Stuart over at Business Matters mentioned a “must read” article for all business start-ups in the Sunday Times Small Business section last week, written by Rachel Bridge. She has a new great offering this week with “The secret to securing a start-up loan”.
Two things caught my attention, in section two she talks briefly about having a cash-flow forecast in preparation for the bank interview. In another section she says:” If you can get a bank loan instead of giving away equity, do so.” That is certainly not something I would agree with as general advice.
It seems to me if you have to prepare the cash-flow forecast to go to the bank to get money, you prepared it too late. Surely you should do the cash-flow first, check all other options, like looking at payment terms with your suppliers and also look at when you customers pay you.
And then I think you should look at other possibilities to raise capital, if you can find a partner then I think you should consider that very earnestly. You would have someone else thinking about the business and its best interests. Also consider what a personal guarantee will do to your private life if things go wrong?
My point here is: a bank loan or overdraft should be your last option. You should talk to a good accountant with a business advisor mentality. Our free AccountsOffice has a cash-flow tool that you can use with your accountant.