Banks, Lenders & Investors Business Development & Marketing Finance General

SMEs, start-ups and ethical fundraising

ethical fundraising to save the planetFund raising can be a challenge for SMEs and start-ups but there are signs that many are turning to ethical fundraising for their money.
This growing trend is particularly pronounced among younger business founders and entrepreneurs, many of whom are reportedly shunning the venture capital routes that focus primarily on forcing them to grow as fast as possible to generate returns.
With the issues of global warming, climate change and damage to the environment being a major factor among young people it is no surprise that ideas of sustainable growth and ethical sources of finance should be so appealing.
But are they narrowing their options by focusing on ethical fundraising and risking their prospects for growth and possibly their business survival?
It would seem not, according to analysts, as there is also a growing movement among investors, particularly retail investors, to search for investment opportunities specifically with ethical funds.
Lisa Ashford, chief executive of Ethex, says: “Venture capital funding can often be about financial performance and short term returns and exit strategies, sometimes to the detriment of the other impact aspirations of an organisation. That’s not what our investors are about.”
Ethex was started about ten years ago and works to match ethical businesses with investors that shared their values. It only works with businesses that have a clear social mission and those that conform to very high standards of governance and accountability.
The Guardian last year reported on the growing attraction of ethical investing, which its article argued was becoming more attractive to mainstream investment funds.
Nearly 80% of investors across 30 countries told last year’s Schroders’ Global Investor Study that sustainability had become more important to them over the last five years, increasingly seeing sustainability and profits as intertwined.
According to the website the term ethical “is often used as a catch-all to describe funds managed with social, environmental, or other responsible criteria in mind”.
It says the main approaches of ethical funds are that they usually avoid companies that do harm to society and instead invest in those that have a positive social impact. But it warns investors to do their research diligently to ensure a fund is consistent with their own views.
From the perspective of the SMEs and start-ups ethical funds may actually benefit them through an alignment of culture, environmental awareness, social consciousness and ethics despite pursuing a strategy for slower growth. There is no reason to suppose such businesses cannot be sustainable, not least because of the opportunities for positive marketing messages that speak to their clients’ or customers’ own ethical concerns.

Accounting & Bookkeeping Banks, Lenders & Investors Business Development & Marketing Finance General

How can a start-up business assess the advice it is given?

An intending start-up business needs advice that is good quality, good value for money and, crucially, impartial.
Getting good quality advice that is value for money is the challenge for every entrepreneur and start-up on a budget.
Whereas the large corporate looking for advice can afford expensive lawyers and advisers, this is rarely the case for a start-up, which has to be more careful about where it spends its money.
It is important to identify those areas for which it is important to pay as opposed to those where it is less so.
Typically the areas where advice is needed include fundraising, investor and shareholder agreements, terms of trading with clients and suppliers, employment, finance and accounts, business planning and development, production, systems, sales and website. Wow, it is a lot and as a business rescue specialist, it is easy to see which areas were neglected when a business gets into financial difficulties.
One way of prioritising what is worth paying for and is good value is to do a lot of research and exercise a degree of judgement. Most lawyers and advisers will provide a level of free advice so take advantage of it. In addition other business owners are normally happy to share the benefit of their experience, but beware that they may only know the way they dealt with a problem and may not be able to advise on alternatives, hence the need to do lots of research.
A good tip for assessing advice you are given is whether an adviser is outlining a range of possible alternatives as options and helping you work through the assessment process to consider the pros and cons of each option.
Steer clear of those who simply tell you what to do as you don’t know if they only know one way, or they have an agenda for recommending their way.
Furthermore you won’t learn from such advisers as it is the assessment and exercising of judgement about alternatives that helps you learn how to manage advisers and often reject advice.
Only when you have spoken to a number of lawyers and advisers will you be able to tell who is trying to sell you a product and who is giving genuine advice.

