Creating a competitive advantage in the SME sector

In a previous blog, my far more cerebral colleague, Stephen Gregson, managed to weave French philosopher Voltaire and man of letters Michel de Montaigne into a discussion about strategic business planning, and assisting clients see through the fog of current business challenges.

I’ll now attempt to link colour-blindness, garden peas and low-cost digital manufacturing initiatives to building a sustainable competitive advantage and shareholder value…stick with me…

My career in accountancy and corporate finance is a quirk of genetics – throughout my youth I wanted to follow in my father’s footsteps and be an engineer. However, a session with my school careers adviser when I was making my A-Level choices cruelly pulled the rug from beneath my engineering ambitions with the news that as most engineering design drawings, electrical diagrams, gas/chemical charts etc are colour-coded, not being able to tell the difference between red and green could be a tad problematic.

My optical deficiencies had been identified some years earlier when, knowing my mum always wanted to impress the local Vicar when he made his occasional home visits, I ran into the house proclaiming his imminent arrival as he had just parked his red Mini a few doors away. 30 minutes later with tea and cakes at the ready, he hadn’t arrived – it turned out it wasn’t the Vicar at all, but someone visiting a neighbour …in a green Mini.

Numerous eye-tests later I was formally diagnosed, laying the foundations of my subsequent career decisions. My younger brother’s similar diagnosis a few years later was a much more straightforward affair when he innocently asked at the dinner table one evening “Mum, why are peas called green peas when they’re red” ?…he’s also not now an engineer.

But, years later, I am still a frustrated engineer and still fascinated by how engineering has historically found ingenious solutions to a vast range of industrial, commercial and business problems. This led me to recently watch a webinar arranged by the ICAEW and Cambridge University’s Institute for Manufacturing, entitled “Making digital manufacturing on a shoestring work.”

I recommend any business owners seeking to gain an insight into how digital technologies can now be implemented at extremely low cost, and to help move your business into the age of Industry 4.0, to visit the IfM website – https://www.ifm.eng.cam.ac.uk/insights/digital-manufacturing/helping-smes-towards-digitalisation/ where a number of SME business owners and academics address how this thinking is helping them tackle an interesting range of operational issues.

Both myself and most of the business owners I have talked to about strategically moving into an era of digitisation and introduction of AI, have assumed that the cost would be prohibitive and therefore beyond their reach. But, this no longer has to be the case based on the IfM’s approach which uses cheap, off-the-shelf technology and devices, and readily available open-source software to deliver significant operational and cost improvements for hundreds of £’s rather than tens of thousands of £’s.

The IfM’s primary focus sits perfectly alongside the approach we also take to assist SME client reviews and assess and challenge their historic busines models, with a view to improving the business and driving shareholder value.

A key part of the non-transactional advisory elements of our Corporate Finance teams’ approach to working with our clients is structured around constructively challenging business owners and management teams to break-out of a cycle of repeating next month, exactly what they did the previous month, and the month before that and the month before that, to open their eyes to alternative thinking.

With all of the competing pressures and challenges of running a business, particularly with the added difficulties and uncertainties arising from COVID-19, it’s not surprising that many businesses, management teams and shareholder groups tend to adopt a primarily inwardly-focused approach to “business improvement”, often missing the opportunity and benefits of exploring how wider thinking, alternate strategies and new technologies could perhaps help deliver significant operational improvements, cost reductions and long term competitive advantage.

In a commercial world dominated, at present, by the combined uncertainties of COVID-19, Brexit and wider global geo-political uncertainties, making your business more robust and more able to successfully take advantage of what will inevitably be an altered landscape of opportunities and challenges over the coming months, is perhaps no longer a choice but now an imperative.

A key take-away from the IfM’s “digital manufacturing shoestring” agenda is perhaps therefore that the adoption of strategic business planning and business improvement processes is not exclusively the domain of much larger multi-national businesses with the budgets to deploy and significant financial resources to take their businesses forward and improve their competitive position – these strategies and thought processes are available to every business.

