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

What items are top of businesses’ post-election wish list?

post-election wish listInevitably many promises were made during pre-election campaigning but how many will be delivered and what items are top of businesses’ post-election wish list?
There is no question that there are many urgent domestic issues that need tackling and were “parked” during the on-going wrangling over Britain’s referendum to leave the EU.
However, now that the so-called “party of business” has been returned with a solid majority, perhaps businesses will see some action on the issues that have left them feeling that they were overburdened and struggling to carry a heavy weight with little support.
While many business groups have been calling for the closest possible trade alignment with the EU post-Brexit it will be a year – or more – before the shape of any deal is known.
In the meantime, there are plenty of items on the business post-election wish-list that can be progressed.
Perhaps the biggest and most pressing burden needing attention is a thorough reform of Business Rates.  Of course, the loudest cries for this have come from the retail sector, particularly from High Street retailers, but there is no question that the current levels, and the slow pace with which appeals are addressed, is a heavy burden for many SMEs.
However, the Federation for Small Businesses (FSB) leader Mike Cherry, has warned that it could take up to five years to complete a rates review and reform
Arguably of equal importance is the difficulty many businesses have in finding people with the appropriate skills and this has been impeding growth plans.
While the new Prime Minister has promised an overhaul of immigration policy, this will affect how and who firms can recruit. It remains to be seen how the proposed three-tier points-based system will work.
The idea is to fast track so-called Tier One entrants such as entrepreneurs, investors and people who have won awards in certain fields, and Tier Two people, skilled workers, such as doctors, nurses and other health professionals, who have a confirmed job offer leaving the need for less skilled, people such as for as agriculture and manufacturing as a problem. Essentially Tier Three employers will most likely have to show that they cannot recruit enough people from within the UK before other entrants are allowed into the country which may take some time and leave them with short and medium term staffing shortages.
Indeed business organisations such as the Confederation of British Industry (CBI) have said that the current immigration proposals are vague and impeding businesses’ ability to plan for growing staffing levels.
The final and most pressing issue, on which the Government has promised action and investment is the country’s neglected and in some cases crumbling infrastructure, particularly in areas like the North and Midlands.
Whether improving communications such as road and rail links, or broadband connectivity, it is going to require significant financial investment and given the lack of growth and current weak economy it remains to be seen how much money is in the Chancellor’s pot come the first budget in March.
 

Categories
Finance HM Revenue & Customs, VAT & PAYE Insolvency Rescue, Restructuring & Recovery

Update on the business rates and appeals fiasco

is anyone listening on business rates?In August it was announced that HMRC had sent in approximately 25 staff to the Valuation Office to fix the business rates appeal portal, which had been repeatedly cited by businesses as being impossible to use.
As the only mechanism now available for appealing non-domestic rate revaluation, the portal has been cited as the chief reason for an almost 90% reduction in appeals since the 2017 revaluation and just before this blog was due to be posted an article in The Times reported that a Government survey has revealed that almost nine out of ten businesses in the first stages of making an appeal using the portal were dissatisfied or very dissatisfied with the new system.
In the meantime, the numbers of business failures, particularly in the retail sector has continued to climb; many attributing the rise in rates as a factor.
Altus Group, a ratings adviser, reported in August that bailiffs had visited 81,000 businesses because of business rates arrears – an average of 222 businesses per day over the previous 12 months.
Last week, as reported in both the Daily Mail and the Daily Mirror, ONS (Office for National Statistics) figures had revealed that more than 51,000 high street stores had closed in the past year.
Yet more pain was added after the 2.7% August inflation rise was revealed with Altus Group predicting that businesses would face an increase of £819 million to business rates if inflation remained at this level.
Is the business rates system fit for the 21st Century?
There have been many calls for a rethink on business rates, from Rohan Silva and the British Retail Consortium which said they were “no longer fit for purpose in the 21st Century”, in the Evening Standard in late August, to Wetherspoon founder Tim Martin calling for a “sensible rebalancing” to create a level playing field for High Street retailers, earlier this month.
Vince Cable, Lib Dem leader, has called repeatedly for business rates to be replaced by a land value tax payable by landowners rather than by tenants while others have called for a reform of VAT into a two-tier system for physical and online retailers.
But there has been a deafening silence from the Government, with the exception of the Chancellor, Philip Hammond, who claimed many high streets had prospered and that high street retailers needed to evolve in order to survive – no surprise given all the many worthy and pressing claims for increased spending that he will have to reconcile in his next budget.
Business rates affect not only the retail sector but all businesses, a point often forgotten in the ongoing focus on retail.
Is the Government living in an alternative universe or has it become so fixated on its own internal squabbles over the “B” word that it is ignoring all the other pressing issues facing SMEs?
Is it listening to business?
STOP PRESS: The Times has also reported that since the appointment of small business commissioner Paul Uppal last December to tackle late payment to small businesses he has helped just nine SMEs to handle complaints, a topic to which I shall return in a forthcoming blog.
Here is a copy of my free guide to getting paid on time:
https://www.onlineturnaroundguru.com/p/getting-paid-on-time

