Funding for businesses will typically
be a consideration at the start-up stage, but may also be an issue
once the company is up and running either to smooth out cash flow
peaks and troughs identified in your cash flow forecast or
alternatively when unforeseen cash crisis issues arise.
The importance of cash flow planning
becomes much more relevant now as you will find predicted or expected
cash flow assistance much easier and generally less costly to obtain
than what appears sudden knee-jerk requests for funding, after all to
a potential investor or creditor if you have to look for crisis
funding they will inevitably ask if you have control of your business
and finances and who would want to lend or invest if they thought you
So where could funding come from?
Own capital investment as an owner of
the business you may be able to fund this yourself by your savings,
investments releasing equity in a property or your salary from
Friends or Friends or family may be in
a financial position and willing to invest either a repayable loan or
purchase a share of your business in exchange for some funding.
Banks or other financial Institutions
lend to businesses if they think the business is viable and the
likelihood of success is good for the business, don’t forget they
will only lend if they think the chances of them getting their money
back is good, no one wants to lend money they don’t think that they
will ever get repaid.
Third Party Investors or venture
capitalists are people and organisations who are financially able to
invest money either as a repayable loan or purchase a share of your
business, they are normally very cautious with their money and
investments and will only invest in the business if the business and
owner are professional have vision and a good chance of success.
Government grants or loans are
available from time to time. Generally they expect such funding to
result in the creation of new jobs some such funding may be based on
geographical areas, business types and the criteria and availability
will vary but its work an internet search to see what may be
Factoring (sometimes called invoice
finance), if you meet the criteria of a factoring company the
factoring company will advance you an agreed percentage of your
invoices and they may then deal with collecting the money from your
customers on your behalf.
Credit from suppliers may be available
and if so this could be all you need to fund your cash flow
A Business plan and cash flow forecast
will be vital if you are to obtain this kind of funding and you will
really see the importance of such documents and the effort you have
gone to in order to make them professional and well compiled.