By Ben Youn Copyright 2014 Quantum Business House WELCOME to QUANTUM BUSINESS HOUSE

 2 hours for each session  10 minutes tea time  Bathroom & Kitchen  Today’s Speaker  Please network each other  Future Plan - Business Forum - Networking Events - Business Mentoring Copyright 2014 Quantum Business House

1. Setting up business structure (June 04) 2. Buying a business (June 11) 3. Business Planning (June 18) 4. Marketing (June 25) 5. Raising Finance (July 02) 6. Financial Management (July 09) 7. Tax system and compliance issues (July 16) 8. Risk management (July 23) 9. Financial Health Check (July 30) 10. Business Evaluation (August 06) Copyright 2014 Quantum Business House

 Equity - Owner’s capital (ordinary shares or preference shares) - Investments (e.g. angel investors) - Trust Funds - Partnership Capital Copyright 2014 Quantum Business House

 Debt - Bank overdraft - Bank loan - Convertible notes - Factory financing Copyright 2014 Quantum Business House

 Normally no securities required (greater risks)  Aiming profit distributions and greater business valuation (Return on Investments)  Rank behind all other secured and unsecured creditors when the business winds up i.e. loss of capital and ROI.  Bear risks of finding a new buyer to exit the investments Copyright 2014 Quantum Business House

 Default risk - Unable to pay the interests - Unable to repay the principal when maturity arrives.  Security requirements to mitigate the risks such as mortgages over property fixed charge or debenture or specific assets (e.g. Account Receivable) Copyright 2014 Quantum Business House

 Sale of shares or units  The amount of return of initial funds invested will depend on the change in value of the business and the ability to find a willing buyer or appropriate exiting strategy Copyright 2014 Quantum Business House

 Based on the terms of repayment of the fund borrowed  The fund will be repaid either instalments over the loan period or at the end of the term.  The business will need to generate enough fund from the profits to meet the repayment commitments.  Debtor financier does not share the risks of the business or fruits of the business. Copyright 2014 Quantum Business House

 Debt - Higher gearing structure means bigger commitments to external parties (interests) - Income tax advantage (tax deductible) - Reduced profits  Equity - Additional room for debt finance - Increased profits (compared to debt finance) Copyright 2014 Quantum Business House

 Combination of two?  Convertible notes?  Consideration also requires: - The ability to recognise an investor’s interests in operating the business with voting right. - Your attitude to lose 100% control position - The need to reduce the risk associated with the gearing level. - Is your business attractive to investors? Copyright 2014 Quantum Business House

 Review of existing debt finance arrangement on a regular basis.  Changing lending institution with better options including different debt product, increasing or decreasing the amount of borrowing, changing the repayment amount or timing etc.  New debt to pay off old debt Copyright 2014 Quantum Business House

 Gaining a better interest rate  Changing interest structure (e.g. from variable to fixed)  Gaining more flexible features in a facility to meet your business needs  Changing the financial cashflow commitment  Releasing security over personal asset/specific assets Copyright 2014 Quantum Business House

 Dangers!! - Fees (e.g. early exit fees or penalty) - Costs of refinancing - Changing in valuation of your security  Benefits - Access to increase in debt finance - Consolidation of debt funding and cashflow saving - Restructuring security offering Copyright 2014 Quantum Business House

 Bank manager (or loan officer)’s recommendation then to credit manager  Personal information - Personal assets - Tax returns - Personal bank details - Credit history Copyright 2014 Quantum Business House

 Business historical information - BAS statements - Debtors and creditors lists - Bank statements - Any loan arrangements  Forecast - Cashflow forecast - Profit and Loss forecast - Balance sheet forecast Copyright 2014 Quantum Business House

 Business Plan  Purpose of the loan  The amount of the loan - Make sure you borrow right amount of money  Term of the loan  Servicing the loan  Security of the loan  Presentation and consultation with business banker Copyright 2014 Quantum Business House

 Financial Management  Tax system and compliance issues  Risk management  Financial Health Check  Business Evaluation Copyright 2014 Quantum Business House