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You don’t get anything for nothing

At the Food For Thought workshop in February we were lucky enough to have a presentation from Janet Herniman looking at both what grant funding is currently available and also sharing some of her top tips for making funding bids successful.

BREXIT has undoubtedly introduced uncertainty in the grant funding landscape, but the government is expected to continue supporting investment in our business performance one way or another both before and after March 2019, largely because it’s good for our economy.

Janet is in a rare position as she works closely with several of the grant awarding authorities in Devon and so in in an excellent position to give us the most up to date information about what is available in which area.

Also, this experience gives her detailed knowledge on what makes the difference between a fantastic application and one that is turned down.

She had four points to consider when writing an application:

1. Evidence
Work out exactly what the project is; how does it help your business? Does the investment create cost savings, waste reduction or extra employment?

2. Need
Grants are available to support investment that would otherwise not take place – there is no slush fund for “white elephant” projects.

A successful application will illustrate that there is an opportunity to make profits and grow your business. However if you can use hire purchase funding to finance the investment, or if you are lucky enough to already have the cash to pay for it, then you don’t need a grant and are unlikely to be get one.

3. Quantify
When it comes to explaining why the plan you have should be backed by grant funding you’ve got to have more than vague ideas for what the benefits will be. Grant assessors want to see specific proof in terms of: Finance for Food & Drink Businesses Workshop
– what new sales you can generate?
– who will buy your new product or service?
– how much more profit will you make?
– how many jobs will you create as a result?
– what about benefits for your suppliers?
– how do you know all this?

4. Proof
Any successful grant bid is potentially subject to an audit to prove that the grant was spent as described in the application. This means that you need to keep records (or at least notes with your accounts) to be able to provide evidence.

Obviously it is easier to do this while the project is going on, instead of four years later when you’re told about an audit.

In rounding up, Janet stressed that while a successful application took a lot of work and preparation, the benefits of getting 40% (or more) of the cost of your investment back is well worth it.

What’s the difference…?

Recently I was at a networking lunch where I was asked why a business would use my services instead of relying on their usual accountant.

It’s clear from the number of accountants who have introduced me to their clients that I’m not their competition. I don’t replace the services that a traditional accountant offers; I work alongside them to improve the information they have to work with and help their clients understand the figures.

The first thing to recognise is that a large number of businesses don’t need my help.

A lot of businesses follow quite a simple model; they buy in goods, add a set margin and sell on. (Simple doesn’t mean easy; it’s just not difficult to understand) There’s a few accounting jobs there that have to be got right but so long as the margin is right, and costs are kept under control the business will run successfully using the standard accounting reports.

The same applies to established businesses who understand what makes them profits. If doing what they’ve always done works for them, then they don’t need my help. (I’m happy to work with them, but they probably don’t feel the need.)

So which businesses does that leave?

I specialise in helping food manufacturing businesses where working out the cost of the product is more complicated and where making one key product creates a number of other products which are often less profitable or harder to sell.

In these sorts of cases the answers that business owners need doesn’t come from analysing the year end accounts differently, or from producing the accounts more often. The figures required come from changing what you measure in order to get information that shines a light on what’s happening inside the business.

– Does it matter how much the total gross margin is if you make a huge profit on one product, but lose most of it on the others? Questions that management accountants answer

– Would you be able to sell more units at a slightly lower price and actually increase your bottom line?

– What will happen to profit if you increase sales by gaining a new customer but need to employ more people and change your delivery method?

It’s all too easy to allow customer demand to dictate how a business grows, but if you have the right information you can make sure that the business is developing in the way that the owners and management want it to.

It’s when they want that kind of information, plus my experience of working in business, managing finance teams and understanding the accounting information that businesses come to me.