And if so, have you asked the right question?

A significant amount of press coverage in recent times has concentrated on the dearth of funding opportunities available to Owner Managed Businesses, and bloggers (including me!) have added to this, laying in to banks – which is, after all, almost as much fun as having a go at politicians.

So if you are running a successful business, should you automatically be looking for more funding to get even better?

And the answer is a resounding no!

It just goes to show that you can get sucked into a particular point of view and lose sight of the realities. A blog I saw recently (http://www.growthbusiness.co.uk/the-entrepreneur/lessons-from-an-entrepreneur/2467522/when-business-borrowing-is-a-bad-idea.thtml) brought this home to me, and I would recommend that anyone thinking of getting external funding read it – it is after all the experience of someone who has run his own business, and not the view of someone like me who might be trying to earn fees out of the  exercise!

The truth is that a successful business can be adequately funded without access to external sources; the best source of funding without any question is profit!

If you are going to buy a new machine for your business, you will – even if it is just on the back of a beer mat – perform a cost benefit analysis :

• how much money will I generate from getting this machine?
• how much is it going to cost?
• how soon will I be cash positive again?

And if the answer in your view is good enough, you will go ahead.

If you apply the same thought process to funding, you won’t go too far wrong:

• How much additional profit will I generate from this funding?
• if all it will do is to enable you continue maintain your business at its current state (ie you’re funding “working capital”) you should see if you can sweat your assets more:
• can I get customers to pay quicker by billing earlier?
• can I be more aggressive in my debt collection procedures without losing customers?
• can I change terms of trade so that the customer pays all or part up front?
• can I change buying arrangements  – order smaller quantities, perhaps sale or return, consignment stock or just extended terms?
• If you’re embarking on a project which will make a significant difference to your business, you should look at it quite dispassionately and ensure that you have considered the downside as well as the upside – when we have something new to look at we are all too inclined to ignore the unpalatable fact that it might not work out exactly as we have planned.
• If additional funding is the answer, how much will it cost? –matching the type of funding to the need, and being prepared to shop around is important, as there are genuine alternatives now.
• And when will the project have paid you back?

If you have read any of my previous blogs, you will know the final comment.
The answers to these questions will be much clearer if you have spent the time preparing a detailed business plan!