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We take a look at how you can find startup finance for your business

If you are planning on starting your own business, then it's very important for you to first figure out where you're going to get your startup finance from. While some people are able to self finance their businesses, the truth for many people is that they need to raise the money externally in order to get themselves going.

With the United Kingdom's economy still struggling quite a bit at the moment, it's not surprising that startup finance is a lot trickier to come across right now than it has been in previous years - especially for anyone who doesn't yet have a proven track record in successfully starting up businesses.

Statistics show that the majority of new businesses will fail within the first two years of their existence, so it is understandable that many potential sources of startup finance are quite stubborn when it comes to loosening the pocket strings. Fortunately there are a few approaches that can yield a much higher success rate for startup companies.

Aside from self financing, one of the most common approaches taken to find startup finance tends to be taking out a business loan. Before you are able to avail of this kind of service from your local bank or financial institution, you're going to need to have a clearly laid out business plan, as well as being able to offer some form of collateral, such as money taken against the business property or assets. It is generally seen as a potential risk to try to secure finances based on assets however, so try to avoid that if at all possible.

There are also a number of government issued business grants available to newcomers to the business scene, so we recommend you speak to a local government business advisor in order to find out just what you could be eligible for before you go to the banks.

Finally, you could look towards some external investors in order to secure the startup finance necessary to get things up and running. You could look at "angel investors" who usually help out startups by investing in between five and fifteen per cent of the company in order to get things started.

You could also take a look at venture capitalists who are willing to fork over a lot more money, but will want much more in return. It's not uncommon for these investors to seek out as much as forty per cent of the business in order to offer the money to get you started.

In both cases, it is very important that you get an experienced solicitor to look over any potential contracts before signing them, because you may find that some of the terms presented are very heavily weighted in the investors favour, rather than the interests of the business itself.

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