the centre for enterprise - impact - issue 3 - business finance
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ÂTRANSCRIPT
IMPACTIMPACTCentre for Enterprise Business Finance Edition mmucfe.co.uk
WINTER, 2013
Business Finance
- North West LEP Areas: Successful small firms tell their story of accessing finance to grow
- How to improve your credit rating
- Find out how networking can bootstrap your business
Viewpoint from the Regional Director of Corporate Business for Royal Bank of Scotland, Rob Pailin, on how to build a successful relationship with your bank
Putting knowledge to work to grow your business• Picture by Ade Hunter
Introduction from the Prof.Hello and welcome to the Winter 2013 edition of our quarterly e-magazine IMPACT. This issue is packed with knowledge, insight, case studies and practical tips around business finance, from MMU’s Centre for Enterprise.
It's not about the money…Or maybe it is? The Bank of England quarterly reports, which map credit flows, show that lending to small firms has increased again this quarter – that's two quarters of SME lending increases compared with six of no change or decreased lending. Evidence from our own research shows marginal or no changes to access to credit here in the North West, so where is all the money going?
Perhaps the lending increase might be related to the increased numbers of firms. The Office for National Statistics reports an estimated 4.9 million private sector businesses in the UK at the start of 2013, an increase of 102,000 compared to the start of 2012, continuing the trend of steady growth in the UK business population since the series began in 2000. Most of this growth in numbers is in very small firms that are less likely to access loans or other funds, however, as their possible sources of money include redundancy payments. If you employ more than 50 people you are in a small minority. Only 31,000 of firms (0.6 per cent) were medium-sized (50 to 249 employees) and 7,000 (0.1 per cent) were large (250 or more employees).
Those employing between 2-49 people comprise around 24% of firms and are seen as the key to economic growth by politicians of all persuasions. However, the majority are self-employed or sole traders. At the start of 2013, businesses with no employees accounted for 75.3 per cent of all private sector businesses in the UK. If this describes you, you are one of 3.7 million businesses accounting for 16.6 per cent of private sector employment and 6.4 per cent of private sector turnover? It is not just high tech firms that are growing and employing people either. If you look at the case studies on page 6 you will see that the largest growth example is a research and development led company in Warrington, followed by a ‘not-for-profit’ social enterprise in Birkenhead.
Finance is just one factor.So if it's not the extra firms, perhaps the extra funds are specifically to support growth? Well, finance is a factor, but it is only one of many for growth firms. Research from the University of Surrey exploring the characteristics of successful SMEs suggests that these firms and their owner-managers are more likely to proactively monitor their cash flow and liquidity and to use more than one source of finance to both start and sustain their business. But they are also more likely to:
ŸConsider direct referrals and search engine optimisation as central to their successŸBe willing to find new ways of doing things and encourage their employees to think and behave innovatively ŸBelieve that learning gives them competitive advantageŸBe open to external advice
Despite this, using more than one source of funding is uncommon. For instance, most use one source of finance to start the business, the main source being personal/family savings with a smaller proportion using a bank loan. If some of these points sound like you or your firm, why not explore other routes to finance your business - and check the successful SMEs to benchmark your own practice.
That's all from me for now, I hope you enjoy the issue and don't hesitate to get in touch with us with any questions, feedback or ideas. We are interested in you and your business, so the first step is to come in for a cup of tea!
“Putting knowledge to work to grow your business”The Centre for Enterprise at Manchester Metropolitan University is passionate about turning research into practical knowledge, which can be applied to improve regional businesses. Our areas of expertise are growth, leadership, entrepreneurship and sustainability. We offer a range of programmes around
these themes, many of which are fully-funded. Register with us to access our knowledge, our business network and to grow your business.
Professor Lynn MartinProfessor of Entrepreneurship and Director of the Centre for Enterprise
mmucfe.co.uk TUESDAY, DECEMBER 17, 2013CENTRE FOR ENTERPRISE IMPACT
Impact December 2013 1│ │
• Picture by Ade Hunter
Start of 2013
4,900,000Private Sector
Start of 2012
4,798,000 Private Sector
Businesses with no employees in the Private Sector
Businesses with employees in the Private Sector
75.3
24.7
%%
99.3%
0.6%
0.1% Medium Firms
Small/MicroFirms
Breakdown of Private Sector Firms
Large Firms
• Information from the Office for National Statistics
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
1
4
5
6
7
8
8
9
INTRODUCTION Lynn Martin, Professor of Entrepreneurship and Director of the Centre for Enterprise - It’s not about the money... Or maybe it is?
INSIGHT from Rob Pailin, Regional Director of Corporate Finance for Royal Bank of Scotland, on how to build a successful relationship with your bank
RESEARCH Pull yourself up by your Bootstraps - how networking can help you bootstrap your business
CASE STUDY from David Forrest, Chief Executive of Compliance Control Ltd, recounts some of the financial pitfalls and triumphs that have helped him achieve growth
NORTH WEST LEP AREAS: Successful small firms tell their story of accessing finance to grow
PRACTICAL TIPS from Peter Wild, Senior Lecturer in Accounting and Finance, offers us some practical tips on how to improve your credit rating
INSIGHT from Jonathan Lawson, Enterprise Fellow - Head and Heart: Why finance can be more emotional than you might think (or feel)
FINANCE ON TWITTER Eleven finance Twitter accounts that business owners follow
PROGRAMMES We would love to work with you: why not browse the current support programmes available? Register you and your business now for further information
3
Impact December 2013 2│ │
ContentsCENTRE FOR ENTERPRISE
MANCHESTER METROPOLITAN
UNIVERSITY
IMPACT
o◦Knowledgeable o Enterprising Collaborative o o
Questions will be printed and answered in the next issue.
Ask the Prof a question?
Professor Lynn MartinProfessor of Entrepreneurship and Director of the Centre for EnterpriseDirect Questions to:0161 247 [email protected] Telephone: +44 (0)161 247 3871
Email: [email protected]
General Enquiries?
CONTACT USWant to contribute to Impact? Want to subscribe to
Impact quarterly?Visit www.mmucfe.co.uk where you can sign up for our free new event and programme alerts.
Join the Centre for Enterprise on
Follow us on Twitter
@mmucfe
8
Each issue of IMPACT carries a central theme, but also relies on contributions from the businesses we work with, our dedicated research team, the wider MMU community and our partners. We always welcome your input so please get in touch.
For future IMPACT e-magazine issue themes and to submit a contribution for consideration please email:
0161 247 [email protected]
5• Picture by Ade Hunter
Information that agencies use to rate your company
FINANCE
Who uses credit ratings in the UK?
What you need to do to get the credit
rating you deserve
Check Experian
Financials
Demographics
Negative News
Trade Relations
The Owners
Sector/Economy
Check your own personal rating
via Noddle
Sort our black markslike CCJs
Fill your accounts
Tell the Agencies whatyou are up to
CREDIT RATING
youyour suppliersyour customers
and external funders 7
• Picture by Ade Hunter
3Manchester City Centre
150
100
50
m
200
BeethamTower
C.I.S. Tower
MMU Business & Law Faculty
Great Northern Tower
Manchester Town Hall
UK Business Stats
TUESDAY, DECEMBER 17, 2013
Introduction from the Prof.Hello and welcome to the Winter 2013 edition of our quarterly e-magazine IMPACT. This issue is packed with knowledge, insight, case studies and practical tips around business finance, from MMU’s Centre for Enterprise.
It's not about the money…Or maybe it is? The Bank of England quarterly reports, which map credit flows, show that lending to small firms has increased again this quarter – that's two quarters of SME lending increases compared with six of no change or decreased lending. Evidence from our own research shows marginal or no changes to access to credit here in the North West, so where is all the money going?
Perhaps the lending increase might be related to the increased numbers of firms. The Office for National Statistics reports an estimated 4.9 million private sector businesses in the UK at the start of 2013, an increase of 102,000 compared to the start of 2012, continuing the trend of steady growth in the UK business population since the series began in 2000. Most of this growth in numbers is in very small firms that are less likely to access loans or other funds, however, as their possible sources of money include redundancy payments. If you employ more than 50 people you are in a small minority. Only 31,000 of firms (0.6 per cent) were medium-sized (50 to 249 employees) and 7,000 (0.1 per cent) were large (250 or more employees).
Those employing between 2-49 people comprise around 24% of firms and are seen as the key to economic growth by politicians of all persuasions. However, the majority are self-employed or sole traders. At the start of 2013, businesses with no employees accounted for 75.3 per cent of all private sector businesses in the UK. If this describes you, you are one of 3.7 million businesses accounting for 16.6 per cent of private sector employment and 6.4 per cent of private sector turnover? It is not just high tech firms that are growing and employing people either. If you look at the case studies on page 6 you will see that the largest growth example is a research and development led company in Warrington, followed by a ‘not-for-profit’ social enterprise in Birkenhead.
