One of the toughest things about running your own business is feeling that you have to do it all on your own and wondering how you are going to fund it. Rest assured, no-one expects you to know everything and there’s plenty of support out there. This section shows you how to build a solid support network and where to go to get the resources and finance you may need.
2. Building a support network
When you run your own business, you’ll make decisions and face new challenges every day. This may make you feel out-of-your-depth and isolated. The answer is to build a solid support network so that you can call on information, specialist advice and general support when you need it.
Informal support networks
Your informal support network includes family, friends and colleagues. These people may not be involved in your business and may have little or no specific business knowledge or skills. However, being able to share your ideas, concerns and frustrations with them, and knowing they are there for you is invaluable.
Formal support networks
Formal support networks are your professional and business advisers, as well as local business clubs and networking groups.
Professional advisers may include your accountant and bookkeeper, business adviser, bank manager, financial adviser, solicitor, web designer, copywriter, IT specialist or even your estate agent.
Some, such as your accountant or business adviser, are well placed to advise you on how to make your business as financially rewarding as possible. Others may be able to provide detailed information on specific areas, often saving you time, money and heartache. Remember, these are usually professional relationships and there may be a charge for the advice you receive.
Local business clubs and networking groups
There are now many local business clubs and networking groups in most areas. These include Chambers of Commerce, Enterprise Agency groups, BNI, 4Networking and many others. They are usually short business gatherings of like-minded people, often with a keynote speaker. You also have the opportunity to meet your peers, share ideas and discuss common business issues. Ask colleagues and professional advisers to find out which groups meet in your area – or try searching for ‘business networks in YOUR TOWN’ on the internet.
Use this template to help you identify your support network (MS Word 113kb). Once you have built your network of support, remember to stay in touch with a quick phone call, email or occasional meeting. Use social media, such as LinkedIn, Facebook or Twitter too.
Other sources of support
There are also many websites offering good advice for business start ups. You’ll find a wide range of information and resources on this website. For answers to specific questions, LinkedIn or other internet forums can be very useful. More formal advice and information is available from trade associations and specialist sources such as HM Revenue & Customs, ACASand the Health and Safety Executive.
3. Finding finance
At this point you’ll have a pretty good idea of what your business is going to be – now you have to figure out how much it is going to cost to start the business and how you are going to fund it.
All businesses need some money to start with. Think carefully about what you need. You may need to pay for capital purchases like equipment, materials or transport, as well as working capital to cover ongoing monthly expenses such as telephone bills, rent, supplies, utilities, wages, marketing and promotional costs, etc.
One of the top reasons many new businesses fail is because they don’t get enough start up capital and also over-estimate how much income they can generate in the first few months. The cashflow runs into problems and the business fails.
Use this what do I need to start a business exercise (MS Word 16kb) to make a list of all your expenses so that you can work out how much money you need to start your business and run it for the first year.
Money In = Money Out
Put simply, you need to make sure there is enough money coming in to cover the money going out. Be realistic about what you need to start and run the business, but be cautious. Make sure you allow a little for contingencies or “the unexpected”.
Now think carefully about how many sales you expect to make and the income those sales will generate. Yes, it is a challenge, but if you can manage your household budget, then you can manage your business budget.
4. Where do you get the money from?
Now that you have a good idea about how much money you need to start the business (and run it for the first year), you need to consider where the money will come from.
5. Financing your business
There are many different sources of finance for your business start up and all businesses have different funding needs. Some types of funding are better suited to certain needs and not all options are available to every business. It is important that you get the right level of funding for your business and that you get it from the best source.
Use this financing my business exercise (MS Word 14kb) to help you identify where you can get funding for your business and the actions you need to take.
Most lenders will want to know the answers to these questions:
- what is your business?
- how much finance do you need?
- when do you expect to be able to repay the finance?
The best way to cover all the information required is in your Business Plan. An overview of how to create your Business Plan is included later in this guide. And full details on how to work out your costs and create a cashflow forecast are covered in the Managing Your Finances guide in this series.
For more information see our Managing Your Finances guide, Business Wales Finance.