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20. July 2012

Finding Investment for Your Home Business

Filed under: Business Finance — Tags: , , — John Delaney @ 21:58

A hand working with the computerA home-based business will have many of the same financial obligations and pitfalls as that of a regular business and once it reaches a certain level, you may need to consider sourcing investors to expand your operations. Whether you operate as a freelancer or professional management consultant, one expense that cannot be avoided is office equipment. Computers and peripherals such as printers, scanners and fax machines all require investment. Some consultants may require specialised test or measuring equipment. All of these items are necessary to remain competitive in your chosen area and must be installed, even if you are not paying yourself a salary during the start-up phase of your home business.

Traditional Investment Options

If you only need less than a few thousand pounds to progress to the next level, the most popular approach is to seek investment from family members or friends as these contacts will be less concerned with security and will generally offer a favourable repayment schedule. In addition, they will not be concerned with a complete business plan with market research and will trust you based on your personal relationship. However, if the amount you wish to borrow is simply not available, other options must be considered. Your local bank manager, if you have a good credit history will more than likely be receptive to your loan application but expect to be asked for a business plan, security and expected loan payment terms.

Last Resorts

If unsuccessful with traditional finance, it is then time to start networking, seeking angel investors or venture capitalists. These will not be interested in investing in your purchase of equipment as their primary role is in making money from viable companies in either a profit sharing or partnership arrangement. In some cases, if the amount sought is high, you may find that your investor will be controlling the direction of your business. This is to be avoided if possible.
In order to maximise success in attracting investment, it is good business practice to have a detailed business plan that outlines the operation, direction and expected sales increases for your home business. An excellent business plan that identifies a viable commercial market will allow you to easily find investors.

IMG: Lincoln Rogers – Fotolia

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