Feature


Enterprise & Innovation


Don’t blow your growth plans by relying on the balance sheet


By Steve Hickman (pictured), partner at KPMG in the Midlands


Doing so can sometimes be more harmful in the long-term and end up being a strain on day-to-day operations. Seeking external finance is crucial for any business looking to


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expand. But before considering kickstarting a growth journey it’s important to have ironed out a watertight financial plan that details your long-term ambitions, how you’re going to achieve them and how this translates into generating returns – for both yourself and your investors. It’s essential to have your finances in shape. Investors and


lenders will expect a concise articulation of why you need the money – whether that’s for people, products, new premises, entering new markets, or overseas expansion – and how that supports the returns you’re projecting. Depending on the type of expansion plans, there are different


sources of funding to consider. It could be a debt facility, looking at private equity or, for larger organisations, looking towards the public equity markets.


Navigating the debt market Debt finance can be a cost-effective way to drive growth. Cheaper than equity funding, it can come in many forms – whether that’s asset-based lending, bank debt, credit fund or debt capital markets. There are also facilities that enable debt to be leveraged against


existing assets. Debt funding also means shareholders don’t have to give away any equity to fuel growth, as they would when


62 CHAMBERLINK October 2019


‘There is currently a lot of liquidity in the Midlands market looking for a good home, so businesses should be confident when looking to secure the financial support necessary to fuel expansion’


uelling growth from your own balance sheet can present multiple challenges. Firstly, businesses often don’t have the working capital to invest in significant expansion plans.


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