Ways to raise finance

Can you advise me on the best way to gain financing for my new joinery company?

Cash businesses like yours will always have problems raising finance. Lenders and investors want to see evidence of activity and growth and unless you have the proper records you won’t be able to convince anyone – banks, suppliers, Customs and Excise, Inland Revenue to name just a few.

At the moment, the only change of getting an infusion of capital might be from a private investor looking to be a partner, but even this I think very unlikely.

Really you need to formalise your business practices. Being paid in cash for the work you do is typical of your type of business, but you could ask for cheques and you may be able to take credit card payments. If your customers still prefer the cash route, this doesn’t stop you paying the cash into your bank account and paying your own suppliers in the normal way by cheque.

It goes without saying that you need to keep receipts and invoices in the proper way, otherwise you might find yourself getting into trouble with the Inland Revenue. Once your business is properly organised and if it is showing signs that the level of trading is becoming stronger and more stable, you should be able to go back to your bank manager and seek to negotiate an overdraft or loan. In the meantime, to fund your business look to persuade your customers to pay money up front, perhaps 50 per cent in advance and the remainder on completion of the job. Many new businesses get their initial capital in this way, from their customers.

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