Business Finance: Your ultimate guide for private companies.

June 26, 2020 / Comments (0)


Business finance or corporate finance is the engine of the business world — it is the “enabler” of those lightbulb idea moments, to borrowing a few million dollars to finance a key acquisition that will grow your sales and profits immensely

…and everything else in-between.

Lack of cash flow, managing cash flow, sticking to your budget, out-of-the-blue expenses, and finding money to support your general business operations, not to mention those extra products and services you would launch…if only you had access to the right type and amount of capital.

Raising money is one thing…but what about these key questions:

  • What are the finance options open to me and how do I start the process?
  • How do I evaluate them?
  • What is the real and true cost of raising cash?

I’ve been in your shoes as an entrepreneur and I know the dark side of raising money the wrong way.

Starting Out

As a young entrepreneur, I borrowed money for my first direct marketing business with two other partners and my mother put her house up as security for the business…I am sure you can guess the rest!

It was a very tough learning experience, to say the least.

Over my business and entrepreneurial career, I have raised cash from many sources and have been targeted by many banks, corporate finance institutions, and private investors, so I understand the game.

On the other side of the fence, I am an investor myself and I can, therefore, give you both sides of the business finance equation and that is what I am going to do in this article.

I started my most successful business from a living room in my South London apartment and I was thankfully only reliant on one type of finance — invoice factoring, and discounting for the duration of that company, other than a former partner investing in the company to buy a percentage of it early on.

You can read my story here.

But I have started other companies and that is where I have been exposed to everything from venture capital to crowdfunding and other disruptive business finance models, such as raising business finance through cryptocurrencies.

I love disruption and disruptive thinking…not just because it breaks antiquated or inefficient business models, for example, but because it forces us to re-think, to set new benchmarks, and pushes us slightly nervously into uncharted territory.

And that is a good thing for entrepreneurs and those who are entrepreneurial in their thinking!

Artificial intelligence (AI). The Internet of Things (IoT), blockchain, and specific to this article, Fintech is all here and ready to move to the next level.

Clearing The Path

In this article, I am going to look at the broad, complex, and confusing area of business finance with the aim of giving you a clear picture of how to look at your options in order to raise money, evaluate them, and how to avoid the pitfalls.

Many businessmen spend endless hours evaluating methods of raising finance that is totally unsuitable for their needs, as well as spending the same amount of time with intermediaries who are incentivized by the commissions they receive for successful introductions.

I am generalizing here largely because I have made the same mistake and so have many of my contemporaries and of course, there are many good intermediaries who actually do some great work…but you have to be aware of how the process works.

I hope after reading this article that you will have a much clearer picture of the industry as a whole, plus how to spend your time wisely when it comes down to starting the process.

Please note — I am not a financial advisor and the information provided here is simply my opinion and I am in no way recommending or endorsing the options of raising finance that I talk about in this article.

Please consult a qualified financial advisor, before raising any type of business of personal finance.

Let’s begin!

Business finance key considerations.



There are some things to consider when you are raising finance and I will open this section by explaining the importance of having the correct professional advice in place before you make any decisions involved with raising capital.

It is essential for you to have a good corporate lawyer and the right financial advisor to help you with your search, evaluation, and final negotiations relating to business finance matters.

Over the years, I have sometimes neglected or tried to short-cut the process and it always turned out to be a false economy.

I will also stress the importance of making sure you understand the cost of this advice in advance — don’t let the clock tick as it is very easy for a professional advisor to spend chargeable hours on your behalf.

The good ones will accept this willingly and will want to build a long-term relationship with you.

Dealing With Investors

Raising finance for a business, unless that finance is provided by you alone, will involve bringing in a third party to the company and that will come with an associated cost.

The most common form of cost to the entrepreneur or businessman raising capital will be for the investor to take a stake in the company and this is known as receiving equity.

Now I have my own views on giving away equity in return for investment and in the main, I believe too many entrepreneurs are too conscious of the value of their equity before they have made their companies successful.

I look at equity as a tool to grow — the more I give in a venture, the more growth I expect.

I watch shows like Shark Tank and Dragons Den in disbelief sometimes — I see entrepreneurs who clearly have good ideas but need help not just in raising finance, but in the areas of sales and marketing.

The investors not only bring cash to the table but a very powerful network of contacts that can rapidly accelerate growth.

But more often than not, I see entrepreneurs haggle over percentages and it’s frustrating when I know I would do the opposite.

