EXTRACT FROM CMR OPERATIONS MANUAL

1)   CMR REGIONAL OPERATIONS

CMR Regional Operations are central in providing CMR's help to SME's throughout the UK.  A CMR Region is the CMR business unit responsible for developing and managing CMR's business within its geographic area.  CMR Regions are semi-autonomous, but operate under the network and resources umbrella of CMR nationally.  Each CMR Region reports to a CMR Divisional Director, who in turn is a member of, and responsible to the main CMR Board. 

Each CMR Region is responsible for undertaking its own local 'indirect' marketing to build awareness and contacts, also to manage and handle the propositions that come into CMR (wherever they enter CMR, the proposition will be sent to the CMR Region in which the client is located), also to deal with investors introduced into their projects, also to build CMR's proactive business in their area through the 'Templeton' and Catalyst Group Programmes.

The success of CMR and its full members in each Region will largely be dependent on how active the Region is in developing local business sources, and in how it handles the proposition flow coming both from local and central CMR routes.  Each CMR Region is very dependent on the motivation, ability and work of new members joining.  This is because many members after they have joined CMR, often start picking-up new clients and business projects, so that after a period many gradually become less active and less able to commit time to new CMR projects as they come on-board.  They have become what the academics call 'portfolio executives' - working for themselves, but with a portfolio of many separate consultancy and business activities.  It is a process that happens to most CMR members - in fact the more active and better you are, the more likely and quicker it happens!  It does however place a special emphasis upon the organisation making maximum use of new members joining, before they become too successful in becoming less active CMR members!  So, we need to encourage all new CMR full members to become as active as possible, and to help us build business levels and then help to manage it properly!  If CMR ever fails to respond promptly and professionally to a new proposition introduced (perhaps by a local bank manager or professional firm), we will start losing our reputation and lose business as a result.

Working within a CMR Region should be all about teamwork.  Very few people are good at everything, and best results will be achieved by CMR members doing what they are good at, but not trying to do those things that they are not so good at.  The real strength of CMR is in the network of skills and experience we have, and we should use that resource to make sure we always have the right people on the job, at whatever stage it is at.  In the past, some CMR Regions have been less effective than others - often because the members regarded themselves as individuals rather than as part of a cohesive team.  Opportunities have been squandered in the past through one person trying to handle it by themselves rather than by calling-in the help or expertise that is needed.

Being active and involved in CMR regional operations means being part of the various activities and management processes happening at regional level.  Broadly speaking, these fall into a number of different categories:

a) Regional Marketing; developing CMR's local business marketing presence.

b) Regional Proposition Management; managing and assessing the flow of propositions received (from either local or CMR central sources).

c) Negotiating with and handling clients;

d) Project Handling; becoming involved in working on CMR projects being handled by the Region.

e) Becoming involved in the proactive operations of the Region, using data supplied by Templeton College or our other database providers to develop contacts with SME's who could need financial and management support.

f) Where appropriate, becoming involved with the general management processes of the Region - as CMR expands we need to increase the level of management control exercised.

 In more detail:

 A) CMR REGIONAL MARKETING

CMR's Regions are responsible for developing CMR's business within that geographical area in all its respects.  There are two primary business activities that happen within a CMR Region:

a) Reactive business

b) Proactive business

a)      REACTIVE business is so called because it is business that comes to CMR and we react accordingly.  The business will come to us as a result of indirect marketing work done previously by either CMR Centre or by the local CMR Region.  Examples are:

CMR Centre initiated marketing: Daily Telegraph link-up, BVCA Guide, British Chambers of Commerce Guide, Money Facts & other publications listing CMR, CMR's Website, National PR, NBAN – National Business Angel Network.

CMR Region initiated marketing: Presentations to local business groups, local PR, local relationship building with banks, accountancy firms, etc.,

As a result of this indirect marketing a stream of propositions is generated as SME clients or their advisers/bankers approach CMR for help - usually, but not exclusively, for funding assistance.  Each proposition is handled as outlined below in 'CMR Region Project Handling'

CMR Full Members wishing to become involved in Regional Marketing activities are actively encouraged.  Regional marketing is controlled by the Regional Manager, and can take a number of forms:

a) Giving presentations/speeches to local business groups (e.g. Chambers of Commerce, local societies of accountants, banks, solicitors, local branches of professional bodies, etc.).  To be successful at this the CMR Full Member obviously needs to be good at public speaking and needs to know enough about CMR's operations to answer any questions that arise.  Giving a presentation can be very effective in building relationships and business at local level - often producing results and business many months and even years afterwards.  CMR does have standard presentation material and slides, which can be adapted for local purposes (these are downloadable from the regional intranet).  Many secretaries of regional professional associations are 'desperate' to fill their speaker slots for the year ahead - and will greatly welcome an offer from CMR to speak.

