How to get funding for a start-up
In this interview on The Logros Show – in association with The Greater Manchester Chamber of Commerce – Lee Dinsdale talks with David Martin from GC Business Finance and Andrea Reynolds CEO of Swoop Funding about how to get funding for a start-up, what makes a great management team and how to write a business plan
Interview with Swoop Funding GC Business Finance only on Unity Radio, The Real Sound of the City.
Lee: If you just want to give us a quick intro of where you’re from, what the business does and whereabouts you are now speaking to us from.
Dave: Hugely international because I’m based in Oldham! Thank you for having me on. I work for the Growth Company specifically the Growth Company Business Finance Department. We look at supporting businesses with their financial needs up to a hundred thousand pounds turnover. I’m not sure I’d go as far as to say Oldham’s international but it’s sunny that is the upside of today.
Lee: , Andrea what about yourself?
Andrea: Hi so I am Andrea Reynolds. I’m CEO and co-founder of swoopfunding.com. I’m currently talking to you from the international Metropolis of Milton Keynes where it’s a little bit chilly today not like Ibiza but I am delighted to be on the show.
I guess we’ll be talking more about our fantastic partnership with the Greater Manchester Chamber of Commerce where we deliver our solution through the Chamber of Finance Finder so Swoop is a one-stop shop for businesses that are looking to raise finance across loans, equity and grants and we power the Chamber of Finance Finder too.
Lee: Firstly we’re going to find out about what kind of support there is for finance and let’s talk as well about grants because, you can find grants – it’s not always about loans and there are options on grants so Andrea first of all I know Swoop is involved in grants so let’s start with that one please .
Andrea: Sure there a few things that everyone should know about grants because the number of businesses that say oh it’s like the dark arts I’ll never get a grant. A few things to know is why do grants exist and therefore this is how you’ll navigate how to get one. So they exist in regions because the region is trying to create more jobs or they exist because you’re creating an innovation that doesn’t already exist in the world and the government is trying to support you in building out that innovation.
So if you’re doing something innovative there are national grants; Innovate UK, UKRI have regular competitions that are opening and they’re getting more frequent during covid in particular because if you build something for that impact they’re available. The other thing to look at is more regional and local. Every region has what’s known as a local enterprise partnership and a Business Growth Hub and within that Growth Hub and LEP you will find what grants are available at any given time. The types of grants that exist are revenue based grants so you’re trying to increase your revenues by maybe launching a website – you may get a proportion of that cost as a grant. Capital grants – if you’re looking to buy some equipment, take out a lease etc. business recovery grants from covid, energy efficiency grants if you’re trying to improve your energy efficiency.
The first place to look is your Business Growth Hub and as I say if it’s innovation look to the innovation authorities. If your business is two years or over and that usually puts you in good stead with the local authority ones and then in terms of the innovation ones you don’t even have to be revenue generating you might have an idea and you can apply based on that. They are kind of the top key principles that you need to be adopting if you’re thinking about a grant.
The last point to mention is if you go for a grant what they will expect are you will match that grant with some other funding. Either your own sweat equity into it or you’re able to get a loan that we’ll be talking about now or maybe some investment that we’ll be talking about later.
Lee: Can you just tell us a little bit more about the kind of loans, I know bounce back loans of the headline loans but the kind of loans that businesses can and startups can look at?
Dave: Of course as Andrea quite rightly said we’ve got the Growth Hub which is part of Growth Company and that is a place to go for grant funding. When it comes to actually obtaining funding I would always say to speak to your incumbent bank first of all purely because they’re the ones who’ve got the track record of how you operate, how you trade and they’ve got access to current accounts so it’s a lot easier to obtain funding through them and being brutally honest it’s cheaper than it would be in the external market.
Now ourselves we will look at cases when a bank has declined it for whatever reason that be it doesn’t mean that these are all bad businesses – it means it just doesn’t fit the bank’s criteria at that given time and as you mentioned yourself bounce back is one of the tools at the minute that we can use to help businesses. The governments have made this this product available and will be up until the 31st of March.
We’ve been lucky enough in that the Greater Manchester combined authorities have accumulated 10 million pounds and they’ve trusted us with giving that to businesses based within greater Manchester. It’s been incredibly busy and bounce back has been incredibly well taken up, very attractive terms on in; no payments for the first 12 months and then a couple of percent afterwards.
Lee: So for everybody listening now that have not taken out a bounce back loan, they think it might be something they want to do what would be a good step to do so?
