How do you grow and get funding for your business in the current economy
Many experienced operators in the hospitality and leisure sector are seeing this time of economic uncertainty as an opportunity to grow their business.
Across the country there has been a general downward pressure on rents. Even in London - where rents are still rising but below the levels of the past - there is growing opportunity for established, well run and cash-rich businesses to expand. Alongside this, with statistics continuing to suggest that the economy is recovering and interest rates remaining low, now may be the perfect time to put in place an expansion plan for your business.
However caution is obviously needed. Even though many are experiencing rents and loan repayments at relatively low levels it is likely that interest rates will rise over the next year to keep inflation at a manageable level as the economy continues to recover.
Many businesses also continue to find it very difficult to get funding for expansion, with most banks seeing hospitality as a high risk sector.
There is light at the end of the tunnel, though. Funding will eventually become available; as the economy continues to recover, the banks will find the hospitality sector increasingly desirable. Businesses should now try to ensure that they do everything they can to make themselves as attractive as possible for when funding taps are turned on.
Michael O'Brien, Business services partner, Reeves
www.reeves.co
FIVE STEPS TO MAXIMISE YOUR FUNDING POTENTIA
1 Patience Funding for businesses in the hospitality and leisure sector is not currently widely available through the normal banking system. However this will change as the economy continues to recover.
2 A well-rounded team Banks and lenders will always look to lend to businesses that have experience in the industry and a proven track record. So build a team that has experience in all areas of running a successful enterprise - not just operations but the financial, administrative and strategic side of the business as well. This includes engaging external professionals, such as lawyers and accountants, with a good reputation in the industry.
3 Management information It is important to ensure that your management accounts and financial information are accurate and up to date; one of the first things that lenders will want to look at when considering your creditworthiness is your recent trading history. So the information needs to be timely, meaningful, reliable and easy to understand, therefore maybe incorporating graphs or other visuals which are more self-explanatory than pages of text or numbers.
4 Business plan As well as past trading activity lenders will want to see what your plans are for the future; your business plan is therefore a critical document that lenders will interrogate in depth. It is effectively your sales pitch to the lender for why you need the funding, but most importantly needs to be realistic in what you are looking to achieve. There are many websites that give advice on the structure and content of a good business plan but it is always advisable to get professional help to assist in the preparation of this and your forecasts.
5 Financial forecasts This is the crucial "numbers" section of your business plan. It needs to bring together all the elements and points made in the other sections of the plan into a financial forecast, assuming that the funding is received. This will show the lender what their financing will help you achieve and how you will be able to make the repayments.
