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UK firms ramp up investments amid Brexit worries  

British businesses appear to have shrugged off worries over the Brexit vote, increasing investments by a rate of 0.9 percent over the last three months, according to official government data released on Friday.

Earlier this year, the pound plunged after the Brexit referendum results became clear.

Economists expected the resulting inflation to slow down UK’s economic growth, but the latest data from the Office for National Statistics seem to be showing a different picture.

The increase in capital spending, which helped push the UK economy forward, beat earlier expectations of a 0.6 percent increase. The growth projection was based on a poll of economists conducted by Reuters.

The rise in investments was supported by a rebound in British exports as well as a sizeable increase in household spending, the ONS said in its report.  Overall, Britain’s economy nudged higher by 0.5 percent three months following the June referendum, where the vote to leave the European Union won.

The ONS, however, cautioned that most of the investment data covered by Friday’s report probably included expenditure decisions made prior to June’s vote.

Meanwhile, a separate survey by the Confederation of British Industry shows that UK retail sales likewise trended positively, rising at its quickest rate in more than a year in November. Experts project strong consumer spending to continue until the fourth quarter, driving economic numbers up.

While big firms such as Google, Facebook and Nissan have indicated their intentions to invest in Britain despite the uncertainty over the decision to leave the EU, recent surveys show that smaller companies are holding back plans for capital spending until economic outlook improves.

Anticipating a slow down in private investments in digital infrastructure, transportation and housing sectors in the near term, finance minister Philip Hammond said this week that his office will be borrowing 23 billion pounds to fund investments in these sectors over the next five years.

If you are unsure about your business’s financial future following the Brexit vote then please get in touch. At Assured FD Services we have over 20 years expertise working as a full and part time finance director for companies across Leeds & Yorkshire, aswell as the rest of the UK.

Assured FD Services 1 Comment

The Fastest Growing Method Of Raising Finance For Your Business Or Startup.

If you haven’t looked into crowdfunding and you need capital for your business or startup, then maybe this blog post is for you.

The way crowd funding works is when a large number of people invest a small amount of money each. This is beneficial to both parties as you don’t need to convince one person to invest a large lump sum and the investors often spread their investments across a few projects which significantly reduces their risk.

Another perk to crowdfunding is that anyone can invest in it as the minimal amounts are flexible. This allows people who wouldn’t usually be able to afford a business investment get a piece of the pie.

 

How crowd funding works

 

Some of the pros and cons

Obviously, one big pro is that entrepreneurs acquire funding for their ideas which allows them to bring them to life.

Secondly, investors can help with the creation of the final product as they are often the first people to receive a prototype and provide feedback. Because they are invested they provide useful feedback then can really help improvement the product. Like a mastermind. This increase the chance of success for both the entrepreneur and the investor.

If this sounds like a good idea to you then you would also be interested to hear that at the end of the day you would retain the full decision-making power when it came to the business. If investors didn’t agree with anything you were doing, because they only invested a small amount it’s easier for them to exit than if they had invested a larger sum.

Another positive is that it is a very fast way to raise finance when compared to more traditional means, and also you would benefit from no fees.

It can also be good for promotion as unique and clever ideas spread fast on these platforms. Millionaires have been made on platforms like Kickstarter and Indiegogo before the product has ever been produced.

A negative from the entrepreneur’s point of view is you risk the chance of having your product or amazing idea ripped off and duplicated before it’s even been produced.

A bad thing from an investment standpoint is that these are usually riskier projects so a loss must be expected, however as mentioned earlier if they spread their investment through several projects they can greatly reduce risk.

Crowdfunding Models: Broken Down

  1. Donations – These projects are often artistic or cultural rather than business and the investors doesn’t really get anything tangible back. Just the feeling of doing a good deed.
  2. Giving a reward for a donation – Investors in these projects are rewarded for their donation with things like recognition, prizes, raffles or if a physical product is being sold often first editions and prototypes of the product. Under this model generally no money is returned to the investors.
  3. Lending-based crowdfunding – This is where investors agree to lend their money to a business. The business can benefit from getting a smaller interest rate than if they got a loan from the bank as well as the investor benefitting by profiting at the agreed rate.
  4. Equity-based Investments – This is where a business sells off a share to the investors. Typically, in crowdfunding circles it’s common for shares to be offered from around £100 and upwards.

If you require any assistance or guidance with negotiating any of these arrangements an interim CFO is an incredible resource to have.

Is this common?

More and more people are getting involved with crowdfunding every year. In 2015 in the UK alone over 3.2 Billion was raised in crowdfunded loans, investments and donations.

 

Crowding Funding Graph

 

Where to start?

