Entrepreneurs looking for an investment in their new business venture must have the ability to deliver an effective pitch, and in a sense they must be good salespeople. Having a good idea with a solid plan in place may not be enough. Pitching your idea to a potential investor is no easy task and many entrepreneurs struggle with this. Nerves can often get the better of you and at times the value of the business idea can decrease following a weak pitch. RTE’s Dragons Den provides us with evidence of business people, often with excellent ideas, that simply cannot communicate them effectively for whatever reason. Hopefully the following tips will make the daunting prospect of making a business pitch a little easier.
Like any business or professional presentation pitching your idea should involve the four P’s planning, preparing, practicing, and of course presenting. These rules almost go without saying. We all know the importance of speaking clearly, making eye contact, and using attractive slides; however what is really going to make you stand out from the crowd to the investors are the following.

1) Know your audience: Before entering the room in which you will make your pitch you should know exactly who will be facing you. Surprises on the day can throw the entrepreneur off. Potential investors should be selected carefully. It is not a case of just getting anyone to invest in your company. They must fit well with the start-ups business culture as well as the product or service being provided. You should know as much as possible about their interests or other business activities or involvements. The presentation style may have to be altered depending on the audience so this is something else that should be kept in mind.

2) Be passionate – sell the idea to them: Perhaps start the presentation with a one minute elevator pitch and include only the important details. Do not immediately ask for money or come across desperate. Make it feel like they would be lucky to invest in a product or service. Most of all be passionate, enthusiastic, and genuinely excited about you new business. If you are not excited about it you can’t expect others to be.

3) If appropriate use props, prototypes or demonstrations: This may be particularly important for new start-ups that are highly technical or complex to explain. Perhaps showing the investor how the product works may be more effective than trying to explain. If your business is a website it may be a good idea to have some screenshots of the site within your slides. If an investor is going to part with his/her cash they will want as much details and knowledge of what they are buying into as possible. At the same time don’t over complicate things. For a simple product or service that can be easily communicated, including props may actually over complicate the pitch.

4) Back everything up with numbers: I can’t emphasise this point enough. At the end of the day investors are looking to make a return on their investment for the most part. They are results driven and knowing your figures for sales, profits, costs etc is absolutely essential. There is nothing wrong with having a small page or record card with your figures on them. Pitching an idea is an extremely difficult task and if you feel that remembering all figures is too big a task don’t do it. The worst thing you can do is forget a certain figure, panic and then be thrown off for the entire presentation. Your projections in terms of profits, sales etc should be realistic. By all means aim high and be optimistic but he numbers must be backed up.

5) Learn from mistakes and rejection: Securing an investment is no easy task! Don’t be disheartened if you do not succeed. Take the advice on board and make the relevant changes. Think about which questions you could not answer or answered poorly. The more experience you have at pitching your business idea, the easier it becomes.

Struggling to find that all-important funding? Irelands growing network of angel investors may be the way to secure the future of your start-up.

As most of you will know it can be notoriously difficult to secure funding for a new business, now more than ever with people watching the pennies and bank loans almost impossible to get. But there is a growing network of Business Angel Investors in Ireland still looking for that next big project to put their money in. The ideal Angel Investor will have a strong commercial track record; excellent business credentials; capacity to invest; ability to identify commercial opportunity; time to invest in the creation of a new company; vision to transform new technologies into solid businesses; established links and relevant industry contacts. There are a lot of time wasters out there who for some reason pose as investors but in fact have no money, (weird I know..) so if you can tick these criteria you know your dealing with a credible investor.

According to ‘Business Angels in Ireland’, Business Angels are private individuals or groups that invest their capital into start-up companies and entrepreneurial ideas in return for partial company management and/or a return on a set amount of the company’s profit (known as an “equity stake”). They often have other benefits for a company, such as experience in the particular sector and often a wide range of industry contacts that can help get your business up and running. So think of the Dragons Den and you’re on the right track.

