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

January planning – Re:act

React resize 1Now that the business plan has been refreshed, the year’s business goals have been set and the marketing plan to achieve them is ready it is time to put them into practice.
It is crucial that progress is monitored throughout the year, but how this is done will depend not only on the goals but on the nature of the business.
A dash board of key indicators is a useful tool for monitoring progress. It should include financial information such as the bank balance, cash received, amount paid out, outstanding debtors, overdue creditors and stock held.
Other useful information on the dashboard to include might be the value and number of orders and quotes, number of visitors, inquiries or responses by source, whether direct sales, website, email, social media.
For example, those who sell products online might find it helpful to use a dashboard to monitor their weekly sales and cash receipts and check them against those projected in the plan.
Other businesses such as distributors and retailers might monitor their management accounts on a monthly basis but check their stock on a daily basis. Stock sold, new stock and returns.
This is done by having appropriate systems such as bar code scanners which will be covered in a future blog.
The frequency of monitoring will be a matter for each business.
However, if there is a marketing plan it is important to monitor the impact of campaigns and to be open to making adjustments according to their performance and progress towards the goals.
There are two essentials to remember when goals have been set and the actions begun.
First, is to monitor progress regularly.
The second is to be flexible enough to make adjustments if goals are not being met.

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

January planning – Re:fresh

RefreshYou’ve done your research and consulted with staff and others and should now have outlined your business goals for the coming year. Now it is time to refresh your business plan.
The big question in this phase is how to achieve your goals.
If your goals are ambitious, achieving them will require additional resources.
New products or services require investment of time and most likely money in R&D, in testing and refining, in design and packaging, in recruiting and training production staff, in plant and machinery, in stock, in marketing literature, in promotion and many more aspects that are key to the success of a new product.
New clients or markets require investment in time and most likely money in market research, in market testing, in advertising and promotion, in sales and marketing, in recruiting and training sales staff, in finding distributors, in learning about foreign markets and many more aspects that are key to establishing new markets.
Once you have a plan, then the plan needs to be resourced. Indeed the availability of resources and finance normally influence the plan. It may be possible to find it with reserves or borrowings but other options should be considered such as partnering with manufacturers, suppliers, distributors or clients who may be prepared to use their own resources for a slice of the benefits. Manufacturers may fund tooling and production and suppliers may fund stock and distribution or both might provide extended credit in return for higher margins. Distributors and clients may pay deposits or prepayments to fund production.
Whatever your plan, an accurate picture of the financial health of the business and projected cash flow will be needed as part of the planning process. Indeed it is often necessary to use the planning process to reorganise aspects of your existing business and restructure its balance sheet.
Having a plan is also necessary to monitor progress throughout the year and provide valuable insights for future goal setting and planning.
Having a refresh stage in the annual planning process will ensure your business remains competitive, even if you do not want to grow. Re:fresh can be used to reinforce a culture of continuous business improvement

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Banks, Lenders & Investors Finance General

Essentials of Equity Crowdfunding

Equity crowdfunding is particularly useful for start-ups and SMEs seeking to grow, particularly because it is so difficult to raise small amounts as share capital due to the extensive due diligence required by investors who don’t already know you.
Even when investors are interested, the share of the equity and control they may require can be an issue for the founders when the business is not yet profitable.
Investors in equity crowdfunding receive shares in the business and with them the prospect of receiving dividends as well as being able to vote and to hopefully sell their shares at a profit in the longer term.
The business must provide a detailed business plan with a lot of information about the key people as well as other supporting information before it will be accepted by a crowdfunding platform.
An example of a successful equity crowdfunding was E-Car Club that raised £100,000 for 20% equity from 63 investors. The online fundraising was organised by crowdcube.com with most investors subscribing small amounts although the largest was £15,000. E-Car Club is a pay per use scheme whereby club members have access to an electric car for a defined amount of time without having the expense of car ownership.
Research by the British Business Bank in 2014, however, found that the growth of crowdfunding had posed challenges to Angel investment networks because some angel investors were choosing to invest through crowdfunding instead.
The risks in equity crowdfunding include a relatively high failure rate for start-ups and the potentially lengthy wait for a return on the investment.
Equity crowdfunding platforms are regulated by the Financial Conduct Authority (FCA).

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

What’s the point of a business plan?

