On April 2nd, 2019, the 30K Instant Tax Write-off was introduced, an increase of 5K on what was currently available. A reason for rejoicing across Australia's SME landscape? Well, yes, but also no. The change in the threshold is only a temporary one, and will only be available until June 30th, 2020. The news may also be surprising to business owners, given that the level was increased from 20K to 25K only a few months before, back in January 2019.
The new $30,000 limit is great news for business and the economy; however, it is not the permanent fix many hoped for. Regardless of who is in power after the next election, this limit will be terminated at the end of June next year.
Well, time is limited, but you do have a year to get your asset write-off to submit, so there's no need to panic. If you want to get your asset written off this year, you will need to quickly however. Any asset purchases you may want to write off should be made without delay, and not left on the back burner.
According to the government, more than 350,000 businesses have already taken this advice and made their move, accessing the write-off within its first month of availability. The threshold of businesses who can claim has also been raised, and now businesses with a revenue of up to $50m are eligible.
Prime Minister Scott Morrison says that this covers 'an additional 22,000 businesses' and a further 1.7 million employees.
But how exactly does the write-off work 404? Let's take a look.
Let's say you purchase a vehicle for your qualifying business. The vehicle you purchase is worth $35,000 and was purchased within the tax period before the last one. You work out that your vehicle will be utilised for business purposes only 25% of the time, which means only $8,750 of the purchase price can be written off.
However, you do not qualify for the immediate write-off because the total value of the vehicle exceeds the $30,000 threshold. Instead, the taxable portion of the asset is added to your business' returns at the end of the tax phase.
Want to learn more about the 30K Instant Asset Write-off? Your accountant is a good person to talk to, as they will be able to help you strategise in the best way possible. If you want to access the capital needed to take full advantage of the 30k asset write-off before the end of the current financial year? Get in touch with the team here at Banjo Loans today.
The federal budget should protect small businesses. It should offer the provisions and the safeguards required to make businesses work for our society as a whole. But, above all, it must be delivered with SME owners in mind, recognising their importance to Australia's economy. So why are so many Australian startups and small business owners feeling left out in the cold by the latest budget?
What exactly has gone wrong here? We take a closer look and examine the three ways in which the federal budget has let Australia's SMEs down. It's not all bad news, but it's not all good news either.
The $30k write-off does just what it says on the tin -- i.e. it provides businesses with the ability to instantly write-off asset taxes on purchases up to $30,000. Of course, this sounds like a good idea, and it is, to an extent. Unfortunately, this provision for business in the latest federal budget may turn out to be something of a smokescreen, and organisations may end up being let down.
Good News
We'll start with the good news -- the latest federal budget has boosted the asset tax write-off by $10k, from $20k to $30k. This, of course, means that businesses can now achieve tax write-offs on major purchases up to $30k, and benefit from this in the same financial year, encouraging increases spending on assets and boosting the Australian economy in the process.
The turnover threshold has also been raised, this time by 500% from $10million to $50million.
Bad News
The critical bit of bad news regarding this is that the move is just a temporary measure. The current extension of the initiative is only valid until June 30th, 2020. This means that businesses do not benefit from long term confidence in asset investment, and neither does the Australian economy. Sure, the $30k write-off might get renewed, but equally, it might not, and business owners cannot work with this kind of uncertainty.
Andrew Conway, chief executive officer of IPA, outlined his concerns;
“We believe this initiative needs to be a permanent fixture of the taxation system and further increased to encourage business reinvestment, growth and employment opportunities,” Conway said.
There is also the convincing argument that the budget provisions are insufficient, and should be higher. If the government is serious about helping the country's businesses, they should consider exploring options beyond the $30k limit. The benefit this would have for our economy would be huge.
The thriving modern economy is a dynamic one, and one which is structured in such a way that it supports technological innovation and vision. The latest federal budget has paid lip-service to this, allowing for an increase in the Export Market Development Grant - or EMDG - and ring-fencing funding for spending in key areas.
