3 dos and don’ts when searching for funding
Are you looking for funding for your business? What if we said you might be going about it the wrong way?
Many small and medium companies could be getting tied into financial facilities that hinder rather than help their business because they aren’t gaining the full picture of what is available out there.
Here are six tips to help you in your search for funding so that you can find the facility that is best for your business.
Do your research
Knowledge is power to any business owner, so make sure you do your research before making any decisions regarding your funding, even when you’re feeling pressure to raise some cash. If you rush into a decision you could find yourself tied into a lengthy contract that may cater for your short-term needs but limit your business in the long term.
With so many products and providers on the market it’s important to familiarise yourself with the workings of the different financial products and services that exist. Always make sure you explore a few options before settling on a particular facility.
If you know exactly what type of funding you’re looking for, compare a few different lenders and get it clear in your head how the facility will work for you and what you can expect. Each one will deliver a different level of service, so you need to know what you’re expecting.
Unfortunately knowing exactly where to look for information is often a huge stumbling block for businesses. As a result, SMEs could be accessing funding that isn’t right for their company as they aren’t aware of all the options available to them.
But don’t believe everything you read
Research from the British Business Bank (BBB) shows that, in 2020, businesses searching for finance often turn to the internet, with 10% of businesses who have sought finance in the past 3 years and 14% of those that hadn’t naming it as their biggest influence.
Unfortunately, there is a danger that some of the information they rely on may not be wholly accurate. While online searches can be a valuable tool when comparing different products and lenders they shouldn’t be relied upon exhaustively.
Just as important is to seek recommendations from friends, family or other businesses who may have used external funding to support their activity. They may be able to help guide you and explain how some products have or haven’t worked well for them, and which lenders or brokers they’ve used in the past.
Do schedule time to search
Finding the time and motivation to begin the search for funding can be difficult. The range of products and providers available is vast and it can therefore feel like an insurmountable task, especially for those who are already under pressure with other aspects of their business.
The biggest mistake you can make is to keep putting it off. Doing this will lead to an endless cycle and it may not get done until it’s too late. It’s important to recognise that there is no right time to do it. You will always be “too busy” and something else will seem more important, but prioritising the search will mean you’ll reap the benefits of a cash flow boost.
The earlier you seek assistance the more likely you are to secure support. Likewise, the longer you leave the search, the more opportunities your business may miss without adequate funding to enable you to capitalise on them.
So make sure you schedule a small amount of time each week to shop around and keep abreast of the latest news and funding schemes being announced. By having it scheduled in your diary you are more likely to dedicate the allocated time to research.
And don’t give up when it doesn’t happen right away
Often the search for funding will lead you to a few dead ends – options that you thought you were eligible for may not be accessible and the amount you can secure may not be as high as you had hoped. But don’t give up.
Reaching a dead end can leave you feeling demoralised and unmotivated to continue, but it’s important to recognise that “no” doesn’t necessarily mean “never”.
And with a host of funding methods available, just because one option doesn’t work for your business doesn’t mean that the right funding isn’t out there. Often you’re just not looking in the right place.
Do consider all of your options
Making the decision to try something new can be daunting, especially where money is concerned. But as the market evolves it’s becoming increasingly important to have an open mind.
When looking at the options available to you it’s important to know what you’re trying to achieve. Are you looking to expand? Do you want to purchase some new machinery? Or is it simply to improve cash flow? Knowing what you’re looking for will help your business secure the facility that ticks every box and provides the funding and service levels that you require.
Some funding solutions offer additional services, like credit management, which could benefit your business. Weigh them up against the potential cost savings these services could bring to your business, such as reduced internal overhead.
And when the time comes to make a decision always remember that the cheapest option isn’t necessarily the best. Assess the cost in the context of the level of service on offer, the amount of funding you can access and any additional benefits such as flexibility. After all, sometimes it’s not the cost of a service but its value that is more important.
And finally don’t worry! You’re not alone.
With a multitude of options available, lenders using potentially confusing terminology and variations on how facilities are structured and priced, the search for funding can be overwhelming to say the least. This is particularly true for small businesses who may not have the time or resources needed to search the market for the right funding facility for your business’s needs.
But help is available. Having an expert talk through your options can be a good starting point when you’re unsure which finance method will work best for your business.
An independent commercial finance broker will work with you closely to fully understand your business’s funding needs and challenges in order to identify the right facility.
A good broker knows that no two businesses are the same and each has its own unique funding requirements so they will be able to explain the benefits of each of the options available to you, allowing you to make an informed decision that will lead to the most suitable funding facility for your business.
If you’re searching for new funding for your business or you’re looking to review your existing facilities, we can help. Contact us today on 0800 9774833 or request a call back to discuss the best solutions for your business’s particular needs.