Business gurus will insist that a SME has no credibility or chance of success without a proper business plan.
There’s no prospect of raising finance without one, even, these days via crowd funding.
But many small business owners struggle with the concept of setting targets for revenue, growth or increased turnover in one, three or even five years time, especially given the volatility of local, national and export markets since 2008.
It can feel like crystal ball gazing or fantasy. Who knows what may happen next?
But what most forget is that a plan isn’t set in stone. It needs to be re-visited regularly and should be adjusted as conditions change.
Most business advisers would advise flexibility and regular reviews of performance so that goals and decisions about spending can be adjusted accordingly.
As part of a flexible business plan, nowadays an essential ingredient is the cash flow forecast.
This can then be used to spend more or less depending on the availability of cash and the return on it being invested such as on growth and marketing initiatives, or on efficiency and cost reduction measures.
For businesses to successfully survive the economic uncertainties that look as though they may be with us for some more years they will need to plan for multiple outcomes regardless of what is planned.
So yes, a business plan is still an essential map through uncharted waters as long as it is looked at regularly and adjusted when necessary.

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

Why should businesses regularly reinvent themselves?

Businesses often assume their business model will survive for ever.
But the salutary story of the troubles of one of the UK’s four largest grocery chains, Morrisons, demonstrates the drawbacks of a failure to reinvent themselves. The company’s profits halved in 2014.
Chairman Andrew Higginson this week admitted in an interview that the company that started as a market stall more than 100 years ago had lost its way. They were certainly later than the other main supermarkets with their online shopping initiatives.
“Morrisons doesn’t know what it wants to be……one minute it’s trying to be Waitrose, the next minute a discounter. You’ve got to stick with your core principles……” said the company’s former property director, Roger Owen, who retired in 2009.
The lessons, however, apply to many businesses and organisations, not only those in the admittedly challenging grocery sector.
The UK’s libraries have also been in decline, partly as a result of austerity cuts to public sector budgets but also because of the changing requirements of users. Technological innovations like the internet have made it easier to access information online as well as firms like Amazon making it easy to browse for books to buy second hand. Some have reinvented themselves and continued to thrive by adopting a different operating model. New initiatives include: providing access to the internet; courses; paid-for research; organising events; hosting clubs, even book clubs.
There is a lesson here for business. The older you are the easier it is to get set in your ways and to miss the threats of the new young “upstarts” snapping at your heels.
The answer? Yes, keep a close eye on developments in your sector and on the competition, and regularly review your core values, structure and business plan.
But more important, much more important, is to keep an eye on your customers and what they want.

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Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting General Turnaround

SME businesses need goals and a plan

As we noted in our last blog more than two thirds of the new jobs created since 2008 are people registering as self employed to set up in business for themselves.
There is as yet no information on why.  It could be that they felt they had no alternative after redundancy, especially if they were older people who calculated that the odds of finding another job were less than favourable. Some may have dreamt of becoming their own boss.  Some may have jumped before they were pushed.
A few will undoubtedly be people with a strong entrepreneurial streak and an innovative product or idea.
One thing all business coaches say is that to run your own business requires passion and commitment, market research, a business plan and sound financial management.
Any plan will include analysis of the market and assessing the competition, without which it is difficult to know if a business can succeed.
Once a plan has been produced, a focus on bringing in business and satisfying customers tends to involve doing more of what works and stopping doing what doesn’t. This needs constant vigilance and regular monitoring to make progress towards goals in the plan.
Revisiting the business plan is more like checking the map to make sure you will eventually get to where you are going. Sometimes when conditions change or opportunities arise you have to fundamentally change your goals and also your plans. There is no strict formula for a plan but having a goal and road map allows you to measure progress towards reaching your goals.
A survey of 1000 SMEs carried out by Bibby Financial Services recently found that one in four of SMEs cited increased competition as their greatest fear, yet all too many of them don’t have any goals and even fewer have analysed their market, let alone produced a plan.
One has to ask, how many of these new self employed businesses really had any idea what they were getting into?

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Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting General Turnaround

Be prepared!

 
The news is awash with worries about a new housing bubble and the need to contain it by raising interest rates.
Although the focus of 17% increases in housing prices is mainly on London and the South East, an interest rate rise will not only affect housing costs across the UK, but all debt repayments including loans to small businesses for growth.
While the economy may be recovering there is still a risk that an interest rate rise could trigger the insolvency of many businesses that are still burdened with historical debt.
Low interest rates are keeping quite a lot of businesses afloat where some may need to consider their restructuring options before events overtake them.
Before rates rise, as they inevitably will, it makes sense for a business to take a close look at its cash flow, its business plan and its plans for growth so that it is not knocked off course.
Amid the day-to-day attention on keeping the business running smoothly and efficiently to satisfy customers, do small business owners have the capacity and the time to stand back and assess its fitness for the future?
Would it help to bring in the supportive, outside expertise of a business adviser, a fresh pair of eyes with the time to focus on what adjustments might be needed?

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Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Change is now the only constant

 

Consumers and clients are fickle, the pace of life is accelerating and it’s all thanks to the internet.

It may be a bit harsh but the SME that wants to do more than just survive needs to not only ensure the quality of its products or services and of its customer service, but also to be alert to potential new innovations and changing customer habits.

