Government handouts for business

Article in Australian Institute of Company DIrectors 7 May 2015 

http://www.companydirectors.com.au/Director-Resource-Centre/Publications/eXPRESSO/15May07BO/Government-handouts-for-business#

Spare cash for new business ideas or research is often tough to find but federal, state and territory governments are handing out millions of dollars each year in grants and tax incentives to help enterprises of all sizes.

The aim is to provide government support for innovation, export, environmental initiatives and a host of other measures.

Many business are simply not aware of the wide range of grants available, says Ivan Kaye, CEO of business consultancy BSI. "Or, if they are, it’s just too hard. The red tape people have to go through is incredible."

But those who patiently work their way through the paperwork (or hire consultants to do it for them) can reap significant rewards.

Kaye gives an example from his own business, which used a tax break and a business grant to help defray the development costs and marketing of a new app it launched two years ago.

The app, called Referron, provides a way to refer potential clients to businesses and for the business to measure, track and reward the referrals.

To begin with, after spending $300,000 developing the app, BSI received $120,000 back after qualifying for the Research and Development Tax Incentive, says Kaye.

Promoted as a "targeted, generous and easy-to-access entitlement program", the tax incentive is open to all firms in all sectors that carry out eligible R&D. Companies may receive a refundable tax offset of up to 45 per cent under the scheme.

"A lot of businesses who do R&D may not be aware that they qualify or think it’s too hard to get," says Kaye. There’s a bit of work in checking that you actually qualify for the incentive, he says, and then it’s necessary to prove that the R&D was carried out.

Firms such as BSI specialise in helping companies to work out their entitlement to this and other grants and incentives, says Kaye. And often payment is in the form of a "success fee" of around 3 per cent of the value of the grant or incentive.

Help to sell overseas

With BSI’s app up and running, Kaye was keen to market the product overseas.

To help fund the costs of travel and appointing a permanent representative in the United States, Kaye turned to an Export Market Development Grant. This grant provides a 50 per cent refund certain marketing costs over $5,000.

"So assume I spent $25,000 on airfares and another $10,000 on accommodation over a period of a year – let’s say 30-40 days – and I could claim back $300 a day for the number of days I’m away. So that’s another $12,000 that goes onto my expenditure," says Kaye.

The cost of hiring a representative to promote the app is also claimable under the grant as is the cost of Google AdWords.

"What we’ve found is, whatever you spend on R&D, you probably spend at least three times marketing," says Kaye.

"So if you spend $305,000, they take off the first $5,000, then you divide it by two and the government will give you a grant of $150,000."

You can expect some hoops to jump through to claim. Your documentation of the expenses and payments needs to meet certain standards, says Kaye.

Kaye received received recommends companies investigate the grants and incentives available not necessarily just to chase a one-off bonus but as part of an overall strategy to help expand their business.

For more information about government grants and incentive programs, go to business.gov.au

In other words…

• Take advantage of the many grants and incentive programs available for businesses
• Millions of dollars are handed out every year to businesses of all sizes.
• Some businesses may hire consultants to help them identify the most appropriate grants and to negotiate the application and approval process.

Do You want to maximise your export grants?

FEDERAL GRANTS ON HOLD

It has recently come to light that the Federal Government has placed a 'temporary pause' on new grants. It has been confirmed that the Commercialisation Australia program and the Clean Technology Investment Fund, among others, have been affected by the pause.

Swan... we are putting a pause on $2b worth of government grants.
We need a surplus!

While the programs are still open for application, no new grants are being written for the duration of the pause which has been described as a 'normal part of the budget process'. At this stage all background work such as preparation of guidelines and the assessment of applications is continuing as normal, but uncertainity remains regarding how long the pause will last and what will happen to the grants programs following the conclusion of the pause.

EXPORT MARKET DEVELOPMENT GRANT

EMDG is the financial initiative of Australian Government aiming to help and aid current and aspiring exporters.

Do you want to maximise your export grants?

Global and domestic economies are facing turbulent times. Europe’s sovereign debt crisis, the struggling US economy, Australian’s two speed economy and wavering business sentiment are just some of the challenges facing business today.

