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Accounting & Bookkeeping Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

Planning ahead? Declutter first

The period between Christmas and New Year is a time when many SMEs plan ahead for the next year.
Something that is often forgotten, however, is that it is difficult to see clearly through a pile of unfinished business that has been put to the bottom of the list because it was not urgent.
Is your book keeping up to date? Have you done your expenses? Does filing need attention? Is it time to cull some of those contacts who might have been useful but with whom you have had no interaction?
Planning ahead is not only about setting new goals and targets but also about becoming more organised so that progress can be monitored and reviewed at regular intervals, and your plans adjusted accordingly.
Preparing for next year is not easy if the information on the past year’s performance is not up to date.
Equally it is hard to think clearly, let alone plan when surrounded by clutter or outstanding actions.
If this is a situation you recognise, perhaps the decluttering process will encourage you to consider how to make life easier next year. There are a number of ways to reduce the build up of clutter, they are however boring since they involve discipline which is something most entrepreneurs lack.
The logical solution is to set aside a specific slot in the diary, every day, week or month to ensure that the low priority but essential jobs such as record keeping and admin get done. It also makes sense to ask why you are doing tasks, indeed your time is valuable so stop doing non essential tasks if they aren’t necessary, or consider outsourcing regular activities such as accounts or filing.
Loud music can help you declutter – I recommend Queen.

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Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

Use the Christmas break to refresh and regroup

Anyone running a small business will know that it is easy to lose sight of the bigger picture in the face of the daily list of “things to do”.
So the seasonal festivities offer a chance to relax and regroup. Taking a break every now and then is important for mental health, as is reconnecting with family and friends who too often have to take second place.
It also provides a chance to reflect on the past year and plan for the next one, setting goals and thinking through how to achieve them.
So we at K2 we would like to wish you all a happy and restful Christmas break and hope that you start the New Year refreshed and ready to lead your business to greater success.

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Banks, Lenders & Investors Business Development & Marketing Finance General Rescue, Restructuring & Recovery

How can SMEs pay for innovation?

SMEs are the lifeblood of an economy and generally have been the most innovative businesses.
It is often said that while the big corporations have the resources for large-scale, ongoing R & D their effort is largely focused on existing products.
But while historically many new ideas have originated from inventors “tinkering” in their spare time, this is less likely in the 21st Century.
Very few SMEs will have a turnover with a sufficient margin to allow for funding ongoing research and development, especially in the highly technical, software, biomedical and scientific fields.
Yet to survive and prosper, SMEs need to find their niche and then innovation to stay ahead of the competition. Can this be done?
There are a number of options. In the UK there is the STEM (Science, Technology, Engineering and Maths) project in schools, supported by businesses, which is designed to encourage the next generation of innovators.
There are also collaborations between businesses and universities, both in the UK and elsewhere.
There is also an EU programme specifically designed to support innovative SMEs with funding and by connecting them with mentoring and other partners. Horizon 2020 can invest up to £2 million in a company and is worth looking at if you are truly innovative: www.h2020uk.org/smes.
Do also contact us at K2 as we are familiar with this and other sources of finance.

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Banks, Lenders & Investors Business Development & Marketing Finance General Turnaround

Export opportunities for SMEs? Go take a look

A global economy does not necessarily mean a homogeneous economy.
Many SMEs struggling to grow their business in the currently unstable UK market doubt whether there will be demand overseas for the goods or services they offer locally, but they could be wrong.
Former property surveyor Chris Ives, writing in the Guardian small business column, is a good example. He set up a micro brewery producing unusual beers after losing his job in the 2008 crash.
Daunted at first by the risk involved in venturing into export, by the perceived expense and by a lack of confidence he took advantage of the facilities offered by UKTI (UK Trade and Investment) and an opportunity to join trade missions run by a well-known bank.
Now he is exporting to the US, Canada and Scandinavia.
He says the keys to successful exporting for a small business depend on visiting your potential market, doing the research and meeting potential partners.
Do you know other small businesses that have made a success of exporting?