Here’s an example – a cafe in London recently switched from charging customers for coffee to charging customers an hourly rate for the time they stayed there.  The owner had noticed that his cafe had become popular with self employed people with laptops looking for a place to work.

The change has reportedly been popular with customers and illustrates the point that these days it pays to be flexible, responsive and therefore change the business model to meet new situations.

Here’s another example.  At one time a business website would likely have been seen either on a PC or a laptop.  Not any more. Now web developers have to produce something that will accommodate itself to these and to tablets and mobile phones.  It’s called responsive design.

A business model does two things.  It can set short, medium and long term financial and growth goals but it is also a daily and weekly satnav to be referred to often.

Increasingly, savvy businesses need to build a responsive model that can cater to changing circumstances as well as keep them on track for the longer term.

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Business Development & Marketing Cash Flow & Forecasting General Turnaround

Self Employed? You need to think like a Business

 

The government has been playing up a rise in disposable income, culled from figures compiled by the Office of National Statistics (ONS), but there is one fact that has been conveniently ignored.

This is that the ONS pay figures do not include earnings by the self-employed.

According to the research organisation the Resolution Foundation, the numbers of self-employed have increased by 26 per cent between 2002 and 2013 while their median reported income had dropped by 28% (approximately £4,000) between 2001 and 2010.

The TUC estimates that  540,000 of the approximately 1 million jobs created since 2008 have been through self-employment.

These are the people who supply the “outsourced” services – from plumbing to IT to Marketing to Consulting – that SMEs rely on.  They are also themselves SMEs as far as HMRC is concerned, where they are classified as sole traders.

No matter what their skills, arguably these are micro businesses with potential to grow, and as the economic recovery continues, they will hopefully be able to benefit.

But like any business, even a one-person micro business needs to set goals, have a business plan, understand finance, and have a marketing strategy for advertising and promoting themselves to generate business leads. 

Furthermore they need a passion and determination to succeed.  Being self-employed can be a lonely existence but need not be with the support of mentors, local networking and business organisations, industry groups or business advisors, any and all of whom can make a huge difference.

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Business Development & Marketing Cash Flow & Forecasting County Court, Legal & Litigation General Rescue, Restructuring & Recovery Turnaround

Law firms need to get serious about their business plans and cash flow

Professional Indemnity insurance is advisable for most professional businesses but for law firms it is compulsory.
Renewal has been complicated by the fact that since 2012 insurers were required to disclose their credit ratings in order to become “qualified” by the SRA (Solicitors’ Regulatory Authority).
In the last year a number of qualified insurers have become insolvent and the financial situations of approaching 1,800 law firms are being closely monitored by the SRA. 
At the same time at least 185 law firms have failed to meet the deadline for re-insuring and if they fail to do so within 90 days under SRA regulations they must close down. Already one London firm, Harris Cartier Limited, has entered administration, the first of what may be many.
Is it time that the culture of law firms is changed so that they see themselves as businesses like any other, requiring a proper business plan with a forecast to support the plan. Such plans might also benefit from input by other experts such as accountants and marketing specialists where lawyers have tended to do it all themselves.
Given the lengthy time between taking on a client, completing often complex legal proceedings and the point at which the job is complete some law firms may need the help with running their business and if necessary restructuring it if they are to ensure they are not forced into closure by failing to put in place the systems that any other business would regard as normal.

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

Is Starting a Business in a Recession Wise or Foolish?

It is no secret that the Government is relying on SMEs to stimulate both the economic recovery and jobs.
Lord Young, senior adviser to the Prime Minister, is on record as saying that a recession may actually be a good time to start a small business on the grounds that wages are low, competition may have fallen by the wayside and premises, too, may also be cheaper to get.
That’s all well and good but there is more to starting a business than having a bright idea and the passion and motivation to get started.
There are a number of other factors to consider, especially where the business is something new and innovative and therefore unlikely to raise finance from currently risk-averse banks and investors.
A start-up must carry out research, identify potential customers, set sensible targets and put all of this into a business plan.  If it needs finance it should consider alternatives to the mainstream sources, whether these are friends and family, partnering with existing firms, seed funding, crowd funding or business angels and also investigate what grants and special concessions may be available that will help in the first year or two of trading.
A mentor or business guardian to help set the path and keep things on track can also make the difference between success and failure.  It’s impossible for a novice to do everything themselves without support and joining local business networks can also be a valuable source of advice and support.
If it is the kind of venture that can benefit from collaboration with other enterprises where there is a synergy, this is an option worth exploring since partnering with existing businesses in a market will help a start-up forge relationships with both a supply chain and  potential customers.
When money is tight, entrepreneurs should explore cash saving ideas such as offering equity, or future work, or future discounts, or other benefits in kind to any business that can provide them with useful services. Examples include introduction to customers, advice, market research, book keeping & accountancy, manufacturing prototypes, provision of office space, use of specialist or expensive equipment, and many more ideas that are only limited by the entrepreneur’s imagination.
Recession or not, starting up a business is all about doing all you can to weight the odds in your favour.