Australian businesses have historically demonstrated their resilience and resourcefulness during tough times. Initiatives such as EMDG are important tools in bolstering the current account and foster strong, sustainable growth.

The Export Market Development Grant:

• Provides a 50% rebate on eligible overseas marketing costs above $10,000 (minimum spend $20,000).

• Acts to encourage Australian exporters to seek out and develop overseas markets. These markets include goods and specified services and industrial property rights which are substantially of Australian origin.

• Has a maximum grant payable of $150,000 per annum for a maximum of 7 years.

We at BSI believe that there is no better time than now for exporters to plan their activities and to establish or increase their overseas market share.

If you wish to know more please contact us and we will be happy to arrange a meeting for an obligation free initial eligibility assessment.

BSI INNOVATION
Suite 1, Level 3
55 Holt Street
Surry Hills NSW 2010
P: 02 9212 5505

Small Business Under attack – Government looking to remove Export Grants and Support Innovation

Grants such as  Commercialisation Australia and the Export Market Development Grant, which are already suffering funding issues, are under threat of being axed.

Wayne Swan announced a freeze on federal grants on Monday as it races to arrest a drop in revenue, due to a 37% drop iin Iron Ore prices. 

Is the Government going to kill a programme that generates $12 of revenue for every $1 of Government support to increase revenue?  Government should encourage more exports and increase support for Innovative Exporters.. Specifically Small Business!!

Killing these Grants will have a significant detrimental effect on innovative Small Businesses who have an export focus and use the EMDG to play on a Level Palying Field. More funding is needed at a time like this.

Pulling support of SME’s Government Innovation and Export Programmes , with a rising Dollar and a Flat World Economy is not the solution to build a robust economy!

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Would love your comments and feedback on how this can be improved.... what articles you want... have you got an article to write... This will be going to 235,000 people!!

5 Ways to raise capital for your SME

Angel Investors

Angel investors are wealthy individuals who will give an entrepreneur financing in exchange for a share of equity in the company. Investment sizes range, but usually are less than $1 Million. Angels often times work in organized groups that screen deals and invest with each other, while many invest on their own. Angel investors are more serious than the type of investor you would find in a Friends and Family Round, but they are usually less serious than a VC Firm.
Pro: Angels normally have experience in the industry and can offer helpful guidance and introductions to their network.
Pro: Because angels are less rigid than VC Firms, flexible business agreements are common.

Con: You can be forced to give up some degree of control over your company. Due to the high-risk nature of angel investing, angels rarely make follow-on investments.

Friends and Family

As an entrepreneur, you can lobby friends, family, and associates for funding that is usually invested more because of your personal relationship rather than an accurate assessment of the business plan. The Friends and Family Round often acts as a seed investment to get the business to a point where it will be able to obtain larger funding from an Angels or VCs.

Pro: Funding is usually obtainable quickly due to your existing relationship.
Pro: Potential exists for the mutual vested interest in the business to bring you closer with loved ones.
Pro: The investment terms are usually more flexible and potential exists for numerous equity or pay back methods.

Con: Immense pressure to succeed can strain personal relationships.
Con: Friends and family frequently have an extremely limited ability to evaluate the potential of your business, though they tend to give advice because of their monetary stake in the company.
Con: Friends and family usually bring nothing more to the table as an investor besides the initial capital.

Venture Capital (VC) Funding

Many entrepreneurs think that VC Funding is the key to their success. Venture capitalists are investors who are willing to put forward a large sum of money in exchange for equity in the company, but who only get their money out once the business either is acquired by another company or goes public. VCs are professional investors that are all about the money. They normally look for investments that can provide a 6X return on their investment, so you better be prepared to go big!
Pro: VCs can invest large sums at once and they can provide expertise and other assistance that is helpful in growing and exiting your business.
Pro: Being VC funded brings instant credibility to your company.
Pro: VCs open up doors to a vast network of individuals including partners and future investors.