Finance is just one factor.So if it's not the extra firms, perhaps the extra funds are specifically to support growth? Well, finance is a factor, but it is only one of many for growth firms. Research from the University of Surrey exploring the characteristics of successful SMEs suggests that these firms and their owner-managers are more likely to proactively monitor their cash flow and liquidity and to use more than one source of finance to both start and sustain their business. But they are also more likely to:
ŸConsider direct referrals and search engine optimisation as central to their successŸBe willing to find new ways of doing things and encourage their employees to think and behave innovatively ŸBelieve that learning gives them competitive advantageŸBe open to external advice
Despite this, using more than one source of funding is uncommon. For instance, most use one source of finance to start the business, the main source being personal/family savings with a smaller proportion using a bank loan. If some of these points sound like you or your firm, why not explore other routes to finance your business - and check the successful SMEs to benchmark your own practice.
That's all from me for now, I hope you enjoy the issue and don't hesitate to get in touch with us with any questions, feedback or ideas. We are interested in you and your business, so the first step is to come in for a cup of tea!
“Putting knowledge to work to grow your business”The Centre for Enterprise at Manchester Metropolitan University is passionate about turning research into practical knowledge, which can be applied to improve regional businesses. Our areas of expertise are growth, leadership, entrepreneurship and sustainability. We offer a range of programmes around
these themes, many of which are fully-funded. Register with us to access our knowledge, our business network and to grow your business.
Professor Lynn MartinProfessor of Entrepreneurship and Director of the Centre for Enterprise
mmucfe.co.uk TUESDAY, DECEMBER 17, 2013CENTRE FOR ENTERPRISE IMPACT
Impact December 2013 1│ │
• Picture by Ade Hunter
Start of 2013
4,900,000Private Sector
Start of 2012
4,798,000 Private Sector
Businesses with no employees in the Private Sector
Businesses with employees in the Private Sector
75.3
24.7
%%
99.3%
0.6%
0.1% Medium Firms
Small/MicroFirms
Breakdown of Private Sector Firms
Large Firms
• Information from the Office for National Statistics
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
1
4
5
6
7
8
8
9
INTRODUCTION Lynn Martin, Professor of Entrepreneurship and Director of the Centre for Enterprise - It’s not about the money... Or maybe it is?
INSIGHT from Rob Pailin, Regional Director of Corporate Finance for Royal Bank of Scotland, on how to build a successful relationship with your bank
RESEARCH Pull yourself up by your Bootstraps - how networking can help you bootstrap your business
CASE STUDY from David Forrest, Chief Executive of Compliance Control Ltd, recounts some of the financial pitfalls and triumphs that have helped him achieve growth
NORTH WEST LEP AREAS: Successful small firms tell their story of accessing finance to grow
PRACTICAL TIPS from Peter Wild, Senior Lecturer in Accounting and Finance, offers us some practical tips on how to improve your credit rating
INSIGHT from Jonathan Lawson, Enterprise Fellow - Head and Heart: Why finance can be more emotional than you might think (or feel)
FINANCE ON TWITTER Eleven finance Twitter accounts that business owners follow
PROGRAMMES We would love to work with you: why not browse the current support programmes available? Register you and your business now for further information
3
Impact December 2013 2│ │
ContentsCENTRE FOR ENTERPRISE
MANCHESTER METROPOLITAN
UNIVERSITY
IMPACT
o◦Knowledgeable o Enterprising Collaborative o o
Questions will be printed and answered in the next issue.
Ask the Prof a question?
Professor Lynn MartinProfessor of Entrepreneurship and Director of the Centre for EnterpriseDirect Questions to:0161 247 [email protected] Telephone: +44 (0)161 247 3871
Email: [email protected]
General Enquiries?
CONTACT USWant to contribute to Impact? Want to subscribe to
Impact quarterly?Visit www.mmucfe.co.uk where you can sign up for our free new event and programme alerts.
Join the Centre for Enterprise on
Follow us on Twitter
@mmucfe
8
Each issue of IMPACT carries a central theme, but also relies on contributions from the businesses we work with, our dedicated research team, the wider MMU community and our partners. We always welcome your input so please get in touch.
For future IMPACT e-magazine issue themes and to submit a contribution for consideration please email:
0161 247 [email protected]
5• Picture by Ade Hunter
Information that agencies use to rate your company
FINANCE
Who uses credit ratings in the UK?
What you need to do to get the credit
rating you deserve
Check Experian
Financials
Demographics
Negative News
Trade Relations
The Owners
Sector/Economy
Check your own personal rating
via Noddle
Sort our black markslike CCJs
Fill your accounts
Tell the Agencies whatyou are up to
CREDIT RATING
youyour suppliersyour customers
and external funders 7
• Picture by Ade Hunter
3Manchester City Centre
150
100
50
m
200
BeethamTower
C.I.S. Tower
MMU Business & Law Faculty
Great Northern Tower
Manchester Town Hall
UK Business Stats
TUESDAY, DECEMBER 17, 2013
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
owner’s own making, they may not be completely in control, nor have the occupational capacity to manage the business effectively. Ensuring that the business owner has the right management structure in place and is not spread too thinly is also evidence that the right support structures are in place, regardless of whether the owner is physically present in the business day- to- day or not.
“Making sure that we can evidence a person is in total control and is capable of handling the growth they are projecting is essential. We never like to discourage somebody with a fantastic idea. Growth can be at all sorts of levels.”
“Some businesses go through rapid phases of growth and it's the control through that growth that's massively important. You cannot always be a one-man band.”
Current ClimateAn article in The Independent 'Small Talk: Come on, banks – it's time to start doing right by SMEs, Monday, 14 October suggested lending to growing SMEs may soon become even more accessible, if economic growth is sustained. But what does this actually mean for SME business owners that are considering approaching a bank to ask for finance?
Rob says...The fact that banks are lending less is partly due to the fact that the demand to take on more debt has actually been decreasing. “Yes, there might be less demand there at the moment, but the expectation is that as the economy starts to turn, naturally there will be more demand. We need to ensure that we as a Bank are ready to be able to meet that demand and support growth when the confidence returns.”
It is important that both the bank and the business owner are able to see threats and weaknesses to the business and not just be blinded by their strengths and opportunities. A business that does not understand their issues, or at least recognise them, whether that be through uncontrolled growth, competitors, market factors or regulation, is going to lack credibility.
Impact December 2013 3│ │
Viewpoint: Rob Pailin, Regional Director of Corporate Business for RBS
It could be said that running your own business is comparable to climbing a mountain. Someone that has recent experience in both these realms is Rob Pailin, Regional Director of Corporate Banking for the Royal Bank of Scotland and Centre for Enterprise Advisory Board member. Shortly after returning from a charity bike ride in the French Alps, which raised over £1/4m for Christie's Hospital, Rob Pailin took time out of his schedule to talk to us about the importance of company management structures, the current climate, building a relationship with your bank and business support.
Rob says...‘Emerging into a growth phase can be a challenging time for SMEs, especially amidst the current economic recovery. So what is the successful formula for relationship management? What can you do as a business owner to have a winning relationship with your bank? What does RBS look for, when it is approached by a company?’
Management StructureIt's understandable that an owner, who has invested personally and financially in their business, may be sensitive to communicating business risks or difficulties to their bank. Rob clarified that what he always wants to understand when talking to a customer is what their plan is. Has growth been achieved as a result of this plan, and to what extent is growth featured in the plan moving forward? Often, if the growth of a business is not of the
Build a relationship with your bankRob emphasised the importance of engaging with your bank early on, throughout the whole process and not just when you are about to hit challenging times. If you want a relationship with your bank, you need to involve them in conversations about risks and difficulties. If the first interaction you have with your bank is to approach them for specific finance, perhaps for an acquisition, a specific piece of equipment or a property, then you would be looking at the bank as being a transactional provider of finance and sometimes it may be too late. It is far easier for the bank to deal with issues relating to growth, if it is involved in the process, rather than if the first interaction it is when you have reached your overdraft limit.
“Relationships are a two way thing.”
Rob highlights that 'it is impossible for the bank to build that relationship unless that business owner is also inviting the bank into that relationship'. Banks tend not to like surprises, so the more management information that evidences the key metrics, whether that be the numbers in terms of financial performance or the particular KPIs indicating whether the business is performing or not, is always helpful. 'Sometimes we are provided with too much information and it is hard to see the wood from the trees. Understanding the level of information required is useful for both parties.’
It is true that not every customer chooses a face to face relationship with their bank, preferring a telephone based approach, but SMEs, especially those in a growth phase can always benefit from at least talking to the bank. The vast majority of these businesses would have a named relationship manager.