The Irish Investment Network operates as a ‘dating site’ for entrepreneurs and potential investors. The website features a running track of the latest investors with details of location and amount of finance available, as well as a brief introduction of the investors experience and interests. This makes finding your ideal investor a lot easier, and takes the stress out of searching through countless sites and directories.

You should also look Halo Business Angel Partnership This is a joint initiative between Enterprise Ireland and InterTradeIreland and is managed by Dublin Innovation Centre. Entrepreneurs can find a guide to the process of finding an Angel Investor, from forming and submitting a Business Plan along with an application form, to securing a match. The Partnership also hosts seminars and networking events to increase your chances of finding an investor.

Halo Business Angel Network or HBAN is another Dublin based network. HBAN operate as an ‘all-island umbrella group for business angel investing in Ireland’ focused on creating Angel Investor syndicates across the country which aims to streamline the funding process for the entrepreneur. To get funding with HBAN you need to have:
• A product that is ready for commercialisation.
• Pre-revenue is considered however some early market traction via revenues preferred.
• A management team with relevant experience.
• An identifiable market opportunity.
• An internationally scalable business model.

Candidates with some or all of the above are invited to get in touch, if there is an interest in your start-up you will be invited to pitch the business, and hopefully secure that investment.
National director of HBAN Diane Roberts was reported in March 2011 as saying that syndicates are most effective as resources are pooled and the possible risks of investments are spread out. As well as this Roberts stated that investing in early stage companies is also considered to be an attractive prospect by many investors following the fall in stock market and property values.

Just by researching some of these sites you can see there are investors out there willing to fund a new project. It is no surprise that Angel Investors are growing in popularity in Ireland as a method of getting a business off the ground, as well as finance they can provide vital business knowledge and support. So if your idea is ready for investment, consider the Angel Networks as a significant advantage for your business.

One of the most frequently asked questions that we get on Startups.ie is what support and grants are available for new businesses.

There is not a one size fits all answer to this so over the next few blogs I will be looking at the various organisations out there and the range of support and resources that they offer.

The first point of contact for most new businesses should be your local county enterprise board (CEB). They are not there to hand out cash to every business that comes along, funding is primarily available for manufacturing and export businesses. They do however offer a range of other valuable services such as training and mentoring and will be able to advise you on the next steps for your business.

At the recent ‘Get Started’ conference in DCU, Eibhlin Curley assistant Chief Executive of Dublin City Enterprise Board explained the range of services that CEB’s offer:

“CEBs offer a range of complementary supports to entrepreneurs and budding entrepreneurs. The supports range from providing an initial “First Stop Shop” service where individuals can receive advice on the steps involved in setting up a business, to the provision of grants for feasibility studies, provision of financial support for the establishment of new businesses or expansion of existing ones and the provision of a range of soft supports such as training and mentoring.

The range of supports is designed to assist businesses to grow stronger and bigger by being able to provide targeted, and appropriate, assistance at each stage of their development. These supports are outlined in more detail in the following sections:”

Financial Supports

A revised suite of financial supports for the Boards was approved by the Tánaiste recently and replace the existing Capital, Employment and Feasibility Grants being operated by the County & City Enterprise Boards with effect from 2nd November 2009. The new financial supports are as follows;

Priming Grants – for sole traders, partnerships, community or limited companies that fulfill the following criteria

• Located within the CEB’s geographic area;
• A business which on growth may or may not fit the Enterprise Ireland portfolio;
• A business employing up to 10 employees
• A Manufacturing or Internationally traded services business
• A Domestically traded Service business with the potential to trade internationally.
• A domestically traded services being established by a female returning to the workforce or unemployed persons where the potential for deadweight and displacement does not exist”.

