Funding Growth & Investment from within the Business

We are often asked to help business owners find funding to support critical investments or to fund growth. Sometimes this is because the bank has turned down the request for a loan. Or the criteria are too onerous. Other times because the options are not deemed desirable.

The starting point is always the same: understand the need and evaluate the plan. The key is to have a robust plan that demonstrates a return on investment from the funding required.

The next step is to identify funding options. A recent Growth Accelerator study highlighted that successful business owners fund 40% of their investment requirements from within their business. Our experience is that there are many more who believe their business is cash strapped but are unaware that there may be pools of untapped cash awaiting discovery if they only knew where to look.

Where are these pools of cash?

• With customers: Too few businesses really focus on getting their customers to pay on time. Many don’t have a discipline around collecting money for fear of upsetting customers.
• In your stock room / warehouse: you may have stocks lying around in a warehouse that are not moving; slow moving stock, obsolete product; poor purchase discipline.
• Unbilled hours: For businesses in the service sector your product can be the time spent by your people on a project. Unbilled service hours are the same as leaving a product lying unsold in a warehouse.
• Un-needed or over engineered purchases: a business without any control over what is bought is liable to have too much and unchecked purchases may include items at the gold standard where bronze or silver is perfectly adequate.

Here are seven suggestions that could help you reveal hidden pools of cash in your business:

1. Put in place a purchasing policy with appropriate accountability
2. Measure time spent on clients & services and track this against budgets
3. Ensure you have a disciplined invoicing and credit control process
4. Politely but firmly make sure you are paid on time.
5. Pay close attention to stock rotation and take action where required
6. Manage your costs!
7. Get into the habit of weekly forecasting cash and follow up on any variances