Con: The term “Vulture Capitalist” exists for a reason. VCs are about the money and will take necessary steps to see a return on their investment, including ousting you from your own company.
Con: VCs may steer the business in a direction that you don’t agree with. However, they are very experienced and may know something that you don’t.

Bank Financing

Bank loans are the most frequently sought after source of financing and can be pursued at your nearest lending institution. Bank financing can be tricky as there are many different types of financing options and interest rates to go along with them. It is imperative to educate yourself about the process and your options before beginning.
Pro: Banks offer a range of funding amounts and payback options to fit your needs.
Pro: If you qualify, the time to funding is usually fairly quick.
Pro: If you go the financing route, you do not have to give up equity in the company.

Con: Bank loans are very difficult to obtain and the criteria is constantly changing.
Con: The entrepreneur owes the borrowed money whether the company succeeds or not.
Con: The large amount of documentation required can be tedious and time consuming.
Con: The financing options can be confusing. If you lack the knowledge or experience, you may lock yourself into an unfavorable deal with poor payment terms.

To enable your business to get the best chance for financing... you need to have your vision, values, 30 second pitch and business plan together, with a good management team and an understanding how the investor will get a return on their investment.

Government Funding 

There are various programmes that will assist you in accessing funding and even match funding on a $ for $ basis without giving up equity.



If you need help with raising capital... look us up on www.bsi.com.au

10 mistakes investors make in Africa, and how to avoid them

Abel Myburgh, Africa Desk Coordinator for BDO

Thu, 12 Apr 2012 11:59


Every year, African governments and big companies issue lucrative international tenders for major projects. Abel Myburgh, Africa Desk Coordinator for auditing firm BDO, offers advice on what companies should consider before and after winning that coveted tender.


Lack of knowledge and planning

Many investors regard the African continent as a single business regime and ignore the fact that there are over 55 countries, which include the surrounding islands. Each nation has its own rules and regulations. Some regions have tried to introduce uniform regulations but on the ground, the applications are different. We have experienced instances where companies tender and win contracts in Africa, only to realise that conducting business is difficult than they expected. We recommend that you start planning early - before the tender documents are filed. There are issues that can influence pricing, deliverability of the terms of the contract, and extracting profits from the specific country.

Lack of knowledge of the business culture in the host country

It is not unusual to find total disrespect for local culture. To avoid this, an in-depth study of the business norms and culture of the specific country should be undertaken. A lot of problems and misunderstandings can be avoided if a new entrant understands the perceptions and actions of their partners in Africa. The language barrier also forms part of this problem - it is important to acknowledge that English is not always the only or the main business language.

Unrealistic expectations

This is one of the most common mistakes made by new investors, and it can have a major impact on operations. The World Bank’s ‘ Doing Business’ guide can be used as an indicator, but country-specific information on regulations and business environment must be obtained in order to be informed on the exact procedures to follow.

Type of business entity to set up

Many companies may be under the impression that they can just begin operating in a country. However, the reality is that in most countries it is mandatory to register an entity. Another important consideration is the duration of the operation as some countries apply Permanent Establishment (PE) regime, which can result to a company paying tax locally on its worldwide profits.

Minimum share capital

Companies need to take into account any statutory minimum share capital requirements, which can vary from US$500 to US$1 000 000.

Local participation

In many countries, it is mandatory to introduce local shareholders and directors to a newly established company. A company then has to source indigenous shareholders, and the risks are numerous here. Proper planning is crucial in order to find reputable local shareholders or to opt for a different entity, for instance, a company branch.

Foreign exchange regulations

BDO has found that a number of companies stumble over this specific hurdle in that they cannot repatriate all of their profits and investments during or after the project has come to an end.

Direct and indirect taxation

Taxation is one of the biggest cost factors that companies have to take into account when operating in Africa. Many African countries have some of the highest tax rates in the world and in some cases, very aggressive tax authorities. Therefore, companies must do their homework when it comes to indirect taxes particularly import duties.

Taxation of employees

This is often a major area of concern, which tendering companies must plan for. Foreign employees’ presence in a country beyond 183 days will most likely trigger residency tax issues.