Dave: First of all if you are with one of the high street banks Barclays, Santander, Lloyd’s, HSBC go to them first. The ones that we look at ourselves are the ones whereby customers bank say with non-accredited banks so Acorn, Cash Plus, Tide and Starling have shut their bounce back funds. We’re trying to help businesses who bank with them get access to the funds.
Lee: You mentioned before about going to your bank and if you’re a small business startup or generally you are thinking about setting up even a bank account before you even got to that stage. Andrea you’re involved with kind of comparisons of looking at different business accounts and sometimes I guess you go for where your personal account is and it’s not always your best option.
What are the kinds of things that you’re aware of that people who are thinking about setting up or even switching for the business account should be aware of?
Andrea: I would say just at the moment there are a number of high street banks have actually closed the ability to open a new account so we’d many who were trying to open accounts so that they could then apply for a bounce back loan and so a lot of the banks have put a stay on that ability to open accounts. I would say there are a few things you should be thinking about when you’re deciding on opening a bank account. The digital banks like Starling, Tide, Anna, and Cash Plus are great in terms of speed of getting your first bank account set up. They’re great in terms of the cost of the bank account so they all win out, there’s no monthly fees etc.
If you’re a business that makes a lot of international payments you would be looking to make those international payments with one of those challenger banks like Starling because the international payment rates and the charges are less with the digital ones than they are with the with the high street ones. But still to this day the high street banks are still the most popular. I think people like the depth of products and as you say the number one trend that we see is they go wherever their personal account was.
What you should be looking for is there are offers with the high street banks where you get your first 18 months free banking. What you need to be ready to do is switch out of that or open a new account and do other services that are less expensive because on average any business can save between 600 and 900 pounds a year on their bank account and people think that banking doesn’t cost very much; well it does especially if you’re making international payments from it.
So shopping around and having two accounts is a good thing to do and using the right services with the right bank account. That’s what we help our businesses to work out and see what is it really costing them and where should they be banking based on how they like to bank.
Lee: I didn’t know that then so there’s quite significant savings there in cash isn’t there from switching?
Andrea: Some people are nervous about digital but they’re growing and they’re stabilizing and as I say it doesn’t mean you have to use one bank account for everything. Multiple banking is becoming the norm now so I would highly recommend for people to start thinking about that.
Lee: On that point as well and we’re not giving advice here or guidance exactly in terms of particular accounts but what are some of the options now on digital accounts? I know there’s something called Revolut and Monzo that are just solely digital accounts; what are your thoughts around those so?
Andrea: If it’s for your business I would go with a business current account. I would suggest that to anyone if you’re a sole trader, if you’ve just started your business, if you’re thinking about starting your business don’t use your personal accounts; get a business account set up so you start trading activity and creating that credit history and that transaction history in a business account, that’s the first thing I would say.
The second thing is Monzo and Revolut for business aren’t as safe further down the road as someone like a Starling is and as I say they’re not the be all and end all like they have their own constraints like, you can’t have two accounts with a bank like Starling if you’re a business account but it’s about what features are you looking for? If you’re going digital don’t expect to be able to go into a branch. A lot of them team up with the post office but there are still businesses that are still considering branches etc. so it depends. But things like foreign transactions or international payments if you’re paying for an offshore tech team, those types of things are where you can really make savings with the digital ones.
Lee: Now we are going to talk about business ideas and this is for those people who may have a business idea and thinking about what to do and certainly with the finance landscape both Andrea and Dave get to see a lot of businesses and know where people are making money and so on and so forth. Andrea I think firstly what are you seeing when you’re seeing inquiries coming through. What businesses are working well?
Andrea: Obviously we’ve seen a big, big jump in the number of e-commerce businesses and businesses that have pivoted online. So maybe for example we’ve had a couple of gyms where they obviously have to close the gym and now they’ve got online classes. That’s been one area the other one obviously being logistics.
Those who’ve already lost their jobs during lockdown have started logistics businesses so delivering for Amazon, Deliveroo etc. and so we’ve seen a big demand for getting asset finance for the ones getting their bank account set up etc. and those businesses growing very very fast.
I suppose the last one is a lot of health tech businesses so anything to do with delivering health through a technological device or online. There’s a lot of investment going into that space right now so I think they’re probably the three obvious ones that we’ve seen big growth in during lockdown.
Lee: Okay and Dave what about yourself?