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Cash Flow & Forecasting Finance General HM Revenue & Customs, VAT & PAYE Insolvency Personal Guarantees Turnaround

HMRC has powers to demand security payments

HMRC is using its powers to demand security payments from company officers for VAT, PAYE and NIC where it considers there is a likelihood of default.
In a case in November 2014 HMRC served a demand notice for a total of almost £70,000 on three named individuals, two directors and the company secretary, of a Berkshire-based metals fabrication company.
An amendment to regulations was made in 2012 allowing HMRC to demand security payments from officers of companies, where it was felt there was a high risk that taxes would not be paid.
HMRC can hold the money as a deposit for up to two years and use it to satisfy any overdue tax debts the company may have.
In our experience such notices have previously only been used for Phoenix companies and not for a trading company.
This new development of personal financial liability is something SME directors and company secretaries need to be aware of and if there is any risk of the company becoming insolvent or being forced into liquidation it would be wise to consult a business rescue advisor early.

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Business Development & Marketing Cash Flow & Forecasting Finance General Insolvency Rescue, Restructuring & Recovery Turnaround

SME – Supplier relationships should be nurtured

If a business is to survive it needs to manage relationships with both its own suppliers as well as with customers. It also needs to consider the risk of being dependent on a supplier or customer.
The revelations about suppliers to Tesco and now Premier Foods are a graphic illustration of the danger of relying too heavily on one customer. A dominant customer can exert control over prices and margins and as in the case of Tesco, demand a raft of marketing support fees.
There is a point when the relationship can become no longer economically viable but if you are not prepared it can be impossible to terminate without putting your own business’ survival in jeopardy.
Many SMEs in particular, like farmers, have been forced out of business by not being able to say “no” to the demands of their supermarket chain customers. Research by accountancy firm Moore Stephens has recently revealed that 146 food producers have become insolvent this year, an increase from 114 last year, in part because of supermarket price wars.
It is not only an issue for food producers and superstore supply chains. Some years ago the Ford motor manufacturer put similar downward pressure on its suppliers, many of whom went bust. In the end Ford had to buy some out of insolvency in order to ensure continuity of supply and its own survival.
The lesson is that SMEs should not only avoid becoming locked into supplying only one customer, but also to learn to say “no” to pressure.
No business can exist in complete isolation. If businesses treat others as fairly as they expect to be treated themselves, then ultimately everyone in the supply chain can survive and benefit.

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Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

Should SMEs ignore the doom mongers?

Many small business owners will be members of their local Chambers of Commerce, perhaps the FSB (Federation of Small Businesses) and their own trade bodies.
Some will also keep a close eye on the business and economic news in the business media. But what kinds of messages do they get from all this?
As they say, “bad news sells”. There has been a fair amount of doom and gloom in the headlines. The Prime Minister’s warnings of the threat of EU stagnation to the UK economy and a new CBI survey reporting that optimism in the service sector is at its lowest for 21 months are two recent examples.
Arguably, most SMEs will be keeping an eye on their cash flow, management accounts, orders and profits as part of the daily tasks of running a business. So they will know how their own businesses are performing.
But how much notice should they take of the UK economy?
It is difficult enough to plan ahead and especially when considering investment in growth. It is even more difficult in times of economic uncertainty or volatility.
There is some evidence that reports of diminishing confidence actually become a self fulfilling prophecy that actually affects business activity.
So should SMEs just grow a thick skin, ignore it all and carry on regardless?

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Banks, Lenders & Investors Finance General Insolvency Rescue, Restructuring & Recovery Turnaround

Ruling on creditors meetings will help improve CVA outcomes

Creditors meetings for insolvency proceedings will no longer be needed unless requested by least 10% of creditors following a new government ruling as part of its small business reforms.
The Insolvency Service argued that attendance of creditors’ meetings is poor and there are more effective means of engagement in the 21st Century.
When trying to rescue a business in difficulty, Insolvency Practitioners have a number of options and one of the most helpful is the CVA (Creditors’ Voluntary Agreement) by which debts can be negotiated by a company to repay its creditors over a longer period and sometimes repaying a reduced amount.
Proposals must be drawn up and submitted to all creditors in advance for negotiation and approval. Approval requires a majority of 75% of votes cast.
Since any insolvency proceeding has to comply with a series of steps laid down by law, and IPs are paid for their services, the costs can quickly mount when creditors’ meetings are added to the mix.
Subject to approval the cost of holding creditors’ meetings can be saved and reduce the burden on both the company as well as improving the distribution to creditors.