Categories
Finance General Insolvency

SMEs need help to navigate the business rates system

the potential effects of business rates?Retailers are the most high-profile sector of SMEs that are struggling with business rates and the appeals system following the April 2017 revaluation that came into force last month.
But it is not only the small retailers that are facing challenges.
SMEs’ problems have been repeatedly raised by the Federation of Small Businesses (FSB) and the British Retail Consortium (BRC) both of which have highlighted two issues.
These are the disproportionate business rates rises on smaller businesses compared with larger ones, and a new, revamped appeals system that the FSB in particular has criticised as seemingly “designed to be hostile” to companies.
National FSB chairman Mike Cherry has described the appeals system as bureaucratic and beset by glitches, while offering no in-person support, no phoneline or live chat options and involving a time consuming and opaque process for uploading supporting material when making an appeal.
Why am I not surprised that yet another Government-inspired online system is proving not fit for purpose?  Excessive reliance on digital systems is something to which I shall return in a forthcoming blog.
According to the Government’s guidance on business rates relief SMEs are eligible for relief if their business property’s rateable value is less than £15,000. Those whose property’s rateable value is less than £12,000 are exempt from business rates. There are also transitional reliefs if SMEs’ revaluations took them out of exemption with a cap on bills so that their monthly payments would not increase by more than £50.
However, it seems that 71% of companies are “very dissatisfied” with the Valuation Office appeals process and that appeals had plummeted by as much as 99% between April and December 2017, according to a report in the Daily Telegraph.
On top of this a £500 fine was introduced for any business that was found to have appealed wrongly.
In April the then Communities Minister, Sajid Javid, announced an independent review of the way the business rates system operates. The review is to be led by former Director General for Public Services at Her Majesty’s Treasury, Andrew Hudson. Who had also previously held the position of chief executive of the Valuation Office Agency, as well as having worked in local government. Business rates are collected on the Government’s behalf by local authorities.
Of course, Javid has since relocated to the Home Office, and, so far, there has been no further information on the review.
It is often said that SMEs are the backbone of the UK economy, and according to FSB and BRC figures they inhabit approximately 1 million of the 1.7 million business premises in the UK on which the tax is payable.
If the economy is to survive the still unknown outcomes of Brexit in anything like reasonable shape it will be relying on these SMEs to preserve jobs, to grow and expand.
This means they need a system of fair taxation, a robust and user-friendly rates appeal system and the minimum of red tape and bureaucracy to have a fighting chance of doing more than simply surviving.

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Cash Flow & Forecasting Finance General

Budget aftermath: will 2017 become a perfect retail storm?

purse decorated with UK flagThe growth of online retail and the rise of the “budget” food stores, like Aldi and Lidl, have been pressures on both large retail chains and smaller independent retailers for some years now.
But, clearly, a series of announcements from the larger chains in the first quarter of 2017 suggests that the pressure has turned up a notch or two.
This week, Budgens stores announced the closure of 34 branches with the loss of 800-plus jobs and, earlier in March, Sainsbury announced a restructure of staff jobs and hours, with the potential loss of 400 jobs.
In February, a shake-up in home estimation and fittings services as well as restaurant food preparation announced at John Lewis could lead to 400-plus redundancies with another 386 staff being re-deployed elsewhere. Waitrose also announced six store closures with 700 jobs at risk.
In January, it was Tesco that opened the New Year large retailer shake-ups with changes to its logistics and 1,000 redundancies.

