It is a fantasy of millions of workers to set up their own business and say goodbye to their boss once and for all. You can see just how widespread this idea is, by looking at the number of ‘business opportunities’ there are on line with titles like ‘Fire Your Boss’. They sell well, so I am led to think, but I would not touch them with a barge pole.
Of these millions of would-be business people, many people do all the hard work of researching the business and doing their sums, but fall at the last fence, for lots of people it is the highest fence of all, the finance of their business. Some individuals cannot arrange adequate credit and others are scared of losing their own money.
The first thing to point out here is that no-one, no matter how rich and no institution, no matter how generous they are towards start-ups, will provide finance to any business, the directors or proprietors of which are not willing to hazard their own money. So, if you do not have any capital and do not have any security, do not quit the day job until you do.
However, if you have some money (and depending on the business, it does not have to be a lot) and you are prepared to risk it, then you have a good chance of persuading others to take a gamble with you.
The first thing to do is make a business plan. There are many books and computer programs to help you do this. You can learn to produce one yourself with a library book and a finance exercise book from a stationer’s or you could use a spreadsheet on a computer to make the maths simpler. A spreadsheet will also make predictions more easily.
Be truthful in the formation of your business plan. The managers who will be looking at it are experts and if you think that you are going to kid them, you are only kidding yourself. Make a detailed business plan for twelve months ahead and another far less detailed section projecting the trend on for two or four more years.
It is a good idea to find out exactly what your bank or local enterprise board actually wants to see in the plan, before you show it. Make certain you have a thorough knowledge of your business and the plan, because there will be questions to be answered and you do not want to be seen to be struggling for the answers.
Assuming that the bank (or whoever) is prepared to forward you some credit, open a business bank account and submit an application for a business credit card. They are more impressive to business people than private credit cards, because it proves that a financial institution has checked you out and approves of you.
Next take this information to traders that you are expecting to use for supplies and request credit. If you have got this far, you are likely to get it from the merchant and negotiate a hefty discount so that your money goes even further.
By now, you have leveraged your small amount of money to get money from the bank and credit from a merchant (or two, so that you can play them off against each other in a price war).
You have come a long way, but do not attempt to run before you can walk. Now is the time to build up your credit status in order to qualify for a higher credit limit. You do this by never missing a payment - ever. In order to make sure that you can pay your bills in full each month, you might have to curtail your business activities at first.
This really goes against the grain, but might have to be done. If it happens two months in a row approach your bank manager and merchants for better credit terms to cope with the increased volume of business.
If you are thinking of credit repair or How To Build Your Business Credit Rating, check out the free information on our web site on Credit Repair.