Month: August 2021

With the lifting of legal restrictions in the UK, it’s great to see businesses being able to reopen their doors after a difficult 18 months of closures.

Whilst it’s brilliant to see businesses with their open signs hanging, this doesn’t mean that the difficulties of the pandemic are over, and many businesses are still struggling to stay afloat.

There has been differing financial support throughout the pandemic and with businesses back in operation these lifelines are now beginning to dwindle and people are unsure as to where they can secure support for their business.

If you’re looking for financial support for your business but unsure where to turn, look no further. Below are some options that could work for your business – from national to regional funding options, we’ve got you covered.

Funding and finance support – where to find it.

The Recovery Loan Scheme (RLS)

This scheme aims to help businesses that are facing struggles due to the COVID-19 pandemic. The scheme is for business purposes and can be used to help with cash flow management, investment, and growth.

Through the Recovery Loan Scheme, you could receive:

• Term loans of between £25,001 and £10m per business
• Invoice or asset finance of between £1000 and £10m

To be eligible for the RLS you must:

• Have a business impacted by COVID-19
• Have a minimum of 2 years of trading history
• Be a limited company or limited liability partnership
• Be trading in the UK

This scheme is available until 31^st December 2021, subject to review.

For more information, visit https://www.gov.uk/guidance/recovery-loan-scheme

 

Seed Enterprise Investment Scheme

This government-backed scheme offers grants to start-up businesses for up to £150,00. To be eligible for this scheme, you must have:

• Less than 25 employees,
• Have been trading for less than two years
• Have a fixed place of business within the UK

This scheme is offered throughout the UK.

Northern Powerhouse Investment Fund

The Northern Powerhouse Investment Fund is supported by the European Regional Development Fund and is an initiative launched by the government-owned British Business Bank.

The investment fund aims to nurture regional entrepreneurship by providing investment and support for small and medium-sized businesses. It does this through three finance options:

• Microfinance:
  • Offers small business loans from £25,000 to £100,000
  • Can be used for smaller businesses looking to fill the funding gap needed for growth

• Debt Finance:
  • Offers business loans from £100,000 to £750,000
  • This option can be used to help businesses ‘level up’, helping with funding for hiring staff, purchasing equipment, or moving premises
  • Research shows that finance can be difficult for businesses in the North of England despite a huge demand – the NPIF is here to help with that

• Equity Finance:
  • This option offers early or late-stage equity funding from £50,000 to £2,000,000
  • Equity finance can be vital for past paced growth at all stages of a business

This is a Northern Powerhouse fund, meaning it is only available to businesses based in the north of England.

To find out more about the NPIF visit, https://www.npif.co.uk/

VAT Reduction for hospitality, accommodation, and attractions

Though not a fund or loan as such, the government announced that it would apply a temporary 5% reduced rate of VAT to supplies relating to hospitality, accommodation, and attractions.

These will remain temporarily reduced until 30th September 2021.

To find out more, visit https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions

Start-Up Loan

The government-backed Start Up Loan is an unsecured personal loan, rather than a business loan – which offers between £500 and £25,000 to grow your business.

To be eligible for this loan, you must:

• Live in the UK
• Be aged 18, or over
• Have (or plan to start) a UK business that’s been fully trading for less than 24 months.

Start-Up Loans charge a fixed 6% interest rate per year. Repayment can be done between one to two years, with no fees for early repayment.

Export Working Capital Scheme

This scheme helps UK exporters access capital finance for export-related contracts.

It is most useful for exporters who have won a contract that is higher in value than they can typically fulfill and may need support.

There is no minimum or maximum value for the capital amount.

To be eligible for this scheme, the exporter must be carrying on business in the UK and must have entered or be intending to enter, a contract for the supply of goods/services with a company that carries on with business outside of the UK.

For more information visit https://www.gov.uk/guidance/export-working-capital-scheme-overview-and-how-to-apply

Bank Referral Scheme

The bank referral scheme was established to help businesses who have been unsuccessful with mainstream banks find alternative finance elsewhere.

With an unsuccessful finance application, the bank in question will refer the applicants to designated finance platforms – which will then help the business find another source of finance.

Eligible businesses are those:

• With a turnover of up to £25m
• Who are UK based
• The principal activity is commercial

For more information, visit https://www.british-business-bank.co.uk/bank-referrals/

AD:VENTURE Grants

This grant offers tailored support of both finance and coaching to ensure you get the best out of your business.

The AD:VENTURE Growth Grant is offered to businesses under 36 months or in their pre-trading phases. Grants are available between the value of £1000 and £25,000 given to support capital growth.

Businesses must be able to contribute a minimum of 50% of the eligible costs.

This grant is offered to businesses that are based in the Leeds City Region.

For more information, visit https://ad-venture.org.uk/finance-funding/

Listen, we know everyone makes mistakes. We’re only human.

