Source Funding: how a CFO can fuel business growth

Just like a plane, a growing business needs fuel to soar. However, navigation to the final destination requires a well-crafted flight plan.

A part-time or fractional CFO can help pilot your business through its growth phase, ensuring you chart the right course—gathering the crucial numbers and securing the funding necessary for your business to thrive.

Here is how a CFO can assist your business to source funding.

CLOSE THE NUMBERS GAP 

This initial navigation requires getting the right numbers in front of potential investors or funders in a format for them to make a decision. There is a large gap that exists in the SME market whereby there are many businesses that are both eligible for funding and should receive funding but don’t secure it.  There is often a gap between existing financial information and what is required to get funding.

A fractional CFO can help your business in compiling the essential numbers that are required to source funding, making your business “funding ready” and enabling it to thrive and grow.

Some of the tools your CFO will have in their toolkit to assist you are (but not limited too):

• Three-way forecasting modelling – balance sheet, profit and loss and cash flow statement
• “What if” or “stress testing” of key revenue and margin assumptions
• Updated reporting packages of historical and future performance
• Prepare information memorandums for potential funders
• Key business data for due diligence
• Competitor analysis and size of market data
• Business cases for the acquisition of capital equipment
• Valuation models to assist in negotiating equity dilution from investors
• Valuation models for M & A activity
• Ensure a Statutory Tax (PAYG, Superannuation, Payroll Tax, Workers Comp and Corporate Tax) Compliance Program is in place and history of compliance.

 

GET THE RIGHT INVESTMENT FOR YOUR BUSINESS – A CFO IS YOUR PARTNER AND NAVIGATOR

With the initial flight plan complete it is time to get the right fuel/funding to grow your business. A fractional CFO, through their experience and contacts, can ensure you not only source funding in a timely manner, but also the right funding partner that fits your growth plan.

This funding could take the following (but not limited to) forms:

• Bank Debt: Bank Debt – Bank Overdraft, Lease Facilities, Secured and Unsecured Loans, Trade Finance Facilities.

• Private Debt or Investment: Direct Equity Investment, Secured and Unsecured Loans, Convertible Notes.

A CFO will guide you through this process by fitting the debt structure to your future vision/plan for your business based on your level of risk and appetite for additional investors.

Many business owners are reluctant to take on new investors, are looking to avoid debt, or are looking to ultimately exit at a future date, hence the right debt structure is critical prior to take-off.

A CFO will walk you through the implications of each path and with you create the right growth strategy and will stand shoulder to shoulder with you through the entire negotiation and funding process.

 

TAKE OFF – WHAT GROWTH CAN I FUND?

With the right flight plan and the right fuel, it is now time to take-off and fly to our final destination, GROWTH.

Growth comes in many forms:

1. Capital equipment to improve logistics or productivity

2. Expand geographically or within business development channels

3. Fund innovation to get product market ready

4. Acquisition of another business to increase market share

Your CFO is the ideal partner to assist you through the growth phase and ensure that you stick to the flight plan – and if you experience turbulence, they are with you to assist in steering the business back to clean air.

Having acquired the funding for growth, funders will require ongoing financial information through the growth phase. A CFO can provide the right numbers to your funders to create a long-term funding partnership that will result in new destinations and growth paths.

 

WHY THE CFO CENTRE CAN HELP YOU SOURCE FUNDING 

The CFO Centre provides your business with a fractional CFO to partner you through the growth of your business.

We understand the numbers that matter, and with you we will:

• Close the “numbers gap” with potential funders
• Assist you to get the source funding you require at the right price
• Use our past funding experience to find the right fit
• Navigate you through the funding process
• Assist you through the growth phase
• Provide funders with the “numbers that matter” during the growth phase

 

CLIENT EXAMPLES 

If you are wary of sourcing funding, we’d like to share some real life client examples. This blog post also delves into the topic in more detail.

• Retool to increase gross margin

The CFO Centre assisted a group of founders to purchase an existing recycling facility. A Bank Lease Facility aided the replacement of the existing plant and equipment to enable the business to export its material to Asia that resulted in an approximate 20% increase in gross margin and eventual 10% market share. This was achieved through three-way modelling, reporting packages and extensive business case and market intelligence provided to the funders.

 

• IT Business restructure, new investors and relaunch

An IT business with high growth potential and a strong customer relationship with Microsoft was experiencing cash flow challenges in the growth stage. The business acquired a fractional CFO though The CFO Centre, and the organisation was restructured into a new entity and new High Net Investors were invited to invest in the business. Within two years the business was acquired, and shareholders received 300% return on equity. This was achieved through three-way modelling, a CFO network of funding options, and business case discussion paper of expanded Microsoft relationship.

 

• Debtor Finance to manage seasonal cash flows and key debtors

A chemical business with seasonal cash flows due to high dependency on the hospitality sector engaged a fractional CFO through The CFO Centre and a Debtor Finance facility was implemented that allowed the business fund 80% of sales daily – effectively bringing cash flow forward by 30 Days. The facility also improved collection discipline as the reporting package established slow payers outside terms.

 

The CFO Centre guides its clients all over the world to source funding. Reach out to discover how we can help.