You know the saying: "Knowledge is wealth, wisdom is treasure, understanding is riches, and ignorance is poverty." - Matshona Dhliwayo.
We 100% agree here at InvestaMatch, and we’re on a mission to demystify the complex world of investment. We want small but ambitious businesses and everyday investors alike to all have the same access, opportunity and knowledge base to see their dreams grow, and drive a thriving NZ economy.
This month in our ‘Ask The Expert’ series we pick the brain of Jemma Ross, Business Loan Broker and General Manager at Spinach - a Kiwi-owned, family-run business with ample experience in the business loans market. Jemma is an avid SME enthusiast with a passion for sharing her vast & valuable knowledge.
We asked: as a small business loan broker, you have the unique experience of dealing with both sides of the coin- small businesses looking for investment, and lenders looking for their next opportunity. From your perspective, what’s the power in utilising the everyday investment opportunities that are out there? The power is in finding the sweet spot between a business needing capital, and a lender/investor getting a return. Both entities benefit and there is a flow-on effect of the productivity the money generates.
What types of other lenders are out there looking for investment opportunities, apart from the banks?
Well, there are non-bank deposit takers who accept investors' money and lend it for return, and there are financiers who lend their own money. There are also a few Australian financiers in the market too (who aren't banks or deposit takers).
What’s your thoughts on ‘opportunity cost’ in relation to sourcing investment?
I describe the concept of ‘opportunity cost’ to my clients all the time. So long as the funds coming in bring a return greater than the cost of the money, then it makes a lot of sense to me. I always ask my clients: "What is the cost of not taking the money?".
When do you know you’re ready to start looking for investment?
When you can show a clear, well thought-out plan with other components to reduce risk, such as strong income from the business, strong personal income aside from the business, property, a contract for upcoming work etc.
Is there a benefit to sourcing investment early on in your journey?
Yes, as it’s much harder to get funds when you are hurting. Good planning showing an upcoming shortfall and the mitigants around that is much more attractive to a lender than a reactive loan dealing with that shortfall after it has happened.
What does ‘having your ducks in order’ look like to you when looking for investment? What impresses you, and what doesn’t?
It impresses me when the applicant can answer my questions in a clear, succinct way. Saying "I need to ask my accountant what my turnover is" isn't great. Having your ducks in a row means having oversight across all the key functions of your business, and being able to make informed decisions quickly.
In what way have you seen businesses thrive after sourcing investment, that they wouldn’t have been able to do without it?
So many ways! I have seen people be able to take on employees to increase volumes, and I have seen people take on equipment to double capacity. I have seen people break into new markets. I have, in the past, loaned someone $50k in order to fulfil an international order worth $750k. So long as people bring their accountant into the picture, loans can be a great thing!
Is there a type of investment (private lending, co-ownership or sweat equity) that you have witnessed as being the most successful or beneficial to both parties long-term?
I believe that there is no one best solution: so long as it fits, it's good.
Based on your expertise, what are the top 2-3 things a person who is considering adding an opportunity on InvestaMatch, think about before they start their listing?
Put themselves in the investors’ shoes and think about why they WOULDN'T invest in your company. And then work to overcome that hurdle, instead of hoping the investor will overlook that thing (or things.)
Who are the top 3 experts those listing opportunities should consider talking to before they start their listing?
Accountant, accountant, and accountant.
What makes you look more closely at opportunities listed on InvestaMatch?
A product I understand, and can get excited about.
If you could give people seeking investment one killer piece of advice, what would it be?
If you have sound research, if your plan is tested by your accountant, and your idea excites you, then don't take no for an answer.
So many gems of professional wisdom in Jemma’s insightful answers to our questions, including a fresh perspective on opportunity cost, growth vs panic lending and our favourite: “Don’t take no for an answer”. Thank you, Jemma.
Are you making plans to finance your business through external investments, or begin your journey to investing in someone’s future? InvestaMatch is here to help- get in touch today and let us guide you through the process.