Capacity Development & Readiness (CDR) Programme
Is Your Business Ready?
Background – Why CDR Programme
Early-stage enterprises face challenges everyday with limited access to capital and struggle with cash flow management leading to loss of opportunities to productively scale business, drive revenue growth and increase employment.
The problem – capacity & information gap
For SMEs – Accessing productive capital and optimising operational capacity for scaling of their businesses can be difficult, time-consuming and expensive.
For Investors / Financiers – SME deals are considered sub-par investment prospects or bad credit risk as they lack essential decision-making data and tend to be very small, difficult and time-consuming to originate.
We fix the information gap and build enterprise capacity
Driving SME to succeed comes with many challenges, it takes dedication, capacity development and right structures to thrive.
CDR Programme is a subsidized business development support initiative by BridgeCap Advisory for early-stage enterprises that would ordinarily not be able to afford to pay for experienced consultant’s services. Under this Programme, BridgeCap offers business development support solutions that help early-stage enterprises to build financial management system and investment readiness capabilities leading to sustainable growth and ease of access to long term investor capital that opens up more opportunities.
Our Advisory team analyses the problems and potential risks that a business is facing and provides practical and relationship-based operational support in a manner that will make the enterprise more efficient and scalable. For each enterprise, the Programme offers:
In determining potential candidates for CDR Programme, BridgeCap applies a set of criteria:
Geographical coverage – East Africa
- Formally registered with current business permit and trading licence
- Formal business location
- Generated income for at least 3 years with year-on-year growth
- At least 2 key permanent employees besides owner / directors
- Ability to pay the Programme-subsidized annual fee of KSh 239,880 / KSh 19,990 per month (standard rate for same scope would be KSh 70,000 p.m.)
Programme benefits / impact measures
The CDR Programme is targeted at helping enterprises:
- Deal with cash flow gaps
- Fund growth initiatives
- Prepare for that much needed capital investment that would grow operations
- Overcome challenges that most SMEs face when looking to scale or raise capital
- Sustainably manage business continuity challenges
- Process payroll and tax returns on time
As a result of going through this Programme, enterprises stand to directly benefit by gaining value through:
- Revenue growth
- Improved earnings
- Improved cash flow management (shorter cash conversion cycle)
- Additional jobs created
- Ability to access finance
Qualified and experienced expert team
The CDR Programme is delivered by a team of certified financial experts who are qualified members of ICPAK and have more than 45 years combined experience. The Advisory team has successfully delivered on transactions in capital raising, private capital placement, corporate finance, financial markets, treasury, securities trading and portfolio risk management.
In addition, our Advisory leaders have founded and run successful business enterprises and therefore have deep understanding of the business operating environment and challenges that early-stage enterprises face having helped in designing and implementing solutions to some of them.
Linking investors with growth enterprises
BridgeCap Advisory Limited is a financial advisory firm providing tailored financial and investment solutions linking investors with bankable projects and growth enterprises requiring impact capital. The firm focuses on enterprises, investments and projects within Eastern Africa.
1. - Financial Management System Set-Up
Many small and medium enterprises lack sound financial management systems and skills hence not able to carry out their objectives satisfactorily. Due to lack of proper cash flow management tools, they are neither able to cater for their recurrent expenditures nor even meet their daily operational expenses such as purchase of raw materials. BridgeCap advisory team will assist in advising and training on the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization. Our team will also advise on not only how to raise capital but also how to allocate the same i.e. capital budgeting. This would involve both long term and short term budgeting aimed at enabling the business achieve its strategy.
As sound financial management also involves determining an optimal capital structure, BridgeCap advisory also enables business to determine the best mix of debt and equity finance. This enables the business get the best returns from capital invested. Our team also assist in preparation of cash flow forecasts hence solving the problems of financial distress in future.
