Thursday 27 October 2016

Five tips for SMEs to get funding in Ireland

Published 26/05/2015 | 17:38

FundSME takes place at the Main Hall in the RDS on Thursday.
FundSME takes place at the Main Hall in the RDS on Thursday.

While the economy is seeing recovery at last, some small businesses around the country are still finding it difficult to acquire funding.

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Ahead of a national event this week which offers top tips to small businesses on acquiring funding, provides five helpful hints here.

Five tips to Get Funded in Ireland:

1. Be prepared and be realistic:

Accounts and Plans - Give the funders what they need. Nobody has a divine right to funds so let’s not let simple form filling be a barrier.

Funders need to be confident that they’re going to get their investment back, plus a return.

Clarity in the company’s financial transactions and historic financial performance is key to building this trust. Providing a thorough analysis of year on year revenue, profit growth, and the factors that have caused these is crucial, as is a realistic assessment of whether they are sustainable.

Sophisticated funders will also be keeping a close eye out for warning signs, such as complex financial structures, which can conceal poor performance.  Businesses that are owned by a single holding company - where it’s easier to understand inter-company transactions and how funds are being used - are often preferred for this reason. Additionally, companies with lots of small loans or access to multiple forms of funding are complex to analyse and, at first glance, will appear to be in financial difficulty.

Any business plan presented should be realistic and sufficiently detailed. Projected growth is a calculation, not an optimistic estimate and budgets need to be accurate. A budget where every item is rounded to the nearest €500,000 suggests sloppiness and will set off alarm bells for any potential funder.

Similarly, it is essential that businesses provide up to date information. If the company in question has been trying to raise money for some time, it gives no confidence to see a presentation that is dated six months ago.

While audited data on customer numbers, sales, unique selling points, and key competitors is essential to demonstrate the strength of the company and its future prospects, so is addressing any negative points early on. Here, it’s vital to be honest and transparent.

Detailing past business weaknesses, such as a history of bad debts or over-reliance on key suppliers for example, in a succint way gives the opportunity to show awareness of potential flaws that the business has overcome. This is crucial and will give funders confidence that the management team is straight forward to deal with.

2.  Know your options – What type of funding do you need?

Equity, friends and family, loan, asset backed, invoice discounting, peer to peer?

Be aware of alternatives.

For the SME/Start-Up seeking €25,000 to €5m in finance, accessing these vital funds can prove difficult.

Currently there are more than 50 funding options with up to €6bn available to fund businesses. Difficulties arise because business operators and advisers do not always possess the knowledge of ‘best fit’ funding options to suit particular business needs and there is a lack of ‘know how’ to access these funding sources.

*94pc of businesses rely on banks as the main source of finance with only 6pc using alternative sources of funding

*70pc of businesses seeking funding require working capital to invest in new personnel, plant and machinery, and promotion. The dilemmas are exacerbated because too often SMEs possess neither the skills, nor information, on alternative types of funding. They simply lack the knowledge of how to access these other funding options. There is €4.6bn in funds available from alternative funding sources.

3 Government supports

Use the invaluable tool "Supporting SMEs".

In a few seconds you will know what is applicable to you.

By answering the 8 questions in the Supporting SME's online tool, a small business will in one location:

*Find out which of the over 80 Government business supports from 27 different Government Departments, Agencies and Initiatives are available to them.

*Get information on the range of Government supports for accessing credit.

*Be informed of their nearest local enterprise office to discuss the outcomes of the guide further.

*Be able to download all these filtered results into a document for their further use

4. Management

Have a good mix of experience and enthusiasm. A good advisor/non executive can really help.

Potential Funders want to see a proper management structure with demonstrable expertise in the business.

 Directors and managers must be focused on the business and they should not be paying themselves excessively. This will demonstrate that they value and prioritise the business over personal interests.

Moreover, SMEs should consider bringing good quality external advisors or non-executive directors on board, as their presence will help build funder confidence in business decision making.

5. – See this website to use the Pathway to Funding tool, and attend the event in the RDS on Thursday. Learn from the experts (over 25) and meet all types of funders

FundSME takes place at the Main Hall in the RDS on Thursday. Tickets can be booked here:

What do you get at the FundSME Event?

€50 million in funds pledged from funders

 30 Alternative and Traditional sources of funds including:

 Bank Loans; Invoice Finance; Asset Finance; Venture Capital; Business Angels; Peer-To-Peer and Online Crowdsourcing

20 experts + case studies on how to get funding to suit you

8 Government SME Support Agencies

€2,500 Trading Online Voucher – How to get one

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