liw 2012- financing business growth (par seminar)
DESCRIPTION
Mark Johnson of Johnson Reed on finacing your new business start up in the Indoor Play Sector.TRANSCRIPT
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Financing Business Growth Presenter
Mark Johnson
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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!!
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• 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
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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…
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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
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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
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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
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Types of equipment one can lease
QURIKY KIT FINANCE!
• The Play Structure• Catering Equipment• Furniture• EPOS• CCTV• Air con
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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.
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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
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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
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Presenter
Mark Johnson
Johnson Reed
www.johnsonreed.co.uk/softplay