It literally makes me want to just jump into the television and scream at them!

I would be prepared to give away the lion’s share of equity if necessary, in order to rapidly grow the company and profits, and twenty-five percent of something is way better than one-hundred percent of nothing.

I will talk a little more about this because I feel it is so important — there was a guy in the fitness industry who launched an ebook.

He knew his subject extremely well but needed to market it to a large number of people to get the returns he wanted and he set up an affiliate marketing deal, where others would do the marketing work for him, in return for a commission of the sale price.

Affiliate commissions at the time were around twenty to thirty percent if I remember correctly and he gave a whopping seventy-five percent!

He knew that a team of hungry marketers who could see they were going to earn a substantial commission would be extremely motivated to sell his product…and he was right, earning millions in the process.

I like this type of approach.

Financial Guarantees

Next, I have to discuss with you the issue of giving a personal guarantee for any business loan or finance that you accept and talking from bitter experience on this matter and it is a tough one.

A personal guarantee is exactly what it says — it’s a guarantee for a bent given by the borrower and to protect the lender.

It can be “limited” in terms of the total borrowed amount, so for example, if you borrow 100K, then the guarantee can be limited to that amount or even part of it and it depends on how and what you negotiate.

In my case, the amount was fixed to one-third of the amount I borrowed (there were 3 partners), but we were all jointly and severally liable.

So if two partners disappeared, the third one would become liable…and that was exactly the case as I was the one left with the liability.

Guarantees can be “supported” as in my case — the support was the underlying asset of my mother’s house, or unsupported where there is no backup asset.

But to me, it makes no difference as unless the guarantee states that there is never going to be a case where it will be called upon, then supported or not, it is still a declaration of having to pay back any monies, should the business fail.

After all, there is no point in having a guarantee if there is no recourse to the borrower!

Always read the small print.

My advice is to never give a personal guarantee unless that guarantee is limited to an amount of money that you can afford to lose, or that will not wipe you out financially.

Let’s say that you are looking to borrow 50K and your total assets are 100k, then you may want to consider giving a guarantee of no more than 10K as this represents 10% of your total assets.

Now I can hear many lenders right now shaking their heads in disbelief and in the old days, they would not have moved from the stance of a personal guarantee equalling the amount borrowed, but with so many options out there to raise finances, you, the borrower can afford to be more choosy.

Negotiate hard with your lender and only ever give a guarantee for monies that you can afford to lose, plus read the small print!

Dealing With The Middlemen

Lastly, I want to talk about working with intermediaries.

A good intermediary is worth their weight in gold — they will fast-track processes and procedures and it is always good to be referred to an outside party, where the referral is from a respected individual.

Bad intermediaries on the other hand can waste valuable time and cost you money.

I have experienced both and on one occasion I have been walked into the CEO’s office of some large financial institutions through a recommendation and also after an initial meeting with another intermediary, been told that I would have to pay an upfront fee of 50K in order to start the process of raising capital…but with no guarantees or refunds.

I’ve seen both sides!

All I can say to you is that you must check out the credentials of any intermediary and as them directly as to what specific contacts they have.

If they are confident, they will not worry about telling you their sources of finance, because they will have a strong relationship with the company and will be able to expedite the process far quicker than you.

As always…be careful and read the small print!

Key takeaways:

  • Make sure you have the right legal and financial advisors in place — don’t shortcut the process and it is better to invest money at this stage to save what could be a fortune in the longer term.
  • Don’t get too caught up with equity discussions — it is much better to look at the growth potential of the business and you should take the view that the more equity your give, the faster and more profitable the company will grow. Make sure you can see evidence of this from your potential investor(s).
  • Be extremely careful when it comes down to the giving of any personal guarantees. Only guarantee the money you can afford to lose and make sure you can live to fight another day.
  • Intermediaries are a good way to fast-track the funding process…but be careful and always make sure you are confident that the intermediary has the right connections and read the small print. Be extremely cautious if there are up-front fees.

Business finance — setting the scene.



Thirty years ago I met a financial advisor here in the UK, who specialized in advising owners of dental practices to prepare for retirement.

At that time, if you had amassed one million UK pounds, you could have earned yourself around 100K in interest per year!

That’s a good amount of money by anyone’s standard and the dental industry, although not as lucrative as in the USA, was one that could have provided that type of asset amount, over the course of a working lifetime.

A dental practice is a business and one that needed capital for premises, equipment and needed to keep up-to-date with technology…plus (for me anyway), it is a necessary evil!

