It’s all about the money, money, money

It needs more cash than you think - experience tells us this and we can help you find it.

The obvious upfront expenditures are: plant & machinery, construction, fit out, rental equipment (e.g. skateboards, pads, helmets,etc).

The less obvious expenditures are: operating licenses, planning fees, insurance, pre-opening marketing and lease deposits. And more or less as soon as you open the doors you will need money for energy, staffing and business rates, which is likely to be before you actually start generating any revenue. 

So, what are your routes to funding? Well, this is dependent on several factors,which are mainly related to you or any business partners and how much of a risk it is going to be to lend you money (i.e. your age, your history, whether you have any other businesses, whether you own property, etc. etc.) Oh, and anyone you want to borrow money from will probably want to see a detailed business plan, well-considered forecasts, a CV for you and any other Directors, bank accounts and your inside leg measurement.

Your access to funding will also depend on whether you are set up as a commercial operation, CIC or charity.

As a charity, funding can come from a range of sources, including national governing bodies, such as Skateboard GB and British Cycling, as well as grants from the National Lottery and Comic Relief. You just need to be prepared to put the work in putting together the bid.

If you get it right, the funding can provide a significant foundation for your facility,demonstrated by Junction 4 in Bolton who were recently awarded £1.2m from the local council and British Cycling’s ‘Places to Ride’ fund, which they used to take their facility to the next level.

As a commercial operation, these funding sources are highly likely to be closed to you, no matter how much good you do in the local community.

So where does the money come from for a commercial enterprise.

Traditional bank funding will only be available if you have a good relationship with your bank, potentially a history of lending into other businesses and you own the property (or the land) which will house the facility, as you are able to use the value of the bricks and mortar to raise funds on a commercial mortgage. The property acts as the safety net for the bank if it all goes wrong.

If you are just leasing the building, short-term, high-interest loans and asset financing will be available, although there is typically a rigorous application process and more often than not, will require personal guarantees, which carries a significant level of personal risk.

You could invite people to invest in your business and become shareholders and a good place to start with that is close friends and family. You will undoubtedly need to put some of your own money (capital) into the business, as if potential investors see you are taking a risk, they are more likely to part with their own hard-earned cash to help you achieve your vision.

Equity crowdfunding is when you ask a large number of people to invest money for a small piece of your business – investors will usually have an interest in what your company does. There are a number of platforms which can help you with this process and it has worked very successfully for a number of consumer companies, such as Finisterre and BrewDog. Albeit this platform is typically used for scaling up and 20% of your target amount will already need to be raised.

Businesses who equity crowdfund are typically EIS (Enterprise Investment Scheme) registered, which means investors will receive tax relief of up to 30% of the invested amount. There is also no capital gains tax on the investment and more tax relief to be gained if the investment fails, thereby reducing the overall risk.

Rewards crowdfunding is typically the domain of charities and community groups who are seeking funding but are not giving away any equity, but will typically ‘reward’ an investor with bespoke products and experiences.

Pier To Pier Action Sports Consultancy can help guide you through the tricky funding landscape to save time and get the best results.