Quite often owners, their staff and management both lack the experience needed to meet the challenges of the new business, how to grow it and how to manage the financial aspects successfully.

Lack of capital
Lack of capital is often the most critical challenge that a successful SME faces as its very success creates this and it quickly becomes a vicious circle. Especially when the purchase of the business has used most of the available funds the new owner has.
Without very diligent cash flow management the business often is constrained by capital as it grows. Often the profit in one operating cycle is insufficient to fund the extra working capital required for the next operating cycle.
This can be made even worse where capital assets are required to process the goods and the company cannot finance the acquisition of these capital assets. Many capable entrepreneurs cannot overcome the obstacles in their businesses cash flow cycle and cannot understand why bankers often cannot provide the financing as the SME often does not have the security to support the debt.
The solution is often easier than most entrepreneurs realize. It often starts with a plan to see what your cash needs are and when your cash needs arise. Then one is in a position to manage it and focus on the cash management techniques most likely to be successful in your business.
Probably the scarcest resource in most businesses is the time of the owner and a little time developing a strategy can often free up the opportunity to focus on real priorities.
Debtor finance is an excellent solution to the businesses cashflow needs at this time. When security is low for Banks, Lock Finance is looking at the debtor book as security. If the Bank has taken the house and other assets to lend for the purchase of the business, they are often not interested in lending more for working capital.
Often Lock Finance has seen that the new business owner has traded okay for a couple of months and then realized that the cash collection cycle is too long and turns back to the Bank for help. At this pain point the business may no longer be showing the great ratios it was upon purchase, due to growth and changes that have happened. However, the business still has a debtor book and Lock can use this to provide working capital finance. Generating up to 90% of the value of the debtor book and ongoing invoices within 24 hours.
So if you are thinking about buying a business, or you are working with someone who is buying a business, ensure they have a working capital solution so that they can continue to trade profitably in the business for years to come.
Lock Finance - a team of specialists with extensive experience and knowledge across a broad range of industries, that are committed to finding the right funding strategy for businesses.