Finance & Funding Jargon Buster

You can’t know what you don’t know, especially when it’s wrapped up in abbreviations and buzzwords. Start.Biz are decoding the most commonly used jargon words when looking for business finance or a funding.

P&L 

Profit and Loss Account – a record of Income and Expenditure within a given 12-month financial period to ultimately determine profitability.

Balance Sheet 

A snapshot of the Assets and Liabilities owned/owed by a business at any particular moment in time i.e. Cash Balance or Value of Outstanding Loans. The value between the Assets owned by a Company after deducting the Liabilities it holds equates to its Net Assets.

Cash Flow Statement 

A log of monthly cash inflows/outflows often using a combination of retrospective and forecast information. For a small business, this is probably the key document to managing cash flow.

Working Capital 

This represents a measure of liquidity on a day-to-day basis within a business and is calculated after deducting liabilities such as supplier invoices/debt/PAYE/VAT from assets such as cash/customers invoices/stock.

MI 

Management Information – lenders often require Management Information such as Aged Debtor/Receivable reports and Management Accounts.

Statutory Accounts 

Financial year-end accounts as produced by the Directors of a business and filed with Companies House.

Management Accounts 

Monthly record of Management Information usually comprising Profit and Loss Account, Balance Sheet and Cash Flow Statement

Aged Debtors 

A report of amounts owed by your Customers to the business.

Aged Creditors 

A report of amounted owed to Suppliers by the business.

SALIE 

Statement of Assets and Liabilities – a form usually completed when looking to borrow money comprised of i) Personal Assets & Liabilities (owned/owing), ii) Monthly/Annual log of income/expenditure.

If you have any questions about financing your business or would like to discuss your personal circumstances, please contact our expert team today. 

Access to Finance Consultation Line: 0800 069 9090 (freephone) or email finance@start.biz

How to Create a Logo for Your Business

how not to use the work we created. I would ask a client to allow me to use it in my portfolio though, under strict guidelines that I’m using it as an example of my work.’

5. A lot of our small business community use sites like Fiverr to create their logos due to limited budgets, would you advise this? 

‘It’s one of those things that sounds like a really good idea in your head. What you have on there is anyone with some design software and then what happens is you start to devalue the purpose of good design. I understand small businesses have less budget but it’s like if you hired a plumber for a fiver, you probably would still have a leaky tap at the end of it.’
‘Canva is great, we use it. I would advise to pop on there and use it for social media posts. If you’re doing a lot of social content, you need templates and it’s really useful for that. I wouldn’t use it to create a logo though.’ 

6. Are there any cliché’s you would advise to avoid in logo design? 

‘When someone says ‘we just like this’. That just means nothing. If I’m presenting to my Director or a client I will always go into the full meaning behind every element I’ve used. This includes colour, typography, colour, and shapes, they all have a meaning why they are linked back to the brief and brand I’m working on.
Don’t follow trends. Trends are just trends, and they change each year but a brand is meant to be timeless. You can’t have something that’s going to fade away in a year.
‘Keep it simple but significant.’ 
Also, the use of generic symbols. Using really obvious icons in a logo, for example how many coffee shops have you seen with a coffee cup in the logo? Or dentists that use a tooth in their logo?
I don’t know if it’s a cliché, but I don’t like monograms, like two interwoven letters. If you google any two letters, you’ll come up with loads of ways that those two letters can look together, it’s very clever but generally it’s overused and it’s not saying anything about the brand.’

