SMEs need to consider funding when looking for growth.

Are Australian SMEs prepared for growth?

Growth is a key driver for most businesses, with decisions and strategies formulated around the idea of expansion. This is extremely important for small companies to consider, and research has found that Australian SMEs have often planned for this eventuality.

A study prepared by Business Connector sought to find how SMEs are dealing with business development through revenue streams. Two options are explored by the survey, one is growth through private capital, and the other is to accept financial assistance.

This decision is an important one for SMEs to make, as it can make or break companies if the wrong option is chosen. With large sums of money at stake, it can also be useful to seek financial advice. 

Business Connector identified a figure of $500,000 as being necessary for substantial growth for a number of SMEs. Around 54 per cent of respondents believe they need this amount or more in order to succeed.

While conducting the survey, the firm found there had been a noticeable change in the way businesses were seeking new opportunities. Founder of Business Connector Mike Boorn Plener explains that the changes saw SMEs reverse standard funding processes that companies normally adhered to while attempting to encourage growth. 

"We are seeing a shift in how SME businesses are being funded that is remarkably different from how the typical StartUp is being funded," said Mr Plener.

"Most of these businesses will go and test the market first, build revenue and THEN raise capital, not the other way around."

Although these are perfectly viable options, it is still important to ensure that plans regarding cash flow and expenditure are in place. The same study found that up to 50 per cent of respondents do not have a proper funding plan, and a further third have no cash flow forecasts.