Posts Tagged ‘Finance’

Ten key tips for aspiring entrepreneurs

October 8, 2011

My new book, “From Vision to Exit- The Entrepreneur’s Guide to Building and Selling a Business” is available in all good bookshops and online now.

Here are my ten key tips for aspiring entrepreneurs:

1. Work on your vision and strategy. If you can’t be passionate, choose another path.
2. Create a clear roadmap or plan. Work out what you will do and how. Don’t set off in the wrong direction.
3. Consider your resource requirements. What will you need in terms of infrastructure, people and finance? Don’t run out of cash!
4. Develop your purpose and values. Why do you exist? What difference will you make and to who?
5. Never underestimate the power of the status quo. Inertia means that it can take far longer (and much more cash) to achieve your vision and goals.
6. Consider meaning as well as money. Work towards a “triple bottom line”, valuing people, planet & profit.
7. Protect your valuable IP. Don’t let someone else take advantage of your innovation, investment and hard work.
8. Think international. Maximise cross-border trading opportunities and take your place in the global business village.
9. Embrace change and be open, flexible and transparent in your dealings with stakeholders- including customers, suppliers, staff and investors.
10. Work hard, get up early and never ever give up!

“Guy Rigby’s book is a lip-smacking smorgasbord upon which to feast. Easily digestible, never dry, stuffed with sage anecdotes and wit, it can be devoured it in one full fat sitting, or you can pick and mix from the menu, depending on your appetite. The tasty top tips at the end of each chapter should become the staple diet of anyone wanting to run a healthy, growing business. It deserves a Michelin star. Bravo.”
Tristram Mayhew, Founder and Chief Gorilla, Go Ape!

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VAT is the problem?

January 13, 2011

With thanks to my esteemed colleague, VAT expert John Voyez, for his insight. Any errors or omissions are entirely mine!

Well, what a lot of rubbish has been written in the press in the last week or two about the increased VAT rate – never let accuracy get in the way of a good headline !

Just for the record, there is no VAT on most children’s clothing, no VAT on most basic food items, no VAT on train, bus and airplane fares, no VAT on books, newspapers and magazines, no VAT on residential housing construction, no VAT on most drugs and medicines, no VAT on betting and gaming, no VAT on education, no VAT on insurance or financial services, no VAT on ordinary postal services, no VAT on most sport activities, no VAT on entry to museums, no increase in VAT on a range of items including children’s car seats, domestic fuel, contraceptives, energy saving equipment, products that help you stop smoking, and, finally, no VAT on cremation or burial (unlike other taxes, death is still VAT free) !

So post 4th January, it will not cost you a penny more at the weekend to slap on an anti- smoking patch, jump on the bus to go to Sainsbury’s where you can buy some clothes for the kids, and at the same time buy most of the weekly shop, including a copy of Sporting Life, before picking up some aspirin to ward of the headache for when you drop in at the bookies on the way home and lose your savings (accrued VAT free) on the 2:30 at Epsom, followed on Sunday by a game of football at the local sports centre in the morning, and a trip to the museum (because you feel you should at least do one thing educational at the weekend), before finally falling asleep in your newly built Wimpey home in front of your brand new 90″ plasma 3D HD TV screen you have just bought, which unfortunately did cost you 2.5% more in VAT.

And, just for the record, if you are still feeling hard done by, most of our EU counterparts have for many years been paying VAT at 20%, and in some cases at a rate well in excess of 20%!

So VAT, exactly, is the problem?

Ode to an Emergency Budget

June 23, 2010

George Osborne spoke, he set the scene….

The nation is in debt.

We’re broke and he will fix it,

Clearly no need to fret!

A billion here, a billion there,

We’ll find the money now.

The poorest will be better off,

But nobody’s sure quite how.

For entrepreneurs, it’s not too bad,

That capital gains tax charge.

£5m they say, at 10%

What’s left may still be large!

For public sector workers,

The cuts will run quite deep.

Let’s hope there’s no strike action,

No promises to keep.

With VAT @ 20 per cent,

Luxury spending may wither.

So if you’re thinking of splashing out,

Whatever you do, don’t dither!

They say you’re still young at 66,

The new retirement age.

But it seems too late to me, you know,

To leave the employment stage.

So some have won and some have lost,

A very taxing day.

There’s only one question that now remains,

Will Capello stay?

