Getting the funding right can make or break your business, especially at the beginning. By seeking advice from experts who understand your industry, you can make sure that you’re well-prepared, and that you’re getting the right funding for your business.
You will need to be able to pay your temps their wages before you receive any money from your clients, which should be a considerable expense. Finding a funder who will lend you capital to start and eventually grow your business gives you the potential to get off the ground sooner and more smoothly, without putting your personal assets at risk. But you will only get funding at exorbitant rates unless you can demonstrate that the funder is putting the money in good hands.
To get the right rates, there can be a lot of work involved in preparing a funding application, and if this isn’t an area that you’re experienced in, you may find the process confusing, maybe even intimidating. You know that there are things you need to know, but you may not know what they actually are yet.
Put yourself in the shoes of a potential funder
What will your funder need to know in order to approve funding? The funder is taking on a risk by funding you, so it is crucial to demonstrate your professionalism, your careful preparation, and your confidence. You will need to prepare a strong business plan that outlines why your business is a good investment. Building up a relationship with your funder gives you the opportunity to show that you are trustworthy, and they’ll be more likely to want to help you if they know you and like you. As the owner of a recruitment business, you’re bound to be a people-person, and this important aspect of the funding process is something that you can control, and that goes beyond pieces of paper.
Seek expert advice
It is important to get expert advice during the process of obtaining funding. Ideally, you should seek assistance from a qualified Management Accountant with experience in preparing detailed three-way forecasts. While you may find yourself initially reluctant to part with the money involved, you’ll actually find that it’s money well spent in terms of return on investment, especially if you’ve used the services of someone who specialises in preparing these forecasts for your industry specifically.
To calculate these forecasts, your accountant will need to familiarise themselves both with the current state of your business, and your plans for growth. Ask yourself some questions:
- How many candidates will you be employing?
- What are your estimated margins?
- Do you have a niche? Generally speaking, the more you specialise the higher your margins can be.
- What cashflow management procedures do you have in place? (Your funder will want reassurance that you are not going to immediately spend any surplus cash)
Once you have considered the above, it is time to work with your accountant to work out your funding requirements and the funding facilities that will best suit your requirements. When you are ready to apply for funding, it is a good idea to bring your accountant along – this shows willingness to leverage expertise, which will reassure your funder. It is also important to demonstrate that you have well-structured systems and processes for payroll, invoicing, collections and purchase orders, and to be able to explain these to your funder.
Getting your funding right is critical for a recruitment business – getting it wrong could be a deal-breaker.