Prospects of significant business growth is exciting. However, realisation of the potential requires planning.

The business growth path is littered with corporate corpses which “grew too fast”. It wasn’t exponential sales growth of great products or services that killed these businesses: it was failure to plan for and manage the financing of their growth. 

Whether your business growth is organic or by acquisitions of other businesses, planning for and managing the potential increase in funding requirements that usually accompanies growth is vital for success. 

Planning for Financing of Growth 

Have you done or up-dated your Business Plan? 

Have you prepared financial forecasts for at least the next 12 to 18 months? 

What are your future working capital requirements are?

Is capital expenditure required?

Will you have to take on more staff, incur more overheads to support your business expansion?

Are there significant lead times for any of these requirements? 

Forecasts in the form of a dynamic 3-way Financial Model are invaluable for planning for financing of growth because it enables you to assess:

§    the impact of changes in key business drivers on profitability, cash flow and financial position

§    the impact of major business opportunities on profitability, cash flow and financial position

§    amount of financing required and timing under different scenarios

§    appropriate debt finance structure

§    appropriate debt/equity structure. Should part of the financing requirement be met by way of equity,  quasi-equity or quasi debt? This depends on a number of factors including but not limited to, the stage of maturity of your business; the characteristics of the industry(ies) in which you operate; the growth strategy; and your risk appetite. 

Contact us today to discuss how we can assist in your business growth plans.