You'll almost certainly need to raise money to start up your company,

unless you already have sufficient capital yourself. The typical costs

of starting up are in obtaining premises, manufacturing your product if

you have one, buying materials, stock or equipment, marketing and fees

for external consultancy such as legal help, accountancy etc. Then when

you're off the ground, you'll need working capital to keep you afloat

in the gaps between paying your own invoices and receiving payment from

customer invoices.

Again, your business plan is essential at this stage of setting up your business. In it you will

already have scoped out what your money needs are and how you plan to

raise the capital, and you'll be using it to persuade potential

investors and lenders of the benefits of funding your company. Your

financial calculations in your business plan therefore need to be

thorough and accurate and presented with confidence.

Everyone expects that they'll be able to stick to their plans and only

need to borrow the absolute minimum, but more often than not something

unexpected crops up to throw a spanner in the works. It therefore makes

good business sense to include a contingency element in the amount you

request. It's better to do that now and have the extra cash as a

safeguard than it is to have to return to your lender or investor not

far down the line to ask for more money. If it wasn't in the original

plan they are likely to be concerned about your financial ability and

your request may be rejected.

How much money should you request? This question worries all start-up

business owners. You want to make sure you have enough to keep you

going without struggling, but how much will your investors or lenders

be prepared to give? Most experts would advise that you should pitch

somewhere in the middle ? don't leave yourself short by requesting the

minimum, but at the same time don't be greedy (and lazy) in asking for

too much. You want to keep costs to a minimum and invest your money

wisely in your company, while still having the security of a little

extra for backup if required. What you borrow should give you a

realistic challenge for your business but should not be too risky. And

back up your calculation with evidence in your business plan ? it has

to be credible.

People raise money for their company in many different ways, not always

from professional business investors or high street banks. How you

raise your capital will depend on your business needs and your own

circumstances. Here's some information on various different sources of

funding.

Your own money ? if you have enough cash to spare, putting up your own

money for the business means you don't have to be in debt to anyone. It

will also give you full freedom over the running of your company as you

won't be responsible to any other interested parties. On the other

hand, you're risking a lot personally by investing your own cash and

you could lose it all ? and not just your business, but perhaps also

your home if you obtained the money by taking out a secured loan or

increased your mortgage, for example. You should also be aware that personal borrowing rates

often have much higher interest repayment rates than business deals.

People you know ? if they have anything to spare, family and friends

are often more willing to give you cash than external lenders or

investors. Again, though, there is a high level of personal risk, both

for your family or friends who could lose money, and for you ? it can

cause relationship tensions. If you do take money from family or

friends, treat it as a formal business arrangement as you would with

external funding and agree clear terms and conditions. You want to

protect both your interests and ensure that there are no

misunderstandings.

The bank ? high street lenders usually have a variety of different

packages and there's usually something to meet everyone's requirements.

You'll have to do a sales pitch to get your money though, and depending

on financial circumstances you might also be required to find a

guarantor or provide some sort of security. Don't just go to your own

bank ? look around for a good deal and do your pitch to various

lenders. If nothing else, it will give you good practice! If you think

you might have more of a chance of obtaining money from your own bank

where you already have a strong relationship and good financial

history, then don't put it first on your list of visits ? present your

case to a few different lenders first to hone your presentation and

persuasion skills to a tee! Even if you can't find a lender to give you

money, there is a government programme that may be able to help. The

Department of Trade and Industry offers a Small Firms Loan Guarantee,

in which it offers three quarters of the borrowing amount to the lender

as a security guarantee. In return, you must pay an annual fee (which

will be a small percentage of the remaining loan amount) to the

Department of Trade and Industry. Up to quarter of a million pounds can

be borrowed over a maximum 10-year period.

Outside investors ? often referred to as ?business angels?, private

investors are rich professionals, often successful entrepreneurs

themselves, who are able to offer a great deal of capital in return for

an expected large profit and dividends when the company starts to make

money. The advantage of obtaining finance from an investor rather than

a lender is that they will not expect any financial returns until your

business is turning a profit. Also, as successful business owners

themselves, they can be a valuable source of advice to guide you in the

right direction with your company. A combination of investment and

lending might be a good option. Your business will seem a much more

attractive and secure prospect to lenders if you already have a sum of

capital to back it up. Investors will no doubt have a level of

influence and decision-making power in your company, though. Most will

want to be kept informed of what is going on ? they will want to

protect and develop their investment, of course, so you will have a

responsibility to them. Also, when you start to turn a profit, it will

be divided among everyone who has invested so you won't get the full

whack. Finally, you'll need to put forward a very good business case to

attract an investor ? these are very wise, shrewd and experienced

entrepreneurs.

Government schemes ? there's a whole raft of options available to small

business owners from the government and local authorities in the form

of low-cost loans and grants ? in fact far too many to mention here.

Your local business enterprise centre, chamber of commerce or local

council will be able to advise on what options are available for your

type of business. The loans are usually offered at very reasonable

rates and grants are of course non-repayable (although competition can

be tough). Such incentives are often given to certain types of

businesses in certain industries located in certain areas, particularly

in areas that are being regenerated and in fields such as science,

research or engineering.

In conclusion, the key message is that however you get the money you

need for your business, you'll need a very strong business plan ? and

you'll need to practise your skills of presenting to ensure you make a

good impression and a convincing case.

The presentation of the document itself is also important. Keep it

clean, crisp and sharp. Use a business-like typeface, use colours

sparingly and use spreadsheets to create neat graphics. Have someone

else look over it for you when it's done to check for mistakes. Print

it on good paper and hold it together in a presentation folder or comb

binding.

Don't just plan to read out your business plan ? people can do that for

themselves. Turn it into a slick presentation with a strong argument

for your case. Write down what you want to say and rehearse it several

times ? in front of a mirror at first and then to family or friends.

Confidence is key and this will come with practice. Ensure that you

know the details of your plan inside out, including the figures. You

don't want the facts to trip you up. It's also a good idea to consider

what questions investors or lenders might ask and how you can answer

them confidently and convincingly.