Overnight in the early 1990s, the whole economic landscape changed and I can remember just before that time, my mortgage interest rate was around fourteen percent!

The  1980s had fuelled a period of economic growth and rising inflation — by 1991, the UK was in a recession caused in simple terms, by high interest rates and falling house prices.

The UK was also a member of the Exchange Rate Mechanism, which kept interest rates higher than we wanted.

The key takeaway from this economic trigger point was that we have witnessed a slow but sure erosion of interest rates that have seen those poor dentists and many other people needing far more than the one million pounds of assets required to give them a happy and stress-free life…at least as far as money was concerned.

High-Risk High Reward?

With interest rates being cut, pressure exists on the traditional business model of the banks in order to retain profitability, and with savers now facing lower and lower returns on their investments, where do they go in order to generate a return in their hard-earned income?

Many have flocked to the property market to realize their retirement dreams and although this can be extremely lucrative, it is not without risks and problems — there is no guarantee of a payday, renters can prove problematic and there is also the government to think of as they always want more than their pound of flesh in terms of taxation.

The stock market is another target for investment dollars as you can imagine…but returns in relation to risk and reward are not going to that excited.

Now we come to the more exotic areas of investment and of course along with this, comes far more risk and potentially far more reward.

The simple fact of the matter is that it is much harder to get a good return on your hard-earned cash than ever before and investors are open to a huge array of alternative options…one of which is to start to invest their money in entrepreneurs and high growth companies in order to achieve any kind of sustainable wealth.

This is why you will find a huge amount of entrepreneurs, like myself, who are looking for the next Mark Cuban or Richard Branson, and each successful entrepreneur continues the search…assuming they want to keep going!

Entrepreneurs are the lifeblood of the economy…to me anyway and their education, development, and growth are of paramount importance — they need all of the help they can get.

In my opinion, traditional banking and finance companies have never really understood the mind of an entrepreneur and that is what I hope disruption to the business finance industry will bring…a true understanding

So the world is wide open for both the lender and the investor as they are in my opinion, more motivated than ever to do deals and grow wealth and returns.

Key takeaways:

  • Investment returns are lower than ever in pretty much all asset classes.
  • Entrepreneurs are the lifeblood of the economy and need capital.
  • Both investors and entrepreneurs are motivated to both lend and borrow.
  • The business finance industry is being disrupted.

Business finance definition.



In the simplest of terms, the definition is to providing finance to operate a business and its activities.

This involves having enough capital to purchase assets, raw materials, products to allow for the smooth running of the enterprise and there must also be enough capital to make sure that the business can operate and invest with a view for the longer term.

Next to the simple definition are the areas of financial management and operations — forecasting, budgeting, borrowing, saving and even lending are the activities that have to be meticulously planned and managed.

The lending aspect of your business, unless you are a finance company in the business of lending, occurs every time you extend credit to your clients.

Work carried out before payment is received has costs associated with it — salaries, products, if applicable and of course, time– these costs need to be financed and managed correctly to provide a return.

In the online world where payment is often received in advance for goods and services, you then have to factor in the possibility of refunds and these potentially can play havoc with the cash flow of your business.

Business finance or corporate finance as it is otherwise known is the most critical area of any business, after the business function of sales.

Sales and selling come first, simply because without that function, no cash would be generated, but the functions even out very quickly, because a poorly managed business finance function will rapidly impact the performance of the company…sometimes fatally.

Learn the language of business finance.



You don’t have to be an accountant to understand the area of business finance — it obviously helps, but there is a huge difference between having an in-depth understanding of the area, as you would expect from a professional working in the area, and a commercial understanding of all financial matters and their impact on each area of the business.

I am not an accountant, or do I have any professional qualifications in finance or business for that matter…but I do understand the big picture and over the years, I have added to my knowledge in this area which allows me to have in-depth discussions with finance professionals.

This is because I understand the language of finance.

Here is a great article to help you written by the Corporate Finance Institute.

What I like about this article is that it talks about the differences between the business function of accounting and the area of finance.

It talks about accounting being backward-looking and finance being forward-looking.

I will let the article “do the talking” so to speak and it really is worth a thorough read!

When I first started my company, I went out and bought some basic accounting and finance books to try to understand the principles. Then I started to make my own bookkeeping records to understand the basics and in those days, I did everything manually…but it was excellent practice and good for discipline.

