Whilst the banking community tighten their belts, it is clear that the business angel work is very much alive and active.
There is much doom and gloom in the newspapers at present and predictions are all offering tough times ahead for business community. And the ones that always seem to get hit first are the small businesses! Whether it’s a lifestyle business or a company employing 100 staff, the squeeze is on from the banks and that can lead to cashflow problems.
However there are some positives out there for those who seek them.
Specialist business angel networks that operate in the turnaround sector of the market are commenting that actually that there is more and more activity and money is available for the right businesses. Not all business angels operate like those on Dragon’s Den! Most are looking to add value to a business as well as invest their own money. Most are not looking to take control, they are backing the management team.
If the business has the potential to make profits in the future, the wise business owner will search for the active turnaround business angel networks and see what’s on offer.
Read any business newspaper these days and it is difficult to avoid references to negative equity, higher prices on food and petrol and or course the credit crunch. As the economy threatens to move into recession and banks tighten their lending criteria many Birmingham businesses are struggling to raise business finance and in some cases are seeing their credit lines withdrawn altogether. It is therefore refreshing to hear a good news story which will benefit thousands of business in and around the Birmingham area.
Beer & Young, a national company with Head Offices in the City of London, specialises in raising new capital quickly for companies experiencing cash flow pressures, creditor problems and banking difficulties. The company which is celebrating its tenth anniversary this year is opening a new Birmingham office with the aim of helping the growing number of businesses in Birmingham and the surrounding areas who are cash starved as a result of the current trading environment and credit crunch.
Nicholas Young, Managing Director, has noticed a sea change in the needs of clients in 2008. “Over the past few years the market has been awash with easy and cheap credit but now we are seeing clear signs that the credit crisis which has hit the property market hard has spread to the small and medium business. More and more companies tell us that whereas last year the bank would normally extend the overdraft to ease a temporary cash flow today bank managers more likely to review the overdraft limits downwards, thus adding to cashflow pressures.
To meet the growing demand for equity B&Y has opened a new office located on the Birmingham Business Park near the NEC and a Regional Director, Brian Rutter has been appointed to spearhead this expansion. Brian says “we definitely want to hear from those companies who are experiencing cashflow difficulties for whatever reason this might be. We will always offer simple and practical advice and can raise new equity based capital quickly via our extensive network of over 1000 investors or business angels.
“We are also keen to hear from professional introducers who wish to work with us. B&Y has built its business almost entirely by personal referral and are comfortable working with bank managers, asset based lenders, accountants and consultants. We are definitely not in competition with these companies; indeed our belief is that we have a win, win, win situation. The client receives new equity capital and the bank/lender, accountant and consultant retain a successful client.”
June 2008
The first five months of 2008 will be remembered as a period of significant financial turmoil as the impact of the global credit crunch has been felt across the worldwide financial system. The impact on business finance for small and medium sized businesses has been felt in the past few months with liquidity becoming an increasing challenge.
The good news, however, is that the ‘recovery culture’ that has been established over the past 10 years or so, now seems to be fully embedded within the financial services sector. Institutional lenders are generally receptive to sensible recovery solutions and will not simply ‘pull the plug’ at the first sign of trouble. The bad old days of the late 1980’s and early 90’s seem to be well and truly behind us.
It should be noted that we also have to give the government credit where it is due and say that legislation and the attitude of HM Revenue & Customs (HMRC) has played its part. Their supportive and more flexible remit has seen them being prepared to agree repayment proposals when arrears have built up. Although HMRC don’t like transactional taxes (VAT/PAYE) being used to fund working capital requirements, they will often allow businesses the opportunity to trade their way out of a difficult period – plus there is little incentive to crystallise a ‘loss’ when a recovery plan looks viable.
We have also seen the emergence of specialist firms that provide effective recovery solutions for distressed businesses. These are not traditional Insolvency Practitioners but firms made up of experienced professional advisers who look to put recovery plans in place. These can often include the introduction of new ‘business angel’ investment, which provides the financial catalyst for ‘real’ recovery.
The emergence of the internet and the availability of information online have also positively impacted on the ‘recovery culture’. This can often be the route to find the specialist help and services that are needed when financial distress is encountered – asking your accountant or bank manager is no longer the only option.