Eligible clients may be awarded a Priming Grant within the first eighteen months of setting up the business. The maximum Priming Grant payable shall be 50% of the investment or €150,000 whichever is the lesser. Grants over €80,000 and up to €150,000 shall be the exception and shall only apply in the case of projects that clearly demonstrate a potential to graduate to Enterprise Ireland and/or to export internationally. In all other cases, the maximum grant shall be 50% of the investment or €80,000 whichever is the lesser. Subject to the 50% limit, a maximum grant of €15,000 per full time job created shall apply in respect of any employment support granted.

Business Expansion Grants
- may be awarded to businesses

• located within the CEB’s geographic area;
• A business, which, on growth, may or may not have the capacity to fit the enterprise Ireland portfolio
• A business employing up to 10 employees
• A Manufacturing or Internationally traded service business
• A Domestically traded Service business with the potential to trade internationally.

The maximum Business Expansion Grant payable shall be 50% of the investment or €150,000 whichever is the lesser. Grants over €80,000 and up to €150,000 shall be the exception and shall only apply in the case of projects that clearly demonstrate a potential to graduate to Enterprise Ireland and/or to export internationally. In all other cases, the maximum grant shall be 50% of the investment or €80,000 whichever is the lesser. Subject to the 50% limit, a maximum grant of €15,000 per full time job created shall apply in respect of any employment support granted. A business that had availed of a Priming Grant will be ineligible to apply for a Business Expansion grant until 18 months after approval/drawdown date of Priming Grant whichever is the later.

Feasibility Grants.
The maximum Feasibility / Innovation Grant payable for the S&E Region shall be 50% of the investment or €20,000 whichever is the lesser. The maximum Feasibility / Innovation Grant payable for the BMW Region shall be 60% of the investment or €20,000 whichever is the lesser.

Training Programmes

The range of skills and knowledge needed by aspiring entrepreneurs can be extremely daunting as they try to get started in business. Small businesses are usually driven by one or two highly motivated people and they will know that they will often have to be the Managing Director, Personnel Manager, Financial controller and Marketing Manager all at the same time. Critically important success factors, therefore, for accelerating business growth and consolidation, include knowledge and intellectual input and skills/expertise resourcing.

Today, business promoters need to be highly accomplished in good management techniques, in budgeting and in resource planning. They need to be conversant with all regulatory requirements which impact on their operations whether in the field of corporate governance, health and safety or workers rights. Their employees too must have the necessary knowledge and skills to enable the functions of business, manufacturing and service provision to be performed efficiently, competitively and in a manner conducive to long-term sustainability.

To assist small business in meeting these challenges, the CEBs provide a wide range of “soft” supports, which are geared to meet specific business needs. The range of “soft” supports on offer can vary from Board to Board but would typically include training programmes, work-shops, seminars and mentoring services. All training programmes are business-specific in content and are designed through consultation with participating enterprises. Flexibility of approach is the key consideration involved. CEBs frequently sub-contract the provision of these supports to specialist providers, where this is more efficient and/or most cost effective.

While training content can be tailored to the particular knowledge and skills requirements of individual clients, certain common themes are ever popular and in high demand. Examples are start-your-own-business-programmes, management development courses, sales /marketing courses, financial management training, e-commerce and IT skills training, etc. Various women-in-business initiatives and networks are also in place with a view to encouraging higher female participation in entrepreneurial and business activity.

First Stop Shop

CEBs are a first port of call for those needing information and advice on how to go about setting up or expanding a micro business venture. Their open door policy with respect to business advice/counselling services and information provision, coupled with their local flexibility, allow them to maximise their resources and more effectively meet their community and clients needs.

In response to client demand, CEBs have developed a range of information services that they can provide directly, or refer clients to, including:

Access to a selection of business publications and periodicals.
Access to sources of market information.
Access to internet research.
Advice on business registration.
Advice on patents and intellectual property.
Advice on company law requirements Information on employment and health and safety legislation.
Guidance and direction on local and national support schemes and programmes operated by other public agencies.
Referrals to experienced business professionals.
Access to the range of supports provided by the boards.

