Having worked with small and medium-sized enterprises for years, we understand that running a small business can feel like a balancing act. You’ve got to keep an eye on cash flow while thinking about your marketing, customer support, and every other aspect – it really is a one-person show.
That’s why making smart financial decisions that support your long-term growth is so important. Whether you’re applying for business finance, managing your expenses, or planning for future expansion, knowing what to do – and what not to do – makes a massive difference.
Do: Have a Clear, Realistic Business Plan
A strong, workable business plan makes securing finance for your small business much easier, and it also keeps your financial decisions on track. Lenders and investors want to see a plan that outlines goals, financial projections, and how your business sees itself repaying borrowed funds. Even if you aren’t looking for external funding at this time, a business plan is still the best way to make sure that your spending lines up with long-term objectives.
Don’t: Borrow Without a Strategy
Taking on finance for a small business without a clear repayment plan is a real recipe for trouble. It can be tempting to borrow to cover immediate expenses, but without a clear return on investment, debt can spiral quickly. Sudden costs – like VAT or other tax bills – might mean you need support, and there’s nothing wrong with that. But having a handle on how you’re going to pay it back is pivotal.
Do: Keep Business and Personal Finances Separate
Small businesses are inherently personal. They are much more likely to be family-run and based around your local community – they might even be run out of your own home. These personal touches have incredible benefits, but when it comes to small business finance, it’s important to have a clear divide. Mixing your personal and business finances is likely to lead to confusion, tax issues and potential complications when you’re trying to track your cash flow. A dedicated business bank account makes financial management much easier, and it gives you clearer records, too.
Don’t: Choose Finance Based Solely on Interest Rates
A low interest rate can be really important when you’re looking at finance for your small business, but it shouldn’t be the only factor you consider. There are so many other aspects that can dictate which option best suits your needs. Loan terms, flexibility, fees, and the impact on your cash flow all matter.
In many instances, a slightly higher rate of interest on a more flexible finance option might be the better choice in the long run. The most important thing is to do your homework, which brings us to our next tip.
Do: Spend Time Researching the Right Options
Not all small business finance providers are the same, and neither are the different finance options each provider offers. Business loans, asset finance, invoice factoring, VAT loans – each option is aimed at resolving a different need.
This means that making sure you’re across the different options is a really important step. We understand that this can feel like a minefield, so if you’re struggling to make sense of what’s best for you, getting in touch with an expert for unbiased advice is always a good idea.
Don’t: Ignore Growth Opportunities Due to Lack of Funding
Anyone who runs a business knows the phrase speculate to accumulate. Some businesses are hesitant to expand because they lack immediate capital, but that’s one of the main purposes of finance for small businesses. If you need to fund new equipment, bring on more staff, expand your premises, or make other investments – but you don’t have the capital to do so – business finance is on hand to help. It provides you with simple and stable access to the funds you need to grow your business.
Do: Monitor Your Cash Flow Regularly
Cash flow is the backbone of your business. Even a profitable company can struggle if cash isn’t managed properly. Make sure you’re regularly reviewing incomings and outgoings, forecasting your future cash flow, and ensuring that there’s enough money in the bank to cover essential costs and prevent financial strain.
Looking for the Right Finance for Your Small Business?
We know that finance for small businesses isn’t one-size-fits-all. Because of that, Bluestar Business Finance offers tailored funding solutions that help your business thrive. From VAT finance to business loans, or start-up equipment finance, we provide genuinely flexible options that work with your needs.
Quick decisions, competitive terms, and a commitment to straightforward service make applying for business finance as simple and easy as possible. If you want to explore our options, click here, or get in touch with our team to find out more.
FAQs
What is the best finance option for a small business?
It depends on what your business needs. Loans give you a lump sum for growth, while invoice finance improves cash flow. The best option varies based on goals and financial position.
How much business finance can I apply for?
The amount depends on the lender, creditworthiness, and the type of finance. Some options start from a few thousand pounds, while larger loans and asset finance deals can go much higher.
Does my business need a perfect credit score to get finance?
No, but a good credit score improves options and rates. Some lenders offer finance even with lower scores, though terms might be less favourable.
How long does it take to get business finance approved?
Approval times vary. Some lenders provide decisions within hours, while others take a few days. Having financial documents ready speeds up the process.
What costs should I consider when taking out business finance?
Beyond interest rates, consider fees, early repayment charges, and any impact on cash flow. Understanding the full cost helps in making the right decision.
