It is reported that the British Business Bank has launched the Growth Guarantee Scheme. This aims to Provide access to finance for UK SMEs. The scheme is expected to support around 11,000 smaller businesses between July 2024 and March 2026. To date, 41 Lenders have been accredited for the scheme, with more to follow! Of these 20 are ready to accept applications.
The scheme’s terms remain broadly unchanged from its predecessor. This was the Recovery Loan Scheme. Under the scheme Lenders will provide various types of finance. These will include term loans, overdrafts, asset finance, invoice finance, and asset-based lending. Facilities will be provided up to a maximum of £2m per business. Size of Loan will, however, vary depending on the type of finance. Businesses that have taken out previous loan schemes will also be allowed to access the Growth Guarantee Scheme.
iBOSS Comment:
If you would like to know more about the new scheme &/or need help in submitting an application then call us at iBOSS (The Independent Business Owners Support Services) on 07770 866 955, e-mail to info@theiboss.co.uk or complete our enquiry form.
The Team at iBOSS have many years of experience of both acquiring and selling businesses. This is both on a personal basis and supporting and guiding clients through the process. Here we are talking about established businesses, although we can also help with planning and financing startups.
The following is a summary of some of the main factors to be considered when acquiring or exiting an established business.
Buying a Business
Buying a small business in the UK can be an exciting and potentially lucrative venture. It’s not a process not to be taken lightly, however, as it can be fraught with potential pitfalls. These can turn a would-be dream into a nightmare. Buyers, particularly inexperienced ones, need to be aware of the various dangers that could jeopardize their investment.
The following are some of the main dangers:
One of the most regular mistakes buyers make is not conducting thorough due diligence. This involves a comprehensive review of the business’s financial records, legal standing, operational practices, and market position as well as HR matters. Failure to do so can lead to unpleasant surprises such as hidden debts, legal issues, or operational problems.
Failing to fully understand the market in which the business operates is another potential danger area! A business might seem profitable, but if the market is in decline or overly saturated, future growth could be limited. It is essential to analyse market trends, customer demographics, and competitors to ensure the business has a sustainable future. Does the business have the right products to meet future demand?
Like many countries, the UK has stringent regulations governing various business sectors. Ignoring these can lead to hefty fines or even the closure of the business. It is therefore essential to ensure the business complies with all local and national regulations, e.g. health and safety standards, employment laws, and environmental regulations.
Before acquiring a business it is essential that the purchaser has a clear and realistic plan for the future. This plan must outline the vision, objectives, and strategies for growth. It should also include marketing strategies, financial projections (including acquisition costs), and operational improvements. A well thought out business plan will guide your actions and decisions post-purchase, ensuring a smoother transition and better chances of success.
Paying ‘over the odds’ for a business is a common pitfall. Ensuring that the valuation is based on objective criteria, including current financial performance, market position, and future potential is essential. Do not ever rely solely on the seller’s valuation. An independent valuation by experts to get an accurate assessment of the business’s worth is highly advisable.
Buying a small business in the UK can be rewarding, if approached with caution and thorough preparation. Avoiding these common dangers can help ensure a smooth acquisition process and pave the way for a successful business future.
This is where we at iBOSS come in! By using our services and experience to conduct necessary due diligence and careful planning, you can save a considerable amount of time and effort and often money! The aim will be to turn your business purchase into a profitable investment.
Preparing to Exit a business
As with acquiring a business, selling one is also a significant milestone that requires meticulous planning and preparation. Whether you’re looking to retire, pursue new ventures, or simply capitalize on your hard work, preparing your business for sale is crucial to maximizing its value and ensuring a smooth transition.
The Team at iBOSS have considerable experience in assisting clients to prepare their businesses for sale. This includes being the Vendor of their own businesses, as well as advising clients. In other words, we have ‘hands-on’ experience. Developing a comprehensive Exit Strategy is essential in achieving a smooth sale and transition. As a guide, the following is a list of some of the important matters to be considered and dealt with.
Evaluate and update Financial Records.
Ensure that all financial statements are up-to-date and accurate. This to include (but not restricted to) profit and loss statements, balance sheets, and cash flow statements,. Prospective buyers will scrutinize these documents to assess the financial health of your business.
Consider having your financial statements audited by an independent CPA. An audit provides credibility and reassurance to potential buyers about the accuracy of your financial records.
Maximise cash flow and reduce debts to make your business more attractive. Demonstrating a healthy cash flow and minimal debt will indicate a well-managed and profitable business.
Obtaining a professional business valuation is advisable.
This process will provide a realistic estimate of your business’s worth, which is crucial for setting a fair asking price. iBOSS can advise on suitable companies to use for this.
Having said this, it is a good idea to familiarize yourself with different valuation methods, especially if you are inexperienced in this subject. For example methods such as asset-based, income-based, and market-based approaches. Understanding these methods can help you justify your asking price to potential buyers. Here again iBOSS can provide advice and clarification.
