Britain’s double- dip recession?

Wednesday 25^th April’s shock revelation showed that Britain is experiencing its first double- dip recession since 1975.

A recession is defined as two consecutive quarters of contraction (negative growth). The economy shrank by 0.3% in the fourth quarter of 2011.

The industrial and construction output are responsible for the most recent decline as the sector barely grew.

There is now a worry that this data will dent already lacking confidence and push the recovery back, with a likelihood that the economy could weaken further.

The shock revelation piles further pressure on the government to increase their efforts to boost the economy and overcome challenges to ease Britain’s debt.

However, these figures are only preliminary and are only based on about 40% of available information, which will be reviewed to reach further statistics in the near future.

If your business is suffering due to the state of the economy and lack of consumer confidence then call Beer & Young today for some free advice on ways to save your company!

Majority of company owners are not aware of the capital, sales and revenue in the business

The majority of business owners are able to write a business plan and put together credible financial forecasts either alone or with the help of an accountant. However most struggle to systematically report progress and analyse what is going on within their company. Figures show that only about 10% are able to do this without financial assistance. So it is no surprise that there is a correlation between this and the number of businesses that survive over three years of trading also being at 10%.

Business failure rates are also high as most company owners can’t spot warning signs, let alone deal with them. You need to ensure that you are realistic about the company’s performance, rather than being overly optimistic and blinkered when it comes to evaluation.

Systematically monitored financial progress and analysis of results is the key, however only the minority of business owners have this under control. It is essential to be aware of the company’s costs, sales and revenue both current and future and work out how much capital the business will require going forward.

If this is something that you have done and have figured out that your company will require some additional funding, contact Beer & Young for a free no obligation chat to discuss potential investment.

R3 defend themselves against BPF’s criticism of pre-packs

The British Property Federation (BPF) have claimed that the insolvency system is underhand when it comes to the retail sector and have released a statement saying that pre-pack administrations are a means of reinforcing failure. Securing the best results for the creditors is meant to be the main role of the IP, however they are becoming concerned that their biggest concern is becoming the interests of the buyers.

However a representative of R3 (the biggest insolvency body) have expelled the assertions regarding underhand dealings and accusations that the insolvency system is unfair.

A pre-pack is in place to allow a potential sale once other options have been exhausted. It is in everyone’s best interest as it maintains some value in the ailing business.

A purchaser is given a license to occupy a company’s premises by an administrator in a pre-pack. This would provide the landlord with a temporary tenant, allowing the landlord the opportunity to negotiate terms of a tenancy with a new tenant whilst still being paid rent.

For a turnaround investment specialist like Beer & Young it is always interesting to hear the views of trade bodies regarding the state of the economy. Contact us if you would like some real help.

Business Failure Rates Set To Rise in the Next 2 Years By 10%

In 2011 approx 23,600 businesses collapsed. This number is expected to rise in 2012 to 25,600 and increase again in 2013 to 26,800. The pessimistic forecast has been blamed on low levels of consumer consumption fuelled rising unemployment and lower earnings.

The three sectors likely to fail most in 2012 are construction and real estate, businesses services and retail and wholesale. The sectors looking set to enjoy positive growth are manufacturing, media, technology and telecoms. This goes to show that companies that are developing innovative products are more likely to succeed, whereas businesses that do not respond to new “norms” are at greater risk of struggling.

However, by 2013 there will be a decline in the rates of failure, with figures falling to 23,700 by 2015.

If 2013 seems like an eternity away and you require financial help now, contact Beer & Young to discuss business angel investment for your company. Don’t let your business be on the list of ones that fail!

Beer & Young- Only Intermediary Amongst 9 Specialist Turnaround Funds

Beer & Young (B&Y) were invited to speak at a major regional event and out of 10 speakers were the only intermediary amongst nine specialist turnaround funds.

Within the industry, the minimum deal size for most investment companies is £2 million whereas Beer & Young’s maximum deal size is £3 million, putting B&Y in a unique position in the sector. B&Y have a distinct focus on the SME sector, particularly those SME’s that require turnaround funding that can’t find funding through traditional sources for example banks and ABL and would value the input of an investor with prior experience.

B&Y have in excess of £1,000 high net worth investors the majority of who on an individual basis want to become involved with the business. Fund investors are driven by the rational objective assessment of the financial outcome and risk, whether the existing management are efficient or need changing and to work to a substantial exit multiple, whereas the angel investor is typified by B&Y’s type of turnover, individuals, fast decision makers with an affinity to the business and a deep desire to use their hands on skills to protect and grow their investment. 