Business Development & Marketing Finance General Uncategorized

Starting a business is no easier for ex-corporate executives

While a business rescue advisor usually enters the picture at the point where a business is struggling often they can trace financial problems back to its early days.
Setting up a business is not easy, even for the formerly successful executive coming out of a big business, and often the advisor will identify structural problems that have been there since the beginning.
For a start-up, a major problem is the number of documents that have to be prepared, checked and approved, from the terms and conditions for clients, suppliers and a website, to the documents like a shareholders agreement, employment contracts and a staff handbook in addition to establishing robust back office with admin, record keeping and accounting systems.
Where the executive may have been able to call on both in-house HR and legal help and will have been backed by ample resources the start-up has no such in-house help. How does a new business owner assess the validity and worth of any advice, especially when he or she has to be careful about the cost of advice?
Then there is the problem of selling the business product or service. Some entrepreneurs are brilliant sales people, who give little thought to systems and accounts, while others are systems or financially oriented but with little experience of business development and selling.
While everyone encourages you to jump, if you are coming out of a big business intending to set up your own company you need to pause, reflect and find out what needs to be done before taking the plunge.
Our next blog will focus on how to find the right advice.

Banks, Lenders & Investors Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Is Starting a Business in a Recession Wise or Foolish?

It is no secret that the Government is relying on SMEs to stimulate both the economic recovery and jobs.
Lord Young, senior adviser to the Prime Minister, is on record as saying that a recession may actually be a good time to start a small business on the grounds that wages are low, competition may have fallen by the wayside and premises, too, may also be cheaper to get.
That’s all well and good but there is more to starting a business than having a bright idea and the passion and motivation to get started.
There are a number of other factors to consider, especially where the business is something new and innovative and therefore unlikely to raise finance from currently risk-averse banks and investors.
A start-up must carry out research, identify potential customers, set sensible targets and put all of this into a business plan.  If it needs finance it should consider alternatives to the mainstream sources, whether these are friends and family, partnering with existing firms, seed funding, crowd funding or business angels and also investigate what grants and special concessions may be available that will help in the first year or two of trading.
A mentor or business guardian to help set the path and keep things on track can also make the difference between success and failure.  It’s impossible for a novice to do everything themselves without support and joining local business networks can also be a valuable source of advice and support.
If it is the kind of venture that can benefit from collaboration with other enterprises where there is a synergy, this is an option worth exploring since partnering with existing businesses in a market will help a start-up forge relationships with both a supply chain and  potential customers.
When money is tight, entrepreneurs should explore cash saving ideas such as offering equity, or future work, or future discounts, or other benefits in kind to any business that can provide them with useful services. Examples include introduction to customers, advice, market research, book keeping & accountancy, manufacturing prototypes, provision of office space, use of specialist or expensive equipment, and many more ideas that are only limited by the entrepreneur’s imagination.
Recession or not, starting up a business is all about doing all you can to weight the odds in your favour.

Accounting & Bookkeeping Business Development & Marketing Cash Flow & Forecasting General

Franchising Can Be Great if You do the Research and Check the Small Print

Many people dream of owning their own business and in the current economic climate are finding themselves pitched into starting up perhaps before they are quite ready.
A franchise often comes with an established brand, support in training, promotional materials and advice so it is tempting to see buying into a franchise as a safer option than going into business completely independently. 
But sinking savings or redundancy payments into any kind of business is a risk and a franchise is no different.
The big danger in taking on a franchise is getting a false sense of security that someone else is responsible for your business. They aren’t and a business plan is as important for a franchisee as for an independent trader.
Also, while the franchise provides support, it may also impose limits on independent action in order to protect its brand and reputation. The most successful franchises have tested their business model and methods and incorporated these into the package. It can happen that a franchise has failed because the franchisee has failed to follow the advice.
In a recent case of a franchise business in difficulty one of the biggest issues was that the franchisor declined to take any legal steps to protect its intellectual property or its franchisees’ rights.  
The franchise model offered complete geographical coverage and each local franchise unit’s success depended on the whole network‘s efficiency, but there was nothing to stop people who had gained privileged knowledge within the franchise from setting up in competition.
It is essential when setting up any business to scrutinise any legalities required, take advice and to negotiate. Until comfortable with the terms do not buy into a franchise.
Essentially, yes, a franchise can be a very good business opportunity but it does not eliminate much of the risk inherent in setting up a business and needs the same preparation work as for any business start-up.