Established in 2008, Addooco IT Ltd provides IT support and advice to businesses throughout the region and further afield.
The company identified the need for a £100,000 investment to enable it to grow the business and diversify into hosting services from its data centre. The investment, to fund hardware and create new jobs, was dual funded by grants and finance, both of which were sourced by Mitchells Accountants and Business Advisers.
Here, Richard Walters, Managing Director of Addooco IT explains how, with the support of Mitchells, the funding application process was simple, hassle free and has enabled the company to increase capacity, build on strong sales and retain its position at the cutting edge of technology.
Who identified that your business could benefit from grant funding?
“Because the investment in the company would create jobs I recognised that Addooco may be eligible for grant funding but was unsure which, if any, grant would be suitable.
Having worked with Mitchells to supply them with IT support services and create their CloudMitchells service, I was aware that they provide grant funding support, so contacted Andrew McDaid, Mitchells Accountants’ specialist in this area, and explained the problem.”
How was the funding process approached?
“Although we knew the business was ready to grow we felt constrained by its cash flow position. Andrew’s first step was to undertake a health check of our accounts. From this point he professionalised our accounts moving them from a simple inventory format to a management accounts format, showing cash flow, debt collection, profitability, etc.
From this point Andrew was able to identify that a combination of grant funding and finance would enable us to grow the business successfully. In order to maximise our chance of funding success, Andrew advised that I should attend local networking events in order to get to know the local funders and make them aware of me, the business and its growth ambitions. This has delivered long-term relationship benefits to Addooco IT Support Services which mean we can access very favourable rates of interest”
Which grants were identified?
“Andrew identified two grants that were suitable to meet our needs. The grants covered around 35% of the money needed for investment, leaving the remaining £60,000 to be sourced through finance.
He assisted us throughout the application process with both the grant and finance, taking on board all the leg work and actually completing the applications. Unlike Andrew, we had no prior knowledge of grant funding in terms of what the funders were looking for, the type of information to include in the application or even the documentation to include. This was a huge help and ensured the best possible chance of success.”
How long did the grant funding process take?
“The applications for the grants were made in July 2014 and less than 3 months later we learned that both had been successful.”
How did you finance the remaining 60% of the investment?
“Working with Mitchells Accountants enabled us to not only access grant funding but also build key relationships with banks and external financers.”
Together we spoke to various banks and Andrew helped us negotiate a significant overdraft facility at a very competitive rate in order to fund the increased working capital requirements of the business.
On the basis of this and Andrew’s own knowledge, experience and relationships he was able to access a considerable amount of asset-based funding on our behalf.
Finance, our own capital and combined with the grant funding gave us the full £100,000 investment and enabled us to acquire the necessary IT hardware.”
How has the investment contributed to Addooco’s growth?
“The combination of grant funding and financial investment allowed our company to grow immediately. Our turnover will have increased 50% this year as a result of the great services we can provide now thanks to the overall investment.
On receipt of the investment we were immediately able to employ a much-needed extra team member. Since then we have employed an additional three members of staff, enabling a greater workload capacity going forward.
More importantly, the investment in IT hardware has put Addooco ahead of what our competitors offer.”
What are the immediate and long-term benefits of the funding?
“The short term benefits are simple; the increase in workforce and IT hardware ensures we can deliver our quality service to more customers, which is generating the cash flow to enable us to achieve continued investment in the long-term.
Aside from the cash injection, we now have a number of important new business relationships in place within Chesterfield and the surrounding areas thanks to Mitchells Accountants.”