Situation
IIL entered the sector of Business Tax Credits and the owners replicated the business model from other businesses that they had worked in, which were completely different in nature. Furthermore, none of the owners had the required expertise which raised compliance and other risks.
Task
I was asked to carry out certain tasks that the management felt when needed. However, as part of my evaluation of the most significant issues came up that they had not thought of, including dealing with compliance, credit, default, refinancing, and management structure.
Action
The business model hinged on HMRC paying out claims within an average of 45 days and they had not thought of any contingencies and scenario modelling where what would happen if these timelines are extended, which I had seen with other businesses. Furthermore, applying a traditional business model on a business without taking into account. The optimum structure was a big failing, which meant that the business will quickly run out of cash. Thirdly, the industry was going growing quickly and there was a huge accelerated demand for qualified claims writers, which was also going to be a problem. Considering this business was new and did not have the significant cash flows to afford talented people so they had to come up.
Result
I designed the first R&DAAS Business model which enabled the business to set itself apart from a complete competition and resolve the underlying cash flow issues. With the reserve cash been created, it was able to invest that towards hiring talent, and also offer them attractive remuneration packages with equity options, which I also help them design.