Crowdfunding – nah it’s not for me [an accountant]

16 04 2016

“Crowdfunding – nah that new stuff isn’t for me & my clients won’t use it” – said the accountant 5 years before he realised he’d missed the boat!

When you start talking about the ‘old ways of crowdfunding’ you know that nowadays crowdfunding is nothing new. After being around in the UK for businesses for the past five years, it’s now come of age as a respected, flexible and viable form of finance for SMEs, and it won’t be long before the larger corporates also see it as part of their potential mix of working capital or growth capital solutions.

I speak to accountants every day. Most of them are owners of a practice, as sole practitioners or within a firm of up to 25 partners/directors. And I’m still astounded how few are capable of, or wanting to, advise their clients on the crowdfunding options. In fact, if I were to go back to the more fundamental problem with our profession, I’d say that accountants haven’t repositioned themselves as business advisers at all. How many accountants can truly say they have actually shown/coached/mentored their clients to become better business owners, and grown their companies as a result? Don’t kid yourselves, as a profession we are losing the battle against the business coaches, incubators, accelerators and even large corporates who are taking the role of ideas generators, brainstorming facilitators, contact-makers, strategic advisers, and entrepreneur self-improvement coaches for businesses in their sector. But more of that another time!

Crowdfunding is just one part of this area where the market has moved on and accountants aren’t moving with it. Business owners are way ahead of you, and we’re sadly lagging way behind the curve.

  • You should be helping them with working capital management – crowdfunding may be a solution;
  • You should be helping them devise a growth strategy – crowdfunding may be a route for growth capital to help them realise these ideas;
  • You should be directing them to the most appropriate platform for their needs;
  • You should be aware of how to lead a crowdfunding project;
  • You should be earning fees from this;
  • You should be gaining respect at THE person to go to in your business community for this advice – before your competitors take that honour;
  • You should be seeing a future for your practice that is different to the past, but still exciting, satisfying and profitable.

Want to hear more how you can achieve all those things? Or in another 5 years are you going to realise you missed the boat?

If you are attending Accountex at ExCEL London in May 2016, I’m on Stand A136 and speaking in the Practice Growth Theatre on 12th May at 4pm. For free tickets click here: http://bit.ly/236ieQ0

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Are UK consumers becoming savvier shoppers?

11 04 2016

The total number of retail sales in 2015 was 4.5% higher than the previous year. However, the average store price across all categories were down (see categories listed below). The growth in retail sales was actually led by an increase in quantity bought but with lower prices.
FYI, the four main categories are:
• Automotive fuel;
• Non-store retailing i.e. ecommerce;
• Predominantly non-food stores;
• Predominantly food stores.
Average store prices down, quantity bought up, across all categories, some more than others. For example, the price of fuel dropped by more than 10% in the year, while quantity bought increased circa 7.5%. Contrarily the amount of goods bought via online retailers increased by approximately 13% and average prices dropped by less than 5%.
While there are some trends in amongst the lower value, higher volume trend, such as falling oil prices and more consumers buying online, a key question arises. Are retailers profit margins being hit by the higher quantity, lower value landscape?
Let’s take a look at Home Retail Group, more specifically Homebase. In the 44 weeks leading up until 2nd January 2016, sales increased by 5.4% over the same period in 2014, however gross margin movement was down c. 100bps. Homebase puts the fall in gross margin down to, “an adverse sales mix from the growth in margin dilutive big ticket products.”
Ok, so maybe it’s just big ticket home products weighing margins down. Let’s take a look at different type of retailer, online fashion retailer ASOS.
For the last four months of 2015, UK retail sales for ASOS were up an impressive 25%, but like Homebase, gross margin was down, however not as significantly, just 40bps. Like Homebase, ASOS has attributed its gross margin decline to sales mix.
Are consumers become savvier? Are shoppers identifying great value products better than before? Are smartphones giving consumers the power to price match in store?
What’s clear is that the ‘sales mix’ is driving margins down.
We’ll be keeping a close eye on retail sales data at The Corporate Finance Network to see how the new retail landscape continues to unfold.





