finance & entrepreneurs, by the supper club
DESCRIPTION
TRANSCRIPT
#finance4SUB
Finance 4 StartUp Britain
In partnership with
The Supper Club
#finance4SUB
#finance4SUB
Duncan Cheatle founder, The Supper Club www.supper-club.net
#finance4SUB
Agenda Oli Barrett and Duncan Cheatle open Finance 4 SUB Session 1 – Financial Management • Duncan Cheatle – The importance of margin • David Brackin – Cash flow management • Jamie Waller – Managing debt • Panel Q&A Coffee and networking Session 2 – Raising Financing • Alex Cheatle – friends, family & corporate • Owen Davies – Venture Capital • Gordon Christiansen – Institutional investors • Panel Q&A
#finance4SUB
The importance of profit margin…
#finance4SUB
Ask Yourself:
• Are you pricing right?
• Are you over servicing clients?
• Or carrying unnecessary costs?
• Do you make enough margin?
• Do you really need to raise finance?
#finance4SUB
David Brackin founder, Stuff u Sell www.stuffusell.co.uk
Cash flow management
#finance4SUB
Being an entrepreneur is like throwing yourself off a cliff…
…and building a plane on the way down
@stuffusell
#finance4SUB
#finance4SUB
Catastrophic failure
Very poor returns
Missed stated target
Succeed
The odds of success
All businesses fail in the same way: they run out of cash
@stuffusell
#finance4SUB
#finance4SUB
Cash management aims to avoid failure & unnecessary dilution
Cash
Funding/Credit
Capital Required
Margin
Product Cash Cycle
@stuffusell
#finance4SUB
#finance4SUB
Confidential page removed
#finance4SUB
Always know how far you are from failure
Doomsday date – a daily discipline
@stuffusell
#finance4SUB
#finance4SUB
Make sure the plane will fly
Insufficient Margin
@stuffusell
#finance4SUB
#finance4SUB
Too much capital required
Working Capital is the silent killer: fall slower
@stuffusell
#finance4SUB
#finance4SUB
Insufficient Funding
Jump off a higher cliff
Cash
Funding/Credit
@stuffusell
#finance4SUB
#finance4SUB
Summary
• Daily discipline of cash flow & doomsday date • Manage your decisions in light of doomsday
• Margins to pull out of the dive
• Working capital to fall less far • Funding to have a bigger safety margin
@stuffusell
#finance4SUB
#finance4SUB
JBW company profile
• Founded: 2004
• Employees: 130+
• Turnover: £14m in 2011/12
• Ranked No 26 in the Sunday Times Top Small 100 Company to Work for
• Main contracts: Transport for London and Child Support Agency
• Services provided: Debt Recovery and Enforcement
My subject for today is credit and debt
#finance4SUB
#finance4SUB
Giving or accepting credit
• Giving credit – o Ensure that you can afford for everyone to pay late (as they will)
o have a process and communicate it with your customers
o Outsourcing the process of recovery to a Credit control business, friend or your partner
• Accepting credit – o Negotiate suitable terms
o Understand the process before committing or signing anything
o Don not bury your head in the sand
o Make contact and understand your options e.g. VAT office before the cleaner
An early understanding of the rules of engagement will benefit everyone . A lack of understanding will lead to debt
#finance4SUB
#finance4SUB
Understand your terms and what makes credit lead to debt
• An outstanding invoice or credit agreement is debt, even if its a day old – so don't kid yourself that it is not
• Example of debts and the recovery process: o Invoice - County Court Judgement (28 days)
o County Court Judgement – Bad Credit Report (Experian 24 hours)
o Unpaid rent or VAT – Bailiffs, goods removed or property possessed (without Court permission, 24 hours and only 7 days to pay)
o Unpaid Business Rates – Bailiffs, goods removed (with Court permission, three months, 7 days to pay)
Understand the process of enforcement before you give or accept credit - simple
#finance4SUB
#finance4SUB
What to do if you become the creditor or the debtor
• You are the creditor – o Hold your head up high o Refer your customer to the process (you shared this with them) o Make immediate contact (those that scream the loudest) o Explain the impact upon you (pull on the heart strings) o Take action.
• You are the debtor – o Create a debtor plan, who do you own money to and how much o Make contact (early as people don’t like to be the chaser) o Share your plan, understand other options e.g. administration etc
Debt does not go away and people know that. Don't be shy, but also not be naive
#finance4SUB
#finance4SUB
Useful information
• Late Payment of Commercial Debts (Interest) Act 1998
• www.moneyclaimonline.co.uk
• www.payontime.co.uk
• www.hmcts.co.uk
• www.jbw.co.uk
My experience of debt is: o Everyone has it (footballers, FTSE 100 firms and the Government)
o Some manage it better than others
o I personally enforce over 20,000 debt orders a month and 98% pay
Communication is the answer to it all
#finance4SUB
#finance4SUB
Panel Q&A Host: Oli Barrett Panellists: Duncan Cheatle, Jamie Waller and David Brackin
#finance4SUB
#finance4SUB
Networking Host: Oli Barrett
#finance4SUB
#finance4SUB
Alex Cheatle Founder and CEO, Ten Group
friends, family & corporate
#finance4SUB #finance4SUB
#finance4SUB #finance4SUB
#finance4SUB
The Ten Mission
We exist to earn and deserve
the trust of our members
through regular, successful,
personalised experiences
and we use expert people
and knowledge management
to make our business better
as it gets bigger.
