Preventing The Credit Crunch From Affecting Your Business Expansion

“What are the best ways to fund your business expansion plans outside of the high street?’

Given the latest news that high street banks are removing a number of mortgage products to new customers, Capital One closing the accounts of a number of their customers and the general restriction of funding, the number of options to finance business expansion appear to be falling by the day.

It is interesting that 18% of small companies are now funded using credit cards*. Many opt for this option as you do not have to justify your decisions to the Bank Manager and the fact that you feel you are getting something for nothing makes it feel attractive, sadly however such funding is not smart or prudent into the long-term and it is certainly no way to fund a serious business.

Business Angels are the only viable alternative out there.

Business Angels are wealthy individuals who have made their money and now want to give something back, some will be in it just for the return on investment, but more usually they are keen to stay engaged with the business community or to mentor younger entrepreneurs.

One of the advantages of Angel funding is the contacts they come with, it is in their best interests to get these deals to fly and thus will introduce you to all of their mates, who will usually be influential business people in their own right.

You may have noticed that Angels do not tend to advertise so how do you find them?

First stop is your accountant and lawyer, friends and business associates.

Most of these will have friendly angels or know of someone who knows someone.

Have a look at very good British Business Angels Association website www.bbaa.org.uk?
It lists full details of each of the major Angel Networks in the UK and good advice on the pros and cons.

These networks have a gatekeeper who is there to guard against time wasters or filter the responses which down meet their specific requirements – such as industry sector and deal size.

It is beneficial to entrepreneurs to gain access to have so many deal-hungry funders under one roof as they can communicate their requirements to a number of angels within minutes of logging-in. Another benefit is that angels often give advice for free that will help you improve your pitch and business ideas – often this can not be sought elsewhere.

The downside is cost. You will often be asked to pay an upfront fee AND a back-end success fee, so that if you are looking to raise £100,000 the fees could easily amount to £10,000.

Also deals are often couched in jargon and ‘olde worlde’ and intimidating language, which in my opinion is there to confuse you in the guise of protecting you.

However, there is an alternative …

Visit www.angelsden.co.uk and find out what it is.