Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Thriving after lockdown | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Covid-19: through investors’ eyes | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
How to exit in 2020 | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Get virtual advice for Covid-19 | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Protecting your wealth | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Cash in a time of crisis | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Bouncing back fast | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Key tools for remote working | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
COVID 19 – Business Owners’ Advisory Service | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Covid-19: get the help you need | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Exit during a pandemic | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Making the most of alternative finance | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Start-up loans - the ‘bots’ have arrived | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Entrepreneurs’ Relief changes from £10 million to £1 million | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Growing by winning procurement contracts | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Five ways to benefit from a growth market | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Make your business more attractive | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
How’s your poker face? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Investment bonanza | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Help… we’re scaling up! | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Six steps to boost productivity | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Crunch time for Entrepreneurs’ Relief? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
How to prepare to sell your business when it’s dependent on you | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Five things you need to know | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Seven rules for hiring employees | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Five reasons loans are declined | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Starting over | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Have you protected your IP? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Navigating to exit in uncertain times | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Raising money to expand | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
How to keep cash flowing | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Lacking interest? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Selling your business to employees | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
The opportunities of private equity | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Skills shortages – what’s the risk? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Do corporates want your start-up? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
The bespoke approach to borrowing | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Don’t cook the books! | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Entrepreneurs’ Relief – which way now? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Should you sell up? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
When a key shareholder departs | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Securing a start-up loan | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Be prepared for an offer | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Finding cutting-edge expertise | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Five ways to find early adopters | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
15 facts about extracting capital | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Do you know your SPOFs? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
11 tips for perfect pitch presentations | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Entrepreneurs’ Relief: how it affects you | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Are you a credible founder? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
How to nurture clients | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Is your business your pension? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Could you get R&D tax credit? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Challenging the corporate bullies | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Ten changes to make at £1m turnover | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Five things affecting exit valuation | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Playing the long game | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Attack of the cyber criminals | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Borrowing from friends and family | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Should you start again? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Breaking down the barriers | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
When is the right age to sell your business and retire? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
How to recruit and retain top talent | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
It’s about culture | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Volatility is here to stay | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Should you save or invest? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Five things overseas customers hate | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
How to fund your success | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Crowdfunding – the new normal? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Over the line | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Going concern | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Knowing when you’ve won… | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Leading in changing times | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Setting up a trust | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
The value of Brand Britain | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Five sectors attracting angel investment | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
The emotional rollercoaster | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Fashioning a new business | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Investing the proceeds of exit | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Retaining key staff | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
How to stay agile | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Finding VC seed funding | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
When buyers come knocking | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
The clock is ticking | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
A start-up born from life’s experiences | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Inheritance tax essentials | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Podcast: the value of advice | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Is your supply chain fit for purpose? | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Giving up equity | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Numbers to wow investors | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Olderpreneur power | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Stay connected | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Maintaining confidentiality | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Guide to IT Budgeting | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Start-up resolutions for the year | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
How to exit in style | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Five resolutions for expansion | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
New year, new growth plan | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started
Six steps to success | SJP Entrepreneur Club

Important notice

Although the content of this article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.


Getting Started

Winning business at a social distance

Being confined to our homes has created an unprecedented business landscape that is tricky to navigate. But there’s no reason to believe you can’t build relationships from behind a screen

Winning business at a social distance

When it became clear that we were heading towards a global pandemic, the thoughts of most business owners turned towards survival. This first stage was about cash or liquidity and then cutting costs and accessing government schemes to keep the business going. For those businesses that did survive, then came the second stage: how do you go out and win work when you have to stay in?

Speaking about the Covid-19 pandemic, UK Health Secretary Matt Hancock told the House of Commons, “This is a marathon, not a sprint”, and the same, albeit overused, analogy should be applied to winning new business in the current economy.

Regardless of any pre-pandemic plans, it’s going to be much tougher than expected to win new business. It’s a difficult market for everyone, and potential clients are particularly unlikely to respond to anyone who looks as though they’re trying to profit off the back of this crisis. Instead, use this time to build relationships that will create opportunities for the future.

“We’re not out there meeting new people, so people are returning to valued relationships that they have already built up. Go around everyone and ask, ‘How are you?’ Just share some comfort and support,” explains Richard Murray, Chief Commercial Officer at business growth advisor Elephants Child. “It may be a longer burn, but any good will you can engender will pay off in the long run, because people will remember you have reached out. So, get out there and talk to the people you know. Ultimately, that will be the best route to market at the moment.”
 

Open for business

While now probably isn’t the right time for a sales pitch, it’s important to let your network know that you are up and running. “The second part of that conversation can be making sure they know you’re still open for business and that you want to win more, because not everyone will assume that you want to scale up at this time,” says Richard.

Be sure to include the fact that being open for business means having adopted new processes that tie in with government guidelines and guarantee the health and safety of your employees. Your network needs to know that you’re responsible.

For the foreseeable future the days of networking drinks, shaking hands and exchanging business cards are behind us, which means winning a cold client is unlikely. Instead, focus on client referrals through your existing network. “Mentally, signing up to a new provider is a bigger step than it was six months ago,” explains Richard. “If people are doing business and want to take on new suppliers, they will want some sort of personal recommendation and testimonial.” He advises reaching out through existing clients, offering them a value exchange on services if they refer a friend who successfully signs up.

Richard also suggests leveraging your existing network by using them as testimonials. “If you have someone who’s thinking of using your service, introduce them to one of your clients. Let them talk about their experience of dealing with you, because that’s going to start to give people that reassurance.”
 

The new normal

Now is also a good opportunity to build brand visibility by offering complimentary webinars. Make sure they’re authentic and interesting, and encourage clients to bring people along. “It may not mean business tomorrow, but the value that you would get off the back of that is tremendous in terms of building those longer-term relationships that will turn into clients,” says Richard.

By now most people are getting used to this digital business environment. For many of us, speaking to clients and potential clients over video conferencing is the safest – and only – option, which means more and more business deals and negotiations are taking place online.

Video technology has enabled the creation of a virtual meeting space that’s not too far from a face-to-face scenario. However, it does make us work harder. Research shows that it’s trickier to read body language, it’s harder to engage, as most of us don’t look directly at the camera when we’re talking, and we struggle more with silences on video than we do face-to-face. But something as simple as moving further away from your camera, so hand gestures can be seen, can make a big difference.

In fact, using video instead of in-person interaction could actually be a positive. Video conferencing does have the benefit of being a considerably cheaper means to conduct negotiations than face-to-face meetings. And amid today’s economic uncertainty, perhaps that’s not such a bad thing after all. 

Business is looking different for everyone at the moment but you can thrive. Safety allowing, most of us would rather be out there, tangibly winning business in a way that we know works. But by strengthening your existing network, having the right conversations and utilising technology to have those conversations in the best possible way, you can build not just relationships, but pipelines and return to revenues.

 


The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.

Thriving after lockdown

Martin Brown, CEO of growth advisors Elephants Child, considers how businesses can return to good health after the pandemic

Thriving after lockdown

In this article, I’ve looked at how businesses can thrive when they emerge from the coronavirus lockdown. And I’ve considered what entrepreneurs must do to take control of the six strategic areas for business recovery that make up the Thrive agenda: Team, Honesty, Revenues, Innovation, Velocity and the Environment.

Team

During lockdown you may have adopted new ways of working to keep your teams safe and motivated and these could provide the ingredients of success as things get back to normal. For instance, condsider the health and wellbeing issues related to reintroducing travel to work. Is it really needed or, more over, what is the right blend with office and working from home? Lessons learned through this difficult period can provide the foundation for a new and more resilient operating model. And it’s not just the way you work with employees that may need to change. Think about your relationships with other stakeholders, such as investors, suppliers and, of course, clients. Rethinking how you work with them could lead to a greater value exchange and richer outcomes from collaboration.

Honesty

At this moment of crisis, there is a real opportunity for you to demonstrate important leadership traits, starting with authenticity. Such traits can help you to increase the positive energy each time you engage with staff, clients and suppliers and will see you evolve as a competent champion. You should also show the foresight to pivot your business model as required to ensure your company prospers. Resilience will be needed, as will a large dose of pragmatism and humour. This, mixed with honesty, will galvanise your businesses for a greater future. Use the simple who, what, where, when, why and how framework to approach challenges and respond with outstanding solutions.

Revenues

As we emerge from lockdown there will be a need to quickly return to revenues. This has to be done while staying true to your purpose and aims, whether they are charitable, or community or commercially biased. You will also need to balance sensitivity with commercial reality. While providing support in tough times may have built relationships and sentiment, this should not be confused with the need for a strong value proposition. Acting quickly and making an immediate difference will give you the ability to retain and grow client revenues. New client acquisition equally needs to be a function of a rapid sales process and effective pipeline management.

Innovation

In the Covid-19 environment, innovation has been key to the survival and stability of businesses and sticking with this mindset will also allow you to thrive after lockdown. Think of some of the non-traditional collaborations we have seen in recent months, such as the Formula One teams joining forces with open designs, to manufacturer ventilators. Many entrepreneurs have rapidly got to grips with new technologies, such as Teams, Zoom, Google Hangouts and Sharepoint in recent weeks. Continuing in this same spirit by embracing big data, artificial intelligence and the internet of things should help you to improve and automate what you do and enable your business to thrive.

Velocity

To re-start or reimagine your business you will need the urgency and mindset of a start-up, and a focus on the marketing Ps of product, price, promotion, place and people. Use this period as a time to work ‘on’ the business, to refine your purpose and to take advantage of the lessons you’ve learned during the coronavirus crisis to inform your strategy for the future. If daily and weekly video calls have brought a crispness and clarity to the way your team works, how can you best apply this after the pandemic? And if your place is informed by digital and physical appropriateness, surely this will drive velocity and a stronger, quicker recovery.

Environment

An economist might argue that macro thinking and micro action on sustainability go hand in hand, so what does your business do to improve our world? And what does it do to protect and create jobs and increase profit (and pay tax)? As a business leader, these are things you can plan for. And in the post virus world they are likely to be high on the agenda.

So, what of the business-specific environment as Covid-19 recedes? Will a large office be needed? Could it accommodate social distancing? Do you need the cost, downtime and waste of excess travel? And what about the ongoing wellbeing of the team? How do these near-term issues drive organisational development now and for your future?

And can your annual operating plan be flexed if and when Covid-19 morphs into its next derivative? The notion of a robust yet agile plan is key and for the vast majority of SMEs, a plan will allow for flexibility and adaptation with a mix of deliberate and known actions, rather than actions that are simply a response to a changing situation.

The SME business community are the risk takers and the dream makers. You are critical in returning the economy to a new normal. For business leaders now is the time to adopt the mindset of a start up, commit, strategise and plan with velocity to thrive after lockdown. The Entrepreneur Club is here to help and if you’d like to take advantage of our complimentary Virtual Coronavirus Advisory Support sessions, speak to your St. James’s Place Partner.


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

Covid-19: through investors’ eyes

Investors tell us how they’re still on the lookout for promising companies despite the coronavirus outbreak

Covid-19: through investors’ eyes

In the past couple of months, our world and working practices have changed drastically due to the Covid-19 pandemic. Workplaces have scrambled to adapt, and for the most part have done so successfully. But how has the pandemic affected tech investment? With a global recession on the horizon, there have been some worrying stories in the press about the ability of the UK’s tech start-ups to weather the storm. However, this gloomy outlook is not necessarily warranted.

A study carried out by Plexal, a workspace provider, and start-up database Beauhurst found that British start-ups had raised £663m1 since the coronavirus lockdown began in the UK. Looking at funding rounds between March 23 and April 27 2020, the study found that start-ups actually raised 34% more than in the same period last year (although the number of deals done was down).

But even with this positive news, entrepreneurs may be uncertain about the funding opportunities currently available.

Zooming in

Karen McCormick, Chief Investment Officer at transatlantic venture capital investor Beringea, says that the company quickly adapted its entire investment process so that it could be delivered digitally. First meetings are arranged on Zoom, ‘digital site visits’ have taken place, and the company has hosted investment committees remotely. These adaptations mean that Beringea has been able to manage its investment process safely and effectively, looking after the health of its own team as well as that of entrepreneurs.

“We had initial concerns about whether we would truly be able to build our conviction for an investment while not being able to meet the entrepreneurs in person or travel for on-site visits,” says Karen. “So far, however, we do not feel the lack of these traditional interactions has created problems.”

Alessandro Casartelli, Executive Director at GP Bullhound, a technology advisory and investment firm, says that as meeting physically is no longer an option, management teams are spending more time with investors on video, and meeting more team members. “Sometimes we organise sessions without an agenda that are a bit more casual; it really helps to build that rapport and chemistry that is essential for doing a deal.”

He also affirms that it’s very much been business as usual, with the company in the process of making several investments. “Certain businesses – for example those in videoconferencing, e-commerce or marketplaces, among others – have had a boost,” he says. “They’ve accelerated their growth and they’re in a position of strength.”

Still investing

Beringea’s investment has also not slowed down. The fund has co-led a US$29m investment in EDITED, a retail data and analytics platform that works with top-tier names such as Zara, Chloé and Boohoo, to improve their pricing and merchandising decisions. It also led a US$3.75m funding round for Luxury Promise, a resale marketplace that enables consumers to shop sustainably for pre-owned luxury goods. The firm has several more investments in the pipeline, including those that began after the start of lockdown. “Covid-19 has not changed our core investment strategy, but it has carved out interesting niches,” says Karen.

As we continue to rely on remote working and apps, online security and AI solutions will thrive. Karen says that Beringea is increasingly interested in the areas of FinTech, RegTech and cyber security – all sectors the firm focused on before the pandemic, but which it sees as of even greater interest and importance now. In addition, says Karen, people are more concerned about their health and wellbeing, so innovations in how we manage both remotely will be key growth areas.

“We see plenty of opportunities for entrepreneurs, whether they are selling to business or consumers. There are certainly still challenges ahead, but the businesses that can adapt to the new environment will survive and thrive,” she says. She does sound a note of caution, though, saying that companies should carefully consider their ideas and plans and whether they might thrive in the current climate – are they offering a particularly popular service? – or whether it might serve them better to put things on pause for a while during this uncertain time. “In terms of raising from Beringea, it is worth remembering that we are primarily concerned with backing talented entrepreneurs that can build successful teams. It is important that we understand the short-term impacts of Covid-19 on your company, but we are ultimately focused on your skills and expertise.”

Alessandro says that long-term thinking is more important than ever. “It’s really important when you speak with people that you’re very well prepared, not only to answer short-term questions but also on how you’re reacting to this new normal.”

Pitching’s new normal

As to the new norms of pitching, Karen’s main advice is to not be nervous about some of the distractions that can inadvertently pop up in meetings. “We are used to, and comfortable with, kids running across the background, screens freezing up for a minute, slow connections etc. Try not to let these things faze you – they certainly don’t faze us at this point!” She does, however, point to the importance of ensuring that if you choose to use a false background, it isn’t too distracting.

Alessandro says that when pitching, entrepreneurs should be aware that communicating emotion through video can be harder than in person. “It’s important that the presenter pays attention to the body language of those on the call to see if they’re interested, or if they should speed up or slow down. You should take pauses, make sure people ask questions and make it interactive.”

“One thing that probably needs to be different when pitching remotely rather than in person is you must have more than one team member who can answer important questions,” says Karen. “A gap in knowledge can be far more challenging – for example, you will not give a good impression if your finance director has a connection that is too poor to be useful or cuts out, leaving you with no one to cover their areas of expertise. Make sure that you are fully briefed on each other’s slides – it is more work, but it will spare your blushes,” she says.

 


The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.Source

1. https://www.cnbc.com/2020/04/28/coronavirus-uk-start-ups-have-raised-825-million-during-lockdown.html

How to exit in 2020

Demonstrate strong leadership through the pandemic and achieve three months of stable, sustainable profitability and growth

How to exit in 2020

Business owners have been left in a state of uncertainty amid the Covid-19 crisis, and none more so than those looking to sell in 2020. But while the global pandemic has led to a pause in acquisitions, an exit this year could still be possible.

“Transactions are being put on hold, but it’s a postponement rather than a cancellation,” explains Andrew Lock, Co-Founder and Partner at LockDutton Corporate Finance. But after months of hold-ups on the completion of M&A transactions, the wheels of business are beginning to turn, and private equity houses are now saying they are once again open for business. Enquiries around new purchases are beginning to rise and buyers are ready to complete purchases that have been put on hold. “They have stated that for owners of businesses that have previously expressed a desire to partially sell or sell in future, then they remain keen to keep the dialogue going,” says Andrew.

There hasn’t been enough activity since economies around the world came to a standstill to know whether those looking to sell should be preparing for a slight downward adjustment in price. But what is certain is that owners of SMEs looking to sell have an opportunity now that they didn’t before, as Martin Brown, CEO of Elephants Child, explains. “The very fact that they’ve survived shows a lot about resilience and the nature of that business,” he says. “In the SME space, most business owners don’t have a plan, and those that didn’t have a plan during the pandemic are likely to have suffered more than others.”

Show leadership

And it’s at a time like this that leadership qualities can shine and impress potential buyers – or further impress existing ones. “It’s interesting to see whether entrepreneurs have been able to show their resilience by demonstrating that they are a good and competent leader,” says Martin. “A key strength of a good leader is forward-thinking: we understand we’re in crisis, we understand it’s been something like we’ve never seen before, but as a leader I’m still thinking ahead to that exit event and preparing as best I can for it.”

But how can you show proof of preparation for something as unprecedented as this pandemic? “It’s the old notion of controlling the controllables,” Martin says. “If you sit back and are overwhelmed, or are waiting for things to happen, you can blindly drift into a situation. Whereas if you start to think about the future and the things that you need for exit, you start to take control.”

In fact, there’s no time like the present for leaders to get their heads down and start working towards that exit. “If you wait for the pandemic to end – and who knows how long it’s going to go on – you’re just going to lose time,” explains Martin. “Having that business plan and the financial projections, the cash and balance sheets and profit and loss, in the form of an information memorandum is good work that should be done now.”

Return to growth

But a slow return to activity means an acquisition will still take time. The exact time period will vary between buyers or private equity houses, but there is one commonality. “The acquiring party will want to see a stable and sustainable level of profitability and growth for a period of at least three months,” says Andrew. “So, if it takes until September for the business to be back up and running at full pace, then by early December the acquirers will have three months’ active information and would look to conclude a transaction shortly afterward.”

And owners who have had to take advantage of government loans or furlough employees and are worrying about how this may come across, needn’t. “As long as their narrative is clear about how they would then expect to recover and move away from those initiatives, I don’t think that’s an issue at all.”

Buyers will, of course, need to know how the business has performed in previous years, and this will by necessity include figures over the period of the pandemic, but as important are the figures for the business’ recovery and what it will look like in the next three years. In the concluding words of Andrew: “There is no reason to believe that well managed businesses will not be successfully sold.”


The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.

Get virtual advice for Covid-19

Take advantage of our Virtual Coronavirus Advisory Support sessions to help your business survive, stabilise and thrive

Get virtual advice for Covid-19

The Entrepreneur Club is working hard to support businesses through these challenging times and that includes our complimentary web-based advisory service that gives businesses the opportunity to get the guidance they urgently need from SME specialists.

These sessions are run by business growth advisors Elephants Child. CEO Martin Brown explains: “On any given day we could speak to three, 30 or even 60 companies, all of which are trying to furlough people or leverage government grants or, in short, survive. The notion of social distancing is very real, so we’re doing most of our work on Zoom or Teams or whatever medium entrepreneurs prefer. I’ve just talked to one company that wants to realise £3m in January 2021 and another that wants to ramp up operations and needs to put together a budget for that. These are organisations doing very progressive things in very challenging times.”

If you would like to book a virtual session with an adviser, you can do so through your St. James’s Place Partner. In the meantime, we’ve asked Martin to answer some key questions that could help companies struggling through the Covid-19 outbreak.

What are the most common challenges during the crisis?

Some businesses were decimated almost instantly, losing all or the vast majority of their business very quickly, so their challenge is very much about keeping the lights on and surviving this initial sharp, intense impact. There are others we talk to who are still not taking action; they are still taking it all in and considering things and wondering what they should do next, which I think is a particularly dangerous approach. And others are taking the opportunity to spend time working on the business, plan and find a way through.

I think a useful way of looking at it is as a three-stage process: first of all being able to survive, then stabilise the business and then thrive and grow the business going forward.

What advice are you giving businesses?

