36 roundtable: funding for SMEs ... continued from previous page
thinking.” Cole mentioned the use of new funding options based on company assets, such as their debtor-book or stock, and invoice financing.
Fuller: ”We still find a lot of companies at the lower end who see themselves as profitable, but need to ensure they are continually focused on having a structured cash position.”
Haley: ”Many companies don’t actually need major funding unless they are planning capital projects. They just need to sell more to improve their cashflow, and manage their debtor books better.”
Andrew Heathcock
Emily Denyer agreed. ”If we sell more product we make more money – it’s really as easy as that. We are a small, streamlined business that hasn’t committed to any great capital outlay. We get phone calls every day offering us new five to 10 year property leases. But we’re not interested. The business is changing and growing so fast. We can’t afford to commit to where we’re going to be in 10 years.” Chewbz is also a highly seasonal business so needs flexibility to ramp up its manpower and workspace pre-Christmas.
Planning the route to success
Are SMEs planning ahead enough, asked Murray.
Emily Denyer
Denyer: ”We have very clear ideas for the next three to five years. The corporate market is our main target but we need a steady consumer base as well. We know where we want the business to go but it is incredibly hard to stay focused on that. You are tackling day-to-day issues personally all the time in a small business. I just know that every decision we make has to be part of our grand plan. It is my primary focus, but the time I get for business planning is very limited. I have to consciously make time for it.”
Nigel Vaughan agreed that too many SMEs tended to concentrate exclusively on ”the day- to-day tasks of just getting the business done”. He advised SMEs to spend at least a modest amount of time thinking about the direction of their business ”to tease out the things that are not going to work, or highlight upcoming cashflow or funding problems”.
Donaldson noted that recession experience had encouraged more businesses to undertake better planning. ”Funding has been harder to come by since 2008/9 and the professional community at large is recommending clients to have something tangible to put in front of the bank or other funder.
Paul Haley
”Even so, cash is still the key to everything, and we have inevitably started to build our relationships with clients to help them with their financial modelling.”
Denyer said many SMEs ”did a business plan for the bank manager” and then put it on the shelf while they got on with running their business. ”It ends up as a plan to get funding rather than a plan for the business.”
www.businessmag.co.uk
Kerry McKeown said Grant Thornton’s corporate finance team was now spending much more time checking, testing and evaluating client business plans and propositions to be put before a bank or funder.
Fuller said banks and funders were equally more focused. ”While we accept that forecasting can be difficult at present, it is important that all parties are aware of the three-to-five year strategy. We are keen to understand plan A, and plan B, right down to Z if necessary, as if we can understand the different scenarios, it makes it easier to help and support when things don’t go to plan.”
McKeown said too few SMEs put stress-testing into their business plans. ”What happens when you take 10% out of your sales? That’s often missing from what the lender wants to see.”
Andrew Heathcock: ”That’s the intangible quality of having a good management team in place. They understand that the unforeseen can occur, and will have the skills to get things back on track.”
Julian Winfield said Haskins undertook extensive four-year planning involving staff at all levels, but found it more difficult to do long-term strategic development planning. One reason was red-tape and bureaucracy. ”The planning process can be scary. We started planning our newest site in 2001 and we are just building it now near Worthing. It’s a £12-million development and it’s cost us £1m in professional fees, dealing with environmental and highways issues for example.”
Planning for overseas operations could be even more difficult, Heathcock noted. He exampled SMEs that had found too many hurdles to overcome with foreign investments, and decided to concentrate on making their UK operations more profitable instead.
Murray queried whether public-sector cutbacks, causing the demise of support organisations such as SEEDA, and reductions in UKTI’s budgets, were endangering the UK’s chances of exporting its way out of the recession.
Which port in the storm?
Denyer self-funded the start of her business two years ago, but following organic growth she was now considering borrowing. ”Our contracts have got larger and we’ve faced negative cashflows of up to £60,000. So, we now want to separate personal and business funding, and change the point where we start to worry.” Although with her current bank since the age of 14, she said the business would be considering other banks. Her husband had been impressed with the service and facilities he had received as a business customer with Santander, she added.
Winfield explained that Haskins had been with its previous bank for over 100 years. ”It was a big decision for us to move. We are a cash-generating business but we have capital- intensive requirements to help fund our development projects and acquisitions. Our 50 acres of freehold assets made us a safe-bet for Santander Corporate Banking.”
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – OCTOBER 2011
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44