entrepreneurs 31 Local business benefits from flexible approach
The profile of smaller businesses is higher than ever – thanks to a combination of Dragons’ Den and increased government and media interest in smaller firms. But in a sluggish economy with increased competition, securing a foothold and growing in a consistent and sustainable way is by no means easy. Access to finance has become more difficult, while customers and suppliers are less likely to extend terms
The importance of SMEs to the UK economy is well established. Smaller businesses account for around 48% of the economic activity in the private sector, employ 60% of the UK workforce, and play a central role in driving innovation and high value development. Clearly, support for SMEs is critical to the health of the UK economy.
It’s with that in mind that Santander set up the Breakthrough programme, designed to provide a range of services, support and advice to smaller businesses. The programme is aimed at businesses that have advanced well beyond the start-up stage to achieve a turnover of between £500,000 and £10 million per annum while posting growth of 20% or more in turnover, profit or employment. However, despite demonstrating great performance, many of these businesses sit firmly in a ‘funding gap’.
Headed up by former Gateway to London chief executive John Williams, Breakthrough has at its heart the commitment from Santander to invest £200m in fast-growth SMEs; and it is backing that up with a support network of experts and advisors to stand alongside these “growth champions” as their journey continues.
Williams believes these businesses need help. “We are targeting the £500k-£10m turnover band. Below half-a-million pounds turnover, business angels will generally be interested in providing support. Above £10m, private equity companies or venture capitalists will look to explore opportunities for investment. So there is a market segment of companies that are potentially the fastest-growing in the country, yet whose growth is being constrained by this funding gap”.
“The average level of finance we’ll provide will probably be around £1m, so we aim to help at least 200 established fast-growth SMEs to achieve their potential.”
In practical terms, that means working with SMEs to provide support in a range of ways.
They include holding Breakthrough Live, a series of events to bring together entrepreneurs, finance providers and professional service firms to network and develop relationships; the internship
THE BUSINESS MAGAZINE – THAMES VALLEY – NOVEMBER 2012
In order to continue meeting the supermarket’s rigorous trading conditions, Preston and her team need flexible finance arrangements to cope with any eventuality. “We’ve worked with the bank on developing a more flexible and less formulaic approach to invoice finance,” she says.
“Initially it was pretty basic. Recently, we’ve looked at it again, examining the security and debtor book that the finance is provided on – we’re dealing with blue chip customers by and large – and that has allowed us to get a more sensible and nuanced offering from the bank. This has freed up quite a lot of capital for the business.
“In the next year I could foresee having a conversation with Santander about our expansion plans. Because they understand what we’re doing and have spent that time, I’d feel very comfortable going to them for further finance.”
Cheryl Adams, regional director
programme, designed to match the cream of recent graduates with the growing businesses that need their skills and drive with subsidised three-month placements; and master classes that offer entrepreneurs the chance to visit iconic businesses (such as Google) and absorb the lessons of success.
Underpinning all this is the commitment, through the growth capital fund, to provide mezzanine finance to eligible growth companies.
Breakthrough has already made a significant impact in the Thames Valley region. For Sally Preston, managing director of Amersham-based Kids Food Company, working with Santander through a period of significant growth has been crucial in supporting the business’s expansion.
Over the past three years, Kids Food has grown at around 60% pa, in part thanks to securing trading relationships with major supermarkets. This is an arrangement that, while positive, does present the business with operational and financial obstacles.
“The big challenge is cash, and making sure you’ve got enough to pay for the raw materials before you sell them,” says Preston. “We import a lot, and we have to pay for goods before we sell them on. So utilising services like Santander’s invoice financing has been really important to us to keep the liquidity within the business.”
www.businessmag.co.uk
Cheryl Adams, regional director for Thames Valley adds “Over the last year Santander’s Breakthrough programme has taken positive strides to help entrepreneurs get the advice and support they need to grow and succeed, entrepreneurs like Sally Preston and businesses like Kids Food are what our economy needs to get it on back on track and we will be doing everything in our power to help them achieve this.”
In November, businesses in this region will have the chance to attend a ‘Breakthrough Live’ event in Oxford – for more information visit
www.santanderbreakthrough.co.uk
To start working with Santander contact you local relationship team.
Details:
Relationship team 0118-9211680
www.santandercb.co.uk
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