Raising Business Finance - Common Mistakes Sourcing
Funds
September 2005
Martin Shearwood, managing
director of Wolverhampton based MJS Business Finance
looks at the common mistakes made by business owners
looking to source funds.
Raising business finance
is never a simple process. Whether you are setting up
a new business, expanding your company or facing financial
difficulties, there are certain mistakes which get made
again and again.
In today’s business
environment, turning to business finance is now more
popular than ever and there are more and more choices
available. Invoice discounting and factoring are on
their way up so now is the time for owners and mangers
to get to grips with how to source finance quickly and
efficiently.
In my experience most
problems can be traced back to one cause, the fact that
businesses do not involve the finance company early
enough. Often the company will decide it needs some
equipment, premises or services, an order will be placed
and only then does anyone realise that do not have the
necessary funds. The company then has limited options
and a limited choice of finance because there’s
not time to find the best deal.
This can result in hire
purchase being chosen, however even for those who are
not in a rush, HP is still one of the most common choices.
Don’t forget there are many alternatives available,
and if you plan ahead this will give you time to look
at the alternatives which could offer a better deal
than HP.
Business owners, managers
and MDs are of course busy people, and will therefore
usually take the line of resistance with many business
decisions. Business finance is no exception, but the
easy route can often lead to you paying more.
It’s important to
remember even before you consider sourcing business
finance that it’s a complicated area, even for
an experienced business person. And for those new to
this side of business it can be particularly daunting
and confusing. You could find yourself being bombarded
with jargon and interest rates by finance companies
or banks. This stops you from getting the full story.
Not understanding the
terms or failing to read the small print is of course
a problem in all areas of life. Documents and contracts
should be checked thoroughly and compared with other
offers available. This avoids any fees or conditions
being missed.
At MJS we meet many business
people who have already been down one or all of these
routes before finding help. However in their defence
they are, like all business people, very busy and keen
to resolve problems as quickly as possible. Despite
this it is possible that the business finance process
can run much more smoothly if people come to us before
taking any action. Even an informal chat can point you
in the right direction and help you avoid many of these
common mistakes.
Of course the best way
to avoid any mistakes is to hand the whole process over
to the experts.
In today’s market
using an independent business finance company is more
popular than ever. Businesses are happy to outsource
as many functions as possible. A business finance company
will do all the background work for you, find the right
deals and read the small print, leaving you to simply
choose the option that suits you best.
MJS’s business finance
services cover the full range of funding requirements
from cars, commercial vehicles, plant and machinery,
to IT and property, including commercial and buy to
let. In addition, MJS can assist with the placing of
working capital facilities such as overdrafts, factoring
and confidential invoice discounting, as well as looking
at other forms of available business funding.
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