“A really good relationship can benefit from the network we have available
• Picture provided by RBS
Insight
We welcome any business who has growth aspirations, so please get in contact for upcoming events or to discuss how we can support you.
Centre for Enterprise, MMU0161 247 3871
Twitter: [email protected]
@mmucfe
Get Involved
• Written by Dionne Anderson
Pull yourself up by your Bootstraps
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
o◦Knowledgeable o Enterprising Collaborative o o
Read the full research article here. Are you a small or medium-sized business looking to grow? We would love to work with you. The first step is to get in touch with us: [email protected] or 0161 247 3871
Get Involved
Impact December 2013 4│ │
the bank. A common misconception is that banks are only a source of finance, but there are lots of offerings a bank has for SMEs looking to grow and develop. With growth comes greater and more complex needs, to which a vast array of products are available just outside the ordinary spectrum. For example, RBS runs a program called 'Mentor' – which provides Health and Safety / Employment Law advice. The bank in fact offers a considerable range of products, but the important thing, says Rob, are the provisions that extend beyond the products and services we provide. For example, we can provide networking, introductions to other advisors, opportunities provided by the Goldman Sachs 10,000 Small Businesses programme and the introduction to the SME Club.
“It's not just about the products the bank provides – it's also about adding value to that customer above and beyond”.
Reflecting on the challenges ahead, not only for SMEs but for banks as well.
within the bank to support that business. We have recently launched BizCrowd, which is a portal enabling businesses to network with each other for free.”
Your Relationship ManagerRob stressed the importance of a business owner questioning their relationship manager, should they feel like they can't see specific benefits to the relationship or if they feel they need more support or guidance.
“If that relationship manager isn't adding any value to you, whether that's through advice or proactive instruction, then is it really a relationship?”
“I've often used the expression “a good marriage doesn't succeed without effort;” relationships don't just work – they work because people put effort into it'. What is it that YOU are doing to enhance the relationship with your Manager and vice versa?
Business SupportThere are many other avenues of support that can be accessed through
Rob admits, “We're learning. We are moving on and taking on board feedback received to implement customer focussed improvements. This is now really about looking at our relationships with customers and listening to their future plans and working together to try and achieve those dreams and ambitions. We have changed the way that we reward our people and they are now behaviourally driven, looking into how somebody goes about what they're doing rather than whether they hit internal targets.”
“One final piece of advice would be to consider whether the bank you're with has the right products and services. Delivering the access to finance modules with MMU Centre for Enterprise, has shown that often raising awareness about the other avenues available is truly beneficial - you need to consider what is right for you. There is a plethora of advice and products - a minefield. Even if you work in finance, never mind a small business owner. This is where you need to use your relationship manager to point you in the right direction.”
Anyone who's started a business on a shoestring is probably good at bootstrapping, because bootstrapping means stretching resources as far as possible. And bootstrapping works for existing business owners. Those bootstrapping usually use personal income and savings, family and community contacts and resources to start up. Once started they are careful to keep costs low, chase debts and get the most out of their resources. Although some of the largest global companies bootstrapped at the start (Apple and Coca Cola amongst them), startups worldwide still bootstrap.
While most new businesses need investment for working capital, many struggle to obtain finance, despite use of overdrafts, bank loans and equity finance. Grants and soft loan schemes have been available under various public and philanthropic programmes but the most often used finance is personal investment, mainly from individual savings and gifts from family and friends. Some social groups experience different barriers to raising start-up finance, with graduates having the least and ethnic minority business owners having the most difficulty in doing so. That's where bootstrapping comes in!
So, if you need to bootstrap you should also think about networking. Research showed that access to social networks enabled new entrepreneurs to bootstrap and that bootstrapping was directly related to success in the early stages of business creation. Networking and bootstrapping skills are crucial in improving the prospects for survival and growth without conventional debt or equity funding.
Find out how networking can help you bootstrap your business
Like this issue?Tweet Us@mmucfe
#IMPACTcfe
• Picture from www.inc.com
• Written by Dr Sue Baines
TUESDAY, DECEMBER 17, 2013 TUESDAY, DECEMBER 17, 2013
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
owner’s own making, they may not be completely in control, nor have the occupational capacity to manage the business effectively. Ensuring that the business owner has the right management structure in place and is not spread too thinly is also evidence that the right support structures are in place, regardless of whether the owner is physically present in the business day- to- day or not.
“Making sure that we can evidence a person is in total control and is capable of handling the growth they are projecting is essential. We never like to discourage somebody with a fantastic idea. Growth can be at all sorts of levels.”
“Some businesses go through rapid phases of growth and it's the control through that growth that's massively important. You cannot always be a one-man band.”
Current ClimateAn article in The Independent 'Small Talk: Come on, banks – it's time to start doing right by SMEs, Monday, 14 October suggested lending to growing SMEs may soon become even more accessible, if economic growth is sustained. But what does this actually mean for SME business owners that are considering approaching a bank to ask for finance?
Rob says...The fact that banks are lending less is partly due to the fact that the demand to take on more debt has actually been decreasing. “Yes, there might be less demand there at the moment, but the expectation is that as the economy starts to turn, naturally there will be more demand. We need to ensure that we as a Bank are ready to be able to meet that demand and support growth when the confidence returns.”
It is important that both the bank and the business owner are able to see threats and weaknesses to the business and not just be blinded by their strengths and opportunities. A business that does not understand their issues, or at least recognise them, whether that be through uncontrolled growth, competitors, market factors or regulation, is going to lack credibility.
Impact December 2013 3│ │
Viewpoint: Rob Pailin, Regional Director of Corporate Business for RBS
It could be said that running your own business is comparable to climbing a mountain. Someone that has recent experience in both these realms is Rob Pailin, Regional Director of Corporate Banking for the Royal Bank of Scotland and Centre for Enterprise Advisory Board member. Shortly after returning from a charity bike ride in the French Alps, which raised over £1/4m for Christie's Hospital, Rob Pailin took time out of his schedule to talk to us about the importance of company management structures, the current climate, building a relationship with your bank and business support.
Rob says...‘Emerging into a growth phase can be a challenging time for SMEs, especially amidst the current economic recovery. So what is the successful formula for relationship management? What can you do as a business owner to have a winning relationship with your bank? What does RBS look for, when it is approached by a company?’
Management StructureIt's understandable that an owner, who has invested personally and financially in their business, may be sensitive to communicating business risks or difficulties to their bank. Rob clarified that what he always wants to understand when talking to a customer is what their plan is. Has growth been achieved as a result of this plan, and to what extent is growth featured in the plan moving forward? Often, if the growth of a business is not of the
Build a relationship with your bankRob emphasised the importance of engaging with your bank early on, throughout the whole process and not just when you are about to hit challenging times. If you want a relationship with your bank, you need to involve them in conversations about risks and difficulties. If the first interaction you have with your bank is to approach them for specific finance, perhaps for an acquisition, a specific piece of equipment or a property, then you would be looking at the bank as being a transactional provider of finance and sometimes it may be too late. It is far easier for the bank to deal with issues relating to growth, if it is involved in the process, rather than if the first interaction it is when you have reached your overdraft limit.
“Relationships are a two way thing.”
Rob highlights that 'it is impossible for the bank to build that relationship unless that business owner is also inviting the bank into that relationship'. Banks tend not to like surprises, so the more management information that evidences the key metrics, whether that be the numbers in terms of financial performance or the particular KPIs indicating whether the business is performing or not, is always helpful. 'Sometimes we are provided with too much information and it is hard to see the wood from the trees. Understanding the level of information required is useful for both parties.’
It is true that not every customer chooses a face to face relationship with their bank, preferring a telephone based approach, but SMEs, especially those in a growth phase can always benefit from at least talking to the bank. The vast majority of these businesses would have a named relationship manager.
“A really good relationship can benefit from the network we have available
• Picture provided by RBS
Insight
We welcome any business who has growth aspirations, so please get in contact for upcoming events or to discuss how we can support you.
Centre for Enterprise, MMU0161 247 3871
Twitter: [email protected]
@mmucfe
Get Involved
• Written by Dionne Anderson
Pull yourself up by your Bootstraps
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
o◦Knowledgeable o Enterprising Collaborative o o
Read the full research article here. Are you a small or medium-sized business looking to grow? We would love to work with you. The first step is to get in touch with us: [email protected] or 0161 247 3871
Get Involved
Impact December 2013 4│ │
the bank. A common misconception is that banks are only a source of finance, but there are lots of offerings a bank has for SMEs looking to grow and develop. With growth comes greater and more complex needs, to which a vast array of products are available just outside the ordinary spectrum. For example, RBS runs a program called 'Mentor' – which provides Health and Safety / Employment Law advice. The bank in fact offers a considerable range of products, but the important thing, says Rob, are the provisions that extend beyond the products and services we provide. For example, we can provide networking, introductions to other advisors, opportunities provided by the Goldman Sachs 10,000 Small Businesses programme and the introduction to the SME Club.
