Upfront costs and unconventional financials have held back the expansion of businesses transforming our energy markets and introducing new ways of delivering electricity.
That’s what happened to Planet Ark Power, an engineering organisation which combines modern PV solar panels and batteries with AI powered software to ramp production up or down based on demand from the electricity grid. With a system that is cash flow positive from day one, Planet Ark Power installations help businesses turn energy from a liability into a revenue stream, as well as providing energy security.
But not too long ago, Planet Ark Power struggled to get the funding they needed to grow.
“5 Months of Hell” – The role of the right finance
Rapid growth brings rapid change, and Planet Ark Power needed a line of credit to cover the cost of those changes. But Executive Director Richard Romanowski says his experience with getting finance from the banks was less than ideal.
“The bank put us through five months of hell, then said ‘go make your sales targets for the year and come back to us’. The banks will only give you money AFTER you’re successful, with no regard for how much energy it takes.
“That’s when Marketlend came to the rescue. They asked us to explain what we were doing and our business prospects. When they understood our challenge, they said ‘this is a great opportunity’.”
By looking solely at past numbers, investors can easily miss high value opportunities like Planet Ark Power. The Marketlend platform makes up for what’s lacking in the traditional lending model by providing investors both a quantitative and qualitative assessment of each company.
In doing so, small to medium enterprises have more flexible access to fast finance, allowing them to take advantage of growth opportunities in their sector.
How Marketlend made growth simple
Through the Marketlend platform, Planet Ark Power borrowed $500,000 from 50 lenders, which Romanowski says has been a game changer for the business.
“The cost of client acquisition is huge. We’ve gone from $30,000 sales to $10 million sales, and each one is a massive learning curve – building new systems, new sales approaches and so on.
“I have a 5-star contract but I have to wait 60 days to get paid. With a customer base growing and changing so fast, I need cash flow to handle it.”
No more missed opportunities
Marketlend puts sophisticated investors in touch with high potential opportunities that fall through the cracks of traditional lenders. It avoids the many pitfalls of a peer-to-peer lender, because it is a vetted, thoroughly transparent lending platform.
“Marketlend actually cares about your business. They really want to know what you are doing,” Romanowski says.
“They take a bit of a punt with you – not in a lender-of-last-resort way, but in a way that actually understands the risk and reward.
“We now have a $500,000 line of credit and are looking to increase it. When we first went to Marketlend we had 25 staff, today we have 35. Not only that, the size of the projects are growing fast.
“Because they really understand your business, they can unlock the opportunity.”
Selling yourself is a part of every business, and marketing is the way it’s done at scale. But how much should a small business spend on marketing?
Like any question worth asking, the answer depends on your situation. Read on for some insight into what businesses are spending on marketing today, and what you need to think about before setting your own marketing spend.
Define your needs
What you want to achieve goes a long way to determining your budget. Your needs are different from other companies and will change over time. You may want to:
– Grow fast
– Grow sustainably
– Build brand awareness
– Maintain an established presence
These are all very different goals, with different associated costs. If you’re just starting out, every company needs a cohesive brand and a functional, professional website. Beyond that, your needs are completely custom.
With that caveat, there are some standards you can use to set your expectations.
How much should a small business spend on marketing?
Marketing budgets are normally measured as a percent of company revenues. To get a dollar amount from the percentages below, multiple them by a firm’s gross revenue.
The August 2018 CMO Survey from the American Marketing Association found an average marketing spend of 7.3% of company revenues from 324 respondents across the US.
The chart below shows this is lower than recent years, but still within a typical range of 7-9% of revenue (source page 26).
Marketing for startups vs established firms
The report calculated average marketing spend by company size, as seen below (source page 27). Generally, smaller firms spend more on marketing than larger companies.
The first step of marketing is brand awareness, so smaller businesses without established brands are wise to spend more on marketing. Established brands can get away with a more efficient budget.