We adopt a structured but flexible approach to strategic planning and business improvement – if you would like to discuss further, please contact Simon Carruthers, Corporate Finance Director or a member of the Corporate Finance team on 0161 519 5050 or email info@mooreandsmalley.co.uk.

PS – there’s a happy ending to the above story. As colour blindness is passed through your mother’s chromosomes, my daughters are both free of this visual impairment and guess what…the youngest is now a graduate engineer!

Protecting your investment portfolio

The pandemic has placed immense pressure on financial markets across the globe. Markets hate uncertainty and, in recent months, that has been one commodity not in short supply.

Heightened volatility, however, does always demonstrate one investment certainty – the importance of portfolio diversification as a means of guarding against market turbulence.

Time to take stock

In uncertain times like these, it’s always good to revisit your investment objectives and review your long-term financial goals. In particular, it’s worth considering your attitude to risk and whether your current strategy provides sufficient protection to your portfolio. The key is generally to ensure you hold a diverse portfolio with a mix of investments suited to your particular risk appetite.

Benefits of diversification

A balanced portfolio is generally one containing a combination of asset classes, which typically includes equities, bonds, property and cash. Each of these provides differing degrees of risk. So, while equities have the potential to deliver higher returns than bonds, the latter can provide an element of capital preservation when investors turn anxious and become risk averse. Adopting a diversification strategy essentially ensures investors do not put all their eggs in one basket.

Beware over-diversifying

While building diversity into an investment portfolio is undoubtedly important, investors must also guard against over-diversification. This is because holding too many assets can spread your money too thinly and thereby have a detrimental impact on potential returns.

Accept volatility

The coronavirus outbreak has also highlighted another key lesson for investors: acceptance of market volatility. Most people invest for the long term and so need to look beyond short-term volatility. As a result, investors’ best policy at the moment might simply be to sit tight, if advised to do so in their specific circumstances.

Need more information?

This article should not be construed as advice or a personalised recommendation. The most suitable solution for you will depend on your own personal circumstances.

We can advise on the investment strategies and products most appropriate for your objectives and needs. Please get in touch with a member of our financial planning and wealth management team.

MHA Moore and Smalley is authorised and regulated by The Financial Conduct Authority under reference number 448716. Full details regarding our practice legal status can be found here.

Business Succession: On Death

What do you have in place should the worst happen?

Many of you reading this article will have considered at some point establishing a personal will and your likely motives for putting this in place will be one or more of the following; you want to limit the amount of tax you pay; if you have children you want to appoint a guardian and ensure they are provided for financially; you want to head off any potential family disputes; and critically you want to have control over how your estate will be distributed after your death.

Individuals generally want to have peace of mind that on their death their wishes are carried out as they would want them to be and it is the same from a business point of view.

Individuals who have business interests via Limited Companies, Partnerships, or LLPs should ensure there is clear instruction as to who and how their business interests are left to…

Worryingly, over fifty percent of UK businesses have not left instructions in a will or any special arrangements regarding shares on their death.

Let us consider an example; a limited company, with 2 shareholders, each owning an equal share of the business. The shareholders are both married, and both have dependents. If we asked either of these shareholders what they wanted to happen to their share of the business on death, they’d likely say they would want their respective families to inherit the cash value of their share of the business and rightly so. However, with no formal agreements in place the reality is often quite different.

The shares would generally pass to the spouse under the terms of the will (and if there was no will in place, the rules of intestacy would apply). The spouse may wish to ‘sell’ these back to the business, but there is nothing binding to make this happen. The business may not be able to buy the shares from the spouse (even if they wanted to) as they may not have any readily available cash.

Perhaps borrowing is an option. This will take time.

Would it even be possible against the likely backdrop of a potentially traumatic period for the company?

They could sell the shares on the open market but, would they get a fair value?

How long would this take?

The business would almost certainly not welcome this course of action.

