How Are UK Residents Starting Businesses With So Much Debt?
The UK has one of the most serious personal debt problems in the whole of Europe. So, it seems odd that thousands of new businesses were started here last year. How can people afford to launch a new company when they are up to their eyeballs in debt? That’s something we wanted to find out, and so we performed a lot of research. After speaking to a number of top bosses over the last couple of weeks, it seems the answer has more to do with determination than anything else. By hook or by crook, UK people are managing to raise the funds needed to make their mark in the business world.
We’re going to list some of the ways in which people are funding new ventures in a moment. We hope that presenting you with the information will help to encourage more folks to make the move. Working for someone else your entire life will mean you never experience the same freedoms allowed to those who try something different. You might have thought that it was impossible to get ahead with so much personal debt, but we’re here to tell you there are a number of solutions. You simply have to think outside of the box and use one of the techniques that have proven successful for others.
Taking control of debt
One of the main factors involved when starting a business in the current financial situation involves taking control of any debt. You can do that in a number of ways. Ideally, it would be sensible to pay your debts off before launching a company. However, that isn’t always possible. A business idea that seems viable today might not be such a good move in twelve months time. So, it’s important you can capitalise on the state of the markets right now. Perhaps it would be worth using an IVA calculator and finding out if you qualify for one? If nothing else, an IVA will mean your creditors can no longer send those threatening letters. Also, your payments will be driven down into one affordable monthly installment.
Getting investment from the bank
Getting investment from your bank is going to be very difficult if you have a lot of debts. However, it is not impossible as many new business owners have discovered during the last twelve months. You simply have to create a business plan they cannot ignore. To help you do that, there are many guides and templates online. That said, someone without previous experience is likely to make mistakes. That is why you will need to get in touch with a good business adviser. They are the ones best placed to ensure your business plan contains all the most attractive elements. Once you have it, you can arrange your appointment. Make sure you dress smartly as that seems to have worked well for people in your situation in the recent past. Sometimes looking the part is essential, especially if you have a lot of obstacles to overcome.
Selling their homes
A number of the business owners we spoke to had to sell or remortgage their home in order to fund their company concept. That can be a rather risky move, but it will almost certainly pay off if your idea proves lucrative. Some people even move overseas to start their business due to tax arrangements. Just remember that around 50% of new businesses fail within the first twelve months. So, you need to be 100% certain that your concept has a lot of potential. Again, a good business adviser will be best placed to highlight any issues with your plan and offer guidance about the ways in which it can be improved. You’re going to need your partner and family on board if you want to use that technique. Sometimes it can be difficult to convince them that selling up and moving somewhere cheaper is a good idea. However, they should be supportive if you explain how much money you might make.
Contacting private equity firms
Private equity firms are the best place to look for investment if you don’t have much luck when speaking to your bank manager. You will have to part with a percentage of your business in order to gain their funding, but that is not a problem. You will have all seen Dragon’s Den, right? Well, it’s pretty much the same concept. You pitch your idea in front of a room full of investors, and they make you an offer if they think it is profitable to do so. No matter what your concept might be, you’re going to need a killer pitch in order to impress them. So, perhaps you should get in touch with someone who has experience and ask for some tips? Alternatively, there is a wealth of good advice available for free online. Many new business owners have had no choice but to go down that route.
Seeking investment from family and friends
Around 10% of businesses started in the UK last year were funded in part by friends and family. Some of you might be lucky enough to know someone with a good business eye. If they have a lot of cash lying around in their accounts, it might be worth explaining your concept to them. Getting someone involved who you know, and trust will take a lot of strain out of the situation. While you will still have to repay their investment, you are more likely to achieve a flexible timescale when following that method. Also, your friend and family member might be willing to help with the business. So, you could get an extra pair of hands without having to pay a weekly wage. That is very useful at a time when money is tight, and you’re working all the hours God sends.
As you can see, UK people have been funding their new businesses in a lot of different ways. The ones mentioned on this page are just the most popular. You would think that starting a business with such high levels of personal debt would be impossible, but now you know there are solutions out there. Just don’t forget to work on reducing your debt as much as possible because that will give you a bit of breathing space.