Review Operational Efficiency.
Identify and address inefficiencies in your operations. Implementing cost-saving measures and optimizing workflows will appeal to buyers looking for a well-run business.
This includes standard operating procedures, employee roles and responsibilities, and any proprietary methods. Clear documentation helps ensure a smooth transition and adds value by reducing dependency on the current owner.
The Management Team.
The decision as to whether the existing management team is retained will depend on a number of factors, but ultimately will be up to the Buyers unless, of course, Team members decide to leave anyway.
If your management team is strong and capable of running the business without your direct involvement the Buyers may well want to keep them on, particularly the ‘Key Staff’. Redundancy matters will also need to be addressed.
Diversify Customer Base and Revenue Streams.
A summary of future growth &/or expansion possibilities (products, revenue streams etc.) is likely to be helpful in encouraging potential buyers, as long as it is realistic!
Review Legal and Regulatory Compliance**
It is essential to verify that your business complies with all legal and regulatory requirements. This includes permits, licenses, intellectual property rights, and industry-specific regulations. Non-compliance can deter buyers and complicate the sale process.
Equally one should attempt to ensure that there are no pending legal issues or disputes. Buyers will conduct due diligence, and unresolved legal matters can be a red flag that jeopardizes the sale.
Thus preparing your business for sale is a multifaceted process that requires careful planning and execution. An experienced broker such as iBOSS can help you navigate the complexities of the sale process in the most effective way. From marketing the business to negotiating with buyers and closing the deal you can significantly increase the attractiveness and value of your business.
In conclusion.
Whether you are considering purchasing or selling a business, iBOSS can provide the expertise needed to navigate these complex journeys successfully. With a well-prepared business plan or a clear exit strategy, you can achieve a successful transition that meets your financial and personal goals. Where needed, however, we are quite prepared to adopt a ‘hands-on’ approach!
To learn more about how we can provide the expertise you need, call us on 07876 503830 or 07770 866955, or complete our enquiry form for a free consultation. We should also mention that we can help with raising finance for business acquisition if needed. We look forward to hearing from you.
The Times reports that small businesses have seen an increase in profits by 6.5% in the first quarter of 2024. This is despite a decline in revenues. According to Sage’s small business tracker, companies have been cutting costs to bolster profitability. It states, however, that many are waiting for a more stable economic and political climate before making investments.
iBOSS Comment:
A regular review of costs & expenditure should be a standard procedure for any well-run business. Any resultant cost reduction is normally to be encouraged, unless that is, it would seriously affect future growth potential. This is Where the Team at iBOSS can be of considerable assistance. Between us we have many years of experience in reviewing company operations with a view to maximising returns. If you are interested in an impartial review of your business’s operation call us on 07876 503830 and ask for a free consultation on the services we offer. Alternatively complete the enquiry form by clicking on this link.
It is reported that UK manufacturers’ confidence is at its highest level in a decade. Businesses are seeing signs of a real economic turnaround. A survey by Make UK, reports that both output and orders have improved. Thus confidence has reached a rating of level 7 (on a scale of 1 to 10). This is only the second time it has reached this level since 2014. This is due in part by Manufacturers being hopeful that interest rates will fall as inflation cools. One benefit is that, with demand soaring and optimism increasing, more businesses expect to recruit over the next few months. The manufacturing sector is expected to outpace overall growth this year. Growth is forecast at 1.2% compared to 0.9% across the broader economy.
iBOSS Comment:
Encouraging news that reflects what we have been hearing from the marketplace. One hopes that the results of the pending UK elections will not have an adverse effect on this optimism. Are you are looking to grow your business?Do you need help with planning &/or finance for that growth? If you do, then call us on 07876 503830 for a free consultation.
UK businesses organisations are urging the future Government to be far more proactive in helping firms to adjust to changes in the global economy. The Confederation of British Industry wants the next government to deliver a programme of targeted subsidies. The purpose: to help firms adopt new technologies. Meanwhile, the British Chambers of Commerce (BCC) has called for the appointment of an ‘AI champion’ to mastermind the uptake of new technologies among SMEs. The Director of policy at the BCC, said this will require “long-term buy-in from our politicians.”
iBOSS Comment:
This is indeed a matter of vital importance for the future of the UK economy. It is essential that businesses thrive and that our exports grow. The objective: to reduce the current balance of trade deficit. This is the only real long-term solution to release all the extra finance needed to achieve all that the politicians are currently talking of funding. All they currently appear to be contemplating is simply ‘shuffling the deckchairs on the Titanic’. One hopes that both politicians and the UK media will pay serious attention to this. If you need help and advice on growing your business call Phil on 07876 503830. Alternatively complete the enquiry form on our web site.
One of the established ‘alternative’ lenders to SMEs, iwoca, has published a new Broker survey. This claims that the main high street banks are expected to further reduce funding for SMEs. They claim that 77% of SME finance brokers believe high street banks will decrease their appetite to fund small businesses. It also says that 86% of brokers expect to see increased demand for SME finance in the next six months. However 68% believe that, in spite of this the high street banks will still reduce access to working capital for SMEs.
