Drawing on Sam’s experience assessing and structuring funding for New Zealand businesses.
Changes in demand, seasonality, investment or activity within a sector can create natural reasons to check in. For one business, that might mean funding seasonal stock. For another, it could be an acquisition, succession, working capital, restructuring or investment in growth.
Those conversations often start with what is changing around the business.
“You don’t need to know every industry inside out. But if you understand what’s driving demand, seasonality or growth in a sector, you’re much more likely to recognise when a funding conversation is worth having.”
What is changing in the business – and around it
Different sectors tend to create different funding triggers.A retailer heading into its busiest trading period may need working capital to bring stock in before the sales arrive. A tourism operator preparing for summer may be looking to increase capacity. A construction business coming out of a quieter period may need support to gear back up as contracts and projects return.A busier season, new contracts, investment plans or a change in direction can all shift what a business needs from its funding.
“A business can look quite different six or twelve months down the track. New contracts, a stronger season, a change in direction – any of those things can change what the funding need looks like.”
Those changes can create a natural reason to reconnect with a client – and potentially get ahead of a requirement before it becomes pressing.
The funding need can take different forms
Asset finance will naturally sit within many business funding conversations, while growth and change can bring other requirements alongside it.
Working capital is one example.
Retailers and wholesalers may need funding to purchase stock ahead of a seasonal increase in demand. Other businesses may need additional cashflow support while they build capacity or wait for increased revenue to flow through.
Acquisitions and succession can create another kind of requirement.
Sam has recently been seeing management buyouts where an experienced employee or general manager is in a position to take over an established business but doesn’t necessarily have all of the capital required to complete the purchase personally.
In one recent example, the business had been operating for around 20 years and the general manager had spent several years inside it before the owner was ready to step away. The proposed funding structure combined support from the outgoing owner with external lending to help make the transition possible.
“Sometimes the opportunity is already sitting inside the business. You might have a GM who knows the operation well and is ready to step up, but the funding structure is what makes the transition possible.”
Funding opportunities do not always arrive as an obvious request for finance. Sometimes they sit inside a broader conversation about where the business is heading next.
Timing matters too
Some funding needs follow a fairly predictable rhythm.
Sam points to Christmas stock requirements for retailers and wholesalers, spring activity across farming and related industries, and signs of construction activity beginning to build again in some areas.
Those shifts often bring funding conversations forward.
“If you know a client is heading into a busy period or planning for growth, it’s better to have the conversation early. Once it becomes urgent, you’ve usually got less room to work with.”
For businesses looking ahead to the next trading period or planning for the year to come, an earlier conversation can create more room to work through what might be needed.
A broader lens can open up different conversations
There is no single shape to a business funding requirement.
A transport operator may be buying another vehicle. A retailer may need stock. A tourism business could be preparing for a seasonal increase in demand. An established company may be working through succession. Another business might be looking to restructure existing debt or free up working capital for what comes next.
The common thread is understanding what is changing in and around the business.
Staying close to sector changes creates more natural reasons to talk with the clients you already know – helping them plan for what is coming, while also surfacing funding opportunities that may not otherwise have been obvious.
This information is general in nature and does not take into account the specific circumstances of your business. Any lending, refinance or change to existing lending is subject to assessment, approval and applicable terms and conditions. Changing a loan term or refinancing debt can affect repayments and the total cost of borrowing. Consider the applicable interest rate, fees, early-repayment costs, security requirements and loan terms before making a decision.
Have a client funding scenario you’d like to talk through?
Talk to the Line Capital team about the business, the requirement and what might be possible.
