I was talking to a friend the other day; getting the right business finance is hard. With so many loan products on offer, how do you go about selecting a product that is right for your business? Is it the bank or financial institution and their reputation, or perhaps it's the features you look for (e.g. overdraft, line of credit)? Are there other considerations or experiences you've had that we should know about?
This is a complex question to answer as the solution is highly dependent on your situation. i.e. do you have a residential/commercial property that you are willing to use as security? Are you looking for working capital facility, or trade finance facility to buy stock, invoice financing facility to manage cashflow, or are you looking to secure a business loan to buy an existing business? In addition, there are many different policies and niches at each bank/lender on what type of loans they are willing to give out to SMEs. The number one key to secure financing on competitive terms and rates is to be able to match your individual circumstances with a bank that has the risk appetite to lend to you for your business needs. The second most important thing to consider is how to present yourself to the bank/lender, the same set of information can be presented in different ways and yield vastly different results.
At the end of the day, it's always good to speak to a professional about securing business loan as they are vastly more complex than a residential homeloan and banks/lenders have significant discretion on whether they are willing to provide the loan or not, so it's not a matter of ticking the boxes and putting in an application form, a lot of care and finesse needs to go into the application to ensure financing can be secured competitively.
If you are selling higher value items to clients you may want to consider offering your clients finance.
One small business I know sells thongs (yes - shoes) to small retailers and offers 6 months interest free finance for their stock while getting paid the very next day and not wearing the risk of factoring (where you still own the debt after three months). This allows him to win a lot of new business and get stock on shelves without owning the finance risk.
Try Scott McNally at ASM Money 0438 680 898 and use my name as an introduction or email me and I can send over more details
Mick, I agree with Jef and Adrienne, may I also suggest some entrepreneurial pitch meet ups in your area. This can be a great place to get your pitch right and to uncover any objections, issues or scenrios you may not yet have discovered. Good Luck!
There is an international not-for-profti organisation for entrepreneurs - TIE International.
This organisation is normally run by investors and "angels" - these are the types of people who are on the committee to run the TIE group.
I have been a member of TIE Sydney - they run all sorts of networking events, advisory groups, 1:1 mentoring. They run a fabulous "Pitching " competition and go through how to structure a pitch when looking for capital from investors. The winner of this pitching competition goes to Silicon Valley and pitches with the other international competitors.
TIE International members - from the investors side - help startups with information, they are also there looking for great ideas. Associating with this group can really help from an information viewpoint, meeting with investors and talking with them about how to source funding and basically networking - you never know who is in the room that might be interested in your idea.
Learning from investors who have been there, is really valuable. Look for your local TIE International chapter or for Startup networking groups - there will be investors in the room.
Jef Lippiatt, Owner at Startup Chucktown
Each bank may have their own requirements but there are some key pieces of information that you'll do well to include.
That is, when you business is still an idea in formation (as ours is) how far ahead should I approach people for money? What should I have done, and put in place before it's a good idea to connect with potential investors?
Neil Steggall, Partner at Wardour Capital Partners
I would suggest that the issue of investor funding and your required levels of future equity should form a key part of your initial business thinking, planning and strategy and be detailed and factored into your plan and budgets.
Waiting until investor funds are needed is usually too late and the business risks stalling or failing.
Most investors are happy to be approached at an early stage of thinking, they have much to gain by investing in a winning idea and so they will most likely be prepared to offer help in developing your plans, speaking to banks and even bringing along other investors.
Early stage investors also make great business mentors or advisory board members often bringing on board many years of experience and knowledge.
Look at it this way....would you jump in your car and set off on a lengthy road trip without first checking you had the fuel and cash to complete the journey?
Jessica McGrath, Marketing Consultant at Stoke Marketing
Not a definitive time but think like the investor.
What value would they like to see in your product to make it worthy of investment? Have you got "skin in the game". Show how much effort? What are the $ for? What makes your product different and appealing to gain traction in the community. Show them this and either the tangible product or a prototype, or the service offering at the least. Show them what problem you are solving and why it's an awesome and compelling solution. Who are you competing against. If no competition, then why would someone want your solution if they are existing with no solution at all. When is a return on investment likely? What's your forecasted uptake? How did you work that out?
Just some thoughts.
Best of luck!
If a person or company has designed and created a new product (not tech) and needs to aquire funding to manufacture and launch to market. What are the best avenues for the start up to approach?
Jef Lippiatt, Owner at Startup Chucktown
I would suggest looking into crowdfunding websites such as Kickstarter, Indiegogo or others. They can be great places not only to gain funding for your product, but also to validate that you have correctly positioned your product and that the market is reacting favorably to a product that isn't even available yet.
You will need to think hard about a launch strategy as well as what type of rewards you're willing to setup at the different tier levels, but all of that can set you up for a successful campaign. Also clearly explaining or demoing the product in a video can really increase the audience understanding and value proposition of the product.
I would also recommend that if you are interested in pursuing this avenue, that you browse the different platforms to find out which one is bet suited to your product, as well as research some successfully funded campaigns and see what you can learn from them to apply to your own.
As a small and new business part of what I do requires a software product that I pay for at moment. I want to finance the software and stretch it out of a few years instead of the payment plan of 12 months that I am on now, has anyone had any experience in getting software finance and what are the best ways to approach getting it? Is there any finance companies that specialise in software finance?
I use ASM who offer awesome finance solutions for small businesses. No worries with software rental - as long as it is under $50,000
Scott McNally 0438 680 898 and mention my name.
Phil Joel, Director at SavvySME
Shaun, what I know is that many large software / hardware companies such as Microsoft, Oracle, Intel, etc can potentially offer financing to their customers if the solution includes their products. Your product appear to be very specialised so somebody like Flexirent is unlikely going finance it.
I did find this other link which could be worth investigating: