Build, Grow & Protect Your Business

3
“To begin with the end in
mind means to start with
a clear understanding of
your destination. It means
to know where you are
going so that you better
understand where you are
now so that the steps you
take are always in the
right direction.”
- Stephen Covey

Legislative/Professional Requirements
Equity Owners (e.g. Shareholders)
Asset Protection & Risk Mitigation
Family Dynamics & Strategies (Risk vs Asset)
Research & Development/Government Grants
Tax Planning & Optimisation
Potential Liquidity Events
STRUCTURING
IS CRITICAL
STRUCTURING, MONITORING & REPORTING

Structuring, Monitoring & Reporting
COMPANY STRUCTURE
Multiple Shareholders

NOT JUST ACCOUNTING & TAXATION
MONITORING PAYROLL
TRACKING
& PROJECTS
JOB
COSTINGS
INVENTORY
MANAGEMENT

Set Targets for month, quarter & year
Set Key Performance Indicators (KPI’s)
Unless you aim at something you will keep
hitting “NOTHING”!!!
Review Actual vs Budget performance each period
Make IMMEDIATE strategy changes where required
SET TARGETS & REVIEW RESULTS

Executive Summary
Demo Company (AU)
For the month of March 2018
Summary:
Mar 2018 Feb 2018 Variance
Cash
Cash received $7,231.55 $8,280.00 -12.6624%
Cash spent $20,064.50 $13,325.83 50.5685%
Cash surplus (deficit) -$12,832.95 -$5,045.83 -154.3278%
Closing bank balance -$2,203.30 $10,629.65 -120.7279%
Profitability
Income $795.05 $20,870.00 -96.1905%
Direct costs $763.64 $0.00 0.0%
Gross profit (loss) $31.41 $20,870.00 -99.8495%
Other Income $97.05 $0.00 0.0%
Expenses $12,252.95 $18,929.14 -35.2694%
Profit (loss) -$12,124.49 $1,940.86 -724.6968%
Balance Sheet
Debtors $16,006.55 $22,217.00 -27.9536%
Creditors $8,507.78 $14,244.54 -40.2734%
Net assets -$16,302.63 -$4,178.14 -290.1887%
Income
Number of invoices issued 4.0 9.0 -55.5556%
Average value of invoices $201.04 $2,318.89 -91.3305%
Performance
Gross profit margin 14.3997% 100.0% -85.6003%
Net profit margin -1359.0954% 9.2998% -14714.3054%
Return on investment (p.a.) 892.4565% -557.4327% 260.1012%
Position
Average debtors days 556.2 29.8 1766.0569%
Average creditors days 20.3 21.1 -3.8376%
Short term cash forecast $7,498.77 $7,972.46 -5.9416%
Current assets to liabilities 0.4 0.8 -52.5468%
Term assets to liabilities 0.0%
EXAMPLE:

REGULAR BOARD MEETINGS
 Monthly (preferred)/Quarterly Board Meetings
 Chaired by an independent, external person
 Pre-set Agenda
 Regularly challenge yourself about all aspects of your business
performance and operations

REGULAR REVIEW MEETINGS
 Tax Planning… January & April/May
 CGT Reviews… Prior to Sale of Business and/or Significant Assets
 Start of Financial Year
 End of Financial Year

Strategic Planning
DEVELOP A STRATEGIC PLAN FOR YOUR BUSINESS
This helps to reinforce to you and YOUR TEAM exactly why you are in
business, what your personal and business goals are, and what you must
do to keep your business growing and increasing profits and cash flow.

Cash Flow
Sales Growth
Profit
Your Team
Strategy
Business Value
Strategic Planning
KEY ISSUES

Business Succession
PLANNING
Determine your Business Value as at
today’s date
Compile a Business Valuation Report
Groom your business for future sale
Ensure your business will survive if
anyone dies, divorces, departs, etc.
Execute a binding
SHAREHOLDER AGREEMENT!!!!!!

SHAREHOLDER AGREEMENT
 When does it take effect?
 How is the business valued?
 Payment terms & funding?
 Roles, responsibilities & remuneration
 Dividend policies & capital returns
 Introduction of new equity/shareholders
 Tag along/drag along

ESTATE
Planning
Ensure Wills, EPA’s, EPG’s and Health
Directives are up to date…and
executed correctly!!!
Perform an annual Asset Protection
Review
Consider cash flow impacts on yourself
and the business
Review and update insurance cover if
required

Structure
Strategy
PlanningMonitor
Revise

24
1) Everyone shut the
hell up
2) Get out of my way
3) Don’t ask me any
damn questions!

KELVIN SMITH & CLAUDE COLLICA
• Specialist Advisors to Small & Medium Businesses
• Xero Certified Advisors & Gold Partners
• External CFO Roles
• Cloud Implementers & Advisors
• Non-Executive Director Positions and Board Advisory Roles
• Certified Practising Accountants
• Bachelor of Commerce (Accounting, Finance & Law)

DOUG VERLEY
MVP Financial
Business Planning & Strategy For Long-term Success

ROB MARUSCO
MVP Financial
Funding For Growth: Stay Private or IPO

FUNDING FOR GROWTH
Reasons for
FUNDING
 Start up
 Operations – day to day running
 Expansion – platform/growth
 Cash flow
 Property – operating assets
 Plant & equipment – operating assets
 Inventory
 Research & Development – new products/new
markets
 Exploration
 Mergers & Acquisitions – strategic development
 Going Public

FUNDING FOR GROWTH
TYPICAL FUNDING
SOURCES & OPTIONS
• Self
• Family & Friends & Fools
• Business Angels
• Venture Capital
• High Net Worth Individuals
• Private Equity/Family offices
• Shareholders/Equity
• Institutions
• Government
31
Good
Luck
Give Away
First Born
Now We Are Talking
Welcome to the Club
Banks

Have Your Radar Up!
YOUR WORLD WILL CHANGE
• With any form of funding debt or equity, private or public your business
environment changes
• Risks may increase – personal assets, friends assets, shareholder assets at risk
• Stress may increase – spotlight is on management
• Controls changes – accountability and reporting cycles
• Strategic planning is paramount
• Operational platform development cycle requires focus and management
• Performance and delivery on “promises”
• Exit planning
FUNDING FOR GROWTH

Funding options for stage of
business development and type
of business
Optimal business
structure – tax, stamp
duty, exit options etc.
Amount and use of
funds
Cost of funds
Term of funds particularly if it’s a
debt type facility
Exit considerations if
equity
Risk considerations –
planning for worst
case scenarios
Funding flexibility
KEY FUNDING CONSIDERATIONS

FUNDING FOR GROWTH –
Funding LevelsCOMPLEXITYLEVEL
Banks are everywhere – but will they fund?
Funding gets bigger as business scale & potential develops
Very high
complexity
Regulators
Detailed
documents
Large range
amounts
Moderate to
Low risk
IPO
High
complexity
Detailed
documents
Large range
amounts
Moderate to
High risk
Private
Equity
High
complexity
Detailed
documents
Mid to Large
range amounts
Moderate to
High risk
Venture
Capital
High
complexity
Detailed
documents
Mid range
amounts
High risk
Business
Angels
Moderate
complexity
Moderate
documents
Smaller
amounts
High risk
FFF
Low complexity
Minimal
documents
Smaller
amounts
High risk
Seed - Self

FUNDING FOR GROWTH –
Costs of fundingCOMPLEXITYRISKCOSTS
Banks are everywhere – but will they fund?
Funding gets bigger as business scale & potential develops
Very high
complexity
Market Regulators
Detailed
documents
Large range
amounts
Moderate to Low
risk
Brokerage, raising
underwriting,
share registry,
ASX, ASIC and
professional fees
IPO
High complexity
Detailed
documents
Investment
committee
Large range
amounts
Moderate to High
risk
Brokerage, raising
and professional
fees
Private
Equity
High complexity
Detailed
documents
Investment
committee
Mid to Large
range amounts
Moderate to High
risk
Brokerage, raising
and professional
fees
Equity &
Hybrids
Moderate
complexity
Credit process
If secured
Detailed
documents
Variable amounts
High risk
Low interest rates
Term Debt
Moderate
complexity
Credit process
If secured
Moderate
documents
Variable amounts
High risk
Low interest rates
Flexi Loans
Low complexity
Credit process
If secured
Low documents
Variable amounts
High risk
Low interest rates
Overdrafts

Showcase Your Business
CRITICAL BUSINESS LEVERS TO SHOWCASE
 Regardless of where the money is coming from (private or public) and in what
form (debt or equity) its important to ensure the business is showcased in such a
way to maximize the chance of succeeding in securing funding
 Seeking funding at start up is incredibly difficult
 As a business moves from family, friends and fools to other external parties like
banks, governments (for grants and incentives) private equity, public monies etc.
a well thought out and structured information package is vital
 A business needs to build a robust and defendable presentation that will
encourage investors (debt or equity) to back the business whether in start up or
growth phase
FUNDING FOR GROWTH

FUNDING FOR GROWTH
Phases Toward
BUSINESS INFORMATION
MEMORANDUM
Compliance, monitoring and reporting
Fundraise support
Information Memorandum or similar
Financial Analysis
Business model preparation
(Business Model Canvas)
Research
Strategy work
Funding Application
7-PHASES

EQUITY RAISING PROCESS
• Inviting anyone in the equity markets to invest in your business takes careful
planning
• Its important that the business is “investor ready” – be prepared
• Identification of the investor target audience saves time
• There are legal parameters in relation to how equity capital is raised - be aware
• Produce robust and defendable documentation
• Be prepared for tough questions – think Shark Tank
• Process takes time, energy and costs – be prepared for a “roadshow”
FUNDING FOR GROWTH

