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How to Raise Money For Building Material Business in the UK
All aspiring business owners must secure enough funding for their startups. Unlike the old days, however, you don't necessarily need to have a fortune for a startup. There are several ways to create the required fund to start your very own building material business in the UK. While it may be easier than before, you will still need to put in some effort. You will have to plan your business' finance carefully and thoughtfully. With that said, here are a few ways you can build up capital for your own company.
Friends and Family
When securing funding, asking for friends and family's support can be one of your sources of capital. It's also one of the most obvious ways that people try first. However, there are both advantages and disadvantages of asking your friends and family to invest in your business.
The advantage of having your close relatives and friends is that you won't have to spend as much interest. While rare, some may even lend you money without any interest. Depending on your agreements, you can also be more flexible in payment than banks or a loan institution. Some may even allow for longer repayment terms.
However, there are also potential problems when asking family and friends to invest in your company. Some may become entitled and will seek to be a part of the business. It's also crucial to write a written agreement, as they may demand their money back at the worst possible times for your business. And if your startup didn't go as planned, you lose their money and their trust. Any problem and misunderstanding arising from the transaction can eventually damage your relationships with them.
Overall, you will need to have a strong mutual trust and a well-written agreement if you avoid the risks of asking your friends and family's support.
Apply For A Startup Loan
Another funding option in the UK is applying for a startup loan offered by the government. The government can provide an unsecured personal loan for anywhere between £500 to £25,000 to start or expand your building material business. It's open for any UK citizen of legal age. The interest is a fixed rate of 6% per year, payable in 1 to 5 years.
However, to successfully quality for a government startup loan, you will need to write a detailed business plan. Writing a business plan will need a lot of research and planning. You'll have to decide what services and products to offer. For example, an outdoor flooring material supply business is an excellent choice due to the high demands for outdoor living spaces. You'll also need to include in your business plan market strategies and financial planning. There are several guides you can find on the internet on how to write an impressive business plan.
Business Angels or Angel investors are individuals willing to fund a company or a business. In most cases, they can lend you anywhere from £5,000 to £150,000 for your startup. The greatest advantage of angel investment is the knowledge and connections that go with it. As experienced business persons, angel investors may provide extensive information and pointers to succeed in the industry. In some instances, they may also be willing to share their connections. They will be closely working with you as your business grows.
However, there are also a few disadvantages of angel investment that you will need to consider. The angel investor will require a share of the company. You will not have full control over the business, as investors will have some say over crucial decisions. Overall, it can be hard to find an angel investor.
It can be hard to apply for a loan in banks and institutions, especially for a startup. Even existing businesses wanting to expand may still find it hard to have loan approval. Fortunately, there are peer-to-peer lending institutions that are willing to fund smaller startups. And because there are several P2P lending companies, it only takes some time to find one with lower interest rates.
While applying for a loan through P2P lending may seem easier, you will still need to reach some qualifications regarding your credit score. In most, if not all, cases, you will also need to pay application fees charged by P2P platforms.
There are several ways to fund your building material business in the UK. You can try borrowing from friends and family, apply for a government loan, look for angel investors, or avail P2P lending. However, finding which one will suit you best will require some planning and preparation.
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