b) Building relations with local professional firms and banks.  This is best done at a personal level, and will be most effective for those who already have contacts or can build through attending local networking functions.  Direct approaches can work but are less likely to be successful, especially if there is any hint that we are trying to sell something.  In most cases, CMR's operations are complementary rather than competitive, to the professional firm.  CMR will work with them in providing help for their client.

c) Developing local PR exposure.  This can be very important for generating local awareness about CMR and what it can do to help local businesses.  The Regional Manager will co-ordinate work in this area, which usually involves dealing with local newspapers and regional trade publications.

d) Generally building awareness levels for CMR and our services.  This can be best achieved through joining local networking functions, of which there are usually many, and through developing whatever local connections the member already has.  Membership of the local Chamber of Commerce, Institute of Directors branch, Institute of Management or other professional/business group, can be a very efficient way to expand your personal networking base, and CMR awareness levels.

There is a 10% allowance for introductory commission built into CMR's fee arrangements, and therefore successfully working on business development can be a lucrative activity!  Each CMR Region will have their own system for rewarding those undertaking regionally organised marketing activities.

b)      PROACTIVE business is where CMR makes direct contact with local SME's.  The contacts are made following the targeting of companies based on their financial history.  There are four primary types of company that are targeted in this way:

i) Newish companies who are having their first credit rating established.  Generally these will be companies with about a year's trading, and they could well be entering the phase of business where growth is being achieved, but finances are becoming stretched.

ii) Established companies whose credit rating has just been reduced - a clear sign of financial trouble!

iii) Established companies with a not-too-good credit rating - indicating probable financial problems.  Data for this section has historically come from Templeton College, Oxford University, but because of problems with out-of-date information, more use is now being made of external databases.

iv)  Companies showing fast growth – which is often accompanied by a need for extra finance to support the growth.

Companies identified from these sources are contacted in a very sensitive, non-selling way.  The most effective results are achieved through making an initial telephone call to introduce CMR as a friendly venture capital company with many private investors wanting to invest into small/medium-sized companies similar to theirs.  A short meeting is then arranged to simply discuss and expand upon the possibilities for business angel finance, not necessarily because they have a current need, but perhaps for future reference.  That meeting is conducted in the same way as all other first meetings - our real aim is to build a rapport and long-term relationship with the client. 

CMR Full Members undertake this activity of contacting the targeted companies and following-up on those first meetings.  It is an activity that should only be undertaken by those who are good at making this type of contact (not everyone is), and who are good at handling clients.  It is important that the client feels comfortable with the CMR member, who should be able to inspire confidence in those he speaks with.  It is very important that the approach does not indicate that we think they maybe in some sort of financial trouble.

If properly handled, the results of this type of contacting can be highly beneficial for all concerned.  There is no lack of prospects to follow-up in this way - in fact the majority of the 2 million plus SME's in the UK have financial problems of some sort!  CMR Full members who are comfortable (and good) at making this sort of client contact will find an unlimited opportunity base, which will generate much business for them and their Region.  Please note that business developed through this process is classified as a CMR project for fee sharing purposes, even though the CMR member making the initial contact may possibly also be the person who earns the revenue through dealing with the client. 

B) CMR REGIONAL PROPOSITION MANAGEMENT

One of the very important functions undertaken by each CMR Region is the review and handling of the proposition and opportunity flow - from whatever source it originates.  This is one of the most crucial activities at regional level, because not only does it determine the strategy/tactics of how we are going to handle the specific needs of the client, but it is also our opportunity to review the other possibilities for helping the client over both the short and long term.  Rarely will the opportunity be single-stranded, there will often be other opportunities for CMR to help, but this does mean that we need to be open-minded and sometimes innovative in thinking through the options and routes forward for the client.  In CMR we have very many ways in which we can help clients and it is important that we consider all the alternatives in handling each client's situation.

It is not possible or desirable to attempt to produce directions or a list of possibilities for all the types of client contact we will have.  Much of what happens in the CMR/client interface will be drawing on the personal business skills and experience of the CMR members involved.  However a general checklist can be useful, and a sample list (PR1) is shown in Appendix 1.  Each CMR Region will have their own particular way of reviewing and assessing projects, to suit their local circumstances, but the end result should always be that all options for handling the client's business or needs have been examined, and the best of those selected for subsequent discussion and hopefully agreement with the client.