Ryan Flannagan of Nuance Media writes startups should expect to spend 12-20% of gross revenue on marketing, while noting a larger firm may only spend 6-12% of gross revenue on their marketing budget.
When the rules don’t apply
Knowing the rules helps you know when to ignore them, and a standard marketing budget won’t suit every company.
The CMO Survey breaks down marketing budgets as a percent of firm revenues by sector, below (source page 27).
Clearly there are situations where a big traditional marketing spend isn’t as useful. B2B services like mining, manufacturing, and professional services for instance typically rely on sales teams to attract new clients (with sales rarely included in marketing budgets).
You can over-spend on marketing. First, there’s the opportunity cost of a high marketing budget that may be better spent on product or business development.
But there’s also the risk of growing too fast. If your marketing is too effective, you may face more growth than you can handle. That can cause serious cash flow problems that undermine other parts of your business, potentially sending you out of business.
Avoiding this isn’t difficult. First, don’t borrow more than what you need for the growth you can handle. If you’re using Marketlend to access flexible, peer-to-peer finance, don’t over leverage yourself. Make your repayments and you can always extend your line of credit later.
If you do have cash flow issues as you grow, a service like UnLock can provide extended payment terms to supercharge your cash flow, like a corporate version of buy-now-pay-later.
Pay it smart
The key element when setting a marketing budget is to be deliberate. Approach your marketing spend with a critical mind and a clear vision of what you want to achieve, and you’ll be miles ahead of the competition already.
While some debt is necessary to fund a business, if you’ve ever found yourself turning to a personal credit card to stay afloat… it’s time to stop for a moment and consider your options.
Here’s a sobering statistic: Last year, a survey of 1,200 Australian SMEs showed about two thirds of small business owners rely on credit card debt to maintain cash flow in their business. Just two years earlier, the Australian Bureau of Statistics found only a third of SMEs would use credit cards to maintain cash flow.
That means the number of businesses turning to credit cards to keep their businesses afloat has doubled in two years.
While there’s a certain convenience to using the credit card, the ensuing interest rates can put a business under even more financial pressure. Instead, here are a few tips to smooth out cash flow, and start to pay off business debt in your firm.
- Are your costs too high?
Reevaluate your regular expenses. Are you paying too much for supplies or materials? Research new suppliers and see if you can get similar materials elsewhere for less.
You could also reduce your office space and sell off equipment you don’t need or no longer use, or look into reducing your energy consumption.
This will result in savings you can put toward reducing your debt, or for maintaining cash flow in lieu of entering into even more debt.
- Can you buy now, pay later?
When looking at supplies and materials, have you considered services like Marketlend UnLock? Launched late last year, UnLock is similar to consumer ‘buy now, pay later’ models like Afterpay, except it is designed for small businesses.
In effect, Marketlend pays the supplier upfront for the materials, then gives your SME extended credit terms to pay the amount back – typically 90 days instead of the usual 30-day time frame.
This longer credit term allows businesses more time to repay, thereby smoothing out cash flow.
- Can you prioritise paying off your debt?
If you’re going to owe money, then you should know how much you owe and to whom. If you’re accumulating so much debt that it’s becoming challenging to keep track of what payments you must make every month, it’s time to take stock of your debt in order to prioritise your payments. Generally, when looking at loans it’s best to pay off those with the highest interest rate first.
Also consider consolidating loans if possible. Not only are consolidated loans easier to manage, as there are less people to pay, but you can typically find a lower interest rate – depending on the circumstances.
This is by no means an exhaustive list, butit’s the three best places to start. If the debt your business carries is slowing you down, the best thing to do is take steps to pay it down today. Even if those steps are small at first, they’ll compound into giant leaps over time.
A new year, a fresh start!
As you think about New Year resolutions in your personal life, consider also what new goals you can also apply to your business in 2019. New Year resolutions can include reevaluating goals to make sure that you are growing and staying on track. They can also include getting important logistical tasks out of the way for the year so that you can focus on what’s most important for the rest of the year.
