What key points should business owners think about when prepping their accounts?
Accounts should be both a factual document – prepared in accordance with the relevant legislation (eg if a company, then the relevant Companies Acts) – and a sales document. If the accounts show a poor result due to the loss of a key customer, say so, but explain how this is being overcome.
What do finance providers look for when deciding whether to provide funding?
Finance providers need to understand firstly why you need the money, how it is going to be spent, what contribution you and the company are making and most importantly how they will be paid back and over what period.
What do you think is the best form of finance and why?
This really depends what you need the money for:
- If it is to buy a piece of equipment that is going to be used in the business then consider a medium term loan/hire purchase.
- If it is to fund a growing business, to buy stock, fund trade creditors, etc, an overdraft or even invoice discounting or factoring might be the most suitable option.
- If it is to develop a building project, then project finance that can be drawn down at key stages of the project should be considered.
- If you are undercapitalised, maybe a medium-term investor.
What should your business plan include when seeking finance?
Your business plan should set out the following:
- What the company does.
- Who owns the company and what are their expectations.
- Who runs the company and what is their experience and loyalty.
- Who are the company’s main competitors – why are you better/how will you become better/get a larger share of the market.
- What are the historical financial results of the company.
- What are the projected financial results of the company.
- How are you going to get there (ie if by more sales - how are you going to get these extra sales?).
- What could go wrong and what would be the effect if it did and how are you planning to minimise this risk?
You must do this yourself – it is a hard soul-searching exercise but by the end of it you will know your business in more detail and, in particular, you’ll understand its strengths, weaknesses and their trigger points.
Blog supplied by Carol Cheesman, Principal of London-based Cheesmans Accountants.