Business Networks

Women in Business:

Many of the CEBs support women in business through dedicated business and networking events. Such initiatives generally focus on how to address the particular issues facing women entrepreneurs and comprise business owners/managers coming together to meet and exchange views and information on being in business.

An important aspect of the programme is the way in which CEBs promote successful female entrepreneurs as role models and the use of mentoring and networking opportunities which meet the confidence-building needs of newly emerging female entrepreneurs. These networks bring together women who are already successfully running their own businesses and women who aspire to emulate them for the purpose of information and experience exchange between them. The networks provide an ongoing programme of activities on business-related topics such as insurance, taxation, etc. High profile women entrepreneurs frequently appear as guest speakers at the network events.

PLATO Ireland Network:

Plato is a European wide business development and support network for owner-managers and entrepreneurs. Each Plato region runs its own programme of events, network linkages and business/management development activities in partnership with a range of support agencies including the County and City Enterprise Boards.

Through a unique partnership with large “parent” companies, Plato creates a confidential and safe environment where owner managers can benefit from facilitated group learning, training activities and networking events. Plato encourages owner managers to share experiences and resources, to stimulate new ideas and to support each other as they make strategic decisions about the future of their business.

For further information check out www.plato.ie.

Skills net:

Skillnets is an enterprise-led support body whose mission is to enhance the skills of people in employment in Irish industry to support competitiveness and employability. Skillnets is responsible for the operation of the Training Networks Programme – a government initiative to ensure that private sector, Irish industry employees are incentivised to train, upskill and keep their professional skills at the best international standards.

For further information see www.skillnets.com or email: info@skillnets.com.

Both new and existing women in business are welcome to join these networks. If you are interested in becoming involved in a Women in Business network contact your local enterprise board for further information.

Mentoring

A significant and much utilised component of the “soft” support intervention of CEBs is their mentor programme. This particular programme seeks to match up the knowledge, skills, insights and entrepreneurial capability of experienced business practitioners with small business owners who need practical and strategic one-to-one advice and guidance. The mentor contributes independent, informed observation and advice to aid the decision-making and action planning functions of the client but does not become involved in the day-to-day management of the client’s business. Assignments under the programme are normally short-term and are governed as to duration, confidentiality, etc. by contract between mentor and client. The specialist fields for mentor engagement typically include general management, financial structuring, production planning, marketing, distribution, corporate organisation and strategic planning.

The CEB complements the provision of financial assistance and enterprise training and management development supports with a Mentoring service.

Starting and running your own business is a job that demands involvement in a wide range of areas. Along with maintaining your own entrepreneurial spark and drive, you may find yourself having to deal with issues that are vital to the success of your enterprise, but that were not really a major consideration in the birth of the original business idea. This Mentoring service seeks to match up the knowledge, skills, insights and entrepreneurial capability of experienced business practitioners with small business owners who need practical and strategic one-to-one advice and guidance. The mentor contributes independent, informed observation and advice to aid the decision-making and action planning functions of the client but does not become involved in the day-to-day management of the client’s business. City and County Enterprise Board has a panel of skilled and experienced people from a range of backgrounds who make their expertise available to the Mentor Programme. Mentors are assigned to clients who need practical and sound one-to-one business advice and guidance. All Mentors have been carefully selected, each with their own areas of expertise and all are highly skilled in assisting small business owner/managers.

The mentor’s role is to:

Listen
Help identify problems and areas for improvement
Suggest solutions and assist in drawing up a Business Plan
He or she contributes independent, informed observations to aid a company in its decision-making process.
Areas of involvement typically include:

General Management
Financial Structuring
Production Planning
Marketing
Distribution
Corporate Organisation
Strategic Planning
Business Process Reengineering
The mentor will:

Outline guidelines to be followed – Point out strengths and weaknesses in proposed projects
Act as a confidential sounding board
The Mentor is not a professional consultant and, under the terms of the programme, may not become actively involved in the day-to-day management or assume the role of executive in the company.

