Archive for June, 2013
Strong businesses will have a strong balance sheet and a solid business plan. They also need to devise a well thought out strategy for accessing capital. This is an extract of the discussion at a Business Exposure Group meeting for business owners.
The Group looked at how business owners have many points to consider, including whether it is better to self fund so that they are in control, who are the most supportive lenders, and whether or not to use third party professional brokers, to tap into specialist lending.
Managing Director, Nick Adamson who attended the event, said: “We now have new funding landscapes because business is complex and so are the options for funding. It is important that businesses make sure they cultivate several lender relationships so that they can keep as many eggs in their basket as possible.”
The merits and pitfalls of the different types of lenders that are available, were also discussed by the Group.
One attendee of the event said: “Generating enough profit and having sufficient working capital to fund growth is a real battle for today’s SME’s.”
53% of SMEs feel the current business environment is riskier than this time last year, and 13% have considered closing their business in the last year, according to a quarterly SME Risk Index from Zurich.
Nick advised: “Anticipate your funding needs early and to make sure that your business succeeds, you can use the 5 C’s of credit – a method used by lenders to determine the credit worthiness of potential borrowers:
a) current capital structure
b) cash flow
d) condition of the business environment
e) character of the borrower.
“At present businesses are at great risk of underperformance. Lenders who believe in the management will back a turnaround. However, lender fatigue can set in if they lose confidence,” continued Nick.
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