Time to take a step back & look up?

30 11 2015

It’s a fact of life (and death) that eventually all of us will have to exit our business one day.  Either in an organised way…or not. So, whilst day to day we may be continually running on that hamster wheel with our heads down, at some point, we need to look up & really assess why we are doing this. What are we building for? And are we directing our efforts at the most important and potentially valuable aim – our exit?  Nobody would choose to leave their loved ones with more hassle to sort, when they are dealing with bereavement anyway.  Establishing a structured exit plan, well before you ever need one, should be on the New Year’s Resolutions list for all business owners.

So what are the actions that you should take to make your business more valuable and more attractive to the greatest number of potential purchasers?  Well there are obviously many different factors. Some sector specific, and some quite typical across all industries.

Through our membership of The Corporate Finance Network, we have access to a tried and tested programme that aims to increase the value of your business, and (more importantly) to make it more saleable. Research of business owners is conducted regularly, and here’s one fact from some recent findings of 14,000 businesses, who had received an offer to buy their company in the last 12 months. This may surprise you!

Would you rather receive 2.93 or 4.49 multiple of your profits when you sell?

The average sales offer received among all of the businesses surveyed was 3.7 times pre-tax profit. However, these businesses were then further analysed between those businesses where the owners were responsible for all the sales effort in their companies, and those that were remote from the sales process.

Where the owner does not know his/her customers personally and rarely gets involved in serving an individual customer, the offer multiple went up to 4.49.

Companies where the founder knows each of his/her customers by first name received much lower offers of just 2.93 times pre-tax profit.

Clearly this demonstrates that in order to be more attractive to potential purchasers, the business needs to operate day-to-day independent of the owner as much as possible. An easy thing to say you may think.  But if you’re not in that position at the moment, we can help with ideas and strategies that may allow you to move towards that position over the coming months and years.

And that’s just one of a number of areas we’ll look at if we conduct our unique 1-2-1 Exit Planning Workshop with you in the New Year.  Please contact us for more information.

And we would love all our clients to take part in the next piece of research which involves just 5 quick questions, and can be found here:  https://www.surveymonkey.co.uk/r/CFNExit2015

 





The 4 ways to be the “Adviser of Choice”

18 11 2015

According to The Telegraph today they have listed Accountancy as a ‘pretty secure’ career. But checking the facts behind the story, it isn’t actually listed on one the UK Shortage Occupations List

Reading the full article from The Telegraph, it actually said:

Five more careers which are pretty secure

Accountants and lawyers are both protected by training and professional knowledge. Moreover, they often find demand for their services rises during downturns. However, both are at some risk from automation, particularly when it comes to more routine work.

So is it a secure profession or not?  Well I guess that depends on what type of accountant you are.

In my opinion, the opportunity for your traditional accountant, the ‘bean counter’, will be gone within the decade. With the online accounting software packages and HMRC’s drive to report real-time information, business owners are becoming more used to entering the basic financial information themselves.  No longer is a degree in Accounting or a professional qualification required to put together a Profit & Loss or Balance Sheet.

However…the role of the Business Adviser, is indeed flourishing! But adding ‘Business Adviser’ to your strap line, business card & website is not merely enough.  To be truly in demand from entrepreneurs in your region, when word will naturally travel that you are your area’s top adviser, you need to have:

  1. excellent business training as a foundation (such as a professional accountancy qualification) plus being bang up to date with the latest thinking and contacts; AND
  2. a mindset that understands the real commercial issues faced by most SMEs; AND
  3. a desire and an ability to coach/mentor/educate entrepreneurs so they become more skilful business owners; AND
  4. the practical tools to assist in all the business areas which small businesses actually require, whether that’s:
    • growing their business by acquisition or entering new markets;
    • funding working capital for growth or for crisis situations;
    • grooming their business for sale so they can actually exit in a smooth and financially successful way.

Oh and a bonus number 5…you need to make it easy for businesses to find you, and see quickly and clearly that you are an expert!

