Are you so wary of debt that you won’t look for external funding to grow your company? Do you still consider the banks to be the only real source of funding?
A ‘yes’ answer to one or both of those questions is a sign that you could be hampering your company’s future growth prospects.
If you are hindering your company’s growth, you’re certainly not alone. Research conducted earlier this year revealed that 78% of the 500 UK businesses surveyed by specialist mutual financial services provider Wesleyan Bank were too wary of incurring debt to seek external funding.
About three-quarters of those surveyed said they had a better understanding of traditional funding options such as bank loans and overdrafts than they did of alternative funding options such as asset finance. A national SME alternative finance survey commissioned by Nesta and the University of Cambridge found that only 9% of respondents had approached an alternative finance provider.
The so-called alternative funding market is growing rapidly, and in the UK alone has more than doubled in size year on year from £267 million in 2012 to £666 million in 2013 to £1.74 billion in 2014, according to the ‘UK Alternative Finance Industry Report’.
Sean Read, Director of Sales & Marketing at Wesleyan Bank says, “Without external finance, many SMEs are stilting their chances of prospering and fulfilling their ultimate potential.”
That’s because funding—whether through debt or equity— is often the catalyst for taking your business to the next level. Without it, you’re likely to stay where you are now or worse, stagnate.
Nowadays, there are many options for both equity and debt financing to consider. There is also the option to combine both debt and equity in a funding mix to provide the capital base for long-term growth and the working capital to support working capital requirements in the business.
While there’s a vast array of options available—including some that can provide funds within days—figuring out how to access these funds can be a very time-consuming, frustrating experience, even for the most seasoned business owner.
Worryingly, the Wesleyan Bank research revealed that many SME owners turn to the internet for advice about funding options rather than speaking directly to banks or independent funding experts. While the internet does provide some accurate information, it is just as likely to offer information that at best is outdated and, at worst, wildly off-the-mark. Following such unqualified advice is likely to be disastrous for your company.
After all, raising funds is critical to your company’s future growth. As such, it should only be managed by those with substantial experience and knowledge of the strategic funding market.
Typically, that person will be an CFO. And there’s the rub, for as an SME, you probably don’t have a full-time CFO with the necessary experience in fundraising to manage the process for you. So what can you do?
You can hire a very experienced part-time CFO to manage the entire process for you. He or she will manage everything from determining your immediate and long-term objectives to finding the right kind of funding partner for the business. You can watch a 3-minute video here which explains the part-time CFO model.
At the CFO Centre, our CFOs have sourced more funding (over £5 billion) for our clients than just about any other company in the UK. We will provide you with a world-class CFO with ‘big business experience’ to manage your strategic funding process for you and we’ll do it at a fraction of the cost of a full-time CFO. It’s the business equivalent of having an Olympic coach to help your business thrive.
To find out more about your funding options, just book your free one-to-one call with one of our strategic funding specialists—just click here now.