Business Tech: Alternate Financial Arraignments

Capital Idea

Got to love Capitalism. I make a widget for one dollar, I sell it for two, and everyone walks away happy. Except, nowadays, business is rarely that straightforward. That dollar widget sells may sell for two dollars, but the store wants twenty cents toward co-marketing, the coupon cuts another half dollar from the mix, and someone has to pay for the recall we had to issue due to a packaging problem. So, when you work for a company which is under the financial gun — and who doesn't — we need to help them get it right.

Two hundred years ago, we'd call on family and friends to get a business started. Some business might still work that way, but fewer and fewer situations like that exist. Likewise, the days of going to Uncle Leo for a loan, to keep the business running or expand it, are largely gone. Funding, like everything else, is getting progressively more complicated.

Banks A Lot

When a business goes to the bank, it needs to bring documentation with it. As IT professionals we need to understand the difference between giving the boss an inaccurate report (bad) and giving one to the bank (fraud). Your best friend is the accurate title. Marking a report as a estimate, or as pre-tax, or however the numbers are slanted, is hugely important. Adding a unique identifier to the title of each report will help you prove the math if it is challenged days or months later. Likewise, footings can allow you to annotate special details.

Remember that Sally from Finance or Bob from Marketing might get a last minute call to run a few more reports. The ones they tell you are going to the bank may turn out to be a partial list. Getting all of your reports up to snuff makes this a non-issue. However, we all know how much work that will be. Make a list of the most used and most useful. Do them first. For the ones you can't get to, simply adding "internal use only" to the footer, or some similar nomenclature is an excellent protection.

Expect the bank to have a list of recurring reports. They will also, in some cases, have some additional rules about data handling procedures or confidentiality. Make sure your company remembers that you can't do your job without access to pretty much everything. Sometimes they forget to put us on the list of people allowed to see the data.

Date with an Angel

Venture Capitalists are one alternative to banks. They are less formal, more risk taking, and often more invasive. Your bank probably doesn't want to run your business. Your VC Angels might. Assume that big procedural changes will come with any VC funding. They are likely to be less organized than the bank when it comes to reporting requirements so you are likely to get several updates to the reporting list.

Unlike the bank, the VCs are more likely to want to meet the IT team. They usually know your importance in a way that your own company may have forgotten. Don't let them flatter you into talking too much. Do see the opportunity to prove your worth, the worth of the tech you use, and the deep integration it has in making the business viable.

If you are working with VCs or banks, you need to have scheduling software. Missing deadlines on delivering reports can have serious financial penalties. It can also create trust issues.

Taking Stock

Going public is another way to bring in the dollars. If we worry about bad reports going to banks or VCs, all the worry doubles up when the SEC gets involved. If you are in a company which is going from private to public, you should take a little time to do a little reading. A good place to start is the SEC website (intl-spectrum.com/s1051). For anyone who hasn't frequented the .gov websites recently, they are surprisingly well put together. Of course, if you are outside of the US, you should look to your country's on equivalent to the SEC. For example: UK (intl-spectrum.com/s1052), Australia (intl-spectrum.com/s1053), and Germany (intl-spectrum.com/s1054).

They Print Their Own Money!

The Government has lots of programs to help businesses. The competition for these can be extreme. Winning through has a lot of luck and timing in it, but the two best ways to lose are: (A) don't apply, (B) do an unprofessional and incomplete job. If we can help the company get the right data at the right time, we don't assure success but, we do improve their chances.

In the US, the Small Business Association covers a lot broader range than you might think. Your multi-national employer might still fall under SBA and qualify for loans and grants (intl-spectrum.com/s1055). Once again, if you are outside the US, there are similar governmental support structures in play. Everything said earlier about timely and accurate reporting applies.

Five O

Some businesses are US 503(c) which means they can accept charitable donations. The same category exists, under different names, in other countries. If your company isn't a good match for a charity designation, parts of it might still be. Mentioning the option is as deep as we will go today. Covering the ins and outs of this sort of business would take well over a year of business tech articles to provide a good grounding. Once again, no surprise, get your reports in order.

Send in the Crowds

Another way is to crowdsource your funding. I've recently put something up on Kickstarter.com. There are lots of other sites designed to meet this same purpose: IndieGogo.com, Rockethub.com, OnSetStart.com are just three examples. Of course, the Internet being the Internet, there are sites which review and recommend sites which crowdsource. One example is at (intl-spectrum.com/s1056). The good news here, is that this is a more causal approach and the requirements on IT are more causal as well. Expect to spend more time on website redesign than on reporting.

People's Choice

I have no intention of ending this article by telling you which is best. Each answer comes with a set of rule and restrictions and qualifications. It is possible that your business fits none of the models or that you are one of the lucky few who can go to Uncle Leo for a loan. My goal here is simply to alert you to the scope and scale of the options before us.

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Sep/Oct 2012