Frustrations of Finance

A busy week or two past and more interest gleaned for The Talking Walls. This is all great and obviously encouraging, but oh, how frustrating at the same time. I would love to work on this and get a model in place - I even have a site who would like this as well, but as all developers / innovators / inventors know, development of the idea to a working model is incredibly difficult to finance. Well, this is the stage I am at currently. Micro project funding has been applied for and now waiting for the outcome. Everything is crossed as you may imagine.

My anxious waiting aside, in various discussions with people about this, it has become clear that funding for small companies / entrepreneurs is either non existent or is an incredibly long process. Unless you are incredibly lucky and meet a fantastic contact at that fantastic moment, you will begin the journey of learning where you need to go, who you need to meet, the types of funding available, the funding-specific business plans that need constant guidance on terminology and definitions (thank you Bernard), and a considerable amount of time. And, none of this will be definite, it may be refused, more work required, or further evidence needed. A very long process indeed.

BUT - there may be easier ways depending on your personal circumstances. I have listed some of the ones that immediately come to mind and ones that you would be asked if you had considered when speaking to advisers:
1. A much quicker way would be to apply for various credit cards and use these to fund your time - this would certainly help to get the development work done and possibly a completed model, but how long would it take to pay back the credit cards and what with? What if you already have exhausted this avenue or cannot get anymore credit?
2. Another way, taking more time and a business plan would be a bank loan, again the same problem of a negative cashflow and time to pay it back, interest rates and goodness knows what other expenses.
3. Raising money from family and friends - mmm, wouldn't you be popular if you were not able to pay it back should one of them have a crisis and need their investment back quickly? And if you are anything like me, this just wouldn't be an option, the funds are just not there.
4. Raising money from the family home, with the cost of buying the house, you are probably stretched just to afford this, let alone borrow on top.
5. Finding an investor who is interested in what you are doing and wants to help you to develop it and become part of the company - or even own a considerable chunk. We all know about Dragons' Den, but there are smaller investors who might want to work closely with you.

So after all these very attractive options, what are you left with? There is a great deal of funding available, some of which is grant based, often match funded. A grant is good as you often do not have to pay it back - but it will be for a specific purpose and checks will be made to ensure that the money is spent exactly as you have specified in your cashflow and business plan. The bug bear is that it is often match funded - i.e. you will need to find the same amount (or more), so you could be back to the beginning, and it is often paid retrospectively.

If you are a charity or a not-for-profit organisation, then the available funding increases considerably. This is great, but if you want to run your own business and make money, this is not going to work.

You could tie up with another organisation - in my case, it could be English Heritage, the National Trust or similar. Whoever you approach will either be pro-active and write the funding business plans and all associated paperwork, tying you in to working with them, and more than probably, part own the rights which would curtail any further opportunities with other organisations. Or, allow their name to be used as co-applicant wth you doing all the paperwork, and still curtail any further opportunities.

There are other ways such as Business Angels and Venture Capitalists (VC's), all of which can be found on Business start up sites such as Business Link and Flying Start, but all of them - other than the credit card method, need business plans, cash flows / forecasts and profit / loss accounts. This is the part that takes a great deal of precious time, the precious time you need to continue developing the idea to a fully working model. And, maybe this is just a completely alien area to you as a creative? Wouldn't it be fantastic to have someone who knows you, knows what you are trying to achieve and can prepare all this for you, negotiate with the funding body, keeping you in the picture and everything ticking smoothly? This would be my idea of a business angel.

What would be your idea of a business angel - or your method of funding? Meanwhile, I will continue to wait anxiously and bury myself in research and writing papers - oh yes, that is another thing, with funding applications, you cannot start on the specified project until you have the go ahead. It will be worth it though!!