Unlocking growth: 5 key business finance considerations

Understanding business finance is vital for startups, growing enterprises, and established companies alike. But it's not just about getting the cash you need – it's about choosing the right financing options, managing risk, and ensuring long-term stability. 

Here are 5 things you should consider when it comes to making informed, strategic financial decisions for your business.

1. Business finance isn't one-size-fits-all

Business finance is the way each company raises capital. Each company has a different approach to this – it depends on the company’s goals and strategies. While many companies choose traditional loans or credit, there are alternatives, all of which have their pros and cons. For instance, debt financing — loans and overdrafts — offers a quick infusion of cash, but can impact your cash flow if you need to keep making repayments. 

Another option is equity financing through investors or crowdfunding, which can provide significant capital that you don’t have to repay immediately. But you might have to share ownership of a company; for example, you’d own 80% and your investors 20%. This might not be something all business owners are happy to do. 

When it comes to making the right choices, the key is assessing your business's financial health, its growth potential, and thinking carefully about your long-term goals.

2. Think about tomorrow

It’s easy to focus solely on immediate needs. For example, covering operational costs or funding a marketing campaign. But you should always keep the long-term impact of your financial decisions in mind. The right financing should not only help you grow – it should contribute to the (sustainable) health of your business.

Securing funds without a clear understanding of how repayments will influence your cash flow can create financial stress in both the short- and long-term. Forecast how the financing option fits into your broader business strategy and how it’s likely to align with future financial needs.

3. Keep cash flow front of mind (always)

Even if your business is profitable, managing cash flow can remain a challenge. It's essential, therefore, to regularly monitor, forecast, and keep on top of where your money is. 

Without a clear understanding of how cash is moving in and out of your business, it's easy to overspend. It could also skew your idea of your business’ performance. A healthy cash flow is the foundation for day-to-day operations, so always factor it in.

4. Don't dismiss the unconventional

Bank loans and investor funding are the most established funding options, but don’t overlook grants and other funding sources. Many businesses qualify for government grants, especially in specific sectors like tech, green energy, or R&D. What’s more, these funds typically don't require repayment, so it’s worth seeking them out.

Crowdfunding is a route that’s growing in popularity. Platforms like Kickstarter and Crowdcube are enabling businesses to raise funds from smaller investors who truly believe in the product or offering. In return, these investors may receive rewards, equity, or early access to future updates or releases.

This approach is effective for businesses with strong consumer appeal, but it’s worth noting that this can be time-consuming and may not always meet funding goals, potentially leaving you with little to show for the effort.

5. Financial management never ends (so just accept it)

Securing business finance is just the beginning. The real challenge lies in managing the funds you've acquired to maximise growth while simultaneously minimising risk. 

Using accounting software or hiring an accountant to manage the finer details of financial record-keeping is often a smart move. The more accurate and up-to-date your financials are, the easier it will be to make informed, strategic decisions for your business.

The bottom line

Understanding the nuances of different financing options — whether debt, equity, or alternative sources — is key to making informed decisions that support your company’s growth and long-term sustainability. Pairing the right funding approach with sound financial management can set your business up for lasting success.

Think carefully and strategically about your financing needs. If you can stay on top of your financial health, you could be in good shape to unlock the resources necessary to expand. You can tackle unexpected challenges and create lasting value for your business and its customers.