Lead SMEs Through the Innovation Journey: Part 3

Where Innovation Meets Investment — And Accountants Become the Essential Link

What if your client’s brilliant idea is ready to take off…but their bank account isn’t?

This is the crossroads every innovative SME reaches — the moment when ideas need money, prototypes need manufacturing, and momentum needs fuel.

Stage Seven and Stage Eight of the Innovation Journey give accountants, bookkeepers, and advisors a unique opportunity to guide SMEs through the most crucial phase of growth: funding and capital raising.

And make no mistake — this is where advisory services become strategic, respected, and deeply valued.

Your client has journeyed through Stage One to Stage Six.

They have an idea… a prototype… a market opportunity… a product with potential.

But now comes the big question:

“Can we afford to turn this into a commercial-ready product?”

This is where accountants step forward as the architects of financial readiness.

From Prototype to Commercial Reality — What Will It Cost?

Leadership teams eventually ask two critical questions:

One: What will it cost to bring this product to market?

Two: What could this product achieve once commercialised?

This is where Stage Seven digs deeper into the realities of commercialisation:

✅ Manufacturing

✅ Marketing & sales

✅ Infrastructure

✅ Technology

✅ Team expansion

✅ Equipment

✅ Talent

✅ Ongoing working capital

Every one of these requires funding clarity — not guesswork.

First Step: The Industry Growth Program (IGP)

Before looking at loans, private investors or equity, SMEs must assess eligibility for the Industry Growth Program, which offers government-backed funding with no equity dilution.

These grants substantially reduce financial pressure and are always the first option your clients should explore.

But what if they can’t meet their matching contribution?

When Cash Reserves Aren’t Enough

If the SME cannot fund their share, the next step is private funding sources:

✅ Family

✅ Friends

✅ Business associates

✅ Early-stage investors

This leads directly to the heart of Stage Seven:

THE FUNDING VISION — What Investors Must See

Investors don’t just fund ideas.

They fund clarity.

They fund confidence.

They fund capability.

Your client must present a clear Funding Vision that answers:

✅ What is the size of the market?

✅ Where will manufacturing occur?

✅ What will it cost to produce at scale?

✅ What infrastructure is required?

✅ What is the sales and marketing strategy?

✅ What is the projected financial return?

✅ After all existing resources — what is the remaining funding gap?

A Winning Business Plan (Stage Four Revisited)

A Stage Seven business plan must now include:

✅ Independent market analysis

✅ Expert commentary

✅ Target market locations

✅ Updated business model

✅ Commercialisation strategy

✅ Sales & distribution forecasting

✅ Demand projections

✅ Expansion pathways

This is no longer a planning document. It is an investment document.

Predictive Accounting — The Financial Story Investors Want

Stage Five now proves its value. Your client needs:

✅ Budgets

✅ Cashflow forecasts

✅ Key driver analysis

✅ Projected balance sheets

Most Recent Annual Financial Accounts

Directors must sign off on current financials — non-negotiable for any investor, lender, or intermediary.

Company Valuation

A valuation strengthens credibility, supports pricing decisions, and prepares the company for the formal capital raising environment.

Funding Option: Borrowing

If the SME chooses to borrow funds, lenders will require:

✅ Updated business plan

✅ Predictive accounting reports

✅ Recent financials

✅ Company valuation

✅ Director details

✅ Security + personal guarantees

This prompts a critical question: Are the directors ready for that level of commitment?

Often, the answer leads to Stage Eight…

What if the only thing separating your client from explosive national (or global) growth…is the right capital raising pathway?

Stage Eight is where ideas become companies with genuine investment momentum.

There are three major pathways for Australian SMEs:

One: Section 708 Corporations Act – Small-Scale Offerings

Two: Early-Stage Innovation Company (ESIC)

Three: Crowd Sourced Funding (CSF) Equity Raising

Section 708 Corporations Act — Small-Scale Private Offerings

Perfect for early capital rounds.

✅ Up to 20 offers in 12 months

✅ Up to $2 million raised

✅ Must be private — no advertising

✅ Ideal for family, friends, business associates

Fast. Simple. Limited.

Early-Stage Innovation Company (ESIC)

ESIC status provides massive incentives for investors, including:

Tax Rebates:

✅ Sophisticated investors: 20% rebate (max $200,000)

✅ Retail investors: 20% rebate (max $10,000)

Capital Gains Tax (CGT) Exemption: no CGT on shares held 1–10 years

This dramatically increases the company’s attractiveness to investors.

ESS BIZTOOLS offers a complete ESIC package including:

✅ Innovation points calculator

✅ Principles Test documentation

✅ ATO submission templates

✅ Investor-ready materials

✅ Due diligence frameworks

This gives accountants everything required to guide SMEs through ESIC qualification.