So what are the additional pressures facing retail in general?

The British Retail Consortium has just published new figures showing a slowdown of 0.2% in sales, between December 2016 and February 2017, particularly in non-food sectors.
This should be set in the context of rising inflation as imports of food and raw materials become costlier due to the fall in the value of £Sterling after the EU Referendum. These are beginning to feed through into prices.
Consumer confidence is also reportedly lower and there is some speculation that many people purchased “big ticket” items such as white goods and cars in 2016 to keep ahead of anticipated price rises.
It may also be that the larger retailers with a massive acreage of physical buildings are also restructuring to take account of likely hefty increases in their business rate liabilities following the rate revaluation that comes into force this April.

What of the smaller retailers?

It has always been more difficult for the smaller independent retailers to compete on price so inflation may hit them hard.
Some will have benefited from exemption to paying business rates due to the rise in the level to £15,000 before payment kicks in and from revaluations reducing their rates, as has happened for some of the luckier ones.
Others, however, will have to find considerably more money to pay their rates before they even begin to make a profit.
There was some relief in yesterday’s budget, after intensive lobbying from various business organisations on the new business rates, in the form of £300m to local councils to use for a discretionary hardship fund for small businesses worst affected by the revaluation and a pledge that any business losing existing relief will not pay more than £50 a month.
But it is questionable how much difference this will make given the additional costs facing small retailers employing staff, who will in April face increases to the minimum/living wage, with the additional obligations of pension auto-enrolment.
With e-commerce operations paying considerably less in tax it looks like the inexorable march towards online retail operations and away from small independents on the High Street could continue.

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Cash Flow & Forecasting Finance General

Will the business wish list for tomorrow’s Spring Budget be fulfilled?

purse decorated with UK flag

There will be two budgets this year, one tomorrow and a second in the Autumn, after which there will only be Autumn budgets.
The signs are that the Chancellor, Philip Hammond, will be cautious. He has already said publicly that he wants to reserve some funds for the Government to use as a fall back to protect the economy after the completion of Brexit negotiations.
Leaving aside the pressing financial concerns about the future of the NHS, social care, education and welfare support, all of which are likely to be disappointed if hoping for extra cash, the Chancellor has already also indicated that there will be no easing of the austerity measures intended to reduce the Budget deficit.
Given all this the question is whether there will be any relief or even help for hard-pressed businesses, particularly SMEs, navigating uncertain times while they try to keep their companies surviving and thriving?

What would businesses like to see in the Spring Budget?

The issue raising the most concern has been the revision of business rates, due to come into force in April. Virtually every national body representing business has commented on this.
In some parts of the country small businesses will have benefited from the higher threshold for exemption but in difficult trading conditions, especially for small retailers, those whose rates have been increased will want to see some help beyond the phasing-in period that currently exists.
Following its annual conference on February 28th, reform of business rates is top of the British Chambers of Commerce (BCC) wish list. It would like to see the switch in how rates are adjusted for inflation from RPI (Retail Price Index) to CPI (Consumer Price Index) brought forward from 2020 to April 2017 and plant and machinery removed from property valuation.
The FSB (Federation of Small Business), too, has highlighted the business rates issue. Called by its national chairman, Mike Cherry, “The broken Business Rates system ..” he wants the Government to recognise the need for a “sensible, fair system for the 21st Century”.
In addition to a rethink on business rates, the Institute of Directors (IoD) wants to see all types of businesses recognised and a more level playing field created to allow for fair treatment of High Street and online business as well as a loosening of restrictions on the rules for various enterprise schemes from which SMEs can source investment funds.
For EEF, the manufacturers’ organisation, measures to boost productivity and pressing ahead with promised infrastructure improvements are high priorities. Enabling higher investment in R & D, skills development and manufacturing investment are a must, although it too mentions the need for reform of business rates.
For the CBI (Confederation of British Industry) it is all about ensuring stability for businesses during the process of exiting the EU. Its pre-budget letter urged the Government to ensure that it does not add to the “mounting burden of costs facing firms for just doing business”.
We shall report on the outcome and its impact on business shortly after the budget.

