Start-Up Business Financing

sbbfc

Swinger
Hi All,

Having left the Regular Army 18 months ago I have spent the time within an operations role in the Manufacturing Industry. I am now in the early phases of launching my own brand retail business and have reached the point of putting some funding together. I will be working full time whilst starting up to self fund an element of the business but I will be looking for around £10k for an initial stock purchase.

Does anyone have any experience of any ex-forces friendly agencies dealing in grants and loans for small business start ups?

Any info would be greatly appreciated.

Many thanks in advance.
 
Funding Circle.
I don't hae personal experience, as have been running my business since 1990, but it's the type of thing they do.
 
I think the RBL does business start up loans.

H4H run a business course.
 
The reality is that getting debt finance for a start up is really hard. You will almost certainly have to borrow the money yourself or, at the very least, guarantee the loan. If RBL do support ex-Service startups, I’d hazard a very strong guess that they will require a guarantee.

Peer to peer platforms like Funding Circle fund established, credit worthy businesses. Most require two years of trading and lend against turnover. Banks just don’t lend to startups. So you have to get imaginative.

Most new businesses are started entirely with owner finance (whether capital or debt) and / or borrowings friends and family. If you don’t have the ability to do that, maybe look at crowd funding. Set it up as a project crowd fund and get it in front of as many friends as you can. You only need twenty to put in £500 and you’re there.

Also look in to a corporate Amex card. If your operations cycle (the time between paying for stock and recouping your investment) is short, you may be able to buy and sell your stock within the Amex payment window. Amex will quickly increase your credit limit if you pay off in the required time frame, so it’s scaleable. I have a friend who has build a £1M a month turnover retail business using Amex to cover her working capital.

Don’t underestimate the amount of money you will need for marketing. Your products won’t sell themselves - whatever your route to market, you have to spend money to make a sale. Don’t be surprised to have to spend 25% of your revenue on marketing in your first year. Which means that you will have to find marketing funds to get your fledgling brand out there before you have any revenue. Work out who your ideal customer is and pitch your brand and marketing at that customer avatar.

Last piece of advice; produce a business plan and get others you trust to critique and challenge it before you spend money on stock. Think about what your business will look like in a year, two years and beyond. If you can’t articulate your vision and be all over your numbers, you’ve no chance of securing debt or investment.

Feel free to PM me any time. I’ll help if I can. Entrepreneurship is a great thing!
 
You have lots to think about. If you are raising funds you are going to have shareholders. That means as well as company articles which define how your company works, you will also have to have a shareholder agreement as some things you will want to do will require shareholder agreement. Going down this route is complex and time consuming, so you may be better off taking debit in the form of loans to the company. Rather than personal loans. The thing to bear in mind here though is you need to be able to service debt. If you can, and you’ve taken debt as a company then you will find your business in insolvent (in Thomas Cook land).

Happy to give you some friendly advice if you want a chat. PM me if you need a bit of a sounding board.
 

Truxx

LE
Hi All,

Having left the Regular Army 18 months ago I have spent the time within an operations role in the Manufacturing Industry. I am now in the early phases of launching my own brand retail business and have reached the point of putting some funding together. I will be working full time whilst starting up to self fund an element of the business but I will be looking for around £10k for an initial stock purchase.

Does anyone have any experience of any ex-forces friendly agencies dealing in grants and loans for small business start ups?

Any info would be greatly appreciated.

Many thanks in advance.
Not the same as raising capital I know but remember that you can offset any "losses"(and as others have pointed out, costs in start up are big, and depending where you are in the tax year can be shown on the balance sheet come January as a big "loss") against tax paid in previous years ( in this case whilst serving).

