worked. So Mr Barnes offers a common sense solution, viz:

Give the money direct to people to spend. Imagine the effect of giving £1,000 to every taxpayer per month for three months. The only stipulation is that it must be spent. It cannot be saved or used to pay off existing debts. Such a scheme could easily be implemented by way of vouchers that retailers could offset against VAT or redeem them with the Treasury. The cost of such a scheme could easily be offset by cutting the overseas aid budget to those places who clearly don’t need it and bloated welfare handouts.

Mr Barnes ends by saying that David Cameron should bring into Government a handful of ordinary people who run businesses and have to make end meet on a daily basis. Quote: After all, unlike politicians, we are in touch with reality.

Common sense? Of course, but so basic and sensible that it will never be adopted, unfortunately. More power to your elbow, Mr Barnes