Seven Key Fnance Success Factors
Growing Your Business: 7 Finance Success Factors
Have you got ambitious growth plans but you’re not sure how to get the finance?
Many business owners find themselves stuck when it comes to raising finance, especially if you are so busy ‘doing the doing’, that you don’t get time to pause for breath, to reflect, plan and take action.
Having a growth plan is great, but growth typically needs finance to make it all work.
Here are seven key finance success factors to help your business succeed.
Have a Clear Vision
When raising finance, the foundation success factor is knowing where you want to go; it’s the old adage of ‘if you don’t know where you are going, how are you going to get there?’
Think about what ‘success’ looks like to you. What do you want your business to look like five years from now? A lack of clarity as to the direction your business is heading leaves you susceptible to making decisions which may not be in the long-term interest of the business.
We each have a different definition of success. For some, success is hitting an annual sales figure; for others, it’s about profit, number of customers, or the range of products on offer. What’s yours?
Decide precisely what success means to you, because without that clarity raising finance is meaningless.
Prepare a Business Plan
Even if you’re not approaching a bank for finance it’s wise to have a Plan in place which summarises your thought process.
A bank will need a Business Plan so they can better understand your business and your future vision. Your Plan does not have to be the size of War and Peace! A good Plan for a bank doesn’t need to be more than 10 to 15 pages (if you need more than that then you’re over complicating it!).
There are plenty of resources available on writing Business Plans but here is a simple four step framework:
- Where you have come from – your background and how you set up the business
- Where you are now – how the business looks today in terms of what you sell, your clients and marketing strategy
- Where you want to be – an outline of what your growth plan is
- How you are going to get there – what you need from the bank and the actions you are going to take
Source the Right Finance Solution
With your Plan in place you’re ready to approach your bank but don’t forget that there are other finance options.
Whilst the traditional High Street banks do provide funding for growing businesses, today is about balancing that support with the expanding range of alternative finance solutions. Here are some options:
- Purchase equipment and machinery? To preserve your cash consider applying for an asset finance facility which spreads repayment over three to five years
- Investigate unlocking cash tied up in invoices via an invoice discounting facility. This allows you to access cash now instead of waiting for 30 to 90 days thereby speeding up your ability to grow
- Crowdfunding your finance needs is growing in popularity. If you are looking for additional funds by selling shares in your business check out equity crowdfunding services provided by the likes of Crowdcube, and Seedrs. You can also source a business loan repayable up to five years via crowdfunding platforms such as Funding Circle and Ratesetter
Seek Out Advice and Support
Running a business can be a lonely experience. It’s impossible to know everything, so surround yourself with the right people and be willing to seek other’s opinions and ideas.
A key financial partner for any growing business is an Accountant. Find an Accountant who understands your industry and so can provide valuable insights on how to boost profits. Working with an Accountant is about having a trusted relationship so find someone you will get on with.
Selecting an Accountant is like finding the ideal employee, so don’t be afraid to interview them! Ask them what they will do for you and how often you will meet. Make them work to get your business.
Who else can you turn to for ideas and support? You can seek input and ideas from government business advisors, and business colleagues; consider taking on a mentor or a Non-Executive Director who can be a sounding board and keep you accountable and focused.
Keep Records and Monitor Progress
To sustain your vision and to keep to your financial obligations you must track your progress, or perhaps it may be lack of progress! Not all of us are good at keeping records but they are a crucial aspect of the financial aspect of a growth plan.
Think about it, if you don’t know which part of your business is slipping then how can you take action to get back on track? Decide on three aspects of your business which are critical to your success then regularly monitor them.
Monitoring your performance must include reviewing your financial performance via monthly or quarterly Management Information. Your financial performance is the outcome of everything you do in the business so watching your financial results will highlight the red flags to review.
Manage Your Cashflow
Cashflow is the beating heart of your business. Manage your cashflow poorly and no matter how profitable you are you can quickly find yourself battling irate calls from your suppliers.
Be tough on management of stock so you don’t have cash tied up on the shelf instead of sitting in your bank account. Be tough on overheads by regularly reviewing your costs to avoid wasting cash. Be tough on overdue invoices by ensuring clarity on your payment terms and conditions. Have process in place to identify late payers and don’t be afraid to pick up the phone and chase for payment.
It’s All About…
If you’re committed to growing your business, go through each of the six financial success factors, which leads us on to the last one… taking action. You can have the best ideas and the best of intentions but the bottom line is that you must take action on these ideas. Growth and being in control of your finances doesn’t just happen; it takes focus, determination and dedication.
Go and take the first step to growing your business and getting your finances in order.