Changing up a gear....

Some businesses we have helped to go to the next level..

A Small drinks importer:

The customer was a relatively tiny business, drop shipping energy drinks imported from eastern Europe to a base of independent retail clients around London.

The business was profitable - in a small way, but cash was continuously re-invested in the next order.

Through networking and hard work the customer saw 2 big opportunities at once - one in to a substantial vending machine operator the other a significant order with a discount retailer.

With gross margins of 12%, no personal assets and no cash the customer literally had nowhere to turn.

We were able to put in place a profit share deal to help this business to the next level.

A Precision engineer:

Established 3 ears, this 2-man partnership had achieved moderate success before hitting a ceiling. To grow required investment & personal commitment, or they could continue as they were - enjoying the income but staying static.

the owners could not agree, so eventually decided on an amicable split.

Using their elderly but solid assets we were able to fund the buyout of the less ambitious partner so the remaining owner could take on a new (minority) partner and take the business to the next level.

A Confectionery manufacturer:

Having acted as an import agent for several years the client saw a huge opportunity to manufacture their own line of goods to both existing UK contacts and a new overseas client bases.

As agents, they operated successfully (with both good and bad years) but had a very small capital base to secure the significant investment in both fixed assets and working capital to develop new markets.

Using a mix of hire purchase, unsecured loan and short term funding we were able to assist this very large step to the next level.

A New product in child play:

In a case worthy of Dragon's Den, the customer had invested their life savings in developing and marketing their education/play product for children.

3 years had brought many accolades but virtually nothing in the way of sales. Investors had expressed interest but no satisfactory deal had been struck.

when the breakthrough order came the customer had a quandary, enter into a hasty equity agreement (never a wise idea), sell their rights or do a profit share.

In the end none of these happened - we were able to assist with a mix of trade finance and confidential invoice discounting,

  which helped the customer from obscurity to real new heights!

And finally - the one we nearly couldn't do..

The customer was an established business - family-owned, supplying and installing CCTV to commercial clients.

Part of their journey to the next level involved a £40K spend on premise works and cloud-based computing. It looked relatively easy but the circumstances were determined to fight us all the way:

• Despite being profitable, the business was run very much for its owners, who left very little capital in the business.
• The spend had absolutely no hard costs, which ruled out HP and leasing.
• They had a recent small crowd-funded loan - too soon for a top up.
• The customer was 100% resistant to any type of invoice finance. Full stop!

With a significant - and not terribly well managed - debtor book, we pursued the point on invoice finance point - undisclosed? Selective debtors?  All drew a flat resistance.

Nearly defeated I put one other option to them. Using our collections and commercial, we would step in and sort out their debtors acting as employees, bringing much needed money of their own into the business. We would also put in place a process to keep things working for them.

It took 4 days of our time, with monthly follow ups (estimated 6 months) to make this work.

Not only did the customer go to the next level, so did we! From this experiment was born CashFlow Consultants  - enabling businesses to go to the next level without borrowing!

Diet, exercise & cashflow...

What could they possibly have in common?


This blog probably refers more to men that women, however since most business owners are men, I guess that is appropriate.

In these enlightened days. most of us are increasingly aware of what what constitutes good diet) though advice often conflicts and confuses. In particular misunderstand the relationship between diet and exercise. Both are good, both are important and there is some relationship between the 2. So presumable it is OK to drink beer & eat chips as long as I go to the gym?

When more expensive costs less:

Each business has its own variant of cost versus value, but occasionally we are thrown a case so clear cut that it doesn't need justifying. And so it was here...

Interest rate anxiety? It's all relative...

As we move inexorably towards rises in our historically low base rate, it is natural that there will be some anxiety as to the outcome.

The reality, however is that for most of us ordinary folk - and small business owners, the impact will be relatively tiny - and here is why:

If Carlsberg did invoice finance...

Well, according to their adverts, it would probably be the best invoice finance in the world, so presumably they would start with some market research.

Our results suggest that they would be met with 2 overwhelming reservations from those contemplating facilities:

Personal guarantees - the most vexed of topics...

It has become pretty much a daily conversation - the opener to to almost every funding enquiry 'I/my client isn't prepared to offer a guarantee'.

First, the good news:

Modern funding - Buffer products

With increasingly positive economic news, businesses are looking for ways to make the most of emerging opportunities.

Unfortunately this is set against a backdrop of continued banking restrictions, particularly on overdraft funding.

In reality (and without getting over-technical), BASEL Banking Accord makes overdrafts deeply unpopular within the banking sector.

Most people are familiar with longer term options such as term loans, hire purchase, leasing and factoring.

Less well known is a wide range of short term or 'Buffer' product available from both private and crowd sources.

