The News on WeWork
The news recently has been dominated by the fate of WeWork and its almost certain demise. It is clear that one day it will be the case study that will typify the fintech revolution. As with everything, it is an opportunity to reflect and learn. They did everything from taking large amounts of private equity, expensive commercial finance and marketed themselves as something they were not. All this came to a head when they went to float on an expected valuation of $87bn. Today they sit at a valuation of $7-$8bn but many are left scratching their heads at that. The failings are not unique to big corporates, but also apply to the average small business in the streets of Bristol.
Private Equity
We work with a dedicated private equity partner who helps businesses access private equity through a strong network. Many SMEs and small businesses see private equity as free money and the holy grail in their ability to grow. In fact, as with WeWork, it just couldn’t be further from the truth. You are selling a piece of your small business and allowing a third party to have some control. Secondly, the SME is immediately under pressure to meet targets and growth plans.
Getting the right private equity backer can mitigate the latter point. As with all commercial finance, it must be considered and the right partner is essential. It is not free money and with WeWork, SoftBank have now taken control of the business.
Commercial Finance Broker
As a commercial finance broker, we naturally see the advantages when it is used correctly. Through our free initial consultation we get to the root cause of the issue, getting it wrong can be expensive. There are lots of commercial finance brokers across the country who will leverage your business with no thought of your business. The fintech revolution and quick cash have only made the situation worse. It is important any SME uses a valued partner and expert commercial finance broker to support them in the funding process. A business loan at 30% per annum could cripple any business and cost you dearly.
As with Prezzo once a business is highly geared, it is hard to shift the expensive commercial finance. In fact, a business loan at 30% might not only trap a business now but deter longer-term lenders from stepping in. The impact of a business loan on cash flow can be terminal if cashflow was already strained. Furthermore look at our previous article on business loans and cashflow for further information. As with Prezzo, WeWork, and any SME, they are left with few options, and this can be a challenge to support even for ourselves.
Looking To Invest Into Small Businesses
Finally, all small businesses and SME’s must market themselves correctly. WeWork tried to market themselves as a fintech when they were not. At Pinnacle Business Finance we do not market ourselves as a fintech as we are not. We are a proud local commercial finance broker who specialises in everything from card terminals to business loans to invoice finance. This makes it easy for potential clients and investors to understand what we do.
If you are an SME looking for a business loan in Bristol or anywhere in the UK, just get in touch. The world or WeWork can be avoided by having the right partner.