However, critics of the budget have pointed out that these provisions fall short of delivering what businesses really need, and risk putting the development of our economy in jeopardy. Political motivations, as opposed to business-related ones, and a lack of understanding of the market, have clipped the wings of a potentially beneficial budget announcement.
Good News
It goes without saying that the increased funding for the EMDG is a good idea and one that will provide many businesses with the additional development revenue they need. The $3.4 million dedicated to supporting women in STEM careers, to be invested over four years, also makes for pleasing reading.
Bad News
While the budget announcement has offered some hope for business, it has also come up short in other areas. Critics have noted the lack of attention paid to the Research and Development Tax Incentive -- something that risks discouraging key innovators from pushing the homegrown business sector forwards.
StartupAUS CEO Alex McCauley highlighted the lack of vision displayed by the government within their new budget;
“The Treasurer chose to focus on the status quo rather than outline his government’s strategic plan for transitioning the Australian economy into an increasingly technology-led world,” McCauley said.
About the R&TDI scheme, McCauley went on to say;
“It is critical to ensure that high-growth startups are unequivocally welcomed under the scheme as soon as possible. This is an urgent issue and was left unaddressed tonight."
Sufficient access to funding is a perennial concern for small business in Australia and across the world. As a result, it was important that the new federal budget really got to grips with this issue, and showed that the treasury was serious about giving SMEs the boost they need.
Alas, this was not to be.
Good News
Small business funding was always going to be a hot topic at budget time, thanks to the Royal Commission's recent report. The Royal Commission has recommended enhanced accountability for the big four commercial banks and lenders in Australia, which is undoubtedly good news for businesses seeking the capital they need.
Along with the budget came the news that the Small Business Minister's Office is also working on how to lower the hurdle for businesses securing funding, potentially reducing the need for business owners to pledge their personal property against the loan value.
Bad News
One serious bit of bad news is that the need for business owners to put up their homes as collateral is still there. This has been a significant complaint among small business owners for some time now.
Other complaints include loan inflexibility (73% of business owners cited this as a frustration), and loan conditions (80%). Neither of these concerns has been adequately addressed by the recent budget.
So, the news is not great following the release of the budget, but at least alternative lenders such as Banjo Loans provide some hope for small businesses. If anything, the latest budget news suggests that a greater need for these kinds of alternative lenders than ever before.
Australia relies upon its small businesses, and these small businesses rely upon capital if they are to grow and survive. In many cases, business owners already have a clearly defined plan for growth, but there is one problem -- the capital they need is not available.
This is where government bodies, financial services firms, brokers, business mentors, and the accounting sector, all have a part to play. It is these entities that help business owners better understand their options for financing.
For many small and medium-sized businesses, it is the timing mismatch between inflow and outflow which causes cashflow problems. With this impediment in the way, how can a business also hope to fund growth? What many business owners do not understand is that growth must be linked with the source of capital, and, instead, they focus primarily on their revenue targets. To grow, a business must win new contracts, hire new staff, purchase more inventory, or pay deposits to the manufacturers of their goods, and all of this rapidly absorbs cash.
So what is the alternative? One route is to generate cash internally, but how can this cash source be unlocked? Many business owners cannot even visualise the sources of cash within their organisation -- for example, in the inventory already sitting on the warehouse floor, or the longer term contracts currently being worked on. How can they be expected to implement the strategies needed to extract this cash? The answer lies in finding a good and reliable accountancy team.
Let's consider, as an example, a rapidly growing company that has been successfully operating for more than four years, generating $2M+ of turnover. This company has historically funded itself in the following ways;
These funding sources might seem like two fairly solid revenue channels, but there is a problem -- the business is not generating enough capital to grow and has had to miss out on key sales as a result. The funding methods this business are using are simply inadequate.