“It's not just about the products the bank provides – it's also about adding value to that customer above and beyond”.
Reflecting on the challenges ahead, not only for SMEs but for banks as well.
within the bank to support that business. We have recently launched BizCrowd, which is a portal enabling businesses to network with each other for free.”
Your Relationship ManagerRob stressed the importance of a business owner questioning their relationship manager, should they feel like they can't see specific benefits to the relationship or if they feel they need more support or guidance.
“If that relationship manager isn't adding any value to you, whether that's through advice or proactive instruction, then is it really a relationship?”
“I've often used the expression “a good marriage doesn't succeed without effort;” relationships don't just work – they work because people put effort into it'. What is it that YOU are doing to enhance the relationship with your Manager and vice versa?
Business SupportThere are many other avenues of support that can be accessed through
Rob admits, “We're learning. We are moving on and taking on board feedback received to implement customer focussed improvements. This is now really about looking at our relationships with customers and listening to their future plans and working together to try and achieve those dreams and ambitions. We have changed the way that we reward our people and they are now behaviourally driven, looking into how somebody goes about what they're doing rather than whether they hit internal targets.”
“One final piece of advice would be to consider whether the bank you're with has the right products and services. Delivering the access to finance modules with MMU Centre for Enterprise, has shown that often raising awareness about the other avenues available is truly beneficial - you need to consider what is right for you. There is a plethora of advice and products - a minefield. Even if you work in finance, never mind a small business owner. This is where you need to use your relationship manager to point you in the right direction.”
Anyone who's started a business on a shoestring is probably good at bootstrapping, because bootstrapping means stretching resources as far as possible. And bootstrapping works for existing business owners. Those bootstrapping usually use personal income and savings, family and community contacts and resources to start up. Once started they are careful to keep costs low, chase debts and get the most out of their resources. Although some of the largest global companies bootstrapped at the start (Apple and Coca Cola amongst them), startups worldwide still bootstrap.
While most new businesses need investment for working capital, many struggle to obtain finance, despite use of overdrafts, bank loans and equity finance. Grants and soft loan schemes have been available under various public and philanthropic programmes but the most often used finance is personal investment, mainly from individual savings and gifts from family and friends. Some social groups experience different barriers to raising start-up finance, with graduates having the least and ethnic minority business owners having the most difficulty in doing so. That's where bootstrapping comes in!
So, if you need to bootstrap you should also think about networking. Research showed that access to social networks enabled new entrepreneurs to bootstrap and that bootstrapping was directly related to success in the early stages of business creation. Networking and bootstrapping skills are crucial in improving the prospects for survival and growth without conventional debt or equity funding.
Find out how networking can help you bootstrap your business
Like this issue?Tweet Us@mmucfe
#IMPACTcfe
• Picture from www.inc.com
• Written by Dr Sue Baines
TUESDAY, DECEMBER 17, 2013 TUESDAY, DECEMBER 17, 2013
Impact December 2013 5│ │
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
Case StudiesFinancing, Forecasting & Future GrowthDavid Forrest, Chief Executive for Compliance Control Ltd. and graduate of the North West Goldman Sachs 10,000 Small Businesses Programme recounts some of the financial pitfalls and triumphs that have helped him achieve growth.
David benefited from the Goldman Sachs 10,000 Small Businesses programme - find out if you and your business could too.
here
Get Involved
some additional Venture Capital Funding from the North West BioMedical Fund. It was the networking and coaching that moved me forward.
The funding has enabled me to expand my team (we have recently added more office space and employed an additional six members of staff) and to develop the software product, without which I would not have been able to continue the initial prototypes I created.
Business turnover is currently around £400,000. Significant monies are being invested in the continued development of software solutions, infrastructure, sales and marketing, advertising and search engine optimisation. I have also been able to establish a contract with Euprotec – a specialist contract research organisation
Compliance Control Ltd. is a leading specialist in regulatory compliance services, with more than 30 years experience in the IT industry. Taking part in the 10,000 Small Businesses Programme in 2012 presented him with some challenges he hadn’t ever considered before beginning the learning process. Here David recounts some of the financial factors that have helped him achieve growth.
David says...Prior to joining the programme through the MMU Centre for Enterprise, I had a steady consultancy business, that was dependent on project work and available staff. It was an unpredictable business and I wanted a steady revenue stream. I decided to apply for the programme, to “get me away from the day job”, giving me a chance to focus on getting my business plan and vision into words. It was an exciting opportunity.
I found that the Specialist Workshops, Networking and Peer Learning throughout the programme gave me greater confidence in terms of how to grow the business in a structured way, which was something I previously did not have a clear idea on – particularly in terms of how to pitch and draw up a successful funding proposal.
I also appreciated the advice and feedback from my mentor about how to seek more funding in order to grow the business. I was provided with the opportunity to speak with many beneficial people from advisors and industry leaders to business angels and financiers. With this support, I successfully received funding from the Technology Strategy Board. I also secured
based in Manchester. The owner – Lloyd Payne, was a fellow alumni member from the programme. It's great to be able to reinvest in other SMEs. It's essential that businesses connect and rebuild the North West's economy.
If there is money available, SMEs should look at it seriously. I was fortunate enough to get a grant, which was a bonus. The VC Equity funding meant that I had to give away some shares, but I look at it as though I'm giving away a small piece of a small cake, in order to get a share of a bigger cake in the future. I would also stress how important it is to have a very detailed business plan, and know it inside out. You will be grilled about every aspect of the plan. Be tenacious, there is money out there. If you are prepared to go and look for it and willing to fight for it, it's achievable. It won't come easy, but there is money for businesses with good management and good ideas.
We are now considering raising some additional funding to speed up our global ‘Go To Market’ strategy. As a result of these on-going developments, I'm incredibly optimistic about the future success for Compliance Control Ltd., however, this is only the start of our company's long journey.
Three Top Tips:1. Always have a plan.2. Be tenacious. Persistence is key.3. Consider alternative avenues to access
finance.
• Picture from www.compliance-control.com
• Written by Dionne Anderson
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
o◦Knowledgeable o Enterprising Collaborative o oImpact December 2013 6│ │
Small firms grow in the North West
#asktheprof: Questions and AnswersProfessor Lynn Martin, Director of the Centre for Enterprise, answers your questions:
Professor Lynn MartinProfessor of Entrepreneurship and Director of the Centre for Enterprise
Lynn Martin @proflmartin“Practical understanding of how small firms work, and grow. Specialist knowledge in tax, credit etc. to help growth happen.”
Cassons Accounts @Cassons_acc“Interested to hear what @proflmartin considers entrepreneurs need from their accountants?”
LancashirePTS International Ltd, Tony Sewell, Owner, Adlington
Lynn Martin @proflmartin“It is often over-used, often devalued by TV stereotypes such as ‘The Apprentice’. But it still means energy, talent, courage and commitment to me.”
Landmark Group @LandmarklnvsGrp“Do you feel the word “entrepreneur” has been ruined by the number of people who bestow the title upon themselves rather than earn it?”
PTS operates, both in the UK and abroad, in two distinct areas: Pavement Engineer ing and Materials Testing.
How has your company accessed finance? We heard about the Rosebud Fund at a preview event for the Goldman Sachs 10,000 Small Businesses programme and then went through a rigorous application process and were awarded the loan. The whole process took about four months so careful planning is required.
How much finance has your company successfully accessed? £250k
What was the process involved for accessing this finance? A combination of application forms backed up with 3 year’s accounts,
predicted cash flows, how many jobs it will create and a series of face to face meetings. The process ends in the hands of solicitors who draw up the final contracts and explain the small print.
What tips would you give to other companies considering accessing finance in the same way? Think carefully about the reasons why you require the finance as the set up costs are considerable. For cash up to 25k per application an unsecured loan is the cheapest form of borrowing and the process is very quick, literally days, and if you have numerous directors then multiple loans can be secured. This is my preferred option with repayment terms between one and five years.
MerseysideMoneyline, Diane Burridge, CEO, Birkenhead
Moneyline is a 'not-for-profit' social enterprise operating in the non-standard credit sector. The company lends substantial volumes of small loans (averaging £500) and provides an opportunity to save alongside lending to customers. Moneyline now has 20 secondary high street branches throughout England and Wales.
“There was a transition period to make the business sustainable but also investment ready, so that we could say, “We are sustainable but also we can make a significant
social impact if you invest in us,” she said. Burridge started pitching to investors whilst on the Goldman Sachs 10,000 Small Businesses programme and since finishing, has raised £2.5m through major investors in the social investment space, which she says will enable her to grow the core business by 40%. She wants to raise a further £10m through a second round in 2013/14 to open more branches and expand other ways of delivering the products and services in the next 18 months.
