Archive for November, 2011
Investment is a key component of growth for many small businesses however attracting investment can be challenging unless entrepreneurs understand exactly what investors require and adequately prepare themselves.
Consider the difference between a lifestyle business and a business set up for sale or investment. Is the business merely sustaining the owner’s lifestyle or is it driven by ambitious growth plans and financial gain? Is the business fit for purpose? Does it provide critical problem-solving for customers or is it just a luxury purchase?
In determining whether a business is investable, investors will evaluate whether there is value in the business domain name, whether it has intellectual property rights, whether there is a strong senior management team and whether there is a simple ownership structure. Read the rest of this entry »
Many banks remain apathetic despite difficult trading conditions. Everything takes a long time to process and is invariably referred to someone who has little or no relationship to the business. The reality is changing banks in business can cause lots of problems.
What you probably need is a better relationship manager or alternatively you might benefit from changing branch. Treat banks as a supplier and invite a selection of them to tell you what they have to offer. Even if you don’t need credit and are unlikely to need it in the future, research your bank’s lending criteria and track record in relation to companies of your size in your specific industry. You never know when you may have to draw upon this facility.
Businesses might need to consider changing banks when their current financial institution no longer provides the services to match their growing company.
Consider whether you need a high street banking facility. Why not have several banks with several different funding arrangements so you don’t have all your eggs in one basket?
Even if you’ve no complaints with your current bank, it’s important for businesses to reassess their financial requirements every so often as part of a continuous health check of the business. Companies evolve and expand and your original agreement may have been surpassed.
Cash management is important for all businesses. The goal is to manage cash balances effectively in order to maximise the availability of cash and avoid the risk of insolvency, do not invest it all in assets.
Managing cash flow is the most important job of business owners. Many owners intent on growing their company and bringing down debt tend to spend all their funds whereas they should leave room for the business to absorb difficult financial times.
The key to successful cash management lies in having realistic projections, monitoring cash collection, effective billing and not over spending. Read the rest of this entry »