Funding v Cash-flow Management: How can you scale your business, without sacrificing equity?

Funding, it’s something we’re almost constantly talking about with clients and friends here at WIZZ&CO. From how to find it, to what taking funding could actually mean for your business, it continues to be a hot topic.

And it’s not hard to understand why! Almost all of the drivers behind wanting to seek funding are positive: Founders see the potential it has to help grow their business, to generate new customers or to create a contract with a major retailer. 

Often businesses can create sufficient turnover, but they still find themselves struggling in terms of cash flow. With nothing significant in the bank, they often believe that funding is the only way to grow their brand.

However, it isn’t always the answer! We have outlined what you need to know about funding and some quick solutions for a cash injection into your business without fund-raising and giving away equity.

CASH FLOW IS KING 

Any basic economics book will tell you that…

It’s through harnessing cash flow and learning how to maximise it that you can generate those new customers, order that stock, launch that new product line or take up that dream contract with a retailer. No fund raising necessary!

This is why we have curated two major finance partnerships to allow your business to thrive, sooner than you think.

DO YOU NEED CASH-FLOW TO FULFIL RETAILERS PURCHASE ORDERS?

Penny Freedom provides classic invoice factoring. If you have an agreement with a retailer, for example, but need cash to fulfil their order, or perhaps their payment terms are too long, then Penny Freedom can advance you cash, based on the value of the contract or purchase order.

Once your account has been set up, Penny can instantly advance money to your business and accelerate your cash flow by getting your invoices paid the same day you raise them. Once accepted there are no credit checks, no tie-ins, no personal guarantees...just funding without the drama. This can be exceptionally useful when a retailer partner’s terms can be 30-day or 60-days from delivery before payment to you, or when you need to commit to a significant stock increase in advance of sales and potential income.

COULD YOU DEVELOP YOUR ONLINE SALES FASTER IF YOU HAD MORE TO INVEST IN MARKETING?

YouLend provides innovative business funding, based on your sales. Simply get approved for a funding amount and the cash can be in your account within days! The repayment is simple: You pay based on your card sales via your card machine or website. A fixed percentage of each transaction is used to repay the advance. This percentage stays the same regardless, meaning you always repay proportionally with your cash flow.

Whether you’re expanding your team, investing in digital marketing, buying equipment, sourcing new stock or giving your cash flow a boost. Fast and flexible funding could help you take the next step more quickly than you ever imagined.

Click on the link below and YouLend will generate your no obligation quote. Complete the questions and once you have a quote, if you wish to proceed there is a separate contract acceptance stage. You are not at any risk of agreeing before fully understanding the costs involved.

WHAT YOU ACTUALLY NEED TO KNOW ABOUT FUNDING

In previous webinars we’ve discussed the various types of funding, and factors to consider if you think it might be the right way to go within your business. To make sure that you’re up to date, here’s a breakdown of the basics... 

1.FUNDING TAKES TIME 

All founders of businesses need to think about funding – most of the time. Above all, think about what you want and when you want it, BEFORE you actually need it. Sourcing funding takes time and effort. So one of the best things you can do is to plan well in advance!

2. THERE ARE MULTIPLE TYPES OF FUNDING

  • Self-funded

  • Friends and family

  • Bank loans

  • Angel

  • Crowd-funding

  • Series 1, 2 and 3

  • Private Equity/Venture Capital

  • IPO 

Make sure you understand each of these, so that you can assess which is best for you and your business.

3. YOU NEED TO UNDERSTAND SHAREHOLDING/EQUITY AND DILUTION OF SHARE-HOLDING 

Before you take the plunge, know how much equity you want to be giving away and for what investment. Really consider the long-term implications of these figures: Will your share and those of investors dilute in future investment rounds?

4. THERE ARE CERTAIN THINGS INVESTORS WANT TO SEE 

  • A pitch pack, investigation, and proof of your business. Essentially, a believable business plan! 

  • Your due diligence process, demonstrating that the offer is real 

  • Validation of your business: PR – editorial and not advertorial, well-known retailers, customer numbers and, importantly, customer engagement

5. THERE ARE SOME THINGS TO CONSIDER, WHATEVER THE TYPE OF INVESTMENT 

  • What are you offering (equity)? How will it split as you generate more investment? How will you exit/generate pay-outs for investors? 

  • How do you protect enough for yourself and the founding team? What are market expectations as you go through the funding process/es? 

  • What do investors expect in terms of things like equity, earnings, approach and attitude? What are they looking for to be able to decide to invest in you and your business? 

  • What are you going to spend the money on?! 


WANT TO SEE IF CASH FLOW COULD BE THE ANSWER YOU’RE LOOKING FOR?

Cash-flow could mitigate your perceived need for funding, to help you grow your business. Read more about our finance partnerships and why we created them:

Funding your businessWizz Selvey