Number-crunching is key for new firms
STARTING a business? Work out how much money you need for the best chance of success.
Consider the cost of stock, equipment, premises, marketing, staff and paying your bills until your venture turns a profit. You can fund all of this yourself, but there are also many ways to raise start-up funds.
Constantin Nicolau bought the InXpress shipping franchise in North Birmingham in September 2018 because he wanted to swap his existing haulage business for one with a better work-life balance.
InXpress franchises normally cost £32,500 for a start-up in a new area, but Constantin had to raise over £100,000 to buy the existing business.
He says: ‘I remortgaged my house and asked my bank for a loan, but my position meant I didn’t meet their criteria.’
So he decided to use the trading power and assets in his existing business to help him raise funds.
‘I got loans from a peerto-peer lending platform, Funding Circle, which connects businesses with investors, and raised money from an asset finance specialist against existing business assets,’ says the 42-year-old. If you are starting a franchise in a new area, franchisors will typically expect you to supply a third of the investment, but many can introduce you to lenders.
It helps if you choose an established franchise, have a good credit record, some collateral and a solid business plan.
InXpress, works closely with HSBC. See gb.inx press.com/franchise-opp ortunities/. Other funding sources include Franchise Finance ( franchise finance.co.uk) and accountants D&T (team-dt.com/funding).
Check if you can get a government-backed Start Up Loan of £500 to £25,000 with a fixed annual interest rate of 6pc (startuploans.co.uk).