great ideasM AY 2 0 1 8
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GET YOUR EYES OFF THE FLOORCONTINUED INSIDE
ALSO INSIDE: LOOKING TO EXPAND OR NEED SOME WORKING CAPITAL ?
Get your eyes off the floorgreat ideas MARK HOLT & COMPANY / HEALIUM MAY 2018
Many of us laugh out loud
at the social media clip of
someone with eyes on their
phone screen who walks
straight into the fountain.
There is an inevitability that
those looking at something
right in front of them (often
completely unimportant) miss
the big thing a few paces ahead
(which might be catastrophic).
OF COURSE, IT ISN’T FUNNY WHEN IT HAPPENS TO A BUSINESS.
A few businesses have recently
approached us for help, having
spent months, sometimes years,
focussed on the seemingly
important things right in front
of them, and missed the critical
issue that now puts their
business at risk.
When we take a look at their
numbers, the trends were clearly
there, but key people were
firefighting day by day and did
not take the important steps to
protect the business or indeed
themselves.
SO WHAT ARE THE KEY ISSUES AND WHAT SHOULD YOU BE LOOKING FOR?
The number one issue in any
business is cash. How has your
cash position changed in the
then take some key protection
steps, but if it actually turns
out it wasn’t that bad, all you
have done is waste a little
time and money. If you
continue in ‘fingers
crossed’ mode or
just tinker with a few
things then it might
be too far gone to
recover when you
do own up to the
problems and seek
professional input.
We have run a number
of ‘recovery’ projects for
businesses who are in
difficulties, with good
success. Not all have
survived, but those that
failed did so in a far more
controlled way with less
consequence for the owners.
Sometimes that is just by making
the tough decisions owners
don’t want to make, like making
10 people redundant to protect
40 jobs that could be saved.
Often it is a more focussed
approach to pricing, marketing
and selling processes, or a sharp
knife to business costs. Whatever
the actions, a business half the
size that survives is better than a
larger one that fails.
last 12 to 24 months? Are you
bouncing around your overdraft
limit every day where it used to
happen once a month? Have
you borrowed expensive short-
term debt to get through a sticky
patch, intending to repay it but
not been able to? Have you put
your money in or reduced what
you take out?
These things seem okay at the
time, as owners are convinced
the issue is a glitch, but they then
find that nothing has changed
months later. One problem
in these situations is that the
short-term fixes are often
more of the owner’s money at
risk, or borrowings that come
with personal guarantees. If
the business does fail, the
consequence for the owners can
be dramatically worse.
Poor cash flow is the inevitable
result of poor trading.
Downward trends of turnover,
margins and net profit can all be
easily tracked. When reported
as numbers on a spreadsheet,
trends can be hard to spot,
but do a pretty graph and the
downward slope is a very visible
slide into financial trouble. Does
your business track its KPIs
(Key Performance Indicators)
and present them in a way that
makes it impossible to ignore the
story it tells?
SO WHAT DO YOU DO IF THE SIGNS OF FINANCIAL STRESS ARE CLEARLY THERE?
The most important point
is to act early. If you jump
into panic mode and seek
advice on what to do, and
Continued on back page...
PET
ER H
ILL
DIR
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AR
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OLT
& C
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As the lead article suggests, managing cash flow and understanding funding needs is a business critical issue many only deal with as panics arise. The key for any business is to look ahead and have the right funding in place early.
LOOKING TO EXPAND OR NEED SOME WORKING CAPITAL ? – READ ON!
DAV
E O
TTLE
Y M
AN
AG
ING
DIR
ECTO
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BA
LAN
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FOR
BU
SIN
ESS
Mention “Factoring” or “Invoice
Discounting” and many
business owners may well raise
an eyebrow. The thought of
selling their sales invoices to
raise cash to inject into the
business fills them with doubt
and apprehension. It still
sometimes has the stigma of
being “last resort” lending.
Are the common misconceptions
about factoring and invoice
discounting still rife even with
today’s economic backdrop?
Unfortunately, yes, and yes. They
are still common, and they are still
misconceptions!
Many businesses are still
concerned that these entirely
relevant forms of raising funds
may give the wrong impression
about the state of their business.
They fear people may leap to
the conclusion that they are in
trouble.
Yet many business owners and
operators know how hard it is
to get funding now & should
be re-assured that banks/
funders simply wouldn’t lend to
businesses on the brink of failure.
They lend to those they believe
in and whose strategy for the
business is positive and viable –
not to lame ducks!
Another common fear is that
customers may not want to
trade with you if they see the
business factoring its debts.
