Back to basics ñ funding your business

With almost a third (29%) of entrepreneurs willing to risk borrowing from their joint savings account to keep their business afloat, rather than securing adequate long term provisions*, specialist cash flow solutions provider Bibby Financial Services is urging budding entrepreneurs in the recruitment industry to consider their long term financial plans.

Bibby Financial Services spokesperson Edward Rimmer, said: ìBusinesses need to think long and hard about securing funding for growth. Exploring alternative finance options and reducing operating costs where possible are the first steps to long-term business success whereas relying on personal finances is often a risky short term strategy.î

To help owners and managers improve their chance of success, Bibby Financial Services has developed the following top tips:

Reduce your operating costs ñ carry out a full review of where your business spends its money. Can you cut back on any expenses without having a negative effect on profits?

Talk to suppliers ñ are you paying too much for supplies? Ask for discounts or better rates especially if you are purchasing large volumes of goods on a regular basis

Buy in bulk ñ consider buying in bulk at a cheaper per unit price. This can help increase profit margins, although it will require committing larger amounts of cash upfront

Ask the experts ñ seek external expert advice from an independent source. But remember to choose carefully ñ it is imperative that you select someone who appreciates your needs and understands which direction you want the business to go in. Advice from a third party can also act as a ìsense checkî and stop any rash decisions being made

Consider finance options ñ in the short term, bank loans and overdrafts can be useful sources of finance, but the latter can be withdrawn at short notice, leaving a funding gap. Consider more flexible sources of finance, such as invoice finance, which allows a business to unlock funds tied up in unpaid invoices, leading to an immediate injection of cash. And, as the business grows, so does the amount of funding available.

Involve funders from the outset ñ involving your funders in the planning process means you can work together to ensure the right deal at the right price

Communicateñ once funds are successfully secured and borrowed; invite the lenders to see how their money has been used. This generates confidence and trust, making future requests for funding a much smoother process

Rimmer concluded: ìGoing back to basics with finance, and investigating all the options carefully to ensure the right solution is sought at the outset, will not only to help bring insolvency statistics down, but improve the health of the UK business nation.î