Only a fool thinks price and value are the same.

Antonio Machado

Few businesses can expand and grow without fresh injections of capital, so it makes sense to understand the banking landscape you're operating in and give yourself the best chance of success. I've learned a few things along the way that may help you navigate this torturous exercise.

How to choose the right bank

I can't stress how important it is to develop a good relationship with your banker and to start building that relationship before you need them and their money. While they will always crunch the numbers to assess your creditworthiness, they will also assess you as a person to decide whether or not to take a gamble on you. Whether you choose to work with a traditional bank, mutual society, credit union or national bank, you'll find their policies and procedures are similar.

For a start, choose a bank that knows your needs. This sounds obvious, but certain banks specialise in loans for certain industries. For example, our bank has a strong presence in hospitality: the bankers understand it and are (reasonably) sympathetic to the undulations of this erratic industry. Mind you, when a bank changes its CEO (and this is happening more and more frequently than in the past), the preference and risk tolerance for an industry can change along with it, so you need to keep your finger on the pulse of what's happening in your industry.

That's why joining your local association or industry advocacy body is so important. They often hold seminars or events that cover topics such as how to choose the right bank and you can ask anyone a question and get a quick answer. If you move in the right (industry) circles, you'll also discover that if a particular bank has had a bad experience with someone in your industry, they may be unwilling to work with you. Knowledge is power. Do your homework so you don't waste time chasing down deals with bankers who are never going to say ‘yes’.

Once you've found the right bank, try to find the right banker to work with. The people working in the bank can differ wildly in how they value a business, assess risk, understand the cyclical nature of what you do (and so on), so if you can get a good referral from an industry insider as to who they like and work with, take that referral seriously: it could be the difference between getting approval or not. Once that's done, you'll receive a business finance agreement (or BFA), also known as a term sheet, which will contain the details of your banking covenant.

The BFA covers off things such as loan-to-value ratios (LVRs), interest rates and when payments are due, length of loan, terms and conditions, and more. It will also cover off on personal guarantees, which is something you should look at very closely because conditions like this could be used against you in the future and bring you down. I know of many successful entrepreneurs who signed off on personal guarantees and even though they made all the appropriate payments, the banks called in the loan and the entrepreneurs went bust trying to pay it off. If you start with that assumption and work backwards, it will help you manage your expectations and prevent disappointment.

You might think all this is pretty standard stuff, and it is, but the devil is in the detail and there could be clauses or conditions that are seriously unhelpful to you should things turn bad in the future. You must review these documents with your accountant and lawyer to ensure you're not signing something that could come back to bite you.

Most people never need to review any contract until the shit hits the fan, and then everyone is scrambling to find a decades-old contract that's sitting in some dusty filing cabinet somewhere, hoping and praying that they didn't sign or agree to something that's no longer in their interest to agree to. More often than not, they signed it, without reading it first, and they will suffer the consequences.

In short, don't sign anything you haven't read and understood. If you don't understand it, ask questions, and if you still don't understand it, ask more questions. It's on your head if you don't understand what you're signing.

How to choose a good accountant

Before you start your business (yes, before you've even bought your company name, website domain name or anything else for that matter), you need to have the right accountant. This is absolutely crucial. A good accountant will assist you in building the foundation of your business, and help you set the goals and create the game plan to get you there. The good accountants offer much more than just a window to the past. The consultative accountants — the ones you want — will help you look to the future to identify what you want and plot out the pathway to help you get there.

The challenge most small-business owners have in hiring an accountant is the cost. ‘I can't afford it!', ‘They charge like wounded bulls' and ‘They bill me for picking up the phone' are common complaints. While this may all be true, the reality is you can't afford not to have an accountant work with you. They should be seen not as an expense, but as an investment. Just as you buy a property with an expectation of a return, you should do the same with your accountant.

My accountant is one of my most trusted advisors. We meet regularly, set the goals and work hard together to achieve them. I tell her what my goals are. She helps me get there. End of story. Why wouldn't I reward her for that effort? She is available to talk and we meet whenever we need to.

Crowdfunding: Leveraging your community to raise money

I have been raising capital for decades now and have always done it the old-fashioned way: locate a pub to buy, prepare my information memorandum, source the funds from investors or the bank and get to work. If you'd prefer to bypass the banks altogether, there are new financing alternatives you can consider.

For example, with the advent of technology, crowdfunding has become a convenient way of raising capital to fund a project and has changed the funding game completely. You've no doubt heard of the concept, but if you haven't, crowdfunding is simply a way of raising funds from a number of people over the internet to help you start a product or to help you make a profit.

Pozible was one of Australia's first crowdfunding start-ups and it helped launch a product that is close to my heart, mainly because we sell it in our pubs. Four Pillars gin distillery is a small gin distillery in the Yarra Valley, Victoria, about 90 minutes north of Melbourne. Its three founders, Cam, Matt and Stu, had worked in wine for years, and in 2013 decided to start Four Pillars with the ambition of making the best craft spirits in Australia. They turned to crowdfunding to fund the first batch of their coveted Rare Dry Gin. Four days after launch, they'd sold out of their first batch and made $10 000. They ran another campaign to fund their next batch, sold it to 306 people, made $31 200 and have never looked back.

Four Pillars showed that ‘rewards' crowdfunding is a legitimate and efficient way to test, launch and sell a brand-new product and find your first customers along the way. The key advantage of this form of crowdfunding is you don't have to give any equity or shares away.

There's no two ways about it. Capital raising can be hair raising, but if you're to grow, expand and realise the full potential of your amazing business idea, you'll need to get stuck into it eventually. Whatever method you use to raise money, know that everything comes with obligation and commitment, so be sure to choose wisely, honour the agreements you commit to and don't overpromise.