Start up Your Business

Decisions regarding how you finance your business should be taken very seriously as it is one of the most critical decisions you will make at the start-up phase and forms a key part of any business plan. When considering the different financing options, you need to spend some time learning about the conditions that come attached to early stage capital investment.  By far the best way to finance your business is from current cash flow arising from sales but unfortunately this is not realistic for most start up businesses.

A cursory glance through mainstream newspapers indicates that raising start up finance remains difficult as UK banks are simply not lending money to businesses (especially start-ups).  As Luke Johnson of Beer & Partners argues that;

“Angel investors are the only realistic option for these early-stage companies. Currently banks are barely open for business, or tend to offer loans on unattractive terms, so the need for equity capital is greater than ever. What’s more, since current low interest rates give savers such poor returns, more and more angel investors are emerging that have a strong appetite for direct investment in small companies.”

As Luke Johnson indicates, we have witnessed a growth in the number of angel investors seeking to fill this gap seeking to support entrepreneurs through the provision of early stage capital.

In addition, the ongoing success of the BBC programme, Dragon’s Den (where entrepreneurs seeking investment pitch their business plans to a panel of prospective investors), has added to the growing popularity of angel investment as a primary means by which entrepreneurs secure early stage investment in their fledgling businesses.  However I believe there is an alternative more compelling option which is more appropriate for non capital intensive businesses like Internet start-ups- and it is known as bootstrapping.