How do I Fund a New Detailing Business?

This is a question that crops up regularly – particularly for those just embarking on a new career in the Car Care industry – “How do I pay for all of the things I need to start my business?”. There are several options, some more paletable and maneagable than others, and all of them will depend entirely on your personal situation, location and personal finances. Lets look at the headline options.

Start with your own resources

The obvious routes such as Personal Savings are always the first and most cost-effective resort, as it is money that you would only owe to yourself.  No interest to pay, very little interest being earned on them (at present), no chasing debts, and no one but yourself to answer to.

This isn’t always feasible, we know – either cash is tied up, or you simply haven’t had the opportunity to save enough yet. Credit Cards, Personal Loans and even short-term options such as PayPal Credit or Klarna exist for those who have an existing income to meet the repayments, and are planning to phase into their new venture over a period of time. Credit card debt can be manageable in the short to medium term, but be cautious of interest terms and offer terms, and ensure you always keep up repayments as this can affect any offers you are using.

UKDA accepts quite a few payment plan options for all courses, precisely as we recognise the benefit of spreading course costs with a potentially interest-free credit function, such as Paypal Credit, or Klarna.

Family members can often be called upon to help financially if they are in a position to do so, but always open and honest, regardless of how well or badly things may be going, as you only get one family and money can be a difficult tension to overcome. The ideal personal loans are one people can afford not to see back, and you would be wise to ensure the risk is made clear to anyone offering help, no matter your or their confidence in your plan.

How much will you need?

Well, the first step is to add up a wish list of equipment and large outlays such as van hires, initial rent and deposits, website costs, professional fees for the first 6 months, etc. We even have a Fixed Costs calculator available to help you identify business outgoings, if you don’t know where to start. Once you have all of these – double it for your initial estimate.

It sounds flippant to just say “double your estimate”, but businesses rarely go exactly according to plan. You don’t need to go exactly double, but a fairly large contingency is sensible. With a large sum of available extra cash in place, if everything takes off as you expect you’ll have a lump sum to pay off loans early, funding to expand rapidly, or enough for some R&R when things calm down or tail off a bit.

If things don’t go well, having sufficient backup funding to push through the difficult learning period can be a make or break for businesses. Sometimes all a business needs is another few months of support in order to crack a market, and having this safety net of spare finance can give you that freedom. Additionally, costs can come out of nowhere for things you didn’t realise you needed, so having a “float” gives you flexibility, so things don’t hit a brick wall before they’ve had a chance to begin and start to pay back.

If none of the previous options are available to you, the good news is that there are a few other routes which may be open to you. The two most useful of are…

Small Business Loans

There are numerous banks that will lend to new start-ups, but you will need to make sure that you are able to put forward evidence that your venture will make sufficient money to be able to meet the loan repayments.

Business Lenders are specialists in this field and will often help you to put all of the information together, as well as help you with support and guidance.  This isn’t out of the goodness of their hearts, however, as they are merely protecting their investment and ensuring they will get the loan repaid, along with their profit-making interest.

A compelling Business Plan will be needed to secure a loan of this type and our Level 1 Career Development course will help to give you some of the building blocks you need to put this together.  It isn’t all about the Profit & Loss though – your lender will be looking to see how sustainable your business is in order that they can continue to be involved for years to come. You’ll need to show market knowledge and analysis, company setup, service descriptions, SWOT analysis (a list of your business’ strengths and vulnerabilities), and more. Put the time into thinking about your business from all angles, both optimistic and pessimistic and identify what could go wrong to show you have an answer for it. Funders rarely believe absolute certainty, and showing that you’ve thought about aspects from all angles will reflect better and often give you a more positive reception.

Government Funding

Once you start digging – and speaking to the right people – you’ll find all sorts of government-backed options, from grants (usually available only in specific circumstances) to loans, plus support through local providers. The Gov.uk Business Finance Support Finder is a good national starting point, but also ask your local authority, growth hub, and chamber of commerce, as they’ll know about funding specific to your area.

The main government-backed route for new businesses is the British Business Bank’s Start Up Loans scheme – a personal loan of £500 to £25,000 per founder at a fixed rate, which includes free mentoring and is open to businesses trading for up to a few years. Rates and terms change periodically, so check the current figures before applying.

What’s on offer also varies by the local authority area you set up in, so if you’re near a border, check both sides. Funding usually comes with caveats and specified, traceable uses, so read the conditions carefully.

As for funding your training specifically: at UK Detailing Academy we’re registered with the UK Government as eligible to receive funding for the training we provide, though it’s the individual who must apply in the first instance. Those routes change over time, so rather than repeat the detail here, we keep it current on our course funding and payment options page – and if you already run a business, read it alongside our guide to reclaiming training costs against tax.

At the end of the day, it is your livelihood that you are seeking to build and there are a number of people and organisations that want to help you – even if it is for their own profitability, ultimately. See what options are available in your area, and if you’re still struggling to come up with funds for your dream business from launch, starting smaller and self financing is another smart way to reach your goals – even if it takes a little longer.

If you are looking for a way to develop your business plan for a new or existing company, maybe consider our one-day Business and Marketing course to give you an insight into areas for improvement.