There’s no need to be a hero

May 16, 2010

This is no time for heroics. With a freshly squeezed coalition government, a fiscal deficit as deep as Loch Ness, a monster sized public sector and an unfolding Greek tragedy, it is difficult to envision an entirely calm and rosy future. Indeed, the chickens that were hiding just around the corner have now come home to roost and we can only hope that some green shoots of recovery will tempt them out again. We have all had quite enough of recessions and sovereign defaults and would now like normal service to resume. Thank you!

With that off my chest, there are plenty of opportunities out there. Well run businesses will be using these still difficult times to improve their systems and processes, increase their efficiencies and work out how they will out-market and outsell their competitors, as and when circumstances permit. They will be looking at acquisitions and other strategies to increase their market share and may also be considering how our weak pound can increase their international opportunities. Above all they will be carefully managing their working capital and making sure they don’t run out of cash.

Are you one of these businesses that will be ready to take advantage of the real recovery, when it finally arrives? It’s worth thinking about…

On the financing and business development front, there have been some interesting announcements in recent weeks.

In case you have missed them, here are some of the headlines:

– A new company, UK Finance for Growth Ltd (UKFG), has been established to manage and coordinate the delivery of finance to SMEs. The range of funding will be from £25,000 to £10 million and funding will be in the form of debt, equity or mezzanine funding. Over time, it will bring together all of the existing SME finance schemes including the Enterprise Finance Guarantee and the newly announced Growth Capital Fund- a total of around £3.5 billion.

– The new Growth Capital Fund (part of UKFG) has been created to address the funding gap identified by the Rowlands Review of Growth Capital which was published in November 2009. Starting with a total of £200 million and an ambition to grow this to £500 million, it will provide funding for SMEs seeking between £2 million and £10 million, with the first investments being planned for the autumn.

– Over the next year, RBS and Lloyds have agreed to provide a total of £94 billion of new business loans. Of this, apparently nearly half is earmarked for SMEs.

– From December 2010, there will be a new portal providing access to Government contracts, with relevant contracts flagged as SME friendly. The aim is to increase Government procurement from SMEs by 15% to a total of around £23 billion. This is still only around 10% of the Government’s annual spend, so hopefully there will be much more to come.

– Although taxes are increasing to pay for our nation’s profligate spending, the budget introduced some welcome tax breaks for entrepreneurs and SMEs. There have also been some interesting developments at Royal Mail, where a decision by the European Court of Justice means that many businesses may be able to reclaim VAT on the cost of a number of Royal Mail services, including Parcelforce. Make sure you don’t lose out.

With a new coalition budget just around the corner, there will be more to report in the coming weeks. Watch out for the well trailed increases in VAT and Capital Gains Tax. Is now the time for business and property owners to consider realising some of their assets?

Ten key hooks for investors in early stage businesses

March 19, 2010

Family and friends are a great source of funding for start ups and early stage businesses, but raising money from external investors or business angels is challenging.

Here are ten of the key issues that investors will be considering when they meet you or read your business plan.

1. First impressions

First impressions are critical. Most investors will decide not to proceed within the first 30 seconds of any discussion, or within a minute or two of picking up your business plan. Think about your approach, test in on your friends and practise it to perfection. Don’t fall at the first fence.

2. Demonstrable need

Where is the pain and what exactly is the need for your particular product or service? Most businesses offer ‘me too’ opportunities which are not obviously exciting to an investor. Make sure it’s clear how and why yours is different. Is it better, faster, cheaper or is there some other reason why you will succeed when many others fail?

3. Existing Revenues

Raising money for a business with pre-existing revenues is far easier as demand for your product or service has already been partially proven. The fact that you have already established the beginnings of a customer base will carry huge weight in any discussions.

4. Strategy

You may have a great idea, and you may have existing revenues, but what is the future for your business? Do you have a vision? If so, is it realistic or just “pie in the sky”? We have all seen those hockey stick shaped graphs showing an embarrassment of riches only a year or two down the track. Don’t be tempted to over-promise and under-deliver. It’s normally transparent from the start.

 5. Business plan

The credibility of your proposal will be reflected in the quality of your business plan. A poorly presented, badly researched plan will kill your proposal before it has a chance. An idea may be good enough to gain the backing of family and friends, but it won’t cut the mustard with any serious investors.  