Starting a business in itself is all about trial and error; finding out what works for you and your business and what doesn’t.

But, when it comes to your finances, unfortunately, there is less margin for error. You don’t need us to tell you that your business needs funding to survive. And, whilst every business is different, everyone tends to make similar mistakes the first time around. 

So, here’s where you can come out on top – learn from other businesses ‘ mistakes so you don’t do them yourself. Below are the 5 most common mistakes people make when starting a new business.

Mixing business and personal.

When starting a business, setting up a business account should be one of your priorities. In the beginning, it may seem like more hassle than it’s worth but trust us – it will save you in the future.

It’s too easy to use your personal banking account when purchasing business-related things and mistakenly using your business card for personal spending. Whilst it may appear convenient at the point of purchase, every penny you spend on the wrong account is going to cost you time and confusion when you’re working out your expenses for tax purposes.

Keep everything separate. Having a separate business account means you can keep track of all your expenses, and don’t have to spend time mulling over what train ticket was for a meeting, and what was the family trip away.

Also, another way not to mix business and personal is to not use your personal funds or savings for business where possible. We understand that when starting a new business, some of your own money will be used to get the business off the ground, but further down the line, if you were to experience financial difficulty in your business and you invested all of your personal savings, it has the potential to be detrimental to your financial standing on a personal level outside of your business. This isn’t worth the risk.

Going too big, too soon.

Business owners want the very best for their businesses. That’s a given. Every business wants the state-of-the-art computers, large modern offices and, cutting-edge technology – but spending beyond your means is a sure-fire way to burn through your money dangerously.

This doesn’t mean it isn’t always wise to invest in things that will keep your business ahead of the competition, but every purchase should be a properly thought-out decision with cost vs benefit analysis.

Another mistake to avoid here is to avoid using your financial backing and outside investment for unnecessary purchases. This money should be used to elevate your business and keep it afloat, purchases that are not essential should not be considered until your business is at a stage of financial freedom and you have the luxury to spend more freely. Whilst investing in software that will make your jobs easier may be a smart decision, spending big on frivolous office furniture just because it looks nice is not so wise. Do you see our point?

Where’s the Budget, Budget, Budget?!

“Fail to prepare, prepare to fail.”

This may seem like an obvious suggestion. But research shows that 61% of businesses do not have a set budget.

As a business owner, one of your main goals is profitability. To achieve this, you need to stay on top of what is coming in and out of your business. If you don’t keep track, it’s easy to lose sight of spending and find yourself spending more than you’re bringing in.

Having a budget set in stone means you know what spending is occurring that month, and as such is likely to deter you from unnecessary purchases. If you haven’t planned for it in the budget, it’s probably an impulse buy – if not, put it in next month’s budget.

No emergency funds

Nobody wants to see their business struggle, but unfortunately, roadblocks occur – often ones we could never have planned for. This is why it’s necessary to have an emergency fund, you never know what could go wrong.

Just look at the past year as an example. COVID has taught us that financial planning is desperately needed to withstand external shocks to the business, both from a cashflow and emergency fund perspective.

Experienced entrepreneurs and financial advisors recommend that between 3 to 6 months of your operating expenses is a sensible figure to have saved away for a rainy day, but that’s not always achievable. What you can do is plan by investing in covering yourself ahead of a catastrophe.

Speak to us about how our key person cover, health insurance, and life insurance could be a solution.

Thinking you need to be a one-man-band.

While many businesses are sole traders or start as one person in their bedroom, this doesn’t mean that you have to do everything alone.

Running a business is incredibly difficult to get right and doing everything yourself – no matter how experienced you are- can lead to mistakes.

It’s always acceptable to ask for help. Running a business is hard. Staying on top of your finances, especially as a small business can be daunting. You don’t have to overwhelm yourself by doing it all yourself. There are a number of ways you can alleviate stress.

Help from peers can be great for new businesses who don’t have to finances to seek professional help but know people in business who can offer free advice. There is a multitude of apps and cloud accounting services that can help you stay on top of your accounts and bookkeeping.

Investing in professional help from an accountant early on can stop you from making mistakes that are completely avoidable early on. As well as this, they can take the load off your to-do list, making running a business that bit easier.

As always, at Shenward we are here if you have any further questions or would like to contact us to see how we can help you and your business https://shenward.com/contact-us/.

Starting a new business can leave your mind reeling – with a never-ending to-do list, it is no wonder 72% of small business owners feel overwhelmed with their responsibilities.

Whilst you may be excited to get your product or service out into the world, you must remember your business is more than what you’re selling, and there are a number of things you need to think about in order to help your business run smoothly in the long run.

One thing which should be at the top of your list as a new business owner is sorting out your finances, particularly getting your banking in order, so that you have tight control over where your money is coming from and going to.

