You have probably been bombarded with information on the above measures that the Government has taken to support and protect businesses of all kinds against the impact of the COVID 19 virus in the UK. There is a lot of information going out to businesses and employees at the moment. The information isn't static but evolving daily. I have received many calls and I understand your frustration and concerns. After several conversations with senior staff in Financial Institutions, Trade Body Associations and Funding Associations and reading subsequent follow up documents from the government, things are much clearer. The operational mechanisms for delivery and implementation are still being worked on in some cases.
As you now know, money will not come directly from the government to businesses. It's a wholesale process and it’s the British Business Bank that will be liaising with selected banks.
Key highlights however are:
1. The CBILS is being disbursed through the banks and even this is evolving with time
2. The schemes are taking time to set up HMRC and have said they will be ready for April 2020. However, banks are already taking loan applications through their EFG
3. Some of the information is changing rapidly
4. No matter how big or small you are the government is saying schemes will become available, ranging from Universal Credit for the Self Employed to Grants and Loans for SME's
5. Look at your insurance policy under the business interruption section to ensure that any business interruption by viruses is not covered already. The Government will not double fund what is already covered in your insurance. Some policies have fixed diseases they will cover and some don’t
6. Government will pay 80% of the salaries of staff who are kept (where it can be proven that these staff were about to be let go by their employers due to the virus crisis) covering wages of up to £2,500 a month – Part of the Job Retention Scheme
7. Please note that GRANTS only relate to business rates and you will be contacted directly by the local authority and not vice versa if you are entitled to this
8. Relief for Statutory Sick Pay
9. Mortgage Holidays even for Buy to Let properties
10. IR35 tax reforms postponed for a year
11. VAT and income tax deferments
12. Reclaims for Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.
13. Support for the Self Employed – Please click here for more details
For full details regarding CBILS, please click here
The key thing to note is grants are all rate related and will be dealt with by your local council. Loans will be through banks, mostly likely through the Enterprise Finance Guarantee (EFG) Scheme already in place, but with 80% government backed guarantees. Job retention will be through HMRC as they manage the payroll program and it is all linked to your reference numbers and UTR. Self Employment support will be through HMRC. Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.
Facing Cash flow problems now, then please feel free to contact us and we will help broker and facilitate access at no cost to you. We will also offer guidance around eligibility and possibilities for raising finance.
If you want some help for your company with regards to the above or you just want someone with the required knowledge and experience in business to guide you on other related matters, please connect with our business advisers at RBSS Consulting Ltd on 0333 355 1696 or direct on 07796 800 187 or drop us an email. We provide real business solutions for start-ups and existing micro and small businesses.
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The type of finance you choose will depend on what sort of business you are setting up, how much capital you need and what you will use it for. For example, you could:
Use your own savings or personal borrowings to get the business underway, especially if you can’t get finance or investment from external sources.
Borrow money from family or friends. But be careful. It is often hard for them to say no, but what happens if the business fails? How would you pay back their money? What strain would that put on your relationship. Are they ending you the money, or investing in a share of your business? Remember to put things in writing.
Borrow from a bank if you have a credible business plan and can offer some security. If your business is seasonal in its cash flow, it’s essential to be able to clearly illustrate these to your bank so you can plan an overdraft. Many businesses use overdrafts for day-to-day borrowing and to manage cash flow, and loans for long-. You may want to use funding to finance large purchases such as equipment. When considering bank finance, it is generally a good idea to take professional advice from your accountant or business adviser.
Can you secure outside investors? Perhaps you are willing to sell shares to business angels or venture capitalists. This can provide short-term finance without the need for repayment. Having investors can also bring in additional business expertise. When you hand over shares to investors it is likely that they may want some control over its management.
Do you qualify for a grant? Grants or government supports can offer cheap financing, and often come with business advice or consultancy. However, there is usually a lot of competition for grant schemes, and you will invariably need to meet various criteria first.
For those unable to get bank finance, you could consider commercial lenders – such as insurance companies and building societies. These tend to have lower interest rates. However, commercial lenders are also subject to fewer regulations than banks and so you may have to provide some security in order to obtain funding.