What is crucial in this situation is how you act as a leader. So, the message is, think about yourself first and then the business. Identify what help and support you need – whether that’s for your own wellbeing, your own health, or mental clarity. Then you can think about your business. Take a step back, think, then go and communicate your plans and how you want to move forward.

Of course, when we normally plan, we think about a three-year strategy and then an annual operating plan and then turning that operating plan into half years, quarters and daily activity. In a crisis situation like this you’ve already got to flip that plan to a 90-day horizon and become very granular, doing things hourly and daily. And you need to manage liquidity and cashflow and what you can do to preserve cash and bring more in to survive.

What support is available to businesses during the crisis?

Our offer in the first instance is about just being there for clients and potential clients so they’ve got somebody to lean on, who can bring them a bit of balance and perspective. That starts with a telephone call to understand what the business situation is and what they’re wrestling with. We also help them understand the raft of support measures the government has put together: job retention and deferment and various grants and business interruption loans they might be able to access.

How can businesses make the most of opportunities during the crisis?

Use this time to think about and address all of the things you can do to improve your business and make it relevant when we come through the other side. Start by supporting your clients, helping them and being generous with them. Even if that doesn’t lead to billable work, hopefully when the recovery comes, you’re top of mind. Communicate well and get brand messaging out to a wider audience. Have good positive conversations now, and if your business model is right then over time that’s going to stand you in good stead.

Are there any reputational risks for businesses to be aware of?

Businesses are trying to balance what’s right for people in terms of keeping them healthy and gainfully employed versus what’s right for the business, the brand and the brand values. It is these judgement calls that amongst other things require those strong and competent leadership traits; authentic, forward thinking and the ability to leave all key relationships and situations in a better place than when you started.

What learnings can business leaders take from the crisis?

The global effect is so significant that a lot of businesses in real trouble now couldn’t have done anything to protect themselves. But others that had a contingency plan in place have experienced an impact, but are trading through it as a result of planning they did two, three or five years ago.

Businesses that don’t have a plan or are early in that process are being hit particularly hard because everything is a challenge and a variable and they don’t have a clear path through it. Many are seeing themselves fall over in the area of technology, for example, because they haven’t invested in it over the past two to five years and now it’s really biting them. So, I think the message is about planning, working on the business and taking the time to do that rather than being swept along. There will be positive changes to businesses from this crisis.


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

Protecting your wealth

How can entrepreneurs secure their personal wealth in the era of coronavirus?

Protecting your wealth

The coronavirus crisis is putting many businesses under pressure and placing a huge strain on entrepreneurs’ finances. For the majority of business owners, personal wealth is closely linked with business wealth, which means the threat to their money and future lifestyles is amplified.

It’s not uncommon for the lines between personal and business wealth to become blurred. Technical Connection consultant Simon Martin says: “An entrepreneur is extremely reliant upon his or her business. It provides for their present and future – their lifestyle is dependent on how their business is doing – so naturally it’s going to be quite important to get it right. As business owning entrepreneurs, often they are not very well diversified, so considering diversification as a removal of risk is important.”

Thinking about risk

In light of the pandemic, there is a lot to consider, and knowing what to do in such an unfamiliar situation can be daunting. Simon explains: “For a financial planner, risk is the key thing to consider and mitigate. Thinking about how to protect your business – because your business is the driver of your wealth.

“So, think about what actions you may need to take. It might be protection in terms of life insurance. It might be an element of diversification within your business; maybe look at new markets or new opportunities. Creating a really detailed financial plan that incorporates both business and personal assets is important. And also engaging with specialists to look at your business and make sure it’s as efficient and effective as it can be. The key action is - create a plan.”

Martin Brown of business growth advisers Elephants Child adds: “First you’ve got to survive and stabilise your business, but then you want to push on and thrive. Now is a really good time to think about what your agenda looks like. Although we are in the midst of a crisis, there will be a way through it, the market will recover and we will recover, and everyone needs to be best placed to take advantage of that.”

Look after yourself

For you to effectively manage your personal wealth at the moment, he suggests that it’s important to start by looking after yourself: “Don’t be afraid to feel vulnerable or to lean on people. Don’t panic or bury your head in the sand. Do something positive and do something logical. If that means you need a bit of help, then so be it. It will pay dividends in the long run.”

To prepare for when we come out of the crisis, he suggests forward thinking and strategic planning: “Think about what you want in retirement, when you are going to retire, what you need and what you want to leave to others. From that standpoint, you can see what your pension looks like, what the gaps are, and what protection or tax-efficient wrappers you need to get in place.

“You then need to know what the business needs to do for you. If you think about it as enabling your future, you can review remuneration packages, consider key person shareholder protection and whether you are fully funding your pension. All those things often get lost because we’re just thinking about satisfying our next client, paying our next supplier and managing our teams. But these are things that you can do now, even in a time of crisis.”

The St. James’s Place Entrepreneur Club is uniquely placed to help you navigate the Covid-19 crisis. We can provide the business advice you need from people with many years of experience of running businesses themselves. And through your St. James’s Place Partner you can also access financial expertise so that you can develop a seamless and robust plan that spans your business and personal finances.


The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.

Cash in a time of crisis

As the Covid-19 crisis engulfs the country, entrepreneurs are forced to consider the impact it will have on their balance sheets, and implement strategies that will help their businesses emerge from lockdown safe and well

Cash in a time of crisis

April 2020 saw wave after wave of sobering news reports, from the Prime Minister’s health to the lack of PPE for frontline workers to the cancellation of the last few sporting events left on our summer calendar. But for business owners, one in particular is likely to cause sleepless nights. At the beginning of the month, the British Chambers of Commerce released its first Covid-19 Business Impact Tracker, in which it revealed that 44 per cent of UK businesses have less than three months’ worth of cash in reserve1.

With the economy predicted to be hit hard by the pandemic – a March 2020 report by KPMG sets out a downside scenario in which UK GDP contracts by 5.4 per cent in 20202 – what, if anything, can businesses do to survive? And how can entrepreneurs mitigate the impact this black swan event will have on not only their business but their own mental health as the stress of shrinking cash reserves plays on their minds?

Pivot and pare down

Julie Devonshire, Director of the Entrepreneurship Institute at Kings College London, believes that many entrepreneurs have the skills and mindset to emerge from the crisis stronger.

“We’ve already seen so much entrepreneurial behaviour,” she says. “People using their skills to solve problems, learning to innovate, working in diverse teams to increase the supply of essential items like face masks, scrubs and ventilators. You only have to walk down your local high street to see businesses working on their Revenue 2.0 models, pivoting to keep things ticking over. The catering trade, with the widespread move to takeaway and online delivery, is a classic example.”

Even if repurposing your business to sell fresh produce online or manufacture PPE isn’t possible, there’s still a great deal entrepreneurs can do to weather this storm, says leading entrepreneur, investor and technologist David Walsh, who is now Entrepreneur in Residence at the Institute.

“We’ve experienced downturns as severe as this before, and if you can get through it you will be a stronger business,” he says. “For most small businesses, a little money goes a long way, and it’s possible to make progress, albeit modestly. You’ve got to cut costs and look for ways of bringing revenue in. You’ve got to communicate clearly, accurately and respectfully with your clients, suppliers and banks to find a way to work together.”

Once a business has assessed its eligibility for government funding and put in place a cash flow plan and a vision for its return to normality, Julie says, there is an opportunity to look at what you can do in the meantime.

“Can you do other things with your brand and your business?” she asks. “For example, smarten up your premises, work on your brand, accelerate your digitisation, build in e-commerce or grow your online community?”

Julie cites the example of the author and influencer Joe Wicks, who has used the crisis to send his already strong brand supernova by offering free physical training sessions on YouTube, aimed at families in lockdown.

“His brand has just exploded. He’s done an amazing, entrepreneurial thing to support others and his business will be far better after this crisis,” she says. “If you can’t do anything about revenue now, you can still build your business for the future. Many businesses forget how much you can do with very little and how much you can achieve by being lean and agile. You don’t need £30,000 to build a website, develop an online community and amass a social media following. And we all have time for that now.”

Don’t worry, be happy

Of concern to many entrepreneurs is the drying-up of investment funding following the crisis. In early April, the tech community launched the Save our Start-ups campaign3 – which resulted in a £1.25bn equity-based liquidity package from the government to rescue at-risk start-ups4 – and businesses in other sectors looking for investment face tough decisions too.

“Investors are not necessarily looking for new investments, but they are keen to keep those they’ve already funded running,” David says. “But there are still funds out there looking, and amazing opportunities in sectors that are not impacted by the crisis. It’s important at times like this that investors show leadership, act positively and stick together.”

Even if cash-flow worries are mounting up, Julie emphasises the importance of maintaining perspective.

“Resilience is vital for entrepreneurs,” she says. “This is an opportunity to understand where your levels of resilience lie and try to improve them. People keep returning to this being about more than business: people’s health, families and happiness are most important, and that helps them to focus on practical things they can do to help get through this. And we will – a vaccine will come, lockdown will end. One way or another, this is temporary.”

David emphasises the importance of ethical behaviour by businesses during times of crisis. “I have seen poor behaviour from some landlords and banks. But when we come out of this, there will be those who can hold their heads high and say they did the right thing. The real test is what we do to help one another, and how we can emerge from this leaner, fitter and more resilient so we can look back and say we had a good Covid crisis.”


1. https://www.britishchambers.org.uk/news/2020/04/bcc-coronavirus-business-impact-tracker

2. https://home.kpmg/uk/en/home/media/press-releases/2020/03/covid-19-brings-uk-economy-to-temporary-standstill-but-upturn-expected-in-2021.html

3. https://saveourstartups.co.uk/

4. https://www.bbc.co.uk/news/business-52348409

The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

Bouncing back fast

Now is the time to plan for recovery.

Bouncing back fast

Businesses, communities and individuals have already been impacted dramatically as a result of the global Covid-19 pandemic. Now that most businesses have put their continuity plans in place or closed down completely, it is time to look to the future and plan for recovery.

We are still in the middle of the crisis, and most businesses are somewhere between reacting to the situation as it unfolds and adapting their working practices so they can still deliver for customers clients and do the right thing by their people.

When a crisis hits, good companies do three things fast;

  • Their leaders step forward and are visible,
  • They make decisions quickly to protect their people and get continuity plans in place; and
  • They communicate clearly and regularly.

But this is the basics.

Surviving through this is only part of the challenge. We now need to start to plan for growth and recovery.

 

The “New” Normal

There will be a few organisations that will click back to old processes and ways of working when this is all over. They will thrive on having some normality back and will put the interim changes they needed to make to survive and continue behind them. They will thank people for the things they did to help the business continue, and they will move on.

High-performing businesses will think differently. They will do three critical things which will enable them to bounce back faster and stronger than before.

 

Grow and Inspire

Successful businesses will look for ways to learn and adapt from the experience and will use it as a catalyst for growth and evolution.  They won’t just revert to the old ways of working but will look at what they can learn from the changes they made. They will evaluate what worked, what didn’t and most importantly will decide which new practices they keep and could apply more broadly. I am sure if you told the NHS they could get a new supplier of ventilators through their rigorous procurement and testing processes in a matter of days and weeks before Covid-19, they would have said it was highly unlikely, if not impossible. Now they know it’s possible you would hope their Covid-19 procurement process becomes the norm.

In crisis mode people are able to think outside the box. You need to become creative problem solvers to be able to react to the changing situation. Work out where you can apply this new way of thinking elsewhere in the business to drive change and better performance.
Create symbols of change which demonstrate the positive things that can emerge from this period. Find things big and small that you are doing differently and tell the world… well, the people in your business at the very least. This links directly to recognition. Following a crisis there are always tales that bring to life the spirit of your business. Find them, celebrate them proudly and use them to inspire others.

 

Engage and Thrive

Now is the time to invest for growth.

This crisis will impact your strategy and the way your brand is perceived for the foreseeable future. You might need to change your approach, or you may not have the funds for investment that you thought you would, or you could have had to completely pivot your business to survive.  

Take the time to review your strategy, identify whether it is still fit for purpose. If it is not, work with your people to set a new path. Paint a clear vision for the future and build the journey you will go on to achieve your goals together. When you have defined your strategy, review your learning and development strategy to ensure that it will build the skills you need to make you future fit.

A crisis is an opportunity to see the true DNA of your business. Make sure they are the same characteristics that will enable your growth and prosperity and invest in making sure your culture is evident at every stage of your employee journey.  Bacardi have spent years focused on their culture, making sure their employee experience reflects their DNA Fearless, Founders and Family are not just words but direct how they work as colleagues and how they do business. In a crisis you see this come to the fore spontaneously, whether that’s changing production lines to make hand sanitizer or launching a new product to raise money for charity. This happens because their people are empowered to truly bring the Bacardi spirit to life in the best and worst of times. 

The right culture will drive customer loyalty and growth, so take this moment of reflection to think about your culture.  Does it need to be redefined to enable you to achieve your goals?

 

Involve and challenge

When your strategy and vision is defined, your people are clear on their role in helping you succeed and your culture is hard-wired into every step of your employee journey, it will be easier to find opportunities for continuous improvement. 

Listen to your people to find out what is getting in their way and create the forum and mechanism for them to solve the problems. Remind people what your purpose is to help you drive productivity, effectiveness and problem solving. Create moments and platforms for innovation for your entire team, not solely the innovation function. Work out loud to enable others to collaborate, connect and contribute so that you can leverage your entire talent pool, particulary in moments of crisis.   

Navigating a business through such difficult times is not something most leaders will have experienced.  This is new territory. Looking for the opportunities to reinforce who you are and what you stand for will be critical. The challenge is not to be underestimated especially when many businesses will also need to rebuild trust and re-engage people who they have furloughed during this period.  Unleashing, empowering and inspiring your talent though this experience will be key.  This is not something we can cost cut our way out of.

 

We need to think differently. We need to be ambitious. We need to put the human back into business.


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

This article has been provided courtesy of United Culture.

Key tools for remote working

The software that can keep your remote team working seamlessly together

Key tools for remote working

The Covid-19 crisis means that the vast majority of companies have had to move to home working. For some employees, this will be the first time they have worked from home; for many companies, this will be the first time their entire workforce has had to work remotely at the same time. 

Prithwiraj Choudhury, Lumry Family Associate Professor of Business Administration at Harvard University, says that companies should avoid letting employees feel distanced or alone, which can happen easily without the typical day to day casual meetings and conversations easily engendered in an office setting. “Check in on workers and team members’ psychological wellbeing,” he says. “Try to socialise online – set up virtual watercoolers”.

He notes the importance of ensuring these activities are optional (so that workers don’t feel under extra pressure) and also that there are several scheduled social activities, so that people are able to attend while still fulfilling their other obligations outside of the workplace.

Jean-Nicolas Reyt of the Desautels Faculty of Management at McGill University agrees, saying: “A lot of the ‘teaminess’ in teams comes from informal interaction with peers. Research shows that teleworkers who are not involved in these informal interactions tend to feel isolated. It is essential for teams to use online tools to recreate these types of interaction. A meeting on Zoom in the morning is a good way to check in with everyone.”

As to what companies should bear in mind when choosing the platform(s) on which to work remotely, Prithwiraj says: “More than the tools, it’s the habit. It’s human routines that are hard to change”. He advises being patient with employees in this unusual time. And Jean-Nicolas notes that managers need to focus more on ‘why’ the work is done and let their subordinates figure out the ‘how’.”

With this advice in mind, we run through several software options below to help you pick out the best for your team.

Skype

Now a household name, Skype has been around since 2003. A telecoms application, Skype allows users to make video chat and voice calls across a range of devices, from desktop computer to mobile. It also provides instant messaging services, but its primary use is for enabling voice or video communication.

Skype’s Meet Now option allows you to invite Skype contacts and those without a Skype account to a collaboration space, either via the app or through web browser. Call recordings are stored for up to 30 days.

Zoom

Founded in 2011, Zoom offers remote video conferencing services. Easy to use, and available through an app or web browser, since the lockdown usage has exploded. There is no need to create a Zoom account, and it is free to use. However, paying customers get perks such as unlimited meeting times and can use the software’s Zoom Room offering. This allows companies to schedule and launch Zoom meetings from conference rooms; up to 500 participants can join.

Of course, a key concern with Zoom is its security flaws, with reports of ‘zoombombing’ (when hijackers take over a call) and with the revelation that it was easy to find thousands of user videos online. While some municipalities, schools and organisations have chosen to ban the use of Zoom, others have embraced the software. Zoom continues to work on patching up its security flaws.

Teams

If your business already has an Office365 subscription, Microsoft Teams is an easy choice to make as it integrates with Office. Teams can also be customised so that it easily works with other existing software your company uses, such as Creative Cloud, Trello and Google Analytics.

Teams allows direct text chat between participants, which can easily be turned into a one-on-one or conference call. Within a team, different channels can be set up for different conversations. Files can be uploaded to the app.

Trello

Launched in 2011, this Kanban-style software allows users to create task boards and track projects across them. Deceptively simple, Trello can be used to map the most complex tasks and assign roles. By creating ‘cards’, users can add comments, upload files and create checklists. Everyone invited to a board gets notifications as to actions taken, so nobody misses out. Trello offers various add-ons; some are subscriber-only, but others are free.

Slack

This business communication platform brings a company’s communications together into one space. All content on the platform can be easily searched, from conversations to copy contained within files and presentations. Users communicate via text and can speak through public or private channels. Files can easily be dragged and dropped into Slack and shared with colleagues; they can then comment on these instantly. Slack can be used via app or web browser, and is built to integrate with other tools a company may be using. 

Basecamp

This project management tool allows users to divide up their work either via project or team. Message boards mean users can easily track a project’s process and send messages either to all in a group, or to sub-groups. To-do lists and schedules can be set up, and all are accessed via the same easy-to-navigate page. For more informal chats, there is Campfire. Basecamp encourages users to use this chat interface for quicker comments and chats. Basecamp can also be synced with email, so that users can get notifications when messages are sent in the software.

Whatsapp

Although primarily seen as a personal app, used for chatting with friends and making calls, Whatsapp also has a desktop version, Whatsapp Web. The software (both app and desktop) features end-to-end encryption, meaning that file-sharing and conversations are secure. Users can send files and voice notes to one another via text and can make video and audio calls. Chat group size can be anywhere from two to 256. 

Lockdown is a chance to get to grips with some of the most exciting software tools on the market – and they could see your business through to more normal times.


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

COVID 19 – Business Owners’ Advisory Service

In this time of crisis, the immediate focus is how to survive... and then, how to thrive

COVID 19 – Business Owners’ Advisory Service

There’s no getting away from the fact that recent events have changed the way we live and do business. As a business owner you will be feeling a range of emotions, with your livelihood and those of many others seemingly on the line. In this time of crisis, the immediate focus is how to survive. And then, how to thrive.

This guide provides vital strategies and tactics you can implement right now and in the medium term, to ensure your business does both – survive and thrive. It’s important to create some space between the stimulus and the response. So, take ten minutes to understand the shift you have to make from what you knew, to the current environment - which is covered in the opening section of this guide. Once you’ve flipped your focus, the guide provides a useful timeline, outlining what you need to do, and when, backed up by our support to help you navigate the uncertain waters ahead. You’ve probably done some of this already, but please be reassured that there are plenty of resources available to you.

 

Create the space

In normal times, our advisory support for you is spread across a number of fundamental operating activities, primarily encompassing:

• Strategic intent or long-term view on the direction of travel
• Three-year plan
• Annual operating plan
• Half-yearly focus
• Quarterly tracking
• Monthly performance to promises, compliance and governance
• Daily action

However, these aren’t normal times, so we need to flip this and focus all of our attention on four specific key areas only, namely:

• Daily actions and outcomes
• Weekly reflection, refinement and we go again
• Monthly performance to promises, compliance and governance
• Quarterly – 90 day rolling plan

 

Timeline

In an ideal world, you would have already completed these daily actions in Week 1 of crisis management:

Day 1: You. And assess if your business is at immediate risk.
Day 2: Support
Day 3: Cash and costs
Day 4: Risk Register
Day 5: Outcomes

DAY 1: YOU

Define what support you need both business and personal. What is your work mode for the coming weeks and months? Start with you. Take care of you and yours.

Who do you need to help and support? Think about the key relationships in your business and how you can support them, what do you want them to think and how do you want them to behave in these times of crisis:

  • You – can you reduce your cost burden on the business
  • Clients
  • Suppliers
  • Your Team
  • Investors
  • Stakeholders

Create a communications plan that includes providing employees and other stakeholders with regular situation updates as well as actions taken.

Is your business at immediate risk? We can offer you access to practical and pragmatic advice so that you satisfy your duty of care and powers under Companies Act 2006 and connect you with insolvency practitioners, if appropriate.

