Financing business growth
Raising the necessary business finance is the first chapter of any business success story. And it can involve a lot of energy, persistence and some basic business planning to make it happen. Here are some main sources of business finance.
Your bank may be able to offer you a business credit card or an overdraft for short-term financing and a business loan for longer-term financing. You will need a well thought-out business plan with strong financials and cash flow projections to start the conversation. A detailed plan is the first step to success. If you can use property as security, it may assist your application. Don’t forget that credit criteria and other conditions and fees are applied by credit providers when assessing your application.
There are business people out there who are looking for businesses to invest in. They are usually looking for short-term returns and/or medium-term sale value of your business. You will be inviting people to become shareholders in your business and you’ll need to be comfortable with their input and scrutiny. They can also bring experience, ideas and direction. They can be hard to find, so start by talking to the small business association in your state. There will be a lot for you to think about, including the documentation of the formal agreement between yourself and any other third party.
There’s lots to think about when considering your business finances, including cash flow. Some of the things to consider include the balancing of the terms you negotiate with your suppliers (when you have to pay them) and the terms you extend to your customers (when they have to pay you).
Rather than buying expensive items, like machinery or cars, you may want to consider the advantages of leasing them instead. These items are generally covered by shorter term finance as opposed to longer term business finance which is designed to support your business growth over the medium to long-term.
The importance of obtaining expert advice
There’s a lot to think about and important decisions to make, when setting up and running a business. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this document, including when considering starting business.
This webinar is produced by the Davidson Institute, Westpac's home of free financial education resources, building confidence today for a better financial future.
General advice: This information is general only and does not constitute any recommendation or advice. It is current at the time of publication, and is subject to change. It has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on the information, consider its appropriateness, having regard to these matters. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this document, including when considering the finance options for your business.