Luke Davis offers some insight into crowdfunding business networking.

 

For this sizeable collection of entrepreneurs who are not fortunate enough to access an affluent group of friends or relatives, a proactive approach is paramount. Business owners or those hoping to start a company should embrace as many networking opportunities as they possibly can to stir up greater awareness of their product and growth intentions. When the time comes to seek initial investment, you will then have established solid connections with like-minded business owners or investors who could be your first point of contact to raise that crucial 30%.

To read more click here.

 

Alternatively, there are platforms out there to promote your crowdfunding project and have their community invest. A number of UK services are provided below.

  1. Crowdcube – Is one of the few crowdfunding companies that solely helps British businesses so this takes our number one spot.
  2. Crowdfunder – Another UK based company – This platform is especially great for community projects but also has some business opportunities.
  3. Ratesetter – Voted the UK’s leading peer to peer lending based service. They boast lending out over £1 billion without any of its customers losing a penny.

There are also dozens and dozens of international platforms available such as Kickstarter, Indiegogo and GoFundMe, but for the purpose of our audience, I’ve tried to keep it to UK.

If you are looking to raise capital for your business or startup there is a huge amount of options available to you, including the SEIS programme we blogged about earlier this year. We, at Assured FD Services, are experts in business finance providing first class business financial management as part time FD across Leeds & Yorkshire and the North of England. Contact us today, to discover how we can help you launch your business idea or accelerate the growth of your current business.

Phil Hall 1 Comment

Need money to fund your start-up? Try the SEIS with Assured FD.

Have you had that fabulous idea that cannot fail, but can’t get funding from your Bank without giving a personal guarantee?

Then the SEIS, or Seed Enterprise Investment Scheme to give it its full name, could be the perfect solution for you.

The problem you face when starting off in business on your own is to get investors willing to back you.

By definition you don’t have trading history to back-up your confidence and you won’t have / or don’t want to offer personal assets to guarantee the debt.

On the other hand an investor knows that funding a startup is high-risk. Most start-ups fail after all.

The SEIS, a little known scheme set up by the former chancellor attempts to solve these problems by giving the investors large tax reliefs from the outset and also providing further tax reliefs as compensation should the business fail.

Who can use this scheme? Just about any start-up or company that has been trading for less than 2 years with few exceptions.

Who can invest? Just about anyone as long as you’re not an existing employee or own 30% or more of the company i.e. You (That rules out your spouse, mum, dad and children too by the way) But friends can invest- up to £100,000 if they have the cash and the tax bill. So can wider family – brothers and sisters.

What do Investors gain? 50% of their investment can be offset against their tax bill straight away even though they have to hold the shares for 3 years. So that £100,000 investment allows the investor to reduce his tax bill by £50,000.

Should he sell his shares after the 3 years have expired, there is no capital gains tax. Should the business be profitable our investor will also be eligible for dividends.

And what if the business fails? The Investor can claim a further relief of his marginal tax rate multiplied by the amount of his investment less the tax he has already recovered. To explain that – our investor above has invested £100,000 and claimed back his £50,000 relief. Should the business fail he, as a higher rate tax payer, can reclaim 40% of £50,000 (£100,000 – £50,000) or £20,000.

If there is a better way to fund your startup, Assured FD Services is unaware of it.

Interested? Contact Assured FD using our contact form or email info@assuredfd.co.uk

Assured FD Services

Phil Hall No Comments

Neither a Borrower nor a Lender be…

Well the Banks are keeping to their side of the bargain if you believe what you read in the press. My experience in 2011 though couldn’t have been more different. I found the Banks generally keen to support the businesses I represent. The issue I found was not “if” but “how” and it is with this in mind that I want to put the case for Confidential Invoice Discounting.

The attitude of the Banks has definitely changed post credit crunch. The preference now, it seems to me, is for C.I.D financing over overdrafts, being for them a very capital effective method of lending. My problem is that I have yet to work for an MD that likes to admit using Invoice Discounting – probably because it is too closely associated with factoring – “the lender of last resort”

My experience is that Banks understand this and take the “confidential” part of the name seriously – even when they contact your customers as they can be required to do at the outset and during audits.

But first the “Cons”. My view is that it is not a suitable method of financing an acquisition for example and it can appear expensive – a low rate of interest but a service charge that needs to be paid even when you’re not utilising the facility.

But at a time when the value of other forms of security, like property, have fallen, being able to use your sales ledger to access funds quickly means that this method of financing will increase in popularity. And of course the amount you can access grows as your business grows. Best of all – no personal guarantees – though do watch out for indemnity clauses.
If you need to talk to someone about financing and invoice discounting in particular – contact me.