What are your small business New Year resolutions in 2019? Here are a few suggestions:
- Take a fresh look at your business plan
You think you know where you want your business to go, and you’re already on the way there. But now that you’re back in the office from the holidays, it never hurts to take another look at your business plan with a fresh set of eyes. It’s okay to change goals slightly from year to year depending on the progress you’ve made last year, or based on changes in the market. Make sure your business plan is always in tune with your customers and with the market.
- Decide on new goals and how to accomplish them
Once you’re sure your business plan is exactly what you want, then evaluate your progress in 2018 and develop your goals for 2019. Think about what kind of business you want to have by January 2020, and ask yourself what you need to do to get there. This may involve things like hiring new staff, upgrading your office space, or investing in more advertising or marketing. Figure out the specifics of what needs to be done, and how you will go about it.
- Work out a 2019 budget
This one goes hand in hand with number two. Once you know what you need to do, calculate how much money you’ll need in order to achieve it, and plan for where those funds will come from. Don’t get your hands dirty before you have a budget, or you risk overspending and ending up with a deficit. Make sure you have the money to tackle all your goals, whether it will come from personal funds, the profit from your business, loans, or from outside investors. If you need more funds, then plan for how you’ll acquire them. Marketlend is on hand to help you acquire financing by connecting you with the right investors.
- Update the online side of your business
These days you can’t run a business without having the right presence online. Brick and mortar sales are still important, but making sure customers recognise you and can find you online is a must. As 2019 begins, it’s a good time to check your Google analytics to make sure you’re attracting enough web traffic, and that this traffic is translating into sales. Look at how your online customers behave in order to see if you need to change the way you target them. Also check if your website is properly optimised for search engines, and that you’re well-positioned on the major social media sites. If you already have an online brand growth plan, then revisit it and make sure you’re on track to where you want to go.
- Evaluate how you use resources and energy
Have you ever thought about how you use your office space, or how much energy your business consumes? At the start of the year, it’s a good idea to check that no space or supplies are being wasted, and review how much power you’re using. This can include things like moving to a more space-efficient office, reducing supplies that you’re not using, changing your electricity provider, or even looking into using alternative energy sources. Reevaluating what you consume and how you consume it can translate into major savings, which equals money you can put right back into your business.
Once the year starts in earnest, day-to-day business needs often take precedence and its hard to carve out time for any planning or business self-reflection. With the start-of-year seasonal lull many businesses experience, its perfect time to take a step back and map out the year ahead.
So your launch was a success, and your new business is now at cruising altitude. Celebrate, by all means. But keep an eye out for tendrils of smoke in the vents.
That’s because some problems in a growing business are like a smouldering fire: you’re often unaware until it’s too late. If you know their early warning signs, though, and have plans in place to counteract them, you shouldn’t be taken by surprise. Here are some of those signs and the best countermeasures:
1. You’re starting to pay your bills late
If you’re starting to having trouble paying creditors and employees on time, you might be developing major cash-flow woes. Cash is everything to your small business, and you need to figure out where the problem lies right away.
Ask yourself: Are you billing your clients quickly enough, with timely invoices? Are you checking the credit histories of your big customers instead of just giving them the benefit of the doubt? What about collections procedures for the deadbeats? Do you have those in place?
Cut costs wherever you can. The little expenses add up. Barter with other businesses for services; buy your equipment gently used; install a ‘smart’ thermostat; get a solar water heater; make staff turn off computers at night; employ freelancers for suitable tasks. You can even borrow items from a tool library so you don’t have to buy them.
Check your financial statements religiously. Identify any possible opportunities to boost your income, but don’t even think about trying to grow right now. If you’re having cash flow problems, now’s not the time.
You should be able to pay your bills, your employees, and even yourself–on time.
2. You’re always reacting to emergencies
If you’re starting to respond to business emergencies day in, day out, something’s not right.Things should be running smoothly enough to let you plan and think strategically much of the time, and focus on building your business.
