BizSale Small Business Blog. Small businesses for sale.

In the uncertainty of today’s global economic climate, small and medium-sized companies may be concerned about the implications for their business. With some careful planning, a greater focus on cash flow, and more efficient communication with the bank, any business can avoid the possible negative effects of the credit crunch.

The following points from ACCA, and Robert Moore at Bizsale.co.uk, offers advise for small and medium business owners to conduct financial affairs with a more sensible approach.

1. Strong financial planning is very important – don’t allow difficult business decisions to put you off making them.
2. Explore your credit options with other UK banks.
3. Get into the habit of being in communication with your bank, and perhaps with your accountant if necessary.
4. Go over your bank charges. Could you switch accounts or find a better deal with a different bank? Could your current bank give you any special deals as a loyal customer?
5. Keep an eye on rolling-over banking facilities, and look out for hidden charges and incorporate those into financial planning if necessary.

6. Consider your direct debit arrangements – for the business and for your personal finances.
7. Do what you can to clear credit card debt. But if you use credit cards, try to pay off balances before you are charged.
8. If you are due to make payments, inform your creditors of the reason why you can’t do so yet and when they can expect a payment.
9. Pay particular attention to cash flow forecasts and to monitoring cash flow. Make sure that management accounts are up to date, and that all key financial reconciliations are dealt with.
10. Tighten your reins on credit control and cash collection procedures.

11. Consider the timing of future orders and your forward order book.
12. Consider carefully current and future customer’s ability to pay. Don’t depend on credit ratings. Maybe try and get references from people who have dealt with them before.
13. It is important to pay special attention to upcoming investments and major capital expenditure. Can they be rescheduled?
14. For those businesses which import/export, think about whether foreign exchange hedging could be relevant to your company.
15. For April year-end – be clear about Stock and Work in Progress valuations – get early audit agreement to valuation principles. Do the same for all ‘fair value’ items on your balance sheet.

16. Consider your staff requirements. Could you look at offering your current staff more paid overtime, instead of taking on new staff.
17. You could consider temporary or fixed term assignments but first weigh up the pros and cons against full time recruitment.
18. Ensure that awarding pay rises and setting up staff incentive schemes relate to profitability and cash generation as well as growth.
19. Evaluate your personal financial drawings from the business such as cars, home improvements or holidays. Are they appropriate in terms of current and future profitability and cash generation?
20. Don’t embark on new business ventures without fully understanding the risks. As such, make sure you can manage or absorb the loss if things don’t turn out quite as planned. However, it is often during difficult times that new ventures can reap large rewards, as there is less competition and hasher economic conditions can help discipline the business to achieve profitability.

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The media is full of scare stories about the impending Credit Crunch and the impact that it is likely to have on small business. NFEA (National Federation of Enterprise Agencies) is taking action on this issue with the launch of a dedicated Credit Crunch Week - to prepare current and future small business owners for any consequences this economic climate is likely to have on their business.
Running from Monday 28 April to Friday 2 May, NFEA members across England will provide a range of events focused on giving small businesses the skills they need to survive and thrive in a more hostile environment than that to which they are accustomed.
New and prospective small business owners will be able to learn how to ride the storm and manage their business effectively whatever the future brings, in a range of tailored events including seminars, workshops and surgeries as well as the opportunity for one to one independent, professional financial advice.
Commenting on the launch of this dedicated activity, NFEA Chief Executive George Derbyshire has said: “We are not criticising the Government or the banks or big business - but we know from talking to small businesses that they are worried about what they are reading and hearing, and we know that many entrepreneurs, particularly those who have started businesses in recent years, have not had the experience of managing their business through a downturn.”
More information on the dedicated week of events will appear on www.nfea.com in the lead up to the week of events and details will also be promoted locally by NFEA enterprise agencies. For those individuals not able to attend an event in person, online business advisors will also be answering specific Credit Crunch related queries on the free and confidential Small Business Advice Service website, www.smallbusinessadvice.org.uk.

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According to the Institute of Employment Studies (IES), people who spend their career working with a small company are more likely to feel appreciated than those who work for a larger business.

Working with only a few other staff will probably lead to closer, more mutually supportive relationships.

Working in a smaller company means that the work that any individual does is felt with more immediate effect, than if they are a cog in the machine of a larger organisation.

In my personal experience working for a small company is more interesting, as you get an understanding of all aspects of the business, this would not happen as easily in a large company. Also I have found that the roles are more varied and therefore more challenging.

The Department for Business, Enterprise and Regulatory Reform’s SME Statistics report, which was published in the summer of 2007, noted an increase of 125,000 businesses in the UK for that year. Of these 99.3 per cent were small businesses with 50 employees or less.

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Alistair Darling, the UK chancellor has finally made up his mind on the new capital gains tax regime due to take effect after April 5th this year, and announced a major concession for owners of small businesses.

Any business owner making a profit of one million pounds or less on the sale of his or her business will only be liable for CGT at 10%, rather than at the previously proposed rate of 18%. The 18% rate will apply to all gains above the million pound mark, however.

For once, it seems the Chancellor has actually listened to some of the business community. Business groups were united in their dismay at the proposed tax changes. Although many medium to large businesses are not so impressed with today’s announcement, many small business owners are breathing a sigh of relief.

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News, views, tips and advice from the publishers of BizSale, the UK’s leading listing of small businesses for sale.

On the back of many requests from our BizSale subscribers, we finally got around to launching our business blog. So hello everyone!

We decided on using Wordpress as the platform, as it is the most popular and seems to have many useful plug-ins. Anyone have experience of the various blogging platforms? Did we make the right choice?

Anyway, back on topic, we have a loads of resources, tips and advice to all of you who are looking to sell or buy a small business. From capital gains tax, to deal negotiation and industry briefs the range of relevant material is vast.

The aim is to condense the most pertinent and useful information into bite-size chunks. So keep coming back and don’t feel shy about leaving comments! Talk soon.

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