Raising capital means selling the dream

• Financing a Business

With many small businesses the opportunity for growth and sustainability in the market is halted by the hand of funding – or lack of.

In fact, financial issues are the main reason why 60% of small businesses in Australia fail; that’s equal to an estimated one in three folding in the first year, two out of four by the second, and a massive three out of four by the fifth year in operation.

As a result, many business ideas remain as just that, ideas. The risk of running out of money – or having little capital to begin with – is sometimes enough to leave the dream in the drawer.

Instead, develop a plan to source the necessary finance.

In the famous words of Sir Richard Branson, “Risk is the price you pay for opportunity.” And this opportunity can present in capital raising.

Businesses that can successfully raise equity have a clear vision of why they need the funds, how they will use them, and what they are offering investors in return.

Debt Capital

Acquiring a business loan through the bank can give you the finance necessary to kick start a business dream or fund the growth and development of an existing company.

There are definite advantages to bank funding – while the business remains under your control, you secure all its future profits.

With many new businesses, ‘burning cash’ is a common scenario in the first few years of operation.

The monthly loan repayment to the bank with no profits can put enormous pressure on a growing company. As can changing interest rates and ballooning inflation on maturing debt.

It is essential borrowers understand the terms and conditions of the business loan, ensuring default repayments do not affect personal assets, becoming “collateral damage” in the bank’s call on collection.

We help businesses become ‘Bank Ready’

It is vital to ensure that you are ‘bank ready’ to ensure maximum chances of success of funding approval for your business.

At Elevate, we are able to help to prepare you for finance.  This includes preparing financial forecasts with sufficient information and assumptions to clearly articulate the story for the bank.

In preparing forecasts we are able to assist in identifying the necessary amount of funding required.

We have extensive contacts throughout the Perth bank industry which we can utilise to ensure you have the best contacts to deal with.

We are not finance brokers and don’t raise the finance, rather we help businesses to be ready for finance.

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Equity Capital

If a bank loan is not an option for your business, finding an investor who believes in the dream as much as you can lead to a capital investment and long-term partnership.

We speak with many founders and entrepreneurs who are looking to raise finance for growth – and it isn’t easy. In fact, raising capital via a share sale or share placement can be complex, particularly those smaller businesses or start-ups.

Where the pressure for return on investment may be more accommodating than a bank repayment, losing control of your business because of a heavily compensated share structure favouring the investor can affect your profits long term.

How much is your business worth before it even begins? And how much could it be worth in the future? All needs to be considered before signing away shares to an investor for a short-term monetary gain.

Remember, finding an investor that shares the same passion enough to commit to an idea or growth strategy is not easy, and often takes more than a few networking events to get the deal across the line.

How can we help?

Raising finance to start or grow your business can be a daunting task no matter the method best suited for your situation. It is critical to be able to tell the story to the funder and be armed with the necessary information before entering into any meeting – a first impression can be a lasting one, or your last.

Elevate Corporate can assist with:

• Preparing pitch deck or information memorandum
• Valuation and share structure
• Investor introductions

Elevate Group (Corporate) Pty Ltd holds Australian Financial Services Licence number 510682. We are licensed with ASIC to assist companies raise capital and to provide general advice to wholesale clients.

Click HERE for further information or to arrange an obligation free appointment.