The message it sends is that
you are well funded, have the
If Factoring/Invoice
Discounting does not appeal
or if you are thinking of buying
some machinery, equipment
or vehicles – read on!
We have access to a panel
of innovative funders of
business loans from £5,000
to £1million. They all provide
a quick and simple service,
with a decision typically made
within 48 hours and funds
transferred soon after.
Loans can be used for almost
all business purposes:
unsecured loans from £5,000 –
£350,000, secured loans from
£100,000 – £1million.
WHAT CAN YOU USE THIS LOAN FOR? Working capital - Asset purchase
- Liability payments - Expansion
and growth - Most purposes
KEY FEATURES n Fixed rate, monthly repayment loans from 6 months to 5 years
n No application fees - only pay on acceptance
n No early repayment charges, settle any time
n No business plans or forecasts required
confidence and support of a
financial institution that sees
hundreds if not thousands of
businesses, thus demonstrating
that you are ready for growth.
However, many providers
recognise this fear and an
increasing number offer a
confidential service, giving
the impression that all the
communications are from you,
but still providing excellent credit
control support.
Also, worth noting is the range
of businesses that factoring /
invoice discounting companies
can support where traditional
banks are actively trying to move
away from difficult sectors such
as service providers and the
construction industry.
The key with both options is
the flexibility for the facility to
grow as your business grows.
It may be hard enough to get
any form of traditional lending
such as a loan or overdraft
but try going back asking for
more every six months as your
business expands and needs
more cash, and you will find it an
increasingly difficult task.
Not only could it be very hard to
get, but they may well demand
some form of personal security
or charge on property, whereas
the only security the factoring
or invoice discounting company
needs is on the sales invoices
themselves. It’s like having
invoices that are cash on delivery!
IN SUMMARY All companies of all sizes have
many options to consider, to
help fund their working capital
requirements both now and in
the future.
Using a Commercial Finance
Broker, can save both time and
money, as they will research all
the available funding options,
whilst you get on with running
your business.
If this is of interest to you or your
own bank has declined to assist
you, please call us on 01752
227966 to find out more.
Dave OttleyManaging Director
Balance for Business 7 Sandy Court Ashleigh Way Langage Business Park Plymouth Pl7 5JX
great ideas MARK HOLT & COMPANY / HEALIUM MAY 2018
GET YOUR EYES OFF THE FLOOR...CONTINUED
Healium LLP7 Sandy Court, Ashleigh Way, Plympton, Plymouth PL7 5JXTel: (01752) 201165 Email: [email protected]
www.healium.co.uk
Mark Holt & Co. Ltd7 Sandy Court, Ashleigh Way, Plympton, Plymouth PL7 5JXTel: (01752) 220979 Email: [email protected]
www.markholt.co.uk
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Whilst no one starts a business
expecting it to fail, the statistics
suggest that is an all too
likely outcome. You have
probably heard the adage
“80% of business fail in three
years”. Interestingly, research
for a recent seminar looked at
Companies House statistics
on company failures (not sole
traders and partnerships) which
actually showed that the risk
of failing was about 12% in any
year, but this hardly changed
from year 1 to year 15. I.e. bigger
and more established did not
suggest safer and better run.
So look at your arrangements
and understand what would
happen if you failed. Who would
lose money, who would chase
you personally for debts of the
business? Who has the power
to seize assets, and who has no
choice but to wait in the queue
and see what is left?
There are some steps you
can take to protect your own
financial position, such as
transferring equity in your
home to a spouse, or replacing
money borrowed with personal
guarantees for amounts without
them. The problem is that steps
taken imminently before a
business fails can be completely
ignored by the insolvency
practitioner appointed to sort
out what is left. Therefore, the
right time to take any action is
when you don’t think there is a
problem.
Previous Great Ideas explained
the significance of being a sole
trader or ‘normal’ partnership,
where all of your personal wealth
is at risk if the business fails,
and being a Limited Liability
Partnership (LLP) or a Limited
Company, where personal
wealth is protected. If you are
still trading outside of LLP or
company protection, please
think again.
If you have that nagging doubt
that your business is at the top
of a slippery slope, and want to
do something before it slides
too far, or perhaps you feel
everything is fine but some
precautionary steps would
be a smart thing to do, why
not have one of our financial
health checks.
This simple review of your
business examines all the
key stress points and looks at
whether you are in good shape,
or whether some remedial action
is needed, and gives advice
on how you may want to re-
structure your affairs to reduce
your risk if the wind changes.
You are no doubt as sick of
hearing about Brexit as we are,
but that will take us all into
unchartered waters. So if you
want to protect against the worst
that could happen, ask us to do a
health check on your business.
