5 Reasons why access to business funding is important

5 Reasons why access to business funding is important

Reading Time: 4 minutes

Running a business is a long game that requires flexibility, adaptability and money. To keep it running in the right direction and meeting your growth trajectories is an ongoing commitment. Just as you’ve gathered the funds to get started or your profit is looking good, there comes occasions when extra funding is needed. It goes without saying that access to funding is vital for your business. Particularly funding that can keep up with needs intrinsic to your industry changes, challenges and requirements. Here are 5 reasons to keep in mind on why access to funding is important for your business.

 

1. Research and development
2. Fast access to funding helps secure cash flow
3. Good liquidity helps SMEs trade through turbulent time
4. Funds on tap allow businesses to respond quickly to growth opportunities
5. Unforeseen costs

 


Research and development


While not every business needs research and development in the earlystages, every business needs to stay relevant and innovative. Especially SMEs because they have to keep up with unexpected challenges and competitors with better resources. On the other hand many business owners still rely on thorough research to get ahead of the competition, often leading to having to finance the process. Ultimately, research and development is necessary for accelerating innovation and sustaining relevance, and it requires funding.


A few meaningful ways to start your R&D funding include approaching venture capitalists, seeking government assistance, alternative lenders such as Lulalend and using crowdfunding.


Fast access to funding helps secure cash flow 

The money that moves in and out of your business is important. Any sudden changes can impact your business negatively. Which is why positive cash flow is so important. If it dries up it’s difficult to recover and this inevitably affects all aspects of your business. Anything from seasonal slowdowns or recessions can strike at any time and it’s important to be prepared. With fast access to the right funding you’ll be able to keep a positive cash flow problems arise. Consider flexible options such as Lulalend’s revolving credit facility which is useful to business owners across all industries. This allows you to keep up with the kind of cash flow challenges that affect your business directly without applying for funding every time. 

 

Related: Understanding business credit assessments

 

Good liquidity helps SMEs trade through turbulent times

SMEs generally don’t have big cash reserves to fall back on, so when sales drop they need a safety net to meet day to day operating costs. Ideally a business should have anywhere from a month to six months of cash on hand in case of emergencies. Liquidity requires having accessible funds and together with cash flow, it’s crucial to the survival of small businesses. Keeping a close eye on liquidity allows business owners to make smart decisions about their finances and a healthy ratio helps creditors determine your creditworthiness to secure your business the credit it might need. SMEs need to track the financial health of their businesses and measuring liquidity helps to strike the right balance. 

You can look to financing companies to secure additional funding when the chips are down. This can afford you the flexibility to get through unprecedented cash flow crunches and buy you time to improve or rebuild your usual ebb and flow. 


Funds on tap allow businesses to respond quickly to growth opportunities

A new, recovering or growing business needs money to fund expansion strategies. When a business begins to grow, new locations, products, equipment, more marketing or employees might be required. Consider businesses in the construction industry for instance, where upfront investment may be required to fund projects. These activities add to the existing costs and may need additional funding. At this point profits may be slim and whatever the stage your business is in, outside financing might be an important driver of success to reach those new levels of growth and business development.

 

Related: 4 Ways to improve your business’s cashflow

 

Unforeseen costs

There’s no telling when an accident might jeopardise your hard earned work. From fires to floods, natural disasters and as recently experienced in South Africa, destructive protests and looting, or even staff injuries. You have to stay prepared. While insurance might cover most events, premiums still need to be paid and money for salaries still needs to be available during repairs. Even for less disastrous accidents such as malfunctioning machinery or outdated machinery, equipment breaking, just needing to be upgraded or systems being hacked, funding can come in really handy.

Funding allows businesses to plan ahead. In today’s rapidly evolving financial services industry, it’s good to know the options you can rely on. Importantly, it’s good to build good credit and relationships with alternative lenders like Lulalend that can offer you the flexibility you need to access funding easily and efficiently. 

 

The SME Guide to Conducting a Business Review

Reading Time: 3 minutes

 

The latest guide in our Business High Five series, The SME Guide to Conducting a Business Review, takes an in-depth look at how you can assess & improve the operation of your business at any given time.

Download our complete guide to Conducting a Business Review 

In this guide, your SME will be able to make use of insights on:

  • The Importance of conducting a business review
  • How to conduct a basic business review 
  • Practical learnings to expect 
  • Key aspects to avoid when conducting a business review
  • Recommendations on steps to follow when conducting a business review

 

 

The Importance of Conducting a Business Review 

Once your business is set up and has started to run well, most SME owners are inclined to let the day-to-day order of things run as they are. 

