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Working From Home - Getting The Finances

By Kimberlie Hutson

Republish: EasyPublish™
Published: 26Feb2009
Word count: 588
Viewed: 274 time(s)

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One of the biggest fears most people face when they contemplate setting up their own business and working from home is the financial risk it can involve. This is not something that should be taken lightly, most of us work for a reason and that reason is so we can keep a roof over our head and food on our plates, the more we earn the nicer that roof and food can be. Becoming self-employed takes away that certainty that at the end of each month, the money will magically appear in your bank account. Do the potential rewards out way the potential risks? Can your business work? Can you prove it without the aid of a crystal ball?

The most obvious place to start would be your own finances. Savings, inheritance, a pay out on premium bonds or even redundancy pay could be ways to finance your business. Of course, it may be a huge risk, but if you're not willing to believe and invest in you, why should anyone else? The hardest thing maybe justifying touching it, if you were saving it for a rainy day you may be reluctant but if you really do have faith in your new venture this should help you overcome it. Not only do you need to fund your new business but also, you've still got to pay all the normal bills and expenses of running a house - will your saving be able to do both?

If you really don't have the money yourself, do you have any friends or family you could ask? You may be reluctant to mix business with the people you love but it wouldn't be a hand out, you would get legal contracts drawn up stating how much and when they'd get paid pack. If they make an investment they will hold equity in your company in the form of profits.

The bank is the most common place to secure a business loan. Although this can make many people nervous at the moment it may be the most logical option for you. You would need to prove to them their money would be safe with you though, which is where the biggest risk can come into starting you own business. Would you be able to bet your house on the fact you'll succeed? Do you even have a house to use as collateral? Do you have a family this discussion could affect?

The Government's Small Firms Loan Guarantee Scheme might be able to help you secure a loan, this scheme helps small businesses who don't have security, to borrow from registered lenders, up to 75% of the loan can be secured by the UK Department for Business Enterprise & Regulatory Reform (BERR).

Every year millions of pounds are made available to SME's through awards and grants and aren't normally required to be paid back, however these are hard to acquire and very competitive even of you do meet the entry requirements. Have a look into your Local Enterprise Agencies, Learning and Skills Councils and Business Link. If you're a start up business, a young entrepreneur, or are providing work in an industry where unemployment is high you may find you are eligible to apply for funding. The Princes Trust also has funds available to help young people start up their own business if you're aged 18 - 30. The Grants and Support Directory (GSD) would be a good place to start researching grants to fund your new business.

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