Work permits

It is important for a company to understand the latest requirements and regulations concerning foreign workers. BDO has encountered occasions where foreign employees have unknowingly operated in a country illegally due to obtaining incorrect visas.
What foreign investors look for in potential partners in AfricaFor African companies looking for foreign equity partners or financing, there are six key points to remember: western investors value time, honesty, direct communication, competition, planning and action - and they look for entrepreneurs who can execute ideas.

According to US-based investment consulting firm, RENEW LLC, this checklist will provide African companies with invaluable advice on how to deal with foreign investors.

10 points to think about when presenting to a VC

Having raised more than $300 million in numerous financings, and listened and reveiwed in excess of 600 pitches, I have found that there are 3 things that will get a VC  to meet with you.

• an idea
• top people. passionate and ability to work together 
• a big market for the product and service.

 In your presentation, make sure these each get a slide.

Your presentation goal is to get a second meeting - not to get the money at that meeting!!-  give them an overview on the investment opportunity and show how you will make money for them.

1. Do your homework:

ensure that the VC is interested in your space and is prepared to invest the money needed... Often VCs are only inteested in investing 10m + , it is a waste of time presenting a pitch asking for $1m.

2.Ten slides: limit the number of slides in your venture capital presentation to ten. - a normal human being cannot comprehend more than ten concepts in a meeting—and venture capitalists are very normal.
If you must use more than ten slides to explain your business, you probably don’t have a business.

The ten topics that a venture capitalist cares about are:

1.The problem you are solving and industry context

2.Your solution

3.Business model

4.Underlying magic/technology

5.Marketing and sales

6.Competition

7.Team

8.Projections and milestones

9.Status and timeline

10.Summary and call to action

3.Less is more on slide content: Each slide should contain one, clear point

 
4.Start with the big picture: Avoid being bogged down in details at the beginning of your venture capital presentation. Start with the industry trends and why your idea will fit well with the indsutry and where it is going.

5.KISS – Keep it simple —- no jargon or technical terminology that might not be clear to your entire audience

6.Use graphics: A picture is worth a thousand words. Graphics are especially important in conveying new ideas and concepts - make them clear and relevant

7.Readable font size: dont read your slides and make the font big...


8.20 Minutes – spare them the details: it is a venture capital presentation, not a white paper! In a perfect world, you give your pitch in twenty minutes, and you have forty minutes left for discussion.

9.Clear financial model – Have a clear financial model that shows how your business makes money

10.Use “bottom line” conclusions on your slides the venture capital presentation should focus on your bottom line only.




 Remember some of the ideas above using the 10/20/30 rule of a PowerPoint presentation. It’s simple to remember: a PowerPoint presentation should have ten slides, last no more than twenty minutes, and contain no font smaller than thirty points.

Online Spark Magazine

This is by far one of the best SME online publications I have read.... would be interested in your feedback!
http://sparkmag.co/nationau/issue13/index.html

10X Cash Flow Pro

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India Part 3 - Doing Business in India