Of course, this is just a single example, but it rings true for many. Research shows that 67% of small business owners who are focused on long term growth will use business profits as their primary means of funding, while 19% rely primarily on personal savings. Only 8% will opt to use a business loan to fund their growth.
On the surface, this appears to be a wise choice. Borrowing small business growth capital is commonly viewed as a risky strategy, after all. However, this approach could be stifling businesses.
By using controlled borrowing alongside short-term working capital, companies are, in fact, able to accelerate the velocity and quantity of their supply chain, and so take advantage of the market demand. Increased speed to market, combined with a higher quantity of readily available inventory, translates to increased revenue.
Banks, too, and alternative lenders, such as Banjo Loans, can be sources of capital.
The business in this example - an online retailer -- believes they require a 'touch and feel' component to assist sales, and have the opportunity to place stock into European, Canadian, and US markets in time for the northern hemisphere's summer. To cover manufacturing costs, the company used internally generated funds to pay for a 50% deposit with a Chinese manufacturer, but the goods will only be delivered when the final $250K is paid.
While the company waits for further capital to be unlocked within their business, they risk missing out on this lucrative summer market, which could cost them $1.0M in sales. Borrowing the $250K would secure this projected $1.0M, with the same operating cost base for the company, with increased profitability.
In another example, Banjo Loans formed a relationship with a domestic manufacturer of niche transportation vehicles. The manufacturer's turnover was then $1.5M, but market demand was far in excess of the company's capacity to fund the increase in raw stock, as well as manufacturing lead times, finished goods, and credit terms for buyers.
A 30% deposit to manufacturers in China was covered using working capital, as was the purchase of raw materials upfront. Banjo Loans assisted with a short term working capital facility, enabling the company to accelerate its products' journey to market. Their growth in revenue is projected to exceed $7.5M in 2019.
Both of the above examples highlight the 'butterfly effect' within the Australian economy, in which access to funding directly increases turnover, revenue, and profitability. This was highlighted in the Fintech in Australia study, conducted by Frost and Sullivan in 2015, which forecasted how the Australian fintech sector would grow at a CAGR of 76% by 2020 and add $1B of new value to the Australian economy.
But what does this mean on a global scale? When looking at the bigger picture, we can see that 90% of businesses worldwide are classed as SMEs, contributing 60% of overall employment and 50% of gross added value.
A report from the United States, released in May 2018, found a huge upsurge in the amount online small business lenders are providing to SMEs, as well as a huge resulting economic impact. Between 2015 and 2017, small business lenders such as OnDeck, Kabbage, and Lendio;
We can see these same results in other key global markets, such as in the UK.
The data also shows just how big of an impact these lenders have for businesses in local communities across the world. For every $1 lent to an SME, as much as $3.79 of gross output is achieved in the community on average.
There are still challenges to be faced in Australia, but the future looks bright. The rise of fintech and alternative lenders looks set to connect more businesses than ever before to the growth capital they sorely need. And this is, without a doubt, great news for our society as a whole.
There is a new breed of successful businesses that all share one common characteristic. They are customer-first, not product-first. This shift in focus becomes difficult in more well established organisations who have built processes and infrastructure to deliver products they feel comfortable with rather than creating positive experiences for their customers. However, in the modern business world, it is the customers’ desires (and not the business’) that need to come first and inspire innovation and growth.
This is where the product-first model falls short. Instead of dictating to customers, businesses need to listen - and listen well - to what their customer base has to say. In this article, we'll be looking at this in more detail and understanding how small businesses and lenders alike can adopt this new focus.
Data really is everything in modern business. This is not simply because it is helpful for seeing evidence of the results, but rather, it's because business owners need this evidence and this understanding if they are to bring about meaningful changes in their operating procedures.
So, how do business owners measure customer-centricity and how do they receive proof that their efforts are working effectively?
