In December 2022 AwakenHub was joined by our friends and partner AIB for an AwakenClub session to chat through finance for startups. We thought it would be useful to share some of the tips and information with you all.

Early stage, sole traders, first time startups:

o It’s never too early to get your finances in order and establish good financial governance. This speaks to both your personal and professional finances and banking relationships. Having financial literacy early doors will go a long way to helping you build a viable business.

o Have a conversation with your bank about the types of accounts and supports available for new businesses. Find out what you need to have in place to streamline the process of opening a business bank account.

o   Keep your personal and business finances separate from day 1 and remember money in does not equal ‘your money’. You need to be sure to set aside whatever is needed to pay any outgoings, fees and taxes. Usually this means setting up one business-only bank account straight after you set up your limited company. This will ensure all your business transactions are separated from your personal transactions, which makes it much easier to manage your business finances.

o   Look to the local eco-system to see what supports are in place in terms of startup grants, training and finance.

o   Engage professionals to help you. It might be that you can keep control of your daily finances but engaging an accountant or financial support early on will help to ensure you are compliant and can avail of any reliefs or refunds. The same goes for tax and legal advice and support.

o   Lenders want to lend. So help them do that if it’s what you need to build and grow your business. A simple Business Plan will always be of benefit. It doesn’t have to be overly complicated but it shows the outline of your business, who your clients are/will be, financial modelling and marketing proposals.

If further along on your founder journey:

o If you are more established and looking to raise investment or secure larger amounts of finance, then do your homework in advance. Research your funding needs.

o Install and understand a financial accounting software system to make it work for you. This includes understanding client/customer transactions and habits as well as financial health checks

o Understand what type of finance/funds you need – Debt Capital versus Equity Capital. Lender and equity investors have different mandates but may well ask similar questions. Both want a return on their investment but the metrics are not the same. Debt can sometimes be the cheaper than equity but if you want that equity relationship then you need to weigh up what is the best option for your business - whether it be angel investment or venture capital for example.

o Bank debt and equity serve different purposes depending on the different stages of the company’s lifecycle as the company’s requirements may change as it matures. At the start-up stage the company may require only overdrafts, credit cards and internet banking. But as it grows it may also require treasury services, working capital, development capital and mezzanine finance to fund its expansion, while in the later stages it may also need advice if it is considering exit options.

For more information on AIB’s support and offerings please look at Business Banking, Business Online Banking | AIB Business or get in touch with AwakenHub to guide you to the right AIB person in your area.