Each of the sections in this manual dealing with the various services and facilities provided by CMR also examines the alternative options available for client companies in each case.  The manual will provide some useful guidelines to follow - but at the end of the day, it will the personal skill/experience of the CMR members involved that will determine the success or otherwise of the project.

In summary, proposition review and handling is a skilled activity - those involved in the process must be fully aware of all the facilities and resources that CMR has, and they must be able to think creatively about the client's situation - often the best solution or route forward will not be the most obvious.  As CMR's business expands, the need for more resources to help manage this crucial process will become greater, and any CMR Full Members with the analytical skill base required are encouraged to become involved in helping the process within their own CMR Region.

C) NEGOTIATIONS WITH THE CLIENT

Having decided at CMR Regional level what course of action should be taken, the next stage of the process is to agree this with the client, and importantly also agree the basis of our remuneration. 

As our views on the client's business will have been carefully thought-through and there will be a good rational reason for proposing the way forward we are, then discussing this and convincing the client should be straightforward!  You will need good management consulting skills to handle this properly - the major difference that marks-out a good management consultant will be his/her ability to work through and get agreed by the client the solution to the situation, whatever that may be.

It can sometimes help to develop a 'Plan A and Plan B' approach, especially where you know the client has a desire to go one particular route, but we do not share their enthusiasm.  This can happen on funding projects where the chances of the client getting the funding he seeks is remote, but he does not want to deflect from the search.  In those circumstances we would say to him that whilst continuing to search for funding, we should also be preparing Plan B - so that when he accepts that funding is not achievable, we are ready to move forward.

FEES

Having convinced the client that the proposed way forward is the best, and having got his verbal agreement to this, the only next hurdle is to agree the fee structure!

For some CMR services we have a standard tariff, which we will normally stick with, although they are negotiable in special circumstances.  Services for which CMR charges a standard fee are:

i) Equity Funding;  CMR will charge a success fee of 5% of the amount invested up to the first £500K, thereafter reducing by 1% per £500K, to a minimum of 2%.  It is normal for CMR to charge a minimum fee of £7500, although this is sometimes reduced if there are special circumstances.  We will also attempt to have included an option for us to subscribe for 5% of the issued share capital at par.  Sometimes the client will object to this, in which case we will consider withdrawing the requirement.  An example of the standard CMR Funding Assistance Agreement is shown in Appendix 2.

ii) IPR Licensing; CMR charges no time-based fees for IPR Licensing work undertaken, but does take a success fee in the form of a 1/3rd share in the invention - usually 1/3rd of the equity in the special 'Newco' company set-up to own the patents or other Intellectual Property involved.  An example of the standard CMR agreement for IPR work is shown in Appendix 3.

iii) Mergers & Acquisitions and Company Sales;  Fees are on the same general basis as for funding, except that provision has to be made for obtaining notional values where non-monetary compensation is involved.  An example of the standard CMR agreement for M&A, Company Sales, is shown in Appendix 4.

For other work, not covered by a CMR standard agreement the fees and the fee structure will be determined and negotiated by the local CMR Region.  In all cases the task is to find the formula that is right both for the CMR members involved, and of course the client.  Sometimes we will need to be imaginative in structuring the fee base, because it is a fact of life in the small company sector that not all the companies will be able to immediately pay in cash the fees we would like to charge. 

The general principles suggested for fee fixing are:

i) Charge on the high side, but

ii) Defer part of the fee onto a success or performance basis.

iii) Be prepared to consider taking equity in lieu of some fees - but only of course, if you think the equity could be worth something in the future!

iv) Don't forget the bad debt risk - if the company goes down, we all lose!

Fixing of fees for non-standard work is really decided by the CMR members involved at regional level, and does not normally require CMR Centre approval.  The normal way of formalising the agreement with the client is to write a letter to the client stating the work that we will undertake and the basis for payment, and any other conditions that are to apply.  The Agreement must be agreed by the CMR Regional Manager and a copy sent to CMR Centre prior to signing with the client.

D) CMR REGIONAL PROJECT HANDLING

Every CMR Project is under the control of the relevant Regional Director, although he/she may delegate management responsibility to others as appropriate.  In all cases the work we carry out must be of a high professional standard and must avoid circumstances that could result in any conflicts of interest arising.  It is most important that we are perceived to operate with the highest level of integrity and to always have the best interests of our clients to heart.

