Growth Funding – It’s not about the gap in the market

Why Growth Funding Fails It’s not about the gap in the market, it’s about the market in the gap. Not a new line, but still one that is often forgotten or misunderstood. It is something I often see when a business is trying to justify it’s growth plans and projections. It is also something that […]

September 5th, 2019

Why Growth Funding Fails

It’s not about the gap in the market, it’s about the market in the gap. Not a new line, but still one that is often forgotten or misunderstood.

It is something I often see when a business is trying to justify it’s growth plans and projections. It is also something that lenders and investors are really hot on.

The Common Example

The most common way this misunderstanding manifests itself is in how a business determines and justifies it’s potential. If you have ever watched Dragons Den then you will have heard this line.

‘The market is worth £xxbn, I only need 0.1% of the total market share…’

Who cares? Wanting and getting are totally different. I remember my parents saying ‘I want doesn’t get’ and, yes, I have used that line myself. The fact that you only need a small share of a large slice of cake is of no real consequence.

You may have identified a gap in the market but have failed to identify the market in the gap.

Switching it around

Instead of focusing on the share of market required, provide forecasts along with who your next five clients will be. Focus on the need you solve and how you access those clients.

By focusing on the clients you are going to win you demonstrate a few key strengths to the lender;

You have thought about and identified your actual target customer rather than a sector, you know where your sales (and repayment for any lending) is coming from
You know your business and how to grow it
The early stages of your forecast can be relied upon, it is quantifiable rather than bluster and hot air

The bottom line is that by approaching things this way you engender trust and differentiate your proposal from the rest of the pile sitting on the lender’s desk.

Remember, it’s not the gap in the market but the market in the gap.

By Dave Farmer

For any commercial finance queries or more info then get in touch.

David Farmer

Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.