In my mind, I wanted to track the entire process of selling my services and receiving money:

  • The research of the company to target in line with my sales activities.
  • Making sure that the company was financially stable and determining the credit period if applicable.
  • Generating sales for my services.
  • Obtaining satisfactory “completion of service” sign-off.
  • The raising of the invoice to include any government taxes, if applicable.
  • Managing the process between raising the invoice and receiving payment.
  • Receiving payment.

The above process is very simple to understand, but it requires discipline and being methodical, which in my early years of business was a challenge, to say the least!

If you do not check the financial stability of your customers right from the start, for example, you can end up not receiving payment at the very worst and late payment at best.

Sales And Cash Flow

I have seen many businesses go bust and not because they cannot generate sales…but because they are unable to collect the cash due to poor financial controls and management.

You have to simultaneously understand the dynamics of your business processes and operation from the perspective of generating and increasing sales with your own internal business functions:

  • Your fixed monthly operating costs — such as office costs and salaries, etc.
  • Your variable monthly operating costs — these are costs that are related to output, such as sales or other government taxes.
  • Unexpected financial events — emergencies and other “out of the blue” events that can occur randomly.

Just using the terms “fixed” and “variable” “output” and “credit,” although simple to understand, must be understood in the context of conducting business.

As your business grows from a start-up, then it also grows in financial complexity, which then brings in another level of language…but don’t be deterred because as long as you keep your knowledge up-to-speed, then you will be more than comfortable with it all.

Key takeaways:

  • Finance, like technology and music, has its own language and you must understand the terms if you are in business.
  • You don’t have to be an accountant or finance professional to do so.
  • Make sure you understand the dynamics of your sales activities and customers, as well as the dynamics of your own internal business functions.
  • Look at “accounting” as being a reflection of what has already occurred and “finance” as what is going to occur in the future and needs financial planning.

Advice for business start-ups.



There is nothing more exciting than getting your own business off the ground and for me, it was a bold and decisive moment in my life.

Sadly, many businesses fail in the first year and few make it to year 5.

As I explained in the previous section, many companies are able to sell their goods and services, but unable to collect their cash, which then puts them into a perilous position, which could result in the failure of the business.

And many companies fail because they are inadequately financed.

Starting a business today is much easier than ever…and there are so many opportunities thanks to the Internet, but as much as starting a company is easier, the business world is far more volatile and uncertain than ever before, plus it is also extremely competitive.

As an investor, business coach, and mentor, I see a huge variety of businesses and at all stages of growth and development.

The one consistent factor that separates those who I believe will succeed and from those who I am sure will fail is the amount of research they have put into both their industry of operation and the global economy.

I am keeping the factors of drive, determination, and even business experience out of this because these to me are a “given.”

The more research you conduct, the better prepared you will be, and even more importantly, the more brutal and honest you are with the risks that your business could face, the more you will be able to do your best to avoid and prevent them.

Prevention is better than cure.

Business planning.

Many companies are also inadequately financed and have no chance of surviving no matter how positive their sales efforts are and this comes down to the area of business planning.

I have my own views on business planning which will require a dedicated article, so I will only talk generally here — writing a business plan is all about predicting the future of your business and that involves setting goals, objectives and then achieving them.


It is also about identifying risks to the business and factoring in economic and geopolitical issues.

On the business planning front, I have seen and written many, both as an investor and in trying to secure finance. From the investor side, I have seen some of the most elaborate and well-written plans fail to get funded and I have written some very simple, but well-thought-out documents that have secured specialist finance.

A business plan must be a document that is able to excite the investment community, but balanced in terms of realism and risk — this is the ultimate challenge.

Imagine that you are going to put your hard-earned money into a business venture that you are not going to lead or manage to get the feeling of how investors think.

You want to make sure and at the very least, that:

  • The leadership team or the individual is experienced enough and has the expertise to run the business.
  • The idea is well thought out and thoroughly researched.
  • The opportunity is viable and there is potential for growth and longevity.
  • Sales and income forecasts are realistic and targets are not too high for both invoicing and cash collection.
  • Costs are lean, but not so lean as to prevent the growth of the company.
  • Various “what if” scenarios are taken into consideration and showing the minimum sales and maximum credit periods have been identified to allow the business to generate enough cash to run.
  • Risk factors have been identified correctly, with transparency and honesty.

All of the above factors need very careful consideration and remember the words “honesty” and “transparency.”

