Better cash flow: A guide for small businesses

June 23, 2018

There’s no better way to say it, cash really is king in the world of small businesses. Having little or no cash flow leaves your business vulnerable to collapse or debt. We’ve put together a small guide to help you improve your cash flow and secure your business.

Plan Ahead

Step one towards better cash flow is to sit down with your accountant and get an overview of your business finances. They can lay out a financial forecast so you can effectively plan your cash flow in the long term and adapt to situations along the way.

Planning ahead also means protecting yourself. Even with a long-term plan and a clear financial forecast, clients can let you down and leave you with little cash flow. Depending on your line of work, deposits can be a great idea to protect against non-payment. Alternatively, you can arrange staged payments so that your client will pay according to stages of a given project, for example a third after designing, then a third after manufacturing and the final third on delivery.

Check Your Invoicing

Don’t forget to check your own invoicing. Late payments are one of the most common problems for small businesses but make sure you aren’t the problem. Are you sending out the correct details to the right person and in the right currency? You need to make your invoice easy to understand and therefore easy to pay. This makes sure you are paid on time and avoids any cash flow gaps.

Consider accepting online payments to speed up payments. Online payments are often easier and encourage timely payments from your client. If this isn’t an option, look into taking payments via Direct Debit or standing order. Setting up something like a Direct Debit for a set number of goods or hours means you can easily predict your incomings and outgoings as well as guarantee on-time payment.

Consider a Loan

Loans can sound scary but they can be part of a necessary strategy to inject some cash into your business. Especially useful for new businesses, your accountant will be able to advise you on which loan to choose and how it is best used. Always plan for the long term when taking out a loan – what will you be using it for and will it help you further than the next few months? If you are going through a very busy period or your business is seasonal, then a loan could be just the help you need.

Look Around Your Space

Be honest with yourself – when was the last time you took inventory of your stock or equipment? Both could have well-needed cash wrapped up in them. Go through your old stock and see what is piling up or hard to sell. Consider selling off old stock in bulk and put the profit in savings as backup cash flow. Don’t forget old equipment either. Look around your office for old laptops and computers. These days they have to be updated regularly; selling the old tech both frees up space and extra cash.

Build Relationships

As a small business, your cash flow relies on fast payments. Simply working on your relationships with clients and suppliers can help guarantee faster payments. Start with your suppliers. Reach out to them and negotiate an invoicing system that works best for the both of you. They might have discounts for early payments or for paying via either Direct Debit or standing order.

The same goes for your clients. Work out a payment schedule that works for both of you and reach out with a human voice rather than sticking to email. This will make them more likely to pay you quickly and to want to help you out if you need prompt payment.

Source: London Loves Business

96% of UK businesses are microenterprises, without responsible finance, many would not exist

June 13, 2018

Businesses often deemed too risky or unprofitable by mainstream banks can thrive with finance and other support from responsible lenders, says Jennifer Tankard, Chief Executive, Responsible Finance.

What links an artisan fish smokehouse with percussion instrument maker, a luxury chocolatier and a firm manufacturing gear for climbers, bikers and outdoor enthusiasts?

All four outstanding businesses have created jobs and opportunities. Each was supported by a “responsible finance” provider when high street banks couldn’t help them.

And the four firms (The Argyll Smokery, Ruach Music, Harry Specters and Alpkit respectively) were the winners in this year’s Citi Microentrepreneurship Awards, with all award finalists gaining recognition as exemplary businesses.

Recognition for micro-entrepreneurs is important. Much business and industrial policy focuses on larger SMEs and supports already established firms. But microenterprises are vital to the UK. They create jobs and income in local and regional economies, they make up 96% of businesses, and one in seven of the UK adult population now runs their own micro-enterprise.

They innovate too: bringing new products or services to market rapidly; testing, refining, and proving demand.

Start-ups and microenterprises drove the 3.6% growth in the total number of businesses in the UK in 2017. This increase and the rise in self-employment made a large contribution to lowering unemployment.

But the most recent regional and country economic indicators shows wide regional variations in the changes in business numbers.

While there was 7.1% growth in the number of businesses in Yorkshire and the Humber, and 9% in the West Midlands, in the North East there was a 2.7% decrease. In Wales business numbers reduced by over 5%.

Start-up and survival rates for microenterprises are variable. Plenty of folk running microenterprises – or wanting to launch one – have no prior business or management experience. But the biggest barrier preventing people from setting up the business of their dreams is “getting the finance for the business,” according to Micro Business Champion Tony Robinson.

Credit conditions for the SME market as a whole have improved. But trumpeting a return to lending just based on SME figures misses the point. At least 100,000 small business applications for loans are still rejected each year, especially from microenterprises and startups. Many of these declined applications come from businesses that the British Business Bank says are viable.