A recent article published by McKinsey & Company identifies three core elements to successful measuring and analysis of customer-focus in business. These are:
This means expanding the focus of analysis to cover the totality of the customer experience. Rather than solely focusing on a transactional touch point, businesses must gather data from the entire customer lifecycle in order to properly understand how the customer is interacting with the organisation.
The second element requires the deployment of the necessary technology at every stage; technology which makes it possible to gather this valuable data. This includes technology to capture direct, qualitative data from customers, as well as tech which integrates survey results, social data, and other sources on a usable platform.
The feedback loop concerns your customer-facing staff in particular. Your staff need to be able to capture the data provided to them by customers regarding their experience, and then wield this data as they aim to enhance this experience in the long term. This means developing the end product so it is more in line with what the customer needs, as well as applying the same approach to customer service.
And how about the metrics? What should business owners be measuring to ensure that they are adopting a customer-first approach?
There are two key aspects here:
Now that high levels of customer focus have become so vital to modern businesses, it is no surprise that small business lenders are adopting a similar approach. The recent Royal Commission report by Commissioner Haynes pushed lenders to be more customer-focused, directing institutions to act fairly, legally, and with their customers' best interest at heart.
This is a far cry from the traditionally product-first landscape of business lending, in which little attention was paid to relationship building and offerings were often unfit for purpose with regard to small and medium-sized businesses.
The new breed of alternative lenders have recognised this and are already ahead of 'the big banks' when it comes to a profoundly customer-oriented focus. Lenders such as Banjo Loans have the doctrine of being customer-first written into their very DNA, and are characterised by a distinct focus on responsible lending. We can see this in the impact of the lending strategies on the customer themselves - with a customer-first approach, the entire customer experience is supported at each turn, eliminating things like financial stress which can also affect personal lives.
This pleasing shift in focus is evident in other areas too. Accountancy services are becoming increasingly geared towards the customer, and are incorporating improved advisory, auditing, and taxation capabilities, which are more in line with what the client actually needs as opposed to what the accountant wants the client to need. Alignment of need and product, or need and service, is leading to a far brighter future for businesses and is supporting their ongoing growth.
Uber, Amazon, Netflix - chances are you've heard of these organisations. It's no coincidence that all three are obsessed with their customers. The emphasis on customer-focus is not always easy to achieve but it must be the goal of all businesses if they are to grow. There is no way to side-step this challenge - the customer must come first, every time.
A business loan that has been provisioned without requiring standard financial documentation is termed as a Low doc business loan. Small businesses often find it hard to avail the funding they need and find themselves turning to availing low doc loans. This is worrying, because low doc loans can be risky.
Businesses need funding and most common reasons published by Small Business Loans Australia are Woking capital (35.28%) and debt consolidation (10.69%)
Low doc loans are firm adherents to the old adage that if something looks too good to be true, it probably is. This is because, while low doc loans appear to be a relatively easy access point for the funding a small business really needs, the cost that the firms ends up paying over the lifetime of the loan period could be excessive, and even damaging to the business.
The bulk of the cost of a loan is made up of the following components;
As a low doc loan is considered to be of a higher risk to the lender, the lender will work to mitigate this risk through increased costs. These increases can be manifested across any of the components listed above. You can use a loan calculation tool like the one provided by Finder to independently verify the total cost of your low doc loan.
So, a low doc loan is an initially attractive proposition that could end up costing a small business serious money in the long run, but what are the direct risks? Well, the most obvious risk is that ongoing costs and interest rates are so high, and charged over an almost indefinite period, that they end up crippling the small business which is meant to benefit from the loan.
This changes the complexion of the problem a little. Paying a large amount of money over a long time can be seen as wasteful and inefficient, but this is not usually considered fatal for a business. Now we are seeing situations in which increased rates are actually putting companies out of business altogether, as firms incur more debts in an attempt to manage the initial credit facility.
Much of this is due to difficulties in assessing future incomes and earnings for small businesses. These earnings can fluctuate across the financial year, and smaller organisations may be particularly susceptible to project shortfalls. By taking on a low doc loan, the business might be approved for the credit, but they are leaving themselves wide open to the potential risks.