In CMR we always try to bring specific expertise to bear on a client's business - in that way we can provide our clients with the best possible help, whilst also helping to build a long term relationship.  One of the great advantages of CMR is the tremendous network of skills we have, and the use we make of this in bringing the appropriate special skills into projects as required.  It is important that CMR members do not 'hang on' to a client's work exclusively, where it is more appropriate that some special expertise is brought-in.  Similarly, if you have a private client, and need extra help or specialised skills - just use the CMR Skills Database on the Website to find the person you need. 

If you want to be an active CMR Full Member then you will certainly become involved with many propositions as they come into your CMR Region.  Each one of these represents an opportunity to build a relationship with that company, which if handled correctly could result in a revenue stream for many years to come.  Most successful management consultants earn much of their revenue from clients with whom they have built a relationship over a long period.

At this point it is worth noting that CMR projects cannot be 'privatised' without the specific agreement of CMR Centre.  There have been cases where a CMR member has obtained funding independently for a CMR project, where the CMR investors so far introduced have turned the project down.  This is good news and the member's initiative is to be congratulated in keeping the project on-board and the client satisfied - but the project remains a CMR project and subject to the normal fee sharing rules.

CMR REGIONAL MANAGEMENT

CMR has an amazing array of skills, resources, facilities and products, especially aimed at the small to medium-sized company sector.  To be successful, all of these need to be brought to life by CMR members operating at Regional and Affinity Group level.  This involves thinking 'entrepreneurially' about our business, and to use the resources in the best possible way and with the spark of innovative thought, to develop the real potential we have.

To develop business in this way, there are a few key issues we need to get right. They are:

v      To get our regional marketing right - to generate a good inward proposition flow.

v      To get our project handling right - to have happy clients and many referrals.

v      To foster relations with regional investors.

A)    OBJECTIVES

The objective of this section of the CMR Operations Manual is to examine the philosophies and fundamental concepts relating to CMR regional operations and to provide a blueprint of the marketing and management action to be taken.  It is also to provide an operational framework to allow each CMR member to see how he or she can fit into and become active in the business acquisition and processing activities in their Region.

CMR Regions should follow the guidelines contained in this manual.  The action plans are based on what we know works, and any major deviations from this path must be cleared by the appropriate Divisional Director.  In particular, the integrity standards and branding positions must be adhered to at all times.

B) CMR TRUISMS

The action plans that follow are based on the recognition of the realities of business life as they affect CMR and its markets.  It is important that all those actively involved in CMR's regional operations both recognise and agree that these realities exist - otherwise the action and decisions taken will be mis-directed.  In the past many in CMR have thought or hoped differently, with the result that inappropriate action has been taken and success has been elusive.

The following is the list of the truisms, in no particular order, (and with apologies for the obvious ones):

1)      Business doesn't grow on trees - we have to work to make it happen.  We have to 'put ourselves about' and put effort into what we do.

2)      CMR's business cannot be 'sold', it has to be 'developed' - sensitively and professionally.

3)      We only get business when we have gained the client's confidence and trust.  We only keep the business and get referrals by doing a good job.

4)      The primary 'product' the client sees is the CMR member sitting opposite them.

5)      Business has to be won through a process that involves:

a) Opening the door

b) Handling the first meeting well.

c) Developing a personal relationship and turning it into projects.

d) Handling the project well

6)    CMR members are not good at everything.  Only some are good at:

a) Opening doors

b) Handling first meetings.

c) Developing relationships and 'closing sales'.

7)  CMR Regions will not be successful unless they ONLY use people who are good at each particular stage of the process.  It is a complete waste of everything if inappropriate members are allowed to handle opportunities by themselves.  People management and teamwork are the keys to success.

8) The majority of companies looking for funding are unfundable.  Nationally, less than 5% of companies will get the funding they seek.  Also many 'business angels' are fickle and unreliable, with quite a number being time-wasters.

9) Funding is therefore primarily a 'door-opener' for CMR, often giving us the opportunity to turn the initial contact into something more useful - for both the client and us.  Failure to recognise this fact can lead to much abortive work and missed opportunities.

10) The majority of companies that are unfundable, have elements of a worthwhile business, but often lack size and infrastructure to achieve profitable growth.  By themselves they face many difficulties, but by merging in some way with other companies, they can develop.

11) Advertising for business does not work and is expensive.  Building personal contacts does work, and is inexpensive.  Successful CMR marketing does not depend on spending large sums of money.

