Showing posts with label Small Business finance. Show all posts
Showing posts with label Small Business finance. Show all posts

Tuesday, 7 March 2017

Business Finance | Paperless Or Just Less Paper?

Supporting image for a Bob Shepherd Associates LinkedIn Article: Paperless or Just Less Paper?

Business Finance | Paperless Or Just Less Paper?

In the 1980s we were promised a paperless office. I am not the best at technology but I have some of the tools and make an effort. Nevertheless, I have just spent 2 days sorting through some of that stuff that has accumulated. In the old days there was a pile on the end of the desk. ‘That’s interesting, I’ll read that later’ sort of pile. I have a pile like that and I have the equivalent in e-newsletters and emails as well.

When it comes to reading masses of text on screen I hunch up and eventually go to sleep. I need to make notes to keep myself awake and interested. So I still have masses of paper…

My Bank wants me..... To Read the full LinkedIn Article by Bob Shepherd Associates, just click here.  Simple really

Monday, 6 March 2017

Business Finance | Alternative Investments

Business Finance | Alternative Investments

In recent times the alternative investments markets have received more attention and publicity. There are realistic markets in Diamonds and Wines, Stamps and coins as well as Gold and other metals, Fine Art and Antiques and Classic Cars.

You can have an investment in Wines for example, have the broker store it for you and never actually lay eyes on it. If you are cold blooded about it and study the 'form' you can make money from these things. In a more casual way you can watch the TV programmes and see what excites you. if you are a collector by nature you will probably have an idea what your own collection is 'worth'. Always become knowledgeable before you step in and commit your savings. 

Business Finance | No System

Business Finance - No System

"46% of small businesses apparently have no idea how much they are owed or how much they owe."

I have met some of them but I have to admit being surprised at how high the figure appears to be.
‘Surely that is basic?’  To read the full LinkedIn article by Bob Shepsherd Associates, just click here.  Simple really.

Tuesday, 20 September 2016

Business Finance | Bank's can't do it anymore

Business Finance | Banks can't do it anymore

There was a time when the sensible way for a respectable small business to finance the ups and downs of their developing cash flow requirements was to trip down the bank with their figures and see a friendly Bank Manager who knew them, understood their business and had the discretion to assist them sensibly and proportionately with an overdraft.

There were rules about this. With a long climb up the specialist ladder behind him (mostly a him) he knew how to assess the risk and how to apply the brake when required through monitoring, understanding and sensible appreciation of what the customer was trying to do.

And then the system changed.  To read the full LinkedIn article, click here.

Sunday, 28 February 2016

The muddy waters of an SME

The muddy waters of an SME


Of the 5.2 million businesses in the UK, 70% plus are "SMEs" - Small and Medium Enterprises. They form a major component of all that gives life to business and especially so in South Wales. If you stand in a major supermarket and consider the amount of money going through the tills, realise that all this is less than a couple of per cent of what goes on! These small or start up businesses go from A - Accountants to Z - Zookeepers and there is no single definition of what an SME actually is.

Neither is there much agreement as to when a business stops being "small" and starts being "medium". The 2006 UK's Companies Act defines a small company as one that does not have a turnover of more than £6.5million, a balance sheet total of more than £3.26 million and not more than 50 employees. A medium-sized company is one with less than 250 employees and a turnover of under £12.9 million.  To read the full LinkedIn article, please click this link.

Monday, 2 September 2013

Cash Flow Forecast

(Reference : This is the text of some notes I wrote for a course for the Wales European Funding Office)
"Cash Flow Forecast" is one of those phrases used frequently in business, without thinking.  The words cash, flow and forecast are all equally important and point to a different aspect of the exercise.
Cash is not an accounting exercise.  Some things have a material effect on the viability without ever appearing in the accounts.  VAT is a prime example.
Some things do not belong in the cash flow, such as depreciation, and reserves set aside.
The figures represent cash - when it goes in and out and not when it is supposed to go in and out.  Invoices for example, may not get paid for 2 or 3 months.
It is not a budget.  A budget is a sum of money set aside and divided up into months perhaps, or some other useful period.
It is a forecast.  It represents what we think now at the start, with our best educated estimate of what is going to happen for the next year or two.
A one year forecast is very useful.  Two years may be useful to show a longer term breakeven estimate.  Three years is probably guesswork extrapolation and five years is very unreliable indeed.
The forecast should be done at the beginning and again after 3-6 months. That way you always have an up to date best estimate for the next year or so.  It is no good waiting until the end of year one and then deciding it was inaccurate.  Its value deteriorates quickly and needs frequent revision in the light of present knowledge.
It is a planning tool.  It is much better to get it wrong on paper and show it does not work rather than to do so in reality.
As long as it has not provided unrealistic figures, it can show how many sales or what income is required to support a level of expenditure.  It can show what a particular level of income can allow us to spend.
It is a very useful tool! 


