August 09, 2021

Article

In a further insight report I thought it time to continue with the positive trajectory and discuss the start-up phase of a care business moving into the growth period.

Each business has its own pathway with challenges along the way, and post pandemic different challenges will arise. The pandemic demonstrated how even the most established business could stumble, however, other new and emerging businesses rose to the challenge and are moving forward as lockdown restrictions have eased.

So you have a vision, you have prepared the business plan and now you are thinking about the funding model. Business start-ups tend to require an upfront investment from personal funds as well as seeking a source of external finance, which also demonstrates confidence in your business vision. It can also help to have on board a professional advisor at this early stage to act as your ‘critical friend’ and help add credibility to your business plan. Keeping an eye on the evolving tax landscape also assists in forming the appropriate structure for your business, albeit consultations are moving all the time in this arena.

Once you reach a commercial platform you may now be ready for an angel investor or other form of funding, subject to demonstrating that the business is investable.

It is at this point as a business founder that you will probably seek a business valuation to demonstrate the current worth of the business with some capital backing behind it. You are now ready to take the business to the next stage. You may not need an additional investor, but if you do, consider whether the additional support will be in the form of a loan/debt investment or equity. If it is an equity investor, you will need to consider the percentage stake in the business that you are willing to release, the value of this stake and whether you will need further equity investment further down the road. Remember, that retaining a controlling equity stake, is an important consideration at the tipping point into growth of a seed business.

Always consider funding opportunities out there, such as innovation grants and enterprise schemes subject to eligibility. Financial forecasting is a must for any business, whatever stage of its life, and together with scenario planning and sensitivity analysis, which can be automated to a bookkeeping system, provides valuable insight and potential for agility for any business continuity plan.

This will enable real time reporting with an updated forecast for any stakeholder, with the confidence that the business can be tweaked, as it evolves, using the real time management information as the baseline for proactive business discussions. The investor will then have access to the timeline for a return on the investment, or for other forms of funding restructure to be looked at once there is evidence of solid trading.

What the pandemic has shown us is that strong resilient businesses will bounce back and now maybe the time to think about your next step?

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