 6. Business model

Your business model will determine how and where you make your profits and how you will build long term value in your business. A model that requires huge revenues to deliver small profits is inherently unattractive, whereas a business in a niche market with high barriers to entry will be of interest to potential investors.

7. You

Are you credible in the eyes of the investor? What is your track record and what experience do you have of your business? Most successful entrepreneurs “stick to the knitting”, creating businesses based on their passion (ie something they know and understand), personal knowledge or experience. If this is limited, get the support of a mentor or partner. This will demonstrate maturity in the eyes of your investor.

8. Financials

Businesses go bust because they run out of cash, so be sure to demonstrate a good understanding of your financials. Margins and overheads will be part of the discussion, as well as working capital and cash flow. Remember that small businesses are normally cash constrained and prone to overtrading, so the investor will need to understand how you will manage this.

9. Pricing

Don’t be tempted to overvalue your business. We are a long way from the heady dotcom days when investors were persuaded to part with large amounts of cash based on little more than an idea. Nothing will put an investor off more quickly than an excessive or unsupportable valuation. The more you need, the more you will have to give away, so be realistic, cut your cloth and take in as little external funding as possible.

10. Exit

It’s very easy for an investor to put money into your business, but how will he get it back? A vague idea that you would like to buy his shares back at some future date is unlikely to be attractive. Taking in external funds means that you need to “begin at the end” in terms of thinking about exit, having a clear strategy and plan. This may change as the business grows, but you need that stake in the ground.

These are just some of the issues an investor will be thinking about, often subconsciously, in the short time that he focuses on your business. If you’ve thought it all out beforehand and you can tick all the boxes, you will have a strong chance of success.

Good luck!

M&A is back, so be prepared!

January 24, 2010

I’m no pundit, but all my senses are telling me that 2010 could be an awesome year for ambitious, well run, businesses. As someone told me earlier this week, luck happens when opportunity and preparedness collide. So, as the well known motto goes; “Be prepared”!

 Here are five reasons for my enthusiasm:

  • The world economy is recovering. The UK may be behind the curve but that won’t mean a lack of opportunities. At least some of these will come at the expense of less well run, failing businesses, where market share or other assets will be up for grabs.
  • Entrepreneurs are resilient and individual capitalism is the future. M&A activity will return as the realisation dawns that there may never be a better time to acquire good businesses at realistic prices.
  • On the other side of the coin, owners who have been unwilling or unable to sell their businesses will reappear. Death, divorce and retirement are a constant and don’t disappear in recessions – expect an increase in the number of sellers as the economy plays catch up.
  • There will be more help for entrepreneurial businesses and access to funding will improve. Expect a mixture of helpful government policy, increased bank lending, more business angel activity and a resurgence in earlier stage and mid-market private equity.
  • And finally, we are bored with recession! It’s not a very scientific observation, but the UK has always shown its mettle in times of stress, with ingenuity and collaboration coming to the fore. It will be no different this time, with the entrepreneurs and SMEs that employ the vast majority of our population leading us out.

Whether you’re a buyer or seller, this link may help you identify your options.

http://www.smith.williamson.co.uk/corporatefinancesurgery-register

Show me the money!

November 1, 2009

Entrepreneurs with good ideas or growing businesses that need funding may not realise that there is an abundance of cash out there. The banks may still be proving challenging, but they only represent one brick in a massive wall of opportunity for purposeful and determined entrepreneurs.

At the early, early stage, friends and family and business angels will be the main source of funding, but there are organisations, such as that run by Julie Meyer of Ariadne Capital,  the technology specialists, which pride themselves on getting involved. You may also want to take a look at Fredericks Foundation, a charity that helps with business support and micro- loan funding for start ups and small businesses.

At the growth stage, angels may still be an option but organisations like Hotbed, Pi Capital, NESTA and The Technology Strategy Board can provide access to a mixture of equity and debt capital to help you grow your business. Asset-based lenders, offering invoice and other finance can be found through the Asset Based Finance Association. And don’t forget about the possibility of grants from regional development agencies like SEEDA.

For more established businesses that are bumping into lending limits or struggling to raise development capital, there may be relief through VCTs or Private Equity. I like the Government-inspired Capital for Enterprise funds, providing up to £2m to profitable, well-managed businesses. They have £75 million to spend by 31st March 2010.

The opportunities are endless so don’t get frozen in the headlights.  With a good strategy, capable management and a well thought out business plan, there’s simply nothing to stop you.