Is it better to raise all the money we need for the initial period, plus a 'cushion', or to ask for enough to get started initially and then come back when we have six or 12 months' trading experience?
Raise all the money you need, plus a cushion - depending on what sort of business it is, 10-25 per cent of the total. If you attempt to come back to your bank (or to investors) too soon, they are likely to assume that you have run through the original funding more rapidly than was projected, and have not begun to generate income to sustain the business. None of this is going to encourage them to make more cash available.
Related Resources
in the Legal Information Centre
- How far ahead should we be looking, in approaching anyone for money to get the business off the ground?
- Relatives are offering to finance my new business. Should I accept the money as a loan, or as equity capital?
- We have friends and relatives wanting to invest in our business. Should we give them normal shares, or special/preference shares?
- The bank wants me to take out a term loan, rather than an overdraft, to help finance my business. What is the difference, legally and practically?