What else?

The spouse may decide to keep the shares and become actively involved in the business. This could be an unwelcome event for the remaining business owner.

Having a business will in place can provide businesses with a solution. It will allow the funds to be in place to facilitate the purchase of shares and it will ensure that the business can continue, and the family are compensated as per the client’s wishes. Peace of mind for all involved and minimal disruption to the business.

Have a think about you own business, whether that be a Partnership, an LLP, or a Limited Company.

Have you considered what you would like to happen should the worst happen?

What have you got in place to ensure your wishes are carried out?

Importantly, if you believe you have something in place, when was it last reviewed?

Does it still meet your needs?

For an initial free no obligation conversation about your own individual circumstances, please contact our Financial Planning Consultant Nathan Douse who specialises in this area on 01772 821021 or email nathan.douse@mooreandsmalley.co.uk and update your business accounts and finances anytime, anywhere via the internet. It enables you to keep your business finances organised.

Business Loan Protection – What are the risks?

There is no doubt that we are living in unprecedented times. Over six months ago the country was put into lockdown and to this day the thought of returning to what once seemed like ‘a normal life’ still seems some way off. We now find ourselves dealing with local lockdowns, track and trace, wearing of masks in public places and other measures introduced by the government in an attempt to deal with and contain this virus.

From a business point of view many sectors find themselves having to navigate through unchartered territory and immersed in long term uncertainty.

The government announced various measures to support businesses facing difficulties, two of which are the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS). The schemes aim to support long-term viable businesses who may need to respond to cashflow pressures by seeking additional finance.

There is no doubt that these schemes will have provided a crucial financial safety net for many firms, but they do also raise questions about how business owners should protect their debt.  

This pandemic will have forced many business owners to think even more carefully about how to protect their biggest assets, which is themselves and their key people. But for many business owners they do not realise that their debt does not die with them and that any loans will have to be repaid if they do pass-away. Furthermore, how would this debt be serviced in the event of long-term sickness or incapacity?

Remember, the borrower always remains 100% liable for the debt. You’ll be responsible for repayment of 100% of the CBILS facility, not just the 20% outside the coverage of the government’s guarantee and while no personal guarantees are required with the BBLS, the responsibility for paying back the loan rests with the business. Where defaults occur, lenders will follow their standard commercial recovery procedures, including the realisation of security (where appropriate), before making a claim against the government’s guarantee for any shortfall.

Furthermore, these coronavirus-related loans could well compound the existing issue of corporate debt, some of which may well be subject to personal guarantees, namely, your biggest asset, your home. Now is an ideal time to sit down with your financial planner and look at ways to insure and protect your business and family should the worst happen.

At MHA Moore and Smalley, we specialise in formulating and implementing comprehensive protection solutions that will help mitigate the risks a business is faced with. Whilst cost is often an objection, in reality, a robust solution can be put in place for a fraction of most business’ turnover or profit. What business owners should be asking themselves is what is the cost of not having something in place – not just on their business but also their families.

For an initial, no obligation meeting to undertake a review of your business protection arrangements please contact Nathan Douse, Financial Planning Consultant at MHA Moore and Smalley.

E-mail: nathan.douse@mooreandsmalley.co.uk or call the office on 01772 821 021.

Employee Benefits Brochure

As the pace of life moves faster and faster the demands on our time continue to increase. Many employees are now turning to their employer to help them manage their work-life balance.

This is why we have designed and created a brochure that sums up Employee Benefits, what they are and why you should implement them into your work culture.

A well thought through, relevant employee benefits programme can make your organisation stand out from the rest and help you recruit the best employees and retain them for the long term.

If you already have benefits in place, it is important to review these to take advantage of new products and solutions that are on the market as well as making sure that they remain relevant to your employees.

We can help you to become an employer of choice.


Contact us

If you would like to discuss any information discussed in this article, please make sure to get in touch with our Financial Planning Consultant, Dave Gleeson on dave.gleeson@mooreandsmalley.co.uk or ring 01772 821 021.