In challenging times, small firms are still growing in the North West LEP regions. Successful small firms tell their stories of accessing finance to grow.
Lynn Martin @proflmartin“Many different entrepreneurs... Doug Richard & Sahar Hashemi for their honesty re. failure and resilience in the process of success”
Kathryn Young @kyoungcfe“Which entrepreneurs in the UK do you admire and why?”
Greater ManchesterHartshorn-Hook Productions, Brian Hook, Creative Director
Hartshorn-Hook (H&H) is a modern theatrical entertainment company with bases in London and Manchester, producing commercial theatre in the West End and throughout the UK. H&H also offers general management services for medium to large scale and international productions in the UK.
How has your company accessed finance? We originally set up the company independent of any grants, bursaries or public funding. We accessed private finance mixed with commercial investment and profits were fed back into the company. As we grew, we developed a web of small investors and later on some of the shows came with their own interested investors. In 2012 we approached the Arts Council to launch some small/medium scale shows, which then attracted private investors. We now tend to get first performances Art Council funded then take the show to London to get commercial investment to make the show sustainable. H&H have also been involved in crowd-funding, with the high-profile Eric Whitacre musical, Paradise Lost. This project will access a combination of more traditional funding via the government Enterprise Investment Scheme (EIS) and investors.
How much finance has your company successfully accessed? Public funding - £56k
Private investment - £1m
What was the process involved for accessing this finance? ŸEIS - this is a comprehensive application process with HMRC.ŸArts Council - application process.ŸPrivate - contacts, networking, interest in company and a double page spread on the new company in The Stage in 2012 attracted huge interest and investors.
What tips would you give to other companies considering accessing finance in the same way? Doing your research carefully is very important. Know your costs, otherwise investors will pull you apart. Be well prepared and know the investors and their interests. Be very respectful of the investors’ investment e.g. we do not spend money on taxis etc. They are investing in you and your ideas. They care about something and you need to take just as much care about them. They are good business people and will respect you, if you show business knowledge as well as passion.
Any other comments?People don’t talk to each other enough. You need to have a dialogue with peers. On the government funded Knowledge Action Network programme we are talking to people outside our sector, which is also very useful.
CheshireArcis:Altos Group, Jan Rogers, Chief Scientific Officer, Warrington
Arcis:Altos Group is a research and development led company with expertise in the development and commercialization of a wide range of innovative, effective anti-microbial application technologies.
How has your company accessed finance? ŸEquity investment from business angel network and via Enterprise Investment Scheme (EIS) and Venture Capitalist (VC) funds
ŸGovernment funding via R&D tax credits and TSB grant
How much finance has your company successfully accessed? C i r c a £ 4 . 5 m f r o m e qu i t y participation and £200k from government
What was the process involved for accessing this finance? ŸInvestor presentations to EIS/VC funds (mainly based in London) and also to high net worth business angels (via our retained corporate financier, Zeus Capital)
ŸGovernment funds via R&D tax credit submission and through the TSB grant funding process
What tips would you give to other companies considering accessing finance in the same way? Investors generally invest in the quality of your management team, coupled with the underlying proposition. Focus less on the detailed nitty gritty and more on the macro strategic direction the team will drive for.
Any other comments?ŸBank funding has been zero. As an R&D led business we will struggle to gain bank funding until we are profitable and highly revenue generating (the time when we don’t need it!).ŸEven new initiatives like an Enterprise Finance Guarantee (EFG) require reasonably attractive revenue and profit figures rather than accessing the value, of the core science and the teams ability to commercialise and exploit it.
Like this issue?Tweet Us@mmucfe
#IMPACTcfe
TUESDAY, DECEMBER 17, 2013 TUESDAY, DECEMBER 17, 2013
Impact December 2013 5│ │
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
Case StudiesFinancing, Forecasting & Future GrowthDavid Forrest, Chief Executive for Compliance Control Ltd. and graduate of the North West Goldman Sachs 10,000 Small Businesses Programme recounts some of the financial pitfalls and triumphs that have helped him achieve growth.
David benefited from the Goldman Sachs 10,000 Small Businesses programme - find out if you and your business could too.
here
Get Involved
some additional Venture Capital Funding from the North West BioMedical Fund. It was the networking and coaching that moved me forward.
The funding has enabled me to expand my team (we have recently added more office space and employed an additional six members of staff) and to develop the software product, without which I would not have been able to continue the initial prototypes I created.
Business turnover is currently around £400,000. Significant monies are being invested in the continued development of software solutions, infrastructure, sales and marketing, advertising and search engine optimisation. I have also been able to establish a contract with Euprotec – a specialist contract research organisation
Compliance Control Ltd. is a leading specialist in regulatory compliance services, with more than 30 years experience in the IT industry. Taking part in the 10,000 Small Businesses Programme in 2012 presented him with some challenges he hadn’t ever considered before beginning the learning process. Here David recounts some of the financial factors that have helped him achieve growth.
David says...Prior to joining the programme through the MMU Centre for Enterprise, I had a steady consultancy business, that was dependent on project work and available staff. It was an unpredictable business and I wanted a steady revenue stream. I decided to apply for the programme, to “get me away from the day job”, giving me a chance to focus on getting my business plan and vision into words. It was an exciting opportunity.
I found that the Specialist Workshops, Networking and Peer Learning throughout the programme gave me greater confidence in terms of how to grow the business in a structured way, which was something I previously did not have a clear idea on – particularly in terms of how to pitch and draw up a successful funding proposal.
I also appreciated the advice and feedback from my mentor about how to seek more funding in order to grow the business. I was provided with the opportunity to speak with many beneficial people from advisors and industry leaders to business angels and financiers. With this support, I successfully received funding from the Technology Strategy Board. I also secured
based in Manchester. The owner – Lloyd Payne, was a fellow alumni member from the programme. It's great to be able to reinvest in other SMEs. It's essential that businesses connect and rebuild the North West's economy.
If there is money available, SMEs should look at it seriously. I was fortunate enough to get a grant, which was a bonus. The VC Equity funding meant that I had to give away some shares, but I look at it as though I'm giving away a small piece of a small cake, in order to get a share of a bigger cake in the future. I would also stress how important it is to have a very detailed business plan, and know it inside out. You will be grilled about every aspect of the plan. Be tenacious, there is money out there. If you are prepared to go and look for it and willing to fight for it, it's achievable. It won't come easy, but there is money for businesses with good management and good ideas.
We are now considering raising some additional funding to speed up our global ‘Go To Market’ strategy. As a result of these on-going developments, I'm incredibly optimistic about the future success for Compliance Control Ltd., however, this is only the start of our company's long journey.
Three Top Tips:1. Always have a plan.2. Be tenacious. Persistence is key.3. Consider alternative avenues to access
finance.
• Picture from www.compliance-control.com
• Written by Dionne Anderson
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
o◦Knowledgeable o Enterprising Collaborative o oImpact December 2013 6│ │
Small firms grow in the North West
#asktheprof: Questions and AnswersProfessor Lynn Martin, Director of the Centre for Enterprise, answers your questions:
Professor Lynn MartinProfessor of Entrepreneurship and Director of the Centre for Enterprise
Lynn Martin @proflmartin“Practical understanding of how small firms work, and grow. Specialist knowledge in tax, credit etc. to help growth happen.”
Cassons Accounts @Cassons_acc“Interested to hear what @proflmartin considers entrepreneurs need from their accountants?”
LancashirePTS International Ltd, Tony Sewell, Owner, Adlington
Lynn Martin @proflmartin“It is often over-used, often devalued by TV stereotypes such as ‘The Apprentice’. But it still means energy, talent, courage and commitment to me.”
Landmark Group @LandmarklnvsGrp“Do you feel the word “entrepreneur” has been ruined by the number of people who bestow the title upon themselves rather than earn it?”
PTS operates, both in the UK and abroad, in two distinct areas: Pavement Engineer ing and Materials Testing.
How has your company accessed finance? We heard about the Rosebud Fund at a preview event for the Goldman Sachs 10,000 Small Businesses programme and then went through a rigorous application process and were awarded the loan. The whole process took about four months so careful planning is required.
How much finance has your company successfully accessed? £250k
What was the process involved for accessing this finance? A combination of application forms backed up with 3 year’s accounts,
predicted cash flows, how many jobs it will create and a series of face to face meetings. The process ends in the hands of solicitors who draw up the final contracts and explain the small print.
What tips would you give to other companies considering accessing finance in the same way? Think carefully about the reasons why you require the finance as the set up costs are considerable. For cash up to 25k per application an unsecured loan is the cheapest form of borrowing and the process is very quick, literally days, and if you have numerous directors then multiple loans can be secured. This is my preferred option with repayment terms between one and five years.
