How to achieve sustainable growth
The key to a successful developing business is growth. As an SME you must constantly be weighing up your options, seeking out the fertile grounds for your business to establish itself and tap into new markets. The one thing that we as SME owners must not do is allow our business to become stale and experience a declining rate of growth. However, whilst focusing on achieving our current targets, what we must also consider is what lies ahead. For many SME businesses, the aftermath of a recent growth period can be the most trying. You may have expanded into new areas, added extensions or grown your customer base, but as tempting as it may be you can’t afford to relax. Following a period of growth, what many SMEs tend to experience is uncontrolled spending and a lack of direction. This needs to change. Taking back control Despite the UK’s current economic climate, SME owners are still eager to grow their businesses into new areas which is, undoubtedly, brilliant news. However, what we must be careful of is running before we can walk. Growth must be calculated and measured, simply growing for growth’s sake can be a risk that can easily cause problems later. If you’re considering expanding your business, consult your business plan first. Given your business’s current situation, you need to analyse your business plan carefully. Is it up to date and relevant? Is your business moving in a new direction and, if so, is it one you’re happy with? But most of all, how do you intend to maintain your business’s standing? In some ways, growing a business is like scaling the side of a steep mountain. You’re constantly having to find your footing, making sure your grip is both tight and secure. Moving up without a plan or before you’re ready puts you at risk of slipping. In business, expanding before you’re ready can put your business’s finances under a critical amount of strain. If you were to open a second branch in another location before the first is in profit or in a decent condition, you’re going to find management extremely difficult. You’ll have to pay more for increased inventory, staff wages, tax, energy bills and so on. Add to that the reality that you’ll be constantly having to travel between two location and you’ll have a situation where you’re uncontrollably wasting time and huge amounts of cash. One of the most common reasons for this is a lack of funding. Despite the vast amount of funding opportunities available, there are still many business owners who are intent on only using their own capital to expand. By doing so, you’re depriving yourself of the cash that you’ll need for reinforcing your position. If your cash flow isn’t strong enough, or your customer base isn’t reliable, you need to address why that may be first. The best time to expand your business The best time to expand depends on your business’s conditions. Growth isn’t just about opening branches or wanting a large workforce just for the grandeur, it’s also about preparing the foundations and key engines for further growth. If you’re adamant about expanding into a new location, preparation is essential. Typically your business must have at least 6 consecutive months of consistent profits that aren’t the result of a seasonal trend. However, expanding into a new location is a big step, so why not investigate other options first? There are so many ways you can grow your business and in a sustainable manner. Some of these include adding more equipment or staff in order to better cope with customer demand, marketing to grow your customer base, refurbishments for adding appeal and so on. When considering growth, the only boundaries that exist are your imagination and your funding. Growth Finance: When considering growing your business in a sustainable manner, Growth Finance can be a crucial pillar of support. Growth Finance is a fully customisable alternative finance package designed to help fund all manner of growth projects. To fully support your business, Growth Finance uses a diverse assortment of business loans in order to give you a lump sum or release equity in order to help fund growth projects. Business loans: Business Loans are an excellent way of acquiring a lump sum or cash injection for your business and can be used in any way you see fit. Loans are typically either Secured or Unsecured and come as short or long-term solutions that last between 1-3 years or 3-6 years and beyond. Throughout the term, you will be required to make fixed monthly repayments, plus interest. Repayments are calculated using: capital, term length and interest. With an Unsecured loan, your business could gain a sum in the region of £5,000 to £250,000. Should your business fall behind in making repayments, lenders can’t seize assets. However, it would affect your credit score making it harder and more expensive to secure finance in the future. On the other hand, a Secured loan can grant you access to a larger sum ranging between £5,000 to as much as £1,000,000. However, should you fail to keep up with the fixed monthly repayments, the lender can seize assets to recover the remaining amount. Asset Refinance: Asset Refinance allows you to unlock the value tied up in any of your existing and unencumbered assets, enabling you to receive a lump sum on the back of them. This is a great way to raise cash for your business without relying on your bank, allowing you to purchase new equipment and fund a wide variety of business growth projects. Technically a type of Secured loan agreement, as the funder takes security in the assets, terms can typically range up to 5 years, during which you will be required to complete fixed monthly repayments, plus interest. As such, should you fall behind in making fixed monthly repayments the finance lender can seize the assets in order to recover the remaining costs. At the end of the term, and once the finance has been fully repaid, ownership of the asset is returned to you. Our values are simple – We’re on your side. At Rangewell, our services are clear and transparent. We support a wide range of SME businesses of every shape and size, for finding every type of finance. Follow us on Twitter and LinkedIn for business tips and tricks, and feel free to call us on 0203 637 2340 if you’d like to chat about what we can do for you.
