M56GrowStrategy & Growth· Module 6
Capital and Funding
The business needs funding to grow, but doesn't know how much, what kind, or what lenders will look for.
- Grow
- Scale
- Finance
- Strategy
- Governance
- ~5 min · Checklist
The business problem
Founders often seek funding late, in a hurry, and of the wrong type — short-term overdrafts for long-term assets, or equity for working capital. Poor records and founder dependency make lenders and investors cautious.
Why it matters
The right capital, at the right time, on the right terms, can accelerate growth. The wrong capital can take control of the business or drain its cash.
What you will learn
- Match funding type to use: working capital, assets, growth
- Understand debt, asset finance, trade finance and equity
- Prepare the information lenders and investors require
- Estimate how much funding is really needed
Core questions
- What exactly is the money for, and when will it be repaid or return value?
- What type of funding fits that use?
- What will a lender or investor want to see?
- What control or security are we giving up?
Work through the module
CaseWhat is happening?
Packaging manufacturer, 65 people · Illustrative teaching case
A packaging manufacturer uses its overdraft to buy a new machine. When a large customer pays late, the overdraft is exhausted and payroll is at risk. The business refinances the machine through asset finance, frees the overdraft for working capital and prepares monthly management accounts to support future applications.
DecisionWhat does the leader need to decide?
Keep funding everything from the overdraft, or match each need to the right kind of capital?
FrameworkHow should they think about the problem?
Matching funding to use
Short-term needs (working capital) → short-term, flexible funding. Long-term assets → long-term or asset finance. High-risk growth → equity or patient capital. Lenders look for cash flow, security, records and management depth.
ToolWhat can they use?
Funding readiness checklistChecklist
- Use of funds and amount, with growth model
- Monthly management accounts
- Cash flow forecast
- Security available
- Management team beyond the founder
ApplicationHow does it apply to their business?
Apply it to your own business:
- List your current funding and what it is used for
- Identify any mismatches
- Complete the readiness checklist
ImplementationWhat changes?
What should change in the business:
- Restructure mismatched funding
- Prepare the information pack before you need it
- Build relationships with lenders early
ReviewDid it work?
How to tell whether the change worked:
- Is funding matched to use?
- Are applications processed faster?
- Has the cost of funding fallen?
After this module you should be able to decide
Keep funding everything from the overdraft, or match each need to the right kind of capital?
And leave with: A funding plan matched to the use of funds.
Sequence · Strategy & Growth
Related modules
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