It’s at this point, however, time to rethink your strategy. Following the critical early stages, you should evaluate your progress on a frequent basis, develop ways to maximise the market position you’ve established, and decide where to take your company next. Your business strategy will need to be revisited and updated.

 

How to conduct a basic business review

According to Lulalend’s CEO & Founder, Trevor Gosling, it’s very important to step out of the day-to-day and review your company’s performance. “Some areas should be reviewed more regularly than others, most notably financial performance, to ensure you are tracking your business goals.”

Many small businesses operate in a reactive, short-term manner. This gives you more freedom, but it can also cost you time and money as you transition from the beginning stages of your organisation to growing and improving it.

 

Related: The Basics of Reviewing your Business Model

 

Practical learnings to expect 

While the main aim of conducting a business review is to figure out how you can redefine your business goals to further your success, there are other key learnings you can gain from this. 

“The biggest thing about reviews is that they help shape the future of your business by giving clear indications of areas that need the most attention. Without this understanding, you can be focussing your energy in areas that won’t necessarily make a difference in the way you perform,” says Gosling.

 

Key aspects to avoid when conducting a business review

It’s easy to get caught up in the execution of a business review but one should also be wary of the common mistakes business owners tend to overlook in doing so. 

“Just like spending too much time on day-to-day operations is not healthy for your business, spending too much time on a business review can also be harmful,” advises Trevor Gosling. “Keep a healthy balance, don’t get lost in the details and when things are not completely clear, don’t be afraid to go with your gut!”

 

Related: How to write the perfect business plan

 

Recommendations on steps to follow when conducting a business review

Gosling stresses that you should “always have a plan or goals that you can track your business against. That’s the crucial starting point and without it you’re operating in the dark. When you track your performance against your goals, it very quickly highlights where things are going well and where you are missing the mark. But goals are never static and need to be developed/refined, particularly as your understanding of the market improves, to ensure you are setting targets that make sense and are achievable.”

 

Download the full SME Guide here.

 

What can 60 days of cost-free* funding do for your business? 

To help SMEs get the funding they need to grow their business sooner, rather than later, we offer a 60 day delayed repayment option to all first-time customers. So if you apply for funding today, you won’t have to start repaying for 2 months.  If prompted enter promo code LULA when applying.

 

The Basics of Reviewing your Business Model

The Basics of Reviewing your Business Model

Reading Time: 3 minutes

Your business model is your business’s plan to make a profit. It’s an outline of how your business plans to make money which allows you to identify your target market and their needs, the expenses you should anticipate as well as the products and services your business plans to sell. Business plans are important for both new and established organisations, as they help businesses attract investment and talent. Importantly, they help assess whether things are working the way you want them to.

To keep ahead of trends and changes, it’s important to review and update your model. Here are 4 ways to consider reviewing your business model. 

1. Customer value proposition
2. Profitability
3. Resources
4. Processes 

 

Customer value proposition


Do you still resonate with your customers and are you taking their feedback into consideration? Reviewing your value proposition is a great way to establish your relevance in meeting your customers’ current problems, or how you can make adjustments to your product to keep improving their situation. Doing customer research to establish what your customers need can help you in this process. It can give you quantified feedback on the specific benefits of your products. You can find some useful tips for this on our blog post How to Drive Sales Through Customer Retention. It could also spark ideas that you may have overlooked initially. Remember to solve real and important problems for your customers, maintain your differentiation from competitors, and remind your customers why they should trust your brand.  

Profitability

It’s imperative to understand your profitability for the success of your business. The profit your business makes should be used to help secure growth opportunities. Analyse how your business brings in money and opportunities for growth. Start with a profit and loss statement. If you don’t already have one in place, you can start by individually listing how your business generates income and spends money. Also, consider doing a pricing review to understand if you’re making enough margin to be profitable. Once you’ve consolidated the audit, you can try to eliminate work that costs you money and focus on opportunities that generate income. To get a good idea of how to approach this, have a look at Freshbook’s step-by-step outline on how to check if your business is profitable. 

 

Related: How to Drive Sales Through Customer Retention 

 

Resources

Take some time to consider if the resources currently available to you are appropriate for your business model and how it’s evolving. Do you have access to the right people, and are you meeting your financial goals? Whether the answer is yes or no, it’s always a good idea to review this aspect of your business. Consider your capacity and demand management, your resource utilization as well as your progress and time tracking. It’s important to establish your actual resource availability and to get a realistic view of your demands and capacity to deliver. Understand what roles and skillsets you need and streamline communication between your employees and the business, as well as with your stakeholders. If you’d like some ideas on how to get started, Planview – a portfolio and work management solutions organisation – has great advice on resource management best practices. 