7. What are the biggest mistakes people make when designing a logo? 

‘It’s understanding good design. Everything from the basics of how things are aligned through to typography. Typography has so much meaning, every letter and font style has a different meaning as to why it’s those letters and those shapes and why they’re spaced out that way. Choosing a different font is going to give a whole new meaning to your brand. A number of fonts get overused because they’re safe. Designers saying not to use Helvetica has actually now become a cliché within itself.
‘The whole point of a brand is to cut through the noise of your competitors and speak to the audience you want to speak to. If you use safe design, you’ll just get lost in a sea of brands and advertising.’ 
‘People don’t really think about scaling things. I think that really matters when it comes to typography, you could have a really nice type face that looks amazing when you’re a foot away from your computer screen but when you stand 6 feet back you can’t read it. Think about how the logo will look when someone is driving past in a car, or how it looks scaled down onto a business card or blown up onto a billboard.’
‘Don’t be scared to do things a little bit differently, go against the grain. You never know where it could take you.’ 

8. What is some of your favourite branding? 

‘The IMB logo is timeless, they haven’t changed that since the 70’s and they haven’t needed to. MacDonalds are a great example of maximising the potential of your logo, even building campaigns around it. I don’t want to advocate anyone eat MacDonalds but from a branding point of view they’ve created a whole story out of that logo that really speaks to people.’
‘Ultimately it’s about communicating your brand and creating something your customers will love.’ 
You can check out Oliver’s work here
Instagram – ovr-design

Business Finance & Funding FAQ’s

What finance is available to me if I haven’t started trading? 

Start Up Loans are government backed loans where the borrower/s can each borrow up to £25,000 to a maximum of £100,000 for any one business at a Fixed Interest Rate of 6% Start Up Loans – click here to find out more.

What funding can I access if I have been trading for 6 months, 1 year, 2+ years? 

There are lots of options ranging from High Street banks to Alternative providers (i.e. Responsible Finance providers) to Asset-backed lenders (Invoice & Equipment finance specialists).

What key business documents do I need when applying for trading? 

Annual Statutory Accounts, Management Accounts, Profit and Loss Account, Balance Sheet, Cash Flow forecast and Personal Assets & Liabilities Statement.

Who should I go to first when looking for a business loan/access to finance? 

If you have been trading for more than 6 months, try your local Growth Hub – they are a great centralised place to receive connections to finance providers from. Alternatively, give us a call at Start.Biz.

If I get turned down by high street banks for a business loan is there any alternatives? 

There are lots of alternatives. A good place to start would be to look for local Responsible Finance providers who often offer the required level of finance whilst also appreciating the need for SME Business Owners to get decisions on funding quickly. Click here to find out who provides responsible finance in your area.

How much can I borrow? 

This will depend on a number of variables:
i) The level of profitability currently within the business and moving forwards is critical. The more profitable you are, the more likely you are to get higher levels of finance.
ii) Whether the Business Owner is offering a Personal Guarantee to secure the loan
iii) The quantum of investment that the Business Owner is putting in

Can I get a grant? 

Yes but this will be dependent upon the criteria of each individual grant. A good place to start would be to sign up The Innovation Factory’s (Drew Currie) monthly newsletter, click here to sign up for free.

Can I get a project funded? 

Possibly but a bit like Grants, it is entirely dependent on the funding resource in the market at that time. Innovate UK offers Loans and Grants with a focus on business’ growing via Innovation, find out more here.

What kind of business activity can I get finance for? 

You can apply for finance for a multitude of activities including:
– Business acquisition/merger
– Asset purchase
– Invoice Finance
– Refinance
– Working Capital/Cash Flow

Are there still any covid recovery schemes available? 

The Recovery Loan Scheme (RLS) is available until 30th June 2022

What is a good interest rate? 

The Interest Rate applied is often directly linked to the perceived level of risk with the loan itself. High Street lenders will lend at 3% + the Bank England’s base rate of lending. Currently, SMEs are finding it harder and harder to access funding at these rates via the High Street. Rates for SME’s can range from as little as 6% right up to 14%. Sometimes the easiest thing to do is secure finance at a higher level of interest to get the required funding before then refinancing at a later date at a better rate of interest.

If you have any questions about financing your business or would like to discuss your personal circumstances, please contact our expert team today. 

