Funding Business Growth

Nov 9, 2021 | Finance

Does your business funding drive growth?

Do you have ideas for innovation? Is demand exceeding your ability to supply? Does your business require new assets to address growing segments?

Too often ideas and breakthrough innovations fail because of sub standard funding. And a big part of this failure is wishful financial resourcing! Thinking that limited funds available can stretch to provide added value. In other words bargain hunting becomes the go to tactic, which stresses out cashflow and places the business in jeopardy. This happens in every business type – from start-ups to established businesses. And it’s a trap that will foil your business growth plans.

Being ready and funded for growth is reliant on sound financial planning. However, before you get into whether you need to seek finance of any nature you should consider your internal funding options.

Firstly, you could ask your business to find savings in other areas. Or you could achieve your goals through alliances that share the financial cost? 

Finance options you should consider for Growth

Funding and cashflow are essential and the lifeblood of any business.

This is especially true when a business is experiencing or wants growth.  Growth is an exciting phase for any business and its owners, but it comes with some risk too.

The very first funding option you should consider is your own.  What I mean here is to look internally first to see if you can sharpen up any aspects of the operations of your business.  This may include:

  • The gross margin you achieve on the sale of your products – can it be improved? Or can you focus on the mix of the products you are selling?

  • Review all your Expenses, are their any savings that can be made?

  • Credit Control – do you know what your average Debtor Days and Creditor Days are?

External Funding Options

Once the internal renovations are completed it may be time to look at external options.

This is where most businesses get it wrong. They get the incorrect type of funding for the purpose it is needed.

Some businesses do not have the luxury of choices.  You might not have property available to offer as security for a loan.

Whatever funding is available, think through some of the following:

  • What is the exact purpose? (i.e. To fund more inventory for more sales?)

  • How long do you need the funding for? (Do a Budget – is it seasonal?)

  • Can we use the actual asset we are acquiring (e.g. equipment) as security for the finance?

  • Can you match the finance term with the period of time for which the asset you are acquiring will provide a benefit?

Equity Mate

Lastly, sometimes debt is not the answer.

A business structurally may be under-capitalised, meaning that funding generally needs to very long term and without the impost of immediate repayment commitments.

If you are currenlty evaluating your options you suggest to speak with an advisor.

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