Now it may come to light that when you are being brutally honest with yourself, you may find the business opportunity is not viable — much better to identify this from the outset, than have a business failure on your hands that has cost you and any investors a lot of time and of course, money.

The business plan is a vital document and not just for investment — it gives you a framework from which to operate, manage and measure your business and many people are too optimistic in their sales forecasting, do not pay enough attention to the realistic timeframes that they can actually see the monies owed, land in their bank accounts and are nowhere near brutal enough in their assessment of risk.

Here are two resources for you to help and if you are in the USA, then take a look here and in the UK, here.

Your business plan should be a simple document in its own right, but behind the simple document is a huge amount of complexity and that begins and ends with research.

Your research at the beginning of “pre-plan” is critical to assess and evaluate your ideas and as you progress on your business journey, the research will ensure you are always kept up-to-date with events, trends, and other situations.

So present simple, well-thought-out facts, predictions and make sure you identify risks…but please do not forget to showcase “who you are” to the world and clearly display the qualities you have to ensure the business plan has the very best chance of a profitable execution.

Personal finance.

Before you look at financing your business, you need to ensure that your personal finances are in order and I can tell you that when I started my first business, they were in dire straits!

But they were still in order!

Many people who start companies do so in an attempt to get out of debt or to achieve financial freedom and it is not up to anyone else to tell you why you should start a company.

I knew my finances were terrible, but that was because I had got myself into debt by living beyond my means in my youth, and by starting businesses that were not thought out properly, were launched with the emotion, rather than the raw materials for success and with no business experience.

For me, I simply knew I had the drive and determination to succeed, but not the business ability — it was time to put my house in order and learn!


So do a personal audit of your personal finances and make sure you are brutally honest — some investors will like you to have a pristine credit history in order for them to consider you for any type of business finance and others do not care.

Let me give you an example relating to me:

My first business venture in the staffing or recruiting agency sector saw me initially join the company as a salesperson and then working my way up to being the head of operations.

Eventually, I invested in the company to acquire an equity stake and I had borrowed money in order to do so.

Unfortunately, I did not do my homework or conduct any formal due-diligence with regard to the company and the result was that we had many debts and we were inadequately financed.

Despite an excellent sales turnover, we could not achieve consistent profitability to survive and eventually, we were “rescued” by two outside investors who could see our potential — we were young, full of enthusiasm and very good at sales, but we were nowhere near experienced in financial management and lacked the controls…hence our problem.

The investors would provide the financial capital to operate and we would run the sales operation…but we were no longer executives in the company and would have no say in the financial running of it.

And we were given a small equity stake in the new company, that would increase in line with sales and profitability to incentivize us — we could still easily make some serious money if we performed.

The investors had no interest in our own personal financial situation, only the performance of the business.

If you are in a good or even great financial position, then you must ensure that you do not risk all of your capital in any business venture.

It is also very worthwhile to talk to a specialist financial advisor and it can be hard to find someone who really understands the mindset of an entrepreneur or businessman, so take your time and find the right one.

Here in the UK, I recently spoke to a guy called Mark Burch, who did understand the entrepreneurial mindset in our discussion.

He is definitely worth talking to and by the way, I am not affiliated to Mark in any way, nor do I receive any commissions and I am merely passing on an introduction here and not an endorsement of any kind.

Now in the “good old days”, you would often hear stories of entrepreneurs who put everything on the line to back their ideas and I have done this myself…but today’s economic landscape is way different from any other I have experienced.

My advice to you is to look at de-risking everything as much as possible and to protect your own financial position as much as possible…but you must also have some “skin in the game.”

I have and still see many investors who are looking to finance their companies as well as draw a salary, without putting in any capital of their own, and for me, unless there are other reasons such as simply not having any cash to invest, then I will not invest.

Like many private investors, I am not prepared to finance a lifestyle as well as a business and it shows a lack of faith and commitment with regard to the person looking for investment.

Key takeaways:

  • Make sure you thoroughly research your business idea and the global economic and geopolitical situation.
  • Many companies fail within the first year and few make it to year 5.
  • Selling is the key, but collecting cash within your credit period if applicable is critical.
  • Writing an honest, transparent business plan that determines key risk factors and shows the minimum amount of sales and cash required to run the business is extremely important.
  • You must also do a personal financial audit.
  • If you are using your own funds to invest, then do so cautiously as the economy is extremely volatile and uncertain, but your own investment will be required unless there is a genuine reason as to why you cannot provide it if you want to be taken seriously by investors.

