Part 5: How do you finance a business?

While the financial needs of a business will vary, there are several common considerations applicable to all new businesses.

Where will you get your funding?

The most obvious question for a start-up enterprise is what funding is necessary to get it off the ground. Your first concern is to accurately define the start-up financial support needed, bearing in mind that the first three years of operation must be taken into account while the business finds its feet.

But where will that funding be sourced? In the current climate, sourcing the necessary funding is difficult. This further strengthens the need for a viable and informative business plan, based on fact not fantasy. This plan can help persuade potential investors or lenders of the attractiveness of your proposition.

Make it official

If you're proposing to source the necessary funds from family members or friends, make sure that this arrangement has some degree of formality attached to it.

There are countless examples of personal relationships becoming damaged beyond repair due to conflict. This can result from loosely constructed financial agreements between a business owner and his or her relatives and friends.

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Putting a system in place

Every business, regardless of size, needs a financial system to ensure that finances are managed efficiently.

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Financial reporting and taxation

Appropriate and timely financial information will help you make smart decisions for your business.