When starting your UK home business, more often than not, it will involve some capital. Where can you source capital from, and how much do you need? These are two very important questions you have to address beforehand.
Planning is key here, because if you don’t prepare, you will most likely lose all of that capital. With that, your UK home business idea would have gone to waste. Also, not everyone has a hefty savings account; and even if you do, dedicating all of it to your business would not be wise. Instead, the better option is to look for outside financing from investors, banks, crowdfunding, etc. Also, you may want to safeguard your business against a possible future crisis with insurance coverage.
Here are three money matters that you should consider first before starting your UK home business.
Determine your startup costs
First of all, determine what you need to start out. Do you need stocks of products? Will you need a storehouse? What office equipment would you need?
Depending on the kind of business you have, these will vary. If you’re an online retailer, for example, of course you will need stocks of products and a place to store them. If you provide virtual services, like a copywriter or graphic designer, you won’t need those, but you would need a capable computer as well as a good internet connection. Factor all of these into your startup costs.
When your UK home business is still new, a simple balance sheet will be enough to track income and expenses. You can do this yourself to save on costs, while things are still simple. Once your business grows, though, you may need to take in an accountant later on. Of course, you would want to save time and effort doing all of the books when they get more complicated.
Financing for your business
If you are looking for outside financing, look into small business grants. They are extremely useful, but can be difficult to come by. If you can’t find any grants, you can ask family and friends for zero-interest or low-interest loans. As a last resort, you can apply for a bank loan. In general, bank lending for new small businesses is hard to come by. Even then, most businesses end up approaching the bank at some point.
You may be thinking that taking out a loan will get you into debt. Yes it will, but it’s a good debt in this case, because you’re using the money to put up something that will earn you money. Soon enough, you can pay back your debt, and the business will continue to make money for you.
There’s also another thing you can look into, and that is crowdfunding. Platforms like Kickstarter, IndieGoGo, and GoFundMe are getting more and more popular for acquiring startup funding these days. The challenge with crowdfunding is that you should get people to see that your business is a great idea at the very beginning. If people don’t perceive your business as something exciting, they won’t fund you.
Angel investors can also help. These are investors who specifically fund startups. With that, they take on the risks that you take. But if your business succeeds, they also have a share through royalties or equity.
It’s wise to include insurance in your budget, so that you’re prepared when crisis hits. Take out whatever insurance policies you need, including public liability insurance. Doing so is a sound financial decision; think of it as “saving for the rainy days” instead of just another “expense”.
But also make sure that the insurance policies make sense, and that they don’t offer outrageous claims that don’t compute with how much premium you pay. As a rule of thumb when dealing with anything financial, when the claims are too good to be true, they most probably are. So, stay away from those dodgy deals, no matter how enticing they may seem. Certainly you don’t want lousy insurance policies to cause your business to fail. Therefore, stick with insurance policies that are reasonable.
Money isn’t easy to come by these days, so we all should value our money. Especially if that money is the initial investment for your UK home business! Take good care of it, and it will pay you back greatly!
To learn more and learn how to copy this and other ideas from an expert about starting a UK home business, or strategies to create your own product, check out icopyit.co.uk.
And oh, don’t forget to apply for our small business tips newsletter and begin to learn more about how to make money online. Leave your details on this site and I’ll send you my free report; ‘Online Business Ideas’.
Every success to you,