Make some assumptions. This pandemic will have a material impact and change certain practices and thinking forever. Global experts will find a cure. We will get through this. We have recovered from other market shocks.

Set some context. This is unparalleled, we are all in this together, now is a great time to lead and work on the business.

Your team: Ensure staff can work from home and have the necessary systems and access at their disposal to do so. Create a ‘work from home’ policy and share it with the workforce.

 

DAY 2: SUPPORT

Access the support that is around you, start with the Government

Work through these support mechanisms and leverage those that are appropriate for you. This will change by the day. A package of measures to support businesses including:


a Coronavirus Job Retention Scheme
• deferring VAT and Income Tax payments
• a Statutory Sick Pay relief package for SMEs
• a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
• grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
• the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
• a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans

• the HMRC Time To Pay Scheme

 

DAY 3: CASH & COSTS

Cash is king, maintaining liquidity is key.

• Collect your cash and manage debtors closely
• Can you extend or defer payment to creditors
• See 2 above for Time to Pay, Deferment, Grant and loan options
• Assess each line of your profit and loss account; can you enjoy payment holidays, reduce or enjoy rebates on say; rent, communication and utility costs.
• Appeal to your time in line with employment law and empathy as to volunteers for reduced working hours and salaries.
• Work out weekly expenditure and make a contingency plan.
• Contact existing debt providers for support.
• Explore financial instruments e.g. discounting, factoring, supply chain loans and term loans.

We can provide access to specialists partners in costmanagement, financial experts who can model cashflow and recommend actions and funders who can provide advice.

 

DAY 4: RISK REGISTER (90-DAY ROLLING PLAN)

A Risk Register approach is a great way to stress-test your current plan or frame the needs for the contents of a plan if you do not have one? Your plan will need to flex as the pandemic impact unfolds.

  • List the risks, suggested headings could include but are not limited to; You, Team, Clients, Sales, Cash, Cost, Insurance, Proposition, Technology, Data, Funding and Markets.
  • Think about the potential outcome of each risk.
  • Define the likely impact, the likely probability and score each out of 5, multiply Impact * Probability to give a score or priority.
  • List what action you can take to mitigate the risk.
  • Define who is taking the action and when.

From this, produce a 90-day rolling plan - A contingency plan e.g. building closure plan, contract clarification, deep cleanprovider, deep clean methodology and sick pay policy.

 

DAY 5: INSURANCE

Review your policy and check with your insurance broker if you need confirmation of the type of insurance you have purchased.

It is highly unlikely that the vast majority of businesses will have any cover for losses following COVID-19. Businesses who have cover for Trade Credit Insurance will have cover for their customers who owe money for products or services and do not pay their debts or pay them later than the payment terms dictate. This could result from businesses not being able to pay for goods and services delivered as the result of Coronavirus.


Be sensible, practical and, above all, calm when managing risk and engage an expert who can help you with this.

 

WEEK 2: 

Reflect on the outcomes from week 1. Re-assess your ability to survive and structure your approach to Day 6 and each day thereafter.

• Have you improved or fully address the actions from week 1; you, support, cash and costs, plan and insurance.
• Which actions do you need to carry forward?
• Think about and deliver great Leadership (see below)
• Review the previous days outcomes and actions.
• Review the previous days COVID 19 advice and support.
• Action carried forward from week 1 e.g. COST or a new action.


Leadership

The five attributes of effective leadership in Volatile Uncertain Complex Ambiguous (VUCA) times are thus:

1. Visibility
2. Sensible, considered and pragmatic responses
3. Positivity and frequency in communications
4. Authenticity and integrity
5. Care and empathy

Being mindful of these in all your business dealings both with colleagues and employees, and with external contacts and suppliers, will ensure that you maintain a sense of calm and measured leadership throughout the duration of this crisis.

 

Next steps: Join our Covid-19 - Business Owners' Advisory Service

To help and support you through these challenging times, we have set up a complimentary web-based advisory service with a specialist SME business adviser. These sessions are designed to be led by you, exclusively focusing on your specific issues, needs and support requirements. As well as providing access to specialists, we can cover some or all of the following topics:

1. Manage client relationships
2. Improve cash and liquidity
3. Reduce costs
4. Understand and leverage insurance
5. Winning new business in a crisis
6. Using technology
7. Access to finance
8. Operational resilience, ‘keeping the lights on’
9. Communicating effectively in crisis
10. Lead and inspire – executive coaching

Talk to your St. James’s Place Partner to book an hour-long session with our virtual consultancy service, which can help you manage the challenges of Covid-19.

 


Covid-19: get the help you need

We'll guide you to the support available to see your business safely through the pandemic

Covid-19: get the help you need

The pandemic has been sudden and extremely challenging with many businesses forced to close as part of a national strategy to slow the virus and protect the vulnerable. With economic activity suspended in many sectors, a huge effort has been made to support companies until Covid-19 is brought under control. Here are just some of the tools to help you shelter your business.

1. Coronavirus Business Interruption Loan Scheme

Your bank may be able to help if your business gets into difficulty because of Covid-19. The Government and Bank of England have made billions of pounds available to support small and medium-sized enterprises through the Coronavirus Business Interruption Loan Scheme. It will provide lenders with an 80% guarantee on each loan. The scheme will support loans up to £5 million and your business is eligible if it has a turnover of no more than £45 million. The full rules of the scheme and list of accredited lenders is available on the British Business Bank website.

2. Job retention scheme

The Chancellor has announced a coronavirus job retention scheme, allowing any employer to apply to HMRC to have up to 80% of a member of staff’s salary paid – capped at £2,500 a month. This will be backdated to 1 March and run for three months (a timescale that will be kept under review). All UK businesses are eligible for the scheme but you will need to designate affected employees as ‘furloughed workers’ and provide information about them and their earnings through an online portal. At the time of writing HMRC was working urgently to set up a system for reimbursement.

3. Time to Pay

If you think you may be eligible for support from HMRC through Time to Pay, which allows you to pay tax over a longer period, you can call the helpline number on 0800 024 1222. Arrangements are agreed on a case-by-case basis and can be tailored to your circumstances and liabilities. In a further bid to help, HMRC has also deferred VAT for the next quarter and you won’t need to make any VAT payments during this period. You have until the end of the 2020/2021 tax year to pay any liabilities that have accumulated over the period.

4. Statutory sick pay and Employment Allowance

Small and medium-sized businesses (employing fewer than 250 people on 28 February 2020) can reclaim statutory sick pay (SSP) for absence due to Covid-19. It covers up to two weeks of SSP per eligible employee. You need to maintain a record of staff absences and SSP payments but employees do not need to provide a GP fit note. If you require evidence employees can get an isolation note from NHS 111 online. In addition, small employers with a National Insurance bill of £100,000 or less will continue to qualify for Employment Allowance, which will be expanded to £4,000 per business from this month.

5. Business rates holidays

A business rates holiday for retail, hospitality and leisure businesses in England has been introduced for the 2020/21 tax year. And if you received the retail discount in the 2019/20 tax year you will be re-billed for this period. Eligible properties include shops, cafes, restaurants, drinking establishments, cinemas, live music venues and those used for assembly and leisure, hotels, guest and boarding premises and self-catering accommodation. This will apply to your April council tax bill and you don’t need to take any action. In addition, Small Business Grant Scheme funding of £10,000 is available to some businesses – your local authority will contact you if you are eligible. The governments of Scotland, Wales and Northern Ireland have launched similar help.

6. Insurance cover

Think about how your business insurance will work if your business has to close due to an outbreak of the virus. Check the wording because standard policies may not include any protection if your business suffers because of disease. Talk to your broker to see if you have business interruption cover in your commercial insurance policy. Once you have confirmed that you have business interruption cover, check if you have an extension for ‘notifiable diseases’. If you have this policy wording, you should contact your broker/insurer to see if coronavirus is covered. Most businesses do not have insurance that covers a pandemic, however, and in this case, you should consider the Government support on offer.

7. Self-employed Income Support Scheme

If you are self-employed or a member of a partnership, you can claim a taxable grant worth 80% of your trading profits, up to a maximum of £2,500 a month, for the next three months and this timescale may be extended. You should check the Government's advice on the Self-employed Income Support Scheme to make sure you are eligible. Among the requirements, you must have submitted a self-assessment tax return for 2018-19 and your self-employed trading profits must be less than £50,000, while more than half of your income must come from self-employment.

At the time of writingit was not possible to apply for this scheme. HMRC will contact you if you are eligible and invite you to apply online. You may be entitled to 80% of trading profits from the three tax years between 2016 and 2019.

8. Government advice

The Department for Business, Energy and Industrial Strategy has launched a dedicated business support helpline, where small business owners in England can get advice on how to minimise the impact of coronavirus. The number is 0300 456 3565 but you can also email enquiries@businesssupporthelpline.org. The Scottish Government’s helpline number is 0300 303 0660; the number for Wales is 0300 060 3000 and in Northern Ireland it is 0800 181 4422.

The Entrepreneur Club is here to help. You can read our guide or talk to your St. James’s Place Partner to book an hour-long session with our virtual consultancy service, which can help you manage the challenges of Covid-19.


Links from this article exist for information only and we accept no responsibility or liability for the information contained on any such sites. The existence of a link to another website does not imply or express endorsement of its provider, products or services by us or St. James’s Place. Please note that clicking a link will open the external website in a new window or tab.

Exit during a pandemic

There are still some buyers out there but most owners will have to navigate the Covid-19 crisis before considering a sale

Exit during a pandemic

Exit plans will have been thrown into disarray for many entrepreneurs by the sudden and devastating impact of Covid-19. Many now face a period of uncertainty just at the moment they had hoped to sell up and reap the rewards of years of hard work.

Corporate finance company Entrepreneurs Hub says that while some buyers remain upbeat and committed to purchases that have already been negotiated, it is impossible to say whether they will finally sign on the dotted line if the crisis continues for some months.

Entrepreneurs Hub Director Andrew Shepperd says: “Strong acquirers are still looking and these broadly fall into two categories: opportunists looking to pick up businesses on the cheap, mimicking activity after the 2008 financial crash; and strong companies taking advantage of the lack of competition to buy very special businesses or those that will help them power through this crisis."

Changing landscape

And the mergers and acquisitions landscape has shifted significantly, with new ‘hot’ sectors emerging that are related to the pandemic. These include pharmaceuticals, healthcare, healthcare supplies, online ordering, home delivery and distribution, cloud and online businesses, video streaming and electronic gaming.

Malcolm Murray, also a Director at Entrepreneurs Hub, says: “Obviously you are going to have certain types of businesses that are going to do quite well through this period. These are people supplying the UK in sectors such as medical equipment, manufacturing, distribution and supply. But if we look at the high proportion of business owners, they have been significantly impacted over the past two or three weeks.

“If you were planning to exit it is time for damage limitation and what you can do to make sure the business stays as profitable as possible. It is going to slow the market down for a period in certain sectors but we still have buyers saying: We are committed to this. We know it’s a freak period and we are still committed. Of course, what I can’t say, if I’m being honest, is what timeline they will complete the deal in."

Start contingency planning

So, the advice for those about to exit is the same for all entrepreneurs at this critical moment: don’t panic and understand the situation your business is in. You need to really understand your business and how long your cash will last. Then you can make a contingency plan, whether that means accessing government loans or furloughing staff.

Malcolm adds: “There is a mix of emotions at the moment. Some business owners are afraid. Others are saying they just have to make some hard decisions, and I think that’s the key. Doing nothing is not an option. This isn’t just something that might go on for a couple of weeks. It could go on for two or three months, so you’ve got to take action to protect your cash. We are encouraging business owners to look at their cash flow for the next three to six months and what they might need to do with staff who can’t work.

“We are in unprecedented times – your turnover and profits may take a short-term hit,” he adds. “Stay in contact and maintain your relationships with your customers so you understand their situation and they know you are there for them and will return when the country returns to some normality. Don’t focus on the situation, focus on taking actions to implement a plan to ensure you control costs, maintain cash and longer-term profits.”

Malcolm says that many owners he has spoken to regret not selling sooner and more may consider an exit once the pandemic is past in order to bank any further risk. And for many, the clear lesson that has emerged is the need to maintain higher cash reserves to ensure their companies are as resilient as possible and can weather any storm.

The Entrepreneur Club is here to help. You can read our guide or talk to your St. James’s Place Partner to book an hour-long session with our virtual consultancy service, which can help you manage the challenges of Covid-19.


Exit strategies may include the referral to a service that is separate and distinct to those offered by St. James’s Place.

The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.

Making the most of alternative finance

The rise of alternative finance shows there’s more than one way to get the growth funds you need

Making the most of alternative finance

Entrepreneurs have benefited from significant growth in alternative finance over the past five years. According to the British Business Bank’s Small Business Finance Markets 2019/20 report, between 2014 and 2018 the value of smaller business asset finance deals has risen 32% to £19.4bn, while the amount of equity finance increased by 131% to £6.7bn. In the meantime, however, traditional bank lending has remained flat.

Part of this is legacy from the financial crash of 2008 when bank lending evaporated. But Mark Brownridge, Director General of the Enterprise Investment Scheme Association which supports UK investors and small businesses, says that companies are also more aware of the range of finance options available.

Finance for agile growth

Mark says: “It isn’t always appropriate for early-stage companies to borrow as they may not have revenue and can’t pay off the interest and the capital."

He believes British businesses are following a trend established in the US where equity finance is much more mainstream, and where young enterprises are more open to giving a stake in the company in return for cash. “SME businesses are far more aware of equity funding as an option, and I think that will only increase in the future. A lot of businesses look across to the US and see the trend towards taking a lot of Venture Capital (VC) money, going big and quick with the fail fast kind of attitude – you can’t do that through bank lending.”

“Finance generally comes through a VC or fluid equity lending, and that kind of model is becoming more established in the UK where companies don’t just want to grow steadily based on revenue, they want to get a lot of investment and go quickly. You look at companies like Monzo and Revolut, and they’re taking a lot of equity funding and trying to get lots of customers and are not necessarily worried about revenue or profit."

The money raised from equity funds a range of things, often it is for cash flow and keeping the company running and paying wages, but it also finances new product development or entering new markets and taking the business to the next level.

Asset finance requires an asset to be loaned against and so generally favours manufacturing, engineering or transport-based industries. As a result, it tends to be used to invest in new assets such as machinery or fleet. Because there is security in the assets being refinanced or financed, there is plenty of flexibility with asset finance products, including seasonal payment structures.

You can find out more about how your business can benefit from alternative finance by speaking to a St. James's Place Partner.

What investors want

Investors, from VCs to angel investors, are looking at a broad range of sectors. However, Mark points to fintech, artificial intelligence, data analytics and public security as particularly popular areas at the moment. He says: “Different investors want to invest in different stages; some want to get right in at the first stage and be loose with the first wave of money and continue on that journey with the company and hopefully realise significant growth. Others don’t want to take early-stage development risk and want to come in later once the company has revenue and heading for profit."

Chris Barrett is an angel investor with a long and varied career spanning electronics, media, software development, and consultancy in the City of London. "Because of my background, I'm interested in media and financial ecosystems but also medical technology because of the fascinating crossover in different disciplines.”

Preferring to make his own investment decisions, Chris is not aligned to a syndicate, accessing deals both on crowd platforms and directly. He says: "It is unusual to see profit in the first few years, so patience is required."

While Chris is quick to filter out business ideas that don’t appeal or interest him, the people behind the concept are critical. “The entrepreneurs I work with are smart, and they need to have credibility. I look at the founders and figure out if they have the right stuff to follow their vision. They need to be agile and able to recognise if they’re going down the wrong route and pivot to the right opportunity."

While alternative finance can be more challenging to navigate than traditional bank lending, alternative finance providers understand the needs of SMEs and have specialist knowledge in a variety of sectors to support the business and their investment.


Please note that some of these methods for raising finance are unlikely to be the first options as there will be conditions attached to any agreement reached, which by their nature will be more onerous than those imposed by a mainstream lender.

The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.

Start-up loans - the ‘bots’ have arrived

Loan providers are automating more processes. Entrepreneurs have an opportunity to get ahead of the game

Start-up loans - the ‘bots’ have arrived

Vast amounts of data are now available on start-up businesses and their founders. Funders are tapping into these new data sets using advanced technologies to find and assess high-potential businesses. The rules of start-up funding are being re-written and savvy entrepreneurs will want to understand how they can win the bots over.

Loans now reaching start-ups

Traditionally, loan finance has not been available to start-ups. Lenders still typically want to see a trading history of around two years, often longer, before even considering a loan. But this is changing.

One lender targeting start-ups is Just Cash Flow plc, which uses a process they have called ‘augmented intelligence’. According to CEO John Davies, this takes advantage of machines’ ability to process large amounts of data very quickly, and couples it with experienced human insight.

Finding high-potential companies is mostly automated. Just Cashflow’s technology screens new companies registering with Companies House – around 16,000 per week1 – and identifies those which have a high potential to be successful.

John says this focusses mostly on the founders, not so much the characteristics of the business itself: “It is people and their actions who are mostly responsible for a business succeeding, and technology allows us to identify the ‘DNA’ of someone who is likely to be successful. The business might be a start-up, but the people are not necessarily starting-up. And particularly in the first few years of a business, it’s all about the people. Good people will learn and adapt to make that business a success.”

John does however stress that rolling out loans to start-ups is not a replacement for equity finance. His company targets businesses that will be able to generate revenues and profits very quickly and will be able to service loan repayments. Businesses where revenues and profits are still some way into the future would not qualify and are more suited to equity funding.

New data sets

Just Cashflow’s algorithm looks at a range of information to identify target companies. For example, it looks for founders who have appropriate experience (sector-specific, managerial and entrepreneurial experience) by searching sites such as LinkedIn. Their behaviour is considered, such as how quickly they get their website indexed, how well they have built a professional social media presence (perhaps a widely-followed blog, Facebook or Instagram account), and when they register for VAT. John says: “These are just some of the actions which are typical of people who are setting out their stall to create a successful business.”

Of course this can work both ways. According to John: “We tell our children to be careful on social media because some posts might look bad in a future job interview. The same thing applies to entrepreneurs who might be talking about their own business, clients or suppliers. Everything you put on the web stays on the web.”

After having been identified, the shortlist is manually reviewed by experienced underwriters with the most promising businesses invited to apply for a loan. If they do so, even more data becomes available to Just Cashflow before a final decision is made as applicants then give permission for it to access further data such as full credit reports. See Entrepreneur Club article Five reasons loans are declined for more information on what will be considered by loan underwriters at this stage.

Expect more automation

Rob Warlow, founder of SME loan broker Business Loan Services, says he hasn’t seen any other lenders deploy similar practices to Just Cashflow yet, but he wouldn’t be surprised if they are working on similar initiatives: “In today’s environment, this is the next logical step in loan underwriting. If useful, alternative data is out there, why not use it? And we have lots of brainpower in our ‘Fintech’ sector looking into things like this.”

What he also points out is that for larger loans, lenders are looking at similar data points anyway – such as a detailed assessment of a business owner’s experience – but are doing so manually. He says: “What is new here is the process of automating these assessments and making it efficient for lenders to use this data to assess smaller loans. This is only economically feasible for most lenders right now when it comes to larger loans.”

Rob sees these developments in automation as a positive. “For brokers like me, it could be seen as a form of cutting-out-the-middleman because you have lenders approaching businesses directly with most of the data they already need, so a broker isn’t needed. But if this development helps businesses to scale-up faster it gets them to the position where they will be looking for larger, more complicated loans (where brokers would typically be needed to advise companies on their loan applications) sooner – because they are growing faster. And that’s a great development for everyone.”

 

 


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

1. Just Cash Flow plc, February 2020.

Entrepreneurs’ Relief changes from £10 million to £1 million

The March Budget saw the Chancellor announce that Entrepreneurs’ Relief is being scaled back from £10m to £1m – how does this affect you?

Entrepreneurs’ Relief changes from £10 million to £1 million

If you’re a business owner, we’re sure you’ll agree that we’ve all been navigating some interesting challenges in recent times: an election, the Brexit process, the flooding that’s affected much of the UK, and Coronavirus.

To add to this, in the March Budget, we saw the Chancellor announce that Entrepreneurs’ Relief is being scaled back from 10m to 1m, which means the current tax benefit of 10% only applies to the first £1m.

Malcolm Murray, Director of Entrepreneurs Hub, reflects on the news: “As a business owner, you might be asking, “Why didn’t I sell my business sooner?” but it’s important to remain positive and have perspective. There will always be speculation and there’s no greater constant than change, so it’s always important to look at the bigger picture.”