12) Any business, CMR's included, does better if it markets its strengths and unique products, rather than trying to push 'me too' products.  CMR's (almost unique) product strengths are:

v      Private investor funding

v      CMFC Procurement-backed 'Interest-free' funding

v      IPR/Technology Licensing

v      CMR's Business Lifeline - corporate recovery

v      CMR's M&A and Company Sale Division

v      The strength of our executive base

13) Greater returns can be achieved by arranging deals and 'doing things', rather than through conventional consultancy-type services.  Also there are only 24 hours in a day, which somewhat limits the earning potential of the latter.

CMR REGIONAL MARKETING ACTION

The objective of the following action programme is to create a healthy flow of opportunities involving face-to-face meetings with owners and managing directors of SME's, which when handled properly will translate into revenue-earning business.  There are many different channels for developing CMR business:

SUMMARY OF REGIONAL MARKETING ACTION:

a)      Building local awareness of CMR through:

i)    Giving presentations and speeches to local business and professional groups

ii)   Networking with CCi’s and other local business groups.

iii)  Obtaining local PR exposure

b)   Building relationships with local professional firms, banks, etc., who can act as introducers of business.  Firms of accountants are particularly important in this respect - both for the introduction of propositions and the intake of new private investors.

c)   Undertaking the direct contacting of local businesses - NOT to sell anything, but to start the relationship-building process.

d)   Using one client to leapfrog to many others

e)   Using our M&A capabilities to generate ‘catalyst’ group-building opportunities, which in turn provides many other possibilities for relationship building.

The following pages include detailed action plans for the above items.

DETAILED REGIONAL ACTION PLAN

1)      GIVE PRESENTATIONS TO BUSINESS GROUPS. 

a)                  Identify those active members able to give good presentations and project the 'right' image for CMR, and able to field all likely questions competently.

b)                  Create fee-sharing arrangements to reward those giving presentations from which business results.

c)                  Establish the titles of each presentation to be offered to local business groups.  Standard CMR presentations available are:

·         Funding problems & solutions for SME's

·         Revolutionary New Interest-free Loan Capital Scheme for SME's

·         How to fund and commercially develop innovation.

·         How to handle financial and solvency problems

·         How to minimise costs by using interim managers.

·         How to retire profitably from your own business.

 d)                  Contact the Secretary for each appropriate professional and business group in the region, offering to provide a CMR speaker for whichever subject is offered or selected.  NB. Most Programme Secretaries are desperate for speakers - they usually have to arrange these over the year ahead.  Suggested organisations to contact are: 

Institute of Chartered Accountants

Association of Chartered Certified Accountants

Institute of Directors

Local Chambers of Commerce

Institute of Bankers

Institute of Management

 This contact can be made by telephone or letter.  If by letter, the following format is suggested: 

Dear xx, CMR would be pleased to provide a speaker for one of your forthcoming meetings.  You probably already know of CMR - we are a venture capital and management group helping small to medium-sized business to obtain the help they needed to grow and prosper.  I enclose some information about us, together with some press articles that will help to give a flavour for our activities.

We are able to provide speakers on the following subjects:

b)                  Funding problems & solutions for SME's

c)                   Revolutionary New Interest-free Loan Capital Scheme for SME's

d)                  How to fund and commercially develop innovation.

e)                   How to handle financial and solvency problems

f)                    How to minimise costs by using interim managers.

g)                  How to retire profitably from your own business. 

Our speaker will give an informative presentation covering the fundamental issues involved.  The talk will not be a selling exercise, although we may make some comment on the role that CMR plays in helping the company or business concerned.

Whilst we prefer to schedule speaker appointments well in advance, we can sometimes accommodate short notice 'panic' situations - so if you do find yourself 'embarrassed' or let-down at the last minute, please give me a call.

Best wishes....

2) BUILD LOCAL NETWORKING CONNECTIONS

Encourage regional members to partake in local networking events.  Most professional bodies have local associations meeting monthly or quarterly, and bodies such as the local Chambers of Commerce (CCi), Institute of Directors, BIM and many more, hold regular networking meetings.  This networking will also be personally valuable for CMR members individually.

3) BUILD RELATIONS WITH LOCAL PROFESSIONAL FIRMS

Arrange to bring local accountants, solicitors, IFA’s up-to-speed on how CMR can help their clients, and how we can help them.  This can be done by a separate meeting with one of the partners - or better still, why not offer to talk to all partners and senior staff in their premises, over a sandwich lunch or after close of business?

