"An entrepreneur without funding is like a musician without an instrument."
Robert A. Rice Jr
Entrepreneur
Investing in your business
Your career is the instrument of your wealth.
Invest in yourself.
An injection of cash can be the difference between success and failure. Small businesses often fail as they haven’t invested correctly in their future, so make sure you get the help you need when it comes to investment.
Here To Help
Setting up your own business is seldom as straight-forward as people think. There’s much to consider and many financial responsibilities you will have to ensure you’ve covered before you can get started.
Funding your business with enough capital is frequently overlooked. Most companies that are underfunding will struggle with cashflow, and potentially cause the early demise of fledgling business.
Across all the pages in this section, we provide a series of guides to help you find what you should be looking for, particularly when it comes to funding your business to the right levels, so when that time comes, we can help you…
CHOOSE THE ADVISER WHO UNDERSTANDS YOUR NEEDS.
What is business investment?
The money used to grow your company is a business investment, no matter where it comes from. You might use this money to:
- Buy new equipment / IT
- Hire more staff
- Provide staff training and development
- Move into better premises
- Pay for advertising, PR and marketing
- Develop your brand
- Patent and/or protect your intellectual property
Do you need a business investment?
Sometimes at the start of a business, it can be hard to identify where you need to invest more time and funds. It’s a busy time, and often circumstances are trial and error for a little while before the business settles. You may be struggling to meet targets identified in your marketing plan or find that the marketing strategy you’d laid out is not having the desired effect. Signs like this could suggest you’re in need of some investment in certain areas.
Investment is important in a company. Not only would it have a positive effect on tactics and strategy but can help boost morale and keep revenue moving upwards. It can also do wonders for the appearance of your business – keep your space fresh and inviting and you should find a positive atmosphere is developed.
What can it do to help me grow?
The overall aim of your business is to grow it. You want to feel that you’re making a success and it’s a service that the world now can’t live without. Investment can provide a lot of benefits for your business, here are a few:
People
The people you work with are one of the most important elements of a company. They are the power behind your brand, and a massive asset to any company. Having regular development training available shows a commitment to them growing, not only as individuals, but for the good of the company. Arming them with skills and knowledge related to your business can help move your business forward. Team building days and onboarding systems for new starters are also great ways to develop the company’s culture, creating an encouraging and interesting place to work.
People also need to feel they are getting a good deal, so investing in them will help to maintain high morale. Employee benefits such as a workplace pension, flexibility and extra holidays may be some great things to consider when it comes to work perks. Not only that but offering these things to new recruits is cheaper than offering a higher salary.
Equipment and processes
As your business grows, the more use your machines will be getting and the processes you have in place may start to become cumbersome. Make sure both these are up-to date to help develop long-term growth.
Market research
Market research can help you to stay in touch with your target market; revealing new opportunities and risks. It doesn’t always come cheap, but it could be worth it in the end and end up paying for itself.
Research and development (R&D)
Do you have a need for innovation? Advancing in scientific or technological information through R&D could qualify you for some government funding, so it’s worth considering to help progress with new ideas and solutions to industry issues.
Marketing
Marketing is presenting your best side to consumers, both new and existing. This can be a big challenge and it’s hard to get it right 100% of the time, especially at the beginning of a business. Investing in marketing and any expertise you may need to help can be a massive help in putting your business in the right direction.
What are the types of investment available?
There are three ways to secure investment for your business:
Private equity
To acquire a private equity investment you will need to sell a stake of your business to a wealthy investor. They in turn inject cash into your business, as well as offer business support and guidance. You won’t need to sell more than 30%, and these “angel investors” will be a great help, especially if you’re a start-up. These investors are likely to only invest in a business that has a clear strategy and a knowledgeable leader, so make sure you have a strong business plan to present to them when bidding for the investment.
Debt
This is the process of taking out a business loan from a bank or a lending company. You need to have a good credit score, in the same way as applying for a mortgage, a strong business plan and a detailed reason for your need for the loan.
Most use company assets as a security, however some are based simply on your personal finances.
Reinvestment
This option will help you to avoid debt and interest so is the cheapest option of all three. By putting some of your profits back into the business rather than taking at as income, you’ll be able to see significant benefits in growth without diluting equity. As well as this, if you choose to look for either of the other options, your confidence in your own business is bound to impress new investors.
So, which one is right for me?
This very much depends on your personal situation, so choosing has to be an individual decision. If you’re keen for fast growth, help from a private equity investor will provide you with expertise you may be missing. However if you feel you can develop your enterprise alone and you have a healthy profit, reinvestment could be the best idea.
Debt funding will help if you want to keep all shares of your business, but simply can’t afford to sacrifice any profit. However, be aware of the repayments on this option.
Abacus Associates manages the personal wealth of many people across the UK and over £1 billion of investments, providing clients with financial advice and access to investment products and services.
We do not charge for initial consultation meetings. If you would like a face-to-face meeting, feel free to pop over to our office or we can always can come to you.
Give us a call today on 01432 343322 and ask to speak with one of our advisers,
or email [email protected]
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Abacus Associates is a trading style of Saltus Partnership Limited which is authorised and regulated by the Financial Conduct Authority. FCA reference number: 554381
Registered office: Solent Business Park, 4500 Parkway, Whiteley, Fareham PO15 7AZ. Registered number: 07586042
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Your home may be repossessed if you do not keep up repayments on a mortgage.
Capital is at risk and you may get back less than you invest.
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