From time to time, all businesses will need a cash flow injection or financial support to help them get up and running or to keep going and expand their capabilities. But getting a business loan or any type of financial support for your business isn’t as easy as making an application online like you would a personal loan. You need to be clear with your intentions for the funds and be in good financial shape to obtain the required finance.
Preparing your business for funding isn’t something you should be doing only when you feel you need it but all the time to ensure that when the time does come, you are in the best position possible. This post looks at how to prepare your business for financial support and find ways to support what you do.
What you can expect in this article:
Keep On Top of Cash Flow Forecasting
It goes without saying that before you ask anyone for money, you need to be able to demonstrate good cash-handling skills. You need to have an up-to-date cash flow forecast in place and update it regularly. While it doesn’t need to be too in-depth, you need to show a good understanding of the cash and working capital it takes to run your business.
Key aspects include invoicing clients promptly, allowing for automated payments, reviewing contracts with suppliers regularly, and how you are using existing loans or finances within your business.
A Robust Business Plan
Lenders won’t want to lend to a business that doesn’t have a robust business plan. While it’s true that it doesn’t need to be comprehensive, if you are applying for finance, you need to be able to show how your business is moving forward, what your goals are, and how you will get there. Some key elements to include in your business plan are;
- Executive summary
- Key personnel, along with their experience
- Current client base
- Intended client base
- SWOT analysis
- Market analysis
- Competitive landscape
The more details you have inside, the easier it is for lenders to see what you are about and how the funds will be used to support your growth and development, whether you’re looking for Asset Finance, angel investors, or a traditional business loan.
When submitting your finance application, you will need the correct documentation to support your application, and having these prepared beforehand can make things easier when the time comes to apply. If you’re keeping your records up to date, then you will be in the best position moving forward to apply for funding regardless of the amount or funding route you choose. You will likely need up-to-date accounting data, the last 3-6 months’ worth of bank statements, and your previous full-year turnover and profits. Having this ready will remove any issues and ensure you are well-placed to proceed.
Time It Right
You need to time your application right. Please don’t take out loans because you can, or you don’t need them. First, make sure that you are applying for business finance intentionally when there is a genuine reason to do so. It can be to facilitate growth, offset the purchase of new equipment, meet new client contracts, or stop missing targets and sales due to your current setup not being able to handle demand (i.e., requiring a move to larger premises or taking on more staff).
The better prepared you are for applying for finances, the easier the process will be for you when the time comes. Be prepared and be intentional, and you will put yourself in a strong position to get the support your business needs.