When you start up any kind of business, anywhere, there is an expectation that some of the financial backing and assets will be home grown and generated by either the family or the business owner from previous activities. Maybe there was a business venture prior to the currently discussed and the ethos of that created a niche opening for the new business by using spare funding. This would be an excellent start so long as that funding is free of any ties to any other source. I.e. it is not owed to anybody else and is free to be used for this purpose. The old world way of financing a new business venture would be to go cap in hand to the Manager of the local ‘high street’ bank and beg for an interview to apply for a business loan. For this loan one would need to have full five year and ten year business plans with very clear examples of how much funding is sought; how much of one’s own financial backing is available in addition to the loan request. Vital information at this stage is business projections – what is the business model; how much is it costing to produce; do these costings include all design work and prototypes; do the costings include all insurances for running a business with or without salaried staff. If staff are employed then there will be an additional element of Employee Liability Insurance so the company is covered should any employee do something catastrophic like break your equipment or even worse, break the customer’s goods or cause some other injurious event to occur.
There are also causes for concern if an employee gives poor advice or service to one of your customers – unwittingly perhaps but once is it done, there can be very few cases of going back without a cost. In these litigious times, one needs every form of insurance available! Anyhow, going back to the case in hand here, the new business venture: The bank manager, even today when funding is generally easier to obtain, will need to know the costs of producing your goods; the value you think is right for selling them; how much your rent and other overheads are to run the factory/workshop; is there any money owed on those premises or are they completely within your ownership or free use? Have you ever been bankrupt or ruled unfit to hold office? All these aspects are irritatingly common questions and need straightforward honest answers.