Here are 3 questions that every business owner should consider now that Entrepreneurs’ Relief has changed.

 

1. Is the tax benefit of Entrepreneurs’ Relief the only reason you’d want to sell your business?

“In my 15 years of helping business owners sell their companies, I must honestly say I can only remember one business owner who came to us saying that the tax benefit was the main driver for wanting to sell his business”, says Malcolm.

Interestingly, when Malcom explored further, the fundamental reason for him and his wife was actually that they had built a solid business, but they’d worked themselves into the ground in the process. That was putting a lot of stress on them, so it was time to move onto their next chapter.

The reason most business owners want sell up is because they have come to the point where they know the timing is right for them and their family to exit. It can often be because they’ve lost their passion or the business has become stressful, so they want to move on and turn all those years of hard work into cash.

 

2. Do you wish you had rushed and sold your business just to beat any changes?

If you’re currently in the process of selling your business, then undoubtedly, you would have wanted the deal completed sooner. However, if you hadn’t started the process yet, then the implications of rushing a deal through could have impacted the value of the sale, especially if your company was not fully prepared to be sold.

Only start the sale process because you really want to sell the business. Secondly, only start the process after you have had a review with a reputable adviser who can confirm that now is indeed a good time to go ahead.

 

3. Would you agree that we can’t change the past, but we can change the future?

Selling your business and only paying 10% tax on the first £1m of the proceeds is still an attractive proposition for any business owner.

Not only that, your most lucrative sale is ultimately going to come from the quality of your business. If you can demonstrate strong growth potential, proper record keeping, clean books, written contracts with customers, staff and suppliers, and protected intellectual property then you’re onto a winner, no matter what’s going on with tax benefits.

So, don’t look back, look ahead and take the right steps to ensure your company is adequately prepared for sale and the marketed in the right way, to the right people.

The changes to Entrepreneurs’ Relief may result in you paying more tax when you sell your business and you may be kicking yourself that you didn’t sell up sooner. However, don’t dwell on the past but focus on the future and find opportunities to maximise the value when you exit – your St. James’s Place Partner can help you do this.

 

By taking the time to prepare for exit properly, you might be able to sell your business for £8m instead of £6m. Even paying tax under the new changes will still mean you are better off!


The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.

Exit strategies may include the referral to a service that is separate and distinct to those offered by St. James’s Place.

This article has been provided courtesy of Entrepreneurs Hub.

Growing by winning procurement contracts

It can be a daunting prospect for an SME to tackle a formal procurement process – but the rewards can be worth it

Growing by winning procurement contracts

Sourcing business from government and larger corporates is a massive opportunity for UK SMEs. These are huge, growing markets and both segments are very keen to buy more from smaller businesses. 

The UK government has set itself a target of spending 33% of its procurement budget on SMEs by 2022, which if reached, will be a big jump from the 24% level in 2017/181.

Large private sector companies are making similar noises. Construction giant Skanska spends over £1.2 billion annually across 5,500 suppliers2, the majority of which are SMEs, and its corporate community investment strategy states an intention to increase local procurement and SME spend.

But these larger organisations buy goods and services using very formal and often rigid procurement processes, which can be a daunting prospect.

Expect complexity (and bureaucracy)

Tom Evans, managing director of Pro-Outsourcing, who has worked in the procurement departments of large corporates such as Airbus and JCB, and now advises SMEs on procurement practices, says SMEs need to go into a procurement with their eyes wide open and be very well prepared. 

He says: “That large order from a big company may look like an attractive chunk of business, and it may very well be, but SMEs need to understand that it often comes with terms and conditions that are unfamiliar to them and stacked in favour of the buyer, with little or no room for negotiation. And as a rule of thumb, the bigger the company you deal with, the more hurdles there will be to jump over.” 

Tom highlights a number of areas SMEs tend to struggle with the most:

Payment terms are often 60 or 90 days – so SMEs in the manufacturing sector will need to find the cash to fund the purchase of raw materials as well as their product manufacturing and delivery costs while waiting for payment. They may also need to demonstrate to the buyer that they have the financial strength to do this, by providing them with financial statements and details of their access to finance.

Formal quality, ethical or social responsibility certifications or policies may be required to qualify as a supplier. These can seem like an unnecessary expense and inefficient use of management time for an SME but putting them in place will usually only have to be done once and they will put the business in good stead for future procurements. 

Onerous penalty clauses may be insisted upon, such as ‘liquidated damages’, which means incurring a financial penalty if deliveries are not made on time – a practice more common in sectors with just-in-time supply chains such as the automotive sector. Also, warranty and insurance requirements are often more demanding than SMEs expect. 

SMEs will also need to fit in with buyers’ existing systems, such as having to install a barcoding system to be compatible with that of the buyer.

Tom points out that while some buyers do try to help SMEs with meeting these requirements and might have training programmes in place, this is not always the case.

Top 10 tips for SMEs

Simon McCann, procurement specialist and partner at law firm Blake Morgan, has a list of ‘top tips’ for entrepreneurs who are looking at bidding for larger contracts, which have been drawn from his own experience of bidding for contracts, helping others bid for contracts, and acting as a tender evaluator for larger organisations:

1)    Don't waste your time bidding for everything. Focus on what you know you can do well. If it feels like you're stretching to make your experience or capabilities fit what the client is asking for, it's probably not worth the effort. Procurement teams are good at spotting the ‘hopeful’ bids and they generally go straight in the bin.

2)    Build relationships. In the business-to-business sector (as opposed to the public sector, where there tends to be greater detachment), if there are two tenders of similar strength, buyers are more likely to choose someone they know they can work with.

3)    Read the tender documents. Then read them again. Make a list of the key points the client is asking for. You'd be surprised how many tenders miss out key things or even answer the wrong question.

4)    Ask clarification questions if you're not sure. Buyers would rather get a bid in that's complete and responds to their requirements than one that wastes their time and misses the target.

5)    Look at the criteria and weightings (such as price, quality, experience etc). Spend most time and provide most detail on those with the highest weightings.

6)    Identify any ‘threshold requirements’, for example: a minimum level of experience, qualification, financial standing or insurance. If you can't meet these requirements, don't waste time bidding for that contract.

7)    Don't assume that because you have worked for an organisation before, they will take this into account. In many larger organisations, the procurement team are separate from the people you may have worked with, and they will only look at what you have submitted in your tender, not past track record. So make sure you put all relevant information into the tender.

8)    If you're bidding jointly with another business, check whether the buyer insists on joint and several liability (where each party is 100% liable for any losses, not just their ‘share’). If so, do due diligence on your partner to establish how strong they are. It might make sense to incorporate a separate joint venture company to contain the risk.

9)    If you're unsuccessful ask for feedback to find out what went wrong and what you can do to improve. In the business-to-business sector (not so much the public sector, as they tend to be more cautious) it is often more productive to offer to meet the decision-makers for a coffee or organise a phone chat – people will generally tell you more that way. Written responses tend to be formulaic and not as helpful.

10)    When you do a good job, ask for references and comments there and then, while the gratitude is still fresh. You will then have a stockpile to use, rather than pestering clients to give you a quote or a reference when you're up against a short tender deadline.

Getting the ball rolling

For public sector contracts, SMEs should register with and search the various government procurement websites - Contracts Finder (covering England), Public Contracts Scotland, Sell2Wales, and eSourcingNI and eTendersNI for Northern Ireland.

Simon also highlights the opportunity presented by getting onto ‘frameworks’ or ‘dynamic purchasing systems’, which effectively pre-approve suppliers for on-going work and then allocate specific contracts by a specified method or else by a "mini-tender", which is shorter and simpler than a full tender. These procurement methods typically relate to high-volume, repetitive purchases and can provide regular opportunities for SMEs without the time and expense of having to do a full tender.

For private sector contracts, SMEs may need to invest time searching and registering on individual websites, for example this supplier page of Hitachi Rail, or subscribe to one of the various commercial tender subscription services.

Lastly, Tom stresses that SMEs should look at their own procurement processes. He says: “I have found it is common for SMEs to struggle to get larger corporate deals simply because their prices are too high – and that is often because of their own sub-optimal procurement processes. Also, reducing your cost-of-sales can have a big impact on your bottom line.”

Typical areas of overspending by SMEs, according to Tom, include courier and logistics services (where he says savings opportunities of 50-60% are common); IT and IT support; and in the manufacturing sector, ‘over-specifying’ component parts sourced from suppliers, when a lower-specification component could do the job just as well.


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

Sources:

1. Inopsis, May 2019

2. Skanska, February 2020

Five ways to benefit from a growth market

Top tips on how entrepreneurs can reap the rewards

Five ways to benefit from a growth market

A decisive UK general election result has brought more certainty about the political landscape ahead for the next few years and could prompt entrepreneurs to be more confident around plans to grow their businesses. In this article, Martin Brown, founder of business advisors Elephants Child, provides five tips to help entrepreneurs take advantage of a growth market.

1. Plan to grow

“If you’re thinking about growing your business, it’s really important to commit those thoughts to a plan,” says Martin. “In doing that you need to stress-test all areas of your business – not only your core proposition but also back office functions like your IT and comms, systems and processes, KPIs, cashflow and structure. Ask yourself if those things can scale up. If they can’t, they will be constraints on your growth.

“Setting out both a business plan and operating plan for the next three years is absolutely critical to ensuring your business is set not only to grow but to grow and create value because that’s what is going to make it sustainable in the longer term.”

2. Capital structure

“A growth journey is going to bring different demands on your cash flow. You might have to buy stock, recruit people or invest in premises so capital structure is key. You must have working capital, so you have the scope for that growth,” says Martin.

“If you’re going to borrow, find the right kind of borrowing to suit your situation. But your finance approach could be anything from an overdraft to taking a term loan, using invoice discounting or selling some shares. 

“Whatever way you choose to finance your growth, remember investors will expect you to have a business plan with a financial model that supports it. It’s amazing how many SMEs don’t have that.”

3. Where and what to grow

Martin’s third tip is to ask yourself if you want to grow your business in the domestic market or overseas? Also, will you be growing with your existing products or do you need to develop new products?

He adds: “Another question is whether your growth will be organic or through merger and acquisition (M&A). You should be teasing out the answers to all these questions in the strategic planning process. If you decide on growth through products, by going overseas or through M&A, then that takes longer, there’s a higher level of risk and you really need to plan how you go about it.”

4. Organisational structure and leadership style

According to Martin, not having your management team and structure in line with your strategy will be the “single largest barrier to growth”.

He adds: “You must have the right people in the right jobs, and clarity around roles, job descriptions and targets. Everyone needs to know where they fit on the growth journey. And the kind of leadership style you want is one that encourages growth through coaching and motivating your team.”

5. Be scalable – talent, systems & processes

Martin says: “You want skilled and motivated people who can help grow the business, but you also want systems that scale up with you, that will work whether you have one member of staff or 1,000.

“So, for example, you should have your IT and comms systems hosted in the cloud and able to grow as you add people, customers and transactions to your operations. That same ethos would apply to your accounting systems too and essentially all the other processes that are part of how you do business. If these elements can’t be ramped up, they’ll be a constraint on your ability to take advantage of a growth market.”


The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.

Make your business more attractive

Academics at Nottingham University Business School believe start-ups and growth firms can boost their chances of success by becoming more attractive

Make your business more attractive

There will be many an entrepreneur familiar with standing in front of a mirror checking their appearance and reciting prepared conversation before a business meeting or dinner invitation. These are skills we have learned over a lifetime to present our best selves to partners, peers and colleagues.

But according to new Nottingham University Business School research we can use roughly the same criteria to make our businesses more attractive to customers, suppliers and talent.

Boosting your appeal

Dr Zsofia Toth, assistant professor in marketing, has created an ‘Attractiveness Toolkit’ working with Nottingham SMEs, mainly B2B, to boost their online and offline appeal. “It’s applicable both for start-ups and high-growth firms. We are focusing on SMEs because they have less market access, finance and skills to make them attractive,” Zsofia explains. “We want them to improve their appeal to existing and potentially new suppliers and partners.”

The SMEs begin the project with an attractiveness audit. This involves an in-depth discussion with Zsofia about their social media and online presence and what has been going well in existing business partnerships and where they see potential for development.

“We look from the partner’s perspective as well, because attractiveness is in the eye of the beholder,” says Zsofia. “We then look at a range of different approaches that will work with a particular partner. It is not a one size fits all solution.”

Get referrals

One key suggestion is for firms to make the most of online referrals. This can include publishing business partners’ logos, case studies and client testimonials on their website. “Research shows that a lot of potential suppliers and partners look for referrals,” Zsofia explains. “They want to check your knowledge of your industry, your experience, successes and the scale of your network.” 

She also encourages SMEs to keep their Google profiles up to date. “An outdated address, faulty links and incorrect contact details can impact negatively on your attractiveness,” she warns.

Another online tip mainly directed at B2B businesses is to dare to be boring with social media. Zsofia urges firms that focus on these markets not to be ‘too social’ on Twitter, Facebook and Instagram as this might reflect poorly on their professionalism and invest this time and money on other growth areas instead. Conversely, B2C businesses should focus intently on social media with articles, blog posts and images to make them more appealing and dynamic.

Try the personal touch

SMEs also need to develop their face-to-face networking skills to create “word of mouth attractiveness”. This is done by attending events, conferences and making the effort to personally visit partners at their offices.

SMEs supplying to overseas markets, aiming to expand their activities there in the future or looking for collaborators for innovation projects should learn to globalise their business etiquette. This means noting the different dos and don’ts when interacting with overseas clients either in a formal meeting or informally. 

One of the participants on the project who wouldn’t struggle with the latter is language tourism group Forte Academy. Founded by Florence Forte in 2018 it combines study courses in Classics and Italian history and language with trips to cities such as Florence.

“We struggled to attract people in the first year because we didn’t have the funding to build our online presence. Not enough people knew about us,” explains Florence. “Zsofia’s team began with an MOT of our business which was valuable as I have been very close to my idea and perhaps wasn’t seeing the scale of opportunities I should have been.”

Start blogging

She explains that suggestions for increasing attractiveness included benchmarking its website against competitors, developing blog posts from its tutors and ex-students and more call to action buttons on its website enabling users to get more information or to register interest. 

“They identified university students as our target group, encouraging us to use flyers to get our name known and do face to face workshops. I’ve had a number of emails from students following these events,” she adds. “We are also seeing increased site visits.”

Zsofia hopes to now share the toolkit more widely but generally encourages SMEs to adopt best practice by regularly reviewing how attractive they are to clients and suppliers.

 “Look at your partnerships and determine whether you can do more to work better together or develop new strategies to keep that relationship alive. It is like a long marriage – people often forget to make an effort to appeal to one another.” she says.


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

How’s your poker face?

Holding your nerve under pressure is vital for getting the best price when you sell your business

How’s your poker face?

Exiting a carefully nurtured, successful enterprise is one of the most stressful and challenging business tasks an entrepreneur can undertake. Negotiating the best possible sale price for your ’baby’ is a bit like playing a game of poker, with much to win if you play smart, and plenty to lose if you don’t.

But unlike poker, you can stack the odds in your favour before you even get to the table, according to Dr Stephanie Hussels, Director of the Betany Centre for  Entrepreneurship at Cranfield School of Management.

First steps

Successful negotiation is all about preparation, she argues, particularly when selling to another business, or to a private equity firm or venture capital investors. Stephanie says: “Doing your prep and knowing exactly what you want from the sale gives you confidence and the emotional and mental strength you need to gain the edge during negotiations.”

“Once you decide to sell you must be 100% certain about your exit plan because a flaky exit strategy will definitely undermine your negotiating game. Be clear from the outset what you want in financial and personal terms – do you want to remain part of the business or walk away completely? Firmly define the 'magic number' you want and what will make you ‘walk away’ – and ensure you stick to it.” (Your St. James's Place Partner can help you define your 'magic number'.) 

Timing and support

There can be a long run-up to a sale so keep your cards close to your chest about your intentions, both internally and externally. An ill-timed leak could be destabilising and drive employees to leave, weakening a key asset and reducing the value of the business.

It’s worth appointing external advisers specialising in negotiation to support you in the wider sales process and carry out due diligence and research on buyers. It’s absolutely vital you know beforehand what’s driving buyers, what’s important or unimportant to them, why they want to buy and how these factors align with your objectives.

“This puts you in a position of strength because you can negotiate hard for something you know they want but you’re not bothered about – without letting them know,” explains Stephanie. “You can also use your adviser to strengthen your hand during negotiations, with them taking the hard line and asking difficult questions, leaving you to be more friendly and retain goodwill – a good cop, bad cop approach.”

Leaving for good?

“If you’re planning to fully exit the  business, you’ll be looking for a ‘cash-out’ sale. However, selling a business without its ‘rainmaker’ can weaken its value and your buyer may walk away unless you can convince them you’ve a strong management team in place. Offer reassuring facts and figures and involve competent members of your team in the negotiations to build confidence.”

Stephanie recommends taking a role as chairperson or board director before the sale begins, whereby the buyer gets you as part of the business but it will be easier to step aside without the business suffering once the deal has been completed.

Play the ace

“Remaining part of the business usually makes negotiations easier,” Stephanie adds. “The ace you’re holding is you – you’re an intrinsic part of the sale.” 

For example, a venture capital or private equity buyer will very likely want you on board as they are unlikely to want to be hands-on and  run your business. So, assess your worth to a buyer and negotiate hard.

“You can command a higher price by negotiating a formal ‘earn out’ where you might sit on the board, run a division or look after a specific part of the business for a set period of time as part of the agreement, reassuring the buyer you’re staying.”

Concluding, Stephanie says: “The bottom line is do your prep, understand your buyer, don’t give away anything without trading hard and remember your own value.”


The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.

Exit strategies may include the referral to a service that is separate and distinct to those offered by St. James’s Place.

Investment bonanza

Greater political certainty is likely to mean more investment capital will be released – but can you get your share?

Investment bonanza

Entrepreneurs could be set to reap the benefits of the decisive general election with the release of billions of pounds worth of business investment. 

Some industry commentators predict an investment bonanza for start-ups and scale-ups now there’s greater political certainty – especially concerning the UK’s departure from the EU. But just how much money is likely to be available? And what are investors looking for – in other words, how do entrepreneurs make sure they get their share?

Confident investors

Tej Parikh, Chief Economist for the Institute of Directors, says the investment mood is positive: “Investors that were tightly holding on to their cash at the height of political uncertainty, may now, following the election, have a bit more confidence to take the plunge. With interest rates near historic lows, investors will certainly be looking for yield and the UK’s world-renowned and innovative start-up sector will be a draw.” 

Jeff Lynn, Executive Chairman and co-founder of crowdfunding platform Seedrs, also believes investment institutions and individuals are more confident. He says: “The exact amount of funding that will be released is unclear, but in 2019 we saw just more than £10bn venture capital invested into UK tech start-ups and scale-ups. I think we could anticipate a meaningful level of growth over that in 2020, so it wouldn’t surprise me to see 20-30% growth, an extra £2-3bn.”

Alexandra Daly, investment expert and entrepreneur, and Chair of the Council for Investing in Female Entrepreneurs, says there’s “a huge amount of capital waiting to be unleashed”. She continues: “A staggering amount of growth can be achieved if start-ups and small businesses can access this capital effectively.”

Attracting funding

On the topic of getting hold of that capital, Greg Rice, seasoned investor and founder of digital start-up accelerator Activate, says investors will continue to look for the same things in a business: “A great idea, good team and something truly different and impactful. Those that get these elements right will be of greatest interest to potential investors.”

Alexandra adds: “As ever, investors are looking for a good yield and return on their money.” However, she also highlights a more recent development in that investors are now frequently asking about impact investing and socially responsible funding opportunities. “In recognition of shifting public opinion on environmental issues and increasing pressure to act responsibly from across stakeholder groups, investors in the UK and across the globe are starting to put capital to work to proactively address these social and environmental issues.”

Many options

Greg says this should be an “opportune time” for start-ups to get their share of any extra investment capital. “Traditional UK investments such as property and shares will have challenged returns for the foreseeable future, making start-ups appear more attractive than ever, especially with tax incentives like the Seed Enterprise Investment Scheme available to investors.”

Alexandra adds: “There are brilliant and high-value opportunities for start-ups and growing businesses coming from the angel investment and venture capital (VC) sectors. Angel investment in particular can be a fantastic opportunity for launching companies.”

