From Vision to Reality: Preparing your Business for Growth

Rapid growth rarely happens without the right business funding, although finding the most suitable investment partner is often half the battle. Frontier Development Capital (FDC) explores how SME business owners can prepare to take the next step.

When it comes to elevating business plans to the next level, it can be difficult for SME business owners to take flight. With many routes to take when accessing the right funding options, it can be hard for decision-makers to choose the right direction of travel. The ability to navigate the complex funding landscape is essential in making ambitious plans a reality.

A report* discovered that in 2022 63% of SMEs planning to apply for loans wanted the funds for business development, such as to fund expansion in the UK. However, only 62% of primary loan applications succeed, with higher success rates for those SMEs who had borrowed previously, suggesting that a lack of detailed knowledge and financial guidance might be inhibiting business expansion. (*BVA BDRC – SME Finance Monitor Q4 2022)

Utilising Advisory Networks

Choosing the right funding option can help get business plans off the ground. However, there are numerous challenges SME business owners contend with when seeking out any kind of growth investment. If inadequately prepared, approaching both traditional and alternative lenders directly can lead to a swift decline without explanation. To improve the potential for success in raising funds SMEs must consider several factors when trying to seek and secure finance for their business.

• Quality business plan: Prospective investors will want to see a viable business plan laying the foundation for discussions with growth-oriented businesses.
• Finding time to research funding options: The alternative funding landscape offers a vast array of products tailored to virtually every business need. These different funding options can be daunting for SME decision-makers who are short on time.
• The application process: Lengthy and complex application processes can be confusing and requires significant time and effort from SMEs to complete.

This is where having a skilled support network can provide priceless assistance to decision-makers during the daunting process. Building a ‘team of all talents’, either in-house or externally, can help pilot businesses on the course towards growth.

Securing Funding

Alternative funders such as Frontier Development Capital (FDC) offer flexible long-term debt investment to mid-market SMEs seeking funding to support their growth plans. Part of Mercia Asset Management, FDC deals with businesses on a case-by-case basis, understanding that no two business strategies are alike.

Having the right finance provider can have positive influences on the business performance, with an alternative funder taking a holistic view on a business’ situation and providing ‘more than money’. They can often provide the clarity a business needs by supporting a business to achieve its core goals. This is especially the case if the funder has experience of supporting similar businesses going through a cycle of growth and development.

It is critical that SME business owners broaden considerations and talk to trusted advisory networks that can provide effective guidance, rendering alternative finance easier to secure.

Success

FDC’s debt funds have supported hundreds of businesses with investments tailored for their growth. More recently, FDC provided Hertfordshire-based Sales Transformation and Enablement consultancy Mentor Group (Mentor) with funding, who utilised advisory network expertise – identifying FDC as an ideal funding partner - to launch their MBO journey.

The ￡2 million investment was part of a multi-million-pound deal to support the MBO of Mentor by its management team. This will unlock considerable potential for the business, enabling their plan to drive new products to meet their customer’s needs, propelling Mentor to the forefront of the industry.

When it comes to a business preparing to take the next leap knowing where to set off can be challenging, especially if decision-makers try to open investment doors on their own. SME business owners need to establish the journey they wish to take and plot crucial points along the way. By speaking to trusted advisors, accountants, or researching alternative funders, a business can narrow down the list of investors and spotlight opportunities.

FDC supports mid-market SME businesses seeking funding, providing tailored and flexible long-term debt investment of over ￡1m for growth capital and shareholder transactions.

If you are a business seeking investment, visit www.frontierdevelopmentcapital.com/sme-funding to download our helpful information pack to guide you through our investment options.