How to raise money for your business
Raising finance is often problematic, as doing it well relies on a myriad of different factors. How much do you need? Where do you look? How do you present your case? The list is never-ending, which is often incredibly frustrating for small or medium-sized businesses looking to expand. Luckily, Alpha Financials has years of experience when it comes to raising finance and knows exactly what is required of businesses. In this blog, we share some of our knowledge about how to raise money for your business and what to look out for. Read on for some of our most important tips!
The first thing your business needs to do when raising money is to optimise cashflow to minimise what you actually need to borrow. This should always be your starting point. For example, managing debtors and creditors better leads to some immediate cashflow benefits. However, an effective cashflow management process establishes a virtuous circle of improvements. These arise as you gain greater insight into your revenues, expenses, debt repayments, and tax obligations. In turn, these allow you to generate further opportunities to save money.
Financial Plans & Projections
Now that you’ve optimised your cashflow and squeezed every extra drop of cash from your business, you need to put together a waterproof financial plan. This is always built on a detailed and in-depth analysis of past financials, along with specific details about your business and your market. Furthermore, this also includes a detailed overview of the purpose of the loan, along with accurate future projections and how robust the financier’s returns are.
These documents create the basis for your application process. However, the way you present them is often more important than the documents themselves. Do this in the most professional and perceptive way possible. Any weaknesses in your plans or application could seriously lower investor confidence. At Alpha Financials, we know exactly how to put together these financial reports and applications. We understand the lending process and how it applies to the SME market. More importantly, we know how to apply our specialist knowledge to your business situation. The result is a highly effective and efficient lending application which gives financiers the confidence to trust your business with their money. Once lost, credibility can’t easily be restored. If you only get one opportunity, it’s best to use the most professional approach.
Finding the best deals
After all the projections, documentation, and the business analyses – comes the hardest part: finding the best deals. Hopefully, your business has options. But even then, you’ll soon experience the difficulty of identifying and choosing the right option for your business. Important distinctions need to be made between various funding options, like equity, bank debt, venture capital, leasing, and peer-to-peer lending. Naturally, each of these comes with its own characteristics, costs, risks and restrictions. All of these factors impact your business and your own short and long-term returns. Weighing all these factors is daunting and you may soon find yourself out of your depth.
There’s no need to panic, however. Independent bankers and management accountants establish some clarity during the fund raising process. Post financing, they also help fend off potential problems by ensuring appropriate and timely reporting/communication with the funders.
How to raise money the Alpha Financials way
With our vast array of experience, we help businesses navigate the common pitfalls of raising finance. Our deeply analytical method identifies and pursues feasible and advantageous financing avenues for your business. Contact us for more information about how to raise money in a sustainable manner.