© iStockphoto.de/MatusDuda

No More Flying Without Instruments: How Firms Enhance the Transparency of New Lenders and Raise Revenues

An interview with Dieter Dorn and Christian Schulte, Steinbeis experts in corporate finance and investments

The business model is already in place – a model that has often worked for years. The brains are also on board. But somehow business growth isn’t something you can bank on in Germany anymore – there’s still a hurdle to overcome regarding the right financing. Dieter Dorn and Christian Schulte are directors of the Steinbeis Consulting Center for Corporate Finance and Investments in Frankfurt. They have already accompanied more than 200 firms on the flight during financing, investments, and sales. In an interview with TRANSFER, they reveal how they give expanding businesses a helping hand.

Hello Mr. Schulte. Hello Mr. Dorn. SMEs and new and expanding companies are particularly likely to find it difficult financing business expansion through debt capital or company equity. Why exactly is that?

Christian Schulte: Transparency is one of the more important factors. Business enterprises need meaningful planning when it comes to finances and earnings, but also, based on this, the right analysis and reports. So that includes comparisons between forecasts and actuals for the balance sheet, the P&L, and capital flow calculations. It also requires detailed planning of sales revenues, the right planning numbers, and an investment plan. All of this has to be pulled together on a dashboard with key performance indicators.

Dieter Dorn: This isn’t just important for new or existing lenders, but also for a business’s shareholders and directors. Making things more transparent for them makes it easier to steer business development and company planning.

This is where you come in with your expertise. How do you approach the consultation process?

Dorn: We have a management accounting, analysis, and reporting tool, and we introduce it to the companies we’re working with. It’s an information system that provides managers at the company with an overview of key financial indicators. The numbers are crunched every month, then we talk about the results and help management with the decision-making process. Our role as the Steinbeis team of experts is to act as an active sparring partner for senior management at the company.

… and the company has experts with the right experience next to them, who they can work with in a sense of trust. What impacts does this have on the financing of the company?

Schulte: This support is also important for future funding providers. That’s because the company is making it clear that it’s always looking closely at its own development and potential risks. This reduces the threat of future undesirable developments – early.

So what does this entail specifically for financing, which new firms are particularly likely to require during expansion?

Schulte: Using the management accounting tool provides a good basis for meetings with potential funding providers, and it can also result in better financing terms and a better valuation of the business. Issuing monthly or quarterly reports is a good way to round off the professional financial communications of the company after an investment, and it lays a foundation for further financing later on down the track.

As an enterprise in the Steinbeis Network, you’ve been working in this area with companies in a whole variety of industries, for many years. What do your customers find important when they’re working with you?

Schulte: Companies need a solution that is effective and pragmatic. That’s what we offer them with our tool, and we’re a sparring partner, and we accompany management if they need it with financing and B2B selling. This allows us to move the company forward together.

Dorn: It’s wonderful to see how positively things develop for companies. Ultimately it’s about healthy company growth in the long term. The information system we introduce – and being able to talk about it – is like having a navigation system on board that points the company in the right direction with important decisions. That’s particularly key for selling, planning, and financing the company.

Contact

Christian Schulte, Dieter Dorn
Steinbeis Consulting Center: Corporate Finance and Investments (Frankfurt)
www.steinbeis-mittelstandsfinanzierung.de