Governments want to help your business start its digital transformation.
“Really?!?” you might think.
Or even: “Who has the time or expertise to deal with the government? They work in mysterious ways.”
They don’t. Or at least, some experts can help.
The Canadian and Quebec governments are actually very receptive to growing companies looking to improve their productivity through investments in technology and business processes. Enterprise Resource Planning (ERP) software is a perfect fit for some of these government grants.
We asked an expert
To get answers to some of your most pressing questions, we sat with Michel Plouffe, co-founder of Lefebvre Plouffe Consultants. Since 2012, the Montreal-based consulting firm has been working with successful small and medium-sized businesses to help them access government funding for their innovation projects and growth plans.
Plouffe and his co-founder, Dominique Lefebvre, are both industrial engineers with MBAs and 35 years of cumulative experience in government funding.
Here’s what we learned.
Which Canadian businesses are eligible for government funding of ERP systems?
Eligibility criteria for the funding programs vary. They may include business factors such as the number of employees, minimum revenue, the location of the equipment being used, and the industry sector you’re in. For example, the Quebec government favours the manufacturing and IT-related sectors, among others.
This government financing can come in various forms: loans without interest, tax credits, or non-refundable contributions (i.e., grants).
For ERP-related financing, there are at least five programs Quebec-based and Canadian businesses may be eligible for. (See the list at the end of this article.)
What are the concerns of business leaders working with consultants in government funding for the first time?
“The first concern is time, especially for leaders of small and medium-sized businesses,” observed Plouffe. Other major concerns include the following:
Complexity
Some leaders may have had prior experience in applying for government funding and found it too complicated. So they’re wary about getting involved again.
Risk
Is the effort invested in the funding application worth it? To address this concern, Plouffe gives the following example.
Let’s say your EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) equals 5% of sales. If you receive a grant of $100,000, that’s the equivalent of two million dollars in sales.
How much time would you invest in a project that could win you the equivalent of a two-million-dollar sale? The answer often helps reframe the application process for the leader.
Consultant fees
Some experts charge a project fee, and others work by the hour. Some consultants request a minimum amount of hours plus a percentage of the funds received. A significant number of consultants get compensated exclusively on a percentage of the government funds the business obtains.
“In almost all our mandates, we agree with clients to be paid on a percentage of our results,” Plouffe said. “So we only get paid when they’re paid. Clients like this arrangement because it shows our commitment to their success.”
What criteria should a business use in selecting a consultant for government funding?
Business leaders evaluating potential consultants should consider the following four criteria:
1. Expertise
If you get a referral for a consultant from your accountant, banker, or another trusted source, that’s certainly a vote of confidence. But review the consultant’s professional background and ask yourself questions such as these:
- Do they have the business experience to understand the scope and implications of the projects you envision?
- Do they have expertise that adds value to the application process, such as in engineering, management, manufacturing, or marketing?
- How long have they been working in government funding?
2. Tailored support
Each funding application requires a specific form of follow-up with both the company and the government. Documents, expenditures, and requests for reimbursement need to be made and submitted at precise times. Can the consultant provide such support?
3. Long-term vision
Often, growing companies will be eligible for different kinds of government funding over several years. Does the consultant have a long-term vision of these opportunities? Do they conduct themselves in a way that aligns with this vision?
4. Compensation
How does the consultant like to be compensated? Does their fee model make the funding application worthwhile?
What process should you expect when working with a government funding consultant?
Most consultants have a four-stage process, as follows:
1. Learning about the company
The consultant sits with business leaders to review their growth or innovation projects for the next 24 to 36 months. Some questions would include: Are you planning to expand into new markets? To export? To grow domestically? To invest in technology or processes to improve your productivity?
At the same time, the consultant learns about the company’s history and current status. This discussion may reveal that the company is eligible for funding that goes beyond an ERP implementation.
2. Evaluating fit with government criteria
“Once we understand where the business wants to go and where it’s coming from,” Plouffe said, “we look at how the businesses’ projects align with the criteria the government are looking for.”
The funding programs of the Canadian and Quebec governments target companies that are financially successful and striving to get to the next level. So the company needs to show the following:
- It possesses or will possess the means to carry out the project it proposes.
- Its project aligns with its goals, strengths, and weaknesses. For example, a company with $75,000 in revenues will most likely not be approved for a one-million-dollar capital expenditure program.
- It has a track record of successfully executing prior projects.
3. Applying for funding
Once a government funding program has been targeted, the consultant works with the business to develop the documents required in the application. While each program has its own document requirements, a suitably adapted business plan is a common request.
It’s important to remember that these documents become the sales tools of the government representative working on your project. This rep is your internal salesperson in the government organization.
Thus, the documents prepared must precisely and concisely answer all the questions that your rep could be asked by his or her superiors. As part of your rep’s briefing, do include a tour of your business. When your rep is well prepared, you improve your chances for a fast favorable response to your funding request.
For funding from the federal government, applications can be completed in English or French. The Quebec government requires French documentation.
4. Following up on the application
As noted above, each funding application requires rigorous follow-up before, during, and after (hopefully) government approval of the project. Approved expenditures must be made within specific periods. Other documents and reimbursement claims need to be made correctly and submitted at precise times so that your business gets the maximum benefit from its government funding.
What are the advantages and risks of applying for government funding without a consultant?
“This might sound like asking your barber if you need a haircut,” said Plouffe, “but when you think of the potential downside of doing this [applying for government funding] on your own, I don’t know if saving the fee is worth it.”
Businesses thinking of applying for government funding on their own should ask themselves the following questions:
- Will your team have time to review all the options available? There are hundreds of funding opportunities to review.
- Does your team have the expertise to respond correctly and completely to the funding application?
- Can your team follow up on the timelines stated in the contract with the government?
- Can your team forewarn the government in a timely way of any project modifications to minimize the risk of refusal for your reimbursement claims?
If you’re not confident you can answer these questions positively, then you can improve your chances of ERP success by working with a government funding consultant.
What if the government does not approve your funding application?
A properly qualified company rarely experiences a refusal.
If one occurs, a mistake was probably made. The right government entity may not have been addressed at the right time. Timing is critical in all funding applications.
For example, tax credits may be applied for retroactively, but subsidies, loans, and grants need to be applied for months in advance.
Sometimes, companies are in a hurry, as may be the case if you’re looking to invest in an ERP system. One solution may be to divide the project into several stages of action. Then, eligible costs can be scheduled so that the government can support them in a timely way.
Every year the Canadian and Quebec governments grant billions of dollars to small and medium-sized businesses. If your business strives to operate at the next level, why shouldn’t some of those dollars support your ERP implementation?
The following Canadian and Quebec government programs can provide ERP-related funding support:
Canada Digital Adoption Program (CDAP)
Investissement Québec, ESSOR program, Section I and II
Investissement Québec, Productivity Innovation initiative
Michel Plouffe is co-founder of Lefebvre Plouffe Consultants. The firm has 35 years of cumulative experience helping businesses access government funding for growth and innovation projects. Connect with Michel at mplouffe@consultantslp.ca
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