To ensure sustainability of the business, BridgeCap also assist in recommending the best methodology and software that the business can use to monitor, oversee and govern its income, expenses and assets with the objective of maximizing on profits. The recommended system will improve short- and long-term business performance by streamlining invoicing and bill collection, eliminating accounting errors, minimizing record-keeping redundancy, ensuring compliance with tax and accounting regulations, helping personnel to quantify budget planning, and offer flexibility and expandability to accommodate change and growth.
Other attributes of the system recommended would be:
- Keeping all payments and receivables transparent
- Amortizing prepaid expenses
- Depreciating assets according to accepted schedules
- Keeping track of liabilities
- Coordinating income statements, expense statements, and balance sheets
- Balancing multiple bank accounts
- Ensuring data integrity and security
- Keeping all records up to date
- Maintaining a complete and accurate audit trail
- Minimizing overall paperwork
2. - 1 Year Book Keeping And Financial Reporting
BridgeCap will assist in ensuring that all financial transactions such as sales, purchases, receipts and payments in your business are well recorded. Our team will assist in verifying and correctly recording information from the source documents from which accurate financial reports will be deduced. The reports will range from monthly management reports, adhoc reports, quarterly reports, half year reports as well as end of year reports. In line with IAS 1, financial reports will be presented in a way to allow comparability of the reports over a period of time as well as comparability with other entities in the same industry. BridgeCap will assist in preparation of the following financial reports:
1. Income statement
This is commonly referred to as P&L account and would show the incomes and expenses of the business for a certain period of time. This would enable the business determine whether it made profit or loss at a particular period of time. As such, income statement enables the investors and creditors determine the past financial performance of an enterprise, predict the future performance and predict the capability of generating future cash flow. Bridge Cap advisory team would help in preparation of an income statement in line with IFRS depending on the industry in which the business operates. Relevant disclosures and explanations will be provided in the accompanying notes to the financial statements.
2. Balance sheet
This is basically a statement of financial position of a business as at a specific period of time. This would give a summary of the business assets, liabilities and equity as at a specific period of time hence establishing the net worth of the business. The statement of financial position is useful to financiers and potential investors who would like to determine whether or not the company qualifies for additional money. Other parties interested in this statement would include: current investors, suppliers, company management, some customers and government agencies.
3. Cash flow statement
This will show how changes in balance sheet account items and income affects cash and cash equivalents. It would break the analysis down to Operating, Investing and Financing activities and would show how cash moves in and out of the business hence the statement is based on cash accounting. The tool will enable the business determine its short term viability and especially its ability to meet its recurrent expenditures.
4. Statement of Changes in Equity
The statement will explain the changes in company’s share capital, accumulated reserves and retained earnings over a period of time. The statement breaks down the changes in owner’s interest in the business and the application of retained profits from one accounting period to the next.
For SMES, the statement will show all changes in equity including: Total comprehensive income, owner’s investments, dividends and owner’s withdrawal of capital. The statement may not be prepared on monthly basis but is part of annual financial statement.
3. - 1 Year Payroll Processing (Including Statutory Returns)
BridgeCap team will assist in processing paycheques for the employees of your business. This will include but not limited to submission of all statutory returns as per the applicable rates and regulation within the set deadlines. We understand that this is a critical area because employees are sensitive to payroll errors and irregularities. Good employee morale requires payroll to be paid timely and accurately. Our primary mission will be to ensure that all employees are paid accurately and timely with the correct with holdings and deductions, and that the withholdings and deductions are remitted in a timely manner. The following deductions and set deadlines will be of paramount importance to us:
1. Pay As You Earn (PAYE) – This will target all employees and will be done before the (9th) ninth day of following month. Any person who receives employment income of more than KSh 13,486 per month either as a full time employee or part time employee is liable to pay the income tax as per the law. Thus any employer is supposed to deduct the tax due from any remuneration paid to their employee.
2. National Hospital Insurance Fund (NHIF) – This will be deducted from the employee’s salaries and assist when he/she requires medication. It is a requirement by law and any employer who flaunts this labour law can get into serious trouble. The same will be submitted before the (9th) ninth day of following month. The contribution rates will be based on individual’s gross income.
