Member Article

Tips on How to Secure Business Finance

There is a huge amount of data relating to the analysis of boom/ bust cycles in developed economies over the last 100 years that points to a process and time-frame for the recovery of our economy. The cycle from low government debt/ GDP and back to the same pre-recession point takes, on average, around ten years with personal/ GDP debt shrinking more quickly as recessions bite and people stop spending. It is only when personal spending has started again that recovery starts to take place. There is recognition though that governments must de-leverage in order to bring their economies under control again.

So far in the UK government debt has not yet begun to fall in real terms but consumer debt is falling so we are in the very early stages of recovery. The good news is that this a sign that the economy is following a well worn path. The bad news is that all the banks economists will be very aware of this process and will feel that right now credit quality is poor and consumer demand is weak.

Therefore it is not entirely an unfair comment when the banks say that they would like to lend more but that credit quality is just not good enough. In addition to this cycle the banks also have to contend with the Basel II and now Basel III capital adequacy regulations which require them to hold far greater amounts of cash than before. This is limiting their ability to lend and is actively discouraging any type of unsecured lending.

So there are macro-economic factors at work which you and I can do nothing about. There are however some key areas on which you can and should work to improve your chances of securing funding –

1) Your pitch. When you go to your bank or investor have you prepared your presentation? Have you worked with a friend or adviser to make it perfect? I always recommend that my clients rehearse and even roll play important presentations. It really helps to iron out problems and to identify possible questions. There is nothing quite like being prepared.

2) Your business plan. Your bank manager or investor probably has several potential propositions to look at and you need to give him or her an abiding reason to invest in you and your idea. The plan needs to be clear, concise and it needs to cover the main points without the need to refer to other sources of information. If you make life difficult for these busy people they will probably not ‘buy in’ and will move on to another client.

3) Know your bank/ investor. Your bank might have a specialism in a certain sector or type of business. For instance in York HSBC supports technology businesses through its’ involvement with York Science Park and Barclays has always supported manufacturers. If you find a bank which knows and likes your type of business they will be far more likely to be supportive. The same applies to investors and indeed is even more important as the investor may well also bring expertise which could help you improve your business.

Phil Dibbs

Managing Director

Hawkmoor Associates Limited

www.hawkmoorassociates.com

phil@hawkmoorassociates.com

www.twitter.com @hawkmoortweets

07866362333

This was posted in Bdaily's Members' News section by Phil Dibbs .