In a world that appears to be constantly obsessed by coaching – football coaches, tennis coaches and Team GB Olympics coaches have all hit recent headlines – it might be more logical for today’s business owners to consider a different type of coach, if only to guide us out of this seemingly never-ending recession.
Sue Weighell is a finance coach at Delta Solutions. She has imparted some of her infinite wisdom to us regarding the correct way to go about business funding. You will no doubt have read in the press about the initiative by the Bank of England to make bank loans cheaper, but business leaders have said that the scheme will fail to reach firms struggling to secure loans. Only time will tell how effective this initiative will be. So how can you help your business to secure its funding? There are no guarantees, but to give yourself a good chance we thought you might like to share Sue’s top ten tips:
1. Understand your business finance. Have you fully got to grips with your accounts? Can you talk about your results to potential lenders with confidence?
2. Produce accurate management accounts on a regular basis, preferably monthly. Sending these to your bank relationship manager each month will give the bank confidence in your performance.
3. Make sure that you understand why there is a funding gap in your business.
4. Look at alternatives. Consider things like cutting costs by reviewing your overheads or raising finance using your debtor book.
5. Banks don’t like surprises. Keep your relationship manager informed of the finance news in your business. Good news like a big new order from a customer, as well as the bad news such as a key supplier ceasing to trade. But why tell the bank about the loss of a supplier? You might source a different supply chain but a new supplier may well require advance payment that will affect your cash flow.
6. Produce financial forecasts. These should include a profit forecast, cash flow forecast and balance sheet forecast. This should always be done before the beginning of your financial year but will have to be re-done when you are looking for new funding.
7. Always document your assumptions with a financial forecast. Don’t just predict sales of £Xk per month, but break the number down into products/customers and build up a sales forecast that is realistic and achievable. Make sure you have the resources for that level of sales.
8. Understand what you need. Ask the funder for the amount you want and the reasons why.
9. Learn to present your plan in a confident way that shows you really understand your business and your finances. Think Dragon’s Den!
10. Produce a written business plan, pulling all the above information, and more, into one document.
So if you’re a smaller business and you find yourself in a position where you can’t grow without professional help, but you’re not in the position to commit to full-time professional help, it could be worth contacting Sue at https://www.delta-solutions.org.uk
Sue can give you the experience and knowledge of a commercially minded professional who has worked with a wide range of businesses. When she’s armed you with all the right information, then it’ll be time to turn to Johnson Reed.