How the programme works:

Each request for a Mentor is dealt with individually
Careful consideration is given to a “match” between the requirements of the individual/company and the specialised skill and experience of the prospective advisor
Several possible Mentors will be suggested and the final selection is made by the individual/company on the basis of information supplied by the individual/director, or alternatively a mentor will be selected by the board
The Mentor signs a confidentiality agreement before taking on any assignment
Either the individual/company or the Mentor may terminate the arrangement at any time
If assistance is needed in more than one field of expertise, one or more additional Mentors may be assigned to the individual company.

How to apply:
Any Enterprise Board-supported individual or company which feels itself in need of temporary, totally confidential advice, can contact their local CEB to discuss their specific needs with a business advisor. Some boards charge a small fee to access the mentor service.

For further information or to find your local CEB please click on: http://www.enterpriseboards.ie

Hothouse – www.hothouse.ie is here to help start up businesses! It is funded by Dept of Education and Science and is run by Dublin Institute of Technology. The main points of note are:

* Free incubation space for 1 year
* Ten sessions with a business mentor
* Workshops on key topics
* Access to funding

Hothouse Venture Programme, is a year-long comprehensive support and incubation programme for entrepreneurs with technology based business ideas. The programme offers a number of supports including:

- Incubation space
- Management development training
- Strategic business counselling
- Access to an enterprise and investment network
- Access to funding through Enterprise Ireland CORD grant which could provide you with up to 50% of your previous years salary paid to you on a monthly basis over the course of the Programme The guideline requirements for CORD are…

* Potential to have turnover of €1million and 10 employees within three years
* Have strong export potential.
* Have some new or unique technology
Note you can still come on Hothouse without being eligible for CORD.

The workshops are run once a month for 12 months on a Friday and Saturday 10am – 5pm. They are generally very practical in nature. Lots of collaborative work, case studies and active participation. The cover topics such as Business strategy, Legal, Market research, Finance, Pitching to customers and/or investors, Sales, time management, and HR. So a broad range of the relevant topics in setting up a successful business.

We also organise mentors. These are professional people most often from the industry relevant to your business. They have great experience and often great contacts.

You can apply by emailing info@pdc.ie with a description of your business, what stage your service/product (e.g. proto type, trial customers, trading etc). Also any market demand feedback. A copy of your CV is also useful. More details on the Hothouse brochure www.pdc.ie/pdf/Hothouse.pdf

So we are looking forward to hearing from all you intrepid entrepreneurs…

NDRC is now accepting applications to January 2011 three month Accelerator Entrepreneurial Internship Programme “LaunchPad”

NDRC (National Digital Research Centre) today announced that it is accepting applications to the January 2011 “Ideas to Income” LaunchPad programme. LaunchPad is a three month accelerator programme that is targeted at emerging start-up entrepreneurs with strong research links; applications will be accepted from small groups or individual entrepreneurs with ideas for new businesses in the digital space.

A number of applicants will be invited to NDRC to pitch their concept to a panel of judges. Successful applicants will be provided with a dedicated working environment within the Digital Hub for the 3 month period, a hands-on mentoring programme from industry experts; weekly workshops and networking opportunities; plus an investment of up to €20,000 per project. All projects work towards a product or service launch, on completion projects will take part in “LaunchPad Lift-off” where they will network and pitch to investors in a battle for funding.

A number of projects have achieved successes through the LaunchPad programme to date. One company that has emerged from LaunchPad is Point The Way – offering an advanced GPS navigation system for the visually impaired. While taking part in LaunchPad Point-the-Way secured an advisory team that includes the National Council for the Blind. Point-the-Way are currently in discussion with the Royal National Institute of Blind People in the UK, technology companies and other partners on the potential to improve the independence of blind people. Glidesys Technologies Ltd joined LaunchPad with their product Glidebooks, an instant activity sharing service that addresses the cost and complexity of managing a mobile workforce, back-office operations and customers. During their time in the LaunchPad programme, Glidebooks secured follow-on funding, built an advisory board from academia and industry and is currently testing their product with a user base of 250 people.