Analysis of Bank of England data shows that 77% of gross lending went to larger firms last year. In contrast the total value of lending by the big banks to SMEs in the first quarter of 2023 has fallen. This is by more than £1bn over the same period i.e. from £15.5bn in Q1 2023 to £14.2bn in Q1 2024.
iBOSS Comment:
The decline in lending to SMEs by high street banks has led to a rise in the popularity of specialist lenders. Some 59% of SME lending now comes from outside the big banks. These specialist lenders have proliferated, particularly since covid, with iwoca being just one of them. Indeed this has raised a new problem. That is to determine which of the ‘alternative’ lenders offers the best option for a particular business. Here is where our associate company BFS, with their experience going back over 20 years, can be instrumental. They can ensure that the best funding option(s) is chosen. For a free consultation fill in their enquiry form at www.bufinserv.co.uk or e-mail enquiries@bufinserv.co.uk and they will get back to you.
According to the Office for National Statistics (ONS) the decision-making skills of the worst-performing UK SMEs were well below average in 22/23. They were more likely to make guesses when faced with challenges than make decisions based on business analysis. The survey found that, although management had made an improvement on the previous year, family-owned businesses had lower scores compared to those run by career managers. Interestingly foreign ownership had a positive impact. The main barriers to improvement were being too busy, not seeing the need for improvement, and concerns about cost. The survey also revealed that small firms and manufacturing companies had poorer management practices. The ONS highlighted the importance of continuous improvement and performance measurement.
iBOSS Comment:
Based on our experience this conclusion by the ONS is a rather harsh assessment. There are undoubtedly many SMEs with highly competent management as can be seen by improved performance over the first quarter of 2024. (One has to wonder in fact whether they have included Government performance in their survey! ). Having said this, the ONS comments about cost and lack of time are regular factors we recognise. It’s all too easy for hard working mangers to miss the obvious inefficiencies. This is where we at iBOSS can help with our long experience of business management.
If you feel that your business is not achieving its full potential but can’t put your finger on the reason(s) then give us a call at iBOSS. For a free consultation and to learn how we can help simply call Phil Jones on 07876 503830 or e-mail him on phil@theiboss.co.uk.
The FSB reports that confidence among small businesses has climbed in the first three months of 2024. Their index returned to positive territory for the first time in two years as business confidence increased by 20 points between January and March. The increase took the balance of firms feeling confident to 5.5 points. The most confident sector was manufacturing, which rated 19.1 points. Having said this, when questioned about challenges, 83.7% said that increases in operating costs were their main concern. This particularly related to rising utility and labour costs. The Policy Chair at the FSB, said that “The rebound in confidence levels in most sectors is a good indicator that the shallow recession recorded at the end of 2023 is firmly in the past. Many SMEs are now keen to look ahead to expansion and better trading conditions.”
iBOSS Comment:
Generally encouraging news, particularly as manufacturing is leading the way. If you need some help, guidance or finance in growing your business then call us at iBOSS for a free consultation. Simply call 07876 503830 or e-mail info@theiboss.co.uk
The Telegraph has reported that apprentices are a better option for learning. The claim is that they can out-earn university graduates. This applies to the first 5 years of their working life. Furthermore they avoid the £45,000 of student debt that graduates can incur. Engineering apprentices in the electricity generation, water provision and manufacturing earn an average of £39,200 after five years. This surpasses the estimated £36,500 earned by engineering degree graduates. Apprentices in building and construction also tend to out-earn their university counterparts. Another advantage of many apprenticeships is that they offer more immediate job opportunities. Figures show that 77% of apprentices are in sustained employment one year after completion. This compares with 62.5% of graduates.
BFS Comment:
Some strong arguments for young people to consider taking an apprenticeship rather than going down the pure academic route. The only thing they miss out on is the ‘Students Union.’ That can be compensated for by local Pubs & Clubs. One advantage of a proper apprenticeship is that it gives experience of work/business at a much earlier stage. Having said this, the perfect solution is what used to be called a ‘Sandwich Course’. This involves part time with an employer and part time at college.
James Thomson, chair of the City of London Police Authority Board, has announced a new £152m anti-fraud web site. This service will replace Action Fraud. The objective is to tackle fraud and cybercrime more effectively. This is in response to MPs on the Public Accounts Committee having described the current reporting system as “unfit for purpose.” Mr Thomson insists that the new service will speed up the time it takes to report offences, keep victims informed of progress and quickly close fraudulent websites and bank accounts.
iBOSS Comment:
Our Associate company, Business Finance Services, suffered a Cyber attack back in 2022. On that occasion, Action Fraud acted swiftly and prevented any serious damage. Anything that can be done, however, to further improve the protection available to SMEs is to be encouraged. This particularly applies when the perpetrators are based overseas!