Our partner Raviv Byron, talks to us about how to do business in India

Experts warn small exporters will pull back unless grant funding increased

Tuesday, 25 May 2010 11:03
James Thomson - Smart Company

Industry experts have warned that a significant shortfall in funding for the Government's Export Market Development Grant program could force SME exporters to pull back from overseas markets at a time when other nations are investing heavily in support programs for exporters.
Ian Murray, executive director of the Australian Institute of Export, and Ivan Kaye of grant advisory firm BSI, says exporters were dismayed to learn that the recent Federal Budget did not include extra funding for the EMDG program.
While the Government boosted funding for the program in 2009-10 by $50 million to $200 million, funding will fall back to $150 million in the 2010-11 year.
Murray says that could lead to a serious shortfall in the size of grants paid to exporters.
The EMDG scheme is open to Australian companies that spent at least $10,000 on export-related marketing expenses, and have a turnover of less than $50 million.
Kaye says that claimants in the 2008-09 year, which are paid in 2010 under the scheme's structure, will only receive 60% of their full entitlements due to a sharp increase in the number of applicants.
Murray puts the shortfall for the 2008-09 year at $30 million and says the shortfall for claimants in the 2009-10 year, which will receive funds in 2011, could face a shortfall of up to $80 million if the total funding pool is slashed by $50 million.
"The whole issue is uncertainty. People who are looking towards their expenditure for this year and next, if they are not confident they are going to get the level of support they expect, we simply believe they will pull back," Murray says.
"The dollar is tough, the economic environment tough, all you need now is this uncertainty and people will pull back. I would have thought it was one sector where you would you would say, let's put in some dough and let's try and drive this."
Kaye says his clients who have applied for EMDGs are concerned about paying for export-related marketing expenses they thought would be covered under the scheme.
"They have actually budgeted on getting an Export Market Development Grant and if they don't get the amount they expect, their cashflow is in serious trouble."
"But the reality is that they can't do anything about it. The reality is that will just spend less."
Murray is also unimpressed with the Government's decision to slash its funding to the Tradestart program, which is specifically focused on export advisers to work out of 54 offices around the country.
While the Government announced in the Budget that the program would be extended for a further four years, the level of funding has been cut from $22.3 million over the previous four years to $14.4 million over the next four.
"That's not a lot of money, but every piece of research that has been done has been supportive in terms of return on investment."

EMDG Shortfall for 2010 - worse expected for 2011

The Government in the budget have reduced the budget allocation to support the Exporters EMDG programme.

The EMDG budget for next year is $150 million (down from $200m) .

2009 EMDG Claimants can expect 60% of their entitlements with a lot less expected in 2011.

This is a disaster for SME Businesses....

There is a chance if SME's lobby that the Government will continue to support the SME's who are focussed on Exporting their Australian Goods and Services.

Australian Government support for export businesses

By Export Finance and Insurance Corporation (EFIC)

Any first foray into exports can seem daunting. One must set about preparing an export business plan, developing a marketing strategy, organising logistics and securing finance. While government support can be a key to export success, navigating through the myriad of government programs can be a challenge on its own.

The Australian Government’s three key export agencies, AusIndustry, Austrade and Export Finance and Insurance Corporation (EFIC) , offer valuable support, whether a business is new to the export game, building on early successes or an established global player.

AusIndustry, the Australian Government’s agency for supporting business innovation, can help on the export journey.

BSI assists companies identify which programmes are best for them and assists in maximising these grants.

If a company is in the early stages of growth, or a separate company has been set up to commercialise research, you could be eligible for financial assistance and business advice under AusIndustry’s Commercialising Emerging Technologies (COMET) program.

Another AusIndustry scheme, Tradex, can provide up-front exemption from customs duty and GST on eligible imported goods that are intended for export.

Austrade, the Australian Government’s trade and investment promotion agency, has programs designed to assist in developing the skills and knowledge to find and maximise export opportunities.

An Austrade Export Adviser can help determine the best way to obtain market research, link the company up with international partners, provide on-the-ground support when it is time to visit potential buyers and help develop a risk management plan.

Once an overseas market has been identified, an effective export marketing strategy is essential. Austrade can advise a business on how best to market its product or service internationally.

Austrade’s Export Market Development Grants (EMDG) scheme encourages the growth of export markets by reimbursing up to 50% of expenses incurred on eligible export promotion or marketing activities above a threshold amount.

It’s also a good idea to talk to a bank at an early stage about the finance to support export plans. If the bank can’t provide all the necessary support, contact EFIC. As the Australian Government’s export credit agency, EFIC provides finance and insurance solutions to help Australian exporters overcome the financial barriers when growing their businesses overseas.

EFIC helps successful businesses to win, finance and protect export trade or overseas investments. Working directly with exporters or with their banks, EFIC provides loans, guarantees, bonds and insurance products which can be tailored to the needs of both large and small exporters.
16/09/2009 12:00 AM

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Ivan Kaye interviewing Harvey Gartrell on EMDG

Ivan Kaye interviewing EMDG Expert Harvey Gartrell on Export Incentives.
For more information see www.bsi.com.au