Again the offer can be made by phone or letter, or both.  Suggested letter:

Dear xx, You have probably already heard of CMR - we are a venture capital and management group, operating throughout the UK with 14 regional centres - we are in CMR's xxx Region.  I am enclosing some information about us, together with some press articles, which will help to give a flavour of our activities.

Our operations are particularly relevant for professional firms - not only are we able to provide substantial help for your clients, we will also generate opportunities and revenues for your firm.

I would like to bring you up to date on these activities with a view to perhaps working together in the future.  This could be achieved in a personal meeting (takes less than 30 minutes to cover most aspects), or perhaps by giving a short presentation to all relevant partners and senior staff, either during the lunch break or after close of business.

The particular aspects of CMR's operations that will be of greatest interest are:

a)                  Our ability to provide equity funding through our own private investor bank.  CMR is also a Special Associate of NBAN (National Business Angel Network) and has access to a large reservoir of business angel investors.  In addition, CMR has alliances with many venture capital and trade-related finance sources, and can provide capital in many situations.

b)                  Our new revolutionary ‘Procurement-backed Interest-free’ Loan Scheme supported by our associated major banks.

c)                  Our special funding and licensing resources for companies with innovative products and intellectual property.

d)                 Our ability to provide very high quality consultants and interim managers from every industry and discipline to help solve problems or deal with a crisis.

e)                  Our Progressive Company Sale Programme, which helps owners of companies to retire to their own schedule, and maximise financial returns. 

In addition, we would be happy to grant free investor-membership of CMR to any of your clients who are interested in SME investment.  After a simple registration process we will let them know of investment opportunities as they arise that meet their stated investment preferences. This invaluable service is free of charge, and can be handled direct or through yourselves to the clients involved.  Investors will be advised to seek professional advice (through you) before committing to any investment.

I look forward to talking with you further ..............

Working with firms of accountants can be particularly valuable for both sides.  CMR’s services are almost entirely complementary and not competitive for most firms.  In fact a linkage between CMR and the firm will almost certainly generate extra fee income for them, whilst allowing them to provide valuable extra facilities for their clients.  For example:

1)      If the Firm introduces clients into the CMFC ‘Interest-free’ Funding Scheme, we will be happy to appoint them as the administration Chartered Accountants for that project – from which they will earn good fees (to be negotiated).  This is subject to agreement by the lending bank.  This arrangement will also help to make the client more comfortable with the Scheme.

2)      If the Firm introduces clients to us for private investor funding, their client will almost certainly look to them for advice when negotiations with potential investors start (bearing in mind that CMR steps back at that time).

3)      If the Firm introduces clients to join our private investor bank (see Section 10 below), they will similarly look to the Firm for help in the due diligence process when considering an investment.

4)      If the Firm introduces clients for our Progressive Company Sale Programme, we will be happy to work with them in ensuring that the financial aspects of the Programme are managed properly, and not to the disadvantage of the client.  This will not only create revenue for the Firm, but also will also give confidence and comfort for the client.

4) RELATIONS WITH LOCAL BANKS

Whilst banks still represent the main line of finance for SME's, and are therefore of interest to CMR, they will be difficult to deal with unless a personal relationship exists.

Most banks now operate away from branch level, and therefore relations need to be established at regional level.  In addition, most banks will be plugged into Business Links for consultancy assistance and NBAN (the old Business LINC) for business angel funding.  Unless one of CMFC's panel of banks, they will also not be too keen on our 'Interest-free Loan Scheme'.  Final problem with banks are that they will not want to put their necks on the line, so will be super-cautious about recommending anything or anybody to their customers that could rebound on them.  However, that said, we do get referrals from banks, especially via our NBAN connections.

At this time, it will not normally be worthwhile marketing to banks unless a prior personal relationship exists.

5) BUSINESS LINKS

To an extent CMR and Business Links could be seen as competitors.  However, for those unique services that only CMR provides, forming alliances with local Business Links could be worthwhile.  The CMR products of interest are:

a)                  CMFC Interest-free Loans

b)                  IPR/Licensing

c)                  The availability of our Affinity Group expertise.

Contacts with Business Links are best established through personal contact.

6) DEVELOP AND USE LOCAL PR

The purpose is to build awareness for the CMR Region generally, and to encourage contact in respect of the services offered by CMR.