#finance4SUB
#finance4SUB
Specialist
teams of experts
Pioneering
information
sharing
Intelligent
support services
#finance4SUB
#finance4SUB #finance4SUB
#finance4SUB #finance4SUB
#finance4SUB #finance4SUB
#finance4SUB
#finance4SUB
#finance4SUB
#finance4SUB
#finance4SUB #finance4SUB
#finance4SUB
#finance4SUB
#finance4SUB #finance4SUB
#finance4SUB
Meaning is more
powerful than a five
year plan
#finance4SUB
#finance4SUB #finance4SUB
#finance4SUB #finance4SUB
#finance4SUB
#finance4SUB
#finance4SUB #finance4SUB
#finance4SUB #finance4SUB
#finance4SUB
#finance4SUB
#finance4SUB #finance4SUB
Owen Davies founder, My Hobby Store
www.myhobbystore.co.uk
Venture Capital
#finance4SUB
Magazines E-commerce Community sites
Events
Our brands…
#finance4SUB
#finance4SUB
Our funding path
MBI funded by
Endless LLP
Exponent purchase
Endless stake
Chrysalis VCT
invest in
ecommerce
Turnaround
Funding
Private
Equity VCT
#finance4SUB
#finance4SUB
“Media companies are going to become retailers and retailers are going to become media companies”
How we see it..
#finance4SUB
#finance4SUB
Content
Community Commerce
Our mission…
A new e-commerce startup
#finance4SUB
#finance4SUB
ANGEL
INVESTORS
£1m
PRIVATE
EQUITY
£5m+
VCTs
£1m - £5m
Decide level of funding
#finance4SUB
Know funder hot buttons
Generalist
AIM
Sector Specific
Asset Backed
#finance4SUB
#finance4SUB #finance4SUB
#finance4SUB
Networking
Soundbite
Plan your exit
People
Pitch for funds
Have a clear proposition
#finance4SUB
#finance4SUB
The deal structure
Debt instrument eg £680k
1st charge
High interest
Equity eg £20k
£700k investment
#finance4SUB
#finance4SUB
Institutional Investors
Gordon Christiansen
CEO, Colway
www.colway-limited.co.uk
#finance4SUB
#finance4SUB
Introduction
• Family business until 1990
• Corporates until 2004
• GM / CEO since 1997
• Current business since 2004, MBO 2006
• Debt / equity deal
– Restructured 2009 & 2012
Introduction
#finance4SUB
#finance4SUB
Colway group
£24m turnover, £1.6m EBITDA, 155 staff, 7 London locations
Inspiring seriously creative people Retail art and graphic materials. 4 stores in London, + mail order and on-line
Expert’s choice for creative technologies Workflow and digital colour output for media services and design businesses
Making offices work Office Supplies, Catering & FM, Computer Supplies, Document & Data Storage, MPS, Printed Media, Studio Supplies,
Delivering value for workplace investment Office interiors, space planning, workplace furniture, consultancy
Colway group
#finance4SUB
#finance4SUB
Who are they?
• “High Street” banks
• Foreign banks – corporate divisions
• Merchant banks
• Asset Back Lenders (ABLs)
• Private Equity / Venture Capital
• Public – AIM, London Stock Exchange
Who are they?
#finance4SUB
#finance4SUB
Getting ready
• Professional advisor (s)
– Investors are used to dealing with advisors
• Balanced management team
– CEO, CFO ++
• Excellent business plan
– Information Memorandum; tell the story
• Brush up your presentation skills
– They buy you, be credible
Getting ready
#finance4SUB
#finance4SUB
Managing the relationship
• High quality financial information
– Monthly packs, agree the format
• Regular reviews
– Board meetings with agenda and minutes
• Updated and accurate forecasts
– Re-look at your numbers regularly
• No surprises
– Basically, they hate them
Managing the relationship
#finance4SUB
#finance4SUB
Lessons learned
• They need you more than you need them
• They are not your friends
• Always have more than one option
• Negotiate hard – fees, covenants
• Seek advice; speak to people you trust
• Never sign Personal Guarantees
• Strike a Work:Life balance
Lessons learned
#finance4SUB
#finance4SUB
Panel Q&A Host: Oli Barrett Panellists: Alex Cheatle, Owen Davies & Gordon Christiansen
#finance4SUB
#finance4SUB
End of morning session
#finance4SUB
If you would like any further information about the speakers, The Supper Club or StartUpBritain then please feel free to contact us on either [email protected] or [email protected]