Getting your finances in order and sorting out any financial issues before you ask for funding will give you a better chance of success in business.
Business finances | Improve your financial position
It may be a good idea to do some financial housekeeping before you start looking externally for funding. Getting your finances in order and sorting out any financial issues before you seek finance will give you a better chance of success.
If you haven’t already done so, consider talking to an accountant or business advisor about your financing needs and options. If your funding needs are relatively small, an advisor or accountant may be able to suggest other ways of improving your cash flow situation or provide options for sourcing funding internally. Some ways you can improve your financial position and cash flow include:
- Recover outstanding debt
Chase up as many outstanding payments as you can. If you don’t have the time, consider outsourcing your debt collection with a reputable debt collection agency. Before you make a sale, always make sure you have a condition of sale agreement in writing that outlines the terms and conditions of the sale including how long your debtors have to settle the debt and any percentages applied for overdue payments. Visit our Getting your money back page for more information on debt collection.
- Reduce/rearrange expenses
Analyse all of your expenses and figure out which of these you could reduce or rearrange. Some options include:
- arranging a deferred or periodic payment plan for larger expenses
- switching insurance companies, banks or suppliers to get a better deal
- modifying the quantity and/or timing of your stock purchases to coincide with higher cash flow periods
- switching to cheaper alternatives for consumables.
- Sell assets
Selling unwanted assets can be a good way to access cash and reduce your storage costs. You could also consider leasing your main assets to help spread the cost over a longer period.
- Offer markdowns
Applying markdowns to full-price products or services can attract sales and shift surplus stock or discontinued products. If you’re offering markdowns, ensure you always comply with pricing legislation. See the Australian Competition and Consumer Commission (ACCC) for more information on pricing and your obligations . See our Analyse your finances page to calculate your Markdown.
- Increase prices
Increasing prices can be a valid option for businesses facing rising costs, even if it’s not popular with customers. If you consider this option, ensure your prices always comply with pricing legislation. Check the ACCC for details about pricing and your obligations .
- Consolidate debt
Look at your current debt and see if you can combine it all into a low interest and low fee product. When considering refinancing your current debt arrangements, make sure you shop around to see if you can you get a better deal elsewhere.
- Use new marketing techniques
Putting more effort into marketing doesn’t necessarily require spending more money. For example, using the internet and social media can be a cheaper and smarter way of getting your message across.
- Offer additional payment options
Offering additional payment options such as credit, e-commerce, or additional payment systems (e.g. BPAY, BillPay or PayPal), can open up different markets and improve your bottom line.
- Look for government grants
Generally, the government doesn’t provide finance to people who want to start up or buy a small business. However, you may be eligible for a grant in certain circumstances such as business expansion, research and development, innovation or exporting. Search our Grants & Assistance Finder tool for available grants and assistance.
- Invest your own money
Investing your own money or that of your family or friends may give you a better chance of obtaining finance. Generally, lenders require a certain amount of equity (own funds) invested in the business before they will lend you money. Before you decide on this option, you should first carefully consider how this arrangement can affect your relationships.
What to do…
- Search our Grants & Assistance Finder tool for details about government grants, incentives and other funding programs available for businesses.
- Call the Small Business Support Line on 1800 777 275 to access information, assistance and referral services.
- Seek finance in your state or territory.
- Visit our Getting your money back page for more information on debt resolution.
- See our Manage your finances topic.
- Visit the MoneySmart website if you are thinking of investing in your own business and want to improve your personal finances.
- See the ACCC website for information on pricing and your obligations including making carbon price claims .
- Seek advice from a business advisor or accountant.