If you’re planning to found a new business, you’ll need enough startup capital to get this venture off the ground.

And once you’re up and running, you’ll need additional business finance and investment at each stage of your growth and expansion along the business journey.

But where does this business funding come from? And what are the best routes for accessing the finance you need to bring your business plans to life?

Five way to access the right funding

There are multiple routes to funding, and many specialist types of finance that cater to a specific industry or a particular business type. However, it’s always a good idea to understand the funding fundamentals and the options they offer for your business.

We’ve summarized five different funding routes that are worth considering:

1. Bank loans and overdrafts

Traditionally, your bank was the go-to place for business funding. Taking out a business loan allows you to pay back the loan over an agreed period, and in easy installments. Extending your business overdraft can give you more credit to play with. But in recent times, banks have become more reticent to lend and will need cast-iron evidence of your ability to repay any agreed loan or overdraft.

• • • Pros: Large sums of money can be borrowed
    • Cons: Strict lending criteria and may require collateral

2. Private investors

Getting high-net-worth individuals to invest in businesses is another well-worn path to funding. Private investors can be a great source of funding if your business is unable to qualify for a bank loan or needs a large amount of funding quickly. However, investors will usually expect shares in the business and some form of control over the direction and running of the company. Shrewd investors will also want a guaranteed return on their investment (ROI).

• • •  Pros: Can provide large sums of funding and more flexible criteria than banks
    •  Cons: Can be difficult to find private investors and they will expect good ROI

3. Business loan providers and niche industry lenders

There are many lenders that specialize in providing loans to businesses in specific sectors, or at particular points in the business journey. These lenders may have less stringent lending criteria than the main high street banks and can offer more flexible repayment terms. If you’re trading in a niche and need money quickly, these lenders are well worth adding to the mix.

• • • Pros: Less stringent lending criteria than banks and flexible repayments
    • Cons: Interest rates may be higher than bank loans and collateral may be needed against your loan

4. R&D tax credits

R&D tax credits are government incentives that can help you offset the cost of your company’s research and development activities. R&D tax credits can be a valuable source of funding for businesses that are developing new products or services and will help to cut your corporation tax bill – savings that can then be reinvested back into the business.

• • • Pros: Offsets the cost of R&D activities and can be claimed retrospectively
    • Cons: The application process can be complex and time-consuming

5. Government loans and tax incentives

There are a huge range of government loans, enterprise incentives, grants and tax incentives available to your businesses. These funding options can be used for a variety of purposes, such as starting a new business, expanding an existing business or creating jobs. Each country and territory will have its own specific government incentives, so it’s worth doing your own research, or working closely with your advisers to find the most suitable loans, grants and incentives in your particular area.

• • • Pros: Provides a valuable source of funding, and (if you meet the criteria) some grants may not require repayment
    • Cons: Criteria must be met in full and the application process can sometimes be complex and time-consuming

Talk to us about setting up your funding strategy

Whatever point you’re at in the business journey, there’s real value in having a clear funding strategy set up and agreed for your business. The right routes to funding will depend on your business goals, your ability to make repayments and whether your sector is classed as high or low risk. But having a funding strategy in place really is an essential element of your planning.

As your adviser, we can run you through the funding options available to you, with industry-specific advice on the most practical and effective routes to finance.

The following content was originally published by BOMA. We have updated some of this article for our readers.

For your business to make money, you need to generate revenue.

You produce revenue through your usual business activity, by making sales, getting your invoices paid, or taking cash from paying customers. So, the better you are at selling your products/services and bringing money into the business, the higher your revenue levels will be.

But what actually drives these revenue levels? And how do you get in control of these drivers?

Knowing where your cash is coming from is more crucial than ever

As a trading company, you face the multiple challenges of a global recession, an increase in online consumer buying and a ‘new normal’ when it comes to trading, markets and buying expectations. The better you can understand the nature of your revenue and its drivers, the more you can flex, manage and control your ability to generate this income.

This helps your medium to long-term strategic thinking, and your decision-making, allowing you to be confident that you’re focusing on the business areas that deliver maximum revenue.

Import areas to consider will include:

• • Revenue channels – where does your revenue actually come from? Do you create income from online sales and ecommerce, through retail sales in bricks and mortar stores, or through wholesales to other businesses? You may focus on just one of these channels, or it could be that you use a mixture of two, three or more.
  • Revenue streams – your total revenue will be made up of a number of different ‘streams’ So, you might be a coffee shop, whose revenue streams include coffee sales, cake and pastry sales and lunch sales. Knowing which revenue streams you rely on, which are most productive and what return they are delivering allows you to make decisions. If 80% of your income comes from 20% of your products, perhaps you need to tighten up your product range and ditch some of the poor sellers. If you’re selling more services to one particular industry, perhaps you should focus more marketing in this specific niche, or downscale your sales activity in less profitable niches.
  • Product/service split – Do you know which products/services are the most profitable in the business? Which products/services have been resilient to market changes (giving you some revenue stability) and which have adapted well to change? The more you can dive into your metrics and find the most productive and adaptable products and services, the greater your ability is to provide constant and evolving revenue for the business.
  • Value vs volume – Is your revenue based on selling a high volume of products/services at low margin, or low volume at a high margin? Based on this, can you move your margin down to create a more attractive price point (and more value for customers)? Or are their ways to push volume up, shifting more units and boosting total revenue? By diversifying into new channels, new streams or new products/services you can aim to balance value and volume to create brand new sales – and higher revenue levels.