MerseysideMoneyline, Diane Burridge, CEO, Birkenhead
Moneyline is a 'not-for-profit' social enterprise operating in the non-standard credit sector. The company lends substantial volumes of small loans (averaging £500) and provides an opportunity to save alongside lending to customers. Moneyline now has 20 secondary high street branches throughout England and Wales.
“There was a transition period to make the business sustainable but also investment ready, so that we could say, “We are sustainable but also we can make a significant
social impact if you invest in us,” she said. Burridge started pitching to investors whilst on the Goldman Sachs 10,000 Small Businesses programme and since finishing, has raised £2.5m through major investors in the social investment space, which she says will enable her to grow the core business by 40%. She wants to raise a further £10m through a second round in 2013/14 to open more branches and expand other ways of delivering the products and services in the next 18 months.
In challenging times, small firms are still growing in the North West LEP regions. Successful small firms tell their stories of accessing finance to grow.
Lynn Martin @proflmartin“Many different entrepreneurs... Doug Richard & Sahar Hashemi for their honesty re. failure and resilience in the process of success”
Kathryn Young @kyoungcfe“Which entrepreneurs in the UK do you admire and why?”
Greater ManchesterHartshorn-Hook Productions, Brian Hook, Creative Director
Hartshorn-Hook (H&H) is a modern theatrical entertainment company with bases in London and Manchester, producing commercial theatre in the West End and throughout the UK. H&H also offers general management services for medium to large scale and international productions in the UK.
How has your company accessed finance? We originally set up the company independent of any grants, bursaries or public funding. We accessed private finance mixed with commercial investment and profits were fed back into the company. As we grew, we developed a web of small investors and later on some of the shows came with their own interested investors. In 2012 we approached the Arts Council to launch some small/medium scale shows, which then attracted private investors. We now tend to get first performances Art Council funded then take the show to London to get commercial investment to make the show sustainable. H&H have also been involved in crowd-funding, with the high-profile Eric Whitacre musical, Paradise Lost. This project will access a combination of more traditional funding via the government Enterprise Investment Scheme (EIS) and investors.
How much finance has your company successfully accessed? Public funding - £56k
Private investment - £1m
What was the process involved for accessing this finance? ŸEIS - this is a comprehensive application process with HMRC.ŸArts Council - application process.ŸPrivate - contacts, networking, interest in company and a double page spread on the new company in The Stage in 2012 attracted huge interest and investors.
What tips would you give to other companies considering accessing finance in the same way? Doing your research carefully is very important. Know your costs, otherwise investors will pull you apart. Be well prepared and know the investors and their interests. Be very respectful of the investors’ investment e.g. we do not spend money on taxis etc. They are investing in you and your ideas. They care about something and you need to take just as much care about them. They are good business people and will respect you, if you show business knowledge as well as passion.
Any other comments?People don’t talk to each other enough. You need to have a dialogue with peers. On the government funded Knowledge Action Network programme we are talking to people outside our sector, which is also very useful.
CheshireArcis:Altos Group, Jan Rogers, Chief Scientific Officer, Warrington
Arcis:Altos Group is a research and development led company with expertise in the development and commercialization of a wide range of innovative, effective anti-microbial application technologies.
How has your company accessed finance? ŸEquity investment from business angel network and via Enterprise Investment Scheme (EIS) and Venture Capitalist (VC) funds
ŸGovernment funding via R&D tax credits and TSB grant
How much finance has your company successfully accessed? C i r c a £ 4 . 5 m f r o m e qu i t y participation and £200k from government
What was the process involved for accessing this finance? ŸInvestor presentations to EIS/VC funds (mainly based in London) and also to high net worth business angels (via our retained corporate financier, Zeus Capital)
ŸGovernment funds via R&D tax credit submission and through the TSB grant funding process
What tips would you give to other companies considering accessing finance in the same way? Investors generally invest in the quality of your management team, coupled with the underlying proposition. Focus less on the detailed nitty gritty and more on the macro strategic direction the team will drive for.
Any other comments?ŸBank funding has been zero. As an R&D led business we will struggle to gain bank funding until we are profitable and highly revenue generating (the time when we don’t need it!).ŸEven new initiatives like an Enterprise Finance Guarantee (EFG) require reasonably attractive revenue and profit figures rather than accessing the value, of the core science and the teams ability to commercialise and exploit it.
Like this issue?Tweet Us@mmucfe
#IMPACTcfe
TUESDAY, DECEMBER 17, 2013 TUESDAY, DECEMBER 17, 2013
Impact December 2013 7│ │
• Picture provided by MMU
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
Practical TipsDon’t let your credit rating get in the way of your plans
you made (too many name changes, too many year-end changes, raises too many questions)? Where is it based (Knightsbridge ranks better than Moss Side)?
Negative NewsThe Registry Trust gives them information about court proceedings such as CCJs.
Trade RelationsYour customers and suppliers may provide extra information on you (particularly those that use the Credit Agencies themselves). Phone & Utilities companies share information almost routinely, so take care with them, pay by DD, and don't stop payments even if in dispute. Agencies also take note of your trade profile, so appearances in trade directories may help.
The Owners They will check the personal credit rating of your company directors. Call Credit is the main agency for individuals, and you can see how they rate you personally on Noddle (https://www.noddle.co.uk/). It's free, and has pop-up boxes that allow you to amend the information held about you. And take care with Directorships in other companies, your rating may be affected by those companies too.
Sector/Economy Your business sector is also considered, within the context of the overall economy. A restaurant is a risky prospect at the best of times, and during a consumer spending squeeze it's even riskier.
Get The Rating You DeserveIf the Agencies have the wrong rating for your company… frankly, it's your fault… so:
1. Get your ratingCompany ratings can differ between Agencies, but check Experian as a minimum (some accountants do this for free), and check your own personal ratings via Noddle. Tidy up any errors (they happen more often
The truth is, the credit ratings of most SMEs are seriously flawed... but the even sadder truth is those ratings play an important role in company funds. Your customers may use them, your suppliers may use them, and your external funders will certainly use them. So, just who are the people behind these ratings, how do they rate you, and how can you change what they think of your business?
In the UK, the main credit reference agencies include Experian, Equifax and Dun & Bradstreet. There are others; your own bank may even have a credit-checking service, but they essentially use the same data collated by these main agencies.
The infographic above, is a guide to what information the agencies look at, and how it is weighted when they come to rate your company.
Financials Information filed by your accountants at Companies House is most important and very heavily relied upon. Try looking at that information yourself - (http://www.companieshouse.gov.uk/). See just how hard it is to get an accurate and fair view of your company from what is there, but that's what the agencies use… unless you supply them with better information.
DemographicsHow long has your business traded (the longer the better)? How many changes have
that they should) and sort black marks like County Court Judgements
2. Get your accountant on boardThe fuller the accounts you file at Companies House and the quicker they are filed the better. Full accounts are by far away the best, but Accountants will file as little information as late as possible… it's the way we are… but it's not good for your rating.
3. Get goingTell the Agencies what you're up to and how things have gone since your last year end accounts. If you're growing, then last year's accounts won't reflect how you're doing, and neither will your rating. All Agencies will take a call and have procedures for challenging & changing the information they have on you and some have 'products' to help improve your rating.
I've recently worked with several firms who've lost major sales opportunities or been crippled by cuts in supplier credit limits due to poor credit ratings… and firms who have opened up new export markets or raised money with the help of well managed credit profiles.
It isn't rocket science, or a dark art… but it's one of those areas firms don't bother about until they need to… and then it may be too late. It can take up to 60 days for any changes to hit your score so don't let your credit rating get in the way of your plans. Deal with it now.
Information that agencies use to rate your company
FINANCE
Who uses credit ratings in the UK?
What you need to do to get the credit rating you
deserve
Check Experian
Financials
Demographics
Negative News
Trade Relations
The Owners
Sector/Economy
Check your own personal rating
via Noddle
Sort out black markslike CCJs
Fill your accounts
Tell the Agencies whatyou are up to
CREDIT RATING
youyour suppliersyour customers
and external funders
• Written by Peter Wild
If you would like to hear more from Peter, why not get in touch to see if you are suitable for our fully funded growth programmes? Peter offers invaluable support to SMEs in all areas of Finance.
Centre for Enterprise, MMU0161 247 3871
Twitter: [email protected]
@mmucfe
Get Involved
MMU Senior Lecturer in Accounting and Finance, Peter Wild offers us some practical tips
How to change your profile:Call their Credit Review service 0844 4818 888 and check out a few of the offerings they have for SMEs.
http://www.experian.co.uk/small-business/own-company-report-credit-review-service.html
For £250 they'll let you send them management accounts, business plans, details of new business, and up to 3 trade references (from tame referees!)… and they'll use this to completely review your rating.
You can even join CreditPal and let them have online access to your management accounts to ensure the accounting information at the heart of their rating is never out of date.