Perhaps you’re trying to have the business do too many things at once; or maybe you’re bad at setting priorities and managing time.
The Eisenhower Matrix
Have you heard of the Eisenhower Matrix? It’s a formula developed by Dwight Eisenhower, the American World War II general, more than 60 years ago that has stood the test of time. Basically, Eisenhower split his workload into urgent tasks (returning a phone call from Winston Churchill, say) ) and important tasks (such as planning for D-Day)). He made sure to schedule time for his important tasks and to delegate the unimportant ones. What he accomplished with this approach is none too shabby: he vanquished Hitler, became president of the U.S. and developed its highway system, among other things. And his formula is still alive today.
Eisenhower didn’t even have the benefit of project management apps, but you do. These can help you and your staff work together efficiently. Eisenhower also knew that having too many meetings in one’s schedule is a bad idea — they suck up lots of time.
Be realistic about your own weaknesses, and consider hiring someone to help set priorities and establish your office systems.
3. The staff you just hired is leaving
Once you’ve invested in training good people, you want them to stick around. If
they’re leaving sooner than you’d like, schedule exit interviews with them to ask why. Then ask yourself what you can do to improve staff retention.
And take a look in the mirror. A good boss fosters enthusiasm, sets clear expectations, gives timely feedback and conveys a sense of mission. Then he or she gives the employees room to get the job done. If they do their jobs well, don’t micromanage.
Let your employees know you value their efforts (or at least, let the good ones know); pay them a decent wage; express an interest in them. They’ll reward you with loyalty.
If these strengths aren’t yours, consider hiring someone else to manage your staff. Outside consultants can also help identify why employees keep heading for the door.
Turnover rates vary by industry, so you might want to call your industry’s trade association, if there is one, to see how your rate compares.
4. You experience a sudden drop in sales
A sudden drop in sales could be just a hiccup, but it could also be a sign of bigger problems, so investigate immediately. Have your competitors beat you to the punch in some way? Is your product or your way of selling it outdated? Do you need to adjust your pricing or your marketing? If you have sales staff, are they hitting their quotas?
Are you targeting the right customers? Is technology revolutionising your industry in some way and changing your customers’ buying habits or methods?
Put yourself in your customer’s shoes and try searching for your product and business online. If you sell online, make sure everything on your website functions smoothly, from landing to checkout.
Check in with your industry’s trade association, if you have one, to find out if the drop you’re experiencing is part of a bigger trend, or perhaps customary at this time of year for reasons you might not have thought of.
Now you have it — four situations, each of which could be a wisp of smoke telling you your engine’s on fire. Ignore them at your peril.
Funding is often a constant concern for SMEs. To fund a business doesn’t just mean finance and there are creative ways to bring money in the door that can support growth.
What are your best options for funding? Here are some “outside-of-the-box” options that can help.
Presell Services or Products
This is a creative way to fundraise when your business is in the early stages. Get your elevator pitch ready for anyone who wants to talk about your new project. If you plan to offer a consulting service, web security, a new line of grocery stores, offer a presale.
A presale means you receive money before your grand opening. Give your customers proof of purchase, such as a coupon, to be redeemed when the business opens. Customers love to help a business they believe in and are happy to exchange a proof of purchase for something new.
This works best if you can show proof that your business is more than a concept. Blueprints for your new building, a working model, or an online store all help push presales.
Approach Angel Investors
If you have a tech startup or product idea that will disrupt a market, try pitching to a group of angel investors. If you get an offer of money, it will come with the caveat of equity. Angels want to take part in any business they fund, so they choose businesses they know well or like. This can work to your advantage if you are open to hearing a new voice as you build or expand. However, if you don’t want a board or individual looking over your shoulder or combing through your books, this might be a detriment to your growth.
The key to approaching angel investors is use your connections and your reputation. Start by asking people you already know if they have any connections to the investment community and use those familial or social ties to build your network. When you meet a new investor because a mutual, and trusted colleague introduced you, the prospect of getting money is much greater.
