Cutting Costs

Ever since the start of the Credit Crunch, I’ve noticed that people and businesses alike started to pay more attention to their outgoings. Should they not have been doing it from the outset?

Cash is king, recession or not! When times are hard, the first thing that businesses do is cut their costs. However, there seems to be a trend there on such cuts:

• Jobs
• Staff training
• Marketing

These are not the best places to start with! Instead of going into a panic mode, businesses ought to review their outgoings and how you manage your payments to understand the situation and what it means for their future survival. Look at the spending patterns.

How do you pay your suppliers? Have you got good terms with your landlord and suppliers? Do you still use the old-fashioned cheques and pay on an ad-hoc basis as of when a bill comes through? Do you pay money into your bank account when you get a cheque?

Ask yourself these questions as a starting point. Contact your suppliers to negotiate terms that would not cripple your business in the long run and ensure that you have your cashflow forecasts updated for at least three months ahead in order to show you a full short-term picture.

In order to better understand your position, talk to specialists: Business Advisor, your Accountant, Bank, solicitor for professional advice and guidance.

Starting Your Business

A lot of people will say that starting your own business especially in today’s economic climate is madness. But why? Don’t people need the same services? Do they not need the same products?

Perhaps we have all become more careful with our money and cut down on spending on luxury items and think twice before making a purchase. However we still need to maintain our homes, support our families, have friends and therefore have a social life, etc. Of course, in order to do that we have to work to earn money.

Now that the economy is down and a lot of businesses are downsizing with others disappearing people are worried for their jobs which sometimes creates panic and worry as to what they would do if they were not to work.

But isn’t it now the right time to look at what opportunities are out there? Competition, although still fierce, is nonetheless reducing. One thing that a recession does is filter out those businesses that do not have a plan and strategy in place to cope with difficult and critical situations, businesses that are not flexible enough to adapt and change direction if necessary. This is true of some large businesses, which is where Small and Medium Enterprises (SMEs) have an advantage!

A lot of people I’ve met told me that the reasons they had gone into business were:

• Redundancy
• Decided that what they were doing for someone they could do for themselves
• Wanted to be their own boss
• Wanted a change in life-style and couldn’t achieve while being employed

Whatever the reasons for starting a business are, the key to starting a good business is preparation and planning. If you do not have that roadmap, then how do you know which way to go? How do you know that you future business will be a success? How would you develop and grow your business?
FAILING TO PLAN IS PLANNING TO FAIL!
If you are thinking of starting your own business then a lot of work must be done and a lot of points must be considered:

• Legal entity: Sole Trader, Partnership or Limited Company?
• Start-up capital and where it come from
• Sales & Marketing strategy
• What equipment is required
• Premises
• Location
• Pricing levels
• Suppliers, etc.

Get help and advice from specialists, such as Business Advisors, Accountants, Business Link, banks.

Liquidity in Business – Where to Look For Help

We all hear on the news that the banks don’t lend and businesses suffer through lack of that support. But why don’t they lend and where can SMEs go for help when a business has a viable product or service but all that it needs is finance?

Firstly, contrary to what we see and hear in the media, banks still provide lending to businesses. However, their criteria have changed as they had to tighten the rules. For too long did the banks provide finance to businesses that would not be able to afford it or would not qualify for. In addition to that, was it the right type of finance in the first place? But let’s not dwell on things that happened in the past. It’s onwards and upwards, as they say...One good thing that some banks are doing is actively trying to help businesses by providing information on how to manage your money and trade through the economic downturn. One of such banks is RBS with their Money Sense for Business. Have a look at their latest information page.

If you are looking for finance for your business, firstly, identify what the loan is for. Is it for training? Purchase of assets? Or another type of project in your business? This will provide you with a number of options of what type of finance you would need and where to go for it. There are numerous options out there on the market. If you are not sure what finance to apply for, click here for help and speak to your accountant or another independent specialist / business advisor who will be able to advise and help you.

Once you know what type of finance you require for your business growth and development, be sure to prepare to answer a lot of questions!Here are some tips to prepare an application for business finance:

• Get your Business Plan up-to-date
• Clearly state what the finance is for. Outline how this finance (or what it is for) will assist your business
• Do your research. Find out who your main competitors are and what makes you stand out from them
• Get your financials in order: it is usually a requirement to supply 3 years’ accounts for established businesses.
• In some cases lenders would accept Management Accounts
• Get your business and personal bank statements for the last 6 months as some lenders will not consider your application without them
• Prepare a details cashflow forecast. Remember, you must demonstrate that you can afford this borrowing and it will not drain your business and personal finances

There are also other options for businesses, such as De Minimis Aid, which includes various schemes either provided or supported by the government. These include:

• Small Firms Loan Guarantee Scheme (SFLGS): this is where a security is required by a lender, but it is not available from a business or its owner(s). If a business is qualified for such a scheme, the government will underwrite 75% of the loan. You may still have to find the remaining 25% worth of security though
• Government grants through Business Link and Local Authorities
• Train To Gain

Contact the relevant body to seek further information.