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Banks, Lenders & Investors Cash Flow & Forecasting General Rescue, Restructuring & Recovery

Are we brewing another bubble?

Profits are up at Currys, PC World and Asda.  Outgoing Bank of England Governor Sir Mervyn King has revised upwards the bank’s growth forecast for the year and the CBI too is a bit more optimistic about “more balanced growth” in the economy.
Add to this, results from the Royal Institute of Chartered Surveyors’ latest survey showing that house buying enquiries had reached their highest level for three years and in April the Ernst & Young ITEM Club predicting a pick up in the housing market activity to almost pre-2007 levels.
Some would argue that Chancellor Osborne’s Funding for Lending and Help to Buy schemes are finally helping potential home buyers but let’s not get carried away here.
Was it not unwise lending on housing that led to the unsustainable property bubble that precipitated the 2008 economic meltdown?
Despite the unseasonably chilly May are these reliable signs of green shoots?
Or are we collectively clutching at short term straws?
We should remember that banks are still weighted down by illiquid assets such as commercial property, investors continue to seek short term gain rather than investing in the longer term future and politicians think only in career terms of keeping their seats in the next election.
Clutching at short term straws will not fix our economic problems. Investing in the longer term, in promising new companies, in support for R & D to keep our knowledge economy competitive overseas and investing in a sensible education and business support policy that provides the skilled workers for the future through apprenticeships just might give the economy a fighting chance.
In the meantime while it’s a bit early for SMEs to shift their focus away from managing cash flow it might be appropriate to revisit the business plan and model to identify any changes that should be made to prepare to take advantage of growth should it materialise.

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General Insolvency Liquidation, Pre-Packs & Phoenix Rescue, Restructuring & Recovery Turnaround

Saving insolvent companies needs both a restructuring and business plan

Following the demise of Rok and Connaught, a third national building maintenance company, Kinetics Group, has gone into administration with 500 employees being made redundant leaving a skeleton staff of 50 to deal with its five sites.
Insolvency practitioners Begbies Traynor were appointed as administrators in July and attribute the demise to the loss of key contracts and delays in payments by customers.
The background to this dramatic failure seems to be rather complicated. In June 2011, there appears to have been an attempt to save the company through acquisition of the business and assets of a number of its own subsidiaries by a newly formed subsidiary SCP Renewable Energy Limited (SCP).
It is not yet clear if the acquisition took place before or after these companies were placed in liquidation or administration and a further complication is SCP Renewable Energy Limited’s status, referred to by the administrators as a newly incorporated company owned by Kinetics. But this name is not listed at Companies House.
In my view it is clear that the June restructuring was flawed. What exacly was the role of the various stakeholders? Did they ensure that viable restructuring and business plans were in place as a condition of their approving the acquisition?
Is this an issue with the sale of business and assets by an administrator, where the administrator is not responsible for the ability of any purchaser to run or fund the acquired business?
Administrators rarely save a company as a going concern, so their only real objective is to maximise realisations for the benefit of creditors.

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Accounting & Bookkeeping Business Development & Marketing Cash Flow & Forecasting General

Franchising Can Be Great if You do the Research and Check the Small Print

Many people dream of owning their own business and in the current economic climate are finding themselves pitched into starting up perhaps before they are quite ready.
A franchise often comes with an established brand, support in training, promotional materials and advice so it is tempting to see buying into a franchise as a safer option than going into business completely independently. 
But sinking savings or redundancy payments into any kind of business is a risk and a franchise is no different.
The big danger in taking on a franchise is getting a false sense of security that someone else is responsible for your business. They aren’t and a business plan is as important for a franchisee as for an independent trader.
Also, while the franchise provides support, it may also impose limits on independent action in order to protect its brand and reputation. The most successful franchises have tested their business model and methods and incorporated these into the package. It can happen that a franchise has failed because the franchisee has failed to follow the advice.
In a recent case of a franchise business in difficulty one of the biggest issues was that the franchisor declined to take any legal steps to protect its intellectual property or its franchisees’ rights.  
The franchise model offered complete geographical coverage and each local franchise unit’s success depended on the whole network‘s efficiency, but there was nothing to stop people who had gained privileged knowledge within the franchise from setting up in competition.
It is essential when setting up any business to scrutinise any legalities required, take advice and to negotiate. Until comfortable with the terms do not buy into a franchise.
Essentially, yes, a franchise can be a very good business opportunity but it does not eliminate much of the risk inherent in setting up a business and needs the same preparation work as for any business start-up.