New Zealand is often described as a nation of small businesses. We’ve all seen the statistics showing that 97% of NZ businesses have less than 20 employees.  With only 3% of businesses defined as large corporations, this bottom-heavy set up means smaller players can find themselves working with much larger and more powerful clients.  This is something of a ‘David and Goliath’ scenario, so how do we ensure our David’s can work successfully with the Goliath’s?

For many smaller operators, landing a big piece of business is a dream come true and something they have been striving for from the outset.  As well as leading to increased revenue and better cash flow certainty, signing a large client can give your business instant credibility and open the door to opportunity.  Should be win-win right?

The answer is yes (but with careful planning!)

Businesses often come to Apricity when they are on the brink of something big – they have a growth opportunity or perhaps they have just won a new client or contract.  This is an exciting time for any business, but one where it can be very easy to get carried away.  Businesses become fully engaged working out how to land the golden goose but get distracted from figuring out how they will meet their new (as well as existing) commitments.

Don’t let excitement take over reality

Make sure you have the capacity to fulfil your obligations.  Do you have the staff, equipment, funding for development, and supply chain all in place?  Have you thought about everything / spoken to your colleagues and suppliers who may be impacted?  Do they agree and support you?

Plan your cashflow

Having the resources at hand is one thing but having cash in the hand is key.  I often talk about businesses knowing their physical supply chain but not fully understanding their financial supply chain. Make sure you do the appropriate financial due diligence upfront to ensure that margins and contract terms are not only achievable, but also good for your business.  Know your contracts inside out – certain deliverables, liabilities, timing or cash flow constraints can severely impact the success of your business.

War story

I have recently seen a handful of start-up businesses. Those that did not plan ahead are now unable to pay suppliers. Those that overlaid their financial supply chain on top of their physical supply chain created a cashflow forecast which clearly showed the need for cash to be in the tank before starting business as well as a secure line of funding to continue business.

Keep your eye on the long game

Don’t look for short term loans to cover shortfalls or immediately upscale your business to work with larger, powerful clients.  You must look longer term and have a real business plan (3-5 years) if you intend to really make an impact in big business.  Ensure you complete cashflow forecasts and cost projections to meet peak funding and resourcing requirements.  Make sure you have a funding partner with flexibility and reliability to support your business long term.

Apricity Invoice Finance

One of the most enjoyable parts of my job is what I call the ‘enabling piece’.  In many cases, businesses come to us when they are lacking the cashflow to act on an opportunity or manage their commitments though a period of growth.  I like to see our solution as an enabler – one which supports small business succeed and grow.

We are not a bank and our solution is not a loan.  Put simply, having an Apricity Invoice Finance Facility gives you access to the funds from your own invoices sooner, helping you smooth your cashflow and meet your funding and resource needs (particularly during periods of growth).  In addition, we do not ask for collateral and by using invoice finance you are not getting into debt (as you may be with a traditional bank loan or overdraft).

Small business is the backbone of our economy and in an increasingly fast paced and global marketplace it is of great importance that they are supported in their opportunities for growth.  With thorough and robust planning, the David’s of today may well become the Goliath’s of tomorrow.

Apricity Finance is a Trans-Tasman business, our solution has helped a number of NZ clients expand and take advantage of opportunities at home and in Australia.  Find out how an Apricity Invoice Finance facility could help your business grow.