At Nucleus Commercial Finance, we realise that running a thriving business is no easy feat. Whilst tending to the endless list of tasks you must juggle as a business owner, maintaining the financial health of your SME is amongst one of the most challenging.
It can be hard to determine whether your business needs external funding, but it is worth noting that accessing funding from a stronger position is always the best route to take. Whereas historically, borrowing money was always looked at with much disdain, the taboo surrounding borrowing has gradually diminished and businesses now feel comfortable approaching both their banks and alternative lenders.
Whilst attitudes towards commercial loans have changed for the better in the last decade, there is still a vast amount of businesses that refrain from borrowing and we have previously talked about how a fear of funding can hold a business back.
We conducted a study back in June to better understand the attitude of SMEs towards funding and our findings revealed that businesses are still somewhat reluctant to borrow money. Almost 7 out of 10 SMEs said they had not considered applying for business finance in the last 12 months, yet funding can make all the difference when it comes to a company beating the odds of surviving beyond the five year milestone.
1. You Have Zero Working Capital
Our research revealed that almost a third of SMEs listed a need for working capital and better cash flow as their motivation for a finance application. Running a business without access to working capital is almost impossible and if your SME relies on unpaid invoices to continue day-to-day operations, the future of your business might start to look murky very quickly if those payments are consistently late.
Sadly, there is a vast number of SMEs that have met their demise due to long payment terms issued to their customers and unpaid invoices. Struggling to make it from one month to another should not be a reality that the majority of businesses have to face at some point in their journey and accessing funding at a much earlier stage will enable you to take control of the future of your company.
Our invoice finance product is fantastic for businesses wanting to raise funding against their unpaid invoices. If you would prefer not to use residential or commercial property to secure your loan amount against, this funding product is a fantastic option as the money we provide is secured by an asset – your debtor book.
2. You Plan to Launch a New Product or Service
A fifth of the SMEs we surveyed had applied for finance to either launch a new product or service. SMEs often decided to branch out into other areas once they are established in their chosen sector. Whilst initially most businesses launch with the intention of offering a specific product or service in mind, with time, the same SMEs become far more adept at addressing other similar pain points for their target demographic.
Once you have successfully managed to provide a solution to your audience, it then becomes far easier to understand how you can help them with other needs they may have. Take for example a small vegan café serving lunch and dinner to its relatively limited market. That same café might be the only one of its kind for miles meaning it would make sense to cash in on being a unique provider to such a specific audience. From that the idea of selling various other products to address vegan needs would be born and as a result your business would benefit from launching new products or services.
However, your SME might not be in the position financially to afford that transition and it could be years before it has the money spare to explore doing so. Instead of clipping the wings of your business and holding it back from expanding into other markets, negotiate a commercial loan for your SME now and see what your small business can really achieve with the right resources at its disposal.
3. You’re Being Held Back from Growth Plans
Just over 25% of the 500 SMEs we gathered data on said they were motivated to access external funding to fund a business expansion in the UK, with a further 9% wanting to fund business expansion internationally.
You might have a business plan that you regularly refer to and through following the actions discussed on your business blueprint, you might have realised there is scope for growth for your SME. Whether you want to expand within the UK or test the ability of your business to succeed overseas, expansion is only ever possible if you have the cash in place to support those plans for growth.
Before you actually make moves to expand, you should first put together a detailed growth strategy. As part of that, the financial aspect involved with supporting that growth will need to be addressed and gaining external funding from either an alternative finance provider or your bank will allow you to tick that important step off your growth checklist sooner rather than later.
For more SME advice and tips, read our related posts below. If you are experiencing cash flow challenges or want to realise your business growth plans, get in touch with our team of Funding Specialists today on 020 7839 9451 or email [email protected].