Reflecting on the successes of past programmes Ben Hurley, CEO, NDRC said “We have seen impressive results from the LaunchPad programmes to date with 82% of projects launching prototypes within the 3 month programme time period, 27% of projects that have taken part in LaunchPad have successfully raised finances to proceed with their business and 91% of projects have met with potential investors”. Mr Hurley continued “These figures reflect the potential that can be achieved within a short period of time when the right people collaborate and focus on progressing ideas to income. NDRC is positioned between industry, academia and venture investment, bridging the gap between research, and investment with a bold approach to progressing concepts from idea to investment”.

Closing date for application to “LaunchPad” is 5pm on 17th November 2010. Selected applicants will pitch for entry into the programme to a panel of evaluators and the programme start date will be 5th January 2011. To apply for a place on the LaunchPad programme visit http://www.ndrc.ie/submit/launchpad/

Dublin City University’s Ryan Academy for Entrepreneurship announces the establishment of a seed venture fund of 1 million for early stage technology start-up companies.

The Ryan Academy for Entrepreneurship has just announced a new venture accelerator fund for high tech start-ups, details can be found on the academy’s high tech entrepreneurship blog www.ryanacademy.wordpress.com

The new venture fund is an accelerator fund, which will help fund new companies develop from concept to product. The aim of the venture fund is to jump-start a number of high technology start-ups in Ireland with an emphasis on software and biotechnology hardware ideas such as medical devices and diagnostics.

The successful companies will get approximately 50,000 in direct funding, as well as a three-month programme of support from the Ryan Academy for Entrepreneurship, which will include office space, mentorship and specially-designed networking and educational programmes. The financial support for the venture fund is provided by the One Foundation. In addition any profits generated by the Accelerator Fund will be returned to the Fund for further investment.

“This is an important initiative for Ireland and I am delighted that the Ryan Academy is providing a catalyst for the next generation of Irish entrepreneurs. This initiative is not only another clear manifestation of DCU’s commitment to be the University of Enterprise but also addresses an obvious deficit in the pathway from concept to successful product”, said Professor Brian MacCraith, President-designate of Dublin City University.

The first round of investment will open for applicants in October this year, with the first four successful entrepreneurs being announced before the end of the year. A further eight entrepreneurs will be funded in 2011 and again in 2012. Each of these entrepreneurial groups will then work with the Ryan Academy to develop their company, building key and lasting business relationships along the way to help them sustain a viable business. The Ryan Academy is aiming to work with other seed funds and individual investors, and will be seeking to increase the fund size over time.

“Raising the money to get through the first year is often difficult for entrepreneurs and our objective is to support twenty early-stage entrepreneurial teams over the next two and half years” said Gordon McConnell, Deputy-CEO of the Ryan Academy and venture manager for the new fund. “We will work with other later-stage angel investors, other funds and the venture capital community to help ensure further funding for these new companies. We want to help nurture innovative technology ideas and act as a launchpad for new entrepreneurs.”

The fund is unique as it is both a university-related venture fund for start-ups across Ireland, as well as offering a programme of support for these startups through the Ryan Academy and its network.

The new fund will be governed by a Technology Advisory Board, which will be announced later

About The Ryan Academy

The DCU Ryan Academy is a partnership between Dublin City University and the family of the late Tony Ryan (Ryanair). The Academy exists to promote entrepreneurship and innovation and to use our iconic building in Citywest as a dynamic hub for entrepreneurs and researchers to develop ideas, learn new skills and network. There is widespread agreement in business, political and academic circles that the key to Ireland’s recovery and future is the development and exploitation of our best and brightest people who have developed world class ideas to fuel world class competition. The Ryan Academy is working with researchers and entrepreneurs to help them achieve their potential.