Any risk to Australian small businesses is a risk to the Australian economy as a whole, which relies heavily upon these smaller scale enterprises and the growth they achieve each year. As a result, it is no surprise that the government is seeking to take action against the seemingly cavalier attitude displayed by some lenders in the small business loans market.
The Financial Ombudsman Service Australia has published a document outlining its approach to low document loans, and to the disputes which arise from them. Rather than simply using low doc loans as a means of squeezing money from small businesses in the form of exorbitant rates, lenders are now required to apply a much more rigorous set of checks ahead of providing the loan, and may only provide credit facilities to those businesses who meet these criteria.
In the event that this does not take place, and a loan is provided to a company that cannot afford it, the business which acquired the loan has the legal recourse to raise a dispute via the ombudsman's office. The burden of proof now rests with the loan provider to show that they carried out the necessary checks.
These checks include ensuring that the company has held an ABN for at least one year prior to the applications, as well as credit checks and other assessments.
The trouble is, small businesses do not generally turn to low doc loans by choice. Instead, they explore this option because they lack the documentation required to acquire loans of other types. To put it simply, they have nowhere else to turn.
Or at least they didn't have. The financial technology, or fintech, revolution is beginning to provide real alternatives to these risky credit facilities, and streamlined application and decision processes are enticing increasing numbers of SMEs in this direction.
But it is not just ease of access that is turning small businesses towards the fintech option. Customised solutions provided to specific businesses, meeting their needs perfectly with a more personalised approach, have proved popular among businesses seeking the capital they need. In addition, fintech lenders are showing themselves to be more committed to transparency and responsibility than their more established counterparts, with Smart Company reporting that six Australian fintech lenders had put their signatures to a new code of practice for lending in the summer of 2018. A raft of other non-bank lenders such as Banjo Loans has been members of AFCA and signatories to the Banking and Finance Oath.
So, while low doc lenders are exposing businesses to unnecessary risks, the future does look bright, thanks to increased awareness regarding the dangers of a low doc loan, and the future-focused solutions offered by today's fintech service providers.
Starved of credit?
At Banjo, we share in the vision of small businesses, we love hearing exciting business ideas and inspirational stories of business success. Most of all, we like to see people out there pursuing their passion. There are 2 million small businesses in Australia employing around 49% of workers and representing some 97% of all businesses in Australia. These stats make it clear that we all benefit if small business, the backbone of our economy, has the support and environment to develop and grow their businesses.
So we were perplexed that now, 7 years after the GFC, small businesses globally remain starved of credit and Australia is no different. One issue raised frequently in the small business sector is; ‘why is it so hard to get the funds we need to grow our business?’
Of 2 million SME’s (Small to Medium Enterprises) in Australia, 51% have no lending product at all and they are typically funded with family loans or credit cards at rates closer to 25% without generally adjusting pricing to reward lower risk borrowers.
Funding for SMEs globally has become constrained during the recession and stayed at these low levels since: it is generally more profitable for traditional lenders to make a $2m loan than a $50,000 one.
Post GFC traditional lenders have grown their personal and home loan credit books at much faster rates than their small business books. This has been attributed to a number of factors such as the relative riskiness of SME loans to housing loans, greater capital requirements for SME compared to other forms of lending and finally reduced competition amongst business loan providers post GFC.
Submissions to the recent Financial System Inquiry[i] stated structural issues such as information asymmetry, regulation burden and the taxation system also as possible contributing factors to the lack of business finance provision to SME’s.
There are a number of initiatives being implemented internationally aimed at addressing the same issues Australian SME’s face accessing finance, and we could consider some of these as roadmaps for our creation of a better SME world.
