Introduction to our quest for funding

A bit about Bubble & Balm and our quest for funding...

Bubble & Balm commenced trading in June 2009, and was one of the first companies in the UK to offer Fairtrade certified beauty products. Since launch, we've seen strong sales growth. Our products are available in a number of independent outlets, and we're currently in discussions with a national retailer.

The business started with the founder - me - making products in my kitchen, and whilst we have outsourced the manufacture of our biggest selling product (soap - over 15,000 units sold) to a specialist UK soap manufacturer, our other products are still made by hand at Bubble HQ.

Our potential for growth is strong, and we have several new 'world first' products on the stocks. But, to realise this potential we need funding. Firstly, making products in my kitchen is (to put it mildly) not the best use of my time. Everything is in place to outsource all manufacture, but minimum run sizes mean we can't afford to do it, especially when suppliers require pro-forma terms for first orders. Secondly, our new products (which really are world firsts, we've checked) require funding for stock and marketing. When I met Peter Jones a few weeks ago he advised me to focus on a killer product. We have the product - we just can't afford to get it to market!

Before launch, I approached several banks to talk about funding under the Enterprise Finance Guarantee Scheme (previously known as the Small Firms Loan Guarantee Scheme). As a not-yet-trading firm, I rather expected the answer to be no (too much risk) and I was right (it's perhaps useful to know that before Bubble & Balm, I worked for a High Street bank for over ten years). These early conversations did prompt some interesting bank responses though...here's some examples...

- we don't even consider lending until you've been trading for six months

- the EFG is a Business Link scheme, you'll have to talk to them

- your best option is to take a personal loan for the money

Set in the context of the government's push for banks to lend, and the banks telling us they are 'open for business', these responses are interesting. The second is frankly bizarre, but the first is quite telling. Presumably the government's aim in providing the EFG is to encourage and support entrepreneurship - people starting and growing businesses with no access to funds / security - yet the bank in this case have a policy of no lending to start-ups. From the bank's perspective I understand it - start-ups are risky - but it's a good indication that the government and banks don't understand each other. The personal loan comment is also interesting - and a lot of small businesses do start this way - but surely lending is lending whether personal or business? It also only works if you have an existing income to qualify for the personal loan.

We're now trading, and trading well. So, over the coming weeks, I'm going to be talking to all the banks about EFG funding, and i'll be blogging about it on this site. My intent is not to have a go at the banks, but more to share how it really is for small businesses looking for funding. I'm also hoping to get a discussion going - advice, ideas, success stories etc.

I've already made a start with my approaches...see my next post!