If no one can give you an introduction, try a cold email or a message sent without the buffer of a personal introduction first. Research the investor you want to talk to and see what kinds of projects they prefer. Stick to those who are active in your industry and go for it.
Once you take meetings, be sure to be as transparent as possible with your numbers. Any exaggeration or dishonesties will paint you in a negative hue and keep potential partners at bay. Be yourself and let your business speak for itself to win people over.
Crowdfunding sites like Kickstarter let you set a financial goal, break down your vision and timeline for visitors, then market yourself to potential donors. Each campaign has a set number of days to raise the necessary money. If you reach your goal, you get the money deposited into your account and the site asks for a small percentage of what you earned. If the donations fall short, you receive nothing.
Successful campaigns start long before they are up on the crowdfunding site. This requires marketing videos, a large following and tons of buzz over what you have in the works. The most successful campaigns have money promised to them before the timer ticks down.
Once the campaign is up, it can be a full-time job to manage the social media and email marketing to bring in additional money. You will also have to organise rewards for donors that don’t gobble up all your new money but still make it worthwhile to give. A campaign requires creative marketing in all outlets in order to succeed.
It’s a lot to handle, but people make real money on these sites. If you are a master of marketing, this is a good option.
Australia’s government offers a variety of grants for small businesses, but expect a complex application process and very specific criteria for funding.
Grants are available at the state or federal level and are listed online. They tend to favor specific projects or a stage of business, such as funds to start or funds to hire as you expand. Research grants ahead of time so you know what to apply for throughout the year. Tailor each application to the specific grant, don’t rely on generic forms and answer each question with clear, honest responses.
Some of the categories for grants include expansion, green business or disaster recovery. They’ve been created to help solve problems as opposed to a basic round of funding. Check out the whole list and mark which ones line up with your business or future undertaking, then mark due dates on your calendar. If you can talk to someone who received a grant in the past, ask for advice on how to present your problem in the best way possible.
Before you Finance
Still think you may need finance? Here are some things to avoid to help you make finding finance smoother and more likely to lead to success:
- Not working with an accountant – Many business owners turn to bookkeepers, but an accountant will keep your statements in order and all your numbers on point.
- The wrong partner – Investors want to see dynamic teams that balance each other out and have a clear vision with a solid plan to put it in place. Don’t waste time with someone who is unprofessional or doubts your vision. Find a partner who shares your vision and knows exactly how to help you succeed.
- No plan for the money – Anyone who funds you wants to know your plan on how to spend it. Have all of that in place before you borrow or accept the grant.
- Waiting to ask – Plan out your search for finances early. The decision to put off the search for finances can put unnecessary stress on your business. You know what you need to stay functional, so don’t hesitate to ask for it
Need some general tips on improving your small business’s health –especially when it comes to getting finance? This week, we have the pleasure of welcoming Bessie Hassan, who shares our drive to educate the market and help small businesses. As the Money Expert for finder.com.au – the site that compares virtually everything – Bessie is an experienced commentator who often appears on national radio, TV, and throughout online publications sharing her best money-saving tips and property advice. Bessie is passionate about empowering Australians to make better decisions, whatever it is they’re looking for.
Whether you’re an entrepreneur looking to start a new business from scratch or a seasoned owner wanting to expand your business offshore, you’re going to need some capital at some point. To get your hands on this extra dosh, it’s likely you’ll need to take out a business loan. In business, time is money and money is time, so it’s worth knowing a thing or two about how to apply for finance the right way.
Here are four ways to improve your chance of getting the “green light” for your business loan.
1. Check your credit health
Although we’re told to keep our business and personal lives separate, this rarely happens for business owners, as lenders often look at both your company and personal credit scores before lending you money. There’s no point applying for a business loan if you know you don’t have a great credit history (either personally or via your business). Being patient and working to improve your credit score before applying will give you a better chance of securing finance.