Impact December 2013 8│ │ o◦Knowledgeable o Enterprising Collaborative o o
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
Insight • Written by Jonathan Lawson
We welcome any business who has growth aspirations, so please get in contact for our upcoming events or to discuss how we can support you.
Centre for Enterprise, MMU0161 247 3871
Twitter: [email protected]
@mmucfe
Get Involved
11 Finance Twitter Accounts Business
Owners Follow
1
2
3
4
5
6
7
8
9
10
11
@FinancialTimesHeadlines from the FT or @ft for news stories, features and updates
@BizFinanceMagBusiness Finance Magazine - all finance, all the time, no bones about it
@ericabizErica made her first million in her mid-20s & wants others to find the same success. Focus on small business finances & she is very chatty!
@business_angelsEnvestors Manchester advise ambitious entrepreneurs and invest £20k-5m in high growth NW businesses
@trenttsdAfter suffering a financial breakdown, Trent Hamm set out to analyse exactly what happened & how to prevent it for the average person
@GetRichSlowlyThe exact opposite of a get rich scheme! This feed is all about growing your worth over time. Good for business and personal finances.
@FARNOOSHFinance Expert, Author, Host of Financially Fit, the webs #1 personal finance series - with some great tips
@BIYourNomeyThe latest personal finance news from the Business Insider, with some good links
@nwfundThe North West Fund is a substantial fund investing in start up and established SMEs
@MarcoCarbajoOwner of Business Credit Insiders Circle, Marco provides great links around how to build your business credit separately from your personal credit
@smallbiztrendsNews conduit for all things small business, from a variety of authors, discussing all sorts of topics including finance trends
"Are you ok there?" my teaching colleague asked a business owner as his session drew to a close."You've gone a bit quiet." “It's fine," she replied, through partially gritted teeth. "This is just the way I deal with anger."
The anger, I hasten to add, wasn't directed at my fellow academic, but at the business owner's own accountant, who, she had just discovered, hadn't really been doing a marvellous job for her.
Making the small businesses who take part in my programmes angry is rarely something we seek to achieve, but it can, on occasion, be a force for good. I know that this emotion will be a driving force and that this Managing Director will have better advice, a better credit rating and a stronger financial profile in just a few weeks. And that, of course, is very much something my MMU colleague, Pete Wild, and I, do seek to achieve on programmes such as 10,000 Small Businesses and the Knowledge Action Network, where we explain the inside track on how the world judges your accounts.
Emotion about the numbers, which I have seen not just in this one business owner, but in hundreds of owners on the programmes I deliver, seems to be a uniquely inspiring thing. Everyone thinks about their accounts, of course, but often this can become a dry or even daunting exercise, to be endured once a year.
However, once you realise that your accounts are busy telling a story about
your business every day, to suppliers, to customers, to banks and funding providers, and that in many cases you aren't managing that story...well... then we see the excitement, the worry and the passion come to the fore. Moreover, if that means you go and do something about it, as I have seen so many businesses do, then that seems like a positive outcome.
When I am not found angering people into getting to grips with the financial story of their business, I am often to be found helping people to prepare for seeking finance on the Fast Forward Funding programme. Surely, there can be no emotion here, at least, in the cold, hard world of investors and debt providers?
Would an investor pass up a great opportunity simply because he or she didn't like the business owner? Can a sceptical bank be won over by the passion and enthusiasm of an entrepreneur? Will a business angel take a punt on the person, even if they do not believe the business model? As a semi-professional cynic, I am constantly surprised when I see those examples where the answer is "yes"… but see them, I do.
Now, that is not to say that this is the norm, or that you would not be doing yourself a disservice in relying on an emotional connection over a strong business plan, solid track record and doing your homework. Nevertheless, finding a good finance provider is, for me, about finding a good match. Where a bus iness match i s complemented by an emotional match, a values match, even a personality match, the result is so much the stronger. Seeking finance and seeking a fiancé are only a typo apart, but there is more truth to the comparison than you might think.
So whether you are looking for money, or managing the money you have got, don't ignore the emotional element - it can be a motivator to improve, a barrier you should acknowledge or an added tool in achieving your goals.
Head and heart: Why finance can be more emotional than you might think (or feel)Jonathan Lawson, Enterprise Fellow at the Centre for Enterprise, explains how emotions can be a barrier and a motivator to achieving your business goals
• Picture by Ade Hunter
TUESDAY, DECEMBER 17, 2013TUESDAY, DECEMBER 17, 2013
Impact December 2013 7│ │
• Picture provided by MMU
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
Practical TipsDon’t let your credit rating get in the way of your plans
you made (too many name changes, too many year-end changes, raises too many questions)? Where is it based (Knightsbridge ranks better than Moss Side)?
Negative NewsThe Registry Trust gives them information about court proceedings such as CCJs.
Trade RelationsYour customers and suppliers may provide extra information on you (particularly those that use the Credit Agencies themselves). Phone & Utilities companies share information almost routinely, so take care with them, pay by DD, and don't stop payments even if in dispute. Agencies also take note of your trade profile, so appearances in trade directories may help.
The Owners They will check the personal credit rating of your company directors. Call Credit is the main agency for individuals, and you can see how they rate you personally on Noddle (https://www.noddle.co.uk/). It's free, and has pop-up boxes that allow you to amend the information held about you. And take care with Directorships in other companies, your rating may be affected by those companies too.
Sector/Economy Your business sector is also considered, within the context of the overall economy. A restaurant is a risky prospect at the best of times, and during a consumer spending squeeze it's even riskier.
Get The Rating You DeserveIf the Agencies have the wrong rating for your company… frankly, it's your fault… so:
1. Get your ratingCompany ratings can differ between Agencies, but check Experian as a minimum (some accountants do this for free), and check your own personal ratings via Noddle. Tidy up any errors (they happen more often
The truth is, the credit ratings of most SMEs are seriously flawed... but the even sadder truth is those ratings play an important role in company funds. Your customers may use them, your suppliers may use them, and your external funders will certainly use them. So, just who are the people behind these ratings, how do they rate you, and how can you change what they think of your business?
In the UK, the main credit reference agencies include Experian, Equifax and Dun & Bradstreet. There are others; your own bank may even have a credit-checking service, but they essentially use the same data collated by these main agencies.
The infographic above, is a guide to what information the agencies look at, and how it is weighted when they come to rate your company.
Financials Information filed by your accountants at Companies House is most important and very heavily relied upon. Try looking at that information yourself - (http://www.companieshouse.gov.uk/). See just how hard it is to get an accurate and fair view of your company from what is there, but that's what the agencies use… unless you supply them with better information.
DemographicsHow long has your business traded (the longer the better)? How many changes have
that they should) and sort black marks like County Court Judgements
2. Get your accountant on boardThe fuller the accounts you file at Companies House and the quicker they are filed the better. Full accounts are by far away the best, but Accountants will file as little information as late as possible… it's the way we are… but it's not good for your rating.
3. Get goingTell the Agencies what you're up to and how things have gone since your last year end accounts. If you're growing, then last year's accounts won't reflect how you're doing, and neither will your rating. All Agencies will take a call and have procedures for challenging & changing the information they have on you and some have 'products' to help improve your rating.
I've recently worked with several firms who've lost major sales opportunities or been crippled by cuts in supplier credit limits due to poor credit ratings… and firms who have opened up new export markets or raised money with the help of well managed credit profiles.
It isn't rocket science, or a dark art… but it's one of those areas firms don't bother about until they need to… and then it may be too late. It can take up to 60 days for any changes to hit your score so don't let your credit rating get in the way of your plans. Deal with it now.
Information that agencies use to rate your company
FINANCE
Who uses credit ratings in the UK?
What you need to do to get the credit rating you
deserve
Check Experian
Financials
Demographics
Negative News
Trade Relations
The Owners
Sector/Economy
Check your own personal rating
via Noddle
Sort out black markslike CCJs
Fill your accounts
Tell the Agencies whatyou are up to
CREDIT RATING
youyour suppliersyour customers
and external funders
• Written by Peter Wild
If you would like to hear more from Peter, why not get in touch to see if you are suitable for our fully funded growth programmes? Peter offers invaluable support to SMEs in all areas of Finance.
Centre for Enterprise, MMU0161 247 3871
Twitter: [email protected]
@mmucfe
Get Involved
MMU Senior Lecturer in Accounting and Finance, Peter Wild offers us some practical tips
How to change your profile:Call their Credit Review service 0844 4818 888 and check out a few of the offerings they have for SMEs.
http://www.experian.co.uk/small-business/own-company-report-credit-review-service.html
For £250 they'll let you send them management accounts, business plans, details of new business, and up to 3 trade references (from tame referees!)… and they'll use this to completely review your rating.
You can even join CreditPal and let them have online access to your management accounts to ensure the accounting information at the heart of their rating is never out of date.
