When I was young, I had no idea what Business Start ups were, how they worked, or why anyone would need to invest in them. All I knew is that I wanted to make my own money. A startup or startup is basically an unproven project or business undertaken by an individual entrepreneur to seek, establish, and test a scalable business model for which he/she will be rewarded with a percentage of the profits. Business Start ups are like companies; if you want to start a business you have to go through a series of steps starting with the idea. The next step is to get financing, which will require some negotiations between your bank and your potential investors. Once that is done, you then go through the process of developing the business plan to look at your business in a larger perspective and determine its feasibility.
There are various ways for entrepreneurs to approach their start up challenges; some choose to bankroll their ventures themselves using personal savings, others seek venture capital, while still others work with private lenders or angel groups. You can also consider a hybrid investment approach, where you invest in a business but lease the commercial property on which it is being operated from. The most common way to finance a business venture is through the use of credit lines from banks or financial institutions. These lines of credit are very attractive for people who are just starting out because they are relatively low risk ventures, as long as you have strong business plans that prove you have the ability to repay the debt. Business Start ups are highly influenced by the capital market, because entrepreneurs are eager to obtain credit for their start up businesses, because credit lines are secured by tangible assets (in the form of hard cash).
In the early days of entrepreneurship, the only way to successfully invest in a business venture was to apply to a bank. However, over time, many financial institutions have made it possible for small entrepreneurs to apply for loans directly from them. Today, you can go online and find a variety of investment opportunities, ranging from traditional high street banks to online funding sources such as angel networks. There are even some highly prestigious venture capital firms that have tailored investment strategy specifically tailored to new business start ups.
Many of these venture capital organisations operate as networks of like-minded business start up investors. Their stated goal is to back reliable start up businesses which they feel have the potential to be successful. As their reputation in the industry grows, they will offer more capital to businesses, with the aim of making it easier for them to attract and fund more small businesses. They are not solely looking for high risk ventures but also those with the potential for high return. To qualify for capital from a bank, you would need to fulfil a number of criteria. Having a sound business plan, a significant amount of personal credit (and in some cases, investors), strong contacts in the industry, and evidence that your business ideas are realistic and feasible.
In the last few years, the start up boom has seen many industries experience sharp increases in start up activity. However, there is a negative side to this boom, particularly in the financial services industry. The number of start ups has outstripped the number of established businesses that have been in business for many years. This means that many businesses have had to rely on debt and equity finance to meet payroll costs and other ongoing expenses. This has led to an increase in defaults on commercial loans by companies with poor cash flow.
In conclusion, commercial loans for small businesses have helped many fledgling start ups stay afloat during the worst of the business start ups crisis. At the same time, careful planning and a sound business plan can make it easier for you to get the money you need. As always, you should work with a qualified business finance consultant who can advise you on the best solution to suit your own particular circumstances. For more information on commercial loans for start ups, see start ups financing in London.