Access to Finance Consultation Line: 0800 069 9090 (freephone) or email finance@start.biz 

Intellectual Property (IP) Essentials for Small Businesses

We speak to business owners daily about their professional business service needs and one thing that often gets lost in the mix is their IP protection. Many consider it an issue for larger companies, designers, or inventors however, as experienced IP experts we know it can be one of the most valuable assets of any sized business. We also unfortunately know, how much of a headache it can be in cases of coping or unintentional infringement. In this article we’ll get you IP savvy in less than 5 minutes so you can make informed decisions about how best to protect your business.

1. What intellectual property does my small business have? 

Intellectual Property (IP) refers to many different creative outputs your business may have or use commercially. In includes but isn’t limited to imagery, logos, processes, symbols, designs, ideas, writing, names, website layouts etc. Every size and type of business will have some sort of IP which is valuable, how it is and what can be protected needs to be investigated.

2. What IP do I get automatic cover for and what do I need to apply for? 

To understand the value of your IP assets, we’ll look at what is covered automatically by UK law and what type of protection you’ll need to apply for:
Automatic protections – 
Copyright – This is automatically covered in UK law when the new piece of writing, photography, music, recording etc. is created. This doesn’t mean you won’t have to go to court if someone uses or copies your copyright.
Employee output – The creative output of your employees is also property of the company they work for if the work was created in company time or using company equipment. This should be stipulated in their employment contract however automatic protections in law come into play here. Please note this IP does still need to have protection applied for to stop others, outside the organisation, copying or using it.
Third-party designed logos – Do not assume this is a given, externally designed logos are not automatically your property. But all you have to do is be really clear when you engage a designer that you want it stated in the contract that the IP rights are signed over to you as part of the job.
Business Name Protection – ‘Passing off’ is a common law action that can be used to protect unregistered trade mark rights in the UK. For example, if you believe another business is copying your business’ name and customers may confuse the two businesses, you can legally ask the company to cease and desist. You will be responsible for the legal fees should the case go to court, and it could take some time to resolve. Alternatively, you can register your business name with Start.Biz for £99 (+VAT) per annum. As part of their Business Name Registration package from Start.Biz who will cover up to £10,000 of legal fees and deal with the administration of the case for you if a ‘Passing Off’ incident arises. Find out more here Business Name Registration.
Protections you will need to apply for – 
Trade marks (TM) – you can trade mark a name, word, logo, monogram, shape, letters, numerals, signature, or any combination of these.
Digital – this includes domain names and social platform handles. It is good to have your handle as close to the trading name as possible so people can find you easily online and know it’s you. Even if you aren’t planning or building a website just yet or putting content out on all social media platforms it’s wise to buy the domain name and set up the accounts on all major platforms. When you start to grow and want to develop your sales channels and marketing they’ll be ready waiting for you and not taken by someone else. Individuals and companies can buy/reserve domains and social media handles which they may offer to sell to you at a much higher price.
Registered design – A Registered Design protects the appearance, physical shape, configuration and the decoration of products whereas trade mark registration protects the names of your products or brands.
Patents – these are usually applied for by inventors or larger companies in the manufacturing or pharmaceutical industries. If you think your business may need a patent it is advised you seek professional advice from an expert.

3. How much is IP protection going to cost me? 

The costs of IP protection can vary dramatically so it’s good to shop around and understand all of your options:
DIY applications
It is possible to apply directly to the Intellectual Property Office (IPO) yourself in the UK. There are helpful guides on YouTube and their website, and if you have the time to work it out, this could be the cheapest way of seeking IP protection. However, it isn’t without its drawbacks. Your application may be challenged, contain mistakes, or be submitted incorrectly with little recourse. All of these will come with extra costs meaning it may not actually be as cost effective as you first thought.
Engage an IP lawyer
Their expertise and familiarity with the process will offer peace of mind however lawyers charges start from around £200-250 per hour so this is out of budget for many small businesses.
IP experts
There are companies that specialise in IP protection, that have qualified experts and will charge a lot less than a solicitor. They will also have packages aimed at smaller ventures including Business Name Registration which will help you if your business is a victim of ‘Passing Off’. Start.Biz offer a free, no obligation IP consultation where we advise what IP your business has and how best to protect it, get in touch today to find out more 0121 678 9000 or email info@start.biz

