Leasing is powering ahead in the funding marketplace. In 2013 43% of SMEs used leasing as a method of funding new plant and machinery, office equipment and cars, this increased to 51% in 2014. The survey of 3,000 SMEs from Germany, France, UK, Italy, Spain, Netherlands, Poland, and Sweden found that SMEs financed 19% of their total investment via leasing in 2013, more than any individual form of bank lending. This figure showed the popularity of leasing among SMEs, as the leasing penetration rate for businesses of all sizes stood at 12% in 2013. SMEs focused on exporting and growth were found to rely on leasing to a greater extent than other firms. Exporting firms financed 20% of their investment via leasing, as opposed to 18% for non-exporters. Similar results were recorded for growth firms, with almost a quarter (24%) of their investment financed through leasing, significantly more than the 18% of non-growth SMEs. For further details contact: Peter.kelly@hcbusinessadvisors.co.uk … [Read more...]
Time to get back on the horse?
Over the last few weeks and months (and for some possibly years) we have been buffeted with bad economic news. If it is not the plight of the Euro, it is the unemployment figures or the deficit or many other pieces of informatioin that makes us all feel gloomy about our prospects. Well I say enough is enough! We cannot sit on our hands for ever waiting for market conditions to improve. Conditions will not improve till WE do something about them. I know many companies that have had good years throughout the recession (double dip or not) Why? They have gone out and got on with business. They have not cut their marketing budgets and some have increased them and fought even harder against their competitors. They have not listened to the doom sayers and they have made their own 'luck' Talking to a small company recently they were moaning about the state of the Euro zone. This intrigued me as they do not export and have no intention of exporting, they do not buy from outside the UK and … [Read more...]
Deficit reduction or growth – which is the chicken and which is the egg
Small business that get into trouble by over-borrowing, end up making no money, or even worse, making a loss because the cost of borrowing gets to be greater than their profit. Where do they go from there? Growth: you need money and resources for that and if there is none, you have to find it. Deficit reduction: cost reduction is an absolute must for businesses in this position to free up some cash. Restructuring: this is the White Knight option - someone, often a predatory acquirer, comes along who will take on the debt at a lower rate of interest - not many of those around today. Default: for some companies going into Administration is the only option, with a pre-pack to take out the best bits and leave most of the debt behind. Shame for the the creditors, especially the tax man and the small shareholder. So what about the National Debt? Default - think of Greece. Restructuring - think of the ECB and the IMF. Deficit reduction - think of the UK and other realistic national … [Read more...]
Should we do more to repatriate jobs to the UK
Are we missing a trick? Last week saw the US approving legislation to bring jobs back to America that had previously been outsourced to lower-cost economies. The measure is aimed at reducing America's 9% unemployment, and with the economic case for outsourcing no longer as compelling as it was 10 years ago this seems like a good idea. This begs the question - should we be doing more to repatriate jobs to the UK, to tackle our own unemployment? Bringing jobs back to America Congressman Frank Wolf reports that "legislation approved yesterday in both the House and Senate requires the Commerce Department to immediately set up a task force to examine what needs to be done to encourage U.S. companies to bring their manufacturing and research and development activities back to America’s shores. " "The department also must develop a list of “best practices” for states and communities to follow to help foster the repatriation of jobs that have moved abroad." Is this not happening … [Read more...]
Bank or pawnbroker?
There was a time when as a small business owner you could go to your bank with a reasonable business plan and you would get a modest overdraft. But not now: what has happened to make the banks so dislike overdrafts? Are banks now behaving more like pawnbrokers than old fashioned banks? Banks don't like unused overdrafts I was at a talk last week by a senior manager from a national bank, and he explained that his bank requires that an overdraft has to be covered by a capital reserve. And this is the case even if the overdraft is secured by the borrower. And fundamentally, what the bank doesn't like is unused overdrafts - they have a capital reserve for funds that have not gone out of the bank! This is why, if you go in to talk about a long term facility, they move you towards a loan. Short term support However, the presenter did say that many clients make the mistake of asking for a long term overdraft facility when what they really need is short term help. Especially for … [Read more...]