What a missed opportunity! They are the potential Citi Microentrepreneurship Awards (CMAs) winners of the future. The UK needs their innovation and drive. We need their employment and job creation, catalysing growth in some of the most deprived parts of the UK.

Help is at hand though. 27 responsible finance providers specialise in ethical and affordable lending to businesses which struggle to get finance from the mainstream banking industry.

The businesses they lend to are often deemed too risky or unprofitable by mainstream banks due to a lack of trading history or small scale. Yet with the finance and other support that responsible lenders offer, they can thrive.

The 16 finalists and winners in the CMAs prove just that. They are a diverse range of businesses, across multiple sectors from manufacturing to artisan food; pharmaceuticals to retail; hospitality and social enterprise and more.

All have grown their ideas into enterprises that are creating jobs and opportunities for their local community.

And each was supported by a responsible finance provider when they were unable to access traditional finance to develop.

The artisan fish smokehouse, Argyll Smokery, supplies wholesalers, retailers and supermarkets. It was awarded the prize for Sustainability in the Citi Awards. Young microentrepreneur of the year, Stephen Henderson, founded Ruach Music, a traditional “cajon” percussion instrument maker which now employs 8 full time staff and sells instruments worldwide. Social Enterprise of the Year, Harry Specters is a deluxe chocolatier training and employing autistic people. Alpkit manufactures and sells gear for climbers, bikers and outdoor enthusiasts, and scooped the CMA for growth – the business now has over 60 staff.

Like so many micro-enterprises, they’ve all brought new and innovative solutions and products to market. Without responsible finance, it’s probable that these businesses – and the jobs they’ve created – would not exist.

The achievements of all of the businesses shortlisted in the Citi Microentrepreneurship Awards are truly impressive.

I’m proud that our members lent £67 million to over 5,000 businesses in 2017.

But I’m also proud of the non-financial support they offer, which entrepreneurs such as Charlotte Purdie of The Milk Lounge and Stephen Henderson of Ruach Music (both young Citi Microentrepreneurship Awards finalists) say is the difference between success and failure.

More and more people want to start their own business. The recent Pathways to Progress Global Youth Survey 2017 found 69% of young people interviewed dreamt of owning their own business.

Without access to affordable, responsible finance – and the support that comes with it – many aspiring microentrepreneurs won’t have a chance of fulfilling their potential.

Source: Politics Home

Levelling the connectivity playing field for UK business

May 27, 2018

Digital connectivity plays a critical role in powering the UK’s small and medium-sized enterprises. However, in a survey on workplace productivity last year, 24% of UK employee respondents noted that slow technology was preventing them from doing their job well.

Despite London’s reputation as one of the world’s tech hubs, many of the capital’s businesses still don’t have access to the high-speed, robust connectivity that they need to succeed. There are a whole host of reasons why London’s businesses face a variance in the standard of connectivity available.

The first is the diversity of London’s business community. Larger businesses typically have the resources to install their own technological infrastructure and set up a dedicated team to manage, maintain and troubleshoot any issues.

Meanwhile, the capital’s start-ups and scale-ups are more likely to start off working from home or lack the office resources for the same quality of connectivity.

The second reason is the lack of transparency from landlords. Office space providers typically do not detail the quality of connectivity they offer – making it more challenging for businesses to identify and select an environment that meets all their requirements.

It should be a landlord’s responsibility to help businesses navigate the commercial property market and understand the standard of connectivity available.

Finally, businesses are not actively demanding the high-quality technology they need. I would advise any enterprise looking for space to request assurances about the digital infrastructure, the speed of broadband available, protocols for service disruptions and the cyber-security measures in place.

Crowded market

London’s commercial real estate market is increasingly crowded and with new spaces launching every week, there is more choice for businesses than ever before. A breadth of options – including traditional offices, flexible space and co-working areas – is undoubtedly a positive but it can make selecting the right space a challenge.

The good news both for businesses and landlords is that there is now an independent rating system.

International connectivity accreditor WiredScore reviews a building’s technological infrastructure with potential tenants in mind – rating and certifying buildings with the best-in-class setup that businesses need.

To date, WiredScore has reviewed and certified some of the UK’s most prominent buildings, including The Shard and the BBC’s Broadcasting House.

The certification takes into account how quickly customers can get connected, the capacity for high-speed internet connectivity, resilience and security and, crucially, how properties are future-proofed for innovations to come.

At Workspace, we’ve made the commitment to achieve some of the highest ratings across 50 of our buildings so far, reassuring our customers that we can meet their tech challenges and requirements.

At a time of comparative instability, it is imperative for landlords to commit to supporting businesses wherever and whenever possible. High-speed wireless, resilient technology infrastructure and secure connectivity will be crucial for tenants and landlords alike to future-proof against the changing business landscape and to facilitate efficient and innovative working.

Source: Property Week