Our Finance Story

Acquiring a business is always challenging. Acquiring a business during a global pandemic might be considered stupid.
In August 2020, we acquired Start.Biz after the best part of 12 months trying to get the deal over the line and it was the best decision we ever made.
Bevan and I became friends whilst our wives, Kirsty and Michaela, were pregnant. During the first year of becoming parents both couples decided that we wanted to control our own fate.
We had spent the best part of 15 years working in businesses and helping the Directors and Shareholders of those businesses make a lot of money. We thought it was about time we pooled our resources and brains to have a go ourselves.
On 3rd January 2020, we received confirmation that our offer for the business had been accepted. After initial jubilation/celebration, the hard work began. Alongside working in full-time roles across the UK and completing Due Diligence, we had to start and complete our finance raise. Our journey to raise finance and finalise the deal had six steps:

Step 1 – “Skin in the game” 

No-one was going to lend to us without us putting some money in ourselves. The business was profitable and cash generative, but lenders wanted to see us share some of the risk. Over a period of 6 months, we managed to raise one-third of the deal value using our own money plus begging/borrowing from family.

Step 2 – Start Up Loan salvation 

We were one-third down but still some way to go. Due to us structuring the deal via the formation of a new Limited Company, we were eligible for a Start-Up Loan. Both of us and our wives were able to apply for these loans which secured another 25% of what we needed. Although these are personal loans, the business (post-acquisition) makes the repayment and at an interest of 6%, it is a great funding source to go to when there is a funding gap.

Step 3 – Alternative providers 

High-street lenders weren’t interested in the deal. At the time of our finance raise, Covid had just started, and all focus was on businesses securing CBILS or Bounce Back Loans for survival. We were way down the pecking order so had to approach other funders. Luckily, in BCRS and ART Business Loans, we found two lenders that were willing to work with us and provide the required debt to get the deal over the line. Funding secured, or so we thought….

Step 4 – Panic 

We arrived in mid-June engulfed in ‘legals’ and things started to go quiet. Having been through a few of these processes previously, I knew that this wasn’t a good sign. After what seemed like an eternity, we finally spoke to the Seller who told us that he had been giving the deal a lot of thought and decided to pull out. Bevan and I had already racked up a lot of costs to get to this point and more importantly, we had started to get emotionally invested in the business and our plans to drive it forwards. Although all seemed lost, we went back to the Seller for one final time with a revised/improved “Hail Mary” offer – two days later, it was accepted. Phew!

Step 5 – Completion 

From the moment the deal was back on track, we went into overdrive to get the deal done as quickly as possible but now we needed more finance!! We had run out of time to go to another finance provider and the effects of Covid had started to be felt throughout the UK. Eventually, one of our contacts was able to provide a short-term loan to give us the space to get the deal done before then applying for new finance, post-Completion, to repay him.
Right up to the day of Completion itself, we really weren’t sure whether the Seller would go through with the deal which, in itself, was pretty stressful. At 1:30pm on 28th August 2020, the legal documents were signed, and the business was ours.
We gave ourselves the weekend to celebrate….

Step 6 – Re-focus and drive 

From the following Monday and ever since, we have been striving to drive the business forwards with new staff, products and systems. Like any SME, day to day costs need to be managed as we grow our customer base. All of this has required investment and use of working capital. From day 1, raising finance has been inextricably linked to our ownership and management of the business. With the plans that we have in place, that isn’t going to change any time soon.

What happens after the Recovery Loan Scheme (RLS) ends on 30 June 2022?

Here are our predictions for what will happen after the scheme finsihes this year.