The Academy believes that specific areas of the economy, in particular the Social Economy and Green Technologies, will play a key role in Ireland’s economic recovery and we are committed to providing leadership and support to these and other key sectors

Brian Larkin is a qualified accountant who previously spent several years in practice specialising in growth strategies for SME’s and start up companies. He tells us why more than ever cash really is king ….

CASH IS KING.

It’s a cliche, but during these turbulent times, cash really is king. The only way to master cash management is by putting a plan in place.

How many SME’s and start up’s have a financial plan in place?

Apparantly most starts ups put a financial plan in place but few actually use it as an ongoing living document that could drive their buisiness forward. In fact, most companies that invest the time and moeny to create a finance plan normally allow it to gather dust on a book self or let it live within a drawer somewhere.

Our summer holidays…

I can’t wait for my summer holidays. I look forward to them every year. We spend weeks planning our annual holidays – deciding on locations, deciding on hotels, deciding on activities, deciding on methods of transport. We spend countless hours planning our holidays. But how much time do we spend planning for our business? Most owners of SME’s spend more time planning their holidays than they do planning for their business – which ultimately finances the summer holidays!

Ok, you know exactly how your business is cash wise. You don’t need a financial plan…

But what happens when the unexpected occurs? You loose a key contract? An unexpected bill arives? Do you have a long term picture of your cash position? Can you see the long term impact of your current decisions on your long term cash? Are you prepared for an unforeseen cash crunch?

Creating a financial plan that will really make a difference to your business…

Well like all good stories a financial plan should have a begining, a middle and an end. Being realisitic and honest with your business is the first point. A financial plan is like a road map for your business. And like all good route planners, we need to first establish exactly where we are NOW before we can plot our course. So, firstly identify your cash position (bank balance), creditors position, debtors position and tax position.

Once an opening position has been established you can critically access your ongoing monthly costs and populate a simple spread sheet. This will ultimately create the conclusion of your plan.

Most importantly, a cash forecast will give you a clear picture of your business. If your business is going through a rough patch, a financial plan will also give you peace of mind that the company can trade out of its predicament.

How long to plan for?

I read alot about businesses implement five year financial plans or three year financial plans. I personally don’t consider any financial plan that is greater than twelve months to be of any value. It is pretty difficult to put an accurate financial plan in place for two years time. Think back two years ago… could we have foreseen the financial crisis that we are currently living in?

If anyone wants to talk to me further regarding financial planning, then please feel free to drop me an email (B_larks@hotmail.com).

About:

Brian is a qualified accountant who previously spent several years in practice specialising in growth strategies for SME’s and start up companies. Most recently Brian has held senior finance positions for one of Irelands best known business men. Brian is currently studying for an MBA from DCU Business School.

Great Blog Brian….Thank You…www.startups.ie

Looking for an alternative source of investment capital? Check out first step microfinance.

The goal is the creation of enterprise through self employment and they provide loans of up to €25,000 to start up or expanding new businesses.

First-Step provides loans to people who want to create their own enterprise and who cannot access funding, or sufficient funding, from other sources.

The core goal is to help finance start up and expanding Small and Medium Enterprises (SME’s) to provide job opportunities. They have an application and screening process which evaluates the applications received and stress tests them for likely success based on information received.

