11/02/2015

By Louise Cronin, Growth Vouchers Admin & Claims Co-Ordinator, Winning Pitch

In recent years a number of investment and financial readiness initiatives have been launched to the SME world. These have been designed to raise awareness of what businesses need to do to access funding.

Securing money to drive growth whether debt or equity, is about more than crafting a well-presented business plan and forecasts. Many of the challenges linked to fund raising lie in an organisations fundamental operating systems, management team and business model. A significant number of entrepreneurial SMEs fail to display good housekeeping. This makes them unattractive to potential funders.

My experience is that many entrepreneurs are just not ready to pitch to an investor or bank when the need for funding is identified – often they require a sort of MOT well in advance of their pitch. In many instances structural changes are needed within a SMEs operation – when solid foundations are in place a robust case can be confidently proposed to an investment or relationship manager. This puts key decision makers within financial institutions in a stronger position when they, in turn, make their case to the relevant credit committees.

Entrepreneurs can lose credibility with investors and banks because their business plans cannot withstand scrutiny of a due diligence or credit appraisal process. we believe there needs to be a higher level of awareness and education within the SME community as to what banks and the broader investment community need to see within a financing proposition.

SMEs should never forget that the credibility of a financial forecast is built on the effectiveness and robustness of its systems, people, processes and service/product propositions. These latter issues seem to somehow often get overlooked. A failed pitch can close the door on investors or banks for months and in many instances, years.

Broader and closely related issues to fund raising would suggest that many entrepreneurial businesses often:
• Lack absolute clarity of strategy, vision and planning
• Spend too much time in the business and not on it – fail to look at the big picture
• Lack effective management teams, this puts funders on the back foot when it comes to assessing an organisations capability to deliver the plan
• Become slaves to their business and lose sight of the growth plan
• Hallucinate – their vision/strategy is a wish list
• Have financial systems and controls which are not fit for purpose
• Fail to build relationships with their funders and last minute request for funding, often when its too late, is commonplace

Because of the entrepreneur’s lack of awareness of what funders want, financial institutions have come under significant attack for poor lending strategies. Whilst this may be true in some cases, my experience would indicate that there is no lack of funds for well run businesses, commercially viable ideas and sound new ventures supported by a strong management team. One example is Growth Vouchers, which provides matched funding for businesses wanting strategic advice.

The gap often lies in what the entrepreneurial SME fails to understand about both the process and the quality of their business model. Growth hungry entrepreneurs should spend more time “living in the funders world”.

Growth Vouchers is the ideal programme to help overcome obstacles of this sort offering businesses in any stage of their life cycle the opportunity to access advice to help drive their business forward.

The Growth Vouchers Programme is a research initiative which offers support to small, micro and medium businesses registered in England. Strategic advice is offered within 5 different areas. In addition to Raising Finance & Managing Cash flow they can also cover; Leadership & Management, Recruiting and Developing your Staff, Making the most of Digital Technology and Marketing, Attracting and Keeping Customers.

Gaining expert advice in these areas is crucial to the development and growth of business whether it is a one hour meeting with a mentor or a 3 month programme of support with a consultant- it is proactive, rather than reactive. The key to success in business lies in the ability to plan, implement, execute, measure, and adjust. It is very difficult, in most cases, for a business to accomplish all of these on its own.

If you want to learn more about how a Growth Voucher can help you visit http://www.greatbusiness.gov.uk/growthvouchers/ , read the case studies and apply for your voucher today!