FUNDING FOR GROWTH
LISTED CAPITAL
MARKETS
• IPO
• RTO
• Equity Placements
• Rights Issues
• Share Purchase Plans
• Script issues for
transactions
HOW ATTRACTIONS • Formal market
• Efficient markets
• Liquidity
• Market Integrity
• Audit &
Compliance
• Disclosure
• Access to for growth
• Diverse investor base
• Improved valuation
• Profile
• Liquidity
• Institutional investment
ADVANTAGES
• Cost of IPO
• Costs of being Listed
• Disclosure Rules
• Market fluctuations
• In the spotlight
• Performance pressure
DISADVANTAGES

JANEAN HICKS
MVP Financial
Your business(wealth) your way

It is inevitable you will
exit your business and
want to retire.

DID YOU KNOW?
AVERAGE AUSTRALIAN BUSINESS OWNER IS AGE… 58
 64% would seriously consider selling their business if approached
 33% of business owners are relying on their business or continuity family
ownership as a source of funding their retirement
 58% of family business owners see themselves working in the business beyond
age 65
YET
 55% do not have a succession plan
 48% do not have a business plan
 64% of business owners do not have adequately funded retirement plan
(Source: MGI Australian Family and Private Business survey 2013)
YOUR BUSINESS(WEALTH) YOUR WAY

BABY BOOMERS ARE ON THE RISE
More than 1.4 million owners employing
upwards of 7.9 million people and
contributing almost $500 billion in GDP
will retire in the next decade, according to
PwC’s analysis
Did you know the life expectancy for male
average 50 is 32 years……
64% of business owners have
NOT Adequately funded
retirement

WHAT IS BUSINESS
SUCCESSION
& EXIT PLANNING

THE MARKET
Within Australia there are $2.2 million actively trading businesses as at
June 2016-2017.
Estimated Visitors Total %
Non employing 135,247 62.3%.
Micro (1-4 staff) 53,621 24.7%
Small (5-19 staff) 21,274 9.8%
217,090 100%

BANK SURVEY
Conducted by St George with over 1,000 small business owners
AND FOUND…
 55% did not think they’d save enough for retirement + 19% unsure
 20% had never sought advice regarding their personal wealth or insurance
 74% had no retirement plan in place
 20% intended on funding retirement by selling their business
 54% had no plans for business succession
(Source: Smallbusiness.wa.gov.au/Australian bureau of statistics/Department of Finance/Taxpayers Australia Limited)

50
Every business has an end date
Every business owner at some stage will need to exit
Big % of business owners will be exiting within next 5-10 years
(Baby Boomers “Tsunami”)
Supply and demand….How will your stand out from the crowd?
Not all business will sell if they are not prepared
If it is prepared, want to obtain a premium in a demanding market
Why do you need to
PLAN?

WHAT DIFFERENCE WILL IT MAKE?
This will involve some planning…
 Be ready for the opportunity. Your Business Your Way
 On your terms and timetable
 Help clarify what buyers are looking for?
 Get the structures right, tune up business
 Take advantage of Small Business TAX Concessions. Do you qualify-will the
involve some planning
 What if something happens to your business partner?
 Transition to family. Is everyone ready?
 Plan your future……secure your retirement

How can I exit my business on my terms and on my time?
How can I increase the value of my business to ensure that I
get my investment back from all my hard work?
How can I ensure that my business on sale is transferred
successfully?
How much $ do I need to retire and be financially secure?
THE 5 MOST COMMON QUESTIONS I GET ASKED
How can I ensure financial security for my family, outside my
business and/or when I sell?

Where is the business now?
Where do you want the business to
go?
Your personal goals?
Business Financial Forecast
What are the pain points in your
business?
What are the impacts-financial form
these pain points?
The priorities of these pain points
Business Owner
NEEDS

BUSINESS GAP VALUE ANALYSIS
How much is my
business worth?
How much can I afford to
sell my business for to
ensure that my
retirement and lifestyle
goals will be met???
GAP

WEALTH MANAGEMENT
Goal & Outcomes
PERSONAL READINESS

33
Reiterating Kel’s important point….
BEGIN
WITH
THE
END
IN
MIND.

WEALTH MANAGEMENT
Protect the value before you
exit your business…..

UNPLANNED EVENTS
Certainty of outcome in your business is key:
 Shareholder Agreements
 Buy and Sell Agreements
 Funding Arrangements (Insurance)
 Key man and Income Protection Insurance
LESS RISK - HIGHER VALUE

ESTATE PLANNING
Update Your Will
Update Enduring Power
of Attorney & Guardianship

All good things must come to an end…
#GROWWITHMVP

Build, Grow & Protect Your Business

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