Wednesday, 16 January 2013

A Government Enquiry into Lending for Small Business

I picked up today that Dylan Jones Evans is chairing an enquiry for the Welsh Government into banks’ lending to small business. I’ll be interested to see how much they manage to unravel as Banks have collectively been in denial on the subject of small business lending. “It’s not our fault, it’s that no one is presenting bankable propositions” has been the defence for the last year or two.

Deep seated problems
I hope they will enquire not only into new applications for lending but in the behaviour of banks to their “mass market” small business customers as well. For example HSBC have been tackling any business with an overdraft and bullying them into accepting alternative lending – factoring or invoice discounting usually, often quite inappropriately. Other Banks have done the same in more limited cases. HSBC culled a swathe of business managers back in the Autumn just a few days after they strenuously denied doing so. Whether the Head office spokesman knew about the cull and was wondering how the heck the journalist I briefed found out about it or whether the Head Office Spokesman had not actually been briefed at that stage remains speculation. 

One of the scandals about the ill conceived Project Merlin last year was that Banks were counting lending figures in their Merlin stats to look good that were not new money lending at all but were simply rescheduling old lending.Not much was made of the sickly outcome of the project that was announced with vigour and enthusiasm by the government a year earlier. The idea had been to encourage Banks to lend to small business and it failed significantly to do so. 

Shocking behaviour of banks 
Regarding banking behaviour I have come across cases where the account has been sent to some kind of “recoveries” department in a cavalier fashion when a competent manager would have been able to help it steer through choppy waters with no damage to reputation or loss of capital value. 

Shocking behaviour generally,  with a bag full of contributory reasons for it all happening. There is a lot of depth to such an enquiry and i bhope they manage to get to the bottom of some of these points in the short period they have to report. 

Other articles by Bob Shepherd 
I have a number of articles on line that relate to these questions you might like to see, with links below.



Bob Shepherd Associates is for business finance and business building. We try to get the components in your business working together and in proportion. The small business owner has a lot of divisions to deal with and to expect to be good at them all is a tall order. Let us see what can be done to maximise the potential of your business. 

Monday, 5 March 2012

Things Ain’t What?


To a large degree the traditional Bank Manager has ceased to exist. Some Twenty years ago the main stream banks split 'retail' and their 'commercial' business and headed pell mell for Business Managers working separately. Later this was refined accounting for size of business, and then they realised that they had quite large accounts that didn't actually borrow much but were still worth looking after. That meant a mix of targeting responsibilities based on Turnover as well as Lending came about. This coincided with a cultural swing towards sales in a cynical and robust way that they had never done before. 
In many cases this meant the idea of service first went out the window (and is the basis of all the claims for PPI (Loan Insurance selling) that we have seen lately). At the same time many bank people couldn't, or wouldn't swallow the change in philosophy and took the opportunity to leave. This suited the Banks anyway because the retail/commercial split facilitated centralisation of just about every function one by one, leaving the High Street premises to function as little more than cashing shops. 
The idea was to create 'centres of excellence' with a concentration of skills. This achieves an economy of staff needed to push a processing system. That was fine for a while as everyone knew all about the processes anyway, but as time went by the centres began to believe that the branch folk knew nothing about what they did while the branch folk realised that the centres didn't care about them or their customers much, as they had their workflow problems to worry about and anyway they didn't have to actually look at the customer. 

Training need 
New people appeared in branches and business manager roles so a giant 'training need' opened up with anyone facing customers having to go on an ' awareness course ' to know what to expect and how to service it for the banks' systems. The more this happens the less they know by experience. The 80/20 rule applies in shovel loads. If your case is at all unusual or requires a little interpretation, and doesn't quite fit, then you will have a major problem on your hands to get past an initial negative reaction . 
A few of the old school managers are still out there but since the Banks were shedding staff at a colossal rate with their centralisation, many of those who are still there are those with a survival instinct. They may know their stuff still but they are subject to the targets and sales pressures and the latest flag waving new ideas that their younger colleagues have in their little folders. 