So lets say, for instance, that this start up year shows a loss of £10k. You can set that loss back 5 years (I think) and get the tax difference back between the salary you actually earned and that same amount less £10k. You can continue to do this for a number of years after start up ( see the HMRC website for details)

In addition there will be lots of things that you have done, and purchased ( 1/7 of your mortgage interest, that new mobile phone, setting up an office etc etc) all of which need to go on your balance sheet to leverage the max advantage in terms of tax rebate from tax already paid whilst in uniform.

I am sure you have got a decent accountant but getting him or her looking at all this is worth its weight in gold.
 
You have lots to think about. If you are raising funds you are going to have shareholders. That means as well as company articles which define how your company works, you will also have to have a shareholder agreement as some things you will want to do will require shareholder agreement. Going down this route is complex and time consuming, so you may be better off taking debit in the form of loans to the company. Rather than personal loans. The thing to bear in mind here though is you need to be able to service debt. If you can, and you’ve taken debt as a company then you will find your business in insolvent (in Thomas Cook land).

Happy to give you some friendly advice if you want a chat. PM me if you need a bit of a sounding board.
Not knocking your advice, which is sound especially around shareholder agreements. IMHO (and from personal experience), you really need to thrash out a decent agreement with early stage equity investors. If they’re not on the same page, you’re storing up issues for later.

But how does a start up with no trading history take on debt? I’d humbly suggest that any commercial lender will require directors guarantees or security.

TBH the OPs initial funding requirement is tiny at £10k. If he’s not prepared to underwrite that risk, why would anyone else?
 
Not knocking your advice, which is sound especially around shareholder agreements. IMHO (and from personal experience), you really need to thrash out a decent agreement with early stage equity investors. If they’re not on the same page, you’re storing up issues for later.

But how does a start up with no trading history take on debt? I’d humbly suggest that any commercial lender will require directors guarantees or security.

TBH the OPs initial funding requirement is tiny at £10k. If he’s not prepared to underwrite that risk, why would anyone else?
Only way the OP can do that is with a personal guarantee. You've more than covered the options already, so I thought I'd add to your post with the shareholder reference if the OP found himself going down the friends and family route as raising the capital is just the start.
 
Only way the OP can do that is with a personal guarantee. You've more than covered the options already, so I thought I'd add to your post with the shareholder reference if the OP found himself going down the friends and family route as raising the capital is just the start.
Agree completely, wasn’t being critical.

You’re dead right about shareholder agreements. I’ve been burnt twice where family / friends investors have committed a business plan and shareholder agreement only to fail to invest all that they committed to. It’s all fine and dandy having cash call clauses etc but when your investors don’t stump you’re problem is probably cash not agreements!

There’s probably a wealth of advice and genuine assistance here on Arrse for budding service leaver entrepreneurs. I’d certainly be happy to scrutinise business plans, ideas etc for nothing. Especially at the early stage. I wonder how we could harness it to help people like the OP?
 
Agree completely, wasn’t being critical.

You’re dead right about shareholder agreements. I’ve been burnt twice where family / friends investors have committed a business plan and shareholder agreement only to fail to invest all that they committed to. It’s all fine and dandy having cash call clauses etc but when your investors don’t stump you’re problem is probably cash not agreements!

There’s probably a wealth of advice and genuine assistance here on Arrse for budding service leaver entrepreneurs. I’d certainly be happy to scrutinise business plans, ideas etc for nothing. Especially at the early stage. I wonder how we could harness it to help people like the OP?
I'm the same - I'd be delighted to help anyone wanting to have a crack at setting up. There are a few lads on here who could undoubtedly pile in with advice. I've dealt with the delight of raising seed capital, EIS/SEIS, dealing with the LSE, Nomands, institutional investors and the hundreds of sharks busily ripping start-ups off. It's a minefield and there are some very unpleasant con-artists out there and getting good safe and trustworthy advice in the early days is rock-hard.

It probably wants a thread and a sticky with a list of call signs that are willing to help or offer advice.
 

napier

LE
Moderator
Kit Reviewer

Not sure if this is what you were after, but Ren (CEO) is very helpful.
 

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