Linda Eziquiel | UK Business Advisors

4 top tips to successfully secure business growth funding

September 8, 2019 By Linda Eziquiel

Very few businesses are lucky enough to be able to bootstrap their way to success, most rely on securing business growth funding. Getting funding at the right time is critical to surviving yet alone thriving and growing. Without funding it is much harder and slower to grow and expand into new territories or markets. Here are my top four tips for successfully securing business growth funding.

Know where to look and what type of funding is the best match

There are numerous sources of funding from Bank Loans to Crowdfunding and Equity investment to Trade Finance, Grants and R&D Incentives for innovative companies. Often a growing business will need to draw on a mix of sources. Depending on the stage of growth and type of business some will be more suitable than others. Each type comes with its own positive and negative aspects for example if you’re seeking a bank loan, you will probably have to give a personal guarantee and of course pay back the loan with interest. If it’s equity investment you’re seeking you need to be prepared to give away a share of the company and most likely some of the control you have over the company as well. Crowdfunding does not work for all types of business, it’s best for consumer based projects and while it often requires a low financial investment it can also require a huge investment of time to market your campaign.

Make sure the numbers stack up and you have a robust growth business plan

No-one is going to fund your business unless they can see what will be achieved with the funding, so having a good business plan is fundamental to being successful in securing funding, especially Equity Investment or a Bank Loan. If it’s growth funding you are after, you need to include realistic financial projections to show what the growth trajectory is expected to be and how you will achieve it – Is it new products or expansion of existing products into new territories or something else? Sales projections and the cost of expanding should be clearly set out. Details of your management term and organisational structure are also essential elements of a growth business plan.

Build and maintain your top team and talent pool

It’s widely accepted that most businesses sink or swim on the strength of their C suite talent pool – i.e. the people they bring in and nurture to manage the company. The importance of having a skilled and experienced management team cannot be overemphasised. Equity investors in particular will look for a strong and united team. So if you are on a mission to successfully secure business growth funding in the near or intermediate future, it’s even more important (it’s always important) to put effort into continually building and maintaining a cohesive team with the right mind-sets and leadership capabilities.

Get your pitch right and that includes keeping it succinct

Whether you’re pitching to investors, seeking to impress a bank manager or aiming to excite people to support your Crowdfunding campaign, you need to get under the skin of the funders and see things their way not your way. A big mistake that people often make when pitching their business is to put too much emphasis on their ‘super-duper product or service’ when funders are more interested in how the financial plan stacks up, that’s especially true for an equity investor – What’s in it for them! So spend 80% of your air-time on the financials and how you will achieve profitable growth, plus why your team is capable of delivering the plan (track record) and 20% of your time on explaining your products and services. Plus keep it short – people don’t want to read or hear War and Peace so set a target of no more than 20 slides. Keep your pitch punchy and start with your 15 second ‘elevator pitch’ – vision and mission. Plus clearly communicate the problem you are solving for your customers – What is the problem you are solving? Why is it important to solve? Who most needs that problem solved?

Linda Eziquiel is a specialist in helping innovative companies fund new product developments using research and development tax credit.

Funding is one of the areas we cover in our TwentyTwenty Insight business review process, where we provide a snapshot of the health of your business with suggestions on what you might do next in terms of growing your business. If this is of interest then please contact Linda.Eziquiel@lgbusinessadvisors.co.uk

Beyond technology – what other sectors are benefiting from R&D tax relief or credit?

May 5, 2019 By Linda Eziquiel

Your annual accounts are ready to be prepared but could you find ways to reduce your tax bill or get a cash payment to support your new product development?

Well it might be that you can if you are undertaking development activities that qualify as Research and Development (R&D). It’s not just for rocket scientists or research laboratories. In fact far from it, all sorts of development activities qualify – a few are described below and we’ve also added a more comprehensive list at the end.

The great thing about UK R&D tax incentives is that they apply to any UK registered limited company in any sector – The Dyson Report on Innovation 2010 made this point saying:

“Of the various tax instruments available to government, R&D Tax Credits have the advantage that they seek to help companies that are themselves prepared to invest in R&D.

Government does not need to choose sectors or companies, with the result that R&D can be encouraged in the widest possible range of sectors, taking advantage of businesses’ own insights into likely breakthroughs”

While it’s sometimes easier to spot R&D being done by pioneering technology companies, there are many other areas where companies are able to benefit and the pay-outs can be significant.

