This brief guidance looks at business finance requirements when you are in “formulation” mode – a stage at which you are effectively “pre-launch”, and probably don’t have a fleshed out business plan.
The key tip is to know what you are putting at risk at a time when you are looking to launch a business. How much can you afford to lose if you don’t proceed? The ideal scenario is where you remain in paid employment and able to put together a working plan in your spare time – just make sure you are not in breach of the terms of your employment contract.
For many individuals, creating a new business takes a great deal of time – staying in full time work might not be an option. Indeed, many new businesses are created when the individual has been made redundant.
When you're in employment – and where you have a good and trusting relationship – why not test out whether you could work part time for a period. Many business owners really do respect individuals are who looking to have a crack at something themselves, as long as you are not going into competition!
In terms of finance, friends and family are often the best source of cash – but be clear that they must be able to afford to lose what they are lending to you.
There really is no specialist finance when you are in “formulation” mode – until you have a viable business plan, the only real source of finance is standard “consumer” finance, which is not covered by Informed Funding. More importantly, you should only borrow against a particular activity if you can see that activity generating cash to pay off the loan created.