Consider crowd funding – also known as crowdfunding, crowdsourcing, crowd financing, equity crowdfunding, or hyper funding) describes the collective effort of individuals who network and pool their resources to support efforts initiated by other people or companies. Crowdfunding is used in support of a wide variety of activities, including disaster relief, support of artists by fans, political campaigns, start-up company funding, or free software development, inventions development and scientific research. Crowdfunding can also refer to the financing of a company by selling small amounts of shares to many investors.
Most businesses use a mixture of finance sources. For example, you might invest your own money to cover market research, bring in outside investors to share the risk and borrow from the bank to purchase equipment and machinery.
All of this can be confusing and overwhelming, so it is advisable to speak to a business consultant first. Our Romford-based team at RBSS Consulting can be reached on 0333 355 1696 or by email at email@example.com.
When you talk to different financial and business advisors about getting access to finance, you’ll get similar but varied advice. It all depends on the business’ particular circumstances. RBSS Consulting, a business advice and consultancy firm, has helped raise funds for hundreds of small and medium size investors. The tricky, yet simple, ones are the Angel Investors.
So I put the question to a panel of professionals and these were the answers given by the panel. Similar but still different.
The most powerful thing you can do is show operating profits. If you are in the early stages, show a compelling plan, prototype and comparable companies who are already in your market. Demonstrate how much and when cash flow begins.
Remember that Angel Investors invest in people, just as much as the product or service. They are evaluating if the person who is raising the money has his/her heart and soul in the concept. Are they committed? If not, then they may turn you down. Being ‘all-in’ is the only way to be when building a company, particularly when it involves other’s money.
Assuming you are totally dedicated to making this a success, and depending on what your product is, start selling as soon as you can. There’s nothing that inspires investors more than a sales ramp. If selling you’re not good at selling, invest some money in someone who can.
And finally, don’t give up. It is likely that you will be making many presentations to angel groups before you find the right one. Don’t give up!
When approaching an Angel Investor network, I recommend that you enter the opportunity seeking to build a relationship above all. Plan your first meeting as an introduction only and follow up with a second meeting when you pitch your offer. As much as you need the investment, don’t act desperate.
If you have a partner in your business, then perhaps use them to make the pitch with you. Two people sometimes appeal more to a group of investors. Make sure you have practiced your pitch thoroughly so that you are both on the same page. Try to connect through social media networks.
Angel investors look for high quality business cases supported by financials with scenario planning – optimistic, realistic and pessimistic. They need to understand the promoters understanding of business and ability to read the unfolding environment and marketplace.
Some investors are keen to see what personal wealth has been put behind the idea and the passion displayed to go for the concept over long term.
Have a great idea. Know your numbers inside and out. Appeal to their generosity and how the business will benefit from their support. Show them why it is a great investment and why you are worth it.
The biggest mistake that businesses make when approaching investor is to spend 90% of the time talking about the product and 10% of the time on the financials. You need to reverse the percentages if you want to engage investors.
If you want to talk it through with a professional business adviser first, contact RBSS Consulting. We offer you real business advice and solutions.
For more information contact RBSS Consulting at firstname.lastname@example.org or 0333 355 1696.
Congratulations, you own your own business. You’ve worked hard to make it sustainable. But what now? You want it to grow and still want to make a profit? So how do you do it successfully, without spending a fortune? Here are some tips to consider about how to grow your business profitably.
Profitable Business Growth Tips
Manage your costs
The most important thing to do is to manage your finances. Whilst you are trying to grow your business, you should make sure you are not spending money unnecessarily. Look at your spending, is there anything that you can cut back on or cut out completely? Are you getting the best deal from your suppliers, go back to each of them and ask them if they are able to make any reductions. Do you own or rent premises? Are you using this space efficiently? Are your processes efficient. Is there anything that you could streamline? How about your labour costs? Not only look at staff costs, but also think about effectiveness, materials etc. Are there energy savings that you could make?
Are you ready for expansion?
Is the product or service you sell ready for expansion? Something that works really well at one level, may not work model on a bigger level. Do you have the right systems in place to scale up? Have you thought about what being bigger looks like? Have you thought about any hurdles that you may face when things take off? Try to plan for these changes in advance by building it into your plan. By not doing so may incur unforeseen costs, which would be counterproductive.