At The Corporate Finance Network, we work with larger regional accountancy firms to ensure they can meet all these points in a structured and cost-effective way (email info@TheCFN.org.uk for more information about membership of The CFN)

Membership of The Association of Crowdfunding Association (ACE) will also provide this support for any size firm, adviser or coach, but specifically looking to work more in the ever-expanding crowdfunding arena.  If you wish to find out more about ACE visit: http://launch.crowdfundingexperts.org/

Walk the Walk! Be seen! Be great!





Accountants – so you think your region’s SMEs don’t “do” corporate finance?

7 10 2015

Travelling around the UK, I hear this often. Our town/city is different. We’re not like London (I even hear that in the South-East!). Our clients don’t acquire businesses/fundraise for growth/exit plan….etc etc.

Well lucky you, I think!  Far from bemoan that the market doesn’t exist and deals aren’t landing on your desk on a weekly basis, I look at what a great opportunity you have!

You have a whole market to aim at, with little competition.  You can create your own work from a largely untapped pond.  Yes, it’s going to be a bit harder at first.  Yes, you’re going to have to be persistent and consistent with your messages.  But trust me when I say, this is very possible. And it is the best news ever!

Working in a busy finance city – easier, or not?

The first 15 years of my career were largely spent in Manchester – and in the 1990s there was a flourishing community of experienced corporate financiers, all ploughing their furrow within the same SME population.  Winning work away from “the city” in London was our aim.  And we succeeded.  Manchester became a respected corporate finance centre.

But we also pushed the average deal size downwards, as owner-managers realised that they too could make acquisitions, exit their companies in trade sales, and seek growth finance from providers that weren’t necessarily their high street clearing banks.  But it was a ‘dog eat dog’ world.  Many advisers existed & credible new entrants were coming into the market on a yearly basis.  Having an acquisitive population of SMEs took years (if not decades) to build in Manchester – and I wish I had been there at the beginning of it!  Because I would have retired on my yacht in the Bahamas by now!

How to build the market

Persistence and a consistent message, balanced with some clever psychology and marketing techniques, will bring you the deals – and here are some tips to make that happen:

  1. Educate educate educate to demystify – seminars, newsletter articles, blogs, workshops, talking face to face about how a business can:
    • grow by acquisition (there’s NEVER been a better time to buy a business in my view) and how risk can be minimised;
    • obtain finance for new growth strategies (what are those strategies? Work with clients on developing new ideas by starting with a SWOT analysis);
    • sell their business when they want to retire, not just their property (practical exit planning/grooming tools are essential here – don’t just ‘talk the talk’)
  2. Make it the norm that businesses in your area are running their companies like this:
    • Shout about your good news stories, deals that have been successful, business owners that have made acquisitions, or done an MBO, or have won awards in their sector for growth (do you suggest awards your clients should enter by the way?)
    • Use your website, newsletter, social media, press releases, or provide entrepreneurs with a platform at a client/business event to share their experiences.  .
    • Give clients other business owners to look up to & stories they will remember (not dry facts and figures, but people).
  3. Make it relevant. Make it accessible.  Make it easy.
    • Give them ideas of businesses they may like to acquire, competitors that are on the market, so they can visualise themselves purchasing another business;
    • Break down your areas of advice.  Don’t scare them with large fee quotes!
    • Slowly slowly catchee monkey – be persistent but gentle. Work on their personal psychology before their business mind.

Some commentary I read from Yale said the following “Creating a new market is different from developing a new product or service – it requires convincing an array of customers, partners, and other constituencies to see the world differently.  And the effects can be far reaching, as markets are capable of taking on a life of their own”.

So will you fall into the norm?  Or will you be the pioneer?  Are you going to create this market in your region?  Because somebody will eventually!

My yacht or yours….?

