In tough economic times, business owners know that it's more
important than ever to keep their finances in order and to
understand the best way to go about securing funding to grow.
Over two-thirds of small business owners agree that information,
help or guidance with finance would be beneficial to their business.
But nearly three-quarters of young business owners believe there
isn't enough information available on the subject.
The best way to ensure you get the right type of funding is to be
fully informed of the different types of finance available and how
they relate to your business before making any major decisions.
Business in You, a partnership between the Government and private
sector and supporters of this year's Local Business Accelerators
campaign, is making it easier for businesses to access information
on finance.
Through its Find Finance section, Business in You can help
businesses to plan, prepare, and apply for the funding they need to
grow, including an interactive Business Support and Finance Finder
to help assess the best type of funding for each business's needs.
The range of options for business finance includes: Start-Up
Loans, which are now available for 18-30 year olds and come with a
package of business support; Enterprise Finance Guarantee, which
provides additional lending to businesses that lack the security to
secure a traditional loan; andSeed Enterprise Investment Scheme,
offering significant tax incentives to investors who fund qualifying
small businesses
Four out of five SME owners have no formal training in financial
matters and only 20 per cent seek advice before applying for a loan.
But getting advice can dramatically increase their chances of
securing funding.
Seeking the support of a qualified professional business advisor,
such as an accountant, lawyer or bank manager, could be invaluable
to a small business before applying for finance.
MentorsMe.co.uk can connect businesses with specialist business
finance mentors. More than 1,000 of its mentors are current and
former high street bank staff who have volunteered to mentor
businesses for free. Businesses can be confident the advice is
impartial by working with a mentor who is independent of their own
bank.
The most important factor in a successful application is
convincing the lender or investor that you will be able to pay them
back. Most unsuccessful applications are due to an inability to
demonstrate this or a bad track record in paying debts.
Currently only one in three owners develops a business plan but
many bank managers cite a solid business plan as the key factor in a
successful application for finance.
A business that presents a clear plan with projected profits,
cash flow management, market research and a marketing plan, in
addition to showing how the funding will be used, demonstrates that
they really know the product and the market and gives lenders
confidence of a return on their investment.
Free assistance in developing a business plan is available during
National Business Planning Week, to be held February 11-17 by the
Your Business Matters Tour and Business in You.
Once a business plan is in place, and the business begins to
grow, cash management becomes crucial to success. Around 400,000 new
businesses start in the UK each year, but one third of start-ups
cease trading within three years and, more often than not, poor cash
flow management is to blame.
Managing cash effectively and knowing where to turn for support
and guidance are therefore vital for small business owners.
Business in You, together with the Institute of Chartered
Accountants in England and Wales (ICAEW), Association of Chartered
Certified Accountants (ACCA), and Ernst & Young, have produced two
key resources for small businesses: A Guide to Financial Management
for SMEs and the ICAEW Small Business Finance Best Practices Guide.
Both are available to download free from the Business in You
website.
