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Funding your start-up business
Starting a new business can be a daunting process, particularly when it comes to securing the necessary funding – but there are a number of options open to you.
Business angels, government grants and friends and family are all avenues you can go down to raise the capital for your new business so it is important to weigh up the pros and cons of each option.
Business angels are individuals that invest in businesses in return for equity in the firm – like the Dragons' Den in many ways.
One disadvantage of business angels is that they can be difficult to find so be prepared to spend some time tracking down the perfect investor if this is the way you would like to go.
It's not easy to secure a government grant but it is well worth the effort if you manage to do so.
Three main factors determine whether or not you will be successful - location, size and sector – meaning you stand a better chance if your new company is opening in a location undergoing regeneration, your business is small enough that a grant will make a major difference and if your new company will operate in a sector the government is looking to boost.
If you think your new business will fit into the criteria set out by the government, applying for a grant may be a worthwhile option for you.
Friends and family
This can be the easiest way of securing funding but it also stands the highest chance of going wrong.
If you go down this route it's crucial to set up contracts and agreements and not to go about it on an ad-hoc basis. Zero per cent interest rates seem appealing, but with relationships on the line it is important to remain professional and protect yourself and the friend or relative you are borrowing from.