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Lessons in finance

Applying for funding can be a nerve wracking experience. But with careful planning you can maximise your chances of getting what you need.

The first step is to be realistic. Chasing sources of funding you have little chance of securing will not only dent your confidence – it will also take up time that could have been better spent on the business.

If you are applying for a grant, estimate how much time you will spend on the application process and what that time would be worth to the business. If you can find out what percentage of applicants are typically successful this will help you decide whether it is worth pursuing.

No room for false modesty

A realistic payment plan linked to cash flow forecasts will help funders understand if the amount requested is affordable. But this doesn’t mean you have to be humble in your approach when seeking money either from a bank or a private investor. One of the most common mistakes made by first-time fundraisers is not asking for enough money to take their business through to the next phase of growth.

Another potential pitfall is accepting an offer without properly checking the terms and conditions. Some contracts may prohibit the business from borrowing from another finance provider, while if you are offered a larger facility than required you need to make sure you are not charged for finance that is not being utilised.

Make it personal

When approaching a bank or investor it is important to personalise your approach. Make sure you have done your homework and ensure your business matches up with the core criteria and region of your target investor.

Give yourself enough time to prepare detailed information and to explain what the funding is required for and what it will achieve – different forms of funding are appropriate for cash flow support, capital expenditure or business growth. Work out where the funding should take the business as this will provide clear business targets going forward.

Don’t leave it too late

The need for funding should be flagged early by good financial information. If the need for funding is driven by a fundamental flaw in the business (for example, overheads are too high, margins are too low, or the target market has changed) it might also be a good time to look at the overall health of the business, perhaps with input from an independent observer such as an accountant.

When businesses wait until they reach a cash flow crisis to seek funding they make bad decisions and usually end up having to take whatever is on the table rather than the form of funding most appropriate for the business at its current stage of development.

Finance providers and investors will expect business owners to demonstrate a robust understanding of their cash flow needs when applying for funding. Using a cloud-based accounting solution such as Big Red Cloud will give you this level of insight.

Marc O'Dwyer

After completing a Graduate program in Marketing, Marc’s impressive sales career began at Allied Irish Banks, Pitney Bowes and Panasonic where he received numerous Irish and European sales performance awards and consistently exceeded targets and expectations. In 1992, Marc’s entrepreneurial spirit led him to set up his own business, Irish International Sales (IIS). Initially, this company was a reseller for Take 5 Accounts and Payroll software. Within four years, IIS became the largest reseller of Take 5 in Ireland, acquiring four other Take 5 resellers. He also found time to set up two mobile phone shops under the Cellular World brand and a web design company offering website design services for small businesses. In 2001, he bought the majority share in a small Irish software business, Big Red Book. At that time, the company was losing money. The company became profitable within two months, and Marc then acquired a payroll company to compliment Big Red Books Accounting products. In 2003, IIS were appointed as Channel Partners with SAP for their new SME product, SAP Business One. Marc sold his Take 5 business and concentrated on developing this new market for SAP As a result, by 2007, IIS was recognised as the largest Channel Partner for SAP in EMEA (Europe Middle East and Africa). In 2008, the IIS Sales Manager bought the Company from Marc in an MBO. He launched Big red cloud in June 2012, the online version of big red book, to date the company successfully converts 59% of trials into sales and the number of customers is growing rapidly. Marc continues to run both Big Red Book and Big Red Cloud which now support 75,000 businesses. He is a very keen sportsman, having played rugby for 20 years, represented Leinster at under 16 and under 20 levels, and league squash with Fitzwilliam Lawn Tennis Club for 10 years. Marc has competed in 11 Marathons, including the London and Boston Marathons, and has completed several Triathlons and Half Ironman races. He has also completed six Ironman Races in Austria(x2), Frankfurt (Germany), Nice (France) , Mallorca (Spain) and Copenhagen (Denmark)

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