A Guide to Start-Up Business Finance

A Guide to Start-Up Business Finance

One of the most challenging aspects of launching a new business can be accessing the right level of finance.

Even with the best idea and months, or even years, of carefully planning a new business can quickly become untenable if capital funds aren’t available to get things up and running from day one. 

TEDCO Business Support has helped thousands of North East entrepreneurs get the support they need to launch successful new ventures for many years.  From sourcing finance and devising investment strategy to advising on scale-up growth, TEDCO’s dedicated team of business advisors have the knowledge and experience to make a positive impact on any new venture. 

When it comes to sourcing start-up finance, the team at TEDCO Business Support suggest a number of routes to consider. 

Researching Finance Opportunities

Bill Hartshorne is one of the TEDCO business advisors with specialist knowledge of the finance sector and is well-versed in the difficulties of seeking business capital. 

Bill comments: “For a start-up business, routes to finance can be limited but not entirely closed off in the private sector.  Traditional bank lending has been known to be challenging to access for start-up businesses as the level of risk doesn’t necessarily meet lending criteria but there are other options available.    

“Similarly, grant funding for new business start-ups is hard to find.  Gone are the days when new businesses could access thousands of pounds in capital funding to help with initial start-up costs such as a website or equipment. 

“Don’t be put off, I would always advise really researching what is available in your area.  Some local authorities vary greatly in how they support new businesses and in some cases, grants can be available for businesses in particular sectors or for individuals who may have recently experienced redundancy. Either way, for the sake of a phone call it’s always worth checking as an initial option.”

Crowdfunding

With private sector options for lending to start-ups limited and grant funding no longer available, there are further options open to new enterprises.  Crowdfunding has grown in popularity in recent years thanks to a number of high profile and successful businesses raising capital through crowdfunding platforms to generate much-needed finance to grow a business. Brewdog is one such business to have used crowdfunding effectively and Oculus VR, who turned a Kickstarter campaign in 2014 into a $2 billion business when it was sold to Facebook just two years later, is one of the darlings of the crowdfunding movement. 

But despite its popularity and seeming relative ease, crowdfunding does present its own problems for a start-up.  Bill Hartshorne believes the biggest misconception with crowdfunding is how straightforward it can look to the unseasoned entrepreneur. 

Bill comments “Crowdfunding platforms have sprung up all over the world as a quick and easy way to raise business investment from everyday investors looking to help your new venture get going.

“It is certainly a great way of raising capital and is a welcome addition to the business investment landscape but for a start-up business, in particular, it can be difficult to get a crowdfunding campaign off the ground.  For a start-up with a little track record, you need to really get investors interested in your new venture and this is where crowdfunding can be challenging. 

In many cases, you require initial capital to develop a campaign strategy to ‘market’ the business to potential investors which can detract somewhat from the everyday focus of running the business.  Crowdfunding is much more straightforward for firms who are already known or supported and in many cases, have been trading for a longer period of time. 

“For a start-up business, the potential for success in raising funds through crowdfunding can be difficult.  It isn’t always the best use of limited funds or time when setting up a new venture from scratch and certainly for a start-up, other routes might offer a better and faster return.”

Start-Up Loans

Since the launch of the Virgin StartUp programme in 2013, TEDCO Business Support has helped over 240 businesses access in excess of £3.2m in low-cost business loans.  The Virgin StartUp programme is focused on helping bridge the gap in finance options for new businesses to ensure that start-up capital is available to entrepreneurs yet to start trading, as well as newly established ventures. 

Bill comments: “Virgin StartUp presents a wonderful opportunity for new businesses looking for start-up loans that can help fund anything from equipment to premises or even staff.  The programme is designed to support new enterprises and help remove one of the major barriers to setting up – lack of available capital.  Since its introduction I have seen hundreds of businesses go on to successful futures thanks to the initial support of the Virgin StartUp programme, fully supported by their Virgin mentor and the Virgin brand.”

As part of the government start-up loans programme, Virgin StartUp offers low-cost business loans to new businesses in the region of £1,000 - £25,000.  Hundreds of North East businesses have already benefited from Virgin StartUp loans thanks to assistance from TEDCO Business Support.  As an exclusive delivery partner in the North East, TEDCO provides full support in the application process from start to finish.

Whether at ideas stage or getting ready to start trading, TEDCO Business Support can help in every part of setting up a business to ensure a new venture is in the best position to succeed. 

For more information on access to finance or business support, please contact TEDCO on 0191 516 6102 or visit www.tedco.org.