LIW 2012- Financing Business Growth (PAR Seminar)

Financing Business Growth Presenter

Mark Johnson

Bamboo Tree

Fastest growing woody plant in the worldGrows very little until year 4In the 5th year, the tree can grow 80 feetBUT they don’t grow up every year – but continue growing under ground.Build your foundations!!

• Most small businesses that fail within the first 3 years do so because of lack of cash-flow, not because of a bad product.

• Up to 50% of businesses fail in the first 12 months & 70% within 5 years

• Know your numbers ‘Dragons Den’ type questions, T/O, P&L, GP, net profit, margins

• Key is; planning, planning & planning!

Cash flow

Key points for today

• Bank funds, equipment leasing & EFG loans (replaced the old DTI) and other local grants or just use your own money

• Information required from all lenders

• Recession has severely impacted on niche sectors like Soft play but with good housekeeping, funding is out there

• Market conditions – UK recovery stuttering, rates are set to be on hold for the foreseeable future.

• But this creates opportunities…

Information Required

• Business plan; directors background & CV, SWOT analysis, location details, (serviceability security ability)

• Financial projections; be realistic with accurate assumptions, ask your accountant for help

• Personal net worth statements for all directors - none home owners will not get finance without a suitable guarantor

• Common sense underwriting

Information Required

• Personal bank statements for all directors - not including any unpaid items or missed mortgage repayments

• Investment, clarity ref bank and personal, (often lenders look for match funding)

• Clean credit search

• Other commitments e.g. cards, HP, should be limited

• NO CCJ’s or x bankrupt

Bank V’s Leasing

• Bank normally take security on your property• Bank normally used for working cap and refurbishment work• Leasing is secured on the asset only with a personal

guarantee• Leasing for equipment only• Repayment periods; Bank loans 5-7 yrs, equipment leasing

over 3 yrs normal for a new business up to 5 for established • Lenders like to see match funding i.e 100k loan with either

100k cash contribution / 100k equity in the back ground

Types of equipment one can lease

QURIKY KIT FINANCE!

• The Play Structure• Catering Equipment• Furniture• EPOS• CCTV• Air con

A good advisor

• Able to provide a the mix of bank and equipment finance

• Package your file professionally to both bank and leasing houses

• Have access to a number of funding institutes

• A good business may have a healthy mix of bank funds, equipment leasing & personal cash, with head room on each.

Understand the risks

• Don’t over borrow

• Charges on property or DG / PG

• What is a personal guarantee / can I have a third party guarantee

• You will be pursued

• Do your homework

Summary

• Common-sense underwriting• Do not over borrow• Be committed from the start & once open that's just the

start!• Clearly the market is still challenged but this also creates

opportunities• Recent case studies; The play factory / Yellow Sub, Play

arena, The Zone, Treasure chest• Look up enterprise funding magazine

www.ukbusinessgrants.org for grants • Find a trusted advisor

Presenter

Mark Johnson

Johnson Reed

www.johnsonreed.co.uk/softplay