In the UK, high-growth businesses with low levels of fixed assets also have difficulty accessing credit. The UK Government launched a number of initiatives to support small businesses following a 2012 Parliamentary Review[ii] such as:
In the US, two initiatives in addition to those above caught our eye:
At Banjo, we take an active role in advocating for small businesses in Australia. SMEs are the job creators and innovators we need to keep the Australian economy growing.
Banjo introduces a new online marketplace lending platform built by Australian banking experts who simply thought there must be a better way to provide unsecured loans to SMEs. We want to make it easy so business owners can get on with what they do best!
Increased competition in Australia will be good for business.
Recent calls by the industry to reduce the red tape burden on SME’s by automating BAS and income tax returns are positive initiatives. We support the government task force working to explore the potential of technology and digital platforms joining with the Government to make it easier and more streamlined for businesses to interact.
Over the coming 12 months, the team at Banjo will place their shoulders on the wheel to work with Government, Industry Bodies and the Banking industry to explore ways in which we can all work together to create the right environment for small businesses to flourish in Australia.
Imagine being able to just get on with the business of running your business!
Sounds just brilliant to me.
[i] www.australiancentre.com.au
[ii] www.gov.uk/government/consultations/sme-finance-help-to-match-smes-rejected-for-finance-with-alternative-lenders/sme-f
[iii] http://alternativebusinessfunding.com.au
Cash is the oxygen that enables a small business to survive and prosper, and is the primary indicator of business health. Good cash flow is essential for all businesses. It can sometimes seem daunting, but it needn't be complicated. Our tips are designed to help you reduce your costs and keep your cash flow healthy. By Andrew Colliver, CEO, Banjo
That’s easier said than done. Do you ever put your book-keeping to one side because you’re so busy ‘running’ the business? It’s understandable, and in fact quite common, but if the books aren’t organised, trouble lurks around the corner and your business has cashflow problems before you know it.
The best way to get the books in order is to use a transparent cloud based accounting system like Xero or MYOB (which reconcile with your bank account) and to make sure that it is kept up to date. Once your accounts are in order you’ll be able to stay on top of what funds are available immediately and what’s still in your clients’ bank account waiting to be transferred.
With this level of understanding you’ll have a clearer picture of what funds need to be accelerated by using a funding platform such as Banjo Loans, so you can stay on top of your cash flow but also meet your growth ambitions.
Bad debts are funds owed by customers that cannot be recovered. They are a real nemesis of every business and can easily occur if a proper credit control system is not put in place early on.
Cash generated by the business is the cheapest form of capital. Generally, the shorter the cycle, the less time capital is tied up in the business process, and thus the better for the company's bottom line.
That’s probably the toughest of your financial challenges. If your clients’ credit terms are out of sync with the credit terms of your suppliers, negative cash flow can build up pretty quickly.
There are different strategies that can be applied:
Growth is what every business aims for. However, without the right strategy and tools, rapid growth can cause cash flow problems and hurt the business. Again, there are various scenarios you could implement.
Businesses often face more than one of the above cash flow problems. Paying close attention to your company’s finances and having the right solutions ready to be deployed whenever required will ensure that you make it through the first five ‘survival years’ and become a success story of tomorrow.
At Banjo, we’re inspired by your stories, how do you keep your cashflow in check? What challenges have you faced on the road to growth? . Tell us about your Just Brilliant business! We’d love to hear from you on the below email link.
Year end. Arguably, it’s the time of year you least like running your own business, but it’s also a time to capitalise on the tax incentives the Government is throwing your way! Read on for our top tips to get you through June 30th with minimum stress
If you’re not already doing it, then set aside some time to categorise all your expenses. Nicholas Pateras from Wilson Pateras Accountants says, “ To maximise your deductions it’s imperative to keep good records, especially with Motor Vehicle claims where maintaining a full log-book is essential”.
Other categories can include:
The technology that now exists to manage your records is great. It will save a great deal of time in the log run to use an on-line app such as MYOB or Xero that let you upload photographs of receipts to be categorised and filed automatically so you never have to think of them again!