Processes

To run a business, processes are used every day. In the quest for efficiency, it’s important to review them and keep the ones that make sense, and improve the ones that don’t. With rapid changes in technology and the evolving demands of your target market, dysfunctional processes can lead to breakdowns in communication, increased costs, or unhappy customers to name a few challenges. Make this an important step to review to help streamline your tasks and business activities. To get started on this consider these steps recommended and outlined on Mindtools:


Step 1: Map the process
Step 2: Analyse the process
Step 3: Redesign the process
Step 4: Acquire resources
Step 5: Implement and communicate change
Step 6: Review the process     

 

Related: How to Write the Perfect Business Plan 

 

Running a business is hard work, but regularly reviewing your Business Model can make planning for the future easier. Make it a priority to keep up with the ever-evolving needs of your clients, talent, and expectations of any investors so you can stay relevant. Try not to overlook the components that make you successful and how you can upgrade them. Remember, if any of your adjustments need financing that you might not have at the time you can always get in touch with one of our Funding Specialists at Lulalend to find out how we can help you meet your business objectives.

 

The SME Guide to Improving your Cash Flow

The SME Guide to Improving your Cash Flow

Reading Time: 3 minutes

The latest guide in our Business High Five series, The SME Guide to Improving your Cash Flow, offers useful insights to help you manage and improve your business’s cash flow and increase profits. 

 

Download our complete guide to Improving your Cash Flow

 

In this guide, your SME will be able to make use of insights on:

  • The Importance of a Cash Flow Strategy
  • Practical Tips on How to Manage your Cash Flow
  • Technology to Help Manage your Cash Flow in Real-time
  • Sustaining Your Cash Flow Improvements
  • Cash Flow Management Tools

 

 

The Importance of a Cash Flow Strategy

Proper cash flow management is a critical strategy that any business owner must understand if they want to achieve long-term financial success but is also one of the most difficult issues that business owners confront. 

Reliable cash flow projections are likely to increase shareholder trust, while enhanced budgeting should help you gain better control over costs and generate higher profits. 

 

Practical Tips on How to Manage your Cash Flow

The best way to avoid a cash shortage is to plan ahead. As soon as you foresee a cash shortfall coming up, it’s important to look at all the options you have to increase your cash in hand.

 

  1. Be forthcoming with customers
  2. Review your operational expenses
  3. Re-evaluate the pricing of your goods and services
  4. Secure funding before you need it

 

Related: 3 Ways Bridging Finance Instantly Improves Cash Flow for Your Business

 

Technology to Help Manage your Cash Flow in Real-time

As a business owner, you should use technology to simplify and improve the efficiency of your company’s operations. You can budget and easily forecast future cash flow when you can see all of your business’s financial activity and accounts in one place. This is where online financial management dashboards can add so much value. 

Sustaining Your Cash Flow Improvements

Any cash flow improvements you gain may soon deteriorate if you do not have an adequate cash management system. Many SME owners ignore the small changes that can be made to their operations, believing that the changes are insignificant and not worth the effort. However, a combination of minor modifications to inflows and outflows will have a significant influence on your overall cash flow.

 

Related: The SME Guide to Cash Flow Management

 

Cash Flow Management Tools

Our talented financial experts at Lulalend have put together a list of cash flow tools to help you get a better view of your businesses’ finances so you can plan more accurately for the future. The two options below have proven beneficial for many businesses across the board and are worth the investigation.

PlanGuru

Float

 

Download the full SME Guide here.

 

What can 60 days of cost-free* funding do for your business? 

To help SMEs get the funding they need to grow their business sooner, rather than later, we offer a 60 day delayed repayment option to all first-time customers. So if you apply for funding today, you won’t have to start repaying for 2 months.  If prompted enter promo code LULA when applying.

 

4 Ways to improve your business’s cashflow

4 Ways to improve your business’s cashflow

Reading Time: 3 minutes

Keeping track of your business’s incoming and outgoing cash flows can be tricky, but is critical during uncertain times where revenue may fluctuate. Here are 4 simple and useful actions you can start today to help you manage and improve your business’s cashflow. 

 

Here’s a quick look at what this article will cover: 

  1. Invoice quickly
  2. Offer various payment options
  3. Use software to manage your cashflow
  4. Review your operational expenses regularly

 

Invoice quickly

The faster you invoice your customers, the quicker you’ll get paid.  Rather than waiting until the end of each month, send out your invoices as soon as you have rendered a service or delivered goods. Your customers will still have 7, 30, or 60 days (whatever your business terms may be) to pay, but you’ll save yourself valuable time right from the start. With Lulapay, you can invoice your customers & get paid immediately while still offering them payment terms. Find out more about Lulapay here.
If this doesn’t work, you can also send payment reminders to those “late-comers” or simply pick up the phone and call them.

