However, before you decide on a financing strategy and reach out to potential investors, you should analyze your business model in detail and optimize it accordingly. To do this, it’s advisable to use modern tools such as the Business Model Canvas to highlight your business concept and the unique selling points of your business model, and to define the market and competitive landscape as well as, among other things, the maximum possible market share, so that investors can assess how your company fits into the market.
Furthermore, you should present your management team in a professional manner and also introduce new potential candidates who will play a decisive role in the company’s future development. This will help you illustrate your company’s future potential, which is to be realized through your growth strategy.
You should provide well-reasoned explanations for key positions that still need to be filled or potential weaknesses in your company, rather than trying to hide them. This is the best way to convince investors that you will address and resolve areas with remaining room for improvement with your usual high level of professionalism.
Once you have optimized your business model and clearly highlighted the company’s promising future prospects, you should also thoroughly calculate and transparently present your company’s business case to best convince investors of the success of your growth plan. In addition, disclose any existing collateral and provide the relevant documentation to ensure a smooth application process for the financing.
Also calculate your debt service capacity—that is, your company’s ability to repay the requested loan in full and on time—as this will ensure you are well-prepared for discussions with investors and fully aware of your company’s financial situation. As is very clear here, careful preparation throughout the entire process is crucial.
To identify the optimal financing mix for your company following your thorough preparation, it is advisable to consider private equity firms in addition to traditional sources such as loans from your primary bank. Furthermore, you should not overlook the offerings of regional development banks, the federal government, and the EU, which often provide subsidized loans on attractive terms. Alternative methods such as leasing are also becoming increasingly relevant for small and medium-sized enterprises and should be considered as an alternative to bank loans for your company.
In the case of leasing, for example, the lessee is granted the use of the leased asset in exchange for an agreed-upon payment. For small and medium-sized enterprises, this not only offers tax advantages but also preserves the company’s liquidity. The fact that the leased asset does not appear on the lessee’s balance sheet can also be a relevant factor in the decision-making process.
However, leasing can also have its limitations for small and medium-sized businesses. For example, the company may incur higher overall costs compared to a purchase on credit if the leased asset is used over a long period of time. It is therefore advisable to weigh the total costs in advance and identify the most cost-effective option. For this purpose, it is often advisable to consult a tax advisor.
The advantages and disadvantages listed above should therefore be weighed on a case-by-case basis as part of growth financing planning, for which professional support from a tax or management consulting firm such as Dolling + Partners New Consulting GmbH is also available.
When seeking out financing partners, don’t miss the opportunity to compare the different terms offered by various banks and other financing partners. This will ultimately allow you to select the best partners for your project, rather than being limited to a single offer. Depending on the offers available, you may ultimately also consider combining different sources of growth financing.
In summary, confident and professional communication and presentation, as well as careful preparation, are essential for successful growth financing. If you follow this principle and approach financing partners well-prepared, you will be able to successfully realize your company’s growth potential.
