Where are you going to find funding?
If you set up in business you will need incur two types of expenses:
  • one off expenses such as equipment, furniture, incorporation expenses, machinery, premises, software, tooling and maybe a website; and
  • recurring expenses such as electricity, raw materials, rates, telephones and wages.
Once you are established you should be able to pay the recurring expenses out of your regular income such as sales or fees. You can borrow short term from banks or other financial institutions to get you started.  The one off expenses will take much longer to pay. You can either borrow the money on a long term loan or you would a mortgage or you can sell a stake in your company to a partner or investor.

Short Term Funding

Traditionally this has been provided by the clearing banks but as banks have become less willing to lend to start-ups and other small businesses community development finance institutions ("CDFI") have become increasingly important. CDFI lend money to businesses, social enterprises and individuals who struggle to get finance from high street banks and loan companies. They supply working capital, bridging loans and occasionally start-up capital. A good example of a CDFI is the Business Enterprise Fund of Bradford which describes itself as "a single source of assistance for businesses seeking to access finance from main stream lenders or for businesses that have been turned down by the high street banks." Further information on CDFI can be obtained from their association, the Community Development Finance Association.

Longer Term Funding

A good starting point is Business Link's "Finance and Grants" portal and, in particular, the following guides:
  • choosing the right finance when starting up
  • identifying the right finance options for your business
  • using your business plan to get funding, and
  • finance options.
Business Link also supplies information on grants and other business support through its Business Support Finder database. A similar database is kept by JB4Grants.

The Institute of Chartered Accountants of England and Wales offers useful information on all aspects of funding for small and medium enterprises through its SME Funding Adviser Scheme. The site identifies accountancy forms specialising in assisting start-ups and other SME. Particularly useful is the chapter on small scale equity funding through business angels and venture capitalists. The British Business Angels Association, whose members include venture capital funds as well as angel syndicates, provide further information on angel and private equity funding.