The statistics on business failure are alarming.

Michael Gerber, author of "The E-Myth: Why Most Small Businesses Don't Work and What To Do About It", says that 40% of businesses fail in their first year. 80% fail within their first five years.


Don't let this happen to you.

When we are successful in our business, we often seek faster growth to create greater wealth. We love the word ‘profit’ and like the concept of having lots of it. However, when growing a business it often needs a LOT of cash, more ready cash than we sometimes have.

For some, the need to manage the cashflow and the risks entailed with lack of cashflow can mean that growth is often significantly slowed. Much slower than the business owner imagined or required.

This can mean that great opportunities are missed or turned down because there simply is not enough cash available to keep the business going and pay all the bills to take advantage of those opportunities.

Growth sucks cash because profit and cash are different, yet we routinely monitor profit before cash. Cash is your lifeblood, but like that which flows through your veins, isn’t missed until you reach a crisis. It’s all a matter of timing really and, just maybe, a bit of luck.

Whilst there are options around creating cashflow and outside sources of help, have you first checked your own business and efficiencies to ensure you are as lean as possible?

Staff Productivity
Are your staff effective? Have you given them the resources and processes they need to be as productive as possible? Are they working at capacity? Do you need more staff to grow or do you actually need fewer?

Debtor Management
Having a system to ensure you issue invoices in a timely manner and ask for payment of those invoices helps smooth your cashflow.

Stock Management
Have you got too much stock? Too much stock means dead cash sitting in your warehouse. Are you using your stock or are you forgetting what you have and ordering more? Do you have a stock take system?
Once you are as lean and efficient as possible, you may still need to source extra cash, so what are your options?

Budget and forecast
Understand your market and the opportunities, budget and forecast your income and expenditure requirements. Then save up for the growth, keep a buffer of cash in the company to cover the peak requirements.

Cost: $0

Borrow from your bank
Take your business plan, cash flow and financials to your banker. Explain how much you need, how long for and why you want it. Collate lots and lots of information and potentially give away your home.

Cost: interest rates vary from 6%-18% depending upon security offered, PLUS set up fees which start from $250 but can increase exponentially, PLUS ongoing fees.

Finance the debtors
Invoice funding means you can finance your accounts receivable and manage the need to borrow according to the particular circumstances of the business.

Cost: average 10-14% depending on the business risk and a set admin fee agreed at the start, no long term contract.

Get an equity investor
This can mean getting money from family or friends, or getting a more formal equity investor into your business. Family cost is minimal but the emotional toll can be quite high. Formal investor cost is a % of your entire business, and often time consuming to attract and manage the relationship.
So are you ready to grow?

If you would like to talk about how to fund your growth and get your business ready for explosive growth then call for a friendly informative chat with Sarah Lochead-macmillan, Lock Finance, 027 700 2065