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Figuring out Finance

Running a business means you have to invest time and money to be successful. Whether you've been in business for years or you're just starting out, knowing how to get access to the right small business finance when you need it can be a daunting prospect. Where do you start? Where do you go? How do you make sure you give yourself the very best chance to be successful at getting access to the money you need? Maybe you want to expand in your current area, or you want to branch out and offer additional services. Perhaps your growth means you need an extra hand and it's time to consider hiring staff. Whatever the reason, here are a few things to consider.

Figuring out Finance

Work out how much you need

It may seem obvious, but do you know exactly how much money you need? Sit down and think it through. Consider every eventuality. Say you're a salon and you're looking to move to bigger premises so you can offer additional services. Exactly what is involved? Will you be able to expand your current location, or do you have to move? What are the costs involved? Will you need new equipment? What about staff? Do you have to get specialist staff to offer the additional services you want to offer? Will you need extra products? Consider every single possible cost. Write everything down, and look back over it a few times over a week or so. Whenever something new occurs to you, add it to your list.

Work out how much you need to earn

Be brutally honest with yourself. How much will you need to make in order to repay the loan? Is it feasible? Are you confident that you will be able to make the repayment? If you don't get a certain amount of jobs, how will you cover the payment? Be conservative in what you ask for. Optimism and big dreams are fantastic, but you need to be absolutely sure that the extra finance will improve your business and not become an additional burden.

Understand your cash flow

Much like knowing how much you need to earn to be able to cover your payments, understanding the cash flow in your business is an important consideration. Knowing exactly when money comes in and when it goes out, what sources of income you have that's stable, reliable and constant and how much you can reasonably expect to get from additional jobs will give you a big picture and help solidify your repayment plan.

Keep an eye on the books

Set yourself a time period and keep an eye on what exactly is happening in your books over that time. You might be surprised. Maybe you're spending more petty cash than you thought, or maybe that 2 weekly job brings in a little more than you thought. Knowing exactly what's happening to the money in your business gives you the knowledge you need to make informed decisions.

Who to ask

Getting finance depends on many factors, like how long you've been in business, what you do, how reliable your sources of income are, your outgoings, experience, collateral. Your bank may be your best bet, but you need to be aware of all your options. FSB members have access to a dedicated Funding Platform as well as Cash Advance services and could even benefit from. Investigate the possibilities and have a plan B if your initial application doesn't work out.

We hope the above has given you a starting point if you're considering applying for additional finance for your business. Finance can be tricky, but the more prepared you are the more likely you will get access to the money you need to thrive in business.

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