Having an understanding of business banking is the foundation to good business ownership, and whilst it can feel overwhelming to get to grips with the basics, you shouldn’t worry. We’ve rounded up five things every small business owner needs to know about business banking.

1. Know your business

First things first, you’ll need to determine what kind of business you are as that impacts the type of account you’ll be required to have.

If you’ve set up as a limited company, your business is legally separate to you. This means that you must have a business account separate to your personal banking.

For other business types such as sole traders, it is not a legal requirement to have a business banking account, however it is definitely beneficial.

At the beginning of your business ventures, it can be easy to run expenses through your personal account. Having a separate account for business allows you to stay on top of your spending and is much easier to keep track of if it is all separate from the word go.

When approaching banks to open a new business account, you might be required to present your business plan, so it’s important to have one prepared. Whilst some banks and financial institutions won’t want to see your business plan, it’s still a good idea if you want to access funding later down the line. Then, they’ll need to understand aspects such as where you place yourself within a market, how you aim on reaching you goals, and any expected costs.

2. Understand what kind of bank will work best for you

Over the last 5 years, challenger banks have completely disrupted the banking market.

Challenger banks are banks which are app or online based – and do not having physical branches like the high street banks we are perhaps more familiar with.

Choosing which bank to open a business account with is completely personal to you and your business needs, but it pays to do your research and ask others – there is a general lack of trust for banks and deciding alone which works for you can be tasking.

While the traditional high street banks have the long-running expertise and benefit of simply being known making them advantageous, challenger banks have grown to be much more agile and work to meet customer demands in a much faster fashion than what one would be used to with the ‘brick and mortar’ banks.

For example, the vast use of technology amongst challenger banks means they are generally much quicker and user friendly than that of the high street banks. Furthermore, the security of challenger banks – though initially questioned- can be considered to be much higher, with the integration of facial recognition and fingerprints being deemed as much more secure than that of a traditional chip and pin etc.

Challenger banks have been known to push back on the subpar customer service that has been associated with the traditional banks. Focussing on instant response times and shorter processes for opening accounts, challenger bank’s ease of access and speed has made them very real contenders.

While these challenger banks have become known for their speed, ease and high standard customer service, the traditional high street banks still remain strong competitors. With power behind their name on a global standing, the trust in a physical bank can be hard to knock. Some people prefer going into a branch and seeing a face, the power of that can be hard to top.

So, how do you decide between them all?

Simply put you need to know your business requirements.

This may be swayed by the functions and tools offered in your account. For example, many challenger banks offer integration with other apps such as cloud accounting software. If you were looking to pay in money over the counter, high street banks may offer a better ease of access.

Not so tech-savvy? It may be wise to see which banks offer 24/7 business account support.

What’s in it for you? Remember to look at what extras the bank can offer beside from just your business account. While securing your money is priority number one – having added perks can be the edge which keeps you happy, after all despite this being business, remember it’s you that’s the customer! Knowing what aspects of banking are going to make your life easier is key when deciding upon the right bank for you.

3. Service fees and charges

As a business owner, we don’t need to tell you that nothing comes free.

Understanding which banks offer highest fees and charges for their services, and what you are or are not willing to pay will play a big part in your decision.

There are a number of fees that are common in business banking. From one off application fees, transaction fees, ATM withdrawal fees, to overdraft fees – knowing what your prospective bank may charge when applied against how you intend to use your account, can be a big factor in your decision.

4. Know when to jump ship

Whilst we’re here to discuss how to get to grips with business banking, knowing when it’s time to try elsewhere is something you can’t be afraid to do. Your business account has to suit your needs and knowing when it’s no longer serving its purpose is something you need to be aware of.

Granted, this is something to consider further down the line. Once you have set up your first business banking account, you’ll begin to understand which features work for you, and what could be missing from your account. It can be really helpful to stay up to date with what is happening in the banking world – what new features are being introduced and whether they could work for you. If your current bank cannot provide this for you then perhaps it’s time to look elsewhere.

5. Small business accounting beyond the bank account

There are a number of decisions to be made surrounding banking in the early stages of your business besides opening a business account. One of the most important is the software you’ll use to manage finances in house.

Cloud software is the most popular option, but again, you should choose which cloud software works for you.

It is almost unheard of now for a small business not to use cloud accounting software in some capacity.  While smaller businesses may choose to use these platforms in lieu of an accounting professional to save costs, growing businesses may use a mix of both in a way that is most suited to their business.

Popular cloud accounting platforms include QuickBooks, Xero and our very own Kashflow app. Knowing what you can keep on top of yourself with the help of mobile apps, and what you need to consult an accountant for is key in the smooth running of business. Don’t let things get on top of you.

Finishing thoughts… While it’s of no surprise that there is a lot to consider when opening your first business bank account, hopefully these five aspects of business banking can help to point you in the right direction.