Dave: Very similar to that to be honest. we’ve seen a lot of the e-commerce businesses so it’s blatantly obvious that retail’s been massively affected by what’s going on so if you don’t have a physical shop front that you can open to allow your customers into you may as well open physically online. So e-commerce has shot up massively, requests for funding, requests for support for ourselves as well and it’s been lovely to see how resilient and thoughtful people have been in terms of the PPE side of things.
This is going to be something now that isn’t going to go away completely it’s going to change the way of life and PPE products and services are things which not only healthcare service but businesses in general are going to need so we’ve seen a lot of businesses pivot from what they were doing originally and moving into the PPE side of things.
Lee: On that note then what is the next step? What do you advise in terms of putting the plans together to apply for finance? So if someone hasn’t done it before they may be a little bit nervous like wanting to know what are the right steps first time in making sure the paperwork’s correct. What are some of the common problems you come across and what advice would you give to someone who’s now looking to apply for some finance?
Dave: That’s a great question. A business plan for me is such a useful document but it’s always been seen as kind of a one-stop shop in that you do it when you first start out in business, stick it away and never look at it again. I don’t see it as that; I see it as very much an ever-changing moving document – a whiteboard if you want to see it that way. it’s great to put down your ideas of how you think the business is going to go; not too long, not too short just make sure it’s nice and concise, what you see is key to the business, the people, the suppliers, your customers, jot them down, jot your main ideas down.
Now it might be that you re-review it in a month’s time. Some of it’s working some of it’s not working; you might have forgot but we’re all human you do forget so you can then re-prioritize; change your focus and that business plan that moving document is a great source of support for yourself moving forward.
We got a free template on our website and if any customers want to go on or any potential businesses and make a business plan from that document please by all means do. What I would say is that the one I’m going to provide you is very specific to gaining finance so it might be that you need to tweak it if you were looking for investment. It might be that you need to tweak it if you’re a business that’s brand new or moving to the next level. Either way myself and GC are here to support if you’ve got any questions please by all means let us know we’re happy to help.
Lee: That’s a great shout out Dave. We’ll look at that form and see if we can put something on the website. Andrea what are some of the common mistakes that you see where people go back and forth with some conversation?
Andrea: I would say if you’d asked me say 10 years ago what a business plan was and I think if anyone’s listening they’re probably thinking this is some 30-page document that we all used to do back in the day – the world has changed completely. The first thing you need to do is get that one pager out and there’s a thing called the Lean Canvas and essentially you put down in three bullet points in each square what is the pain that you’re solving for a customer? What’s the need? What’s your proposition, why is it better than anyone else’s? How are you going to make money this is the key one; I am going to make money by and I will make a profit by; honestly you need to start very basic and then really challenge yourself and go out and do some research; is there a genuine need and is there a market for what you think is a good idea? That’s the first thing I would do. The second thing is absolutely there are different documents for different reasons so if you’re going for loan finance the template that David has mentioned is absolutely fantastic. If you’re going for equity investment it’s a completely different document. It’s almost like a sales pitch it’s known as a pitch. It’s about 10 to 15 slides long. There are probably three to four lines on each page. Again we can provide templates on that so you’ve got to think who is the person that’s reading my business plan and the business plan you need to care about is that one pager that David mentioned and keep adjusting that and challenging yourself on that. That’s kind of the key to all of this. Do not write reams and reams of pages just because you think that’s the thing you’re supposed to do. You need to live and breathe it every single day and challenge yourself on it.
Lee: What kind of advice do you give people who may be inexperienced in the forecasting or the numbers side of things? it’s like a bit daunting, how do you have a financial forecast – what support do you offer or is there any kind of support that you think would help?
Andrea: I’m sure Dave is the same. we’ve templates that we give people and to help them set up and I would say another thing when you’re thinking about your bank account just linking it back to that or you need to think about what’s your accounting software you’re going to use. Lots of banks now give you accounting software for free as part of your bank account. That software will have ability for you to type in your first basic numbers and from that a lot of them have forecasting tools. So you don’t have to become an accountant to be able to do your first basic set of financial template and then organizations like David and Swoop will help you improve on that. All you should be thinking about at the moment is what comes in what goes out, it’s as simple as that like you do your home finances. It’s pretty much the same thing when you’re starting off with your first version for your business finances.
Lee: Great this is the Logros Show in association with the Great Manchester Chamber of Commerce. It’s all about help and support around finance about getting your business off the ground, enhancing it taking it to the next level. Now we’re going to talk about actually both experiencing attributes of when you’re giving out finance you obviously meet a lot of management teams and business owners and it would be great to get your feedback on what you kind of see as key skills and the difference that makes the difference.
