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Whatever type of business you run, an appropriate financial structure ...
...will be needed if growth and development are to be nurtured.
Any structure needs to provide maximum flexibility. You will have to balance the needs of a positive cash flow and sufficient working capital with the desire for a return on investment. For example, you must ensure that money withdrawn from the business to maintain the living standards of the directors is not damaging to the firm's long-term future.
You will also need to build in protection against such risks as interest and exchange rate fluctuations, seasonal economic changes, slow paying debtors and illness or premature death of key players.
As companies grow and expand it is very easy to lose control of the business - often with critical results. Internal control procedures that were ideal for a medium sized company may no longer be sufficient to keep a much larger operation running smoothly. It is therefore important that you review your controls on a regular basis to ensure that they are reliable, appropriate and working efficiently.
Formulate a structure which will be fair to all investors, both now and in the future, and monitor the debt-to-equity ratio -- repaying debts may sound sensible but it can mean denying your business necessary cash.
Your financial structure should also take into account your final exit route. The earlier a decision is made to implement an exit strategy, the more efficient that strategy can be both in terms of improved tax planning and in optimising the position of the business at the point of sale.
Grant Thornton Corporate Finance can assist you in formulating your financial structure and can undertake reviews of your systems and risk assurance.
Contact us about Raising Finance and Flotations
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