04: Forward planning

Whether you are raising debt or equity finance, the process is likely to be time-consuming, and your company should be looking to raise the funds well before they are actually needed. Equity funding options can take between three and eight months to secure. It is also important to factor in the time required to do preparatory work.

Before approaching lenders, you should consider whether taking on debt is the most appropriate kind of funding, or whether there are other less costly options available internally, such as reducing stock levels or improving cost control and invoicing systems.

You must work out how much money needs to be raised (which will require a business plan and a cash flow forecast) and be able to demonstrate to lenders a good case for needing the funding, together with an indication of how and over what term repayments will be made.

Before approaching investors, you will need to have a clear vision and direction of where the company is heading and know exactly how much funding it needs before deciding whether to approach business angels or venture capitalists.