You would assume that when you hear of a business owner selling equity in their business they are after only one thing… cash.

However, a new survey reveals something completely different.

A survey carried out by Angels Den, an investment network, discovered that 76% of business owners want a deal from new shareholders that comes with mentoring and business advice. Just 12% of those surveyed said they wanted cash and nothing else.

This is an encouraging finding because it shows that the majority of those selling equity realise there is an accountability or skill gap in their business and it needs to be filled.

Investors come in two guises: a passive investor who simply hands over the cheque, goes off into the sunset and waits for the annual dividend cheque; and then there’s the active investor who spends a day a week, a few days a month or even more frequently imparting their knowledge, skill and support.

When a business is growing there is no substitute for having a team around you who can provide input without the shackles of being blinded by the day-to-day issues.

Don’t just chase the cash; find those with cash and skills… a winning combination.

In the latest episode of the Business Finance Bulletin Rob Warlow examines an issue that keeps many small business owners awake at night… late payment and poor cashflow. Rob looks at a recent survey which reveals how painful the task of chasing late payers can be.

One way to solve cashflow problems is to unlock the cash trapped in a business and Rob shares a relatively new financial solution to this problem which is spot financing.

And in the Business Finance Tip of the Week, a clip from a live seminar Rob delivered at a Kevin Green property and wealth creation weekend hosted in Amsterdam. In this clip Rob talks about raising growth capital via selling equity and how it can benefit a business.

In this episode of the Business Finance Bulletin Rob Warlow looks at the latest review on the UK banks Loan Appeal Process – how successful are business owners in turning a ‘no’ into a ‘yes’?

Crowdcube, an alternative source of finance, has launched a Mini-Bond scheme and Rob explores how that works and how you could use it in your business.

Banks and crowdfunding platforms are now starting to accept that working together may be the way forward with news that a UK High Street bank has partnered with a leading peer-to-peer lending platform.

And in the Business Finance Tip of the Week Rob talks with Alister Betts of Lucid Ventures on how to get you and your business ready to seek outside investors via selling equity.

Posted on 05.02.2014

With 2014 being a year of growth for many businesses, as we have talked about before in this blog, the question is how is that growth going to be financed?

Whilst there is evidence to suggest that banks are dipping their toes back into the market and avenues for alternative sources of finance continue to grow, one area of funding that is under-utilised and little understood is equity.

A recent report issued by the CBI, ‘Slice of the Pie: Tackling the Under-Utilisation of Equity Finance’, has revealed that just 3% of small and medium-sized businesses use this type of finance.

Raising equity to release cash involves shareholders selling a slice of their business and yet for many business owners this is a step too far. Not unsurprisingly the report reveals that the biggest barrier to improved demand for equity finance is the perception of losing ownership. 46% of businesses say they will not considering using equity finance due to concerns about losing ownership and decision-making power.

The CBI survey finds though that 68% of those firms which have raised finance this way believe that the investment had a positive impact on their business. As a result, four out of five of these businesses said that they would use additional equity finance to fund their business growth in the future. Bringing in new capital has also helped 26% of businesses gain additional external finance.

These businesses are ready-made advocates of equity finance, with 81% saying that they would recommend equity finance to another business.

Against the background of these benefits the CBI has recommended the following actions:

• All parties should proactively promote the benefits that equity finance can bring to a business and dispel the myths about it being a less attractive form of finance
• The government’s soon to be launched Business Bank should develop an equity/finance option to help ease businesses concerns about losing control.
• Government should trial adjusting the criteria of its equity co-investment schemes, such as Business Angel Co-Investment Fund and Enterprise Capital Funds,
• Government should pilot a simple tax incentive to encourage retail investors to hold shares on a longer-term basis
• HMRC must streamline the application process for small and medium-sized businesses to gain Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) qualifying status