Running a business is demanding. Most owners spend their time focused on customers, people, operations, cash flow and the daily decisions required to keep moving forward. However, the bigger strategic decisions that include raising finance, taking investment, buying another business or selling a company require a very different lens.
That was one of the themes that came through strongly at our recent Snowball event at Jodrell Bank, The Future of Your Business: Real Business Owner Stories. The event brought together entrepreneurs, business owners and advisers to discuss the key moments that shape the next chapter of a business. A consistent message was that important decisions are rarely made well when they are rushed, made in isolation, or viewed only from inside the business.
For more information on last month’s event, please see the newsletter from last month.
External expert and importantly, independent, advice and support provide business owners the ability to step back.
In corporate finance and funding situations, this perspective is critical. A lender, investor or buyer will look at a business differently from its owners. They will assess risk, quality of earnings, customer concentration, growth plans, management depth, cash generation, security, valuation and exit routes. An adviser helps the owner understand how the business is likely to be viewed before entering the market, rather than finding out too late in the process.
A good adviser also helps create structure. Most business owners will only go through a sale, MBO, EOT or significant fundraise once or twice in their lifetimes. Buyers, lenders and investors do this every week. That imbalance of experience matters. External advice helps level the playing field by preparing the right information, shaping the story, challenging assumptions, managing the process and ensuring that the business is presented professionally.
The same applies to borrowing and growth finance. The funding market has changed significantly over the years. There are now far more sources of capital than simply approaching a high street bank. Asset finance, cash flow lending, invoice finance, property-backed lending, private debt, government-backed schemes, equity investment, SEIS/EIS funding and specialist sector funders may all be relevant depending on the situation. The challenge for many business owners is not whether finance exists, but knowing which route is right, what the implications are, and how to access it.
This is also where businesses can get into difficulty. We are seeing more examples of companies that have taken on multiple short-term loans, often from different providers, without a proper overall funding strategy. This ‘loan stacking’ can create serious problems. Each facility may appear manageable on its own, but when repayments overlap particularly where there are daily or weekly payments, high costs, personal guarantees or duplicated security the pressure on cash flow can quickly become unsustainable. Sadly, I am seeing more and more examples of this happening, and they have been badly advised or not advised. Often the right answer is not to take more funding and to fix the underlying issue in the business.
Short-term loan stacking very rarely works as a long-term solution. In many cases, it simply moves the problem forward by a few weeks or months, while increasing the total debt burden and reducing future options. It can also make the business harder to refinance, as new lenders may see a pattern of emergency borrowing rather than a clear, well-structured funding plan. What starts as a quick fix can become a cycle of borrowing to repay borrowing.
This is where independent advice matters. The right answer is not always the quickest approval, the easiest product to explain, the first lender approached, or the offer with the lowest headline rate. The right answer depends on the purpose of the funding, repayment capacity, business plans, risk, timing, ownership ambitions and future flexibility. Poorly structured finance can restrict a business just as easily as well-structured finance can unlock growth.
External advisers also provide challenge. They should ask difficult questions before a lender, investor or buyer does. Is the forecast realistic? Is the valuation supportable? Are margins sustainable? Are the management team ready? Are there risks that need explaining upfront? Are there better options than the route initially assumed? This challenge can feel uncomfortable, but it often protects value and improves outcomes.
At Snowball, we believe advice works best when it is independent, transparent and focused entirely on the client’s objectives. Whether the issue is raising finance, preparing for sale, considering private equity, exploring an MBO, looking at an EOT or simply understanding the options, the starting point should be a proper understanding of the business and the owner’s personal goals.
Corporate finance decisions are rarely just financial. They affect ownership, control, people, legacy, risk and the future direction of the business. Getting advice early does not commit you to a transaction. It simply gives you better information, better options and a clearer route forward.
In a complex market, the best decisions are made with preparation, perspective and trusted advice.