A mini revolution in the food industry

There’s a mini revolution going on in the food industry with new producers coming into the marketplace supplying for example frozen vegan ready meals, vegan ‘cheese’, and a whole array of vegetable, nut and seed based products. Plus established producers are updating their recipes to reduce salt, sugar and additives to meet changing consumer demands. Similar things are happening in the drinks industry. They will all be undertaking qualifying R&D to develop their new or improve recipes and in some cases their manufacturing processes as well.

While my focus here is not technology it’s worth mentioning that food and drinks businesses are also increasingly being driven to embrace technology, to automate manufacturing and production methods and there will be significant qualifying R&D being undertaken as part of that.

Materials and packaging for a better environment

There’s also a lot of qualifying R&D being undertaken to develop new more environmentally friendly packaging materials, to replace or reduce our reliance on plastic and polystyrene.

I buy all-natural cosmetic products made with organic ingredients. I was intrigued to see that my last order was packed using biodegradable, extruded nodules made of a starch product. There was a note on the top saying the packaging is water soluble and wouldn’t harm you if you ate it, so it can be disposed of as food waste. It looked so like the polystyrene or plastic packing nodules we are used to seeing in mail orders items, that I hardly believed their claims. So I put a piece in water and sure enough it dissolved. Development of this starch based packing product would certainly have qualified as R&D for a tax credit cash payment or tax relief.

It’s not only the creation of new materials that qualifies as R&D. Things like the design of packaging and how it is assembled can also be qualifying R&D. For example the development of a new packaging system to improve shelf life for a food product, or to hold a product securely to prevent damage during transportation, would be qualifying R&D so long as the development was not a routine or obvious solution i.e. there was some experimentation involved to work out if it was feasible or how to achieve the desired outcome in practice.

Construction and engineering challenges

There is a significant level of R&D in the construction and engineering industries, much of which is still not recognised as R&D by those undertaking it. For example a company may be seeking to build something in a novel way or in a difficult physical environment – such as a waterlogged area or on an unstable foundation, so they develop a novel solution that was not obvious and therefore would be considered R&D for tax relief. Another example is the engineering of elements of a building to enable a modular construction method, such as metal fabricated stairways or balconies. In this case there could be R&D in arriving at a design that meets the architects brief while also complying with regulatory requirements and being easy to fit.

I’ve just touched on a few areas, below is a longer list. For companies with under 500 employees the benefits are generous paying out between 19% and 33% of relevant expenditure, on things such as staff salaries or sub-contractors costs, materials and energy consumed.

Please feel free to email us to check if you qualify. Or speak to our specialist R&D Tax Credits advisor Linda Eziquiel on 0771 9439 229.

My business is driven by technology – can I claim R&D Tax Credits? My business is driven by technology – can I claim R&D Tax Credits?

March 6, 2017 By Linda Eziquiel

Maybe you are creating apps or adapting existing software for cloud delivery (SaaS), or creating tools to make sense of big data, or using CNC machines to mill complex parts, or developing wearable tech or designing new medical devices …… the list is endless.

Whatever your angle you will know that technology and what you can do with it, is constantly evolving. But what you may not know is that the skills and knowledge you are investing into technology could mean you can claim generous Government support.

The questions to ask are:

Do I design innovative products or processes?
Do I employ technical staff or technical subcontractors?
Is there some uncertainty in how to go about getting the outcomes I’m seeking?
Do I spend staff time and money on my designs and developments?

If you do, then you really should check your R&D tax credit eligibility. It’s quite easy to find out, quick to do and will cost you nothing.

How do I check my eligibility for R&D tax credits?

Actually it’s very easy…. most R&D tax credit specialists don’t make any charge for an initial assessment – and it can be done in as little as 10 minutes over the phone. All you have to do is call one!

What happens next?

You will want to know how much your claim is worth and again, most good specialists will make no charge to advise you on the potential cash benefit.

They earn their fee from providing you with support once you have decided to go ahead. They’ll help you to make the case for your claim to maximise the total value. Since the fees you pay for assistance are commonly contingent on success, it’s a low risk process.

What does it cost?

A competitive rate is around 18% of the successful claim value, although some R&D tax credit specialists charge much more… often because they use their internal accountant which adds to the cost. Usually, you can ask your own trusted accountant to submit the R&D claim for you and most accountants actually prefer that.

Any benefits you get go straight onto the bottom line, so they are a welcome ‘windfall’ especially considering that you did not know you were eligible in the first place.

Checking whether you can claim is quick, painless and costs nothing.

Interested in finding our more about R&D Tax Credits for your business? Then email Linda Eziquiel at linda.eziquiel@lgbusinessadvisors.co.uk or call her on 020 8856 9835 for a ‘no obligation’ chat about your eligibility.

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