Henry Audley-Charles is the Owner and Founder of SME funding UK Ltd.
Henry’s knowledge and experience of providing financial solutions have led to him becoming a trusted advisor to the businesses he works with.
If there’s one thing I cannot emphasise enough, it’s the importance of cash flow in your business.
It’s the single most valuable piece of advice I give to my clients; understanding how good money management helps your business to survive and grow.
As a finance broker working with SMEs for more than 30 years, I have seen it time and again; the amount of cash flow in the business will always determine success or failure.
Cash flow in a crisis
The impact of the Covid-19 crisis has had many businesses firefighting over the past few months. No-one envisioned the devastating impact the crisis would have on our economy: pipelines have dried up overnight, customers have stopped calling, and as a result, there is no cash left in the business. Many have had to close their doors for good. So, what can you do to keep the business going?
Many businesses have accessed government funding packages, payment holidays and furloughing staff. However, these options will only be successful if you are fully aware of your current financial situation and most importantly, what your future may look like.
You need a plan. Plan, predict and prosper.
With the prospect of lifting lockdown, business owners can now turn their attention to rebuilding their futures.
Despite the current crisis or any business climate for that matter, my top tip ALWAYS starts with the two most important documents you need to succeed.
1. The Business Plan
2. A Cash Flow Forecast
Get it Right First Time
When a lender looks at a potential borrower, they will consider several criteria before making an offer of finance. The more prepared you are, the better chance your application will be approved.
The Business Plan
First and foremost, your business plan is a roadmap to get you from A-B. It should be a working document which you regularly refer to and can adapt and change as your business develops.
Secondly, it’s a detailed document that tells potential lenders and investors precisely who your customers are, how you are going to make money and the potential growth of the enterprise. It will help them decide if it’s a viable idea and if they are likely to see a return on their investment.
The Cash Flow Forecast
This is the most important document you’ll need to keep your business afloat.
Without available money in the company, you’re going to struggle to implement your business plan and grow, not to mention pay bills, wages, suppliers and tax.
The forecast will help you to keep track of what’s coming in, when it’s due plus predicted income and monthly balance. Lenders will use this document to see how and when you will be making repayments.
If there are weaknesses in your business, be honest and show your contingency plans to mitigate the risks. Your foresight will demonstrate that you are aware of potential pitfalls but can pivot if necessary.
Why work with a finance broker?
An ethical finance broker is more than just a go-between in the lending cycle. Working in tandem with the business owner, they can offer valuable advice in preparing all your documentation.
Including the business plan and cash flow forecast, your broker will help you to gather everything you need and present it to potential lenders in a favourable light.
They will put forward several options for borrowing and help you to choose the most suitable solution for your needs right now.
They can also provide valuable insight into the lender’s motives and establish an agreement in principle before you have to make any commitment.
The benefits of working with a broker always result in a cost-saving due to the fact they will help you find the best deal in the market with the most relevant repayment structure for your needs despite their fee. Plus, the fact the chances of your application being approved is considerably higher if you’re working with an experienced professional.
Find out more at www.smefunding.uk