A guide to business funding
It is widely thought that the most successful businesses of the next decade will be those that have the financial capability and know how to achieve their ambitions for growth. In the current climate, the ability of a business to leverage appropriate levels of funding to support growth plans has never been greater. With banks, alternative lenders and equity investors all looking for opportunities to fund strong, growing businesses, the market for debt funding is somewhat healthier than many would believe.
Obtaining business funding
The key to obtaining such funds is the presentation of a clearly articulated business plan and the preparation of robust financial forecasts. Corporate finance Managing Director, Laurence Whitehead works closely with businesses looking to raise funding and believes that business owners must understand that the onus is on them to present themselves as a credible prospect. Given that many funding proposals are refused because they are not presented to a standard required by funders, the message from Laurence is clear:
“Take early professional advice from those whose business it is to understand both the funders’ wish lists and the business’s funding requirements.”
UK lending market
Although traditional lending in the UK market is still perceived to be difficult to source, the high street banks are very committed to lending to healthy companies with strong management teams who can demonstrate that their business plan is a viable and robust one. With regard to equity funding, reports suggest that there is a war chest in excess of £50 billion waiting to be deployed by private equity and venture capital houses. So the message is clear: funding is available but your proposal needs to stand out from the crowd.
The first step is to obtain professional advice early in the process from an experienced corporate finance team who can logic check your business plan and financial forecasts and introduce appropriate funding sources to you (both high street and alternative, debt and equity).
Below are some of the other top tips to help achieve success when approaching funders and investors:
- Ensure that your management and financial information systems are in good shape.
- Make sure presentations are accurate, positive and clear.
- State the level of funding required and for what purposes.
- Ensure you know exactly how and where the business is making and will make its profits.
- Demonstrate clearly how the business can grow with the appropriate funding in place.
- Show that you have all of your costs and overheads under close control.
- Demonstrate how your business is unique and important to its customers.
- Do not ignore potential pitfalls - be honest about the areas to improve in your business.