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Finance

For most start-up businesses a large amount of finance needs to be committed long before the first sale is ever made.

The initial cost of premises, plant, equipment, vehicles, insurance, advertising, etc must all be paid for up front. The continued costs of heat and light, telephone, wages and vehicle expenses, etc all need to be covered for the period before the business moves into profitability.

When starting your new business, you will need to have capital to meet these initial costs. At his stage you need to consider where this money is going to come from.

Are you going to supply all the finance needed? For small businesses that can be run from home with low initial outlay this may be possible.

Do you need a bank loan? A loan from a bank can be secured against certain assets of the business, but often the money may be needed for the items where there are no assets to provide security. If this is the case, a good business plan (see idea evaluation) may convince a bank manager you have seriously thought about your business and have a good understanding of what is required.

A cashflow projection, listing all the expected income and costs over the short to medium term will help demonstrate the cash generation potential of the business.