REGIONAL ACTION:

a)        Identify and list all relevant local newspapers within the Region.

b)        Where possible, aim to establish a personal contact with each.

c)        Use CMR's national press releases and articles - send them to each newspaper, preferably with a local flavour added.

d)       Create the Region's own press releases, preferably with newsworthy items relating to the local Region.

e)         Use all suitable press articles (both national & local) to build and maintain relations with all important regional contacts;  Dear Fred, Thought you would like to see the enclosed press cutting concerning CMR's activities on xxx.  Look forward to meeting you on xyz.  Best wishes, Jim.

Aim to have some reference to CMR in each local newspaper at least every 3 months.  Of course, local successes achieved by the Region can make good newspaper copy.

7) DIRECTLY CONTACT LOCAL SME's FOR FUNDING DISCUSSIONS

The objective is to obtain 'informal' meetings between suitably qualified CMR members and the owners or managing directors of SME's in the region.  The arranged, subsequent meeting should be low-key, primarily to introduce the concept of using our private investor funding resource sometime in the future.  Also to briefly talk through the way the process works (previewing and recommendation of any changes needed by CMR, the introduction of several possible investors, negotiations between company and investor directly, etc., etc.).  The meeting should be viewed by the client as a friendly briefing for his future reference, without any pressure from us.  Of course, a skilful CMR executive will be able to engage the client in conversation and start to talk casually about the other things that CMR does - picking-up on any expressions of interest from the client - and developing an ongoing relationship and business.

It is very important that the telephone call (or letter) setting-up the meeting is not seen as a selling approach.  The best approach is to say that CMR represents very many private investors who are interested in investing in small to medium-sized companies - you may care to specifically mention the industry area of the company being contacted ("our investors have mentioned a special interest in manufacturing companies").  You could even say that we have been asked [by the investors] to talk to companies that may have a possible future need for their investment capital.  Making such phone calls cold is always difficult - it helps to have a 'genuine' reason for calling - even if it is imaginary!

The only objective of the phone call is to fix a short 15 minute or so meeting, as casually as possible ("our man will just drop-by to have a quick chat on the subject").

REGIONAL ACTION:

A sample script for the telephone call is in the CMR operations Manual.  The CMR Sales & Marketing Special Business Group is available to help those Regions who may not have enough experts of their own.  It is very important that only those that are good at this type of work are asked to do it.  Anyone having less than a 50% success level (i.e. that 50% of contact-made phone calls result in a meeting being set-up) is not suitable for this work, and should not be used - it just wastes the database used. 

1)      Identify those regional members who are willing and good at making these calls.

2)      Alternatively use the CMR Direct Marketing Programme to set-up appointments with prospective clients (cost is £25 + VAT per appointment). 

3)      Agree with those making the calls how they are to be remunerated.  Suggested that they be paid around 5% of every project resulting from the meeting set-up, purely for arranging the meeting. 

4)      Decide what database (if any) is to be used to identify companies to be called.  Sources of data can range from the local Chamber of Commerce (most publish a list of members with details and contact info.), through to Yellow Pages!  It helps to have some idea of the company's size, its product, and that it is independent (not part of a big group) - but that's all.  It is unnecessary to have detailed financial information - in fact it can be damaging if the company feels we have been snooping on them. 

5)      Monitor the success rate of those making the calls - if it is too low, stop them from making more calls. 

6)      Identify those regional members who are willing and good at handling the first face-to-face meeting with clients - and only use them (otherwise we completely waste all the effort expended so far). 

7)      Agree with those handling the first meeting(s) how they are to be remunerated. 

8)      Handle and manage the resulting projects in the normal way - i.e. by bringing suitably skilled members into the project, appointing a project manager, and monitoring progress.  Bring-in external skills from CMR Special Business Groups and Affinity Groups as appropriate.

8.)    USING ONE CLIENT TO LEAPFROG TO MANY OTHERS

Most businesses operating in the Region will have some use for the services provided by CMR/RMC at sometime in the future - if not right now.  We can only get that business if they are aware of CMR and have a favourable view of us.  We can only achieve that awareness if we are in 'contact' with them, either indirectly or directly.  Of course, we can always use the cold telephone contact method as described above, but there is another way - we can also use one client (or prospective client) to enable us to make contact with many other possible clients.

For example; when we are in contact with a small company that we consider to be unfundable, or has financial problems, one of the routes forward for that company is to 'merge' in some way with another company in the same area of business.  This can be a larger company, or perhaps another company of the same size where together they can achieve the critical size and infrastructure that possibly both lack today.  When dealing with an unfundable company, it is always worthwhile suggesting that CMR could help them to examine the possibilities for this - on a confidential basis of course.  This is something that companies cannot really do for themselves - it needs an independent body, like CMR, to handle this in the sensitive and confidential way that's needed.

