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Financing Your Business In A Tough World
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Financing Your Business In A Tough World

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Presentation by the Founder and Chairman of the Corporate Finance Network (GB) LLP discussing alternative financing for your business.

Presentation by the Founder and Chairman of the Corporate Finance Network (GB) LLP discussing alternative financing for your business.

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Financing Your Business In A Tough World Financing Your Business In A Tough World Presentation Transcript

  • Financing your business in a tough world
    Alternatives to the traditional
    options on the high street
    Autumn 2009
  • Traditional routes
    Overdrafts
    Loans
    Asset based lending (HP, factoring)
    Generally provided by high street banks
    “Big 4” = 70% + of market in 2007 (Source: Business Banking survey 2007)
  • The High Street banks today?
  • Banking options
    Enterprise Finance Guarantee Scheme
    Replaced SFLGS, similar guarantee for bank (75%)
    Wider availability to more businesses but still some restrictions (eg insurance, education) – check
    Still bank’s decision
    Extra premium payable
    Plus some banks now have:
    new mandates to lend
    change pricing
    or convert debt to equity (Capital for Enterprise Fund)
  • What are the alternatives?
    • Our Top 10 ideas for innovative sources of finance
    • Various sectors - hopefully at least one which will suit you
    • Plan ahead – it takes time to arrange finance. Don’t wait until...
  • Planning
    How much do you need & when by?
    Don’t leave it until you’re in your weakest position & be sure you won’t damage your current facilities
    Have an excellent business plan – both the ‘story’ & the ‘numbers’
  • Warnings!
    • Contacts, contacts, contacts
    • Personal recommendation is best
    • Each business’s circumstances are different & these options may not be appropriate for all businesses – please talk to us afterwards for more information & to review your situation in more detail
  • 1a & 1b
    • For all businesses
    • The fundamentals
    • Reduce your costs, especially:
    • Utilities
    • Purchase ledger costs
    • Use a procurement expert on a 50:50 savings share or put your requirements ‘out to tender’
  • 1a & 1b
    • Working capital systems
    • Debtors
    • Creditors
    • Stock
    • Cash
    • Credit control
    • the best it can be?
    • do you offer discounts & do they really work?
    • Paying suppliers
    • On 30 days?
    • Extend credit terms
  • 1a & 1b
    Stock control
    Get better ‘just in time’ relationships with your suppliers
    Petty cash & employee expenses
    Use company credit cards
    Get hotel trade accounts & fuel accounts?
  • Number 2
    • Do you sell/distribute commodity goods to businesses?
    • Sales aid finance gives you the ability to offer your customer a 3rd party finance facility to pay for their goods over an extended period of time
    • Also known as supplier finance or point of sale finance
    • Watch that you aren’t tied into the facility or have to cover any defaults; you don’t want a tri-part agreement
  • Number 3
    • Independent asset based lenders offer
    • Factoring/invoice discounting
    • Plus ‘cashflow’ loans
    • Or EFGS
    • Spread your lenders & get a better service
    • Watch the terms will suit your business – eg concentration clauses & credit insurance
  • Number 4
    • Do you sell goods online via Worldpay, Protx or similar?
    • Do you have to wait 30 days until you are paid?
    • Merchant finance will provide upfront cash against that balance you are due
  • Number 5
    • Do you hold stock of finished goods that have a wide resale market? (usually consumer goods)
    • Stock finance will advance you a facility against the value of that stock
    • But – only applicable to those businesses who have excellent continuous stock control systems & many resale options
  • Number 6
    Financing your payroll
    56 days advance
    Doesn’t affect your existing facilities
  • Number 7
    • Do you have any properties with substantial equity?
    • Bridging finance is a short-term facility which can be arranged speedily
    • But quite expensive c.2% per month, hence short-term
  • Number 8
    Have you developed a new technology?
    Could be licensed if it is patented & can earn you income from royalties
    Skills are in pitching the idea to the right person in the organisation – not ‘techies’
  • Number 9
    Corporate Venturing Scheme is used by certain large corporates to gain tax reliefs
    Invest/JV with a small business
    Both gain something from the arrangement eg access to specialist skills or resources
  • Number 10
    • Buying a business?
    • Negotiate the deal for deferred consideration – you don’t pay for all the business on ‘day 1’
    • Many SME disposals are structured this way & this will increase as business sales get more difficult
  • Conclusion
    There are many alternatives & others not even mentioned here (eg grants, equity finance)
    We have the contacts & the skills
    Plan ahead & talk to us soon
  • Contact details
    Kirsty McGregor, Chairman,
    The Corporate Finance Network
    For your local firm, visit www.corporatefinance.org.uk/about-us.php