Finding The Finance To Start A Business

Posted by Allison on 5 April 2009, 11:01

More and more people are thinking of giving up the idea of being employed by someone else and going into business for themselves instead.  The advent of the internet has led to many businesses being able to go online and sell directly to people all over the world, accepting payment in many different currencies in the process.

But before you can reach that stage you need to get your business off the ground in the first place.  That can take money, so it's important to decide how you are going to finance your business in order to make it easier to establish yourself in the marketplace.

The amount of money you will need to get started will depend on what area of business you are going into.  Some businesses require thousands of pounds (or whatever currency applies in that particular country) to get started, while others require little or no money at all.  For example if you are going to start your own car lot you will need to have the cash to buy the cars to sell on in the first place.  In contrast, starting your own eBay business can be done on virtually nothing – just a few pence to get your first auction up and running for a personal item you no longer need.

This is why a business plan is a good idea to begin with, since it will give you a good idea of how much money you will need to get started.  Once you have a rough figure in mind, you will be able to think about how to get hold of that money. 

The most obvious route to consider first is to think of any money you have available yourself.  Many people start their own businesses with some of their own savings, and if you only need a small amount this can be the best way to get started.

There is also the possibility of borrowing some money from relatives or even remortgaging your house to get a larger sum.  Alternatively your bank may be willing to lend you the cash, although in this instance they will want to see a firm business plan that will enable them to see how you are planning to make money to be able to pay the loan back.

Many businesses only start to make money after a few months or even years in business, which makes it very important to get the financial side of things right from the very start.  It may be possible to carry on working in a full time job during the early stages of setting up your own business in order to keep a flow of money coming into your accounts.  Not only will this keep the bills paid while you develop your business but it will also bring in some money that you can use to fund your business further if it needs it.

If you feel that getting the required finance in your currency is going to be a problem to begin with, it may also be possible to start your business on a smaller scale than you would otherwise.  This isn't possible on every occasion but for some businesses it may work.  If, for example, you are intending to start an eBay business and you were intending to plough £500 (or the equivalent in your own currency) into it, you could start on a much smaller scale if money is tight.  By selling your own unwanted items on the site first you could probably raise the £500 you need in no time at all.

It is also worth checking over your business plan again to see whether there are any areas where you could cut back without damaging the basic business idea in any way.  It's obvious that you will need to invest in some things, such as business cards for instance, and probably some form of advertising as well, but in many cases you can cut back even on these.  There are plenty of forms of free advertising available for example that would help to reduce the initial outgoings you will have to cope with.

Of course not everyone is cut out to run their own business.  You need to be disciplined in many ways but especially where money is concerned, since having a firm grip on your business finances will enable you to make more money in the long run.  Every business has both income and expenditure to think about, and you need to make sure your income vastly outweighs your expenditure.  This is something you will always have to think about, no matter how young or well established your business may be.

Whatever currency you plough into your business it's advisable to amass as much knowledge as you can about your particular area of business before you get started.  By reading about how other people successfully funded their businesses you can gain a better idea of how to fund your own.  Bear in mind though that everyone is different and some people are happy to take bigger risks on their business than others.  Don't follow other people's ideas to the letter since you will want your business to be 100% yours right from the start.

Whatever source you use to find the finance you need, make sure you have all the information on the rate at which you will need to pay back any loans, as well as the rate of interest that will apply to them.  This will usually be a monthly payment which will come directly out of the business so be aware that it may be some time before you go into profit.

With that said, there are many benefits to building up your own business – not least the matter of being answerable to no one but yourself.  It is a tremendous responsibility which requires many skills, but it is also one of the most rewarding journeys you could ever take.  So long as you are fully prepared, you will stand the best chance of earning a very good income from it.



  1. I have my own business so I was very interested to read the points in this article. I got started on a shoestring of around £200 (and that was to buy stock to sell online) but it seemed like a lot of money at the time. Fortunately things went well so I managed to make the money back, get some profit and plough it back in to build the business for the future. I’m still at it now!

    Finances are very important when you are a business owner though. And this doesn’t just apply to getting started – it’s something you have to think about throughout your time as a business owner. Every week and every day, you have to focus on those finances.

    — Kate · Aug 27, 07:21 PM · #