1. It might not end 

The RLS has already been extended once, from 31st December 2021 to 30th June 2022, and it has been mooted that there may be another further extension yet. With over 70 lenders on board and a steady stream of RLS loans still being approved, demand would suggest there is still a need for this product. Watch this space!

2. The RLS may be replaced 

We had a meeting this week with one lender who informed that talks were ongoing about a replacement for the RLS currently under review by the Government. No terms have, as yet, been released but this would imply that the Government recognise that without further encouragement on their part, the debt market place (for SMEs in particular) could start to shrink.

3. The debt market place returns to pre-Covid’19 conditions 

Without an accessible Government-backed loan product on the table. The Government may determine that it has propped up the business community enough over the last 2+ years and now it is time to start recouping those monies rather than lending more into this space. There are pros and cons of ending the RLS and the decision would be made much easier if macro-economic circumstances were not as turbulent and fragile as they currently stand.
Over the last 2+ years, high-street banks have lent multiple times their annual average and are now working hard to secure repayments; market share that alternative lenders started to occupy after 2008 has accelerated and borrowers are more comfortable with paying a premium for more accessible debt without the ongoing management and financial information requirements; debt is now commonplace amongst a high proportion of SMEs that had previously never considered or required taking it on pre-Covid.
The Chancellor has to make a big decision on the RLS in the coming months that will impact the market as a whole. One thing is certain and that is that the debt landscape has changed for good due to Covid’19: demonstrating strong entrepreneurial skills (adaptability/innovation/resilience) will determine the winners of tomorrow.

Different Types of Business Finance Explained

Accessing the right debt finance for your business can be hard – the debt market is very noisy and has some sharks patrolling its shores. Despite this, raising finance is a very common requirement for the majority of businesses whether they are a start-up or large Corporate.
Before taking on any new debt, the first question we always think requires serious consideration is “Do I actually need it?” Can the business get where it needs to be in the same timeframe without the debt, albeit with a bit more difficulty along the way? If so, don’t take the debt on and endure the short-term pain for the long-term gain.
If taking on new debt is the right option for the business, then we typically see this taking one of three formats:

1. Finance for Growth: 

Start Up Loans – Typically aimed at the pre-start/early stage marketplace, Start Up Loans are government backed loans where the borrower/s can each borrow up to £25,000 to a maximum of £100,000 for any one business. Critically, these loans are personal loans and repayments will be made by the individual. Interest rates are 6% which is reasonable relative to the high-risk nature of the loans themselves.
Working Capital – “Revenue is vanity, profit is sanity, cash is King.” Every evolving business has its working capital pinch points and cash management is one of the biggest challenges that SMEs face. Working Capital finance can give a business the breathing space it needs to manage its growth, hire new staff, take on new contracts etc.
Assets/Equipment purchases – Raising finance for equipment, vehicles or acquiring a property is a natural evolution in most business’ growth. There are a variety of ways to fund an asset-led deal which can work well for a borrower and add some tangible value to a business’ Balance Sheet. When allied with certain tax breaks (Capital Allowances) that businesses can currently receive, they are well worth consideration as a business looks to expand.

2. Finance for Mergers & Acquisitions: 

A Merger or Acquisition can be a great way to accelerate business growth and profitability. Certain sectors such as Technology and Healthcare are ripe at the moment for consolidation. Raising finance in this area can be challenging and requires a substantial amount of due diligence and financial analysis and forecasting. Getting the right finance package in place can be one of the key determining factors between a good deal and a bad one.

3. Finance for debt management/refinancing: 

In our ever-changing and unpredictable world, a rise in the Bank of England’s base interest rates can have a meaningful impact upon monthly debt repayments. As a result, refinancing debt via a cheaper provider or looking to extend the term of a repayment can ease cash pressures and allow management to focus on the core activities of the business.
At Start.biz, we have 15 years’ experience raising debt finance in all of the above areas and have built a network of industry contacts over this period to introduce our clients to. Give us a call on 0800 069 9090 or e-mail via finance@start.biz to set up your free consultation.