The biggest obstacle in starting your own business is money. But with some daring and a little help, this obstacle is made smaller or eliminated altogether.
It also helps that the government has done good for home-based businesses. Last year, new rules have been set in place: you can run a herbal shampoo and soap business from your kitchen without having to get permission. And if your drawing room and your son’s old room becomes a roomy setup for your online consultancy startup, you won’t need to pay business rates at all. Your domestic property shall remain domestic.
With these complications out of the way, it leaves you free to concentrate on turning your idea into profit. And before profit (and taxes), you need funding.
1. Get a loan. The Small Business, Enterprise and Employment Bill is being read in the House of Lords. Once it is law, banks who refuse loan to small-medium businesses will be required to recommend alternative funding sources.
Those alternatives are what follows. As for bank loans, loan rates are cheapest for loans of £7,500 to £15,000 over a period of three to five years, with the best rate from HSBC at 3.9% (for £10,000 in five years). As of last year, repayment is around £184 a month.
There are also lenders like Fleximize, especially pledged not to strain your business by limiting or removing interest after several successful payments.
3. Crowdfunding! That exclamation point is deserved. Nowadays, you sell an idea before, or along with, the product. In the latter case, it’s like pre-selling. In both cases, it’s a competition for people’s approval and admiration. You might have seen news of innovative products getting rave reviews and financial backing in crowdfunding sites like Kickstarter and Indiegogo. We have our own in the UK, Crowdfunder.
How it works: It’s free to launch a campaign or a project. Of course, you might have to invest in a good presentation, like a video. In return for funds, you can offer perks, freebies, events/classes, or the product itself.
4. Contests. Speaking of competitions, check online for business idea or business plan contests. Companies and organisations hold these contests from time to time for publicity and community spirit. In addition to a cash prize enough to fund your startup, you might also win a package of mentoring and partnership.
5. Accelerator funding and backing. Mentioning competition and mentoring made me remember this. As Americans call it, it is like a startup boot camp, really tough to get into, and quite tough to participate in. I would recommend this for seniorpreneurs who like adventure and challenges. There’s an application process, and if you are accepted, your mentoring starts. In a span of about a quarter of a year, the accelerator would mould you and your business into something presentable and desirable to investors on the final day, the ‘demo day’.
It’s already prestigious and quite a recognition just to be accepted. By demo day with those investors, your startup would be a bit past ‘startup’ stage and on to a real venture.
6. Use a business credit card. Money Saving Expert has this guide on the best credit cards for your startup. One to a couple of years free of charge, low interest rates, and even cashbacks when you spend on them… these are the perks of using a credit card. But remember to pay, pay, pay so that debt doesn’t overshadow your gains.
7. Your assets. Or instead of taking a loan, sell or use income from another source. Equity release is an option, as well as selling something, like a vintage car, perhaps. I know a friend who sold his. It broke his heart (and his son’s heart), but they’re happy with their startup now. Some invest what money they do have and then fund their startup with the multiplied returns from that.
Home-based or not, the Seed Enterprise Investment Scheme is also there to give you breathing room. If you’re eligible, you may invest up to £100,000 a year with tax relief for 50% of your funds, and profit is excempt from Capital Gains Tax. See the SEIS website for all the rules.
What with all the above, your seniorpreneurship faces a less foggy window and less bumpy road, doesn’t it? You have fewer and fewer obstacles in jumpstarting your business.
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