‘Landmark’ small business finance guide published » SMEInsider

‘Landmark’ small business finance guide published

Some 23 of the UK’s most eminent finance organisations have joined together to issue a landmark new guide focusing on SME finance.

‘The Business Finance Guide – a journey from start-up to growth’ has been produced by, among others, the ICAEW, British Business Bank, FSB and UK Export Finance. It outliens the current situation facing SMEs seeking growth finance as well as laying out the range of options open to them across a range of providers.

In terms of beginning the process of raising finance, the report offers 5 key tips for those looking to raise finance, handily grouped under the acronym START:

Step out from your business
 Entrepreneurs want to focus on doing business. For many, finance falls under the category of administration, which may not be their forte.
But to make sure the business can move forward entrepreneurs must step out from the business and ask the questions that need answering.

Take a fresh look at prospects
and challenges 
Plans may have been made when the business was little more than an idea. Things change and circumstances move on. You need to make a fresh assessment of where the business is, what the opportunities are, how achievable they are and what new challenges there are to the business.

Analyse your opportunities
 You need to make a detailed analysis of the prospects for the business in light of any changed circumstances. A review of the new upsides and the new downsides needs to be carried out and the impact of them assessed, together with the probability of different scenarios.

Reach for the future
 On the basis of the above analysis, prepare a detailed forecast, looking at the forecast profit and loss (P+L) account and balance sheet and then, crucially, at the cash flow, which will highlight how much capital needs to be put into the business to finance your latest plans.

Think about finance
 You then need to think about the financing options for the business, how appropriate and how attainable they may be. To secure debt financing and/or investment, you need to make your business proposition clear and understandable to your target audience – with a business plan. At
this stage a business is likely to require outside advice and experienced resource to ensure that it is ‘investment ready’ for potential investors, giving it the best possible chance to secure funding.
Be open-minded. The funding landscape has developed considerably over recent years and there are a lot of options available – some are new and some have been around for some time.

Commenting on the release of the report, ICAEW president Michael Izza said, “Businesses need certainty and that also applies to when they are raising finance. We want businesses to come out of the dark and have their most powerful tool to grow – information and advice.

“With businesses expected to grow investment by 2.3% in the next 12 months, getting the right advice is crucial especially as the landscape and sources of finances has changed so significantly. The guide, which has already reached over 750,000 entrepreneurs, enables businesses and their advisers to find out more about the options available to them to meet their specific needs.”

SME Insider recently reported that mainstream lenders are under pressure from alternative finance providers; and a guide to alternative finance was also released.