Business Succession: On Death

What do you have in place should the worst happen? Many of you reading this article will have considered at some point establishing a personal will and your likely motives for putting this in place will be one or more of the following; you want to limit the amount of tax you pay; if you have children you want to appoint a guardian and ensure they are provided for financially; you want to head off any potential family disputes; and critically you want to have control over how your estate will be distributed after your death.

Individuals generally want to have peace of mind that on their death their wishes are carried out as they would want them to be and it is the same from a business point of view. Individuals who have business interests via Limited Companies, Partnerships, or LLPs should ensure there is clear instruction as to who and how their business interests are left to…Worryingly, over fifty percent of UK businesses have not left instructions in a will or any special arrangements regarding shares on their death.

Let us consider an example; a limited company, with 2 shareholders, each owning an equal share of the business. The shareholders are both married, and both have dependents. If we asked either of these shareholders what they wanted to happen to their share of the business on death, they’d likely say they would want their respective families to inherit the cash value of their share of the business and rightly so. However, with no formal agreements in place the reality is often quite different.

The shares would generally pass to the spouse under the terms of the will (and if there was no will in place, the rules of intestacy would apply). The spouse may wish to ‘sell’ these back to the business, but there is nothing binding to make this happen. The business may not be able to buy the shares from the spouse (even if they wanted to) as they may not have any readily available cash. Perhaps borrowing is an option. This will take time. Would it even be possible against the likely backdrop of a potentially traumatic period for the company?

They could sell the shares on the open market but, would they get a fair value? How long would this take? The business would almost certainly not welcome this course of action.

What else? The spouse may decide to keep the shares and become actively involved in the business. This could be an unwelcome event for the remaining business owner.

Having a business will in place can provide businesses with a solution. It will allow the funds to be in place to facilitate the purchase of shares and it will ensure that the business can continue, and the family are compensated as per the client’s wishes. Peace of mind for all involved and minimal disruption to the business.

Have a think about your own business, whether that be a Partnership, an LLP, or a Limited Company. Have you considered what you would like to happen should the worst happen? What have you got in place to ensure your wishes are carried out?

Importantly, if you believe you have something in place, when was it last reviewed?

Does it still meet your needs?

Contact us

For an initial free no obligation conversation about your own individual circumstances, please contact our Financial Planning Consultant Nathan Douse who specialises in this area on 01772 821021 or email nathan.douse@mooreandsmalley.co.uk

Business protection series

Maximising your Deposit returns and Security

As we continue to manage our way through the Covid pandemic and start to see some aspects of life return to some form of normality, many of us will have had considerable time on our hands to consider our own financial wellbeing and this will also be true for Charities.

At MHA Moore and Smalley, we understand that it can be difficult for Charities to build and manage cash reserves.

Interest rates in the UK have been at a low level for several years. Currently the Bank of England are weighing up their options to stimulate the UK economy and give it a much-needed boost to help it through the Coronavirus crisis, including looking at a negative base rate. More potential bad news for savers looking at generating a return from their deposits.

For Charities this leaves them with little or potentially no return on the funds they rely on to keep everything going.

The Financial Planning team at MHA Moore and Smalley can help as planning is the cornerstone of financial confidence. We can assist with reviews of rates, mapping a plan of how to secure the highest rates in the marketplace, with an eye on capital security, conducting due diligence on the institutions, and for a lot of our existing charity clients, providing that extra layer of security and acting as an independent credible challenge to the trustees decisions.

As advisers, we provide peace of mind in these uncertain times and help to provide access to rates that are not available in the marketplace. We also take away the headache of research, thus saving time now and in the future on what can be an essential exercise for the charity to maximise its returns.

We do charge fees for our work, but for our existing clients we have been thanked for our efforts and told that we have provided great value for money in the work that we do.

