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Q: How does a start-up business in the UK manage a "burn rate" if their business isn't projected to reach a break even sales level until year 3 or 4?

Aug 29 2007

Answered by: Mark Endersby Ask a question

Funding actual losses while waiting for a business to reach a critical mass or ‘turn a corner’ can be difficult as lenders will view this as high risk.

Cashflow finance can be secured by way of an invoice finance facility, which can provide much needed funding. Typically you will need to be selling or providing a service to other businesses. Different lenders have different criteria and we are happy to point you in the direction of a suitable lender that can meet your needs.

The key to understanding what investment or capital you need will rest heavily on your financial forecasts. Understanding the requirements will be important because if you run out of cash when you are 99% there, it will be frustrating to see your investment and 3 or 4 years effort dissolve.

Comments [1]

Comment by Abdur-Rahman Syed

Wednesday 12th September 2007

Thanks for the answer, Mark. But what if you're looking at angel investors? Would you recommend beginning with one seed investor? Or perhaps going for a loan to get you started and then getting investors on board? I'm developing a web-based service, but we can't put together a demo or alpha product to show investors without some initial money.

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