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Accounting & Bookkeeping Cash Flow & Forecasting Finance General

How does the recent business rate revaluation affect you?

business rate revaluation up or down?It has been a long time since business rates were last revalued, but finally the Government’s Valuation Office published draft new rates on September 30, 2016.
They will come into effect from April 2017, leaving a window for businesses to challenge or appeal their new assessment.
In some cases, it was anticipated that small businesses would see a reduction in their charges because they have been based on 2008 valuations and in some cases businesses will be eligible for transitional relief.
Changes announced in March 2016 mean that small businesses with a rateable value (RV) of below £12,000 will be exempt from payment.

Check your business rate revaluation

Businesses can check their new draft business rates online, but the following are some examples:
In Ipswich, a street close to the town centre containing a mix of restaurants and small, independent retailers, one small retail unit of 100 square metres was RV £5,100 (2005), £7,200 (2010) and the draft RV for 2017 is £9,600.
In a small retail mall in Harwood Road, Fulham, London a small retail unit of 54.6 square metres was RV £16,750 (2005), £17,500 (2010) and has remained unchanged in the latest valuation.
By contrast, a large retail unit of 12,754 square metres in Oxford Street, Westminster, London, has jumped from RV £3,630,000 (2010) to draft RV £5,850,000 in 2017.
There is some suggestion that the valuations have been adjusted to allow for a fairer system for smaller businesses taking into account some years of over payment since 2008.
The chairman of the Federation of Small Businesses (FSB) Mike Cherry last week welcomed the review, especially the possibility of relief for some small businesses, but has also called for more frequent revaluations because there will have been a “big jump between the old valuation and the new one”.
The Local Government Minister, Marcus Jones, said “as we make the system fairer up and down the country, nearly three quarters of companies will see no change, or even a fall in their bills, including 600,000 who from next April will have their bills cut altogether”.
We would urge all businesses to check their new valuation online and to share your views on the impact it will have on your business.

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

After the budget hubris, what's in it for SMEs?

Chancellor's red boxThe drama of threatened backbench rebellions and a resignation following last week’s budget has rather overshadowed the elements of good news it included for small businesses.
The most significant of these was the increase in the threshold for business rates relief from £6,000 to £15,000. This is expected to benefit an estimated 600,000 small businesses, particularly the small High Street retailers, many of whom will no longer have to pay business rates.
Given that many small retailers have been under extreme pressure from the rise of online retail, this will hopefully level the playing field at least somewhat as will another budget measure, a crackdown on foreign firms selling products online in UK without paying VAT.
The Chancellor calculated that this measure would save them around £7 billion per year.
To offset this loss to the Treasury another crackdown on tax avoidance was announced. This was aimed at reducing the scope for larger business to reduce tax by treating debt interest as a cost or by rolling over historical losses.

Another potential boost for SMEs?

There was help, too, for entrepreneurs with an extension to Entrepreneur’s Relief by which all long term investors who hold onto shares in unquoted trading companies for at least three years will now be able to claim the 10% reduced rate of Capital Gains Tax (CGT) on the sale of their shares.
Time will tell whether this will encourage more investors to switch from property investment, which is subject to a CGT rate of 28% on sale, to put more of their money into private companies.  If so, again it will be small businesses that will benefit.
Other business-friendly measures included a reduction in the headline rate of corporation tax from 20% to 17% by 2020.
Dr Adam Marshall, Acting Director-General, British Chambers of Commerce, welcomed the support for small businesses and entrepreneurs: “He has finally taken real action to lessen the crushing burden of business rates, and sharpened incentives for entrepreneurship and investment.”

