Obtaining finance can be challenging for any business but it is an acute difficulty for micro and small businesses in their start-up phase.
Having the Best Business Idea in the World won’t necessarily be enough to convince sceptical, risk-averse banks to approve a loan, especially if the business owner doesn’t have a proven track record to back their entrepreneurial ambition. The same logic applies where a business owner lacks the business assets with which to secure finance from a financial institution. Although borrowing on the security of a private home is an option, this is a step too far for many small business owners. Unfortunately, more than 60% of small businesses cease operating within the first three years if starting (source: Australian Bureau of Statistics), with lack of working capital cited as the cause of two in every five failures.
Considering small businesses are widely considered the ‘engine room of the economy’, accounting for around 97% of Australia’s businesses and employing nearly half the national workforce, difficulties accessing finance can have profound, far-reaching impacts. When a person starts a local business they also establish a virtuous cycle, with the money they invest in their business recycled many times over through their community, including other businesses. However, if they are unable to secure the funding they require to get their business off the ground and employ local staff, this virtuous cycle won’t occur.
Through their new Grants for Growth initiative, tax leader H&R Block is giving 20 small businesses, including sole traders, the break they deserve. There are twenty $10,000 grants available to Australian businesses with fewer than 20 employees and less than $3m in turnover*. The grants encompass $4,000 in cash, $5,000 in H&R Block business or bookkeeping services and $1000 in Officeworks gift cards*. For a chance to win a grant, entrants must explain in 100 words or less why their business is deserving and identify 3 ways H&R Block support small business. Applications will be judged on their creative merit, how well they address the entry criteria, the potential benefit to the community and their alignment with the H&R Block brand.
According to H&R Block, an injection of cash and know-how worth $10,000 can make all the difference to a budding business owner. For example, it can be used to finance a robust business plan or a feasibility study to establish if there is a market for a proposed business. Alternatively, it can contribute to the purchase of much-needed equipment (e.g. machinery, tools, office furniture or IT equipment), enabling the business to open it’s doors, or the kind of research and developmentthat can turn a prototype into a market-ready product. In turn, these investments can help create jobs and increase spending capacity in the local economy, thus boosting other local businesses.
H&R Block offered the following examples for how different grant recipients could make an impactful change in their business:
- A small business has come up with a great new idea for a child safety product. The prototype is attracting lots of attention but in order to fulfil bulk orders, the business needs to invest in machinery which can produce the product in large numbers. The small business applies for, and receives, a Grant for Growth and uses it to purchase the necessary plant.
- A small business selling educational products wants to improve its profitability. The business has a sales force of ten people who spend much of their time on the road demonstrating the products to potential customers and taking orders. The small business wants to provide each member of the sales force with an iPad to enable them to deal with work-related emails whilst travelling and present videos and other promotional material to clients. The small business applies for, and receives, a Grant for Growth and uses part of it to fund the purchase of the iPads.
H&R Block Director of Tax Communications Mark Chapman told Dynamic Business: “Given the difficulty in getting financing for great new business ideas, the role initiatives like Grants for Growth play in seeding new businesses across Australia cannot be underestimated. For 20 lucky businesses, Grants for Growth will mean the first step to success, the creation of new jobs, and the creation of an innovative, entrepreneurial culture so often stifled through lack of opportunity.”
To enter the Grants for Growth competition, visit www.hrblock.com.au/grants-for-growth. Entries are open from now until 30 September 2018, with H&R Block set to announce the winners on 14 October 2018. Runners up will receive three months of free bookkeeping services.
*For terms and conditions visit www.hrblock.com.au/grants-for-growth