Crowd Sourced Funding (CSF) Equity Raising

When SMEs want to raise big dollars — publicly, legally, and at scale, CSF allows companies to raise up to:

✅ $5M in any 12 months

✅ From hundreds or thousands of everyday investors

✅ With full public marketing freedom

Eligibility requires:

✅ Turnover < $25M

✅ Assets < $25M

✅ Not publicly listed

✅ Active operating business (not an investment company)

CSF is ideal for companies that:

✅ Have a strong growth story

✅ Need expansion capital

✅ Failed ESIC due to age/turnover

✅ Want to build a community of supporters

✅ Have compelling brand positioning

Core Documentation for CSF

Accountants will support clients to prepare:

✅ Business plan

✅ Predictive accounting reports

✅ Capital structure charts

✅ Corporate chart

✅ Share register

✅ Loan details

✅ Options & rights information

This culminates in the CSF Offer Document, covering:

✅ Risk Warning

✅ Company Information

✅ Details of Offer

✅ Investor Rights

Marketing, Launching & Closing the Raise

Once approved, companies can:

✅ Market publicly

✅ Promote through social media

✅ Engage investor communities

✅ Build momentum during the offer

When the raise closes, the intermediary:

✅ Provides shareholder lists

✅ Transfers funds (minus fees)

✅ Finalises reporting requirements

Why This Matters for Accounting Firms

Supporting SMEs through capital raising allows your firm to:

✅ Deliver true advisory value

✅ Become a key partner in innovation

✅ Offer high-level strategic services

✅ Generate new revenue streams

✅ Position the firm as a Virtual CFO

✅ Gain long-term client loyalty

Capital raising is one of the highest-value advisory services an accountant can offer.

75% OFF BLACK FRIDAY SALE – OFFER EXTENDED TO 15 DECEMBER

The tools, templates, predictive accounting modules, and capital raising resources used in Stage Seven and Stage Eight are included in ESS BIZTOOLS packages (use coupon code ESSBF75 at checkout):

EXPLORE ESS BIZTOOLS AND SUBSCRIBE HERE

Visit our website – www.essbiztools.com.au – to discover the detailed overview of the services provided by ESS BIZTOOLS. You are also welcome to contact us on 0418 190 181 or email .

Insights From Our Affiliates

Why Clients Care About Benchmarking (Even If They Never Say It Out Loud)

By Darren Gleeson, CEO — TaxFitness

Accountants often tell me, “Darren, clients don’t really care about benchmarking.”

Yes, they do. They care deeply — they just don’t know how to ask for it.

Most small business owners walk around with the same quiet questions:

“Are we actually performing well… or are we behind?”

“Do other businesses make more money than we do?”

“Is my pricing wrong? Are my wages too high? What am I missing?”

Benchmarking gives them straight answers — something they rarely get anywhere else.

Here’s why clients take benchmarking seriously:

1. It cuts through the guesswork.

Most owners make decisions based on gut feel. Benchmarking gives them the truth — fast.

2. It turns noise into a plan.

If you tell a client their wages “seem high”, nothing happens.

If you show them they’re 13% above the Top 20%, they move.

3. It sparks competitive drive.

Every business owner compares themselves. Benchmarking points them at the right benchmark — the best in their industry.

4. It makes advisory real.

When a client sees they’re $80,000 off Top 20% performance, the conversation changes instantly.

5. It gives them hope.

Business is hard. Benchmarking shows improvement is possible — and measurable.

Clients don’t want more reports.

They want clarity, direction and confidence.

Benchmarking delivers all three.

More info: www.taxfitness.com.au

Make sure to use the Referral Code: ESS100 for $200 off your annual subscription.

EXPLORE TAXFITNESS AND SUBSCRIBE HERE

Offer to Accountants

Sign up to The Boss Factor Library for an annual subscription of $70 (plus GST) per month.

Free Webinar by ESS BIZTOOLS

Guiding SMEs to Success Through Business Planning

📅 Thursday 11 December | 11am AEST

💻 REGISTER HERE

Smart Succession Planning for SMEs

📅 Thursday 18 December | 11am AEST

💻 REGISTER HERE

ESS BIZTOOLS Podcast

In this episode of Accountants Minute Podcast, Peter Towers introduces Stage One of the Innovation Journey — where every breakthrough begins with a simple idea. You’ll discover how accountants and bookkeepers can guide SMEs from that first spark through R&D eligibility, record-keeping, prototype development and commercial planning.

This is your roadmap to becoming the internal auditor, advisor and strategic navigator SMEs desperately need as they innovate, experiment and build new intellectual property. If your firm wants to lead clients through real innovation (and unlock new advisory revenue along the way), this episode is your starting point.

CLICK HERE TO LISTEN TO OUR PODCAST

Listen to more Accountants Minute Podcast episodes here

Want to know more?

Visit www.essbiztools.com.au.

If you would like to have a discussion about how this concept of virtual CFO services can be supplied by Australian accounting firms please ring our Managing Director, Peter Towers, on 0418 190 181 and we will arrange a complimentary 45-minute Zoom meeting to discuss your firm’s position and to give you our advice.

We believe that this is the blueprint for the delivery of an enhanced range of services by Australian Accounting and Bookkeeping firms to assist SME businesses to add value to their businesses and to assist accountants and bookkeepers not only to attract but to retain outstanding talent who want to be involved in the delivery of “real accounting services”.

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