And if you’d like more ideas from me, at The Corporate Finance Network we have created 17 specific tools for Deal Origination.  And that’s just a start!  Get in touch via http://www.TheCFN.org.uk





How to defend your firm from the ‘Big Guns’

7 10 2015

A recent article in The Times Business on 5th October entitled “Accounting’s big guns take aim at promising start-ups” unsurprisingly resulted in a powerful and vocal response at the breakfast tables and desks of partners from the smaller, independent accountancy firms.

Laughter, sarcasm and angry retorts that the Big 4 accountancy firms would have no idea how to help smaller businesses; their skills and fees would be mismatched; and only smaller firms would care enough to help resolve issues that involved a few hundred pounds, rather than hundreds of thousands or millions of pounds.

However in the aforementioned article (http://www.thetimes.co.uk/tto/business/workinglife/article4575765.ece) I commented that I was actually pleased that the Big 4 were adopting this strategy.  And no, I’m not a Big 4 alumni, I actually turned down a training contract with Peat Marwick McLintock (now of course KPMG) in favour of Baker Tilly, and have spent my career in the independent accountancy sector since qualifying 20 years ago.  So before I am hung drawn & quartered in front of my peers, let me explain why.

“Pride goes before a fall” or as Shakespeare says “A fool thinks himself to be wise, but a wise man knows himself to be a fool”. 

I now market my services in The Corporate Finance Network to accountancy firms. And as a result I meet many local and regional firms.  Maybe 1 in 10 of those firms I meet actually become members and decide to invest in my services – not just money (we are amazing value for money as our recent ROI benchmarking shows), but the time and effort to be open to the fact that there is a better way.  And equally, I meet many firms who I wouldn’t want to be members of our exclusive network.  This is mainly because I can see that they aren’t going to be willing to change their approach.

A recent survey of 300 firms and clients about client service by Kashflow & Accounting Web has proved what I have thought for years.  The most interesting figures from this survey for me are this:

  • How many accountants asked their clients about their investment/funding needs: 35%
  • How many accountants asked their clients about their strategic objectives and KPIs: 34%
  • Clients that want their accountants to offer pro-active business advice in the next year: 61%
  • Firms that are planning to do more of this work offering pro-active business advice: 19%
  • Clients that believe their accountant is like their business mentor: 38%
  • When businesses were asked where they went for business advice, their replies were:
    • Accountants 31%
    • Google 24%
    • Online sites like UK Business Forums 24%
    • Family, friends and business mentors 21%

Almost 10 years after I formed The Corporate Finance Network for EXACTLY these reasons, I continue to be exasperated!  Accountants who are still holding onto the tag that they think they are their clients’ “trusted adviser” are very misguided.  How many accountants describe themselves as ‘business advisers’ nowadays? Thousands of firms!  But how many deserve this description?  What exactly are they doing to help their clients’ businesses grow?

If less than 4 in 10 even ask clients about their strategy for growth, how can they possibly assist?  The days of the accountant being the compliance auditor and tax adviser are waning fast.  They have been for 20 years truth be told.

It was 11 years ago when the audit threshold increased from £1m to £5.6m. Accountancy firms should have been investing in corporate finance and other business reporting services from that point onwards.  But I see very few that are willing to, even now.  Even with the huge impact that cloud accounting has had on how businesses record their transactions, many are still blinkered to the way this will change their own accountancy business and product offering.

So we have seen that the Big 4 are entering this market.  And it is very easy to adopt that well-known defensive approach of ‘head in the sand’.  But the ‘Big 4’ are organised. They have a strategy. Do not underestimate them.  I see them at all the networking events I attend for smaller businesses.  I see them sponsoring incubators.  I see them all over social media and in business publications.  They will cast their net wide, offering a very slick service to a large number of small businesses. And they will offer that proactive advice to help businesses grow – because that is where their strengths lie.

And those that do will then move onto their full service accounting division.  Interweaving corporate finance and business growth services is natural to them.  Clearly not so for the smaller independents, based upon the research and my own experiences.So the best form of defence is to act.

My call to regional and independent accountancy firms is to act now and radically review your product offering to your clients.  Give them the all-round business advice they crave.  Become their mentor.  Work with them on their strategy & operations to bring growth and more profitability.  Help them become a better business owner. Become their invaluable commercial adviser, who they won’t ever be tempted to leave.