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

Business rates reform – there is a prospect of SMEs being exempt

It is three months since the BIS (Business, Innovation and Skills) select committee of MPs published its findings on the current system of business rates and called them not fit for purpose and in need of fundamental reform.
Its suggestion was to replace business rates with a sales tax, something the Government has rejected on the grounds that the UK already has a sales tax – VAT.
There have been various suggestions from interested parties about what needs to be done.  The BRC (British Retail Consortium) proposed that small businesses with a rateable value of below £12,000 should be freed from paying the tax, something that would benefit an estimated 100,000 businesses.
Most recently the CBI (Confederation of British Industry) has waded in, calling the current system “outmoded, clunky and regressive”.
It has suggested that there should be more frequent rate reviews, that the tax should be linked to rental values rather than land values and that small businesses should be exempt.
Given that despite the economic recovery many small businesses are still struggling to survive and even fewer are able to grow we argue that the impact on them of business rates is “disproportionate”.
It time the Government grasped the nettle rather than kick the can down the road with a further delay that is expected following the Autumn review.
With support from the BRC and CBI, small businesses and their representative organisations should become proactive by lobbying Ministers and MPs for change, especially given the prospect of being exempt from business rates.

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

What help was the budget to SMEs?

 

A post-budget vote in Kent by 100 business people revealed that 80% of them were more confident about the prospects for the economy in the South East than at this time last year.

But looked at closely, there was very little in the budget that was likely to make things any easier for the UK’s SMEs, which account for more than half our output and two thirds of all employment.

Admittedly, direct lending from government to UK businesses to promote exports was doubled to £3bn and interest rates on that lending cut by a third and business rate discounts and enhanced capital allowances in enterprise zones were extended for three years. But how many SMEs will benefit from these measures?

Admittedly also, some small builders may benefit from the extension to Help to Buy until 2020 and the “support” for the building of more than 200,000 new homes.

But there was not a word about the review of business rates that had been pressed for by so many businesses, not only High Street Retailers, in the days leading up to the Budget statement, nor about the previously oft-repeated promises to reduce red tape.

Given that the Chancellor himself has conceded that economic recovery is built on very fragile foundations is such an increase in confidence on the part of the businesses of Kent a case of too much too soon?

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Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Business Rates – time for a change?

 

As the Chancellor’s March Budget statement approaches, calls for a complete overhaul of business rates have been growing.

The British Retail Consortium (BRC), several large manufacturers (including Tata Steel and Vauxhall), ex Tesco boss Sir Terry Leahy and a number of MPs have been among them. There seems to be general agreement that the current tax regime needs reform.

Some, principally the BRC, have put forward alternative suggestions, one of which is to replace the property-based tax with an energy tax.  There is no doubt that for High Street retailers the payment of rates, set at pre-2008 crash property valuations, has posed a particular challenge given the competition they face from online shopping and changing consumer habits.

But, as the British Chamber of Commerce has pointed out, business rates affect all sectors, not only retail.

The BCC is right to highlight the burden placed by this tax on all businesses. 

There will doubtless have to be a thorough review before any new system is introduced and perhaps now it is appropriate for a more nuanced approach to be considered.

There may be scope for a scale of charges tailored to different sectors of the economy, or tailored to the size of a business, or one based on the number of employees in a premises, which may achieve political as well as tax collection objectives.

We need to support both SMEs and employers to promote jobs and people on whom the economy is depending for growth.

Do you have any suggestions for the Chancellor on a fairer way of assessing business rates?