Your company’s credit score will be impacted by how long you’ve been in operation, your credit enquiries, Personal Property Security Register (PPSR) registrations and director information. You can improve your score by paying your bills on time, keeping balances low on credit cards and communicating with your creditors. Your personal applications for credit and accounts held in your name may also be checked to help the lender determine your risk profile. Being happy with your credit score and taking steps to improve it will put you in a strong position to begin your finance search.
2. Have a solid business plan
Lenders are most concerned about your ability to repay the loan over time. They’re not going to fork out and invest in your business if they doubt you’ll be profitable and successful in the future, so they’ll want to see proof-points that your business can stand the test of time.
A thorough business plan will make it easier for you to communicate your business vision, strategies and goals to lenders. Including information about how the money will be used and some cash flow projections will show you’re serious about your business and confident in your ability to repay the loan.
3. Know what type of loan you need
There are many different financing options available for businesses. To be eligible for most, you’ll need to have an Australian Business Number (ABN) and for some you’ll need to have been operating for a certain period of time (eg one year for most unsecured loans). You also might need to generate a minimum amount of annual turnover, which can range between $50,000 and $200,000 depending on the type of loan you’re going for. To decide which option to take, you’ll need to understand why you need the capital in the first place.
For example, if you need some additional funds to meet daily business expenses, you might want to take out a business credit card. Remember you’ll need to compare providers to score the lowest interest rate you can. If your expenses can fluctuate (maybe on days when you purchase stock) then consider a business overdraft account, which allows you to overdraw on your business account to a certain limit.
There’s no point approaching a lender for equipment finance if you’re just going to spend the money on inventory – it’s important to do your research so you apply for a product that will complement your needs.
4. Don’t leave it until the eleventh hour
All businesses need money to operate so if you’re short on cash, your business’s lifespan may also be short. If you know you’re going to need extra cash in the near future, start researching your loan options now! Approval for a loan can take anywhere between a few days and a few months, depending on the type of finance you’re applying for. It’s important to have some time up your sleeve so you’re not rushing the application and can wait out the approval process (without going bankrupt in the meantime).
When embarking on your search for finance, it’s important to practise due diligence to ensure you take out a loan that will suit your business needs. Understanding your credit history, having a solid business plan in place, researching your finance options and being prepared are simple ways to improve your chance of being approved so you can make your business vision a reality.
The thought of approaching a professional investor with access to millions makes you sweat, but if you’re like many startups, you need money to get your new business off the ground. What is it that makes investors reach for their wallets?
Businesses who bring in money do several things right. Here are key points you want to present to any potential partner.
1. Do Extensive Research
A lot of entrepreneurs skip this step as they develop their product or service. But market research is crucial and it needs to cover each angle.
Start with your industry. Look at how new developments in tech affect your field and be an advantage. Make note of trends and patterns, what aspects are in decline and where the market may expand. Approach customers and ask them how they use the product or service and take notes.
Next, tackle demand. What do customers in your area of expertise want? Real estate firms may see a need for more rental properties. If you have a chain of gyms, ask your members what products or services they wish you had.
The creators of Instacart are a great example. They studied the food industry and saw the move towards deliverables. They put together a plan to expand delivery service to groceries. Today their industry is worth 2 billion USD. The company saw a demand and responded, which makes them a big draw to investors.
2. Write a Stand-out Business Plan
A business plan is your future company on paper. It lets investors see the results of all your research, understand what problem you want to solve and shows how you differ from your competition.
A good plan includes:
- A one to two-page executive summary, (an overview of your plan’s key components)
- Your research presented as proof of demand and market
- Financial data and how much money you need
- A description of your perfect customer
- A write up of any staff or team members
- Past accomplishments and future goals
Walk the line between enthusiasm and hyperbole. Use plain, straightforward language and be sure to edit several times. Ask a professional writer to look at it, make sure it reads well and seek any minor mistakes.
