Accessing finance

When Does Your Business Need Funding?

23 January 2018
3 minute read

Whether it’s a planned expense such as refurbishment or purchasing stock, or the need to fix an unexpected issue; running a small business, you’ll know that these scenarios - and their demand for financial support - are often just around the corner. And when they arise, you want to know that you’re making the right choices both in terms of timing and funding.

There are now many flexible funding options available to small businesses to help you do this. Options that allow you to borrow the amount your business needs while paying back at rates tailored specifically to you; a smart alternative to the more traditional banks. An example of this is a Business Cash Advancewhich allows business owners to make repayments based on a fixed percentage of their daily customer card takings.

With this in mind, here are some examples of when business funding could come in handy:

Bridging Cash Flow

Maintaining a steady cash flow can pose a significant problem for small business owners; and when there’s not enough cash coming in to cover the outgoings, it could be time to consider sourcing some additional business funding.

According to our SME Investment Survey, 27% of businesses taking out finance are doing so in light of cash flow problems. Although most businesses will be trying their best to keep on top of this, unexpected or uncontrollable events such as slow sales or outstanding invoices can leave them in some tricky financial situations. Not only can additional funding provide some essential support in these cases, but it can help to smooth over fluctuations in seasonal quiet periods too.

Accounting For Seasonality

These seasonal rises and falls in cash flow can be assessed through year on year reviews of your sales. How effective and accurate your assessment is will depend on the industry of your business. With this data you will be able to forecast seasonal spikes and plan for any busy periods. Often, this will require additional funding to account for things like ordering extra stock, operating longer hours and hiring more staff.

Without the funds for this upfront, many businesses will turn to additional finance to avoid missing out on potential sales and revenue. The key to making the right decisions is forward planning. Look at historical sales data and put a plan in place so you’re able to predict seasonal highs and lows, and work out how much you’ll need to borrow and where you need to allocate the funds.

In Need Of Refurbishment?

Whether it’s a refurbishment, renovation or just a bit of a business refresh you’re after, you’ll need sufficient funds to make this happen. Not only is there the cost of new equipment and furniture to consider, but you’ll also need to factor in the manual labour involved and loss of profits if you need to close for a period of time. Planning out your budget carefully and accounting for every single cost will help make sure you’re able to access the right amount of funds to cover you.

Laura Howells, manager and owner of Foam bar and restaurant has been working with Liberis and our Business Cash Advance since 2015. She says: “We needed a boost in cash reserves not only to absorb the normal business fluctuations but to continue the ongoing upgrade of furniture, fittings and equipment and grow the business in line with demand. Without a Business Cash Advance we would have had very little opportunity to continue improving operations.”

Time To Expand!

Growing and expanding your business can be a very exciting time. However, it will come at an initial cost as you’ll need to factor in things like purchasing extra stock, investing in new technology and equipment, the possibility of taking on a second location, or hiring more staff to accommodate your expansion. To ensure that you’re able to grow and expand without anything getting in the way of your plans, you should look at your long-term goals, what funds you need, and how you can pay this back in manageable installments.

While businesses will look to business funding for various different reasons, it’s important to consider exactly how much you need to borrow and thoroughly explore the different options available to you. This will ensure that you’re able to give your business exactly what it needs without the financial risk!

Next Steps

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