But she warns that these opportunities are not as accessible to some entrepreneurs as others. Research from the British Business Bank, in collaboration with Diversity VC and the British Private Equity and Venture Capital Association, shows that less than 1% of UK venture funding goes to all-female teams.

Jeff has the following advice for entrepreneurs: “Find out who’s investing in your space and think beyond pure VC because there are lots of different options. The number and different types of players – UK-based and foreign – that are investing has changed dramatically in the past 10 years. Now, there’s everything from family offices and wealth management groups to a wide range of angels, online platforms like Seedrs and larger institutions like investment banks.”

Speak to your St. James’s Place Partner to find out how the Entrepreneur Club can help make sure your business is attractive to investors.

Please note that this is unlikely to be the first option for raising finance, as there will be conditions attached to any agreement reached, which by their nature will be more onerous than those imposed by a mainstream lender. Please be aware that these schemes are only suitable for sophisticated investors willing to take a high risk with their capital as there is a risk an investor may lose some or all of their capital if the company invested in fails.


The opinions expressed by third parties are their own and not necessarily shared by St. James’s Place Wealth Management.

Help… we’re scaling up!

Most entrepreneurs haven’t scaled a business before, so what do they need to know to turn from a mouse into a gazelle?

Help… we’re scaling up!

When it comes to scaling up, age is nothing but a number. Natural beauty and vegan firm Faith in Nature was a 38-year-old business when founder Rivka Rose appointed chief executive Joy Parkinson in 2012 to use her blue-chip consumer goods background to accelerate growth.

“Rivka needed new, outside skills,” explains Joy, who has previously worked for some of the UK's leading brands. “I brought in a new senior sales, marketing and finance director to develop us from a leader in independent health food to a national retailer presence. It took us three years to launch into Holland & Barrett, and in the last two years - after we invested in a brand redesign - we have launched into Boots, Sainsbury’s and Waitrose.”

The company grew from a £2 million turnover to £5 million in 2018 and £10 million today and it is even eyeing up £20 million turnover by 2023.

Mouse or gazelle? GAZELLE!

Graeme Quar, scale up specialist at business advisors Elephants Child, says Faith in Nature has turned from a mouse into a gazelle. “Mice businesses cruise along making money whilst gazelles, or scale ups, grow fast and create a disproportionate amount of wealth and employment,” he says. 

According to the ScaleUp Institute there has been a 23% rise1 in the number of UK ‘visible scale up’ firms to 5,4562 in the past 12 months. Defined by the OECD as businesses with average annualised turnover and/or employment growth over 20% over a three-year period, they contribute £1.3 trillion3 to the UK economy.

“Gazelles aren’t just trendy tech firms, they can be from any sector,” adds Graeme. “You can be a start-up or a firm like Apple, which for its first few years grew at mouse-like pace and then, after inventing the iPod, took off.”

Four key drivers

The owners he advises on scaling up are encouraged to look at four key areas – strategy, execution, people and cash. “Strategy is clearly defining and targeting where you want to be in, say, three years, your vision, core customer and products,” he says. “It means weekly meetings and setting quarterly targets. So, developing a new website in 90 days rather than a year, or chasing customer payments promptly, or rolling out new products without delay.”

Execution means developing consistent processes from sending out quotations to dealing with invoices. “Good process leads to quicker decision making,” says Graeme. People means “getting the right people on the right seats going in the same direction”. He adds: “Keep or hire A players and train your B players up.”

With cash it is about tighter financial management. “Growth sucks cash because you are spending on new hires and technology and there is a time lag for that return on investment. So, send your bills out one week quicker and chase invoices harder. You also need to consider funding growth by invoice discounting, bank loans and overdrafts,” Graeme explains.

Start communicating

Joy says strategy, people and communication have played a huge role in Faith in Nature’s growth. “We’ve added depth and breadth to our team and invested in machinery because demand was blowing the roof off our factory.” she says. “We’ve set very clear and visible targets, consistently communicated in monthly team and individual briefings. We explain what we are doing and why.”

It’s also about responding to signs of strain. “Tremendous 75% growth this year meant we had to play catch up on capacity and our service levels dipped. But we have invested in putting a second shift on in our factory to get through it,” she adds. 

Faith in Nature also has two non-executive directors with a marketing and finance background to help them cope. “We are open to anyone helping us,” Joy says.

Help and advice

Where then can owners go to help them spark growth? They can speak with their St. James’s Place Partner to find out how the Entrepreneur Club can help plan for growth. In addition, they can look to mentors, non-executive directors and peer-to-peer networks.

When it comes to investment, owners should look at angels and venture capital as well as funds and Government grants. The ScaleUp Institute has mapped around 194 UK programmes dedicated to fast growth. “We are seeing increasing evidence of programmes that help tackle scale-up challenges, such as access to talent, markets, leadership capacity, finance, and infrastructure,” says the Institute's Stuart Rock. 

The right mindset

He says good programmes have a clear structure focusing on developing individual leadership capabilities, confidence and knowledge. Graeme agrees that a leader’s mindset is key to scaling success. “Some owners find scaling up too much of a rollercoaster,” he says. “But for others they enjoy the challenge and excitement. It’s like being a start up again!”

Please note that angel and venture capitals are unlikely to be the first option for raising finance, as there will be conditions attached to any agreement reached, which by their nature will be more onerous than those imposed by a mainstream lender. Please be aware that these schemes are only suitable for sophisticated investors willing to take a high risk with their capital as there is a risk an investor may lose some or all of their capital if the company invested in fails.


1,2,3 The Scale Up Index 2019, the ScaleUp Institute

The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

Six steps to boost productivity

Martin Brown of business advisors Elephant’s Child offers some top tips on ensuring your business is as productive as possible

Six steps to boost productivity

1. Measure and benchmark your productivity 

The first step is to assess your business’ productivity and benchmark it against organisations in your sector of similar size, structure, employee levels, located both locally and across a wider geographic region.

Productivity is measured as sales divided by the number of employees. To carry out an effective benchmarking exercise, consult a data analyst to assess the data and produce a report relative to your rivals. The St. James’s Place Entrepreneur Club provides an online benchmark report that includes a productivity assessment and uses comparative data from Dunn and Bradstreet. Its report provides a red-amber-green traffic light rating of the firm’s productivity and how it stacks up against similar rivals. Speak with your St. James’s Place Partner to find out more.

2. Focus on increasing sales and understand the value of your time

Increasing sales activity and turnover by using the same number or fewer employees is key to raising productivity. Sales is not all about winning new clients. First, it is vital to retain and grow existing customers and, by carefully nurturing existing relationships, this objective can be easier to achieve. You also need to win new clients, which means reviewing and assessing your sales process, offering and value proposition to deliver constant improvement.

For both approaches you need to evaluate how you use your time. The more time you can spend productively with clients, the more your business will grow; so, delegate, outsource, redesign or drop the non-productive, low-value parts of your work.

3. Establish a clear strategy and culture 

Good productivity needs people aligned around the same, clearly defined strategic goals, and it’s important that everyone – not just the board – understands and engages with them.

However, for any strategy to succeed, people’s behaviours and values have to be aligned with it; a great plan with the wrong culture behind it is like having two engines working against each other. The Cultural Web is a useful business tool that enables you to evaluate your culture and create a new more relevant one for the organisation. 

4. Ensure your team works well together

When everyone in the business works well together, productivity naturally increases. Porter’s Value Chain Analysis is an established business tool you can use to analyse the functions of your business and improve them to deliver optimum customer service and better margins. 

The book, The Five Dysfunctions of a Team by Patrick Lencioni, says trust is the bedrock of any successful team and contains a useful model for assessing levels of trust and improving them. A team based on trust is better at having challenging discussions about productivity and improving it. 

You also need your people to understand what numbers or key performance indicators drive the business and how they can be improved. Enable them to find their way around cashflow forecasts, profit and loss accounts and balance sheets – the more they understand the more productivity will improve.

5. Be ‘lean’

‘Lean’ is a set of well-established working practices devised by Japanese car manufacturer Toyota in the 1970s but the principles can be applied to any business today. Essentially, it’s a set of tools that help identify and eliminate waste to improve productivity and reduce costs. It’s probably best to consult a business advisor to help you devise and carry out a ‘lean audit’ to assess how to make your business ‘leaner’.

6. Use your leadership skills 

Your leadership and passion for the business are absolutely critical qualities for driving productivity by engaging and motivating your people. 

You can assess and strengthen your leadership skills through mentoring and coaching and by understanding good practice. Joining a Peer Board is a good way to gain and share knowledge, experience and best practice within your sector and others.

It's also worth looking at UK Government initiatives that support entrepreneurs on leadership and productivity, such as the Small Business Leadership Programme, the Be the Business Mentoring Programme and Knowledge Transfer Partnerships. 

Finally, as a good leader, you must be prepared to give your people autonomy and empower them for optimum results, because if everything has to come through you it will constrain productivity.


The opinions expressed by third parties are their own and not necessarily shared by St. James’s Place Wealth Management.

Crunch time for Entrepreneurs’ Relief?

All signals point to Entrepreneurs’ Relief being reduced or removed in the March 2020 budget. Entrepreneurs should consider revising their business and personal financial plans accordingly.

Crunch time for Entrepreneurs’ Relief?

For some time, the writing has been on the wall for Entrepreneurs’ Relief (ER), which halves the Capital Gains Tax payable when an entrepreneur sells a business from 20% (in the case of a higher rate taxpayer), to 10%.

Then Chancellor, Philip Hammond, signalled a change to the mood music in his 2018 autumn budget speech, saying: “I have received representations that I should abolish Entrepreneurs’ Relief and put the savings towards funding our NHS”. Under new leadership at the end of 2019, it was confirmed that this tax break remained a bugbear of the Conservative Party. In its election manifesto, it pledged to ‘review and reform’ ER, saying it hadn’t delivered on objectives. And as we all know, the Conservative Party won.

Fait accompli?

Financial journalist and self-confessed ‘ardent HM Treasury watcher’, Dan Atkinson, thinks changes are now a fait accompli. He says: “In the March 2020 budget we can almost certainly expect to see further restrictions on ER, but I think it’s unlikely to be scrapped entirely.”  

In terms of what might change, Dan says it is difficult to predict, but there are three main things to look out for. First, further restrictions on qualification for ER could be introduced, but this has already been a trend over the last few years, so is unlikely to provide the scale of reform government is looking for. (New restrictions around share ownership were introduced in 2018 and 2019, with shareholders needing to hold a minimum 5% economic interest in the company and needing to have held shares for at least two years, up from one, to qualify.)

Second, the tax rate could be increased from the current 10%. And third, the lifetime limit on gains that the ER tax rate applies to (currently £10 million) could be reduced. 

Dan says the timing couldn’t be more opportune for government: “An election has just been won, so by the time the next one comes around, the issue won’t be fresh in the minds of those upset by the move.”

He continues: “This government can say it was a misconceived Labour tax break (ER was introduced in 2008 when Alistair Darling was Chancellor). And to be fair, it is a tax break that is difficult to defend. In most cases, ER reduces the tax bill for people selling mature businesses. Entrepreneurs do not roll their sleeves up, start businesses, and create jobs because they will eventually get a tax break many years down the line.”

Dan also points out that ER is extremely unpopular with many HM Treasury officials, who consider ER to be mostly used as a ‘financial product’ constructed to reduce tax, rather than as a scheme moulded to the needs of entrepreneurs which in turn drives additional entrepreneurial activity. 

Plans will need updating

Steve Hoon, tax partner at BDO, says that, if changes are made, they could be effective immediately and a ‘grace period’ or delay in implementation of any such legislative changes should not be expected. He says recent changes to Capital Gains Tax (and consequently ER) have become effective for disposals taking place on or after the day following the Budget. 

But he stresses that a knee-jerk reaction between now and budget day should be avoided: “Selling a business is a major event and in practice is not something that can be significantly rushed.” 

Steve also says it is important to keep the scale of the ER tax break in perspective. He says: “Is the difference between a tax rate of 10% and 20% really big enough to fundamentally change a huge commercial decision such as selling a business?” He continues: “And remember that even without ER, the UK has a very attractive Capital Gains Tax environment when selling a business, with 20% being far lower than income tax rates.”

He does however acknowledge that if a business owner is already part-way through a sale process which has a realistic prospect of completing before budget day, then the signalling from government might certainly tip a marginal decision in favour of selling and upping efforts to get the deal over the line. 

But, for those owners with exit plans extending beyond March 2020, there is a possibility that they will be paying more than the current ER rate of 10% on their capital gain. Irrespective of any changes to ER, it is worth noting that there are other steps that business owners can take to maximise their net proceeds on a sale. This may include undertaking vendor due diligence exercises to help articulate the value of the business to potential sellers (see Entrepreneur Club article Ten steps to due diligence readiness) or taking steps to improve the working capital requirements of the business pre-sale.

In addition to Steve’s comments above, entrepreneurs may also want to consider revisiting their personal financial planning. Changes may be required – such as adjusting the target ‘exit value’ for their business upwards (to account for the loss of any ER tax break) to provide the same ‘retirement pot’ when the business is sold. 

For further discussion on how to incorporate tax and other uncertainties into exit planning, see the Entrepreneur Club article Navigating to exit in uncertain times.

A good place to start when you are preparing your business for sale is to fill in the St. James’s Place Entrepreneur Club app, which will give you a clear picture of your current position.


The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Exit strategies may include the referral to a service that is separate and distinct to those offered by St. James’s Place.

The opinions expressed by third parties are their own and not necessarily shared by St. James’s Place Wealth Management.

How to prepare to sell your business when it’s dependent on you

Understanding your value to your business

How to prepare to sell your business when it’s dependent on you

What’s the fuel that keeps your business firing on all cylinders? State of the art products? Superior service? Stellar reputation? Leading brand? And YOU!

When you’re thinking about how to prepare to sell your business, be aware that potential acquirers could lower their offer or head elsewhere if they learn that the lynchpin of its success is, in fact, the owner.

Do you personally have client relationships that span the life of the business, or a significant part of it? Are others in your business educated and empowered to make key decisions, or have you been reticent to delegate? Does the knowledge and expertise your business readily draws upon exist mainly in your head, rather than on paper?

And what would the repercussions be if you left the business today?

The answers to questions such as these should alert you as to whether your company is too dependent on you. So here are 5 ways you can reduce that impact in the eyes of your ideal buyer and sell for maximum value.

 

Develop a strong management team who can run the business on a day-to-day basis

Consider how heavily involved you are in the day to day running of the business:

  • Who is responsible for the sales?
  • What about key client relationships?
  • Who runs your operations?
  • What about the development of new products?

If you’re serious about selling a business, part of the preparation must include the recruitment and training of a management team to whom you can pass the baton on aspects such as sales, account management, operations, product development and finance.

By reducing dependency on you and having a strong management team in place, you’ll make the business more attractive to potential buyers and that will enable you to exit the business sooner rather than later. If you fail to do this, why would a buyer offer you a decent price when the main USP of your business (you!) is about to exit?

 

Upskill others with your knowledge and insight

Exiting a business means delegating leadership responsibility to a well-informed team of management talent. However, sharing your knowledge and insight is just as important as the delegation of management duties.

Business owners who keep the secret ingredient of their recipe for success to themselves will not create an attractive proposition for acquirers. Weave that wisdom into the fabric of your business. Train employees at all levels across your company with your unique knowledge – from the office, to the warehouse, factory, studio, laboratory, and shop floor.

Chances are, processes have evolved while you’ve been running the business. Customer behaviour almost certainly has. There might have been seismic cultural shifts within the industry. Share this experience and the insight it has brought along the way, to help staff write the next chapter in the history of the business.

Don’t forget to document all valuable knowledge and insight, too. This is particularly important in smaller businesses where it might be impossible to have two people for every role. A buyer will be relieved to see that there’s a way for someone to pick up business-critical tasks if a key member of staff leaves.

 

Preserve client and supplier relationships with contracts and strong communication

Buyers could be worried that clients and supplier relationships might be negatively impacted by your departure. One way to reassure them is to provide up to date contracts that protect the supply chain and key revenue streams e.g. where your business is the preferred or exclusive supplier.

In the months leading up to your exit, you should also introduce and involve relevant members of your management team in meetings with key accounts and suppliers. Plenty of face-to-face contact will build relationships and help alleviate the worry and uncertainty that transition can bring.

 

Work with the new owner on a consultancy basis

Despite a painstakingly careful handover and diligent documentation, there are still times your exit from the business will need to be an even more gradual process.

Where there is an intricately layered level of complexity around the operation of your business – perhaps linked to major seasons and cycles within the year – your buyer could be keen on you continuing to work with them post-sale on a consultancy basis so that they can rely on your expertise for that full cycle.

Shelved projects that the new owner might wish to rejuvenate, long-term projects with a complicated history, and cases to which you’re inextricably linked are also scenarios in which your consultancy can benefit the new owner. By offering this you will be able to command a higher price.

And if there is shareholder dependency, it you will certainly need to be involved as part of the transition period.

 

Take some time off!

We saved the best tip for last. When was the last time you took a holiday? By that, we mean a genuine break where you weren’t answering emails from your sun lounger? Probably not since the invention of the smart phone or Blackberry, at least!

As you prepare to sell a business, you will be extremely busy, so taking a break could seem counterintuitive. However, being able to show a new buyer how well the business runs without you is evidence that your involvement isn’t the ‘be all and end all’ of its success.

Once you have efficiently delegated key responsibilities to senior managers and shared your knowledge around the company, you need not feel anxious about stepping away for a week or two here and there. It will be the ideal way to test how well your handover works in practice.

It’s also wise for your own wellbeing. A sudden departure from a business can feel traumatic for many people – understandable when you have lived and breathed it for many years. Time off and head space to contemplate your next chapter is healthier for you and shows potential buyers what a healthy business they are about to buy.

There will always be a transition period when you sell a business but the less dependent the business is on you, the quicker and easier it will be. 


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

*Exit Strategies may include the referral to a service that is separate and distinct to those offered by St. James’s Place.

This article has been provided courtesy of Entrepreneurs Hub.

Five things you need to know

As a business expands it can be hard to keep up with company law – here are some of the compliance issues that might apply to your business

Expansion means your start-up has succeeded in finding a market for your product or service, but the bigger you get the harder it is to meet all of your statutory obligations and keep regulators happy.

However, non-compliance could threaten the growth you're trying to achieve with possible financial penalties, or even suspension from trading, harming both your bottom line and the reputation of your business.

Here are five questions entrepreneurs should ask themselves about compliance as their business grows.

1. Do you need a statutory audit?

Guy Wilmot, start-up specialist and partner in the corporate and commercial team at law firm Russell-Cooke, explains: “The threshold for the legal requirement for a yearly audit, the results of which are sent to Companies House, is hit if a company has turnover of more than £10.2m, assets of more than £5.1m or employs more than 50 employees."

However, many businesses choose to be audited even though they're not legally obliged to do so as it adds extra credibility to a company, for example, if it needs to raise finance from a bank.

2. Do you need a data protection officer?

Data protection officers are responsible for overseeing a company’s data protection strategy and its implementation to ensure compliance with General Data Protection Regulation (GDPR) requirements.

Guy says: “Instead of a specific financial threshold that applies to the appointment of a data protection officer (DPO), businesses need a DPO if they carry out large-scale regular and systematic monitoring of individuals or large-scale processing of special categories of data – for example, health data.”

GDPR guidelines say the regulation covers “core activities” that are “inextricable” to the company’s primary functions – not support activities like payroll.

3. Do you need a modern slavery statement?

Introduced as part of the Modern Slavery Act, which became law in 2015, it’s once again size that matters when it comes to a company's legal obligations. “The requirement to publish a modern slavery statement only applies to businesses with a turnover of more than £36m,” explains Guy.

Companies in that category must produce a modern slavery statement for each financial year. The information it should contain includes details of a company’s anti-slavery policies, the parts of its business and supply chains where there is a risk of slavery and the steps that it has taken to assess and manage that risk.

4. Do you need to report a gender pay gap?

Since 2017, all businesses or organisations with more than 250 employees have been legally required to annually publish and report their gender pay gap information. Your calculations must be based on the 'snapshot date' of 5 April and the information can be published using the government gender pay service. The Equality and Human Rights Commission has the power to enforce any failure to comply with the regulations but the reputational damage of not reporting could be far worse.

5. Do your freelance contracts meet IR35 rules?

These regulations, also know as off-payroll working rules, come into force in the private sector in April 2020. They are designed to close a loophole in the tax system where workers could use the set-up of a limited company structure in order to pay less tax. The benefit for employers hiring workers in this way is not having to pay employers’ National Insurance contributions or give contractors employee benefits.

