As the Bank of England (BoE) finally raised the base interest rate for the first time in a decade, consumers across the UK scrambled to understand how the move would affect them.
The same principle applies to business-owners, as the increase from 0.25% to 0.5% will trigger a hike in the cost of borrowing and potentially make it harder for entrepreneurs to fund their start-ups. This could be damaging to the economy in the long-term, particularly with the over 50s now established as the most prolific entrepreneurs and key contributors to GDP growth.
So, how can those aged over 50 strive to fund their business ventures, without tapping into their hard-earned pension plans or being forced to borrow at an unmanageable rate? Consider the following:
Organise and safeguard your assets
Before you do anything, you need to develop an understanding of your net worth and carefully organise your assets. This not only helps you to identify a viable sum that can be invested into your business, but it also makes it easier to safeguard your capital and make it stretch further. Service providers such as Tilney can help with this, as they provide comprehensive financial planning services and advice that enables you to make informed fiscal decisions.
Increase your earnings
If you find that your capital is tied up in assets or you choose not to risk any of your savings at all, you can instead look to raise funds by increasing your earnings. How you achieve this will depend on the nature of your career and preferred methodology of working, but there are several options that can advance your cause.
You could sell your marketable skills as a freelancer, for example, creating an additional stream of income to sit alongside your day job. Conversely, you can make the transition from full-time career to independent contractor if applicable, allowing you to work with more freedom and command a far higher, daily rate.
Consider short-term funding options
If you aim to deliver a relatively low-cost, service driven business, the barriers to entry are relatively low. In this respect, the challenge is to identify short-term funding options that can sustain your venture during its formative months, with options such as invoice financing helping you to achieve this.
This is a practice through which you sell your accounts receivable to third-party investors, enabling you to instantly secure the full value of your invoices regardless of whether you operate in line with 30, 60 or 90-day payment terms. You can then repay this when your clients settle their invoices, ensuring that you need only enter into a short-term cycle of debt and can retain an optimal amount of equity within the business.