For many businesses, growth is the goal. A new vehicle, additional equipment, more stock, larger premises or extra staff can all create opportunities to take a business to the next level. Growth also requires careful financial planning.
From my perspective with over 30 years in Banking & Finance, one of the most overlooked assets a business owner has is a good relationship with their bank or lender. Too often, finance is considered only when the money is urgently needed. By then, options can be limited.
A better approach is to start the conversation before the funding is required. If you are planning to expand, understand what the project will cost, how it will be funded and how the additional debt will be repaid. A lender will generally want to understand the business’s income, expenses, debts, cash flow and growth plan.
Good financial records are particularly important. Up-to-date financial statements, tax returns, management accounts and realistic cash-flow forecasts can help demonstrate that the business is well managed and that the proposed borrowing is affordable.
It is also worth reviewing existing finance. Interest rates and lending products change, and a business with a strong repayment history may be in a position to negotiate better terms or compare alternatives. The cheapest rate is not always the best solution, however. Loan structure, flexibility, security requirements and terms are critical.
Equipment may suit asset finance, while working-capital requirements may need a different facility. Buying property is another proposition again.
Don’t wait until you need money to talk to your lender. Planning ahead gives you time to plan and get things in order.
For a growing western Sydney business, good finance planning can turn an ambitious idea into a practical growth strategy.