Business finance options.



I have previously set the scene for business finance, so you will not be surprised that there are many individuals and companies that are eager to lend money to businesses at all stages.

There are simply too many options to cover in one article and it would take a book, but I have covered the main ones and also looked at some disruptive options to give you a starting point for further investigation.

Here we go:


This is how some of the world’s largest companies started out and how I started with my technology staffing business.

I used my credit cards to cover the initial expenses for my business and in those days, it was a fax machine and a telephone, plus an old computer that someone had given to me…but that was later.

There is a huge amount of satisfaction to be gained from starting a business in this way and once you generate some cash flow, you can then start to look at other forms of finance, and in my case, is was factoring and invoice discounting as I described earlier.

So scrape together all of the financial resources you have, keep some back for a rainy day as you may need it, especially if the business fails, and then plow the rest in!

Pros: You are starting right at the bottom and building something that you have one-hundred percent control of.

Cons: You may stifle the growth of the business from not having enough cash and in today’s fast-paced economy, you may fall behind your competitors who are better funded.

Bank finance.

In my early days in business, I was heavily dependent on traditional loans from the banks — these came in the form of guaranteed overdrafts with fixed limits and also fixed-term loans.

Depending on your business needs, going to your own bank is sometimes the fastest way to raise capital.

Banks are great for arranging short and longer-term overdrafts, as well as loans with varying repayment periods and especially if you have a good history with the bank.

Remember that a bank is in the business of lending money to obtain a return…but always take a look at the small print and many people assume that because they have been with their bank for a long time, that the bank has their best interests at heart.

All banks will have a clause in their terms and conditions and it is usually to the effect of the loan being repayable “on-demand” and this is where the bank and for any reason, can simply withdraw the funding at their discretion.

However, in my experience, this is unlikely, but you have to at least be aware of it.

Loans can either be “unsecured” — meaning that they have no underlying security other than the borrower’s ability to repay the loan or “secured” — meaning that they are secured by an underlying asset, such as a property.

But…unsecured loans can turn into secured loans if you fail to repay the loan — banks can apply for a “charge” or security on another asset, such as property or in some cases, apply for the bankruptcy of the individual or borrowers.

A charge is a formal document that gives the bank or other investor the rights to the amount of money specified in the charge in relation to the asset that the charge is placed on.

For example, if you have borrowed 20K on an unsecured basis and you default on the loan, then the bank will come to you for repayment in full on that loan.

If you fail to make repayment and you have a house that has no mortgage and valued at say, 200K, then the bank will make an application to a court of law, to have a charge for 20K placed on the property, to secure its position.

If the bank is successful, then it will now have converted the initial unsecured loan to a secured one.

If repayment is still not made, then the bank will force the sale of the property and reclaim the amount owed and give the rest to the borrower, but this will usually come at an increased cost because of the legal fees and other costs that are associated with the process — and they are not cheap.

Pros: A bank overdraft or loan is a quick way to raise money and in some cases, it is all the entrepreneur needs to get their business off the ground and running. If you build a good history with your bank, you can “dip in and out” of this type of finance as you need it and you will also build a valuable credit history over time if you keep to the terms of the loan.

Cons: It is more restrictive than other types of finance and the cost of a bank overdraft, for example, can be expensive if it is unauthorized or is maintained at the maximum agreed amount.

New business grants.

There are many grants available to businesses ranging from start-up government-backed loans, to specialist finance to help maintain the integrity of an ancient building!

It makes sense to check all of these out…but I will warn you that it can cause you to spend a considerable amount of time exploring what seems to be an endless array of opportunities and this can distract you from the main business of starting or running your company.

There are many intermediaries offering to help in this space and they can be useful in taking away the legwork and hard slog, but make sure you are crystal clear as to the expectations and charges before engaging their services.

The first step in doing so is to look at the various grants that are available from the government and here are a few links:

For the USA, then look here.

For Europe, take a look here.

And for the UK, here.

You have nothing to lose by exploring these opportunities and it is important to note that there will be state and country differences in the USA for example, country-specific differences in Europe, and in the UK, you have different options depending on where you are located.

Here is a link for people living in Wales to give you an example.

It is important to note that at the time of writing this article, we are still in the midst of the coronavirus pandemic, and governments around the globe are giving out grants to companies as well as employees and the self-employed, so make sure you check what your government is offering.

Pros: You have nothing to lose.

