Preparing for Financing

Before you seek external finance, you need to work out what is realistic in terms of amount, the timescale and the factors that will affect these calculations. Backers expect you to arrive at the sum you seek through careful planning and rigorous research. Fundamentally, they want to know what it is for, how long it will last and when you will provide returns.

It is important to be realistic for the stage of development your business is at. For most companies funding levels tend to rise incrementally from small amounts of debt, to more sophisticated facilities (such as invoice finance and leasing), to angel, venture capital and public market funding. Think about:

  • How financial institutions view your sector
  • Your management team’s track record
  • Existing and potential future competitors, and the economic climate
  • Your existing debt facilities – the difference between what expansion capital you think you need plus everyday overheads as you grow, and the availability of your existing facility
  • Your asset backing – any assets you can use as security with investors or lenders
  • Vision – it’s important to have a clearly defined goals and ambitions for your business