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Posts Tagged ‘funding’

Perhaps controversially, I believe that too much emphasis and, indeed, money is spent on encouraging people to start their own business. In my opinion, resources should be restructured to offer more help to people once they have actually taken the plunge. 

I believe people should be shown that business is a genuine career option, and I am a strong advocate of Young Enterprise. But I’ve seen too much money wasted on national campaigns encouraging Joe Bloggs to start a business while someone who has a great small business cannot get to the next stage because of unnecessary barriers.

A prime example of a product which should help but which doesn’t is the Government’s Small Firms Loan Guarantee (SFLG). The idea behind this is that the Government covers some of the risk of the loan in order to allow banks to lend more easily to small businesses.

This was re-launched last year as the Enterprise Finance Guarantee Scheme and the Labour Party’s manifesto tells us it has helped 9,000 businesses. Writing as someone who has first-hand experience of the SFLG, I can tell you that if I was to start the process over again, I certainly wouldn’t bother. In the end we gave over so many of our own guarantees that the entire point was lost; despite whatever their PR says, the banks are simply not ready and willing to lend on this scheme.

In a nation of more than 60 million, 9,000 people on this scheme is not a claim to fame but an admission of failure. The figure should be tenfold. The Government needs to seriously and quickly address this issue and they should not be putting forward a scheme which the banks may or may not promote. They should be telling the banks that if a business comes in and meets a set of criteria, then they must allow them finance under a scheme where the risk of the loan is partially covered by the Government itself.

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    Well, guess what. I have finally heard from the bank, after 3+ weeks. Inefficiency? Procrastination? Well, whatever it may be, the bank said no. At this point I could U-turn and get a job, a salary and pack it all in. But I KNOW there is something out there that will work, a stone that has been left unturned.

    This is a hard knock on my fundraising effort. We have gone so far. Larger contracts have been placed and I can’t develop new products without the funding I was counting on. What next?

    I spoke to my neighbour, a successful, experienced builder who is going through a difficult time at the moment. He said exactly the same thing. He needed bank support to make a new project a reality. The equity was there to secure the loan but the bank said they didn’t want to make him homeless- can you believe it? I’ve no words to explain my frustration.

    I have been speaking with a couple of investors but they want to take their time and my time is now. How do I say “now”, not later? How?

    I think you’ll agree with me that opting to run your own business means NOT settling for the easy option. There’s a huge degree of resilience required, which one needs to develop along the way to cope with the difficulties. As the bank said no to lending to the business, we moved on to (another!) personal loan.

    Now it’s all about moving forward… due to a grant we got from the East Midlands Food and Drink iNet, we were able to have a PR agency work with us for a few months. This means we were able to write our first newsletter and we also sent loads of samples to magazines and newspapers. I’ve had my first interview with a glossy magazine which will hopefully mean that there will be more awareness for the products nationally. We’ve had interest from other national magazines, and a large food magazine is talking about writing a feature on us which would be fantastic.

    You can find out more about Marcela on the new interactive business website www.inafishbowl.com

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    Starting up a business is always going to be tough and like many things in life, there’s probably never going to be a perfect time to take the leap and launch your idea. For many entrepreneurs, one of the key concerns is acquiring funding to turn your dream into a reality. Doug Richard says that one of the best ways to fund your start up is to seek investment from one of the three Fs – Friends, Family and Fools.

    Many people are reluctant to enter into business with friends. What has your experience been? Would you advocate mixing business and friendship?

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    It’s not easy raising finance for any business right now, least of all a start up.  Which is why it’s worth taking a few moments to find out how Simon Woodroffe managed to finance Yo Sushi, when the banks were turning him down.

    Has anyone else out there been creative with early stage funding for their business?  Please share your story.

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