 

Offer multiple payment options

By offering your customers various ways to pay, including online options such as accepting credit cards, debit cards, or mobile payments, the more likely they are to pay you faster. For example, making use of mobile payments can get you paid on the spot as soon as the job is done. There are plenty of ways of doing this by using services such as YOCO, Zapper, Snapscan, and even Masterpass

 

Related: 7 Ways to manage your cashflow in your construction business

 

Use software to manage your cashflow

Managing the cash flows in and out of your business can be challenging enough, but dealing with the additional accounting and tax work that comes with it is another task. Consider using a cloud-based accounting system such as Xero & Sage to make managing this easier. More advanced systems come with built-in plugins like project costing, quoting, and inventory management to help alleviate the burden of system administration and automate these processes for you – giving you valuable time to focus on growing your business. 

 

Review your operational expense regularly 

Managing your cashflow isn’t only about the money that comes in, it’s also important to reduce the cash going out of the business as much as possible. Take the time to review your expenses and see in which areas you can reduce your operational costs. Avoid spending money on things that aren’t necessary for your business and choose wisely which areas you want to focus on. Make sure you cut costs only where you can afford to and don’t cut back in areas that may harm your business. 

 

Related: Practical cost-saving tips for your business

 

Understanding your business’s cashflow will not only help you plan for future growth & development but will also give you great insights into your businesses’ current financial state and how cash is moving within your organisation. 

 

The SME Guide to Building Customer Loyalty

The SME Guide to Building Customer Loyalty

Reading Time: 3 minutes

The latest guide in our Business High Five series, The SME Guide to Building Customer Loyalty, offers useful insights on how to keep customers coming back and staying loyal to your business.

 

Download our complete guide to Building Customer Loyalty

 

In this guide, your SME will gain insights on the following:

  • The Importance of Customer Loyalty
  • How to Measure it
  • The Six Stages of Loyalty
  • Steps to Retain More Customers
  • The Future of Customer Loyalty

 

 

The Importance of Customer Loyalty

Customer loyalty is the act of continually choosing one company’s products and services over its competitors. Customers that are loyal to one business are not readily influenced by price or availability. When necessary, they are prepared to pay extra to obtain the same high-quality service and product they are accustomed to.

High levels of customer loyalty help drive business drive growth in a number of ways:

  • Returning customers spend more
  • Loyal customers refer their friends, helping to acquire new customers at lower costs
  • Both of which lead to increased profitability

 

Related: How to Drive Sales Through Customer Retention

 

How to Measure it

Loyalty isn’t a concrete concept, yet it can still be measured. To do so, it’s often necessary to employ a variety of metrics. Some of the most practical examples are:

Customer Satisfaction Levels

Two easy-to-implement and understand methods of measuring customer satisfaction are:

  • Word-of-Mouth referrals
  • Net Promoter Score

 

Customer Lifetime Value

Your customer lifetime value (LTV) reflects how important a client is to your company throughout their relationship with you.

 

Repeat Purchase Rate

The percentage of clients that return to buy your product or service is known as your repeat purchase rate.

 

Six Stages of Loyalty

On the journey to becoming truly loyal to a brand, a customer typically progresses through six phases, with each stage demonstrating an increasing level of loyalty.

 

Related: Why your SME should consider a Customer Relationship Management platform

 

Steps to Retain More Customers

You can increase customer loyalty by excelling at the things that influence it. Here are five essential factors that drive loyalty:

  1. Offer a 10X better experience than competitors
  2. Make customers feel valued 
  3. Understand the full consumer journey 
  4. Long-term planning, not quick fixes
  5. Employee experience

 

The Future of Customer Loyalty

Today, instead of going to the local shopping mall, 85% of customers start their search on Google. Customers may compare costs across all businesses online by just entering in a description of what they wish to buy. They may get it delivered the next day with just one click. Customer loyalty driven by traditional influences is fading as competition rises.

The most successful businesses will be those that truly understand their customer needs & focus on providing the best customer experience.

 

Download the full SME Guide here.

 

What can 60 days of cost-free* funding do for your business? 

To help SMEs get the funding they need to grow their business sooner, rather than later, we offer a 60 day delayed repayment option to all first-time customers. So if you apply for funding today, you won’t have to start repaying for 2 months.  If prompted enter promo code LULA when applying.