Cons: It is easy to get bogged down in terms of time and also be careful if you use intermediaries — there are some great ones out there, but also some charlatans.

Business angel investors.

Business angels are individual investors who are prepared to invest their monies and sometimes their expertise into companies in return for a piece of the action in the form of equity or convertible debt.

Convertible debt is where the money is lent to a company with the idea that it will convert to equity ownership at some stage and business angels often finance companies when most investors will not.

I am an example of a business angel investor and I will invest in companies that I know both fit my expertise or where my business knowledge will provide a distinct advantage…but I only invest in companies where I can play an active role and this is because, in my younger days, I invested in many companies as a passive investor and lost my money!

Take a look at this angel investment network in the US and this one in the UK.

Pros: Business angels can provide a lifeline for your business and at any stage. The right ones come with cash and experience, which will accelerate your growth or allow you to achieve your objectives much faster than if you were to continue on your own.

Cons: You will be working with someone else and this has the potential to cause friction. Also, make sure you fully understand the terms of any finance you receive, and the obligations of both parties (you and the investor) are clearly understood.

Incubators and accelerators.

Incubators and accelerators help companies get started and grow — they can provide valuable support, by providing the ability to network with other entrepreneurs, little or no-cost office space, and finance.

They also have seasoned entrepreneurs who are able to provide specialist business advice and help on demand.

There will usually be some form of equity exchanged in consideration for the support and services.

Pros: I only wish these types of programs were available in my early entrepreneurial days and to me, they are a godsend.

Cons: Make sure you understand the implications of any equity-related services and deals.

Venture capital.

Venture capital (VC) is a form of funding that provides start-up, early-stage, and growth funding for companies that have high growth potential.

Venture capital firms are of course businesses in their own right and for me, they are far more ruthless in their execution of business than other types of investors.

However, “ruthlessness” can work in favor of the entrepreneur as they are extremely motivated to gain a good return on their investments and it can work against the entrepreneur if the company fails to perform and venture capitalists are quick to cut losses.

When I first came across this type of funding many years ago, it was through a friend of mine who is now a very successful entrepreneur, but at the time he had been “burnt” by the VC who initially backed him.

I will say that this was many years ago and he went on to explain that initially, the VC had a great deal of enthusiasm for the business idea and things progressed fast and a deal was done.

Unfortunately, he found that working with another board member (VC’s often appoint someone to the board of the company to look after and protect their interests) was difficult and his decisions were challenged constantly.

Eventually, the VC could not see a profitable outcome for the business and sold it to a competitor, for way less value than my friend believed it to be worth, with my friend being left out in the cold!

Now that is one extreme and it wouldn’t be fair to leave it there — there are many companies who flourish from using VC’s and you have to remember that the right VC brings a very valuable business network along with the funding…also, they are extremely motivated to get a solid return for their investment and will be alert for potential exit opportunities.

I was approached by a couple of VC’s when I was the major investor of a technology company and I must admit I was wary because of my friend’s experiences, but also excited about the potential opportunity…but we didn’t progress discussions as we were heading into the financial crisis of 2007.

Venture capital should be a consideration of every entrepreneur provided there is the high growth potential for the business and the entrepreneur is fully able to understand the process and evaluate the offer.

You must also make sure you have specialist legal and financial advice when you enter into negotiations with any provider of this type of advice.

Here is a list of 8 London VC Firms Tech Startups Need to Know.

And in the USA, The Top 100 Venture Capitalists.

Pros: You are dealing with professional investors who are motivated to see your business work and deliver potentially substantial returns for both you and them. They also bring financial discipline, a business network, and can rapidly accelerate growth, profits and facilitate an exit.

Cons: They will usually appoint an executive to the board, who will protect their interests and they are driven by ensuring a solid return on any investments they make. They are quick to cut losses and will have more control over the running of the company, especially if the company is not performing in line with expectations.

Asset financing.

Once you have generated some positive cash flow, you can then use your assets, such as your debtors to help you unlock cash that would normally be tied into the business.

In my technology staffing business, I focused heavily on temporary or contract workers and I was placing them around the globe.

I also had the responsibility of paying these contractors weekly and some of them were earning over one-hundred dollars per hour and over a forty-hour working week…well you can do the math!

Plus, I had to extend credit to my customers, who could take anything from fourteen days to three months to pay me.

In this case, growing my business was actually harmful to my cash flow and unless I had extremely deep pockets (I didn’t) then I would either have to severely restrict growth or find an alternative.

