There are many reasons why businesses, whether a new start-up or trading for years, need that extra injection of cash for that perfect opportunity or access to funds to help them through the peaks and troughs of day-to-day operations.
Business finance is not about getting you out of a hole, it’s about investing in your business’s future and seeking out opportunities.
Here are 5 reasons why some of our customers have needed business finance.
1. Diversification of your client base.
As an established business with a strong client base, what do you do if you are approached to service a new type of client?
Matthew Ryde of Graham John Limited explained to us that he was in exactly this position. His business was originally established to offer a unique service to those looking to sell their house.
Whilst the business was originally established for private clients who wanted that extra service, at the end of 2017 Matt was approached and offered the opportunity to work with a corporate client. The client had researched Graham John and liked the levels of service they provided. They wanted their properties to be sold via such a respected, professional and knowledgeable estate agent; an agent who advises prospective sellers when it is a good time and bad time to sell; who advises what little changes can be made to their homes to make it a more desirable property to a prospective buyer and an agent who goes that extra mile as they believe homes make life special.
This opportunity meant that as a business they had to operate in a different market, therefore there were new costs. Funding was required to develop a new marketing strategy. Several properties were being presented at any given time and whilst creating opportunities for Graham John, this resulted in additional expenditure and cash flow requirements. It was as a result of this expansion to the business Matt spoke with the team at Just Cashflow.
When he explained the situation and opportunities this meant for expanding his business the team suggested he utilised the benefits of Business Builder. Because of its malleable nature, Business Builder offers features such as payment holidays, early repayment without penalties, and loan extensions. It also allows customers to vary their payment terms and work their finances in line with their business needs. As a result of the corporate opportunity and the benefits of Business Builder, Matt explained he has doubled the number of sales compared to the same time last year.
Matt commented, “The decision to proceed with the new corporate client and use Business Builder was a strategic and difficult decision. I still wanted to retain the private clients, being the core of our business, but the opportunity to take on the corporate clients would help us to develop and grow the business.”
He went on to say “Business Builder has allowed us to expand our business without cutting standards and levels of service – these have been maintained. This is important to us as we have grown the business organically and our business is based on a recommendation.”
2. Acquisition of a competitor
What do you do when the opportunity to acquire a competitor presents itself? You have two choices: you can ignore it and let another competitor make the purchase, or you can grasp the opportunity with both hands. It is always essential to undertake your due diligence and make sure the opportunity is viable, profitable and good for your business growth.
Such an opportunity was presented to Optima Defence and Security Group. Stephen Bishop, Finance Director, initially approached Just Cashflow in 2015 about a short-term funding stream to expand and develop his business in order to facilitate a MOD contract. He was then presented in 2017 with the opportunity to acquire an organisation established in 1990 with its origins within the Military Clearance Diving as well as bomb and mine disposal disciplines. They had developed an all-embracing, rapid response diving and munitions location and disposal service. On land and underwater, the organisation served governments, industry and civil authorities worldwide.
Realising that environmental management is widely recognised as possibly the most important new challenge facing industry and commerce, as well as non-commercial organisations, clearing the land and seas of the unexploded relics of war fits so well within the Optima Defence and Security Group. The organisation had located and rendered safe, over 900 unexploded bombs on United Kingdom sites. This made the acquisition a very exciting proposition for the Optima Defence and Security Group. The organisation was profitable and has a strong potential order book of repeat business because of its reputation. All that was required was the funding required for the purchase.
This was the perfect opportunity for business growth and development.
3. To grow and develop existing customers and contracts
A simple and cost-effective way to grow your business is by developing and expanding your products and selling them to your existing customer base.
White Horse Scientific is a leading independent supplier of laboratory equipment. Over the years they have sourced new and innovative products from established manufacturers from around the world, especially those who did not have a presence in the UK market.
The company operates using a direct sales force or customers can purchase items online to speed up the process if required. The business also employs a number of experienced service engineers for installation of technical equipment and also for annual servicing or annual maintenance contracts.
Ian Morris, Managing Director, explained to us that his business designs and manufactures a very specific Blood Analyser used for routine tests on women during pregnancy. Once installed these analysers are serviced and maintained through a five-year framework agreement with NHS Blood and Transplant, which is a crucial part of the business. In order to facilitate the development and manufacture of a large number of analysers for a new framework agreement, it was essential for the business to secure funding to facilitate this, especially as the systems cost over £100,000 per site.
The speed of the process to facilitate the funds was extremely important, as NHS Blood and Transplant had specified a very short timeframe in which to install all units at a number of sites around the UK. It was therefore critical that funds were available to facilitate the orders.
4. Late payments and general cashflow
Many businesses struggle with late payments from their customers, which often has a detrimental impact on day-to-day cashflow. The adverse impact of late payments can include reduced investment, and a delay in paying their own supplier) and impact on individuals with reduced pay reviews and reduced bonuses, impacting on employee morale and productivity.
Rupert Honywood is the founder of both the Integrated Marketing Bureau and Business Growth Bureau. The Integrated Marketing Bureau offers its clients an integrated “done for you” service to maximise sales success, offering a full “lead generation” service.
Rupert initially contacted Just Cashflow as he required funding. He was concerned about late payments from clients and ensuring he had sufficient funds so that his employees, freelancers and suppliers were always paid on time. This is a common issue many businesses both large and small face on a day-to-day basis.
Whilst the businesses did not require the funding immediately, Rupert realised being prepared was a crucial factor in his business plan. Following conversations with the Just Cashflow team and explaining the foresight for his business finance the Revolving Credit Facility was put in place providing a solution to ensure that all financial commitments could be met on time.
Rupert went on to explain that his business plan had identified significant potential growth in the first quarter of 2017, however, there would be a requirement in additional investment to facilitate this growth with IT software, website development and marketing.
Having the funding in place has given Rupert the confidence that his business would be able to grow from a position of strength and ensuring he has no cash constraints.
5. Relocation and expansion
As a business grows and develops there are often occasions where they out-grow their premises. Do you stay where you are and stagnate or do you bite the bullet and relocate to expand?
Rowburn Ltd provides a professional, reliable and quality finish to all commercial property projects and shop fitting services and offers years of experience and knowledge in both building and shop fitting. Their team, including QS, Project Managers, Site managers, H&S manager plus tradesmen, have worked within the industry for over 25 years. They are rapidly building a client base in the private and public sector due to a reputation of high quality finish and completing projects to budget and program.
In recent years they increased their workforce, turnover and completed some interesting Joinery and Building projects, acquiring new commercial clients including, Virgin Money, Aldi, Kier, Gentoo and Mears. They also opened their joinery workshop, which provides a bespoke door manufacturing service.
Paul Thompson, Director of Rowburn Ltd, explained that his business was growing rapidly and the company had to make the decision to relocated to larger premises to accommodate this growth.
Paul went on to explain that the business had incurred the normal associated costs of relocation and during the same period the company was fortunate to win several new commercial contracts including 2 new Aldi stores. As a result of relocation and new business Paul was aware there would be significant expenditure for additional materials and labour and it was essential that he had access to funds in order to fulfil the contracts to his company’s reputational standards and time parameters.
Having access to finance is essential to facilitate business growth. Having funds in place when you don’t need them means that when you do you can access them immediately.
To find out more about Just Cashflow and the businesses that have been funded check out https://www.just-cashflow.com/who