Once you are sure it will be worth expanding look around the market. Who will your new customers be? How much will they pay for what you are offering? Review your prices and compare your products and services against your competitors. How will your customers by from you? Will you expand your online services? Introduce new methods like delivery?
Can you upsell or cross sell to your existing customers?
The Pareto principle, also known as the 80/20 rule whereby 80% of your profits come from 20% of your products/ services, usually also applies to customers. So could you focus more on your profitable customers to push sales? Think about upselling and cross-selling. Do you have the right team in place to do this?
How will your new customers know what you have to offer? Ensure a solid marketing plan is in place, depending on your budget.
Getting advice is one of the best things to do, whether it be bouncing ideas off someone or listening to financial advice. It can help give you the confidence to grow your business profitably. If you would like to speak to a business advisor at RBSS Consulting. Give us a call on 0333 355 1696.
If every time I was asked business advice on this question, I would be sitting on a beach somewhere right now, instead of writing this blog.
Not all businesses need to be VAT registered. What type of set-up you choose is up to you, in most instances. Here are some facts and guidance to help you make the right decision.
First it's important to know that there is a compulsory threshold of £85,000, and if a business’ turnover in the previous 12 months go above this, then they have to register for VAT, and if they don’t there could be fines to pay. Your accountant will be able to keep an eye on this as it works on a rolling basis for any 12 month period, not by tax or business year.
What are the benefits to being VAT registered?
As a new start-up there is no need to register for VAT straight away but you may choose to for the following two reasons:
Financially better off
VAT is a tax that you collect for the taxman, so if you sell a product at £1,000, that becomes £1,200 and the £200 goes to HMRC. If you buy a product which has VAT on top you can also claim this back though, so if you buy an item for £100 with £20 VAT on top, the money you pay HMRC becomes £180, making you £20 richer.
Depending on what your industry is, it may make financial sense to become VAT registered.
If you haven’t reached the turnover threshold, becoming VAT registered may still be in your interest as it will make you look bigger than you are. Again depending on your target market and the businesses you are trying to connect with, you may feel this will help your overall marketing efforts.
What are the downsides to becoming VAT registered?
There are a few reasons why you may not feel it’s a good idea to voluntarily register, when you are still under the threshold of £83,000.
The overall price increase of 20% on your goods or services, could be off-putting if you are trading with businesses who are not VAT registered. If you trade with many businesses like this then it could be problematic. As a new business when researching your target market make sure you have a clear idea of whether this likely to be the case. Of course if you will predominantly trade with businesses that are VAT registered, they can claim it back so it isn’t a problem.
Many businesses say that the VAT paperwork is a lot, so depending on what your accounting team looks like this could be burdensome. However you may find an accountant who can take it on, or has the software that makes it easier to manage, but it’s worth thinking about this when starting-up as there will be many other administrative processes that take up more time than you think.
Businesses that cross the VAT threshold will be required to comply with ‘Making Tax Digital’ for their VAT affairs from April 2019. Read more about making tax digital.
What VAT schemes types are there?
There are different types of VAT schemes. This could influence whether this is right for you or not.
Standard (Accrual) Scheme
This means you pay and reclaim the VAT at the end of the quarter in which the invoices are dated. This could be problematic if you don’t get paid or purchase the items in the quarter you are invoiced.
Cash Accounting Scheme
With cash accounting, you account for VAT on the date you’re paid instead of the date you send the invoice. This can be helpful for those companies that have slow payers, since you don't have to pay VAT before you’ve been paid.
Flat Rate Scheme
You pay a flat rate regardless of how much you reclaim, not only is this less paperwork, but for some lines of work, this can be a benefit. The percentage you say depends on your industry. Only smaller businesses, with annual turnover up to £150,000, can use this VAT scheme. Check with HMRC to find out whether yours is eligible.
You have to weigh up whether it’s worthwhile when starting out as there could be some benefits to doing so, but equally it could be way more hassle and costly than it’s worth. The correct business advice on this is speak to a business consultant or your accountant.
The business advisors at RBSS Consulting in Romford are up to speed with all VAT matters and can help explain the different options to help you decide which one is right for you. Call us on 0333 355 1696 today.