So firstly David it would be great if you shared what’s your experience in management teams
Dave: It’s one of the key things that we look at as part of any lending application especially if there’s more than one person involved. You have to have a good management team around you and this is the same for business, home, personal whatever it may be. there’s some common traits which work well across all areas. You have to know each other’s strengths and weaknesses. You’ve got to make sure there’s good communication between all parties involved. I’ve seen too many businesses fail whereby people just physically don’t talk to each other; tell each other what you’re doing. Tell each other what you’re working on. enable somebody to step into the breach if they’re struggling in a certain part. It might be that the business has adapted and that person has now been dragged into something else – just speak to each other. Regular constant conversations constant meetings know who’s good at the finance side of things know who’s good at the sales. Know has got leadership qualities. The organizational quality is absolutely key. One thing I would say as well about a good management team obviously you’ve got the experience side of things it’s always good to have people in the business who are experienced but if you haven’t got that if you’re a brand new startup or you relatively embryonic, ask for help ask for the support don’t be afraid to go outside of the business and ask for somebody with financial support ask, for somebody in leadership support how to take that business to another market, to another level don’t be afraid to put your hand up.
Lee: Just to follow-up then do you see a lot of benefit in mentors and coaching for those people who are maybe inexperienced or even with experience these days?
Dave: One hundred percent I mean we’ve got guys at the Growth Hub should I say who provide that mentoring capability that is our job day in day out and it’s all funded by governments, local councils. A lot of this comes free of charge for businesses. the benefit of that is that a business may be so deeply entrenched or so far down a rabbit hole or something they can’t see the light of day and it can take somebody external to just take a step back have a look at what they’re doing and say instead of doing it this way maybe do it that way. It’s going to save that business owner so much stress and so much time so please don’t be afraid to put your hand up, ask for a little bit of help. We all love to think we know everything but we really don’t.
Lee: Andrea moving away from like a management team, they talk about business owners entrepreneurs and it’s a lonely place sometimes. What do you see from working with individuals what are some of the characteristics and attributes that kind of move them forward?
Andrea: Being a startup entrepreneur is a very, very lonely place. It all sounds fantastic and exciting but you have to have a vision and the ability to convince people of your vision. What I mean by convincing people is it’s not just the bank; it’s not just the landlord to get your first place. It’s actually convincing others to come in this journey with you convincing customers. You have to know your subject inside out. Be curious about every aspect of the market you’re entering and the customer you’re trying to serve. You have to have resilience because absolutely everything goes wrong. Everything that you thought you planned for goes wrong and you need to have contingency and depth of character to keep persisting.
Every time I speak with investors there’s a universal theme that comes out. They always say they back the person rather than the product in the early stages. They say give us an okay product and a brilliant entrepreneur and we’ll back that more so than we’ll back a brilliant product with an okay entrepreneur.
The last point I would say is you have to have oodles and oodles of self-awareness because you have to be self-aware enough to know what you don’t know, what your weaknesses are and you have to be prepared to learn, learn, learn and bring in others who have competencies that you don’t. If you’re thinking of starting a business I would say just be realistic about the road ahead; it’s really fun but it’s also really, really challenging so they’re probably my top tips.
Lee: On that interesting part, backing the person besides backing the product – just expand on that a little bit more what do you mean by that?
Andrea: Many investors say when you start out on the road with your idea if you’re a good entrepreneur you start out in that road and you think the market wants what you have built or created. You bring that to market and the market says, no I don’t think it’s that great I mean I wouldn’t mind a different version of it; it happens to every business it’s called product market fit and in your journey to get product market fit you might have to change your service, your product, how you sell it, what your price point is and so you have to go back and start from scratch again and re-look at it.
You might say actually the business I started is the wrong one I’m now going to move into this other area I discovered along the journey and so what they’re tracking is your ability to do that. If you’ve got a brilliant product and you don’t know how to distribute it you don’t know how to execute on bringing that to market then what’s the point in having a brilliant product? So that’s what they’re looking for they’re saying you know what if we are about to risk our money we prefer to risk it on the person that we think has the ability to change, to move, to get that eventual fit with the market and so that’s what they’re referring to.
Lee: The traits that you described do you think you can learn that or do you think you’re born with it?
Andrea: Such a good question. I think part of it you’re born with and then that’s what gives you that entrepreneurial streak and that optimism but the entrepreneur I am today versus the entrepreneur I was four years ago all comes from learning. It comes from development, it comes from reading.
