For an SME or business start-up, securing the funding needed to begin trading or to grow can often mean the making or breaking of a firm.
“The good news is there are many avenues you can explore, even in today’s tougher market place” says Peter Czapp, co-founder of national accountancy firm The Wow Company.
He continues: “Cash flow is the lifeblood of a business and key for any business owner. Good planning is the first step to take to make sure you have systems in place to monitor your cash coming in against what’s going out. You will then be able to see and plan for the times when cashflow may be low.”
Peter added: “Having a good business plan and a clear handle on your cashflow will also help you when you are searching for funding.”
But if you don’t know where to start, here are Peter’s top tips and expert advice on different funding routes to consider.
1) Keep it personal — Look to your family and friends for support in the first instance. Speak to them about your business proposition and business plans and potential options for investment. Also consider how you may generate cashflow as an individual — can you free up cash through the sale of personal items or by downgrading, such as by using a smaller car. Personal loans can sometimes be easier to secure than business loans too.
2) Maximise your assets — Look at the options you have to release cash from your existing assets. For example, could you consider subletting any spare space in your offices? Review your stock management system to make sure you maximise your efficiency and consider whether you could utilise your existing accumulated pension funds to help grow your business.
3) The banks — From overdrafts to loans and trade finance, banks have traditionally offered a number of avenues for businesses. While securing funding from the banks is now much harder, there are ways you can improve your chances and strengthen your case. Firstly make sure you have a detailed and clear business plan. This is vital for not only funding, but for the future of your business. Then work with your accountant to produce a cashflow forecast. Finally, put your own money in first, which will show you are serious.
4) Grants — There are a number of business grants available, so see which ones you may be eligible for. A good place to start looking currently is your local Chamber of Commerce and Business Link. There are also sector-specific grants available, such as for manufacturing, exporting, renewable energy, and technology. 0% loans are available from the Carbon Trust for between £3,000 - £100,000 and for details about the latest European grants visit www.j4bgrants.co.uk.
5) Investors — Programmes such as Dragons’ Den have really shown the benefits that can come from securing investment from so called ‘Angels’ or venture capitalists. There is also the Alternative Investment Market (AIM) for those thinking big!
6) Get clever with cashflow — There are a number of ways you can make your money work harder, by getting clever with your cashflow. A good accountant will be able to help you with this, but also consider:
Get extended credit terms with suppliers
Negotiate improved terms with your landlord
Speak to HMRC about spreading your tax bill over a number of months
See if you can spread other annual payments over a number of months
Ensure you have a credit control procedure for your clients — get that cash in early!
Consider swapping products and services if you run out of cash
For more details visit www.thewowcompany.com