In the fourth post of our series, we took a look at cashflow, and the importance of handling short-term transactions and operational costs. In this fourth instalment of the series, we are setting our sights a little more long-term, and examining funding gameplans for SMBs.
The Problem: No Long-term Gameplan for Funding
The Australian market can be a perilous one for small and medium-sized businesses. Even if they are able to secure the cashflow required to “keep the lights on,” they may lack the long-term strategy required to achieve funding they need in the future.
This is one reason why so many small businesses struggle when they could be thriving. Statistics from 2019 show that as many as 60 per cent of small businesses close their doors within three years of opening – numbers that will be very dispiriting to the next generation of Australian business owners.
It is a well-worn cliché, but there is a lot of truth in it: You need to plan for the rainy days while the sun is still shining. There is no point in waiting for the hard times to bite down before you build your strategy, and it would be remarkably short-sighted not to want to safeguard any success you are having early on.
Think about this. Don’t let pessimism blight your good times. But don’t let blind optimism torpedo your chances of long-term survival. Plan out the funds you will need in the long term, and make sure you have access to these as and when you need them.
There are in fact many options for businesses looking to increase their funding, or to secure adequate financing for the future. These options range from private investment and strategic partnerships to government loans and grants, and all can provide valuable support for businesses. Remember that small business continues to be a crucial driving force for Australia's economy, and that governmental help is available to support SMEs that may be struggling.
The resolution, in this case, requires an in-depth knowledge of your own business and of your funding situation. Return to the strategic growth plan we mentioned in the first post of this series, and ask yourself the following questions:
What funding are you going to need at each stage of the process?
How are you going to meet the requirements at each of these strategic stages?
What returns do you expect from the funding investment at each stage? (Consider the performance metrics from the second post in this series.)
What funding sources are open to you? What do you need to do to gain funding from these channels?
Again, flexibility is important here. Your needs can, and probably will, change. Make sure your strategy is a thorough one, and make sure that your needs are met at every stage. However, be prepared to redraft or modify your strategy as you go, to secure the long-term growth you need.