3. National Social Security Fund (NSSF) – This is a mandatory national scheme whose objective is to provide basic financial security benefit to employees upon reaching the retirement benefit and targets those in both formal and informal sectors. The same should be submitted by (15th) fifteenth day of the following month.
4. Value Added Tax (VAT) – VAT applies to businesses which deal with services and products with VAT. The same will be done before the (20th) twentieth day of the following month. The relevant returns will be done in compliance with the VAT act and VAT regulation of 2017.
4. - 1 Year Cash Flow Management Support
We understand that net cash flow is an important measure of financial health of a business. BridgeCap will assist in performing a cash flow analysis on a regular basis and assist in developing cash flow forecast so that the business can take the necessary steps to head off cash flow problems. Our team will also advise on how to develop and use strategies that will maintain an adequate cash flow for your business. This will include advising on the best cash flow conversion period so that the business is liquid enough.
Our financing team will also offer solutions to financial challenges where the business is expanding and need cash injections during the growth phase. The team will advise on the best mix between debt and equity financing so that the business can operate optimally. BridgeCap cash flow management support would aid in operational success of the business in the following ways:
- Solvency and credit worthiness – As good cash flow management would mean that the business can enjoy predictable cash flow; it would assist greatly as the enterprise would be able to cater for its short term and long term obligations such as payments of instalments. This will improve on the credit score affixed to the business making it more impressing to financiers and suppliers.
- Enabling CAPEX and Investment – Good cash flow management would mean that the business will always be left with a surplus which is always set aside. This would mean that the business is in a position to make CAPEX expenditure with ease and lift the pressure off funds from operating activities to make capital expenditures.
- Boosts Employees and Vendor relations.
An efficient cash flow management system would mean that funds are always available at the disposal of the manager/owner. This would mean that the business will always be in a position to honour the obligations of the vendor on time. This would enable to build a positive relationship with the said vendors hence able to negotiate good terms.
Additionally, this would ensure that the business is able to disburse regular expenditures such as salaries. Timely payments of salaries boost the morale of the employees and are less prone to ditch the employer.
Proper cash flow management would ensure that the cash flow of the business always stays positive hence able to survive turbulent waters.
5. - 1 Year Practical Training On Financial Management For A Small Business
Financial management forms the foundation of any business success in the future as it gives tools to chart your course into the future, adjust decisions where necessary and enables one to find the way while faced with challenges. BridgeCap will give quality practical training including but not limited to book keeping, projections, financial statements and financing. Thereafter, the client will be able to determine if he/she is making profits, which products and services to capitalize on , areas of diversification as well as how to negotiate good financing when need arises.
Our team will assist small business into being able but not limited to:
A. Budgeting – the team will assist the business into creating a budget which is an estimate of all expenses and income for a given period. The business will later on compare what was budgeted with the actual performance. This would enable the business to track all expenses, plan for the future, plan for expansion etc.
B. Training on book keeping – This will involve training on how to track all business transactions. It would also involve training on the use of the accounting software in place and reconciliation of accounts.
C. Training on cash flow projection – Training will be conducted for the client to be able to prepare a cash flow projection so as to get the visibility needed to avoid liquidity problems.
D. Training on preparation of an Income Statement – The tool will enable the business determine if it’s making profits (also show how much) or incurred losses. The client will be in a position to determine how well he is managing the business.
E. Training on business financing – our team will train on how to source for financing from various sources and application of the same towards the intended purpose. The following key elements in business financing will be emphasized:
- Equity financing: Invested funds that stay in the business, often permanently. For most small businesses, equity comes from the owner or from family savings and is frequently the only source of funds
- Debt financing: Borrowed funds that are paid back. The cost of debt financing is interest paid to the lender.
- Working capital: Money that is used to pay for the daily operations of the business incurred in the short term, such as inventory and overhead expenses.