With the client's approval (or even without!), we now have the ability to directly contact the managing directors of potentially suitable companies in a 50 mile or so radius to discuss the possibilities for merging, acquiring, or coming to some other arrangement with our first client.  From past experience we know that every managing director (properly) approached in this way will want to have a meeting - even if it's only out of curiosity!  Providing again, that the contact with the managing director is by a CMR member good at handling such meetings, it is almost certain that interest can be created for other aspects of CMR/RMC's services - in addition to perhaps enabling us to tie-up a relationship between them and our first client.

Frankly, for many of the smaller, marginal companies that populate each Region's territory, linking with other companies in this way is the route forward.  The reality is that many small companies are sub-critical in size and lack both the business volume and infrastructure needed to grow profitably into the future.  Many will just scratch a living, and are financially vulnerable especially when recession looms.

ACTION FOR THE CMR REGION 

1)      Be continually on the look-out for clients in this position. 

2)      Involve the CMR Corporate Recovery Group (CMR Business Lifeline) if solvency is a problem. 

3)      Suggest that CMR, operating on a confidential basis, investigates the possibilities for them to 'merge', acquire or whatever, with another synergistic company.  It can also be mentioned that we may have private investors who might be interested if a viable 'merger' resulted.  At the Region's option this work can be undertaken on a success fee basis, or for a retainer fee, or both. 

4)      Identify all the local companies who could be possible 'partners'. 

5)      Using the ‘right’ CMR members only, make direct contact with the Managing Director of each.  We have found from past experience, this is best done by telephone on a personal basis between the ‘senior’ CMR executive and the MD.  Again, it is vital that this is not seen as a ‘selling’ approach from CMR.

6)      At the meeting, the ‘right’ CMR member will both talk about the ‘merger’ possibilities, and will move into ‘relationship building’ mode to develop further business.

7)      Be prepared to consider other opportunities.  We have found in the past that contacts made in this way (and in other ways, as above) can open-up surprising new business opportunities that could not have been foreseen.

9) DEVELOP 'CATALYST' GROUP OPPORTUNITIES

There will be many opportunities in every CMR Region to build 'Catalyst Groups' from marginal companies operating in the same niche market area.  However, this is a skilled operation requiring specialised experience from CMR's M&A Special Business Group, and should not be attempted by a CMR Region by itself.  Direct contact will be made by the CMR M&A Group to each CMR Regional Manager to discuss this further.

10)  DEVELOP A LOCAL INVESTOR BASE

In addition to the action above of developing contacts with possible corporate investors, the CMR Region should also be building a local private investor listing - which will be part of the overall CMR Private Investor Bank. 

Many private investors like to invest in companies that are not too far away from where they live - often for the very sensible reason of wanting to keep an eye on their investment.  Of course, one of the 'horse and cart' problems of maintaining an adequate investor base is that there needs to be a sufficient flow of good quality investment propositions - there is absolutely no point in going out to build a massive investor base, if there are insufficient projects to keep the investor base interested.

Since CMR does not make a charge on its investors, there are no real impediments in obtaining new investors.  The only requirements we have for new investors joining CMR are:

1)      They have a personal investment capacity of at least £50,000

2)      They sign a confidentiality agreement that also acknowledges their responsibility for investment decisions and due diligence. 

3)      They complete a short questionnaire enabling us to match investment propositions with their stated preferences. 

4)      They notify us if/when they are no longer an active investor.

New investors therefore have nothing to lose and possibly much to gain, by being associated with CMR - but because we do not make a charge, we need to be careful not to bring investors on-board who have no real intention to invest.  Professional firms, particularly accountants and solicitors are a good source of new investors - particularly because any such investment activity by their clients will undoubtedly create extra fee income for the firm as their client looks to them for advice and due diligence.

Approaches to such professional firms should only be made once a general relationship has been established, perhaps as a result of the approach recommended in Action Point 3 above.  Direct cold approaches 'touting' for new investors must not be made.

All new investors must be formally registered by CMR Centre - this is most important.  Under no circumstances must CMR projects be introduced to investors who have not completed the required documents, and been registered by CMR Centre - this is also a requirement under the Financial Services & Markets Act 2000.  New investors will normally register with us online, in which case all the legal requirements are covered as they register.