Basic Financial Planning Page 2
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9FINANCING THE BUSINESS
All businesses of whatever size will need some money (often called
capital) to start up ('start-up capital') and to support the business
during the early stages ('working capital').
you and/or security - this can be a major
There will probably be 3 types
stumbling block. Specialist lenders to
of spending to consider:
social enterprises usually don’t want these
things but may charge a slightly higher
1 : The Business' Start-Up Costs
interest rate.
2 : Your Own Survival Budget
(and therefore the wage members
An overdraft can be an alternative for
working in the social business would
day-to-day working capital, but this can
need to be paid)
be called in any time.
3 : The Business' Day-To-Day
Remember that you are the customer
Running Expenses
and should ’shop around’ - if one bank
accepts your plan, then it is likely others
will follow suit.
You will need to calculate these costs
separately and then make provision to cover
You will need to buy equipment depending
them. Where possible, this should be done
on your type of business. Think carefully
using your own resources or money raised
before you spend money, can you justify
from grants or supporters. Bear in mind
the expenditure? What is the best method
that there could well be a long period
of purchase? It would be wise to discuss
when outgoings exceed receipts: for some
this with your accountant - should you buy
businesses this situation could last six
outright, use hire purchase or lease?
to twelve months.
If you do not have all the money you need,
you will have to borrow. This will usually
mean approaching a bank (they are still
the major source of funding) or specialist
social enterprise lender. A detailed business
plan, supported by thorough market
research, will be essential. Banks often
require a financial contribution from
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Parent category: Business