Case study - Sheet metal fabricator bought from receivership

BACKGROUND:

Based in Hampshire, this small business had traded for 23 years.

2 years ago the owner had bought out his partner using cash reserves within the company.

Unfortunately - whilst business had remained constant - they were hit with 2 substantial bad debts in quick succession.

Price wars - Who is your China?

In the world of engineering & manufacturing it would appear that China is the root of all price competition.


It hasn't always been thus - a large client of mine set up a heavily subsidised plant in Tunisia some 20 years ago. They moved to China when the subsidy expired and are now busily looking for the next cheap alternative.

Every sector has a 'China', so what is yours and how do you compete?

Case Study: Buying out a partner

The deal was introduced by the customer's accountant - a long standing contact of ours.


The customer was an established engineering firm looking to quickly raise cash to buy out a partner. The soured relationship was proving disruptive to the business.

The business itself had had some tough years but was on the road to recovery.

The engineering assets were very old.

An impossible deal - and an awkward customer

Or perhaps that should be 'an awkward deal & an impossible customer'

It could have been our dream deal but for the opening comments of the introducer.- an owner-managed engineering firm is East London, established 15 years, profitable and with a good order book from corporate customers.

The words of the business consultant which nearly killed it were 'The deals has already been a few places & the customer isn't the easiest'.

On the phone the customer was less circumspect 'I'm an awkward old bugger' he informed me.

As a rule we hope to be second in line - immediately behind the bank, or potentially third because not all brokers are great - but once a deal has done the rounds it is difficult to see where we can add value.

Just this once - there were so many sweet spots in the deal I couldn't resist a trip to the East End to see them.

Banks resist legislation forcing them to introduce alternative funders.

Are they wrong or right?

This article in The Telegraph seems to take the line that the banks are being unreasonable and that the legislation is a good thing.

Personally, I beg to differ - and here are the reasons why..

The great free banking myth

Perhaps more appropriate title would be 'when loss-leading goes wrong' or 'the true cost of free'.

A little journey through history:

Back in the 20th Century (feeling old now?) there was a major bank called the Midland Bank - so major that it constituted one of the 'Big 4' UK banks.

Bring back the old fashioned bank manager!

Ah, nostalgia - it isn't what it used to be!

Perhaps one of our best pieces of business nostalgia is the old-fashioned manager'.

Presumably the mental image of a sort of benign version of Captain Mainwaring visiting or premises or perhaps playing a round of golf with a briefcase full of cash ready to hand over if he likes the cut of your jib.

I wasn't alive during WW2, so can't be sure whether Captain Mainwaring cut a realistic bank manager or not - he looks right though.

Business funding review

Are you in?

On 28th of March the Chancellor announced to the Federation of Small Business potential plans to force banks to release details of declined proposals to a platform of alternative lenders featured in this article.

Small business, big order - The breakthrough

It is a common business phenomenon and in many cases the moment you have been working towards ever since you started.

You have invested all of your time and effort into developing your product, marketing and getting yourself in front of the right people and yes! It has paid off! You have landed the first big order!

Not only that, but if you get this right the order will be rolled out throughout the group/industry/world.

You knew the customer would want payment terms and have already spoken to some factoring companies.

And now comes the tricky bit: You have to buy stocks, or components. You have to run around a lot before fulfilling the order. You have to fly to China - this all costs money - money you have already spend developing your fledgling business to this stage.

What now?

The AAA guide to applying for finance

Before Making your AAA application - ask yourself this question

Am I applying for finance or do I just want to explore possibilities?

The reality at this moment is that the majority of 'applications' are actually just exploratory discussions.

We have absolutely no problem with general chats about the market, different types of funding or how to put a proposal together, but it is best that we understand what is happening - otherwise we just waste each others' time!

When you have decided that you want to get finance rather than just wondering, our AAA guide will maximise your chances of success.

AAA = Attitude, aptitude & application.

Debt and alcohol - why they are the same

For many years I have used the analogy that when a new lender opens, it is exactly like a new pub opening in a town centre

From day one you will be busy and the business will give every appearance of success - until you stand back and take stock - at which point you realise that the core of your early business consists of either those drunks, fighters or freeloaders who have been barred from every other pub, or simply the not-terribly loyal who will try something new for a few weeks and move on.

Getting funded -The three-legged stool

Many people will be familiar with the three-legged stool philosophy in life - the most common manifestation being in the well known toast 'health wealth and happiness'

The general principle is that of a milking stool. Ideally all 3 legs will be complete and intact.  In reality we will often be on 2 legs with relative comfort - however by the time we are one one leg, things are starting to look a little shaky.

In the commercial lending/borrowing environment, the 3 legs will mostly comprise past performance, future prospects and security available.