When starting up it is vital to take time to consider the finances needed to get your business off the ground, how you will raise these funds and how you will manage your finances as your new venture grows.

Here Business Link’s Mark David provides some practical advice on all aspects of financing a new business, to help ensure it has firm foundations for long-term success.

I’ve got a strong business idea, however how do I determine how much money I will need to get my new enterprise off the ground?

Every new business needs money when starting up to purchase equipment, establish the workplace and meet marketing costs – all before the first sale is made.

Then once you’re established, you’ll need cash to pay the bills and keep the business going.

Your business plan and financial forecasts will be key to determining how much funding your business is likely to require, what it is needed for and when you will need the money. A strong business plan will not only help you to lay out what financial resources are required, but will actually help you to raise the money you need by convincing banks, lenders and other investors that it is worth them taking the risk to back your business.

You will also need to factor in your running expenses, as well as bearing in mind that customers may not pay you immediately, but you will still need to settle all your bills to keep trading.

I know what my start up costs will be, but what finance options are available to help get up and running?

There is a range of financing options when starting a new business and choosing the right one, or a combination of options, is essential.

Many people use their own savings or personal borrowings to fund the business.

However, if you have a strong network of family or friends, they may well back you – but, you should carefully consider the risk that they could lose their money if your business is not as successful as anticipated.

If you have a solid business plan, you may be able to borrow from a bank. Many businesses use overdrafts for day-to-day borrowing and loans to finance large purchases such as equipment.

A larger business with good prospects might attract outside investors. For example, ‘business angels’ typically invest £10,000 or more in exchange for a share in the business.

Will I be able to access funding or grant support to help get my business off the ground?

This should be an option that is explored by all businesses, and Business Link advisers have a good knowledge of the potential options that are available both nationally and regionally.

Business Link can also help you to gain access to the North East England Investment Centre (NEEIC), which invests Government money in projects that will be of benefit to the economic landscape in the region.

Innovation Vouchers are another potential funding option and are designed to help North East businesses to buy expertise from the region’s colleges and universities to encourage businesses to innovate. They are accessed through the Business Link service, delivered through the North East England Investment Centre (NEEIC).

Once I know how I’m going to fund my business, how do I ensure its ongoing financial security?

Healthy cashflow is vital to the survival and prosperity of any business. It means that the pattern of income and spending in a business allows it to have cash available to pay bills on time, so careful monitoring of the inflow and outflow of cash is essential to any business in protecting its financial security.

Are there any ways I can manage my cash flow more effectively?

By creating a cashflow forecast you will be able to predict peaks and troughs in your cash balance, helping to plan borrowing and assessing how much surplus cash you’re likely to have at a given time. It is worth noting that many banks and lenders require a cashflow forecast before considering a loan.

Business Link advisers can provide practical advice on managing cashflow and developing a cashflow forecast. The Business Link website www.businesslink.gov.uk/northeast also includes a useful guide on the basics of cashflow management.

For further information about how Business Link can help you manage your finances visit www.businesslink.gov.uk/northeast or call 0845 600 9 006.