Here are 3 key things you should always do, with every client, not just the A grade ones!

  1. Do you know your clients’ strategies? Do they have any? Your role as mentor includes helping them become better business owners.  That includes brainstorming ideas for growth and writing a business plan to deliver that growth. Does it or should it include acquisitive growth? Can you help your clients identify who they should be approaching?  And then assist them through the whole process of an acquisition?
  2. Review your clients’ financing arrangements. Do they have enough working capital or are they under pressure? (clue: you can’t answer this question without first doing 1 above, then preparing financial projections) Will the bank be getting nervous? Are there other more appropriate funding sources for them?  The alternative finance market includes some credible players, and some newbies that aren’t yet proven. Do you know which is which and do you have personal contacts with the market leaders?
  3. What are your clients’ directors own personal goals? Have they thought about them?  Help them consider their 5 year and 10 year plan.  If this includes exiting the business, build towards that – without just paying lip service to it. Firms often think they talk regularly about ‘grooming a business for sale’ or ‘exit planning’ – but what have you actually done to help that business be worth more, or more importantly, be more attractive to purchasers so that it’s actually sellable. We have a whole suite of practical tools to help with this – do you?To help you win new corporate finance work, we have 17 specific tools for Deal Origination, and that’s just to start with!  And if you already think you do this, why aren’t you a member of The Corporate Finance Network?  The efficiencies and products we can add to your firm will astound you!  So my message to all accountants is to ‘walk the walk’ and don’t just ‘talk the talk’!

If you’d like any more hints and tips, I would be delighted to see you at one of our “Encore” Conferences. Our recent successful National Conference is being repeated due to demand – see more details here: http://www.thecfn.org.uk/news/flaming-enthusiasm-the-encore-651.php





Use the pros to get Britain going again!

21 05 2013

This week our Lincolnshire firm, Nicholsons, reflect on the business lending environment and how we can get Britain’s economy moving again…over to you Richard!

It doesn’t seem like we can go a week without hearing about how difficult it is for small and medium sized businesses to access finance. The banks issue statements saying that they are lending and are open for business and that there’s a lack of demand but I speak to lots of small and medium sized business owners who tell a different story.

Either they have been told by their “relationship” manager that they cannot support any new lending and therefore don’t apply or feel that because of previous conversations there is no point in approaching their bank.

It’s usually quite easy to see why the banks are unwilling to support. Maybe; whilst profits are growing they are still not performing as they were four to five years ago, there are no real tangible assets to provide as security and balance sheets are weak maybe due to losses incurred in recent years. More often than not there are usually also no up to date management accounts, no budgets to compare performance to or predict the future and generally a lack of business planning.

I believe it is the disconnect between business owner and funder that is the most important problem that we need to solve if we are to help small and medium sized businesses develop and ignite wider economic growth in the UK. I’m familiar with all of the bank lending schemes but don’t think that a one size fits all approach is what’s needed.

My opinion is that small and medium sized business owners need tailored advice that is based on an understanding of their business and their needs and with the knowledge of wider funding solutions available on the market.

Whilst some of the support a business will need will come from a high street bank there is now a wide range of alternative (peer-to-peer) funders that can offer flexible solutions, all of which can be combined into an overall funding package. This week I connected with a company called Platform Black who offer a flexible invoice finance product based on a peer-to-peer model. Funding Circle who offer peer-to-peer term loans report funding nearly £96 million via their army of investors whilst crowd cube provides more of an equity based solution.

There are solutions out there for small and medium sized business owners whether they are multi-generational businesses or run by give it a go entrepreneurs providing there is a solid idea, good commercial business plan, a passion and desire to succeed. So my advice would be connect with a professional who understands the alternative lending market and who can help find the right mix of funding products for your business and let’s get Britain going again!

For more information contact Richard Hallsworth at richard.hallsworth@nicholsonsca.co.uk