Determining the quantum of finance

This is again an important factor that a business owner should consider before acquiring finance. The amount of finance should be determined after taking into account the facts and figures of the project. Further one should not ignore the impact of the finance on future cash flows and earnings. Suppose we require 10 lacs additional finance but we make a rough estimation and take a loan of say 13 lacs. So the extra 3 lacs will require unnecessary interest payment and will pinch your cashflows and profits. On the contrary if we take a loan of a lower amount say 8 lacs, it will again take a toll on the cash flows as you may not be able to make the appropriate payments due to lack of funds.

The services provided by our firm in the above category can be broadly classified into 3 stages:

• Planning
• Consultancy
• Implementation

A good business plan and good potential returns is the key to attract investors. Many businesses either work without a business plan or have a plan with many inherent flaws. Our team of professionals shall closely analyze your business operations and prepare an investor ready business plan. Preparing a business plan would help in clarifying the company’s direction. The next step would be addressing upon the four crucial issues:

• Purpose – Do you have a genuine purpose or a good business idea in case of start-ups?
• Marketability – Does your idea have a substantial market?
• Management- Does your team have the ability to lead the company to profits?
• Cash Flow – Does your company have an efficient cash flow system?

Based on the above, our experts will provide a clear picture of the right quantum of finance and the right type of finance.

Assuming the role of business consultants our team will now expose you to the different forms of financing available. They will help in selecting the right type of financing for the business taking into account the effect of finance on the cash flows and future profits. The following are the options for business funding:-

Debt and equity have been explained earlier

Business Angels/ Angel Investors

These are high net worth individuals who provide finance in return of share holding in the business. They may take up an active role in the management as well.

Venture Capital

These are similar to business angels, only that finance is provided by venture capital company. The company manages funds on behalf of their investors and shareholders. For finance through this route the following are essential:

• A strong business plan/proposition.
• Good potential returns.
• Clear exit route for the venture capital company within a timeframe of 3-5 years.

Venture capital financing is suitable for businesses looking out for a high amount of finance.

Mezzanine Finance

This is a combination of debt and equity. The lender gets an option of converting the loan into equity stake of the business. The loan in this case generally attracts a higher rate of interest as compared to loan from other financial institution.

Debt Factoring

This is an arrangement whereby the business sells its accounts receivables to the factoring company at a discount. The business gets immediate finance resulting in improved cash flow. The factor then collects the outstanding amount from the business customers.

This service involves acquiring finance for the business. This can be done by approaching banks, financial institutions, angel investors, venture capital companies and other agencies.