Funding Software Projects
We all know that technology is a core part of any business. What’s more, technology is now a major factor in a company’s ability to grow and succeed in any marketplace. Customer behaviours and demands have changed; their own use of technology drives their desire to interact digitally, their expectations for excellent customer service driven through technology has increased and where businesses are not keeping up, the competition is ready and waiting in the wings.
And it’s not only customers we need to consider. Employees too are seeking opportunities to change the way they work and where they work from, putting greater demands on a companies use of technology. More worrying for some is that their competition is also becoming more digitally aware and if it’s not your business leading the charge it will certainly be a competitor.
Fortunately changes in technology, especially cloud computing, make it far easier for companies of all sizes to adapt to these changes and adopt technology to enhance their business. What used to only be available to larger enterprise organisations, generally due to cost and man-power required, is now available to SMBs.
The sooner a smaller business recognizes these shifts and the need to adopt technology to digitally enhance their business the sooner they can start to appreciate the benefits. The challenge is often then a matter of Financing such a project.
Fortunately, this has also become easier for SMBs and the options for financing digital improvement projects has increased and where historically companies would have delayed spend in this area, in deference to other ‘more pressing’ costs or overheads, they can now look to advance their business agenda.
Fortunately, the Government recognizes the need for small businesses and encourages their use of technology to grow. As such there are always a number of options for Grant Funding at local and national levels. Whilst a grant will generally fund only part of a business improvement project, with the expectation that the company funds the balance, it still contributes a significant percentage.
Lease finance used to be reserved for tangible assets, but like everything else, this has changed over the years. It is now possible to fund software and services up to 100%, so even if your project includes no hardware we can still manage the costs on a monthly basis over a number of years (typically a maximum of 7 but usually 3-5).
A further option is to look to finance your project via a monthly subscription. Whilst this might sound similar to leasing, the key difference is that you never actually own the software. Where leasing is a fixed premium for the term, the benefit of a subscription model is that the payment may vary depending on usage i.e. number of users or volume of use.
All very fashionable these days and great for those with a new idea. Kickstarter being the most talked about.
The final option is to take elements of all the above options to build a hybrid model to suit your business.
Utilising alternative funding methods for your projects can have significant benefits:
- Cash flow – funds can be retained in the business for other uses and costs are spread over time
- Better decision making – decisions on the future of your business can be made based upon needs rather than constrained by budgets
- Retain alternative funding – by using lease or subscription options other funding facilities such as may be offered through your bank are not affected
- Tax efficiency – For lease and subscriptions VAT is paid on the monthly amount not in full upfront. Lease or rental payments may also be more tax efficient as they can be allowable against Corporation Tax
- Budgeting – monthly payments can make budgeting far easier, especially if you wish to allocate costs to different departments or cost centres
Most importantly, it means that you can start a project immediately and appreciate the outcome and benefits for your business sooner rather than later.
If you feel this isn’t relevant and you can continue to run your business as you always have, that’s great. However, if you are concerned that technology and its impact on your market and customers is getting ahead of you then get in contact and we can help not only provide the solution, we can guide you through how best to finance it.