Ten reasons your business could benefit from access to finance

From expanding into new markets to launching new products, having the right finance available to grow your business is key.

Having the finance your business needs may significantly impact the business’ success.

Businesses can face multiple scenarios that could need a finance injection to get off the ground, and this guide outlines ten reasons your business could benefit from access to finance.

It’s always a good idea to seek independent and specialist financial advice when looking to obtain investment, as individual circumstances will vary.

Business scenarios that may require additional finance

1. Expanding or moving to new premises

If your business is going through a period of growth, you may need to expand and move to new premises to accommodate additional staff.

While the move could support the growth of your business, having the funds available to make a move could be challenging, and a finance injection could be the answer to support your business through this period of expansion.

2. Hiring more employees

As your business grows, you may require more employees to fulfil your business obligations.

Ensuring your business has the right skilled employees to support your business needs is crucial.

Finance can benefit this growth stage in your business and allow you to take on the employees you need.

Read our tips for hiring new employees.

3. Entering new markets

If your business is looking to expand into new markets – for example, a small manufacturer expanding their range into supermarkets or high street chains – you may need funds to increase production or expand distribution and logistics.

Finance can be an option to help fund the added expenses to allow your business to enter new markets.

Read our guide on how to export to new markets.

4. Launching new products or services

Launching new products or adding services to your offering could be critical for your business growth.

Adding new products and services could expand your customer base but may involve upfront costs ranging from research and development to inventory and warehousing.

Acquiring additional funding to invest in skills or equipment to enable your business to launch new products or services could be beneficial.

5. Investing in new technology or equipment

Investing in new technology or equipment could be necessary to take on new contracts and meet demands, allowing you to innovate or introduce technology that increases productivity and reduces costs.

Capital involved in bringing in new equipment or investing in new technology can involve the need for upfront financing, enabling new technology or equipment to unlock future savings.

6. Covering unexpected expenses or financial challenges

While business goals may centre around growing your business, unexpected expenses or difficulties may crop up and require financial support.

Setbacks can occur in any business, whether it’s late customer invoices, the loss of a large client, sharp increases in overheads such as energy bills, or equipment failure that requires repair.

Bridging the financial gap can require additional funding to ensure your business can meet customers’ needs.

7. Managing cash flow during slower periods or debt restructuring

Many small businesses experience busier periods and slower periods, meaning your cash flow can vary seasonally, leading to cash flow challenges.

Additional finance can benefit your business by either paying off outstanding debt or being a way to consolidate all debt into one more manageable payment that could potentially be a smaller overall payment going out than all the debts individually.

Read our guide to managing business debt.

8. Investing in marketing and advertising campaigns

Whether your business is just starting or you’re looking to expand your reach, for your business to challenge competitors in the marketplace, you may need to invest in marketing campaigns, such as advertising.

Developing a website for your business or starting a local advertising campaign or marketing strategy can be costly.

Additional finance can fund your marketing activities, introducing new customers to your brand and potentially increasing sales and revenue.

9. Funding research and development

As part of a growth strategy for a small business, it could be beneficial to invest in research and development (R&D).

Research can help your business understand the market you’re trading in and develop new ideas to ensure your business stays competitive.

Research and development can benefit from several tax incentives – and there are often R&D grants available for some sectors – but funding can ensure you can invest the right amount to develop a new solution, service, or product.

Read our guide to R&D grants for smaller businesses.

10. Acquiring another business

There could be several reasons your business could benefit from purchasing another business.

Buying a small competitor and merging it with your business could help expand your reach, expertise, and skills, as well as provide access to more customers.

Types of finance available to small businesses

There are various finance options small businesses can consider when needing a finance injection, such as:

• business loans – a common choice of finance for business where an amount is borrowed from a lender and paid back with interest over an agreed amount of time
• business grants – there are many business grants available throughout the UK and are provided by the government or private organisations to a business for a specific reason with the added advantage they don’t need to be paid back
• equity debt – businesses with a solid business plan for growth could consider approaching an investor to invest in your business financially
• leasing and hire purchase – this is a way to secure expensive equipment/assets for your business that you buy from the lender over an agreed period and own the asset at the end of the agreement
• purchase order financing – if cash flow or ordering supplies to fulfil a large order is hindering your business’s growth, purchase ordering financing can help bridge the gap
• business line of credit – a flexible loan for any size business that is either secured or unsecured and offers either a lump sum or smaller amounts to an agreed amount

Tips for seeking small business financing

If you think your business could benefit from financing, here are some tips to help you secure finance:

• develop a solid business plan
• understand your financial needs and capabilities
• seek independent and specialist advice
• compare different financing options to ensure you choose the right one for your business
• be fully prepared for meetings with potential lenders or investors.