“What you invest in will be one of the largest factors in determining your tax bill. For instance, ‘tax advantaged’ investments such as shares and property, may actually reduce your tax bills if structured correctly”, says Nicholas.
The $20,000 instant asset write-off scheme means instead of claiming deductions bit by bit, you can deduct the full value of every asset purchased to the value of $20,000. Important to note for next year, the threshold has jumped up to businesses turning over up $10 million from July 1 2016. You’ll have to get in quick though; this scheme is set to expire on June 30, 2017.
You can choose how you value inventory to minimise tax to either bring forward deductions or move values into the following year. Stock can be valued at cost, market value or obsolete stock value. If you have obsolete stock, it should be written off fully.
Don’t forget that interest paid on borrowed funds such as overdraft, credit cards and loans for business use can be claimed. Importantly, now is the time of year to consider if you should be prepaying any interest in advance as this is a tax deduction as well.
“ It’s often the forgotten asset, but super is still great from a tax perspective with the lowest tax rate on earnings by a long way”, says Nicholas. This year there is an increase in the concessional contribution limit , from $25,000 to $30,000. Maximising super contributions will provide significant savings with the tax rate set at 15%. If you have a Self Managed Super Fund, this provides a great opportunity to maximise tax savings by contributing up to 3 years in one go at a maximum of $180,000p.a.
June 30th provides an opportunity to write off any bad debts from the current financial year. You must do this before the end of June, not after, irrespective of when you complete your return. You’ll need have documentation to support the write off including measures made to recover bad debts.
But as is the case with many measures to minimise your tax bill, make sure to document what the debts are and the efforts you have made to recover them.If your business is cash based, it’s not as easy to write off bad debts as they won’t have previously been included as income.
“Too often clients visit us to discuss the structure of their business when they are ready to prepare their returns; but it is all too late” says Nicholas, “The review whether you should trade your business as company or trust should be done before 30 June”
It’s tempting to try and save a few dollars and do it all yourself, but using a professional will almost always save you money. The more organised your records are when you submit them, the less time your accountant will need to spend on them. An accountant knows the ins and out of the tax system and will maximise your savings every time, most certainly keeping all your hair intact!
But let’s take a look at two businesses that are already going gangbusters, and find out how they managed to fund their growth.
Scott Bradley was 23 when he and co-founder Sean Towner founded frozen yoghurt chain Yo-get-it.
“When Sean and I first started Yo-get-it, none of the banks wanted to touch two 23-year-olds,” says Bradley, now 29.
But the friends, former construction project managers, we're not going to be put off their dream. Luckily Bradley had $70,000 up his sleeve from TV game show Deal or No Deal.
Adding their own savings to the pot, Bradley took a 41 per cent share of the company, Towner invested in 36 per cent, and friends and family invested in the remainder.
Along with their own difficulties in getting bank finance, Bradley says potential franchisees also faced an uphill battle.
“They’d go and try and get business loans, but even with the backing of Yo-get-it, if the franchisees didn’t have a house or generally 80 per cent of the cash up front, not even the big four banks would want to touch them.”
After some early success, a well-known businessman assisted the young entrepreneurs by putting his name to a bank loan, which he also had to personally guarantee.
Gill Walker, owner of specialist customer relationship management (CRM) company Opsis, is facing a sticky wicket. She’s got more work than she handle, but can’t convince anyone to inject the cash she needs to invest in more staff to grow the business.
“It’s a complete circle that I’m failing to break,” says Ms Walker, who has run the business since 2004.
“It seems from my experience that the only funding available requires you to put your house on the line. Our house is totally owned by my husband, so that’s not an option.”
Ms Walker said if she were to secure funding, she would likely spend it on a results-based salesperson to bring in work, followed by another staff member to help carry it out. For the moment, she is stuck in the “feast and famine scenario” – a situation many small business owners will relate to. “Work does not parallel billings either,” says Ms Walker.