First-Step is a private not-for-profit company. First-Step receives funding from Enterprise Ireland through the EU Seed and Venture Capital Fund and the Social Finance Foundation. First-Step is the beneficiary of an SME Guarantee Facility created within the framework of the Competitiveness and Innovation Framework Programme (CIP) of the European Community.

www.first-step.ie

So you have a great idea, now all you need to get going is some lovely money. The main sources of finance for startups are:

1) Friends & Family
2) Government support agencies
3) Angel Investors
4) Banks

1) Freinds & Family

Tapping friends and family for investment may seem tempting as quite frankly it is easy, people who know and trust you may be willing to back you to help you get started. However be very aware that you will now be compromised (whether you like to admit it or not) to this investor. If the business fails you will be in a very embarassing situation until the money has been repaid. Try not to mix business and pleasure for everyone’s sake. If you cannot resist the temptation to take the cash on offer (which is perfectly understandable) then please be very careful to frame the exact terms of repayment out from the start and also what the investor will receive in return for the investment. It is very easy to be casual at the start of a business relationship, time and time again when money is involved things turn sour. What if the relation becomes hard pressed (probably from throwing money around on startup companies!) suddenly they want their money back!. What wait a minute I presumed I would repay you at a later date shock horror. Consider an alternative scenario and your business starts taking off, suddenly the investor is eager to get more involved with his 50% stake, what? who said anything about 50%?, I thought we said we would see how things went!

Copperfasten everything in a written framework and hit the roof at the first suggestion of deviating from the agreement. Better still get them paid off ASAP and hold on to as much equity as possible (Make sure you never do a 50% 50% deal, these just don’t work and lead to a legal quagmire)

2) Government support agencies

People automatically presume that they are entitled to all sorts of grants and funding, God dammit I am creating employment am I not? I am helping the economy to recover! I am opening a coffee shop!. This is not how it works do not expect any civil servant to get excited about the fact that you are opening a run of the mill business. The amount of applications they get for the resources available are astounding. Unless your business has the potential to create significant employment (i.e. Manufacturing) or has export potential, the main support offered will be discounted training courses, some small employment grants (5K), web development grants (2k) that sort of thing.

Look at it from the other side of the table, application 1 = a website for stag & hen trips in Kilkenny or 2 a private label cream liqueur plant in Cavan. Now which is of more interest?

Local county enterprise boards offer basic support and the training courses are generally worthwhile and often great value (I am just about to start a Accountancy for small businesses course which cost €100)

Enterprise Ireland are the big guns and they have ‘Business bouncers’ at the door rejecting 100′s of business each year. A good route into the system is the hothouse scheme (www.hothouse.ie). Enterprise Ireland are really interested in high potential startups mainly in technology, pharmaceuticals etc. They have huge investment funds at their disposal and are prepared to invest in the right businesses.

3) Angel Investors

Angel investors were very popular in the dot com era. Basically successful individuals who probably founded and sold their own business and now have both time and money to get involved in startup companies. Try www.businessangels.ie for further info, according to their site they were involved in completing 36 deals totalling 6 million of angel investment in 2009 – not bad. The angel networks try to match suitable angels with the right business, so if your business is in retail they will try to find you a Theo Paphitis type etc. Again I would not be approaching these guys with a plan to run a local babysitting service.

4) Ahhh the Banks

Where do I start? Firstly, despite the fact that you opened your first bank account in AIB at UCD and got a free USIT card to boot does not mean that your bank will lend you any money. The banks spend a small fortune promoting their support for small businesses and new business packages, they do want to have new business accounts for the simple reason that they are very lucrative, between cash lodgement fees, cheque book fees, overdraft fees etc you would be very surprised at how much your bank charges will be every year (this is often totally underestimated on business plans where people put down €1000 bank charges, a shrewd bank manager will have more respect for a biz plan with realistic charges).

In Ireland we tend to forget that banks are businesses, for the same reason our families vote for Fianna Fail / Fianna Gael etc for generations despite their varying levels of ineptitude, we tend to see ourselves as being owed something by our banks for years of custom.

Banks in general only want to lend money to people who do not really need it, at present they will expect you to be putting up about 50% of the money required. If you are not prepared to risk your own money then why should they?. You need to be very confident and well prepared and don’t be afraid to play one off against the other “ulster bank have offered me €30,000 at 3.0% can you match this? has a better chance of succeeding versus please sir can I have some more?