Innovative ways of raising capital for SMEs
Written by Emily Couch
SME’s (small to medium-sized enterprises) can raise capital in a systematically painless manner if the business approaches investors properly. It may appear to be a difficult and time-consuming process, but raising capital can help take a business to the next level of success. Let’s take some time to simplify some of the key steps to obtaining capital.
The first step is to assess the current financial health of your business. You can’t figure out where you need to go financially speaking, if you don’t know where your business stands.
GET CASH FLOW PROBLEMS UNDER CONTROL
Triage is the name of the game. If you have cash flow problems, evaluate where the biggest cash problems are located and devise a plan to get your current cash flow problems under control. Your spending needs to be in control before you can approach future investors to take a chance on your business. Venture capitalists, banks, and private lenders want to see smart plans in place before taking a chance on your business. Nobody wants to give you his or her hard earned money for your business to continue to mismanage capital investments.
Learning to control your short-term cash position will help your business create a long-term strategy that is sustainable. It is a prerequisite when approaching individuals for capital investments to have a solid long-term strategy for your business. Creating a plan for financial turnaround demonstrates the sustainability of the business. It’s common sense, people want to make good investments, and no investor is going to take a chance on a business that cannot forecast its financial viability.
You can take a few steps to help recover your current financial situation. Possibly refinancing current facilities, or the sale and division of unused assets. A more extreme option is a complete sale of the business. You have to figure out what works for your business and how you can show potential investors that your changes have improved the working capital in the business and work toward your long-term financial plan.
TARGET THE RIGHT INVESTORS
The second tip is to target and select the right investors. It’s imperative that you choose investors with a solid track record of making sound and profitable investment decisions. Ensuring that your investors have expertise in your wheelhouse is essential. Investors need to understand the market opportunity in which they are investing, so they can inform businesses, like yours, with a clear and concise expectation of financial gain.
Email pitches are often viewed as junk mail; cold pitching is not the way to go. Networking is a sure fire way to get in front of a variety of investors, banks and venture capitalist. If you can get a formal introduction, you can begin to cultivate a personable business relationship. People do business with people they know, like and trust, and networking helps open doors toward personal communication that email just doesn’t translate.
Make sure you do your due diligence before approaching your target investors. Research their investment portfolio, potentially speak with some of their past and current clients, and have multiple meetings with them before accepting an investment deal.
DON'T BE AFRAID TO SELL YOUR BUSINESS
The most important criteria for investing, is if investors can make a substantial return on their investment, but you still have to sell yourself. At the end of the day, raising capital is a sales process. You have to not only sell the viability of your business, but you have to sell yourself. When you do get a meeting with a potential investor, make sure to show up on time. Be engaging, and know your audience. Doing research on how to appropriately pitch your idea will go a long way. Some investors are incredibly easy going and don’t want to be approached with your 57-page PowerPoint slide. Other investors need that 57-page PowerPoint slide to feel safe investing in your business. Regardless of your pitch method, you should stick to the facts and ensure you are able to pitch your business in a way that gives investors confidence.
With these simple steps you can make significant progress toward obtaining much needed capital for your business. Remember: Investor confidence is key. Don’t cut corners on your strategy for returning their investment with significant reward. Know your industry. You should be completely aware of trends in the market and the economy. If there is a forecast of a market downturn, you have to figure out what makes your business unique enough to survive a plunge in the market.
Ultimately, it’s going to come down to investors return on their capital investment. You know the value of your business and you have an amazing opportunity ahead of you, help investors see your vision and you will be able to raise enough capital to take your business to the next level.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.