What a great way to kick of the 2019 IBASA-EPI CPD webinar series.
The ability to secure funding will forever remain one of the top support interventions SMEs ask for. For our 24th January webinar on assisting clients in securing funding, we had three expert panellists offering unique perspectives on the issue.
The webinar “Key questions to ask your small business clients when they look for funding” included experts from Business Partners (Nikita Mfenyana), FinFind (Darlene Menzies) and The NeXt Chapter (Mirriam Papo).
Nikita, Regional Manager of Consulting Services, West Coast at Business Partners, states his focus as creating a positive impact in communities by helping small businesses grow. He started off the webinar from a financier/investor perspective about “questions financiers ask but are often misunderstood”. He highlighted the following as very important questions a business adviser should get their clients to answer to increase their chance of success.
- What do you really need the money for? And by when exactly? Lack of clarity on the purpose of the funding will weaken the business case.
- What makes you sure that the funding you want will get you the additional profits/sustainability? This is about knowing where, why and how your revenues and costs are made up and what will influence them in future.
- What is your Unique Value Proposition and how do you protect your position? The investor needs to evaluate the risk of loss, but also the opportunity to generate a return on the investment.
- What may go wrong? And can you create a Plan B? What is wrong with you, relates firstly to being upfront about your weaknesses and disclosing things like past judgements before the financier finds out themselves. Second, have you thought through and are you able to put in contingencies for things that may go wrong?
- Why may we think you are not as “sexy” as you think you are? How do you put a value on your business or the business/asset you want to acquire? Are you offering an attractive investment opportunity?
Is there a business if you are not there? How dependant is the business operation and value on you as individual? Would it be an asset that can be sold without you being involved?
Darlene. the founder of Finfind, South Africa’s leading online SME access to finance solution and World Economic Forum named one of six Top Female Tech Entrepreneurs in Africa for 2017, talked about “Questions to help your client identify the best suited financier”.
Darlene highlighted the fact that there are 466 finance products and the FinFind tool that can assist business advisers in guiding their clients through the array of funding solutions and applicable funders to approach for each kind. Some key questions a client should be able to answer are:
- How long has your business been trading and is it registered
with CIPC (if not, are you a sole proprietor or partnership)?
- What is your turnover, do you have a regular monthly income and are you profitable?
- How much funding do you require and what is the purpose of the funding?
- What kind of funding are you seeking such as debt/loan finance, grant finance or equity finance (selling of shares in exchange for capital)?
- Do you have collateral, are you willing to sign surety, and do you have any funds to contribute?
Mirriam, founder of The NeXt Chapter, qualified CA learned a lot about SME finance as Chief Financial Officer of IDF Capital. Mirriam focused on “Questions in preparing for a funding application or a due diligence process”. It was clear from the key questions she highlighted below, that the due diligence questions cover all aspects of business, and not only financial issues.
- Who are your clients and how will your client-base grow exactly? Who is your client (know your client)? Current client base (are they cash/contract based)? Plans to grow customer base (targets vs remuneration)?
- Are your budgets and forecasts fully aligned to your strategy?
- Who are the key members of your team & what do they bring to ensure success? • HR capability (in-house or outsourced)? • Who are the key members of the team – credibility and capability • Key man – assess his fit and capability to implement the envisaged strategy. • Is there a HR strategy and is it aligned to the business strategy?
- What systems will you use to manage your people and your money?
- Which financial metrics are most important to monitor? Know your numbers – Profitability, liquidity and solvency • Working capital cycle (where is your money sitting?). What is your revenue and cost drivers? • Budgets and forecasts (do they support and align to your strategy?).
- Which tax implications/incentives have you not catered for yet?
- What is the expected impact (mandate dependent)? Job Numbers, Demographics, Skills transfer/training?
It was clear from this webinar that there are so many pitfalls and options to be considered when seeking funding, it is important to work smart and pro-active. Entrepreneurs will do well to find advisers that will assist them with their best interest at hart and being able to leverage tools like FinFind to help prepare the and guide the process effectively.
The next IBASA-EPI Webinar, scheduled for 21 February 2019, will cover the important subject: “Using coaching techniques in supporting owner-managers to overcome limiting thinking”.
Click <HERE> to register for the next CPD webinar.
View a recording of the previous webinar by clicking <HERE>.