How to secure funding in difficult economic times

Small businesses need new strategies to secure funding when faced by economic challenges, from government initiatives to alternative sources and collaborations.

In a turbulent economic landscape marked by high inflation, escalating interest rates and a cost-of-living crisis, small printers are facing unprecedented challenges. Not only are operational costs for small printers strained, but financial pressure is affecting their clients too. This could lead to reduced demand for printing services, or a desire for more practical products: those ‘must-haves’ rather than ‘nice-to-haves’.

In navigating these challenges, small printers must not only adapt their financial strategies but also proactively seek innovative funding solutions to ensure the resilience and sustainability of their businesses in a stormy economic climate.

You may need to find the right type of funding option to allow you to:

• Set up your business
• Buy into an existing print business
• Acquire equipment and assets
• Acquire premises
• Provide working capital
• Finance growth
• Deal with tax

Preparing to ask for funding is a critical step for any small printer looking to secure financial support. Here’s a comprehensive guide on what information a printer needs to present a compelling case for funding:

1. Business Plan:
   - Executive Summary: Provide a concise overview of your printing business, including its mission, vision, and key objectives.
   - Company Description: Detail the history of your printing business, its current status, and future goals.
   - Products and Services: Clearly outline the range of printing services you offer and any specialty areas.
   - Market Analysis: Demonstrate your understanding of the printing industry, your target market, and the competitive landscape.
   - Organisational Structure: Outline your company’s structure, including key personnel and their roles.

2. Financial Statements:
   - Income Statement: Present your revenue and expenses over a specific period, highlighting profitability.
   - Balance Sheet: Showcase your business’s assets, liabilities, and equity to provide a snapshot of its financial health.
   - Cashflow Statement: Illustrate how cash is moving in and out of your printing business.

3. Funding Purpose and Amount:
   - Clearly define why you need funding and how much you are seeking. Whether it’s for equipment upgrades, expansion, or working capital, be specific.

4. Use of Funds:
   - Break down how you intend to use the funds. Whether it’s for purchasing new printing equipment, hiring additional staff, or expanding your services, provide a detailed breakdown.

5. Financial Projections:
   - Offer realistic and well-researched financial projections for the future. This could include revenue forecasts, expense projections, and anticipated profit margins.

6. Collateral:
   - If seeking a loan, identify any assets or collateral that can secure the funding. This could be equipment, property, or other valuable assets owned by the printing business.

7. Credit History:
   - Provide information on the credit history of your printing business. A strong credit history can enhance your credibility when seeking funding.

8. Risk Assessment:
    - Acknowledge potential risks and challenges your printing business may face and outline strategies for mitigating these risks.

9. Legal and Compliance Documentation:
    - Ensure that all legal and compliance documentation for your printing business is in order. This may include business licenses, permits, and adherence to industry regulations.

10. Personal and Business Credit History:
    - Be prepared to share both personal and business credit histories, especially if you are a small business owner. Lenders often consider the creditworthiness of both the individual and the business.

11. Repayment Plan:
    - Clearly outline how you intend to repay the funding. Whether it’s through monthly installments, a percentage of revenue, or another method, provide a detailed repayment plan.

By thoroughly preparing with this information, a small printer can present a compelling case for funding, instilling confidence in lenders, investors, or grant providers.

Bank funding

Traditional bank funding remains a cornerstone for smaller printers seeking financial support. In the UK, the British Business Bank is a pivotal institution dedicated to facilitating access to finance for smaller businesses, including print shops. Through schemes like the Enterprise Finance Guarantee (EFG), small printers gain access to loans and overdrafts, supporting them in acquiring updated printing equipment or expanding their services.

Opting for a secured loan allows your business to access funds by pledging a business asset as collateral. This asset can encompass various holdings, such as stocks or property. If you are unable to repay the secured business loan, the lender retains the right to sell the designated asset as a means of recouping the funds. While the advantage of this approach lies in lower interest rates and the potential for larger loan amounts, it is imperative to assess your repayment capabilities, as defaulting on the loan puts the secured asset at risk of forfeiture.

Alternatively, an unsecured business loan provides your company with the flexibility to borrow funds without requiring any of your business assets as collateral. As this type of business loan entails a higher level of risk for the lender, it is accompanied by elevated interest rates. While the absence of collateral simplifies the application process, businesses should be prepared for the financial responsibility that comes with higher interest rates when opting for an unsecured loan.

Government initiatives

Governments in the UK and Europe respond to the unique challenges faced by small printers with tailored initiatives. In the UK, the Innovate UK Smart Grants exemplify government support for innovation-driven print businesses. These grants, available to UK-based small printers, focus on transformative projects such as adopting sustainable printing practices or investing in cutting-edge printing technologies. Similarly, the European Investment Bank (EIB) offers funding and financial support to small printers across Europe, promoting economic development and innovation within the printing industry.

Alternative funding sources

The funding landscape has evolved with the rise of crowdfunding platforms. Funds such as Crowdcube and Seedrs, both based in the UK, have revolutionised how small businesses raise capital. Successful campaigns include a small print shop launching a campaign to acquire state-of-the-art digital printing presses, showcasing the power of community-backed funding. As a new and exciting product that captures people’s imaginations, 3D printers in particular have been able to secure financing, reach interested populations and promote innovation in sustainable products.

Across Europe, the European Investment Fund (EIF) plays a vital role in supporting European small printers through venture capital and guarantees, fostering innovation and entrepreneurship within the printing sector.

Building strategic partnerships

Strategic partnerships serve as a dynamic avenue for small printers seeking financial support and collaborative opportunities in the UK and Europe. The Knowledge Transfer Partnership (KTP) in the UK facilitates collaboration between small printers and academic institutions, fostering innovation and growth within the printing industry. For example, a small printing company could partner with a university to develop environmentally friendly printing inks, showcasing the potential for sustainable growth and innovation within the sector.

Diversifying revenue streams

Diversification remains a crucial strategy for small printers in the UK and Europe looking to fortify themselves against economic uncertainties. The UK Research and Innovation (UKRI) Industrial Strategy Challenge Fund supports small printers in diversifying through research and development projects. Real-world examples include a small print shop diversifying its services to include promotional merchandise printing or personalised packaging solutions, showcasing the power of strategic diversification within the printing industry.

When navigating economic challenges, securing funding for small printers demands a nuanced approach with a focus on region-specific examples tailored to the printing industry. The tailored strategies within traditional bank funding, government initiatives, alternative sources like crowdfunding and strategic partnerships, as well as diversification, provide a roadmap for small printers. By leveraging these examples to their advantage, small printers can not only weather the economic storm but emerge stronger, more resilient, and well-prepared to thrive in the face of adversity within the dynamic printing landscape.