From next April a private sector company will be responsible for checking its contractors comply with IR35, and be liable for any unpaid tax, if that company has an annual turnover above £10.2m, a balance sheet total over £5.1m, or more than 50 employees. There's much more guidance available on these rule changes at the gov.uk website.


Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Please note that clicking a link will open the external website in a new window or tab. Links from this website exist for information only and we accept no responsibility or liability for the information contained on any such sites. The existence of a link to another website does not imply or express endorsement of its provider, product or services by us or St. James’s Place

Seven rules for hiring employees

Top tips for when you’ve found the right person to help you move your business forward

Seven rules for hiring employees

Most entrepreneurs at some point need to hire their very first true employee to achieve their objectives for expansion and increased profitability. Selecting the person you want to employ is, however, just the beginning, as the next steps towards actually engaging them require close attention to vital legal and regulatory matters.

But with entrepreneurs typically focused on running their businesses they can be tempted to ‘wing it’ and not go through the proper processes, which can result in legal action, fines and loss of reputation and business.

Two people who know this more than most are Charlie Johnson, CEO of recruiter BrighterBox, and his wife, employment lawyer Jane Johnson owner of JLJ Legal, both specialising in helping start-ups and SMEs across a range of sectors.

Below, they highlight seven key points that must be followed without fail to ensure taking on your first employee goes as smoothly as possible.

1. Register as an employer with HMRC and set up a payroll

As soon as you know you are going to employ someone, do this before their first payday – although you cannot do it more than two months before they begin work. It’s a simple process that can be done online via www.gov.uk, but in order to pay your employee you need to set up a payroll system. It’s best to contact one of the many specialist outsourcing payroll companies to do this for you. They will take all the hassle of looking after things like pension contributions and national insurance, and ensure any employees pay the right tax to save you grief later.

2. Check your employee has the legal right to work in the UK

You can check this online if the employee has given you their “share code”. If they haven’t, It’s a very simple process of asking the appointee for their passport or UK driving licence, or if a foreign national, for any relevant visas and associated paperwork. It’s a good idea to ask for a utility bill with name to confirm their residence. You need to check these documents carefully and look for any obvious discrepancies on dates or the pictures used or if the documents seem less than genuine. If you are not sure, and still want to proceed, consult a lawyer. If you knowingly employ someone you know (or could reasonably have known) does not have the legal right to work, you face a fine as much as £20,000 per individual.

3. Ask a professional screening company to run a Disclosure & Barring Service (DBS) check, if required

Any person involved in working with children or vulnerable people in care homes or hospitals, for example, or regulated professions such as lawyers, accountants, vets, chemists and opticians, must pass a check by the government’s DBS. This ensures that they are a fit person to work in these environments. It’s easy and relatively inexpensive to use a specialist company registered with the DBS that will do this for a set fee and decide exactly which DBS check you need to undertake. Alternatively, you can ask the employee themselves to apply for DBS check on www.gov.uk, for a £23 fee and provide you with the relevant paperwork but you must check it thoroughly.

4. Ensure you’re familiar with and pay the correct minimum wages

There is the National Minimum Wage for people aged 16-24 and the National Living Wage for those aged 25-plus and slightly different rates for those in apprenticeships and living in London. The pay rates are reviewed every April and failure to comply can result in fines of up to £20,000. Full details can be found on www.gov.uk – if in doubt consult your accountant.

5. Purchase employer’s liability insurance

This basically guarantees you are covered for any compensation claims arising if your employee becomes ill or is injured at work. By law you must display the Employer’s Liability Insurance certificate in your premises or office. It’s an easy one to sort out though, you just need to go to a good insurance broker to ascertain the right level of cover for the best price. Under no circumstances be tempted to underinsure – your policy must cover you for at least £5 million. You can be fined £2,500 every day you are not properly insured.

6. Ask a lawyer to draw up a written statement of employment particulars

A written statement of employment particulars – sometimes known as terms and conditions or contract of employment – has to be issued if employment is for more than one month and must be issued within two months of the person starting work. It is effectively a legal minimum contract that covers key aspects of the employment, such as: start dates, place and hours of work, holiday allowances and conditions for terminating employment. Avoid using a free, off-the-shelf template statement, they are usually not worth the paper they are written on.

7. Auto enrol your employee into a workplace pension

You are obliged to set up and contribute to a workplace pension for anyone who is a worker or employee who is aged between 22 and the state pension age, who earns at least £10,000 a year and normally works in the UK. If they are under 22 and earn less than £10,000 but ask to join, you still need to enrol them. Your legal obligations begin on the day your first member of staff begins working for you – known as your duties start date – and you must complete a declaration of compliance to the Pensions Regulator within five months of your duties start date. Failure to auto enrol an employee can result in a fine of up to £10,000. A workplace pension can be pretty tricky to set up on your own, so always talk to your St. James’s Place Partner who can help you find an appropriate, manageable pension for your business.


Where the opinions of third-parties are offered, these may not necessarily reflect those of St. James’s Place.

Please note that clicking a link will open the external website in a new window or tab. Links from this website exist for information only and we accept no responsibility or liability for the information contained on any such sites. The existence of a link to another website does not imply or express endorsement of its provider, product or services by us or St. James’s Place

Five reasons loans are declined

SMEs should be planning their borrowing strategy long before they need money

Five reasons loans are declined

“We have certainly seen a lack of borrowing appetite from SMEs in recent years, mostly because of the uncertainty surrounding Brexit”, says Rob Warlow, founder of SME loan broker Business Loan Services. “There is a huge amount of pent up demand for loan capital. The expansion plans are there, ready to go, but businesses are waiting for more political and economic certainty.”

Hopefully, with the decisive result of the recent general election, more businesses will now pull the trigger on their plans. According to Rob, the supply-side is ready, with lenders keen for more business.

For those SMEs looking to borrow, his hottest tip is to start the process early, ideally 6-12 months in advance of submitting an application. This will allow time to research all options, target the most appropriate lenders, and tailor the business and loan application so that the chances of success are maximised.

Below, Rob shares his thoughts on some common reasons loans are declined, and how SMEs can avoid this fate:

1. Approaching the wrong lender

In recent years, two very distinct groups of lenders have emerged: banks and ‘fintechs’. Traditional banks now mostly avoid small loans (as a rough rule of thumb, below £25,000). Meanwhile fintechs, such as peer-to-peer lenders, dominate this end of the market.

Banks have more manual loan application processes (in a low interest rate environment, small loans are simply uneconomical for them), while fintechs tend to have highly automated on-line processes that are strictly ‘rules-based’.  

So SMEs need to target lenders who are comfortable with the size of loan they need.

It is also important to find out which lenders are active in your sector. Banks and other lenders sometimes avoid some sectors altogether – for example, obtaining credit can be quite difficult at the moment for high-street retailers, restaurants and the leisure sector, which have seen higher levels of stress as a result of general uncertainty. Also, lenders tend to allocate a fixed amount of loan capital to each business sector, and may have ‘maxed-out’ their lending capacity.

It is worth having an early conversation with target lenders to make sure they are active in your sector.

2. Poor credit history (of the business or its directors)

Because of their automated processes, credit scores are especially important to fintech lenders. Banks will sometimes dig deeper into the reasons behind a low credit score, but an automated process just looks at the score itself and a decision is made.

Businesses therefore need to make sure they maintain a healthy credit history. Some of the common causes of lower credit scores include: late or last-minute filing of accounts (there can be a few days delay between when accounts are filed and when they are available for credit scoring algorithms to read, so the algorithm may assume accounts are late if they were only filed at the last minute); late payment of invoices (reporting late payments to credit scoring agencies is becoming more common – this puts a black mark against the name of the late-payer); and judgements or payment defaults against the company (a CCJ has a significant negative impact on a credit score).

The personal credit history of directors and large shareholders is also important. Lenders will often be relying on the personal guarantees of directors and will want to make sure they are in a solid financial position.

3. Financial weaknesses  

Especially in the case of larger loans, lenders will be studying certain financial metrics. They will look at how profitable the business is, that it is generating enough cash to easily cover loan repayments, and that there is not too much existing debt on the balance sheet.

Importantly, businesses need to be aware that lenders will want to look at the filed annual accounts as well as up to date management accounts. With the advances in accounting software available to SMEs today, it will be expected that all management accounts are fully up to date.

An additional point businesses need to look out for is that sometimes accountants will (quite legitimately) structure the financials to minimise profit (and consequently, tax). But this can work against a favourable lending decision. Planning ahead and structuring the financials to suit a loan application well in advance will be necessary.

4. Issues with bank statements

Particularly for loans above the ‘automated’ assessment threshold, lenders will be studying bank statements and reject applications where repeated patterns of bounced cheques or unplanned overdrafts are evident.

5. Applying at too early a stage

Start-ups are generally a no-go for debt finance, due to their higher risk and lack of trading record. As a rule of thumb, debt finance can be considered after 12 months of trading history has been established.

A final point Rob flags for SMEs is to be prepared to provide lenders with collateral. Online platforms issuing smaller loans will generally only require directors’ personal guarantees as collateral. But for larger loans, collateral such as property or machinery (typically with a value of at least 75% of the loan) will be needed. In some cases, the debtor’s book or stock can be used.


Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.​

Starting over

How to launch another business and protect the proceeds of your first exit

Starting over

Inspiration for a new business can come at any time, even when driving down the iconic Route 66 as part of your honeymoon. This is what happened to Robin Knox last year just weeks after selling his final equity stake in Intelligent Point of Sale (IPOS) – the electronic till software system he co-founded from his kitchen table in 2012.

“We had sold IPOS to the payments firm iZettle in 2016, kept an equity stake but then sold up when iZettle itself was bought by PayPal,” explains Robin. “I travelled to Australia, Indonesia and the US and took some time out. But during that drive I started to think about the house we were renovating back home and home security! When I got back, I ordered a new system and found that they haven’t moved on from the 1970s.”

From this came Boundary, a smart home security alarm business which Robin brings to market next May. “I had always wanted to start again and do something bigger,” he explains. “It was a similar play with a utility product and people paying monthly recurring fees, but it was different in that it was hardware and B2C not B2B.”

Operational risk

Creating a new venture in the same market is, according to Crawfurd Walker of business growth advisors Elephants Child, important in helping to de-risk the move.

“Entrepreneurs can use their existing knowledge and contacts and provide a bit of comfort,” he says. “However, sometimes they fancy getting involved in a different market they have an interest in or where they see a good opportunity. Where possible they will try to use the same team as before if they have been successful and bring in industry specific expertise if required. Again, it is about taking uncertainty out of the equation.”

Robin followed this pattern, retaining professional advisers, finding new hardware experts and discussing the business model with previous investors.

“I also quickly hired an operations manager because I decided this time around there were certain parts of the business I wanted to focus on rather than doing everything,” he says. “Also, it helps me prioritise more time with my family.”

It also gave him space to evaluate the strength of his new idea.

“We conducted market research including eight-hour long interviews with members of the public, which gave us peace of mind before ploughing money in,” he adds. “We had to design and build the hardware for the alarm before any sales came in so overheads have been high.” By the time we launch the business will have consumed the guts of £3 million.”

Protecting your cash

So aside from business and operational risk, financial risk must also be accounted for by those starting again. Robin says he and his tech partner have put in a combined £1.2 million into Boundary.

“We didn’t want to bet everything so we set a limit of 10% of net worth into the business,” he explains. “Yes, I’ve worked hard but I have also had luck along the way and I don’t want to jeopardise what I have built up.”

Simon Martin, of St. James’s Place Wealth Management, says it is vital that entrepreneurs create a financial plan to protect their personal finances. “Cost out everything you will need for the business, your family and lifestyle,” he says. “If you have a significant capital holding then consider the most tax efficient way to manage these funds, such as in trusts. Look for diversification for your funds and consider diversifying away from the new business.”

He says there are no fixed rules regarding how much personal capital to hold back, with it depending on the individual’s risk appetite and often age. “But be prudent. A new venture could be rewarding, but you can also lose everything,” he says.

Take your time

Robin’s final advice for getting a new venture right though is more physical than financial. “Take a break after you leave or sell a business. Let yourself get a little bit bored before launching straight back in,” he says. “We started again almost straight away, my lifestyle up to this point had meant I was living on Deliveroo, coffee, beers and adrenaline as we built it up. So much so that I ended up in hospital with a stomach ulcer. But ever the entrepreneur it was all about timing. We felt if we didn’t move quickly, we would get left behind in the marketplace. That and the passion I felt for the product meant I had no choice. I’ve been careful this time to carve out some time with a personal trainer to make sure my health receives the priority it should.”


Trusts are not regulated by the Financial Conduct Authority.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.​

Have you protected your IP?

Businesses that take care of their intellectual property rights are more likely to thrive

Have you protected your IP?

New companies are hotbeds of innovation but their products, technologies and designs are vulnerable to copying or theft by larger rivals. It makes sense, therefore, for them to protect their intellectual property (IP) and a recent study reveals that those who do, benefit from stronger growth.

European SMEs owning at least one piece of IP are 21% more likely to experience a growth spurt and 10% more likely to become high-growth firms, according to a survey by the European Patent Office and the European Intellectual Property Office1. But worryingly, the study shows that only 9% of these companies own their own registered IP rights, compared to 40% of larger companies.

So, what options are available to start-ups and SMEs and what’s the best way to secure protection for IP, which broadly consists of brands, designs, technical innovations, software, industrial processes and creative works including films, videos, books and music?

The best-known types of protection are copyrights, design rights, patents, trademarks that generally require registration, while creative work and software typically get automatic copyright protection.

Misunderstood

“IP is poorly understood,“ says Dr Anthony Thomson, growth planning and IP specialist with Elephant’s Child. “It’s not just about registered IP, there are also trade secrets and know-how. These include technical processes, design, commercial methods, formulae, practices or information that – crucially – isn’t generally known about by others. They’re an alternative defence that’s cheaper to obtain without any registration.”

Creating a trade secret involves process, instructing staff not to share confidential information with people outside the company, building this into employment contracts and including non-disclosure agreements if necessary. Hold regular meetings to ascertain new developments in your business that might need to be protected as trade secrets or other IP.

Going down the patent and trademark route requires your IP to be registered with relevant bodies and protected in each geographic region you’re targeting. Registering patents in particular involves lengthy, legal processes, specialist advice and potentially high costs.

IP Strategy

“IP protection confers competitive advantage, allowing companies to commercially exploit their inventiveness, so it pays to build a costed IP strategy into your business plan right from the start,” Anthony explains.

“But be selective and considered in what you protect so you don’t overspend, and ensure any IP is owned by the business, not an individual. Seeking legal expertise to conduct a freedom to operate (FTO) study to ensure your IP doesn’t infringe on prior art, is a key first step.”

He recommends getting advice from reputable business advisers and legal firms with dedicated IP specialists and access to chartered patent and trademark attorneys. Once protected, it’s worth considering licensing your IP to other companies to manufacture and sell. “Licensing offers high margin revenue streams and is attractive because it is scalable and you can license to multiple organisations, globally,” he adds.

Deterrent

Having protected IP acts as a strong deterrent but when someone infringes your IP, action must be taken, either through the courts or by using specialist companies.

Four years ago, entrepreneur Rachel Jones launched SnapDragon, experts in identifying IP infringers and copyists and getting their websites, and any links to fake products, taken off the internet to stop them being sold, exported, imported and distributed.

She formed SnapDragon in 2015 after fighting a long battle to prevent counterfeits of her children’s high chair, Totseat, reaching the markets.

She says: “As an absolute minimum, with a product, you need a trademark. It’s the least expensive registered IP and a very useful, cost-effective tool to successfully fight counterfeits. Most companies don’t have the skills to scour the web for infringements, which is where we come in.

“I believe registering and defending your IP makes your business more likely to grow because it tells the world you’ve got something worth coveting.”


1 IPR intensive industries and economic performance in the European Union. Third edition. Published by the European Patent Office, September 2019.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.​

Navigating to exit in uncertain times

Personal financial plans and business plans need robust stress testing

Navigating to exit in uncertain times

Simplistically, entrepreneurs' exit plans should include: personal finance plans, with assumptions about the 'pot of money' needed to fund retirement; a business plan, which will spell out how the value of the business will be built; and how that value will be turned into cash i.e. how and to whom the business will be sold.

So far so good, but these plans have to be flexible enough to survive the uncertainties faced by entrepreneurs and their businesses. And in 2019, there is no shortage of uncertainty – think Brexit, an early general election, falling economic growth, a US-China trade-war, and technological disruption just for starters.

In this challenging environment, Simon Martin, tax and trust consultant at St. James’s Place, and Martin Brown, CEO of business growth advisor Elephants Child, offer some nuggets of advice to help entrepreneurs navigate a path to exit through this uncertainty.

Build in contingencies

When working with their financial planner, entrepreneurs should be trying to establish how much money they need for their chosen retirement lifestyle, which will in turn set a target ‘exit value’ for their business.

This is often calculated using the current tax regime and prevailing financial conditions as a base case scenario. But Simon stresses that the plan needs to go further: “The tax and financial environment is very uncertain at the moment. A number of politicians from different parties have suggested changes to Entrepreneurs’ Relief (ER), tax relief on pension contributions, and Inheritance Tax relief. On top of this, financial markets are facing uncertain times from things like Brexit and the US-China trade war. No-one has a crystal ball but it is important that any personal financial plan considers potential changes to the environment, so that entrepreneurs are as prepared as possible.”

He says scenario planning is important. For example, if ER is removed and Capital Gains Tax of 20% is payable when a business is sold (instead of the current 10%), will the original target pension pot still be big enough? If not, changes will be needed, such as re-visiting the target value of the business, retirement dates, or increasing tax-efficient savings. He continues: “It’s best to have an element of contingency built into the plan so that if the environment is not as favourable as initially assumed, the original plan can be adjusted as easily as possible.”

Simon also favours what he calls ‘cautious planning’. If, for example, a 10% investment return is needed on pension savings to reach the target pension pot within the required timeframe, the chances are this assumption is too aggressive. He says more conservative assumptions will naturally lead to an element of contingency being built into the plan.

Lastly, Simon recommends using insurance to mitigate as many uncertainties as possible. In particular, entrepreneurs sometimes overlook ‘protection insurance’. This pays out in the event of a business owner or key staff member dying or becoming critically ill. The pay-out will be designed to protect the continuity of the business because of such events – which can be significant for small businesses because of dependencies on key individuals.

Revisit the business plan

With a target exit value and timeframe in place, entrepreneurs will need to revisit their business plan, and make sure it is aligned to their personal financial plan. Martin emphasises that entrepreneurs should channel their energy towards those ‘controllable factors’ that impact their business, and not get overly distracted by macro factors beyond their control. In particular, he highlights four things to consider when revisiting the business plan in times of uncertainty.  

First, seek out certainty. Martin says: “It’s easy to get panicky about the factors that dominate UK news – Brexit, the general election, or a slowdown in GDP. But if you take a global perspective, that level of uncertainty doesn’t prevail everywhere. While the UK might be going through a period of low economic growth (around 1%) with heightened volatility, some of the world’s largest developing markets such as India and China are growing in the 5-6% range, and the world’s largest economy, the USA, has been growing in the 2-3% range1. So, it’s worth it for entrepreneurs to go back to their strategic plans and see if they can pivot their businesses towards these less uncertain environments.”

This might mean looking at exporting more - see Entrepreneur Club articles The Value of Brand Britain (which explains how popular British goods and services are in some developing markets), and How to crack the USA (the UK’s largest export market by far).

Second, take stock of which uncertainties will, or will not have an impact on the business. Brexit uncertainties might have a very real impact, such as having to change the terms of trade with European customers or suppliers. But Martin says larger ‘macro’ events might not impact smaller businesses to the same extent as larger ones: “A small business can continue to grow and gain market share in times of weak GDP growth. A very small change in market share or winning one or two new key accounts can have a far bigger impact on a small business than a change in GDP growth, so focus on those practical, controllable things. Small businesses can continue to thrive and prosper if they have their proposition correct and they are committing to their plan.”  

Third, look for opportunity arising from uncertainty. Martin points to his experience with a business he works with in the talent management and recruiting sector. In the past, this business was heavily reliant on finding staff for clients from the EU (as were its competitors). But access to those staff is likely to be more restricted post-Brexit. This business has been working hard to open up access to other markets for finding staff so they can continue to fulfil client needs and steal a march on slower-moving competitors.