Your complete and polished presentation will help you stand out and make the right people pay attention.
3. Develop a strong Marketing Strategy
Break down your marketing for anyone who wants to buy into your business. It’s essential to be specific and have a breakdown of your numbers.
Take the college magazine as an example. Here is what an interested investor is waiting for:
“We ran a quick poll on Facebook and got a big response from readers aged 17 to 19.
We tested keywords in tandem with Pay-Per-Click, (PPC), on Google. A new reader costs us $4.50 and generates $30 dollars in profit.”
You know the audience, you can build the audience and be in the black. You are the expert of your project – show it.
4. Have a Working Model
Ideas alone are rarely enough. It’s those who have a working model that get the money. Show that your idea has traction and you are much more likely to get that deposit in your account.
A working model is your service or product offered on a small scale. For example:
Product: An online subscription magazine for students on surviving college
Working Model: A blog with over 1,000 subscribers and a substantial social media following
When investors see the success in your model they will see you as an asset.
5. Answer the Question: Why You?
Never forget that you are the true product, so make investors understand why you, not the competition are the real investment.
Put your best traits, biggest accomplishments, past success in the foreground. If you have a mentor, classes to help you continue your education or any seminars scheduled, bring those up as well.
The best trait about you is that you have more than an idea, you have your drive and your vision to back you up. Show investors you bet on yourself and that will help bring them around to do the same.
Why is starting a new business easier than getting a licence to drive in Australia? In the video below, Marketlend Founder and CEO Leo Tyndall explains how this is a problem and why we should think differently about the reality of starting a new venture. Prefer to read rather than watch the video? The transcript is below.
Q: What do you mean by it’s easier to start a small business that to get a driver licence in Australia?
Yeah. Well, what I mean, is it’s easier to get a driver licence first than starting a business is the reality is, is that driver licence you gotta do a number of hours, and you gotta do these tests, you’re gonna send your contact and accounting firm alike when you open up a company, and away you go. And people will take on commitments, and you’ll be operating.
The problem is, is that, directors’ responsibilities are not fully understood, people don’t realise that there is a lot more complexities around things of reporting, you have finances, or like they do when they grow, there’s no business plan required, and so they send you to get going. Some, you’ll find business plans, but are they realistic or not? So there’s all these problems that come with people setting up businesses, because there is no restriction: you can just contact one of these guys and set up a company. Now, I’m not suggesting we should have restrictions, but what I’m definitely saying, is, that businesses themselves, by the time they get started, get too carried away to actually think about all things they need to know, and unless they’re very experienced, they’re gonna find that things are gonna blow up or things are gonna pop up that they never considered would happen before.
So, there is a need for some more training, on-going training, maybe, or at least some form of compliance check, or supervision, you could say, for businesses that have been operating for a year, or the like. I mean, I just saw a proposal for someone who’s start-up, and I gotta admit, the idea was just on the left field, he’s already spent 2.5 million dollars on it, and it’s like oh my God, is no one sort of sat there and gave him a bit of a shark’s tank, … test, and said, “Really? You need to actually wake-up and realize.” There has to be a very clear delivery of a solution, and not only just an idea, but an ability to actually make it grow and deal with it as it grows over time.
I think the other problem being, which is, in a way, a little bit being fixed is the failure for equity investors to participate in small business . . . the biggest problem in Australia I think is that people have to learn how to get more money, they can’t actually, most of them are not skilled enough to know how to raise equity.
If you look at our business, we haven’t borrowed anything. We’ve got equity partners, and every time we need funds, we’ve raised equity, and we’ve done that on the basis that we don’t, for the first few years, we didn’t think want to be levered. We didn’t want to have that debt hanging over our head, and it’s still the case, and it’s very much where it’s by comparable notes, or whether it’s by some other form, it’s very much that there is a need for the business to be able to grow, and by turning around and just going out and getting loans, ’cause you think that’s the only solution, isn’t the best solution.