Published: Apr 20, 2021
Built on a proud history of industrial regions, today the West Midlands is a diverse landscape home to world-class businesses across range of growing sectors including Advanced Manufacturing, Financial Services, Technology, Digital & Creative, Life Sciences and Transport Technologies.
Maven’s regional office in Birmingham’s city centre is at the heart of business and transaction activity in the West Midlands. We caught up with our local team who work with businesses to source and secure the right funding solution to grow to find out what opportunities are available for companies operating in the region.
1. What do you think are the main obstacles to accessing finance to grow that businesses face today?
One of the main obstacles to accessing finance to grow, is that the business is not ready to take on funding. Often taking on a significant injection of capital can be both a challenging and exciting time for a business, and ensuring a business is ready to manage the money they receive is just as important as securing it.
A finance provider needs to see a business take on some of the risk of growing and lack of shareholder capital can often be an obstacle for companies if there hasn’t been a significant level of investment from the owners or founders themselves as it’s a demonstration of their belief in what the business can achieve. Other barriers can be that business owners lack the knowledge of procedures or types of funding available. The latter can often lead to incorrect funding structures being agreed.
To be ready to take on funding you need to distinguish between your personal and business needs, have a sound understanding of the marketplace with your product or service being tested, for example if your business is technology-based functioning have you patented this technology? In addition to this, other key components such as presenting a robust business plan, good experience amongst the management team and being able to provide a detailed account of your business’s financial performance all help when being funding ready.
2. What would you say to a business that is put off by taking on funding and would prefer to grow their business organically?
Growing organically can be the right approach for many businesses who can benefit from a number of advantages including retaining full shareholder rights and control. However, taking on growth capital can assist businesses in scaling up at a quicker rate and can enable businesses to react swiftly to the ever-changing marketplace. By deciding to use your own cash to grow your business there is a high chance that it won’t grow as quickly or to scale as it could if you used funding via a business loan or venture capital.
One route that growing businesses may look to take is via debt financing which is where you will borrow money that you pay back with interest within an agreed time-frame. One of the key advantages of debt finance is that you maintain ownership of your business, although if you do want to have more knowledge led based resources and don’t mind submitting a part of your company in exchange for this then equity finance may be better suited to you. Another advantage for debt finance is around the possibility for some business loans having tax reductions which means fees and tax charges can be reduced therefore making this an ideal funding route for many aspiring businesses.
3. What’s your top tip for a business that’s looking for funding opportunities?
One of the most important tips for businesses that are looking to raise funding is to be prepared. A finance provider needs information on your business to support a funding application. That information can include historic figures, to prove how the business has grown revenues and managed its financial affairs in the past, financial forecasts, to show how the business will use the funds and be able to afford future debt servicing costs and explain how the budgets have been assumed.
As well as financial information, a lender will also consider the wider business and the market in which it operates. A business owner will also need to answer questions around the strengths and weaknesses of its team, and the product and its place in the wider market. Undertaking the proper preparations means a business can enter into discussions with lenders confident that they have the best possible chance of getting a positive result.
4. As a national company, what other funding and support opportunities does Maven bring to the Midlands?
Maven has established a track record of supporting businesses and delivering strong growth across our portfolio, through a combination of experience, wide sectoral knowledge and a well-established professional network. Our teams, based throughout the UK, have a wide range of professional and commercial backgrounds enabling us to work in close partnership with each of our portfolio companies as they look to raise funding (debt or equity) to enable them to achieve that next stage level of growth.