outside investors to help finance your business

You might want to bring in outside investors. If the business does well, they share in the profits - but if the business fails, they lose their money.Typically, your company issues ordinary shares (standard shares with no special rights or restrictions) to investors in return for their capital. See our guide to shares and shareholders.

Advantages:Attractive for businesses looking to bring in additional expertise as well as funding. Unlike loans and overdrafts, you do not normally have to make payments to investors until the business can afford them. ,Increasing the capital invested in the business makes it easier to borrow from the bank.

Disadvantages:Your share of the business, and of its profits, will be lower,Investors may want control over how you manage the business. ,Investors may want the business structured in a way that makes it easier to sell their shares in the future. Sources of investment:There are several different sources of investment:,individuals, such as friends and business contacts ,business angels ,investment funds and venture capitalists for larger investments


Business angels are wealthy individuals who typically invest £10,000 upwards and may also offer business expertise. Venture capitalists usually invest more than £2 million in businesses they believe will provide a high earning potential and a defined exit time.Before approaching potential investors you need a good business plan, including evidence of your management ability. Your plan should include detailed financial forecasts and demonstrate what you will do with funds invested in the business. You will also need to prepare a pitch, which will sell your business to potential investors. See our guide to equity finance.