The government thinks it’s a publicity problem. Business minister Michael Fallon has called SEIS his “best kept secret”, and talks of his determination to change that. But others have a different take.
Recent research by the accountancy firm Shelley Stock Hunter (which specialises in advising small businesses) found that few of the eligible firms it surveyed understood how they could access the benefits. Bobby Lane, partner at Shelley Stock Hunter, puts this down to a lack of long-term strategy. “Seven out of the ten firms didn’t seem to have a plan that extended beyond 2014.” But how are they connected?
Most obviously, companies will always need some kind of business plan to get any kind of finance – whether it’s a bank loan or otherwise. Most entrepreneurs know this, so there’s no reason why it should be a specific SEIS problem. But more interestingly, Lane thinks a lack of long-term planning reflects an over-reliance on bank finance, and therefore an unwilingness to be more adventurous (and consider schemes that would imply a more lengthy involvement with an external investor or supporter).
So what should your long-term planning involve – and how should this fit in with your ability or decision to access incentivised financing schemes? Inevitably different businesses will have different expectations or plans. But the key is having an idea of how you want to be involved in your business five years along the line.
Are you looking to grow your business, with a view to selling? Could you imagine merging with a major rival? Or do you expect to keep the firm going as a lifestyle business? These may sound strange questions for an early-stage company that is likely struggling with cash flow. But they’re important questions for potential investors.