It comes from absorbing as much as I can from other entrepreneurs who are further down the road than me where I can learn from their mistakes. I don’t think it’s one or the other you are born with natural instincts to be driven to be an entrepreneur and you see an opportunity and you’re optimistic enough to take that risk. The rest of it comes from eternal learning.
Lee: I’m always interested in being able to be patient in one respect but then impatient where the pro-activity drives it forward in the same so you you’re managing two conflicting emotions at the same time. It’s a fascinating world the world of entrepreneurs so thank you very much.
if you are just joining us it’s been a fantastic show all about help and support for entrepreneurs, business owners, startup people in employment looking to set up in business around access to finance just a bit of a recap because the show will be online over the next week or so. We were talking about finding out about grants, about loans as well and also offering some guidance on what makes a great management team and entrepreneur.
Finally just as we come to the end of the show young entrepreneurs coming through wanting to set up in business around the late teens early twenties, Dave what advice would you give to them from your experience so far?
Dave: It’s something that we’ve seen more and more of youngsters of eighteen, twenty one, who have had these brilliant ideas and then the vast majority that I’ve seen massively take off and have made national news have been online. Now I know and you know that there’s other entrepreneurs in other areas in other fields who have probably got the same ideas and maybe don’t know where to turn or don’t think they’ll get the support or advice from the market because they are seen as too young.
I’m a firm believer, I think it’s a football phrase, if you’re good enough you’re old enough and I’ve always said to anybody of any age with any idea come to someone like myself or Andrea there’s plenty of support out there with the guys at growth hubs etc. it might be that you’ve got this brilliant idea which needs to go to market but because of youth, lack of experience sometimes you just don’t know where to turn stick your hand up ask for the advice because there is plenty there.
There is so much talent amongst the younger generation so much talent out there if you need any help or support again this is where the business plan document comes in really useful, put your ideas down keep it bullet pointed, keep it short for that support and excellence there are people out there who can help. Stick your hand up and we will help.
Lee: In terms of getting in contact with the Growth Hub what are the website with the details where can we go?
Dave: If you head over to www.businessfinance.growthco.uk all the information is on there about finance and funding. If anybody wants to reach out to me I am on LinkedIn obviously search for Dave Martin probably a few hundred of me but well you can see me here I’ll make myself available via your website and post all the links there. If you want to send me an email it’s firstname.lastname@example.org I’m happy to help any business of any shape any size
Lee: Andrea again turning to you what would you say advice for younger entrepreneurs from your experience?
Andrea: I would say young entrepreneurs max out on all of the digital tools that now exist to help you be a savvy business owner. Years ago if you’re starting out you do everything manually and go to your bank etc. now you go online you get your digital bank account you get your accounting software hooked into that. You integrate with something like Swoop where we do all the heavy lifting for you. It’s easier to be a better business owner a more savvy business owner today than it was even a year ago even two years ago.
I would say don’t be green there’s no excuse for you being green now if you’ve got a good idea and you’re starting a business do it right. Use the tools available to you and the other thing is you know they’ve got an advantage on us you know you can grow your product or your service on tick tock super-fast now everything will be viral. If you’ve got the right proposition that someone wants your product or service I think to be able to grow that is much easier today. I would say be confident, get on with it nothing holding you back at all now.
Lee: Okay there you go be confident and get on with it. Andrea the show is Logros Achieving Excellence in your view from your experience what would you say is achieving excellence?
Andrea: No matter how successful you get you still look and you say what could I have done better and the ultimate example of that was over the weekend Warren Buffett probably created the most value of anybody in any company in the world. One of the richest men in the world and when he was giving his shareholders reports this week he talked about the mistakes he made. The man is 90 and he’s still talking about the learnings he made from the mistakes he did in 2016 and achieving excellence is about not being defensive accepting things go wrong and where you could have done better and just continuous improvement.
Always blame the problem not the person and you’ll create a much better culture in your in your business and you’ll create continuous improvement in your business. That’s my philosophy.
Lee: Always blame the problem not the person that’s fantastic advice there and Dave over to you.
Dave: In terms of achieving excellence one thing I would always say is striving for excellence continue to push forward. No matter what setbacks you get in today’s day and age given everything that’s going on in the marketplace at the minute there are plenty of excuses. Get your head down push forward; the minute you stand still in business is the minute you are going backwards. Continually strive to be better.
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