Talk to us about exploring your revenue drivers

If you want to boost revenue and increase your overall profitability, come and talk to us. We’ll review the numbers in your business, help you to understand your revenue drivers and will give you proactive advice on enhancing your total revenue as a company.

Get in touch to kickstart your revenue generation.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Getting your head around the basics of bookkeeping, accounting and good financial practice may not come naturally to all business owners.

But the better you understand the numbers, the more control you’ll have over your business and your decision-making.

To get you started, here’s a rundown of some of the main financial terms and how they apply to the financial management of your startup.

Revenue and money coming into the business

Most of us understand that revenue is the income you generate through your sales. If you multiply your average sale price by the number of units sold, this is the top level number you get. It’s a gross figure (i.e. before any deductions) and gives you a clear idea of how much money the business is generating through its sales activity.

Revenue can come from various sources, and each income source is known as a ‘revenue stream’. Revenue streams could include product sales, income from services you provide, income from intellectual property you own (like patents) or income from assets the business owns, like property you rent out at a profit.

Having several revenue streams is a good idea, as it spreads your income generation across multiple areas and reduces the risk of one revenue stream drying up.

Expenditure and money going out of the business

Expenditure refers to any payments you make (either in cash or credit) against the purchase of goods and/or services. In a nutshell, expenditure is the money that’s going OUT of the business, so it’s important to have a good grip on these costs and to make sure you’re not spending any more money than you need to.

Costs that would fall under expenses include your supplier bills, your payroll expenses, your operational overheads and the costs of any raw materials and goods you buy to keep the business running. The less you pay out in these expenses and overheads, the more of your revenue will end up as profit – as we’ll see in the next section.

Profit and loss (P&L)

Your profit and loss statement (usually referred to as your P&L) is an incredibly important financial report to get your head around. The P&L summarizes your revenues and expenditure over the course of a period – usually for the month, quarter or year that’s just ended – and gives you a breakdown of the profits and losses the business made during that period.

If you make more in sales revenues than you spend in outgoing expenses, you make a profit (and that’s vital to your success). For any business to be financially viable, your financial model MUST be able to generate profit. Without profits, the business can’t make money, you can’t reinvest back into the company to drive growth, and you (personally) won’t get paid anything.

Cashflow statements and positive cashflow

Your cashflow statement is another vital tool in your accounting toolbox. To keep the lights on in the business, you need enough available cash to cover your everyday expenses. Your cashflow statement shows you the cash inflows (money coming into the business from revenues etc.) alongside the cash outflows (payments to suppliers, or operational overheads etc).

For the business to have enough cash in the pot, your cash inflows MUST outweigh your cash outflows. This is called being in a ‘positive cashflow position’ and it’s a level of financial health that every startup should aim for. By tracking inflows and outflows, and projecting them forwards in time to create forecasts, you can make sure there’s always available cash in the business.

Improving your understanding of the numbers

It takes time to pick up the financial jargon and accounting terms that will help you understand your accounts. But don’t despair: as your startup journey evolves you’ll gradually begin to get your head around the important numbers, metrics and reports.

Other important finance terms to understand include

• • Turnover = the total sales revenue made in a period. It’s also sometimes called ‘gross revenue’, as it’s the number prior to any deductions being made.
  • Assets = the things you own in the business, like equipment, property or cash etc.
  • Liabilities = the things you owe to other people, like bills, debts and loan repayments.
  • Balance sheet = a snapshot of your assets and liabilities on a given date.
  • Working capital = your current assets minus your liabilities. In common usage, it’s the capital (money) you have in the business to keep the company operational and trading.
  • Funding = bringing additional capital into the business, usually in the form of business finance products like loans, or through private investment from outside sources.
  • Credit score = a rating given to the financial health and risk level of the business. The bigger the score, the lower the risk – and the better your access to funding.

Talk to us about business planning

If you’re planning for your business, please do get in touch. We’ll help you set up the ideal accounting system, so you’re in complete control of your finances.

Talk to us about your new business.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Getting ready for an audit is unlikely to be one of your favorite things to do as a business owner.

But being prepared, organized and ready can take some of the pain out of an audit.

Planning for your audit helps your auditor get their job done more quickly, and also means there’s minimal disruption to your staff and business during the process.

Let’s take a look at five key ways to be ready for an audit.

Carrying out an audit of your business finances is a mandatory requirement for many companies. The rules and regulations will vary depending on the territory you trade in, but once you’re over a certain threshold for turnover or number of employees, an audit is likely to become a legal requirement. So, what can you do to make this process less of a hassle?