Beer & Young are the only company in the market who combine angel investors with smaller than average investment amounts and only in the SME sector, which makes them very niche.

Consequently at the end of the meeting a large amount of visitors to their syndicate room wanted to talk to them and they fully expect to engage in dialogue and commitments with a number of individuals and firms on all levels on an on-going basis.

If you require angel investment contact Beer & Young today on 0207 329 6886.

SME’s have a higher than average debt

It has appeared in recent research that small business owners are more in debt than the average person. It was revealed that the average personal debt of a small business owner is circa £30,500 compared to the Consumer Credit Counselling Service clients who have approximately £20,000 of debt.

Small business owners also have an average of 10-20% higher level of arrears in council tax and utility bills compared to the norm.

The majority of small business debt is held in personal loans and short term credit cards.

If your business is in financial trouble and you could benefit from a cash injection speak to Beer & Young, they may be the answer to your problems.

Rent owed during administration must still be paid by the company

The high court have recently ruled that rent which falls due before a company goers into administration must still be paid and will not be classed as an administration expense. It was ruled that is should rank equally alongside the other unsecured creditors’ claims, even if the property is used by the administrators during the rent period. It was ruled that if rent falls due during an administration the administrator would have to pay the entire quarter’s rent even if the property was vacated after a few days.

Going into administration is bad enough without the aforementioned added worry. Don’t let things get that bad for your company, contact Beer & Young early on to discuss the options available to you, including investment from one of our business angels.

Bosses re-mortgaging homes and taking pay cuts to avoid making staff redundant

Research has shown that small businesses are going to great lengths to protect the jobs of their employees during these hard economic times. One in ten small business owners have even gone as far as to re-mortgage their own home to free up money to pay wages rather than making their staff redundant.

35 per cent of business owners have admitted to taking significant wage decreases in the last 5 years to avoid laying off staff and not just as a short term measure. 60 per cent of them have taken a salary cut for over a year with 17 per cent saying it could continue indefinitely. 70 per cent have cut them by as much as a half, while one in 20 have admitted to scrapping their salaries completely.

Don’t wait for things to get worse, contact Beer & Young today to talk about investment.

Crowdfunding

One of our online colleagues based in the states hosted this discussion which we find fascinating. Most of the comment relates to funding in the US however, the content is relevant to the UK market. One could argue this is just someone’s opinion but Beer & Young’s MD, Nick Young, sees a lot of similarities in terms of the anticipated future of UK crowd funding.

For established trading businesses the crowd funding model is unlikely to work very often and it is best to talk to experienced advisors (for example Beer & Young) if your business needs urgent capital.

I've posted many Discussions on several Groups and my comments have morphed into an "almost" White Paper on the status of private investors shifting to from Wall Street and start-ups to SMEs. I hope you find it informative and by all means please add your opinion to the discussion and by all means agree or disagree with my findings.

Crowdfunding was and still is illegal in the US, but CrowdFinancing has always been legal, just unknown.

I've spent 5 years researching the subject of financing and funding private-sector businesses and it's never been so bad. I've been on both sides of all sorts of deals in 40 years, but Crowdfunding does not attack the #1 problem which is entrepreneurs/CEOs trying raise funds being woefully ill-prepared. Investors talk about this all the time behind closed doors, but it's never disclosed. Would it help if they explained it? Probably not.

I had a long call last week with someone who was a serious angel investor in an earlier life that now mentors start-ups, he commented that 90% of the college-grad entrepreneurs that he sees can't be "coached"! They are either so in love with their idea that they refuse to consider that the investor is taking any risk, or lack the experience to know what they don't know. Crowdfunding makes this situation far worse resulting of a new business being successful highly unlikely.

A really interesting comment I overheard regarded the inability to acquire follow-on funding with the stock owned by a "naive crowd". It's bad enough when it's friends and family money.

Most savvy investors right now won't invest in any business unless there's revenue and that's pushing them towards existing small to mid-caps doing deals banks can't or won't do that produce a collateralized, verses equity, 10-25% ROI. Before an irate angel investor climbs on me, less than 1% of accredited investor are angels according to published data. Think about that, 99% of private investor don't invest in the private sector, at least as angels. I can't find on the 99%, but I know it's huge compared to start-ups.

I see 100 start-ups a day and I tell them a select few they can try raising money, but most to use their own money to buy a business, use private investor money to bridge the sale, use private money to grow the business, then if your start-up idea still looks good then go for it using only your money. You'd be amazed how "coachable" they become when they have skin in the game.