Be prepared W


hile many companies look to raise finance as a stop gap to dig themselves out of a financial hole, there are in fact a number of businesses out there


looking to secure finance to develop their business further and invest in their future, whether it be through the introduction of a new product or service, or entering a new market. Certainly in our contact with many of the major high


Morgan Davies


‘Would you loan money to a business when you had no understanding of what they were trying to achieve?’


street lenders, we are told that they are definitely ‘open for business’ however, evidence would suggest that the success rate of raising finance has been more down to what sector the business is in. What often determines the success or failure of an application is the approach adopted and whether the lender has fully understood the business requirement behind the lending, and whether it’s been easy to asses the ability of the business to repay the loan. Consider for one moment: would you loan money to a


business when you had no understanding of what they were trying to achieve, what impact it would have on the bottom line, or how long it would take to see a return on investment? So why would a lender be any different? Without a formal plan in place to determine all of the


above, how, as a business owner would you know if your plans were viable? Formalising your plans will help set out clearly in your own mind the direction of the company. It is crucially important to understand as fully as possible the impact of any proposed investment on your existing business and the returns that the investment is likely to produce. You need to do this before you even decide to look for finance. In the same way that it is important for you to have


considered the impact of the idea on your business, any lender will also want to do the same. They will wish to fully understand your proposals, and be confident


30 CHAMBERLINK FEBRUARY 2012


MORGAN DAVIES, director at Prime Accountants, explains why businesses must formalise their business plans when seeking finance


that you have the ability to repay any loan. Therefore, once you have that information for your own purposes, it is very important that you are able to present it and communicate it as clearly as possible to any lender that you are approaching for support. There is a thought amongst some business owners


that acquiring this information is purely for the purposes of securing the additional funds; however this couldn’t be further from the truth. Once additional finance has been granted, it is just as important to continually monitor the goals and objectives you originally set out to achieve. Your lender in particular, will wish to be regularly updated on the progress and to do this, it will be important for you to have a handle on what’s happening yourself. Not only will it be vital for you to be able to access this information to be able to pass on to the lender regularly, for your own peace of mind and the security of your existing business, you must be able to assess whether the investment is providing the returns you were expecting. Having the right system in place that will help you


achieve this is key, as it will make it possible for the information to be available to stakeholders on a timely and consistent basis. There are a variety of systems out there to assist with monitoring, measuring and reporting on performance and most recently, small and medium sized enterprises are steering towards cloud based systems, to do this. There are many benefits to be derived from these systems but in the context of helping a business measure its profitability in real time, they provide ready access to the business data by all members of the team including the professional advisers.


So the moral of the story is be prepared when you


approach a lender and put yourself in their shoes. If another business owner approached you for finance, would you take a risk without knowing the full story?


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56