Fourth, be agile and challenge the sacred cows. Some businesses, and especially family businesses, can be too wedded to their traditional business models, leaving themselves vulnerable to changes in the business environment, according to Martin. For example, technological advances and changing consumer shopping habits might make it essential that a traditional high-street retail chain moves from a store-only to a ‘bricks and clicks’ model to stay relevant. He says: “In times of uncertainty, it is useful to challenge the fundamental modus operandi of the business, which might not have been questioned before. And it is usually most useful to have that thinking challenged by an outsider to bring a fresh perspective.”


1Trading Economics, November 2019.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Exit strategies may include the referral to a service that is separate and distinct to those offered by St. James’s Place.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax reliefs depends on individual circumstances.

Raising money to expand

Tips and insight into raising funds for growth through private equity and venture capital

Raising money to expand

Your business has taken off, with sales showing there are plenty of customers for your products or services, and now you want to take things to the next stage by expanding.

However, now there’s the question of how to fund that growth. For many companies, the answer lies in raising money through private equity (PE) or venture capital (VC). There’s certainly a lot of potential funding available: equity invested in smaller UK businesses rose 5% to £6.7bn in 2018, the highest amount recorded, according to the British Business Bank’s annual Small Business Equity Tracker report.1

Raising capital this way can be quite daunting if you’re a business owner who’s never done it before, so below is some insight into what’s involved.

Find the right advice

Crawfurd Walker, Chief Revenue Officer with business growth advisor Elephants Child, says the first move should be finding the right professional advisers, which will help a business owner “maximise value and increase the certainty of completing the deal”.

He stresses a typical deal could take six to nine months and requires “real commitment from the management team and owners, a clear sense of purpose for the funding and a realistic expectation of what the investor will expect – during the process and in exchange for the funds.”

Rodney Appiah of private equity firm Foresight Group warns it's critical to match your business with the right investment partner. Do you want an investor who will take a minority stake and play a supportive and strategic role, or are you ready to sell a majority shareholding with the possibility that your investor will be more involved in shaping the way the company is run?

In early meetings an investor will look at the products and services your company offers, your point of differentiation, your customer base and your growth plan. There will also be discussion about the money you want to raise – which could be anything from £250,000 to a multi-million-pound sum – and about valuation expectations.

Your management team is key

However, one of the most important things that an investor will focus on when assessing a business for investment is the quality of the management team. Rodney explains: “When an investment underperforms, nine times out of 10 the key determining factor is the quality and experience of the management team. Are they in the right roles and have the right support? Are they clear about the growth opportunities that are in front of them? Are they aware of their weaknesses – and are they happy to address them?”

Potential investors will also ask if your company is operating in a growing market, improving your chances of successful expansion, and whether your product or service has a high profit margin to demonstrate the value that is being added. An investor will also want to see that your product has enough of a unique selling point to see off competitors.  

When due diligence checks have been completed, often under a confidentiality agreement, there will likely be a more detailed interrogation of your company's growth plan and financial model before the investor is ready to make a formal offer.

Build a good investor relationship

For those companies that succeed in getting an injection of much-needed investment, it can be a real springboard. Operam Education Group, an education recruitment agency, received funding earlier this year from BGF, which is the most active investors in growing businesses in the UK and Ireland. That funding supported the company's expansion through acquisitions. Company CEO Eddie Austin says: “BGF is a minority investor so we retain control of the business, which appealed to us.”

But he also stresses the importance of BGF understanding and sharing his company's vision for the future. “The advice I’d give any business owner looking for investment is to appreciate the importance of a strong business plan and good investor relationship. This can’t be underestimated.”


1UK smaller businesses receive a record £6.7bn equity finance investment, published by the British Business Bank, June 2019.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

How to keep cash flowing

Failing to manage cashflow could hamper growth

How to keep cash flowing

Recent research from Hitachi Capital1 found that nearly half of SME owners have used their personal savings to combat cashflow squeezes and ensure their staff, customers and suppliers get paid.

Late payments were the main culprit, costing UK SMEs an estimated £5 billion in the last 12 months. Hitachi added that 57% of firms spend at least an hour a day chasing outstanding invoices, noting a 22% rise in the number spending time and money on legal action.

Don’t be naïve

Hitachi has also revealed that 48% of UK owners blame themselves for the problem. They regret having a ‘naive attitude to cashflow’ and worry that it has held back business growth. Almost two-thirds said they had overspent before gaining profit, leaving them in greater debt than they could manage.

“If you don’t have cashflow then you don’t have a business,” says Matt Kelly of business advisors Elephant’s Child. “You might land a £100,000 order but fail to have the working capital necessary to fulfil it. You won’t be able to invest in your supply chain or pay your employees or suppliers. You may overtrade and not have the cash to support it.”

Understand the cash pipeline

Matt says owners need to be “ahead of the game” and have a firm grasp of what cash is coming in and out of the business.

“Many owners begin their business as a passion project and don’t fully know how their business models translate to cash and profits,” he says. “They may have made £100,000 per month in the past but they don’t grasp the reality that they now only have the customer base to do £50,000 a month. They keep spending the same overheads and wages and get into cashflow difficulty. They need to regularly look at the business and ask, ‘what is my realistic cashflow pipeline?’ You should never be surprised by your cashflow.”

Mariah Tompkins, owner of WKM Accountancy Service says new businesses are particularly vulnerable. “In the rush to secure a business opportunity you may spend too much cash on the wrong clients and then the order falls through,” she says. “Low profits are another issue as you will not be able to cover the cost of all your business expenses. So, you need to consider whether you are charging enough for your products or need a new income stream.”

She says having too much stock can also cause cashflow woes and therefore needs to be monitored carefully to ensure it is tied up for only the shortest time possible.

“Seasonality, meaning you receive more business some months than others, is another cashflow challenge,” she adds. “SMEs also need to look at cash going out for overheads such as rent and utilities.”

Forecast your cashflow

When it comes to solutions, she agrees with Matt that a cashflow forecast must be created alongside ‘robust’ debt recovery procedures and credit check policies.

Owners, she adds, need to invoice both accurately and promptly as errors could mean a late payment or incorrect amounts ending up in the bank.

“You can have a major challenge if you have committed £100,000 to another supplier or for your pay run and then a customer pays late. It may be because they haven’t received your invoice, or they are unhappy with your goods or service,” Mariah adds. “If you work with overseas suppliers, they may offer unfavourable payment terms such as paying upfront deposits. You need to have full visibility and understand the full cycle of landing a deal, ordering from suppliers, invoicing and the cash ending up in your bank. What could go wrong?”

James Carfell, marketing manager at Surrey-based SME Collier Roofing, says it includes a 15-day payment requirement. “I believe that 30 days should be seen predominantly as a late payment, rather than an acceptable time schedule, if you are to stay on top of your cashflow situation,” he says.

Get upfront payments

Alina Cincan, managing director of Inbox Translation, advocates asking for upfront payment. “There are a few situations where upfront payment, whether partial or full, is justified, such as when you are dealing with a new client whose financials you know nothing about or with a client based in a country where reaching them in case of non-payment might be a bit more difficult,” she says. “There may also be times when you might consider offering a small discount for upfront payment.”

She also urges owners to follow up unpaid invoices. “Accounting software can track when and if payments have come through and send automatic reminders when they haven’t. This takes the awkwardness out of the equation.”

Other options available include invoice financing where owners receive a percentage of the invoice amount upfront from providers with the remainder to follow full payment.

Keep cash reserves

Matt says overdrafts or loans can also help if the owner knows their future cashflow pipeline can repay it. But there are limits.

“When you start putting family money in and getting personal guarantees then problems start. You are putting your own financial future at risk,” he says.

James says having cash reserves can help avoid that temptation: “You can reinvest back in the business when times are good, but make sure to store some of the cash for the harder months,” he says.

 


1Late payments costing UK SMEs at least £51.5 billion a year, published by Hitachi, Sept 2019

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Lacking interest?

Failing to shop around for better deposit rates to cost UK SMEs dearly over the next year

Lacking interest?

UK small- and medium-sized businesses are set to miss out on a whopping £4 billion in interest in the next 12 months because their cash reserves are languishing in low-interest accounts, a new study reveals.

 

A major new report from CEBR, the Centre for Economic & Business Research, commissioned by Flagstone, the UK’s largest cash deposit platform, reveals SMEs are missing out on billions of pounds every year by not shopping around for a better rate for their excess cash – the reserves not required for the day-to-day running of the business.

The extra £4 billion which businesses could earn if they moved their money to a better deposit account would be enough to fund for a year the salaries of more than 104,000 extra workers on the UK average annual salary of £29,588.1

 

With SMEs currently holding an estimated £199 billion in instant-access accounts and receiving an average rate of 0.41%2, they are on track to earn £578 million in interest in the coming year. However, if they were to switch to a market leading instant-access rate of 1.40%3, they would earn £2.8 billion in total in the next year; £2.2 billion more than they are currently expected to earn.

Further, UK SMEs currently hold an estimated £140 billion in fixed-rate deposit accounts earning on average 0.85%, meaning they are expected to earn £1.2 billion in the next 12 months. But if SMEs instead switched to the market-leading 2.10%3 one-year fixed rate, they would collectively earn £2.9 billion in interest in the coming 12 months; £1.7 billion more than they would have otherwise.

It means, in total, firms are expected to miss out on £4 billion in interest in the next year because their money is languishing in low-rate deposit accounts.

 

Bank of England and UK Finance data show that UK SMEs have increased their cash balances from £191 billion to £339 billion between 2011 and 2019, and the YouGov survey4 which forms part of the CEBR study confirms that more than a third (34%) said that Brexit had been a factor in the management of their cash balances over the past 3 years.

The YouGov survey of over 500 UK SMEs, also reveals that the greatest barrier to getting a better rate on their cash deposits is the hassle associated with opening new accounts. 39% of businesses surveyed said that this was a reason for not switching their money,

 

Andrew Thatcher, Co-Founder and Co-Managing Partner of Flagstone, said: “This study shows that apathy towards cash deposits does not just affect individual savers, but also the nation’s businesses too. Each year, UK SMEs are missing out on billions of pounds of interest income because they are not proactive in moving their money, often citing the process of researching and opening new accounts as prohibitively complex and time consuming.

“Firms that forego this extra cash could be missing out on the chance to increase profit, grow their business by hiring extra staff, or invest in productivity improvements. This may also be damaging to the UK economy given that SMEs account for 99.9% of all UK private sector businesses and 60% of all private sector employment5.

Thatcher concludes, “Platform solutions not only consistently keeps business owners and financial directors in the path of the best rates, but it also removes the barriers to switching, providing a simple way to increase income and reduce risk.”

 


1 Employee earnings in the UK: 2018, released by ONS on 25 October 2018. Annual figure calculated by multiplying median full-time gross weekly earnings (£569) by 52

2 All figures on current SME cash holdings and average interest rates are Bank of England data, analysed by the CEBR

3 Market Leading Corporate Deposit Rates as at 13 September 2019.

4 Survey of 538 SME finance decision makers carried out by YouGov between 11 April 2019 and 17 April 2019

5 Source: London School of Economics’ Centre for Economic Performance; ‘Unlocking SME productivity’ Sept 2018

The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

This article has been provided courtesy of Flagstone.

Selling your business to employees

Why transferring shares to an Employee Ownership Trust can be a tax-efficient way of extracting capital

Selling your business to employees

The ability to sell a business without having to pay Capital Gains Tax, combined with a desire to future-proof the independence of the business they created, is seeing a rising number of entrepreneurs hand over control to an Employee Ownership Trust (EOT).

First introduced in 2014, EOTs allow business owners to sell company shares free of Capital Gains Tax, so long as they hand over control to the employees who helped build the business.  

Building up a business and eventually selling to a third party has long been the more common aim for many business owners. This can often be the best way to secure the company’s future and maximise proceeds on disposal. However, the downside can be that the business loses its independence, some or all of its workforce and the unique culture that made it a success in the first place.

For business owners who don’t want to go down this path, and do not have family members to pass the business on to, EOTs are worth investigating as an alternative exit route. 

How it works

Under EOT rules, owners sell a controlling number of shares in a business to an EOT at an agreed valuation. Typically, the trust will pay for those shares either through contributions from the company's trading profits and/or bank loans secured on the company’s assets. 

For the owner, the sale is free of Capital Gains Tax. However, as with all share transfers over a certain value, stamp duty is payable on the transfer of shares. This is especially attractive to owners who don’t qualify for Entrepreneurs’ Relief and who might otherwise expect to pay 20% Capital Gains Tax on the sale of the business.

Providing a controlling share is sold to the EOT, not all shareholders have to sell their shares and owner/directors can remain in situ post-sale, continuing to receive market-competitive remuneration packages.

However, a key feature of EOTs for owners to consider is that the sale price is not generally all paid upfront, instead some part of it being repaid through the company’s trading profits in the years that follow.

Preparing for the future

One company to choose the EOT path is home entertainment retailer Richer Sounds, which has a chain of 50+ stores in the UK. Founder Julian Richer plans to stay involved with the business, but leave the day-to-day running to its existing management board, along with a Colleagues’ Advisory Council and trustees.

Tax efficient but get advice

Louise Jeffreys, MD of Gunner & Co, who works with businesses around the country, specifically looking at company structure and plans around exit, says: “Employee Ownership Trusts can be a tax-efficient method of extracting value, particularly if Entrepreneurs’ Relief can't be achieved. 

“That said, EOTs can be challenging to implement, so professional advice is essential.” She continues: “Do you have the right people in the business to take it on and grow it (or at least maintain profitability to ensure you get paid out eventually)? Often employees are not always the best business owners/leaders. Cash flow/working capital needs to be well managed to ensure the business continues to flourish while also paying off the previous owner."

Setting up an EOT could be an option for a wide variety of different types of organisations, as a spokesperson for BDO confirms: "BDO has worked with numerous companies, as well as LLPs and groups, on establishing EOTs. They have ranged from companies with just 20 employees to over 1,800, with values from £1m to over £80m and from all sectors."


The levels and bases of taxation, and reliefs from taxation, can change at any time. Tax reliefs are dependent on individual circumstances.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

The opportunities of private equity

Private equity investors can help entrepreneurs grow, partially exit, or fully exit their business

The opportunities of private equity

Owners of SMEs are without doubt worried about Brexit uncertainty, the state of the local and global economy, and even about tax breaks such as Entrepreneurs’ Relief being removed. This has led some to consider ‘de-risking’ and selling a stake in their business (see Entrepreneur Club article Should you sell up?).

Jeremy Furniss, partner at Livingstone, an international mergers and acquisitions advisory firm says he is definitely seeing a growing number of entrepreneurs considering a partial exit rather than a full exit, and exploring the use of private equity (PE) and other forms of investment to do this. 

But, he says: “The most common rationale is a much more positive story than simple de-risking. While there has been a great deal of discussion around the possible removal of Entrepreneurs’ Relief, it isn’t in our experience the overriding factor driving business owners to transact. Rather, they are looking for investment that can help them double or triple the value of their business, the ultimate benefits of which should far outweigh any loss of a tax relief on a portion of their shareholding.”

Whether the primary rationale is growth or de-risking, private equity could be an option. These funds typically buy a stake in a business (anything from around 20% through to a majority stake, depending on the deal rationale), work with the business to increase its value (hopefully), usually for a period of four to five years, and then look to sell their stake to a new investor or acquirer of the whole company.

Paul Cannings, partner at YFM Equity Partners – which has a portfolio of over 40 UK growth businesses and invests up to £10m per company – says they fully understand this ‘de-risking’ motive of owner-managers, and can certainly help. But their involvement does come with some caveats. 

The deal must work for all parties

Paul says: “If an owner comes to us and says: ‘I am really ambitious. I have a clear plan, a great team, I want to stay on as CEO and drive the value of the business. But I also want to protect my family and sell 25% of my equity and put that money in the bank.’ That feels right to us and could be an attractive proposition.”

He says this situation typifies one of the most important things about any private equity deal - aligning the interests of management and the private equity investor upfront. In this case, both parties want to grow the business after the initial deal, en-route to an eventual full exit. “We have been through these journeys many times, we can bring a wealth of experience to help the business get ready for the next stage of growth, and then when it is time to exit, we have loads of experience on how to position the business for that.”

However, says Paul, a deal would be much harder if an owner wants to semi-retire, take three-quarters of their money off the table, and stay on as CEO without ambitious growth plans. “In that type of situation, we aren’t aligned. The owner is effectively a seller. For private equity to play a role, the owner should probably think about finding an ambitious CEO to replace them, and maybe step back into a non-executive role with a small equity stake. As private equity investors, we would then be looking at this as investing in the new team to take the business forward, rather than just being an exit route for the current owner.” 

What to expect 

Paul says one of his top tips for entrepreneurs is to do their research on the investor: “We are going to be assessing you and doing due diligence on your company (see Entrepreneur Club article ‘Ten steps to due diligence readiness’). But you are also taking on a partner, for the next three to five years at least, so you need to make sure that partner is right for you. You should be taking references on the private equity firm itself and the individuals you will be dealing with, talking to other people they have invested in, and especially, finding out how they behave when things go wrong or when things go much better than expected.”

Paul does say that owners should also expect to see some day-to-day changes in the business. The private equity firm is likely to insist on changes such as more formal governance procedures, formal board meetings, more detailed budgets and cash flow forecasts, and putting a strong, dedicated finance director in place. He says: “While these can feel like big changes, they are actually part of the value a private equity partner will bring and also add to the value of the business.”

It is also likely that the private equity investor will insist on robust risk mitigation measures such as key person insurance, which is a life policy taken out by the company on a key executive's life. This protects the financial interests of all shareholders if the executive dies and the value of the company declines as a consequence. 

Jeremy encourages entrepreneurs to think hard about what life will be like post-investment. He says: “A business owned by one individual or by one family will be used to having their destiny entirely in their own hands. They might find the idea of sharing ownership quite concerning. This can work well if the interests of the owner-manager and investor are aligned. But with PE investment, owners will to an extent be losing control over their destiny as the new investor will no doubt exert influence over the business.”

He points to one area in particular that owners should give some thought to in advance, which can be a major change and is often a cause of deal negotiations breaking down – that of ‘minority protections’. 

Jeremy says: “Because private equity investors often take a minority but significant stake in a business, they will insist on having a say over key strategic decisions – such as making an acquisition, a very large capital expenditure, or CEO pay. Also, they will want the right to be able to step in and take action if things start to go wrong (and to be fair we are really only talking about when they go significantly wrong). This might involve the right to fire the CEO, or under certain conditions, take over management of the business altogether. Even though this is the worst possible outcome for the investor, that potential loss of control can be too much for some entrepreneurs to contemplate.”

If a private equity deal is done, owners will also need to give consideration to how their personal financial planning is affected, in addition to navigating the changes to their business outlined above. How the proceeds of a partial exit will be invested has to be taken into account, as well as updating financial retirement plans to fall in line with the planned full exit date. The adequacy of protection insurance such as life and income protection will also need to be assessed.


The levels and bases of taxation, and reliefs from taxation, can change at any time. Tax reliefs are dependent on individual circumstances.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Skills shortages – what’s the risk?

The UK’s skills gap is increasingly posing a challenge to growing businesses. How can they continue to attract the best talent?

Skills shortages – what’s the risk?

Unbeknown to the hundreds of Abba fans currently enjoying the spectacle of ‘Mamma Mia! The Party’ at London’s O2 venue, event planner Shout About is sending out its own SOS for new talent to help its growth.

Co-founder Ben Gamble says the five-year-old firm, which finds venues for corporate clients as well as owning and operating events, is struggling to hire new sales executives.

“Instead of just finding off-the-grid locations for events - such as Victorian pumping stations - we are looking at taking out 20-year-plus leases on our own sites,” explains Ben. “We need more sales staff but the competition in the events industry makes it hard.”

Barriers

Another growth firm in the less flamboyant world of accountancy is facing similar barriers in its ambitions to increase staff numbers.

“We are doing our five-year plan and automation is featuring heavily,” explains James Poyser, co-founder of online accountants inniAccounts and Provestor. “An aptitude to understand automation and how you harness it will be vital, but there are few people with these software skills.”

Such skill shortages are becoming increasingly common with a recent British Chambers of Commerce/Total Jobs report stating that 64% of firms are struggling to hire the talent they need. According to latest Office for National Statistics (ONS) figures there were 813,000 job vacancies in July to September. This is 34,000 fewer than the same period in 2018 but up from 750,000 in 2016.

Vacancies

The ONS said there were 44,000 vacancies in the information and communication sectors, 31,000 in financial and insurance activities and 80,000 in professional, science and technical. A recent Open University report1 revealed that 88% of firms had a shortage of digital skills with the Digital Marketing Institute noting that 74% of marketing companies face digital and soft skills gaps2.