Get a grip on your cash flow
Predict and plan: work out in detail when you can expect cash to come in and plan how you will spend it. It will help you to see where you can generate extra cash to fund new projects if you are growing, or even pay off old creditors if you are stressed. While this applies whatever the size of business, it is particularly critical if you are a micro businesses or a small businesses with significant order-to-ship lead times, buying materials and selling products on credit terms, when you will have a significant working capital - cash - requirement to fund the work in process. On this article we'll show you how to put together a cash flow management workbook that will help you to manage your cash, month by month. Start with your order book and prospect list Starting with cash coming in, you'll know your order book, but what about beyond that? This is the hard bit - study your prospect list and write down when you can expect to get new orders from those clients. For this you have to … [Read more...]
Selling into export markets
Occasionally you come a cross a business that reminds you of what it takes to be successful. Here was a export business that was selling process control instrumentation into a well defined global niche market. Selling was done by a UK-based sales engineer who had intimate knowledge of his market place, and with a market-leading technology, the company had been able to price its products to make a handsome profit. Support costs were low and the products were made entirely in the UK. What more could a government want - a tax-paying export-led business that created employment in the UK! Many different ways of selling into export markets However, for most businesses, growing an export business is not going to be quite that straightforward. A product that someone wants; selling it to them; shipping it; getting paid; low aftercare costs; and making a profit - in principle doing business overseas is the same as doing business at home, but it is certainly more complex, and it is the … [Read more...]
Why are small businesses not borrowing from banks?
A recent article in the Daily Mail suggested that small businesses are hoarding cash because they fear overdrafts could be slashed at any moment. However, isn't it more likely to be the issue of personal security - business owners are just not interested in offering personal security for what in many instances are relatively modest sums of money, required on an intermittent and short term basis. What are overdrafts and loans for? You get the impression that the banks are trying to re-establish the principle that overdrafts are essentially for managing cash flow and that loans are for working capital. This distinction was blurred until recently due to the banks' historic attitude to risk that has recently toughened, and the risks and time-scales are different in the two cases. You need a good business plan But, whether it is for an overdraft or a loan, a good business plan is required to present to the bank, but they are not the same plan - they have different objectives and … [Read more...]
What do you do when a customer makes a complaint?
What will you do if your product or service fails to meet your client's expectations and they make a complaint? You certainly don't put it in your desk drawer and hope it will go away - that's a sure way to trash your reputation. And don't hide behind your Terms and Conditions. We've all experienced being given the brush off when we thought we had a legitimate complaint - it makes you think twice about using the same company again. Actually, you get back to them promptly and talk to them about the issue: you promise to try to resolve it within a given time-frame, and try to keep that promise. Your client might still be unhappy with what you supplied, but they'll be happier with you and your company as they will know you have responded to their complaint and their issue is being addressed. Put in a Complaints Handling System And you should do this systematically for every complaint. Faced with this, recently, a client asked me what was meant by a Complaints Handling System that … [Read more...]
Business Improvement Strategy
Imagine a business that was trying to grow, but was making no profit, generating no cash, and not paying its owner-directors a proper salary or dividends. By going over their business, end-to-end, and they found 27 areas where their business could be improved, and by implementing their 27-point plan, within a year they had turned their business around to a PBIT (profit before interest and tax) of 17% of sales. They then tackled their interest payments: with help, they were able to find lower-cost working capital so that they could pursue their plans for growth, and still have enough to pay themselves a decent return. Business improvement should be part of your business strategy There is as lesson to be learned here about thorough and systematic business improvement: no matter whether your business is rocky like theirs, or doing reasonably well, there can be a huge benefit in having business improvement as part of your business strategy. It can help you to: Find new … [Read more...]
