Tips to turn your business plans in to reality


You’ve had this brilliant idea that solves a problem or adds value for customers. You’ve just won a big contract and now need to increase your stock levels, or perhaps you have grown a business over the last few years and are looking to expand into a new market.


Funding is the next step to turn your plans in to reality – here’s how…

1. Understand your funding options

Your funding options depend on several factors, including the nature of your business, your ambitions and your business growth stage. Funding options suited to mature businesses probably don’t work for ambitious start-ups. If you have been in business for less than two years, your business would fall in to the Start-Up bracket, a company growing at 15% + per year is in the Growth category and large corporate businesses are classed as Established.

2. What is Equity finance?

Equity finance means that you are selling shares in your company to inject funds. Equity finance is typically used by fast growing companies to finance investments that have a longer-term return. In return for the investment, the business usually gives certain rights to shareholders.

This can include making annual payments to shareholders, rights to be consulted on key decisions or represented on the company's board. Investors can also help you grow your company, and some may be willing to provide mentoring and other support.

3. What about loans?

Taking on debt means that you are retaining your ownership of the company - but also means that you are not sharing the risk for growing your business with other investors.

You will have to repay loans or other forms of debt according to an agreed schedule. Many start-ups or very young companies struggle to get access to loans as lenders want to see a track record that ensures the company can pay-back the loan or the company has assets that can be used as security.

4. What about Accelerators?

Accelerators combine seed capital and mentorship - often in a 3-6-month programme that may culminate in a "demo-day" where start-ups pitch to investors.

Some accelerators offer free working space and mentorship support, instead of capital. In some cases, they are backed by large corporates who are interested in tapping into the innovative ideas.

5. How does Crowdfunding work?

Crowdfunding has seen enormous growth in the past few years because it gives businesses the ability to pitch to the masses. If people pledge funds, they will probably buy your product too. Crowdfunding is best for those who can do without the mentoring or guidance that comes with other funding options.

6. The bank referral scheme

If a small business is rejected for finance by the big banks they are now obliged to offer the business a referral to a designated, online finance platform. These platforms give alternative finance providers the opportunity to offer viable businesses, the finance they need. At Funding Xchange, we have over 45 lenders waiting to compete for your business and a team of Business Funding specialists on hand to help you identify the best funding for you – whatever the reason.

*Taken from an exert of the Funding Xchange SME Funding Guide Part 1