“In the financial services and digital sector over the last year Brexit has had an impact on vacancies. We have seen EU talent leave and less come over. Generally, people have become more nervous and reticent about switching roles,” says Meeta Sahni, owner of recruiters The Maine Group. “In digital the number of roles being created is outnumbering the amount of people being trained. That really impacts growing firms.”

Crawfurd Walker, chief revenue officer at business advisors Elephants Child, agrees that finding the right talent is crucial in boosting both profits and value. 

“However recent high levels of employment combined with the uncertainty around Brexit is making finding the right talent an ever more difficult task,” he says. 

Rewards

In such a tight labour market he explains that getting access to the right staff is not just about hiking salaries.

“It is also flexible working schemes for better work-life balance, improved career development programmes and attractive work environments. Businesses need to get better at communicating the benefits associated with their brands both to existing and potential employees,” he says. “Employers can also look to access talent from areas of the labour market they may have previously ignored such as part-time workers.” 

Branding

Meeta agrees branding is vital. “Be clear about what you do and why. It is particularly important to the next generation who are seeking more purpose in their careers,” she says. “In addition, make sure your campaigns over social media and on job platforms are consistent. Internally, look at upskilling your existing staff and use reverse mentoring with juniors working with senior employees to share tech and social media skills.”

Ben at Shout About says it has recently started working with a jobs platform provider which sorts through CVs of interested candidates for any vacancy. “They only send us the good ones which saves us time,” he says. “But we are sometimes much more creative and direct including approaching charity sellers in the street who we think have got the gift of the gab!”

The company also offers flexible hours and team social activities to attract talent. “We emphasise that we are young and creative and understand your individual circumstances,” says Ben.

Development

James says his company uses flexi-hours and brand building to attract recruits. “We create a specific landing page on our website for each role with videos describing the job, our goals, development opportunities and our strategy. We talk about our brand and our reputation as forward thinkers using AI in our software,” he says. “But we recognise that we won’t meet our growth plan just by focusing on recruitment, we need to upskill existing staff. That means structured programmes on growing digital and people skills to help our people be the advisory accountants of the future. We have to get this right to drive our future expansion.”


1. ‘Bridging the Digital Divide’, June 2019

2. ‘Perpetual Evolution: The Interplay Of Talent and Technology in the Future Of Marketing’, The Economist Group in association with the Digital Marketing Institute (DMI). October 2019.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Do corporates want your start-up?

Large companies sometimes acquire smaller firms for their talented people

Do corporates want your start-up?

There is a growing trend for large companies to buy SMEs and start-ups purely to acquire the talents and knowledge of the people.

When a big business engages in ‘acquihiring’, as it’s known, it performs a ‘team lift’ to acquire valuable talent but not the smaller company’s customer base, networks, capital assets or even its technology and products.

For example, Apple’s CEO Tim Cook told CNBC business news channel that the tech giant buys a company “every two to three weeks” and had bought 20 to 25 small businesses in unannounced deals in the six months to May this year1. Elsewhere, Facebook bought London University-based blockchain start-up Chainspace, purportedly to acquire its development team to strengthen its position in the crypto sector2.

Gathering pace

And it is not just tech companies that are acquihiring, explains M&A legal specialist Nina Searle, partner with UK national law firm TLT.

“It’s been happening for a long time in professional services because that’s how firms in the sector have always expanded,” says Nina, who is seeing an increasing amount of TLT’s M&A transactions include acquihire elements.

“As the tech revolution gathers pace, there’s been a marked shift towards SMEs being acquihired by tech companies and small life sciences start-ups bought by big pharmaceutical firms. Primarily they’re firms that might be regarded as disruptors or potential threats.”

She adds: “These buy-outs are highly secretive, rarely making news as larger businesses acquihire stealthily – they don’t want rivals to know their strategic direction or what technology or skills they’ve access to.”

Opportunities

For any entrepreneur, having a major player wanting to buy their business sounds highly attractive, offering a chance to exit with a fantastic deal, maybe to start a whole new business or even retire.

But as Nina points out, it’s not that simple. “Typically, when a small business is acquihired, we expect to see a proportion of the purchase price deferred. For example, a portion of the purchase price may be paid up front and further tranches paid in successive years.

“This is to incentivise those moving to become firmly embedded in the new company – so buyers often want to bring founders with them.” 

Potentially this opens up new opportunities for developing the entrepeneur’s original business idea, with better routes to market, distribution channels and marketing support plus enhanced salaries and benefit packages for all.

“Above all, you have to be sure it’s right for you," says Nina. “Giving up autonomy, freedom to pursue ideas and development and fitting in with a corporate culture with strict compliance isn’t for everyone.”

“That means doing in-depth homework on the purchaser to find out what its intentions are, why it wants your business especially, and how you fit into that: in short, perform full due diligence before you start negotiating.”

Double-edged sword

That advice is firmly supported by Percy Emmett, Senior Lecturer of Enterprise and Entrepreneur in Residence at De Montfort University.

“Acquihiring can be a double-edged sword. Learn as much as possible about the buyer and its motivation for acquiring your business specifically, and consult fully with corporate business advisers and lawyers before agreeing anything.

Tech companies may be just buying your business simply to ‘take it out’ before it becomes big enough to be a rival or negatively disrupts the sector to their disadvantage, he says. “You’ll be promised a nice contract and development incentives, but they may actually be planning to drop you and your team fairly quickly. By then, your personal brand may be damaged if you’re trying to start-up again.”

Percy says SMEs are also sometimes acquihired to handle overflow work and smaller projects. “However, acquihiring does offer clever entrepreneurs a golden opportunity to learn more about running business effectively, to come out with useful skills to run a new small business in a much smarter way.”


1. www.cnbc.com, May 2019

2. www.wired.co.uk, June 2019

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

The bespoke approach to borrowing

How private banking can help throughout the business cycle

The bespoke approach to borrowing

From inception through to expansion, running a business entails consistent funding for a variety of reasons, which means loans can be critical to an entrepreneur’s success. Beyond their own operations, business owners may also be looking to fund other aspects of their lifestyles, such as purchasing their own dream property.

Yet, despite small businesses accounting for 99.3% of all private sector businesses in the UK at the start of 2018 – with 99.9% small or medium-sized (SMEs) – entrepreneurs continue to face difficulty in accessing funds.  (Source: Department for Business, Energy & Industrial Strategy’s Business Population Estimates 2018).

The reality, however, is that many entrepreneurs fail to look beyond high-street banks when attempting to secure a loan. The process of approaching these banks can be a daunting one, with many reluctant to lend to entrepreneurs due to their rigid assessment criteria. But there are ways to overcome the barriers to finance presented by traditional bank loans.

Private banking offers one such alternative: a bespoke approach to lending that takes into consideration the individual and their personal financial situation. What’s more, busy professionals can benefit greatly from a private bank relationship, which is renowned for its personal touch and appeals to those who prefer finance with a face to it, rather than a ‘computer says no’ mentality.

Here, we look at how private bank lending compares to traditional bank lending at three stages of the business cycle.

 

Getting started

Getting a business off the ground takes determination and drive, but this alone does not guarantee funding from lenders.

Following a record year in 2017, total investment in UK startup companies dropped 15 per cent from £8.27 billion to £7 billion in 2018, according to figures published by Beauhurst (Feb, 2019), a searchable database of the UK's high-growth companies. Today, start-up loans for new businesses remain highly sought after.

It’s no surprise then that many business owners cite a lack of finance as one of the biggest barriers to pursuing their entrepreneurial ventures, with most relying on the founder’s savings, investment, gifts from friends and family, government grants or even crowdfunding as traditional routes to funding dry-up.

One major difference between a private bank and a traditional funder is flexibility, with the former taking a more varied approach to credit assessment based on their own method to measuring creditworthiness. A private bank can be flexible regarding requirements and solutions by looking at the bigger picture rather than relying on the rigidity of credit scoring.

For example, private banks will recognise that many entrepreneurs may be on their second or third business and have had one or more successful ventures previously. They may have a need to borrow for a new start-up or have wealth tied up in other investments, and therefore have a need to borrow. This kind of tailored approach is built on the strong interpersonal client relationships that a private bank affords.

 

Early-stage growth

One of the biggest challenges for entrepreneurs during the early growth stage of their business is having the time to meet a whole new range of demands that come with managing an increasing client base, expanding a workforce and generating an increasing level of revenue.

The process of applying for funds with traditional banks can be slow, however, greatly affecting how quickly an entrepreneur can grow their company. In addition, traditional funders may still be reluctant to lend when there is not already a long track record of profitability. 

According to the Federation of Small Businesses (FSB), most start-ups are unlikely to break-even until their second or third year, making them unattractive to many high-street banks. The FSB went on to report in its 2018 Small Business Index (SBI) that 42% of small business owners said credit availability is very poor (19%) or quite poor (23%). Just 24% feel credit is readily available.

Private banks are more likely to consider the individual and lend based on wealth, not just income. A common factor that a traditional bank may overlook is that, while entrepreneurs may not pay a big income to themselves in their current entrepreneurial ventures, they could be wealthy individuals. Many entrepreneurs who fall short of the rigid demands of mainstream lenders may be able to reach their next objective with a private bank.

 

Expansion and maximising profits

Before a business can reach its full maturity, it needs to go through a stage of growth and expansion. A conundrum many small businesses face, however, is how to fund the expansion of their operations without access to financial backing when they find their resources and time stretched thinner than ever before.

Once upon a time, a sound business plan and a solid track record were enough to secure a loan but now, often nothing short of an already-thriving turnover can convince most banks to lend significant sums during this stage.

Whereas traditional banks tend to measure a client's ability to pay based on their income at the time of applying, private banks are more likely to take a longer-term view, factoring in the money a venture is going to make as well as the assets that currently back it.

Ultimately, this tailored and informed approach all comes down to the individual and what they are trying to achieve. When life has been a successful one, and the next milestone is in sight, a private bank’s bespoke approach to lending can help make entrepreneurs’ dreams a reality.


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

This article has been provided courtesy of Weatherbys Private Bank.

Don’t cook the books!

Financial areas to address when selling a business

Don’t cook the books!

Many business owners don’t manage to sell their business first time – or for as much as they’d hoped – because they fall victim to a number of pitfalls.

Selling a business for maximum value involves a fine blend of ingredients and methods: strategic preparation, accurate valuation, targeted marketing to prospective buyers, careful due diligence, and smart negotiation. One thing the recipe for success doesn’t include is cooking the books. Underhand financial practices will devalue your business – or even make it unsaleable.

 

So, you’ve been approached by a potential acquirer and they’ve asked to see your accounts…

Do you feel confident that you can explain the financials of your business to an acquirer in a way that will not only answer their queries – but also shows off what a hot proposition they’re looking at?

Bad organisation, antiquated or patchy processes, as well as a time, skills or resource deficit; these are all genuine reasons why some business owners find it hard to evidence the current financial state of their business in a comprehensive and compelling way.

Don’t worry! Panic can lead to a temptation to ‘cook the books’ in an attempt to make financials appear more attractive to potential buyers – when all that’s really needed is a little guidance, attention to detail, and good preparation.

 

Areas to address

Honesty always pays. Here’s an idea of which red flags acquirers will be looking out for, so you can compile an accurate set of financials that transparently represent your business and makes it more saleable:

Lack of/inadequate accounting, reporting, budgeting and forecasting processes – even if the numbers aren’t consistently strong, robust processes mean your buyer knows exactly where they stand and that there aren’t any hidden issues lurking.

Inconsistent data – if one record states one sum, and another something different, your buyer will be confused or even suspicious, so make sure data is consistent across the organisation.

Suppressed profits – most buyers will calculate value on the average sustainable profit over a 3-year period so don’t suppress your profits in order to reduce your tax bill because it won’t pay off when you come to sell.

Undervalued or overvalued stock and work in progress – get an independent review of your business from an external adviser who can help you evaluate the true worth of your business, taking into consideration ALL value drivers/barriers (physical assets, monetary and otherwise).

Issues with corporation tax, PAYE, and VAT – these could mean future fines or a big bill for the buyer so make sure you can demonstrate there aren’t any gaps by keeping all the filing of returns and payments up to date.

Directors’ private expenses running through the business – keep monthly management accounts wherever possible and remove discretionary expenses not related to the company.

Undeclared cash payments to the company – absolutely everything must be recorded and accounted for.

Poorly-trained or ill-informed accounts staff – whether in-house or outsourced, make sure the people in charge of the books are 100% aware of what’s happening in the business, they’re following all processes, and they can explain discrepancies correctly.

 

If your numbers don’t add up, a buyer might not trust you and is likely to get cold feet. They might even inspect other areas of your business more closely and find other reasons not to buy.

Those serious about selling a business could be well-advised to have a ‘dry run’ on the financial due diligence. Ask your accounts team or accountant to prepare fully audited accounts - that way, you’ll be more than ready when the ideal buyer turns up.


The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.

This article has been provided courtesy of Entrepreneurs Hub.

Entrepreneurs’ Relief – which way now?

A growing number of respected organisations have criticised the relief as ineffective at encouraging entrepreneurialism

Entrepreneurs’ Relief – which way now?

Entrepreneurs and business leaders could be running out of time to take advantage of a tax relief after a growing number of calls to scrap it.

At present, Entrepreneurs’ Relief (ER) means that anyone who has owned at least 5% of the shares of their business for two years or more can pay substantially less Capital Gains Tax when all or part of the business is sold.

Providing relatively simple qualifying criteria is met, tax at only 10% on all gains is paid, instead of the usual level of 20% for higher and additional rate taxpayers.

ER ‘not achieving its objective’

However, the Association of Accounting Technicians (AAT) – whose members provide services to more than 400,000 UK SMEs – has called for ER to be axed, claiming that it’s not fit for purpose because it does nothing to encourage entrepreneurialism.

Phil Hall, Head of Public Affairs and Public Policy at AAT, told the Entrepreneur Club: “Time and time again, AAT members have highlighted that their clients are usually unaware of Entrepreneurs’ Relief until the time comes to sell their business – so it’s clearly not achieving its objective of encouraging entrepreneurialism.

“In most cases, Entrepreneurs’ Relief simply rewards those who would sell anyway or in some cases encourages business owners to look for an early exit.”

He adds that the money should instead be invested in “helping UK businesses to start up or scale up rather than sell up”.

The AAT is not alone in seeking reform. This autumn, left-leaning think tank, the Institute of Public Policy Research, called for ER to be abolished, arguing that it has become concentrated among wealthy individuals with “little evidence it has had a genuine effect on entrepreneurship”.

And the independent Office for Tax Simplification published a comprehensive Business Lifecycle Report which clearly states that while “other reliefs appear to be designed to encourage investment in young and growing businesses, or to preserve existing businesses from break-up in the event of succession, ER does not seem to achieve either of those objectives.”

Finally, another think tank, the Resolution Foundation, has criticised ER – introduced in April 2008 – as “expensive, ineffective and regressive”. It said the £22 billion* it had cost over the past decade would have been better spent elsewhere.

A tax-efficient way to sell 

Against this backdrop of increasing criticism of ER, business owners could find they don’t have much longer to consider taking advantage of it before any possible changes are made to the benefits it offers – or before it’s disposed of altogether.

For the time being at least, ER offers a way to reduce the risk posed by difficult trading conditions through tax-efficiently taking money from the business. And there’s no need to exit your business altogether to take advantage of ER. Instead, selling part of your company to an investor can release some cash.

Qualifying criteria also stipulates that the company’s main activities are in trading, rather than non-trading activities like investment. HMRC may also reject an ER claim because a business is holding too much cash, as this may be considered a substantial non-trading asset if there’s no trading purpose for it – like expanding the business, moving to new premises or buying another company.

However, Martin Brown, CEO of business growth advisor Elephants Child, says any business owner considering selling up should first audit their company to make sure it is ready for sale and their possible exit from the business. If that’s not the case, ER qualification criteria, or the possible scrapping of ER, “isn’t something they should be worrying about”.

Entrepreneurs’ Relief is complex and it’s important to take professional advice before deciding on a course of action.


* Resolution Foundation​​​​​​​ website blog post, 29 August 2018

The levels and bases of taxation, and reliefs from taxation, can change at any time. Tax reliefs are dependent on individual circumstances.

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Should you sell up?

As uncertainty mounts in the UK economy should entrepreneurs look to sell their businesses or stick to their guns and see out the storm?

Should you sell up?

British businesses are increasingly looking to exit ahead of a potentially scary Brexit departure on 31 October.

According to the Office for National Statistics inward mergers and acquisitions (M&As), where foreign firms buy British, jumped in value to £18.3 billion in the second quarter of this year, up from £7.6 billion in the first quarter. Domestic M&A rose by £1 billion to £2.8 billion1.

Many of these, according to the Barclays Entrepreneurs Index2, are growth firms. It recently found that M&A activity involving firms under five years old had risen to 505 deals, a rise year on year from 395 since 2015.

Motivated to exit

Peter Gray, partner at Cavendish Corporate Finance, isn’t surprised. “It’s the best time ever for entrepreneurs concerned both by Brexit and a potential change in Government to exit. A lot of our clients are motivated about getting out,” he says. “Pricing and multiples are at an all-time high, driven by a huge amount of private equity and trade interest from overseas. Private equity has a massive wall of money looking for a home and the weak pound is making high quality UK firms more attractive.”

Entrepreneurs, Peter suggests, are also taking advantage of attractive levels of Entrepreneurs’ Relief (ER) on exit. “We’ll never get any better than its current tax rate of 10%,” he says.

He says tech firms, particularly artificial intelligence and ‘software as a service’ (SaaS) providers, are attracting strong sales interest as are property services.

However, there is a lack of interest in firms with a big exposure to Brexit such as those exporting or importing large quantities to and from Europe. “Purchasers hate uncertainty and it is difficult to get value if they need to take a leap of faith in profit projections,” Peter says. “It is probably why most entrepreneurs will not look to sell. They hope that nothing will change post-Brexit.”

Taking stock

Whatever decision is taken, Martin Brown, chief executive of business advisors Elephants Child, says owners should consider this period of uncertainty as a ‘moment’ to take stock.

“SME leaders are incredibly busy in their businesses and making them grow and rarely get a chance to take a helicopter view. You can treat this as time to review and make a strategic assessment of your personal and business aspirations as well as what impact Brexit might have. It can give you the right answer of what to do next,” he says.

“When do you want to retire, how much do you need to retire and what does the business need to do to provide for that?  How much value do you want to create and where is the business on that journey? To drive that growth could be a merger or sale. A volatile market brings many opportunities and interested purchasers.” 

Conversely if after the review process it is clear that your business does not currently have the value you are seeking then you should stick to your guns and keep focusing on your own growth journey.

“Waiting around just to see what happens is not proactive. Take time to do your analysis, come up with your plan and commit to it,” he says. “I know of one business going through exit that started planning three years ago, whilst another kept their head down and only now, a few weeks before we leave the EU, they are rushing around looking to sell. But it is not in a fit state to go to market.”

Getting organised

If you do decide to sell, then get organised. “You can truncate the sale process. It means preparing a three-page document rather than doing an information memorandum,” Peter says. “It is focusing on targeting key prospects who you can do a quick deal with rather than heading off to China or Japan to determine any interest. But you still need fundamentals such as having a strong management team, profit projections and a full online data room.”

He admits that such a truncated sale could make it harder for owners to maximise their headline valuation but by selling now the attractive ER rate would cushion some of the blow.

Extracting capital

Martin says owners can gain financial security during the current volatility by other measures, such as a partial exit to private equity. “You can take care of your mortgage and family but still have a chunk of the business to move forward with and exit at a later date,” he explains.

Owners could also take out a pension and get their companies to pay into it and mitigate high rates of tax. So even if the business struggles they still have a pension fund to fall back on. In addition, an owner could pay themselves a dividend and then invest it into a Venture Capital Trust or Enterprise Investment Scheme. This would effectively result in 30% income tax relief.

“Do something to maximise your position,” urges Martin. “If you do nothing, you’ll get caught out and never benefit from your years of hard work.”


1. ONS, Mergers and acquisitions involving UK companies: April to June 2019

2. Barclays Entrepreneurs Index​​​​​​​, viewed September 2019

Venture Capital Trusts and Enterprise Investment Schemes are suitable only for experienced, sophisticated or high net worth investors who accept that they may get back significantly less than the original investment.
– These represent a much higher risk than investing in larger well established listed companies listed on the FTSE All Share Index and are inherently more illiquid.
– The legislation surrounding VCTs and EISs and, as a result, their tax treatment, is subject to individual circu