Real entrepreneurs see chances that others don’t. They provide the optimal financing of their business. How can you do this?
The motor of the economy, small and medium-sized enterprises (SMEs), have an urgent need for growth financing. The large banks primarily focus on getting their own bank balances in order. Understandable, but this is providing less space for the high-risk entrepreneurship of SMEs. Still, economic growth cannot occur without investments in working capital. In this blog, you can read how the financing of an SME can be optimally arranged.
SMEs themselves must become more creative in finding suitable and fitting financing. There are increasingly more alternatives, however. The money is there, but it must be found at different sources. For SMEs, this takes some getting used to. It could be lucrative to spend some time deepening your understanding of this. The lucrative aspect is not to be found in the price of money, since alternative financing is generally much more costly than regular bank-based financing. The profitable aspect for an SME is in considering how it should be financed. No longer the automatic infusion by the standard bank, but instead, linking the right form of financing to the SME’s needs.
In my opinion, a lot can be achieved here. Financing high risk with expensive capital, such as venture capital; financing low-risk parts with a great deal of certainties and fixed money flows, which are therefore cheaper. In between, there is a whole range of medium risks. For businesses in the SME sector, it is now time to perform a risk scan. It is of vital importance in their risk analysis for SMEs to consider to what extent their revenue model will still be relevant in post-crisis times. Through inventive entrepreneurship and taking measures in a timely fashion, a profitable situation can arise. Better insight, clear working processes and the will to adapt to a new age lead to higher profits.
Luckily, part of the SME sector consists of real entrepreneurs: people who spot chances that others don’t. The creativity and the entrepreneurship will keep SMEs alive and growing. Who sits still and waits for the return of bygone eras will find himself becoming part of the past. Real entrepreneurs are creative and move forward. It’s a good thing the SME sector exists.
Read what we can do for you in terms of company financing.
drs. Jurgen Boer RA, Partner