The benefits of using Debt
Debt is often viewed negatively, but if planned for and managed well, it can be leveraged to yield outstanding returns, while offering the flexibility and control you need to reach your business growth goals.
A fashion business spin-off from a successful company is setting up an e-commerce solution and requires funding through several routes. Capitalise is helping them get a startup loan, a secured overdraft and one of our partners is doing an equity raise through crowd funding. This could not have been accomplished if the fashion business waited until the need for funding was at the point of being critical.
With the rise of platform lenders and other sources of small business financing, there are more options than ever before to help small business owners achieve their growth goals – while still maintaining their vision for what they want their companies to become.
A recruitment firm for which I am a shareholder recently added temporary work to their permanent placement business. As a cash flow intensive business, the firm often requires funding through invoice financing, but had a negative view of such debt. Their perspective quickly changed when they realised the value of their permanent placement books was 1x profit while the value of their contractor books was 5x profit. Over time, the value of the business will be far higher if they choose to sell. Like equity, debt needs to be measured against the return it can generate, so planning is very important.