Choosing a business loan
Finance is a vital part of ensuring you have the necessary funds in place ready for when you need them most. When it comes acquiring finance, a popular option among business owners alike is the trusty business loan. However, loans tend to come either secured or unsecured, offering short or long-term repayment schemes. In order for you to acquire the most befitting loan solution, it’s vital that you understand how they function. With Rangewell, our services can help source the perfect business loan for your individual needs, ranging from £5,000 to as much as £1,000,000 – for you to use in whichever way you see fit. If you’re seeking a business loan, there are two questions you need to ask yourself first: How much do you need to borrow? How long do you need the money for? Term loans When we discuss ‘Terms’, what we’re essentially discussing is the duration of the repayment scheme. Short-term loans usually consist of a repayment scheme lasting between 1 and 3 years. Meanwhile, with long-term loans, the repayment scheme can last from 3 years and beyond. Secured and Unsecured Loans When we talk about secured or unsecured products, what we’re actually referring to is whether or not assets will need to be set aside as security. Offering up security gives lenders a confidence boost, especially when dealing with larger sums. Should your business become unable to repay the product, lenders can acquire the right to seize assets. On the other hand, with unsecured products, security is not offered so lenders can’t seize assets should calamity strike. Instead, lenders may ask you to sign an agreement stating your intention to adhere and comply with the repayment scheme, as a goodwill gesture. However, failure to repay will affect your credit score and make it harder for you to acquire finance in the future. Due to the nature of this type of product, it’s usually offered to well-established businesses with a proven track record and a reliable stream of customers. Personal Loan Agreement Sometimes when applying for a business loan you may not always be able to secure the sums you need. In order to secure a higher sum and boost the lender’s confidence, you can offer to sign a Personal Agreement. But keep in mind, should your business fail, the lender could pursue you personally in the courts for the missing sums. Our values are simple – We’re on your side At Rangewell, our services are clear and transparent. We support a wide range of SME businesses of every shape and size, for finding every type of finance. Follow us on Twitter and LinkedIn for business tips and tricks, and feel free to call us on 0203 637 2340 if you’d like to chat about what we can do for you.
Finance Guide: Term Loans
A Term Loan is a loan provided to a business for a fixed amount over a fixed (term) period. Simply put, this type of loan is similar to the classic bank loan, and the security of the loan is based on an assessment of a company’s financial standing and history. A Term Loan will usually have a fixed interest rate and scheduled maturity date, with monthly repayments. How long is a Term Loan? This type of loan can be provided by a variety of lenders to meet a variety of business needs. The common thread to all is having a fixed term agreed between lender and borrower, which can be anywhere between 3 months and 10 years. A Term Loan, although generic in title, should not be confused with other types of loan that also have a fixed term such as Hire Purchase or Invoice Finance. These have different characteristics – please click here to see more information on these asset types. Once the funds have been secured they can be used for any reason within the business. Making sure you have the right finance for your business is complex and can often be confusing. There are so many options that can seem very similar, but which when reviewed closely can be very different in terms of monthly payments, overall costs, up-front fees and terms and conditions. If you’d like to talk to one of our Business Finance Specialists: Call us on 020 3637 2455 Or email us on [email protected]