Finance options for a Sole Trader?

DesignerLuke · 15 March 2018 at 11:56AM

Hi everyone, looking for a little advice on business finance...

I'm a sole trader and owner of a design business (active for 28 months). During that time I have been able to support myself and the business but in my early naivety, my current pricing only gets me to just above break-even point. Now with a much better focus on what I need to achieve and how to do it, I'm looking to double-down on my marketing, expand the depth of my services to offer more profitable services and set some time apart to build myself a better website... however, I need a temporary boost of income to achieve that.

I've been suggested a couple of funding sources: a business credit card or a loan (funding circle or otherwise). My monthly costs highly predictable (<£1k) but as I'm not a homeowner and I don't have highly valuable assets (just computer equipment worth around £1500). Also, as mentioned earlier my finances whilst stable haven't been exactly been breaking records.

Ideally, I'm looking for £4k-£10k with up to £1k of the funding being spent per month. Obviously, without major business assets or a house to offer up as a guarantee my suitability for funding is compromised...anyone been in a similar situation who could advise?

Thanks in advance!

bengalknights · 16 March 2018 at 9:49AM

As a sole trader you can choose between business and personal products.

In your case a long terms 0% card may make more sense if its got the available limit

DesignerLuke · 16 March 2018 at 12:29PM

That might make things easier then. Thanks for that!

I've never needed to own a credit card so there are some specific terms used that I don't fully understand but presumably if I approach one of the banks that has been recommended to me by an online 'credit card search' they will have to make all terminology clear.

fishybusiness · 16 March 2018 at 6:45PM

up to £10k seems a lot of cash for a business at your stage of development.

All I can really say is don't, I did similar a few years ago and the business failed - just didn't have the cashflow in the lean times.

These days I don't borrow, more I have gone without and reinvested every penny back in the business and it is coming together in year 3.

Doesn't help, but perhaps food for thought.

DesignerLuke · 17 March 2018 at 12:23PM

Thanks for the advice and for sharing your experience.

10k is definitely more than I really need over the coming months. 3-4k would do fine but I noticed a lot of business loans having a minimum 10k lending rate so that was the reason for mentioning it.

I understand your point and could go without the loan if I wanted to grow at a slower rate. I suppose I could just take the risk now before applying for any additional finance and try to secure bigger clients without anything to present. Definitely given me something to think about!

I have at the very least decided that a loan probably isn't a good option for my needs and instead if I do apply for additional finance, it will be a long 0% credit card.

Thanks again!

Mistral001 · 26 March 2018 at 4:38PM

It is always difficult to raise your rates in a business such as yours as you probably realise. However, I think you have to have the confidence to try to do it. If you have repeat clients, some will leave you, but many will come back once they have tried your competition.

I assume that you are adding new services in an attempt to get more profitable work from new clients. However the pressure from existing clients will always be there to supply all services at a budget price and you could still lose repeat custom.

FatVonD · 27 March 2018 at 11:44AM

Have you tried your local council for a business grant? Not all authorities do it but mine offer up to £1,000.

Do you mind me asking what you design? (Only because I too am a designer!)

Finance options for a Sole Trader?

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