Dashboard Commercial Funding

This is a theory which applies the standard car dashboard as an analogy to preparing your business for raising funding.

How this works is by taking the information supplied on a standard dashboard and applying that to your business. Most of the information available is what top tier commercial lenders look for in a company they are willing to lend to.

The dashboard analogy simply allows SMEs to consider the key factors and determine how the same things are measured in a commercial scenario.

Let me expand a little…

Warning Lights

We have all seen them, low oil, brake pads, headlights and even the dreaded light none of us really know bar it is going to cost money to get it to go off again. Warning lights are indicators that something is either happening or going wrong.

From a business perspective, think;

• What warning lights will come on in my business if something wrong happens?
• How will I know if something isn’t quite right?
• What systems are in place to spot when things are off track?
• Are there any warning systems, if not then how could I introduce them?

Fuel Level

Low fuel means having to put more in the tank. Your dashboard will show you a warning light several miles before you need to fill up, it will give you more than enough time to find a garage and stop you from suddenly coming to a halt.

When it comes to your business swap fuel for pipeline, think;

• How much work have I got ongoing?
• How much work can I accurately project coming in in the future?
• Do I know if I have enough business coming in?
• If I cannot ascertain how much business will be coming in then what am I going to do?
• Do I have a plan to prevent the low fuel light coming on to start with?
• Where will I get more business from? How, why?

Speed

There is a speed limit on UK roads, I have 3 points to prove this fact. The thing is we look at the speedo to make sure we won’t get fined or caught speeding. The speed level is about compliance with road regulations.

When it comes to your business, ask yourself these questions;

• What are the capacity issues in your market? How much business exists?
• Compliance. LePEST is an old business acronym but applies just as well today, it stands for ‘Legal’, ‘Political’, ‘Social’ and ‘Technological’. It looks at the external factors that could impact on your company’s trading. Think about changes in regulation, government policy, the social impact or changing attitude to your business sector
• Think whether there are issues with staffing, think qualification, availability etc
• Industries which have been impacted by LePEST issues include; Care, Nursing, Food, Legal, Finance, Dentists, Building etc. The list is really broad so consider how things may impact on you

Revs

At what point do you change gear? How long will you drive at 7k or 8k rpm? After a while the engine will give out so instead you change gear to ease the pressure. The swap side is when you need to accelerate you drop gear and pick up the revs.

This applies to your company, with revs think about;

• Do you have the staff and resources to change up a gear? At what point do you max out your revs in your business, at what point do you reach capacity?
• Are you proposing something that will take your business beyond where it is capable without expansion or investment? Is everything in place or do you need to get things lined up to avoid risking burning out?
• If you need to change down a gear, say you lose a contract or things get tight then how quickly could you do this? Could you streamline or cut costs without losing more clients?
• Where is your maximum level? How will you know when you need to expand? What are the signals or KPIs for this?

The Dashboard Theory

There are more analogies you can draw, whether you agree or not is fine. The idea about taking the car dashboard and applying it to a commercial scenario is simply to get the business owner thinking.

Top tier commercial lenders will look at all the areas above, they use business models to do this and each will focus on different areas but it is all there. To make yourself a viable and professional entity then getting the areas above covered off will take you a long way.

By Dave Farmer

For any queries or comments about this post please add them above. For anything else then please contact Lime Consultancy on 01293 541333 or via the website.