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Financing a New Business (Written under the pseudonym "Phil Stone")

Published by How To Books Ltd
May 2001
ISBN - 1857037065
Price 9.99 (128 pages)

Raising finance for your business should not be difficult providing you either have an existing profitable business or, you have an idea for a new business that is feasible. Both of these aspects are important. If a lender is to finance your business they must be sure that you can meet the repayments. They are in business to lend money and make a profit.

Raising the right type of finance for your business is also important. There is little point in borrowing money on a short-term basis if you can only repay it over the long-term. This is a common mistake that small businesses make. They utilise short-term finance, for example a bank overdraft, to finance long-term expenditure such as the purchase of a new vehicle. This then leads to a reduction in short-term finance for working capital which could, in some circumstances, lead to business failure. You must match the type of finance to the type of expenditure.

You also need to be aware that in many cases you only get one chance to present your financing proposals to a lender. You therefore need to get it right first time. If the lender has doubts about your proposition it is unlikely that you will be given an opportunity to change it and present it again. You should have recognised the potential pitfalls in the first place and made provision for them in your plans. Once they have declined your request for funding you are unlikely to be able to persuade them to change their mind. Lenders are there to take a risk but that risk must be acceptable.

This book is designed to help you with all of these problems. It covers the research you need to do to put your proposal together and outlines the way in which a potential source of finance will appraise your proposition. It shows you how to make the best use of your bank, and helps you to understand the implications of giving personal security for any debt. A number of different financing options are covered from the use of hire purchase and leasing through to the investments made by venture capitalists and business angels.

Finally this book will help you to stay in control of your finances and cope with any problems that may occur. As a final message, you should always remember that a lender is there to assist you. If you are having problems at any time it is better to discuss them and try and resolve the situation. Once you lose control of your finances you have lost control of your business. Lose control of your business and you will probably fail.