Funding and Cash Flow

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Thursday, 24 June 2010 Written by Claire Young

Category Finance

Funding and cash flow can be very stressful and are often the downfall of many businesses so it's critical to do your best and seek out security from an early stage.

As someone who has set up a business and is going through funding hoops for a second one (a new social enterprise) Marcela's funding video struck a chord with me. She is unsure if she should expect funding now and what is ‘normal’ for a business at her stage. She also doesn’t know where to look to raise the finance. The simple answer is, there is no simple answer and as every business is different, you need to manage finances accordingly.

Cash flow is critical, regardless of funding. Many people starting a business are naive and fail to have a 'piggy bank ' for essential items. It's amazing the things you take for granted when you work for someone else. When it’s your business you realise that all the little things from petrol to get you to meetings to staples and paperclips cost money and it’s money that needs to be readily available in the business regardless of whether customers have paid or not.

As a new enterprise with potential to grow, Marcela needs to put together a realistic business plan and seek investors - individuals, the bank, public sector funding/loans/grants.

Every business reaches a point where a cash injection is needed and it's often the 'boom or bust' moment or tipping point.

Where there is a will there is a way, whenever I have a moment of doubt I remember reading about a large business that needed over £5 million to survive - they found it in 2 months after door knocking and begging. It just shows, it can be done!