If you already own a small business, or you’re thinking of setting one up this year, you’ll understand the importance of laying down the foundations which will go some way to securing success.
From obtaining funding, to ensuring you’re properly insured here we take a look at the bedrocks for business success.
The requirement for funding
The life of your venture will always depend on how much income you have coming in. Capital is essential for when you first start up, but you also need a constant stream of income in order to evolve and grow.
The traditional way of securing finance for small businesses has always been through the bank, but in the current economic climate this has become more problematic. Reluctance on the part of the banks to lend has resulted in high interest rates making it very difficult for prospective businesses to get off the ground. The Government is attempting to rectify this position through the Funding for Lending Scheme, but the power of lending still rests with the banks.
This has resulted in the emergence of more asset based finance options, such as invoice finance which includes either factoring or an invoice discounting service.
A full order book may appear to put your business in a healthy position; but it doesn’t always guarantee money in the bank. Waiting for your clients to pay can potentially restrict the ability of your business to grow, especially if they become insolvent or are struggling amidst the current economy. It’s essential to avoid bad debt.
Invoice finance negates this position by ensuring you receive an immediate payment of an agreed percentage of your invoices as soon as you issue them. You’ll receive the rest (minus a small admin fee) when your clients pay.
Choosing factoring solutions from Cashflow UK, you can also pass on your sales ledger management including the job of chasing your clients; leaving you with time to concentrate on your day to day operations. If you want to retain the control of chasing your clients yourself, invoice discounting may be your ideal option.
Whichever you choose, it may be the perfect way to ensure you have the security and financial bedrock to continue to build your business. What’s more, you’re not borrowing anything as all funds are secured against your existing assets.
Protecting your existing assets
The assets you already have may benefit you in terms of finance, but you also need to protect them fully.
Depending on the nature of your company and your assets you should look to various other forms of small business insurance. For example, public liability insurance is essential to protect the welfare of your clients and the general public when visiting your premises. Furthermore if your sphere of operation requires that you visit third party premises, you’ll be protected against any potential damage caused.
If your business involves providing services or advice to clients it’s invaluable to your future success to secure cover in the form of professional indemnity insurance, as this will protect you against any claim that you were negligent in the advice or services provided.
Whatever your business, it’s important to continue to grow and evolve; but this will only be possible with the right foundations in place.