If you feel that you could benefit from an initial no obligation conversation about your own charity’s cash deposits please contact a member of the Financial Planning team on 01772 821 021 or email financialplanning@mooreandsmalley.co.uk

The Great Wealth Transfer: Why it is good to talk

Transferring wealth from one generation to the next is a difficult conversation topic, but with the baby boom generation expected to pass down a record-breaking amount of assets over the coming years, confronting this taboo has never been so important. And experts suggest that, while discussions involving money can be uncomfortable, the best approach is invariably to talk.

The next 30 years are expected to witness the largest ever intergenerational passing of wealth as baby boomers – the wealthiest generation in history – prepare to pass on assets to their heirs.

Commentators have dubbed it the ‘Great Wealth Transfer’ with estimates* suggesting an unprecedented £5.5tn could be set to pass between generations in the UK.

Involve the family

While the significance attached to the wealth transfer process is unquestionable, most families remain uncomfortable talking about money, with finance among the few remaining taboo topics. As a result, discussing money issues with their children can prove a difficult task for many parents, with conversations typically awkward or stilted. However, it is vitally important retirees involve their offspring in financial planning decisions if the wealth transfer process is ultimately to be successful.

A balancing act

The issue of inheritance unsurprisingly raises a number of concerns for parents. For instance, there is the dilemma of wanting to help children financially while not dampening their offspring’s work ethic. In addition, parents need to balance the emotional desire to leave significant sums to heirs with the need to ensure their own financial wellbeing, particularly in an era of spiralling long-term care costs.

Start the conversation

Arguably the key inheritance challenge, though, remains ensuring your children are ready to take on financial responsibility for family assets. Encouraging their involvement in your financial planning decisions now is a particularly good way to boost their financial literacy and ensure they are ready when the time comes. So, introduce them to us and we can help you start those difficult conversations.

* Kings Court Trust, 2018

The information given in this article should not be construed as financial advice.

For an initial, free, no obligation meeting, please get in touch with our experienced Financial Planning Consultants at your local office or email info@mooreandsmalley.co.uk

This article was originally written by our colleagues at MHA Tait Walker.

Business Protection: Business loans

In our third instalment of our Business Protection blog series, we look at business loan protection.

Many people have a mortgage on their home. Many will take out life cover so that the debt would be repaid if they died. This type of insurance provides peace of mind that their family can go on living in the home with no lender chasing the debt, if the worst was to happen.

Many businesses also have some type of debt; commercial loans, mortgages, overdrafts. These will hopefully help the business grow and prosper. However, what if owners or the loan guarantors die or become critically ill? The debt could soon become a significant liability if the business doesn’t have sufficient assets to repay the loan.

Does a commercial loan have to be repaid on the death of the guarantor?

Almost certainly yes. Even a director’s loan would have to be repaid.

If this is the case, where does that money come from? It could leave a deficit in the accounts if taken from the business.

Could the business take the financial burden?

If there aren’t sufficient assets to cover the debts, lenders can seek repayment from the guarantors estate. This could even mean calling on personal assets including the family home.

Which businesses benefit most from insuring debt?

Essentially, every business should consider insuring debt.

Ironically, the businesses that are least able to repay their debts (often smaller businesses and start-ups) are more vulnerable and less likely to have bought cover.

Business Loan protection

What is it?

It’s a type of insurance policy for businesses. It will help pay off business debts if the owner/debt guarantor dies.

Critical Illness cover option is also available.

Who is covered?

Anyone who has guaranteed the debts – usually the owner, but can be a partner or director of the business.

Who benefits?

The business, because debts are repaid at a difficult time.

Other blogs in this series are also available:

1: Tax efficient life cover
2: Shareholder Protection

Contact us

For further information on the content of this blog, please contact Nathan Douse on 01772 821021 or email nathan.douse@mooreandsmalley.co.uk 

The purpose of this blog is to provide technical and generic information and should not be interpreted as a personal recommendation or advice.

This article was originally written by our colleagues at MHA Tait Walker.