With Brexit approaching and no end of changes predicted, especially with the paper and board industry arranging your finances would be a smart move. With the potential for taxes and charges, alongside price increases and materials stocking some finance might be necessary.
BREXIT CHECKLIST DOWNLOAD: to help you plan for your paper and cartonboard requirements please download our “10 things to consider pre Brexit” and request a free ‘Brexit Planning’ call.
What is business financing?
The world of business finance can be a daunting and confusing place, especially if you are not familiar with the terms and phrases used.
Business financing whether for a start-up or well-established company can be the difference between success and failure. One of the most important factors in a successful business is cash flow and the ability to pay suppliers. The ability to keep on top of these factors is paramount and this is where various finance options can help. The post Brexit period could put pressure on cash flow and extra finance may be a way to maintain a steady business.
What financing can I get?
The range of financing options open to you is huge, but you need to be aware that patience can be your strongest card. Early on, it’s important to retain your most valuable asset – equity. If you can get away with it, try to avoid selling equity as this is likely to make a poor return. Investors will require a lot of equity for not much capital.
If you have stock or other assets you should use this collateral to gain asset finance. This includes invoices as banks will lend against them if late payment is a problem.
In general, companies should, particularly in the early days reinvest continually to get through the growth phases for as long as possible – ideally forever!
You can also download our Brexit Checklist, “10 things to consider pre Brexit” PDF for a quick guide on things to think about.
How do I find out what I need?
The most important piece of financial advice is to get educated. You need to learn how each financial instrument works and how it can work for you. There is not a one size fits all to financing, what suits one may not suit the other. By investigating the market and getting different opinions from a range of sources you can make sure you get the best option for you. It can be easy to rush into the first offer but is it best in the long run? Take your time and work out exactly what you need.
Learn from others how finance works and be relentless in your approach to funding. There are plenty of resources out there that can assist in defining your needs, many business owners are happy to share their knowledge and experience. Don’t be afraid to ask for an opinion. Pushy is good, know what you want and prove that you are in a position to receive it.
Numbers are important!
You should have a solid plan with the numbers always in mind. Do the work, read the data and find the cold hard facts, even if they are not exactly what you would like them to be. Don’t be optimistic with your figures, the lenders want to know the truth. Take a realistic level-headed approach to your project; expect things to take double the time and to cost much more than you think & don’t be disheartened, it is not always a quick process.
Add buffer after buffer and follow the adage: ask for money when you need it least. You will find funding routes harder when you need cash to plug gaps in your finances. Try where possible to be ahead of the game, if you know seasonally that money becomes tight, apply earlier than you planned. Trying to get funding when you are in desperate need of it is not the ideal.
Companies with solid finance control are far more likely to get the right funding. I am constantly horrified how few business owners really know their margins for gross and net profit and don’t properly cost their service and product offerings. Know the ins and outs of what money your business makes and its costs. Knowing the full picture will make you more likely to get the financing you need. Guess work can cause problems down the line.
It’s important to keep trying. Plenty of successful companies were knocked back multiple times for funding until they found the right partner. You have to find the right fit, as mentioned it is not a one size fits all deal. Some companies lean towards specific businesses or products, it doesn’t mean you are not viable, you are just not what they look for.
How do I know what is the right financing for me?
For you it could be a bank, asset finance firm, crowdfunding platform or a venture capital (VC) institution. Look at the details and decide on the perfect match. Which one works for you, some will offer much more than just financing such as support and business advice. Others are purely there to offer money and await profits.
It is important to know the way in which lenders think and evaluate to how and how much they will lend.
Banks tend to me more risk averse than small lenders but do offer a wide range of services such as overdrafts, support, VAT deferment accounts, multi-currency and networking.
It is good to be able to show a proven track record, have a good strong management structure and know your business. Know your gross and nett profit margins, have a full budget prepared, keep a close eye on cash flow and prove that you can run your business in a profitable fashion.
You can also download our Brexit Checklist, “10 things to consider pre Brexit” PDF for a quick guide on things to think about.
Why would Brexit mean I need financing assistance?
No one is 100% clear as to what exactly will happen post Brexit, we are sure however that there will be changes to the way we work with the EU. Following on from our previous blog regarding Brexit there is a chance everything from material to logistics will increase in price.
You may need to consider:
- Stocking material
- Warehousing
- Larger orders
- New systems
- Staff increases
- New suppliers
All of which could increase the money needed to keep the business moving, it is worth looking at your options and which could be the most valuable in the months to come.
BREXIT CHECKLIST DOWNLOAD: to help you plan for your paper and cartonboard requirements please download our “10 things to consider pre Brexit” and request a free ‘Brexit Planning’ call.