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The best time to start a Business

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Who uses all their own money to start a Business? most people have to rely on funding unless your independantly wealthy. Funding availablity is going to be a factor in the decision to start a Business or not. It would be silly not to consider it.

 

As with life in general having money helps a lot, but that isn't to say that people without money can't achieve anything or be successful. But it is just so much more difficult.

 

Starting up a business can be very costly and most people won't have the money to setup a business. So looking for funding is the only alternative.

 

A lot of small businesses are set up by people using their savings or redundancy money, maybe loans from family or friends (it does happen). Bank loans can be (just about) obtained. Sometimes a business is setup from a combination of all of those.

 

You might be able to raise £20,000 to £30,000 this way which for a lot of businesses is the minimum level of capital they need to set up and pay bills etc for at least 6 months.

 

I advise people to have enough capital to setup and pay all costs for 6 months on the basis that you won't receive any money during that period. (Obviously if you run a shop or takeover an existing business that isn't the case, but if you start up a business from scratch it can take 6 months before any money comes in.)

 

Grants and business help loans are available, but a lot are only available to business already trading, so if you set up a business on the hope of obtaining grants etc it can prove very costly if the funding doesn't arrive.

 

And would someone be able to receive a grant for £30,000 on the basis of an idea anyway?

 

Imagine what would happen if you borrowed £20,000 from family and told them you would pay them back in 3 months time as you were able to obtain a grant, but you didn't receive the grant after all? How would they react to losing all that money?

 

So yes take funding and all the freebies you can find, but it still comes down to you have to have a product or service that people want, and generally you will need more initial capital of your own than can be obtained from grants and subsidies.

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The financial experts and accountants I've talked to will mostly (but not all) advise you to have at least 6 mths capital, on like you say, the basis that you will have no money coming in for 6mths. In practice though its not always the case that small business owners can afford this luxury. Yes, I'd agree its sensible but sometimes you have to take calculated risks.

 

I think the best way of dealing with this dilemmma is rather than relying on investment, look at ways you can cut costs, gain custom etc.

 

I'm not advocating starting up with nothing but having all the money there can be a false security. The most valuable resource is yourself. I know people who have thrown thousands at projects and failed. I also know of someone who started with literally nothing and is now a millionaire.

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