In the latest QualitySolicitors Redkite Business Brief column from the Carmarthen Journal, QualitySolicitors Redkite partner Betsan Powell looks at how to prepare your business for the future.
As an SME (small to medium-sized enterprise/business) your best hope for growth, possibly survival, may be investment for working capital and cash flow purposes.
It is openly acknowledged by funders and commentators alike that business growth is key to economic revival.
The common complaint of businesses however is that access to finance, or the lack of it, is the main barrier to achieving growth.
Recent Bank of England Trends in Lending reports said that access to credit was broadly unchanged for SMEs in the first half of 2012 and is set to remain that way.
Yet demand for funds from small businesses rose in the three months to the end of May according to the same report.
With bank term loan funding akin to gold dust, what options are there for SMEs that want to grow?
The Welsh Government has made funding available for SMEs, most recently its 40m SME Investment Fund administered by Finance Wales.
It is certainly the case that funding is available in Wales for SMEs that may not be available over the bridge. The availability of grant funding should also be explored as well as investment by private individuals such as business angels, local entrepreneurs and even family members.
Businesses need to be proactive in securing financial support by ensuring that the business is investment ready.
Whatever the nature of the funder, it will expect business owners to know their business and the market in which it operates.
A good business plan is essential.
The funder is likely to carry out due diligence - the funder will investigate the assets, liabilities, trading performance and finances of the business. This enables the funder to decide whether the business is a viable option for commercial investment.
To make your business as attractive as possible to funders some housekeeping may be needed:
- Ensure that books and records are up to date
- Produce timely and detailed financial information
- Know your customer and suppliers. Produce total sale and total purchases statistics
- Review and update terms and conditions of business
- Review and update employment contracts
- Prepare a schedule of assets owned or used by the busines
- Review the intellectual property rights used in the business. Check that the business owns the intellectual property rights and has protected them
- Ensure that the insurance policies maintained by the business are adequate
About Betsan Powell . . .
I joined the firm as a partner in October 2010 after five years as partner at M&A Solicitors in Cardiff.
As a company and commercial specialist with over 12 years experience gained in commercial firms in London, Bristol and Cardiff, I have extensive experience in a wide range of corporate matters including share sale and purchase agreements, business transfers, joint ventures, equity investments, shareholder agreements and management buy outs. I also advise on transaction funding and stand alone debt facilities.
I also advises on commercial contracts including terms and conditions, supply and distribution agreements, outsourcing agreements and franchising. I have drafted and advised on the implementation of share option schemes including Enterprise Management Incentive schemes.
Described as trustworthy, accurate and efficient (Legal 500 2009) and strong in commercial negotiations (Legal 500 2010), I am a fluent Welsh speaker and advises several of my clients in Welsh.
Born and raised in Pembrokeshire, I have returned to my roots and settled in Efailwen. I enjoy walking my dog in the Preseli hills.
