Finance & Entrepreneurs, by The Supper Club

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Finance 4 StartUp Britain

In partnership with

The Supper Club

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Duncan Cheatle founder, The Supper Club www.supper-club.net

http://www.supper-club.net/



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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

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The importance of profit margin…

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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?

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David Brackin founder, Stuff u Sell www.stuffusell.co.uk

Cash flow management

http://www.stuffusell.co.uk/

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Being an entrepreneur is like throwing yourself off a cliff…

…and building a plane on the way down

@stuffusell

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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

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Cash management aims to avoid failure & unnecessary dilution

Cash

Funding/Credit

Capital Required

Margin

Product Cash Cycle

@stuffusell

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Confidential page removed

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Always know how far you are from failure

Doomsday date – a daily discipline

@stuffusell

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Make sure the plane will fly

Insufficient Margin

@stuffusell

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Too much capital required

Working Capital is the silent killer: fall slower

@stuffusell

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Insufficient Funding

Jump off a higher cliff

Cash

Funding/Credit

@stuffusell

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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

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Jamie Waller founder, JBW www.jbw.co.uk @jbwgroup @jamiebwaller

http://www.jbw.co.uk/

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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

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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

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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

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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

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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

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http://www.moneyclaimonline.co.uk/

http://www.payontime.co.uk/

http://www.hmcts.co.uk/

http://www.jbw.co.uk/

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Panel Q&A Host: Oli Barrett Panellists: Duncan Cheatle, Jamie Waller and David Brackin

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Networking Host: Oli Barrett

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Alex Cheatle Founder and CEO, Ten Group

friends, family & corporate

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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.

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Specialist

teams of experts

Pioneering

information

sharing

Intelligent

support services

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Meaning is more

powerful than a five

year plan

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Owen Davies founder, My Hobby Store

www.myhobbystore.co.uk

Venture Capital

http://www.myhobbystore.co.uk/

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Magazines E-commerce Community sites

Events

Our brands…

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http://www.modelfair.com/

http://www.giantcod.co.uk/index.php

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Our funding path

MBI funded by

Endless LLP

Exponent purchase

Endless stake

Chrysalis VCT

invest in

ecommerce

Turnaround

Funding

Private

Equity VCT

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“Media companies are going to become retailers and retailers are going to become media companies”

How we see it..

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Content

Community Commerce

Our mission…

A new e-commerce startup

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ANGEL

INVESTORS

£1m

PRIVATE

EQUITY

£5m+

VCTs

£1m - £5m

Decide level of funding

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Know funder hot buttons

Generalist

AIM

Sector Specific

Asset Backed

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Networking

Soundbite

Plan your exit

People

Pitch for funds

Have a clear proposition

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The deal structure

Debt instrument eg £680k

1st charge

High interest

Equity eg £20k

£700k investment

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Institutional Investors

Gordon Christiansen

CEO, Colway

www.colway-limited.co.uk

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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

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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

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http://www.londongraphics.co.uk/

http://www.londongraphicsystems.co.uk/index.php

http://www.redspaceinteriors.co.uk/index.php

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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?

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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

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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

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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

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Panel Q&A Host: Oli Barrett Panellists: Alex Cheatle, Owen Davies & Gordon Christiansen

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End of morning session

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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]

Economy & Finance

Finance & Entrepreneurs, by The Supper Club