This content was last reviewed 9 April 2021
Running your own business for many is the route to financial independence and allows the ability to make positive decisions about your future. But knowing when to invest to take advantage of new business opportunities is not an easy decision to make.
Reaching the point where your venture is sustainable and profitable is a milestone that every entrepreneur and business owner dreams about. It can take months or even years to achieve that, and then, as your business grows you start to face a new set of challenges.
You may need to invest at a higher level in raw materials and stock, larger premises, more staff, and marketing and sales. Depending on the scale of the opportunity, to take full advantage you may have reached the point where you have started to consider the injection of growth finance.
Working out how much you should and can afford to borrow can be a challenge. Borrow too little and in a few months you could be back at square one, and not able to fulfill the full potential of the business. Take on too much debt finance and you may worry that if business takes a downturn in the future you may struggle to meet repayments.
If you are planning to take your business to the next level, do you have easy access to fund your expansion plans? Who can you turn to for access to impartial advice? Here are a few things you need to consider before making a decision. FSB Funding Platform uses technology coupled with friendly advice to do the hard work for you.
What is the size of the opportunity?
Be realistic about the opportunity. It usually takes longer than expected to reach your business goals, so make sure your sales projections are underpinned by a predictable and scalable sales pipeline. Investing in marketing and sales is a key component of any growth plan. The way you achieved sales as a small business, may not be the same as when you scale up, selling new products or services, or perhaps selling in a new location.
Do your research, understand the competition and make sure your ‘go-to market’ plan is focused on meeting the needs of your target buyers.
Do I have a realistic growth plan and projections?
Working out how you plan to invest funds over a period of time is critical. It’s all too easy to absorb funds into the business and not to execute fully on your growth plan. Staying on track is key to your success, so put clear investment trigger points in your plan.
Make sure you have a strong set of cash flow projections that clearly show when the funds are being invested, and the impact on cash flow month to month, and quarter to quarter. There are a number of cash flow modelling tools out there that can help you project the impact of your investment and the future cash needs of the business.
What is the worst-case scenario?
Model out low, medium and high financial projections. Stress test your business model and understand the actions you can take if the anticipated growth doesn’t materialise. Business is all about risk and reward. Every entrepreneur will have a different risk profile. It is important to understand the level of risk you are taking, and the impact of things not going to plan, including macroeconomic factors that are out of your control. Plan for the unexpected.
What are my options for a loan?
In recent years the business finance market has witnessed a high degree of innovation with the rise of alternative finance providers increasing choice for the business owner. With choice has come a degree of complexity as borrowers seek to compare traditional funding sources such as banks with new finance providers. It’s important to understand the overall cost of business finance including fees and exit penalties, along with the security you can provide for a loan which will also impact the rate at which you may borrow.
That’s where FSB Funding Platform can help. Our business finance service exclusively for members allows you to access the whole market with a single finance application. There are no fees for using the service and our expert advisors are on hand to help you find the right business finance for your business.
Start your application today
Complete one simple online application with FSB Funding Platform and our platform matches you with the largest panel of business lenders in the UK. FSB members can access free support and guidance from our finance experts.
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Small business finance made simple. A dedicated funding platform with one quick application, impartial financial advice and 24/7 support, exclusively for FSB members.