Clip Board Thinking
In ten years time or less there will be nobody who came up through the old pyramid structure and has all round experience including processing, cash handling, security (collateral security for loans that is), investments and trustee work, administering a business (ie - the ‘Branch’ which was largely a business in the local community) along with staff management, premises, alarms, credit balances, lending and credit control, reporting and putting together applications plus all the business experience out there etc . 
Most of the modern bank staff wouldn’t know what a garnishee order is if it sprang up and hit them. The modern answer will be that they don't need to know, because specialist departments exist to deal with these things. And so the circle is perpetuated. Or perhaps it’s a downwards spiral. The less a customer facing manager knows (and most of these bear no relation to the public's memory of such a thing), the more he or she has to rely on their clip board training. You can't do that, the computer says no has become the reality and not an excuse. That is especially so in the retail sector. Anything out of the ordinary is referred quickly away to a central processing centre which has no personal interest in sorting it out.   

Customer Loyalty 
In short, the idea that anyone has been loyal to their bank for 30 years is a whimsical throwback and has no currency whatsoever. In the face of an application for finance the bank would have the current flow of entries through the account(s) for a year or so and would take note of the last three years' Accountant's published figures but there it would stop. What a Manager might have recorded as an opinion about a business 5 years ago has no weight whatsoever. In many cases the opinion of the local manager who has actually been to and looked the local business in to eye is a minor tick on the list. 
All this means the business case for whatever is in mind now has to stand alone largely with some comforting references to past records. There has to be a ‘way forward’ and a progressive plan for the exercise contemplated. The old idea of seeing your Bank manager for a little help to get through some choppy waters is a big alarm bell, despite what it says in all the published codes of practice. Do that and you are likely to find you are shouldered into some kind of special care department where specialist managers will look after (nurse) your account at a substantial cost to you in interest or fees with a strict sequence of management activity designed to get rid of the problem or you. 
Things certainly ain’t what they used to be. In some ways that is good. In many ways it is not. Unless there is a major change in attitude and corporate culture the whole set up is designed to get worse. Bob Shepherd Associates has the experience and the contacts to do the best for you with your Bank and if you are under pressure to see how you can get out of the mire.

Thursday, 22 December 2011

Money Gets Everywhere

A lot of people struggle with money. Some of them go into business and struggle with money there too.
One thing you must never do is to shove all your bills unopened behind the clock, as it were. The money gets everywhere in business. It’s the measure of how you are doing, how big you can be and a stream of business consciousness. It is the lowest common denominator for all business.
If you do struggle with money there are some things you can do to get to grips with it. Ultimately you can get someone else to look after your business for you but that is undesirable in many ways. You must retain an overview even if you have a bookkeeper for example. Above that the pricing, the investments, the procurements are all down to your day to day management anyway.
Business Tips 
Some straight forward procedures will take away the mystery, the time wasting and the disasters. Some simple ones for micro businesses are offered below but the implementation is up to you and differs from business to business depending on the number of people involved and the scale of activities.
  • ·         Have on line banking
  • ·         Look at every morning to confirm what is happening
  • ·         Have a list of invoices, with a tick box for sent, paid, chased with the dates.
  • ·         Have a set date or method of getting your invoices sent off
  • ·         Have a set date to chase any outstanding
  • ·         Make sure money is cleared at the Bank before you pay against it
  • ·         Keep all your receipts in a tidy file
  • ·         Keep a note of your mileage in your diary as you go along. Use the trip meter
  • ·         Make sure you have a system for pricing and stick to it

In short just be bothered to keep an eye on it all.
For larger SME businesses the idea is the same but the systems need to be more organised. Even so they do not need to be complicated . Do not be fooled into buying some complicated bookkeeping software that you will struggle to keep up with. I see so many businesses unable to extract reports and information from their computerised bookkeeping I have to wonder if they would be better off with a hand written chart or two.

Bob Shepherd Associates has a background in business money. It's not straight forward and there is no reason why you should already be experienced in dealing with it. There is however every reason why you should pay it attention. 

Friday, 28 October 2011

'Pub Talk'

Banks get a mixed press and I for one have been very disappointed in a number of things I have seen with my clients in recent months. However sometimes the bank is justified in its view. I was once called upon by an SME to advise them because their bank was suddenly taking away their £65k trading overdraft.
The reality was that they had had a £25k overdraft which had been increased after consultation to £65k for a 3 month period to cover the circumstances. That 3 months had expired and an extension had been granted to cover some further crisis and so on. 6 months after the first expiry the bank was saying 'this can't go on, we want to revert to £25k at the end of the month'. Not unreasonable when you examine the case and quite different from what I was told initially.
By producing information, preparing forecasts and approaching the bank properly Bob Shepherd Associates managed to get the £65k retained as their normal overdraft. While I was at it I noticed the company's leasing arrangements for equipment were all over the place and I re-sheduled that lending creating £4k extra cash per month in the business.
I call it 'pub talk' where an ill informed half story gains currency. Banks are wide open to it all the time and often cannot answer without breaking confidentiality.