Read these statements and check you understand the vocabulary
1. As long as you can pay your debts, they are not worried about how profitable your
2. Do not accept their money without signing a formal contract.
3. Share information openly with them in order to get funding from them.
4. They have a reputation for financing technology companies.
5. They will not lend money to people starting a business for the first time.
6. You must have property to guarantee the loan.
Read these three paragraphs, which give information on how to obtain finance
For business start-ups, and decide which one each statement 1-6 in Exercise 4
A.Banks are in the business of lending money, so you will get a polite hearing. But fine words, enthusiasm and energy won’t be enough to talk them into giving you a loan. They expect to see an intelligent business plan. Establish realistic budgets and work out what the absolute minimum is that you need to live on. A cash flow forecast is important. So give details of your projected income and expenditure, and have an idea of how long it will take you to reach a break even point (when a company is neither making a profit nor a loss – точка безубыточности).
Banks like to use assets such as premises, motor vehicles or equipment as collateral (or security - залог) against loans. Banks don’t care whether or not your business has great potential. They are only interested in the business’s ability to cover the principal and interest payments.
B.If your friends and family express an interest in helping you with your business financing, try to persuade them in a professional way. Make a presentation in exactly the same way as you would to a bank. Don’t be embarrassed to show financial statements, tax returns or whatever else they want to see. Do anything to get that money! But do think carefully before asking family members to trust you with their life savings. If the business fails how will you tell them? You should prepare a written agreement about any loans. If you don’t, bitter arguments will damage the relationships eventually.
C.Another possibility is to find business “angels” - some venture capital firms which will consider financing a start-up. However, they will only be interested in entrepreneurs who have experience of successfully starting up businesses. They are best known for financing high-tech firms, but they do finance other types of businesses.
Role play Advice about starting a business
Work in pairs
You are business advisors. You will give advice to a pair of entrepreneurs about how to finance the small printing business they want to start.
Before talking to them, decide what type of finance might be suitable for them: a bank loan, a loan from family or friends, a mortgage or using personal savings.
You will need to ask them:
- about the type of business
- about their personal financial circumstances.
- if they have done market research
- who their future customers will be
- if they have many competitors
- if they have any advantages over their competitors
- what machinery they need for their business
- where they are going to locate their business
- when they are going to reach a break-even point
Prepare some questions and when you are ready, meet the entrepreneurs, discuss their plans with them and give them your best advice.
You are entrepreneurs who are thinking of starting a new business, but you need advice on how to finance it. So, you are going to consult some small business advisors.
Type of business:a photocopying and printing firm specializing in leaflets, small brochures, business cards, etc.
Your personal financial circumstances: you have savings of $50,000
Financing requirements:approximately $70,000 if you are ready to use your personal savings. This extra money for:
- equipment - preparing your premises - salary
- initial advertising - materials
Work together and decide what questions to ask and what advice you need from the advisors.
You may ask them advice on the type of financing your business, best location of your firm, a number and kind of employees recruited, etc.
When you are ready, explain your business idea to the business advisors. Get their advice on how best to finance your business.