Impact December 2013 8│ │ o◦Knowledgeable o Enterprising Collaborative o o
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
Insight • Written by Jonathan Lawson
We welcome any business who has growth aspirations, so please get in contact for our upcoming events or to discuss how we can support you.
Centre for Enterprise, MMU0161 247 3871
Twitter: [email protected]
@mmucfe
Get Involved
11 Finance Twitter Accounts Business
Owners Follow
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@FinancialTimesHeadlines from the FT or @ft for news stories, features and updates
@BizFinanceMagBusiness Finance Magazine - all finance, all the time, no bones about it
@ericabizErica made her first million in her mid-20s & wants others to find the same success. Focus on small business finances & she is very chatty!
@business_angelsEnvestors Manchester advise ambitious entrepreneurs and invest £20k-5m in high growth NW businesses
@trenttsdAfter suffering a financial breakdown, Trent Hamm set out to analyse exactly what happened & how to prevent it for the average person
@GetRichSlowlyThe exact opposite of a get rich scheme! This feed is all about growing your worth over time. Good for business and personal finances.
@FARNOOSHFinance Expert, Author, Host of Financially Fit, the webs #1 personal finance series - with some great tips
@BIYourNomeyThe latest personal finance news from the Business Insider, with some good links
@nwfundThe North West Fund is a substantial fund investing in start up and established SMEs
@MarcoCarbajoOwner of Business Credit Insiders Circle, Marco provides great links around how to build your business credit separately from your personal credit
@smallbiztrendsNews conduit for all things small business, from a variety of authors, discussing all sorts of topics including finance trends
"Are you ok there?" my teaching colleague asked a business owner as his session drew to a close."You've gone a bit quiet." “It's fine," she replied, through partially gritted teeth. "This is just the way I deal with anger."
The anger, I hasten to add, wasn't directed at my fellow academic, but at the business owner's own accountant, who, she had just discovered, hadn't really been doing a marvellous job for her.
Making the small businesses who take part in my programmes angry is rarely something we seek to achieve, but it can, on occasion, be a force for good. I know that this emotion will be a driving force and that this Managing Director will have better advice, a better credit rating and a stronger financial profile in just a few weeks. And that, of course, is very much something my MMU colleague, Pete Wild, and I, do seek to achieve on programmes such as 10,000 Small Businesses and the Knowledge Action Network, where we explain the inside track on how the world judges your accounts.
Emotion about the numbers, which I have seen not just in this one business owner, but in hundreds of owners on the programmes I deliver, seems to be a uniquely inspiring thing. Everyone thinks about their accounts, of course, but often this can become a dry or even daunting exercise, to be endured once a year.
However, once you realise that your accounts are busy telling a story about
your business every day, to suppliers, to customers, to banks and funding providers, and that in many cases you aren't managing that story...well... then we see the excitement, the worry and the passion come to the fore. Moreover, if that means you go and do something about it, as I have seen so many businesses do, then that seems like a positive outcome.
When I am not found angering people into getting to grips with the financial story of their business, I am often to be found helping people to prepare for seeking finance on the Fast Forward Funding programme. Surely, there can be no emotion here, at least, in the cold, hard world of investors and debt providers?
Would an investor pass up a great opportunity simply because he or she didn't like the business owner? Can a sceptical bank be won over by the passion and enthusiasm of an entrepreneur? Will a business angel take a punt on the person, even if they do not believe the business model? As a semi-professional cynic, I am constantly surprised when I see those examples where the answer is "yes"… but see them, I do.
Now, that is not to say that this is the norm, or that you would not be doing yourself a disservice in relying on an emotional connection over a strong business plan, solid track record and doing your homework. Nevertheless, finding a good finance provider is, for me, about finding a good match. Where a bus iness match i s complemented by an emotional match, a values match, even a personality match, the result is so much the stronger. Seeking finance and seeking a fiancé are only a typo apart, but there is more truth to the comparison than you might think.
So whether you are looking for money, or managing the money you have got, don't ignore the emotional element - it can be a motivator to improve, a barrier you should acknowledge or an added tool in achieving your goals.
Head and heart: Why finance can be more emotional than you might think (or feel)Jonathan Lawson, Enterprise Fellow at the Centre for Enterprise, explains how emotions can be a barrier and a motivator to achieving your business goals
• Picture by Ade Hunter
TUESDAY, DECEMBER 17, 2013TUESDAY, DECEMBER 17, 2013
o◦Knowledgeable o Enterprising Collaborative o oImpact December 2013 9│ │
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
Join a Programme?
Knowledge Action Network Uncover your business challenges and develop solutions through a network of like-minded peers. This is a fully funded programme, aimed to support small businesses in the North West to grow and innovate. If you would like to be considered for the next intake please express you interest here
Managers2LeadersPrepare for the future by developing the leadership skills of your senior staff. For more information on the next intake, starting on the 22nd of January, please click here
10,000 Small BusinessesThis programme is a unique, practical programme designed to help the leaders of established small businesses and social enterprises define and achieve their business growth aspirations. Applications are open now for the next intake why not register your business here
Register with us for updates on support & events
To find out more, why not get in touch for a chat?
Centre for Enterprise, MMU0161 247 3871
Twitter: [email protected]
@mmucfe
“It has been like having your own Mastermind group - it can help you identify and define a problem, then discussing around the issue helps you to a greater
understanding. The best thing about it is that you take time out to think about the problem from the outside”
Fast Forward FundingFast Forward Funding gives you all of the knowledge and skills you need to give your business the best chance of raising finance and investment. The next intake is January 2014, so why not register your business for more information here
“Managers2Leaders has helped me gain a network of colleagues and friends that are facing similar issues as mine and can understand me”
“I’ve been supported all the way by my coach who helped me with some crucial decisions, even giving me phone advice outside of sessions. We are in a very exciting place at the moment”
“Anybody who is serious about raising finance must have a look at the Fast Forward funding programme”
“The 10,000 Small Businesses programme has made me recognise my strengths and it has helped me put processes in to place”
We would love to work with you. The first step is to get in touch with us and tell us a bit more about you and your business. Why not arrange a visit and perhaps we can tell you a bit more about the options available to you.
• All pictures by Ade Hunter
Contact us:Website: www.mmucfe.co.uk
Telephone: +44 (0)161 247 3871
Email: [email protected]
Twitter: @MMUcfe
Address:Centre for EnterpriseManchester Metropolitan University Faculty of Business and Law,All Saints Campus, Oxford RoadManchester, M15 6BH, United Kingdom
TUESDAY, DECEMBER 17, 2013
o◦Knowledgeable o Enterprising Collaborative o oImpact December 2013 9│ │
mmucfe.co.ukCENTRE FOR ENTERPRISE IMPACT
Join a Programme?
Knowledge Action Network Uncover your business challenges and develop solutions through a network of like-minded peers. This is a fully funded programme, aimed to support small businesses in the North West to grow and innovate. If you would like to be considered for the next intake please express you interest here
Managers2LeadersPrepare for the future by developing the leadership skills of your senior staff. For more information on the next intake, starting on the 22nd of January, please click here
10,000 Small BusinessesThis programme is a unique, practical programme designed to help the leaders of established small businesses and social enterprises define and achieve their business growth aspirations. Applications are open now for the next intake why not register your business here
Register with us for updates on support & events
To find out more, why not get in touch for a chat?
Centre for Enterprise, MMU0161 247 3871
Twitter: [email protected]
@mmucfe
“It has been like having your own Mastermind group - it can help you identify and define a problem, then discussing around the issue helps you to a greater
understanding. The best thing about it is that you take time out to think about the problem from the outside”
Fast Forward FundingFast Forward Funding gives you all of the knowledge and skills you need to give your business the best chance of raising finance and investment. The next intake is January 2014, so why not register your business for more information here
“Managers2Leaders has helped me gain a network of colleagues and friends that are facing similar issues as mine and can understand me”
“I’ve been supported all the way by my coach who helped me with some crucial decisions, even giving me phone advice outside of sessions. We are in a very exciting place at the moment”
“Anybody who is serious about raising finance must have a look at the Fast Forward funding programme”
“The 10,000 Small Businesses programme has made me recognise my strengths and it has helped me put processes in to place”
We would love to work with you. The first step is to get in touch with us and tell us a bit more about you and your business. Why not arrange a visit and perhaps we can tell you a bit more about the options available to you.
• All pictures by Ade Hunter
Contact us:Website: www.mmucfe.co.uk
Telephone: +44 (0)161 247 3871
Email: [email protected]
Twitter: @MMUcfe
Address:Centre for EnterpriseManchester Metropolitan University Faculty of Business and Law,All Saints Campus, Oxford RoadManchester, M15 6BH, United Kingdom
TUESDAY, DECEMBER 17, 2013