Invoice factoring and later invoice discounting would provide a means to receive up to ninety percent of my invoice value each time I raised an invoice and this now unlocked the tied-up capital in my debtors, which allowed me to re-invest into the business to grow.

There is, of course, a cost to this process and it usually involves an interest payment on the total amount of monies lent, plus sometimes a service fee for the administration and processing, and these fees will have to be factored into your operating margin.

There are companies that offer flat fees for this type of finance, which can be high at first glance, but you have to weigh up the fact that through releasing cash, you can make it work harder for you and increase your growth and profits, as I did.

You can also use other assets such as real estate, machinery, and other equipment to release cash.

You must remember, however, that if you use this type of finance then you are putting that asset at risk and in my case, I had effectively “sold” my invoices to the finance company and if the company failed to pay, the invoice would become their property and also any other outstanding invoices in order to cover any losses.

Pros: This is a very efficient method of releasing capital and although the costs may seem high at first glance, the benefits in my opinion, far outweigh them. It is also a simple process that leaves you in control of your business with no loss of equity.

Cons: You have to generate cash flow for this to work and in a startup situation, you will not be able to withdraw any cash until you have done so. 

Disruptive Business Finance.

I love anything disruptive and especially in the world of business and business finance.

Back in my early business days, if you wanted to raise money, you needed a meeting with your bank manager, or with a specialist finance institution.

Business plans would be prepared — in one of my early business ventures we used a firm of specialist accountants to produce a business plan for us (we provided the content, but hoped their “name” would carry some weight) at a cost of twelve thousand pounds.

Now we were looking to borrow a quarter of a million, so the cost was relative and we actually raised the money!

But that was after many meetings and presentations to various banks.

The process was time-consuming, to say the least, and it took me and my business partners away from running our company, which is not ideal.

Today, you can raise money from the comfort of your own laptop, so what is disruption and what does it mean in the world of business finance?

  • Disruptors are fast-moving companies, often startups and they are innovative…and they attack the most profitable elements of the industry they are disrupting.
  • Consumers who need banking services can turn to companies who are not banks…not in the way we traditionally think of banks.
  • High-tech will become far more commercialized, with many associated applications and creating a better user experience.
  • The ability to collect and analyze huge amounts of data will give companies the key to better customer analysis and ultimately higher and faster levels of service.
  • Costs will be slashed through increased automation.

Let me now share some links to companies as examples of the above:

  • Funding Circle is a company that matches investors to companies that are looking for cash. The company, like others in the field, has addressed the issues of businesses needing the funds to grow their companies and investors receiving poor returns on their traditional investments.
  • Fundera is a US company that specializes in small business funding. They take away the headache of having to locate and apply to many financial providers in order to raise money and it is all initiated from their own tech platform.
  • Kickstarter is a crowdfunding platform that has a mission — “to help bring creative products to life.”
  • Monzo is a new kind of bank that is designed for ease of use from your smartphone and designed for the way we live today. It became fully regulated in 2016 and offers business and personal accounts.
  • Stripe is an internet commerce payment platform that supports around 135 global currencies.
  • Cryptocurrencies — take a look at the article to see how to raise finance from cryptos.

You get the idea and there are hundreds of companies just like the ones above and many more to come as the disruption continues.

Pros: You get access to money fast and it is far less time-consuming than more traditional methods.

Cons: There are none really and provided you don’t become too obsessed with the innovation and spend too much time away from your core business.


I hope you now have a better idea of the type of business finance that is available today and more importantly, you better understand the process and the pros and cons of some of the popular finance options out there.

Make sure you also keep your eye on technology as we have only just begun to see its real potential to disrupt and change pretty much the way we will do everything…finance is no exception as I have explained.

Entrepreneurs are the lifeblood of the economy and when you put entrepreneurship into context with the overall investment landscape, then they are the ones that will provide the highest returns…but of course, they carry the highest risks.

Investors are not enjoying the greatest returns with traditional investment products and this is where disruption comes into play.

Banks can no longer enjoy the privileged position of being the go-to source for lending and smart companies have recognized the ability to use technology to connect motivated lenders, directly with motivated borrowers and in doing so they have also slashed the red tape and bureaucracy that traditionally comes with the territory.

The future looks bright…the future is disruptive!

If you need any further help or information, then please get in touch with me.

Neil Franklin

Neil Franklin-Entrepreneur

Last modified: July 12, 2021

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