100 Top Tips for Businesses – #18 Funding
So you’re looking for funding?
Owners of small and medium-sized businesses will often find themselves pondering whether or not they require additional funding. This could be at any stage of their development – at the very outset as a start-up operation with big ambitions, or perhaps during an established organisation’s growth phase where capital costs will naturally be unavoidable.
As part of our series of 100 Top Tips for Businesses, we’ve asked Darren Peacock of Hull-based Peacock Finance – a partner on our InspiringBusiness2018 campaign - to share some pearls of wisdom to help you decide which funding direction is right for you and your business.
Focus on the vision
Darren said: “In my experience, knowing what you want to achieve is the first and most important decision for any business because, without that sense of direction, you are likely to get side swept and knocked off course by what are seemingly good opportunities but in reality bring little benefit, and could even be detrimental to your success.
“Having a business vision, or not, is what separates success from failure. The first thing I suggest to all my clients and potential clients is that they really think through what it is they want to achieve, and what their business goals and objectives are.
“Ideally, you want to know where you are going and why, and what your drivers and motivators are. For example, most business owners will say they wish to increase their profits and assume this means they need to grow their company, but bigger is not always better – you could grow the company to a much larger turnover but increased costs for staffing, asset purchases and other overheads that accompany such growth might actually end up reducing your profit.”
It might feel good to be based at a very impressive-looking office building with a staffed reception, but does your business really require this? Keeping overheads as low as possible makes it easier to achieve the sales, which translate into profits, that you need to remain comfortable.
Tuning in to what makes you tick will assist with this process – someone aiming for early retirement will have different needs to a person focused on building a sector-leading empire, or a businessman or woman who wants to target a set annual income while taking a two-month summer holiday. These are all legitimate business goals but the route taken to achieving them will differ in each case, and funding options will vary according to the individual scenario.
Keep a close eye on the numbers
So, now you have a clear vision and direction of travel, it’s time to get to grips with the figures.
Darren explained: “It’s common for business owners to pass accounting responsibilities to professional accountants, which has lots of benefits but can mean you end up being slightly removed from what’s going on with your money. However, you need a thorough understanding of your numbers if you expect to be successful. It’s not enough to know year-end stats from the previous financial year, make sure you’re on top of current figures too.
“I have years of experience running my own businesses and I totally understand all the challenges involved, but of all these, I can’t stress enough the importance of monitoring the money,” he added. “For example, you need to be aware of at what point in the month you break even and then start to make a profit, and be aware of your monthly outgoings, as this knowledge of the detail will ensure you can identify exactly where you are at any given time. It becomes much easier to identify issues as well as opportunities if you constantly monitor the figures in this way.”
Another key piece of advice from Darren is to remember to check your cashflow regularly. People usually concentrate on making a profit and the balance sheet is certainly important but your cashflow statement is critical. You will never go bust if you don’t run out of cash, even if you’re not making a profit.
Ultimately, however small your business is, it must be run professionally from an accounting perspective.
A systematic approach
Darren’s final top tip focuses on sales, relationships and taking a systemised approach to your operations.
He said: “Look at your organisational structure and operational systems. If you want to expand, do you need to recruit or invest in other assets? It’s important you can visualise and express this to me because, if I’m going to find a funder for your business, I need to be able to convince them your company is profitable, with healthy sales and cashflow.
“Finally, action is more important than anything else. Don’t just wait, make a move. Analyse your vision, your budget and your systems, then make an appointment and I’ll do my best to support you.”
To find out how Peacock Finance could help you, call 0845 5197104 or email firstname.lastname@example.org