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

Unintended consequences

Turning around a struggling economy, like turning a business in distress, is a complex process where it is wise to be mindful of the possibility of unintended consequences.
Here are a couple of examples of ideas and policies that seemed like a good idea at the time.
First, of course, was the idea that it was possible to mitigate the risks inherent in subprime mortgages by packaging them with safer loans and creating complex insurance products for protection such as Credit Default Swaps and we all know where that led us in 2008.
More recently, despite many warnings against creating new housing bubbles, the Government’s Help to Buy lending scheme was supposed to encourage construction firms to start building sorely-needed homes.  What has happened so far? Anaemic growth in house building, surging house prices and an explosion of Buy to Let mortgages.
Removing planning restrictions in order to make it easier to convert redundant High Street shops into homes is one scheme of many to revive struggling High Streets.  How about actually addressing the issue of sky high business rates, last set in 2008 before the financial crisis with a review postponed until 2017?   There are approximately 40,000 High Street shops currently empty. Why would anyone start up a new retail business when business rates are so high?
I am sure you will all be able to come up with many other examples. 
Two questions: why do we seem to be incapable of learning the lessons of history? Do we rely too much on social, economic and business models that can never accurately encompass the complexities of real life and real people?

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Banks, Lenders & Investors Debt Collection & Credit Management General Personal Guarantees Rescue, Restructuring & Recovery

Should Governments try to help businesses or leave us alone?

Governments are an easy target for blame when life is difficult for businesses.
The previous UK incumbents were accused of exacerbating the conditions that led to the 2008 global economic meltdown, while the current regime’s efforts to improve conditions for business have hardly won high praise.
No business can exist in a vacuum and all benefit from so-called “public goods” such as infrastructure and the education system, but recently John Timpson, chief executive of Timpson the family-run shoe chain, was quoted as saying that the best way government can help businesses is to leave them alone.
Certainly various government initiatives, such as stimulating bank lending to SMEs, have been a resounding failure.  For example, the Enterprise Finance Guarantee Scheme only pays out when the banks have exhausted all other forms of security, including directors’ personal guarantees. Not surprisingly the scheme has failed to attract many takers.
Calls for a review of business rates have fallen on deaf ears and tinkering with the planning regulations in a bid to help revive faltering High Streets has so far yielded no noticeable results. The new Help to Buy scheme designed to stimulate house building and revive the construction industry brought forth dire predictions of a potential new housing bubble.
It’s clear that these days few politicians have significant experience of the world outside of Westminster so is John Timpson right?  Tell us what you think.

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

Joined-up Thinking on Retail?

Everybody and his wife has an opinion on what should be done to revive the UK’s High Streets and retail.
They range from the defeatist “the High Street is dead” thanks to online shopping to the Portas Pilots that have given 27 towns in England approximately £100,000 each to try out new ideas.
We’ve had the pop-up shop idea, policy changes on planning, calls for a review and reduction of business rates and calls for the scrapping of town centre parking charges.
Now Bill Grimsey, former Chief Executive of Wickes has decided to do what he calls an alternative review of the High Street, after calling all of the above “tinkering at the margins”. He believes what’s needed is a complete solution encompassing health, education, housing and leisure as well as shopping.
K2 Business Rescue agrees.
People define the High Street in different ways but what’s really needed, we believe, are integrated communities that put less emphasis on shopping as a destination activity. 
For example it used to be the case in the City of London that there was nothing but acres of offices. There was nowhere one could pop out to buy a shirt, or a gift, or perhaps a few groceries. That has changed and it’s a principle that can be applied in High Streets around the country.
Stop press:  Latest to come from a review of Portas Pilots is a proposal to allow more empty shop to residential conversions in town centre side streets to stimulate footfall.  http://tinyurl.com/nj2knoy

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

Rent seeking is a drain on growth

There has been more media doom and gloom about the High Street, with the news that 10 out of 12 of the Portas Pilots have suffered an increase in empty shops and the CBI’s May retail health check showing the steepest falls in sales this year, not only on the High Street but also online.
This is not solely about the squeeze on household budgets but also about the fact that the High Street, like many SMEs, is not competing on a level playing field.
Economists have a word for financial gain that doesn’t do anything to stimulate either real production or economic growth.  It is called rent seeking. It covers everything from income gained from vast financial sector fees, bonuses and charges on transactions to actual rent received by landlords.
Sports Direct owner Mike Ashley has given landlords a deadline of today (May 31) to accept a deal to reduce the rents on the Republic chain that he “rescued” in February from administration or he will walk away and the 116 shops will close. 
The BBC also recently highlighted the plight of one trader in electrical goods in the “Portas” town of Nelson in Lancashire, who needs to move to larger premises. He has identified an empty property vacated by a national chain but it is still tied to a long lease so the landlord has no incentive to re-let at a lower rent.
Add to that the ridiculously high town centre business rates that are no longer justified in the current climate and that the Government has not reviewed since 2007 – arguably another form of “rent seeking”.
How are SMEs supposed to be the engine of growth when even those with potential to grow are facing such impossible odds?