- Fixed asset financing: Used for purchasing equipment, vehicles and real estate.
6. - Investment-Ready Business Plan
A business plan is a written description of the business future, a document that tells what one plans to do and how he/she plans to do it. This is basically a road map that outlines the goals of the business and how they will be achieved.
As one of the uses of a business plan is to get investors on board as well as secure funding, BridgeCap will assist in the preparation of an investment ready business plan intended to answer unique investor concerns. Our team understands that the plan requires to be well thought, proof of concepts, substantial financial modelling as well as persuasive presentation and would offer significant support on the same.
Particular attention will be given to the following elements:
- Executive summary – this would briefly describe the nature of the business, products and services, business markets, the people behind including their unique qualifications. As this is an important component in the plan, it will be structured to attract the attention and interest of the reader.
- Company description – This will describe the type of company (i.e. corporation, partnership, sole proprietorship etc.), owners of the company, management and basically how the company is organized. This element will be of significant importance to the user/reader of the plan and would be detailed enough.
- Service/product description – This would be a detailed description of the products offered by the business. Differentiating aspects of the products would be included such as prices, support offered, training and delivery.
- Sales and marketing – this would describe the various ways to capture customer’s interests. It would include advertising campaigns and venues for promotional materials. It would also describe how sales are accomplished.
- Competition – The business plan will analyse the client’s competitive environment and clearly explain the unique competitive advantages.
- Break even analysis – the targeted investor might be interested in seeing the break-even analysis in the business plan. Our team would be able to analyse the same hence revealing whether the proposal is viable. The analysis will also show that the client has proper understanding of the financial dealings of the business.
- Financial projections – Financiers are majorly interested in their investments which are represented in the financial projections. Our team will assist in developing the said statements and incorporate them in the business plan hence showing the financiers the amount to be generated and whether it will be in a position to redeem the facility.
7. - Comprehensive Insurable Risk Assessment For The Business
CDR Programme enterprises will be offered free comprehensive insurance audit and advised on areas of the business and employees that are adequately covered, under-covered or not covered at all.
The risk assessment is expected to help enterprises build their business resilience capabilities and BridgeCap will also offer to arrange new or renewal of insurance policies that guarantee financial and investment protection.
8. - Free Personal Accident Insurance Cover
Every enterprise that signs up for the CDR Programme will be awarded a free Personal Accident Insurance Cover for 1 key business executive, with the following great benefits.
1. Compensation of KSh 1,000,000 cash in case of death or permanent total disability
2. Compensation for loss of income up to KSh 10,000 per week in case of temporary total disability
3. Indemnity for medical expenses up to KSh 150,000
4. Last expense of KSh 70,000
9. - Access To Working Capital And Transaction Support For Raising Long-Term Growth Capital
Early-stage enterprises usually have most of their working capital tied up in invoices and often lack sufficient cash flow to meet payments or take up opportunities to productively scale business, drive revenue growth and increase employment.
Enterprises enrolled in the CDR Programme will have access to working capital finance of up to KSh 1 Million from BridgeCap upon meeting financing requirements.
BridgeCap financing interventions are tailored for building SME capacity and solving cash flow needs due to growth driven initiatives by discounting invoices and/or financing additional contracts and orders. These are cash flow needs triggered by growth and not financial distress.
Fundraising is a critical part of business growth and expansion. Sufficient funds to operate a business are essential to its success. Before making a formal request for money, a business must have a clear idea of its resources and strategy. BridgeCap links clients with potential financiers and helps to raise the required funds at terms favourable for the client’s business.
Enterprises enrolled in the CDR Programme will be assisted in financial arranging at a preferred transaction fee, and particularly by:
- Supporting the marketing of a Transaction to potential equity/debt investors and financiers as a basis of raising equity and/or debt capital.
- Providing the information needed by potential investors for their due diligence.
- Responding to queries raised by potential investors in a style that increases clients’ attractiveness to the investors.