How to raise finance as a young entrepreneur
You'll inevitably need to borrow money to get your business off the ground, make sure you get it and at the best deal
When it comes to seeking out a cash injection for your new venture, you may well find that age is as much of a help as a hindrance. The dotcom boom and bust has left a bad taste in the mouth of those with the purse strings and has effectively put an end to the days when anyone under 30 with a new business idea could expect to walk away with a pile of money.
According to John Devitt of Shell LiveWIRE, finding finance when you’re young can be fiendishly difficult: “Youth is a barrier – not just in the case of venture capitalists but from banks as well. Even if you’re profitable you can have trouble getting expansion money.”
But this isn’t to say you have to wait to grow a few grey hairs before you can find finance for your business. While some traditional equity sources might insist on a track record and a middle aged spread, there are plenty of other options, some like the Princes’ Trust specifically designed to help young entrepreneurs, to consider. International brand communications group Attik and catering company Inn-and-Out Ltd are just two companies which started up with a small loan and little business experience.
Where to go
Outside of shaking down your family and friends, running up your overdraft or selling your prize stamp collection one of the first stops on the road to securing some capital is likely to be your local high street bank. If you need a quick decision without visiting a bunch of advisers and getting caught up in paperwork then a trip to see your friendly business adviser is a must.
“The benefit of a business coming to us is that we are a one stop shop and can bring in specialist advice where it is needed,” says Mark Till, medium business director at Barclays.
However, there is a note of caution. This speed and efficiency can end up costing you big time, and you should always question whether the advice you’ve received isn’t merely a means for the bank to push their products onto you.
Away from the high street, a cheap and often underused alternative is Business Link. With heavily subsidised costs they can help you explore all your funding options, including grant schemes, venture capital and outside investors. Again many of today’s successful entrepreneurs have made the most of their services and wealth or knowledge, though the quality of what’s on offer can vary between offices.
If, however, the amount of finance you’re looking for is over the £25,000 mark then a corporate finance boutique or accountant will be able to assist. The stereotypical image of dull men in grey suits is a myth and advising entrepreneurs on fundraising is a huge part of what they do, so make the most of it.
While costs vary, expect a thorough examination of your business plan, and in return you’ll gain access to their extensive database of contacts. Should your venture get off the ground, you’ll have a relationship, which will prove invaluable throughout your business’ lifecycle
What to say
When you’ve tracked down a potential source of funding, then there are some key points to bear in mind if you want to get your hands on the cash. Aside from a solid business plan, make sure you’ve explored the marketing of your product and/or service to the full and emphasise its growth potential to ensure those who are about to invest feel confident they’re going to get a good return.
You should also bear in mind that, no matter how well your facts and figures add up, any source of finance will also be investing in you. Evidence of a strong mind, a flair for leadership, and belief in yourself and your product must be there in abundance and a determined, confident and objective personality will go a long way to making up for any lack of business experience.
A determined, confident and objective personality will go a long way to making up for any lack of business experience.