Categories
Cash Flow & Forecasting General Rescue, Restructuring & Recovery

Is blaming the weather for a downturn in High Street trade a red herring?

With the somewhat slow and tentative arrival of Spring have come the by now regular comments blaming the weather for the struggles of High Street retailers.
But there are signs that the High Street might not be dead quite yet and that actually the weather is only a small part of the picture.
Research from analysts Kantar recently has revealed that 70% of us still like to try a product before we buy despite the boom in online shopping and that even with the rise of online shopping 90% of retail spending last year had taken place in actual shops and stores.
While trading conditions are difficult in the continuing economic crisis it may be that what is going on is actually a restructuring process between online, out of town malls and the High Street. 
Recently Tesco has cancelled some plans to build larger retail outlets but in common with other large supermarkets continues to develop smaller drop-in stores both in town centres and suburban local shopping areas. Some formerly online only stores are also moving into physical stores in a process called “showrooming”.  They include the Kingfisher-owned Screwfix, furniture store Oak Furniture Land and SimplyBe, owned by online fashion group JD Williams.
Small independents are also said to have a place on the High Street but as a specialist in turnaround and restructuring I would want to look at their business plans, costs and potential cash flow before recommending that they go ahead.
What would help most of all, however, would be for the Government to finally get the point that Business Rates, last revised at the height of the pre-crisis boom and now at an artificially high rate, which increased again in April, are no longer either justifiable or affordable for SMEs like the independent retailers.
According to Graham Ruddick of the Daily Telegraph, even the Policy Exchange, which is said to have close ties to senior Conservatives, is recommending freezing business rates for two years until they can be thoroughly reviewed. http://tinyurl.com/pxm2c2y
In our view a review and revision downward is urgent. Freezing them will only allow the Government to avoid having to consider revaluations and reductions in the hubristic hope that growth will return to pre credit-crunch “normal”.

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Banks, Lenders & Investors General Rescue, Restructuring & Recovery

Times are Tough for Commercial Landlords

Commercial landlords are coming under pressure from all sides in the current economic climate.
The plight of those landlords in the retail sector has perhaps been the most widely publicised as more and more empty shops appear on the High Streets where retailers have either ceased trading or moved out of expensive and badly performing outlets.
The problem for landlords is the double pressure of receiving no rent for their empty properties while still being liable for paying expensive business rates, calculated at approximately 40% of estimated annual rental value, a considerable burden.
Recently Dixons, owner of Currys and PC World, revealed that it had agreed with some of its landlords, to pay rent of just £1 a year in exchange for Dixons continuing to pay the business rates. Dixons is not the only retailer with business rate only deals with landlords.
Problems are not only in retail, however. Many commercial landlords are struggling as their tenants downsize, restructure or go out of business altogether, leaving empty industrial and office units for whom new tenants are hard to find. They still have to service their own loans as well as securing their empty premises and paying rates.
Added to this is the change in attitude among lenders towards property companies. Property loans are generally provided by banks who are now asking for much more equity and much better tenant covenants with evidence of a secure income when considering new or renewal of commercial mortgages. Banks themselves are already overloaded with vacant and distressed property assets.
The confluence of pressure is leaving many commercial landlords completely boxed in and adding to the problem is the amount of commercial property on the market.
A related issue is the number of businesses that cannot be sold because of an existing lease obligation. Buyers often want to downsize and therefore are seeking to renegotiate lease terms before purchasing the business.
There are formal and informal restructuring options that can be used to help commercial landlords who are dealing with vacant and loss-making properties but restructuring property portfolios is a complex process and every single situation is different.  This is a situation that requires the knowledge and skill of an experienced restructuring adviser.