In advance of the audit date, be sure to:

• • Gather all the relevant documentation – this documentation will include financial statements, bank statements, expenses, management information and any other documentation that your auditor is likely to ask you for.
  • Organize your documentation in a logical way – the whole audit will be far easier to complete if your financial data and documentation is well-organized. Make it simple for the auditors to find what they need, and ensure there’s easy access to all information.
  • Identify any potential financial issues – the last thing you want is a giant problem coming up in the middle of your audit. So, it’s a good idea to check for any financial issues or irregularities that the auditor may flag up. Doing this well in advance gives you enough time to address any issues and resolve them before the audit begins.
  • Be prepared to answer questions – it’s likely your auditor will want to ask some probing questions about your business and financial records. Make sure you’re up to speed with your accounts and be prepared to answer these questions honestly.
  • Cooperate with your auditor – the auditor’s job is to ensure that your financial statements are accurate and that your business is in compliance with all applicable regulations. This will be much easier to do if you cooperate with them, answer their questions with good grace and quickly provide them with any information they need.

Talk to us about getting audit-ready

If you’re thinking that your company finances might not be quite ‘audit-ready’, you’re definitely not alone. Many businesses are not quite as organized with their financial management as they’d like to be. But don’t worry, help is at hand!

If you’d like some assistance with reviewing the health and organization of your financial processes, we can help you get in control of your finances

Get in touch to review your financial management.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Running an online business has become a reality for a huge number of business owners in recent years. There are an estimated 12 million-24 million eCommerce sites across the globe and those numbers have risen sharply since the pandemic. But although online shopping may be convenient, there’s still a real desire for physical shops and in-person retail.

So, if you’ve been running a successful eCommerce business or online side hustle, should you be thinking about getting yourself a brick-and-mortar retail space?

Let’s take a look at the core reasons why a physical space might be right for you.

Why move from online to bricks and mortar?

In short, it’s about one key thing: face-to-face selling to your customers. Yes, people can buy your products online, but in a retail space they can see the products with their own eyes, pick them up, get hands-on demo and generally get to know the things you produce.

There’s also the invaluable relationship-building advantage of having you and your team members on hand to ask questions. People buy from people, and you’ll build a much stronger seller/consumer bond when you’re both in the same room at the same time.

So, having that retail space has many tangible advantages over online. But there are also several key differences to running an online shop and a physical store.

Seven ways to successfully turn your online business into a physical store

One of the big attractions of running an online business are the simplicity, minimal hardware and low operating costs involved. Opening a physical retail store is a very different story and will mean you reassessing your strategy, promotion and operational budgets.

So, what are the big considerations before you take on that new retail space? And what can you do to make this transition as smooth as possible.

To get started:

1. 1. Define your core audience – it’s important to know your audience and how these existing customers might be transitioned over into a real-world audience. Look at your sales stats and CRM data to work out where your customers live, how much you can expect to sell in a quarter and where the best locations for a store might be.
   2. Know what your customers want – think about surveying your existing customer base to ask if a) they are interested in a physical store b) what products they’d love you to sell in the store and c) what they would want from their in-store customer experience.
   3. Decide on a retail location – location is vital, so think hard about where you open your first store. It’s sensible to locate your retail space in a town where you already have an existing online customer base and where footfall is good. But you also need a location where rent/rates are cost-effective enough for you to run the store with a profit.
   4. Define your in-store product range – the limitations of physical retail space won’t allow you to sell every item in your online store. Instead, you’ll need to decide on a core product range for the store, one that highlights all your best-loved items. Remember, this is a literal shop window for selling your business, so think carefully about what you stock.
   5. Rent or buy a property – in most cases, leasing an existing retail space and becoming a business tenant is your best bet when starting out. This will kickstart your real-world presence, but it’s sensible to aim for ownership of a property at some point in your journey. Ownership gives you the freedom to redesign and rebuild the space as you want, and the property will also become an asset on your balance sheet.
   6. Work out your costs and budget – as we’ve already mentioned, running a physical retail space can be much more expensive than going the eCommerce route. It’s vital to work out all your monthly overheads and to forecast your predicted sales and revenue. This allows you to work out if you can run the store in a profitable way, and where slimming down your costs and overheads will keep you on budget.
   7. Consider all expenses – don’t forget to include essential expenses in your costings and budget. Remember to include costs like business rates on the store, utility bills like electricity, gas, phone and internet and the extra public liability insurance you’ll need to run a physical shop and keep your customers safe.

Talk to us about setting up your bricks-and-mortar store

Making the switch from online retailer to real-world retailer is a BIG step.

There are plenty more operational areas to think about and your costs and overheads will become a lot more complex. But, opening your first store could well be the start of a brand new chapter in the growth and success of your business.

If you’re looking to make the jump into a bricks-and-mortar store, do come and talk to us.

The following content was originally published by BOMA. We have updated some of this article for our readers.