I have today received the Government’s much heralded and equally criticised EU leaflet.
Apart from telling me nothing new, the information is worthless, because no references are given for the sources of the statistics used, so verification becomes difficult, time consuming and, for the average person, very off-putting.
No, I’m not biased. I still haven’t made up my mind.
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
Robert Snaith's blog 