Category Archive: People

  1. The five key benefits of EMI share option schemes

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    An EMI option scheme is by far the most beneficial tax-advantaged share option arrangement for an employee. These are what I believe to be their five key benefits:

    The first and main benefit of EMI is the array of tax advantages for employees. There is no income tax to pay when the options are granted or when they’re exercised to buy the shares. When an employee sells the shares, they will pay only 10% Capital gains tax on any profit. Without EMI, they would face paying up to 45% income tax instead.

    Second, the way that the scheme can be set up is very flexible. The only real limit set down in legislation is that options must be exercisable within 10 years. So employees can be given the right to buy their shares at any time from immediately to the 10 year limit. The majority of our clients use an exit only vesting arrangement; this means that the employees can only buy their shares when the company is sold. The other clients use a time-based structure, such as vesting over the first three years after the options are granted, rather than waiting until an exit event.

    The third benefit is that the options provide a very tangible incentive for key employees to stay with the company.  The prospect of a significant profit within a foreseeable period strongly encourages retention of staff, especially as most option agreements provide that options lapse automatically if an employee leaves.

    Fourth, it’s been shown that employees feel much more aligned with the interests of shareholders and the board if they have a tangible interest in the company’s ownership.  It can be a great motivator if all stakeholders are working towards a profitable exit, with everyone focused on building shareholder value.

    Finally, the fifth benefit: a psychological advantage; share options make an employee feel more appreciated, because options are a benefit that can be awarded alongside the usual salary package and they’re about the longer term. It says ‘we want you to stay with us and help grow the business, because we really value your input’.

    Jerry Davison

     

  2. FT2G Devon Pitch 2016 Winner Announced!

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    A catering business that provides exciting food experiences using the West Country’s finest produce has won our co partnered Fast Track to Growth Devon Pitch 2016.

    Pickle Shack has secured £15,000 worth of financial strategy, PR and marketing support for the rest of the year, after a final pitch event in front of a panel of judges in Exeter last week.

    Thirteen companies including Bluebird Care, Custodian Solutions, Otter Valley Dairy and Salcombe Distilling Company were selected for our business growth programme, developed in partnership with PR, marketing and design agency Astley Media, plus headline sponsors Crowdcube, Exeter Innovation Centre and Innovate Exeter.

    Pickle Shack, run by Jodie Sawatzki and Josh McDonald-Johnson, and based at Woodbury Salterton near Exeter, organise and run pop-up restaurants and ‘Grub Clubs’ alongside corporate and wedding catering, private dining and cookery workshops and demonstrations.

    Jodie said: “I’m staggered to have won because there were so many other strong candidates that have been in business longer than us so I’m really grateful. The learning we’ve already got out of Fast Track to Growth has been brilliant and we’re already putting it into practice. I’m really looking forward to working with Fast Track to Growth to help develop and grow the business over the coming months.”

    Kids Holiday Toys, which hires out boxes of toys, books and games for children on holiday, were awarded the best start-up prize, giving the company access to on-going support to develop the business in the coming months.

    Judith Cook, owner of Kids Holiday Toys, said: “The quality of the knowledge shared has been exceptional. I’ve learnt so much and already implemented changes. Fast Track to Growth is giving me the impetus and confidence to move forwards in new ways – it’s very exciting.”

    FT2G Finalists and sponsorsFast Track to Growth saw the shortlisted companies benefit from a series of workshops led by experts to develop their plans for growth, culminating with Thursday’s pitch event at Exeter Innovation Centre.

    Steve Lovett, SouthWestfd‘s  Managing Director and on the judging panel, said: “‘All those on the programme did exceptionally well. We have been particularly impressed by the sheer passion and level of commitment displayed. We look forward to supporting Pickle Shack and Kids Holiday Toys on their growth journey and will be maintaining close contact with everyone who took part.”

    Other companies in the group selected for the programme were OneFlow from Exeter, TIC Training of Brixham, Essential 6 of Torquay, If Everyone Cares of Dawlish, Dial South West of Newton Abbot, Yonder Berries, based in Lustleigh and Southern Filters of Axminster.

    The judging panel included the sponsors of the programme, Richard Eckley of CrowdCube, Phil Sampson of Sampson Hall, Ross Bellotti of Kingfisher Print, Simon Morris of Stephens Scown, Joanne Johnson of Santander and Robin Jackson of Exeter Innovation Centre.

    Richard Eckley, of headline sponsor Crowdcube, the world’s leading investment crowdfunding platform, said: “Congratulations to Pickle Shack and Holiday Toys. From the very start of this year’s Fast Track to Growth programme they’ve shown an eagerness to learn, combined with a passion for their business and a strong focus on growth.

    “The pitches were of a high quality but it’s the effort that everyone has put in throughout the programme that has really impressed me.”

    All the shortlisted companies become members of Fast Track to Growth, with access to business support. Other Devon companies are also able to apply to join and benefit when FT2G 2017 is launched later this year.

    Dan Pritchard, of Astley Media, said: “Fast Track to Growth helps companies work on specific growth plans and includes business planning, financial strategy, legal, marketing, PR and leadership expertise. But another big benefit has been they’ve all been able to learn from each other, sharing experiences, ideas and their own expertise.”

    Rebecca Turner, who runs Southern Filters, said: “The programme has been amazing. Every session has always had something useful in it. We’ve now got a new financial strategy and from Twitter alone have secured £4,200 worth of extra business in recent weeks. We’ve got new financial, PR and marketing approaches to put into practice that I’m sure will help grow our business further.”

    For more details and to register your interest as a growth business or potential sponsor of FT2G Devon Pitch 2017 visit www.ft2g.co.uk

  3. Devon’s FT2G shortlist announced!

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    Agri-tech specialists, a dairy farm and pop up caterers are amongst the firms that have made it to the final of Devon’s new Fast Track to Growth Programme, it was revealed.

    Fifteen companies across the county have been selected to progress on to the programme that will help them develop their plans for growth in 2016. One stands the chance of winning £15,000 worth of financial strategy, PR and marketing supporting for the rest of the year.

    Shortlisted are Bluebird Care, Custodian Solutions, eCow Devon, Holiday Toys, OneFlow and Pickle Shack from Exeter, Care Control Systems of Tavistock, Ottery Valley Dairy near Honiton, TIC Training of Brixham, Essential 6 of Torquay, If Everyone Cares of Dawlish, Dial South West of Newton Abbot, Yonder Berries, based in Lustleigh, Southern Filters of Axminster and Salcombe Gin Company.

    Each will now receive specialist support through a series of workshops to progress their plans, ahead of a final pitch in late April and a chance to win the top prize of a year’s worth of support.

    Fast Track to Growth has been developed by financial strategy experts SouthWestfd and PR, marketing and design agency Astley Media, in partnership with Exeter Innovation Centre and Innovate Exeter.

    Jerry Davison, SouthWestfd Chairman said: “An incredible mix of companies applied and we’ve got a strong shortlist of firms with bold growth plans to now focus on. I’m really looking forward to getting to know the people behind the brands, as we help each business progress through the Fast Track to Growth programme.”

    Fast Track to Growth is sponsored by Devon-based Crowdcube, the world’s leading investment crowdfunding platform and supported by Exeter Innovation Centre, Sampson Hall, Stephens Scown LLP, Santander Corporate and Commercial, Kingfisher Print and Design, SetSquared and Innovate Exeter. The programme helps companies work on specific growth plans and includes business planning, financial strategy, legal, marketing, PR and leadership expertise.

    All companies who applied to the programme were invited to a special welcome and networking event held at University of Exeter Innovation Centre last week. Those that did not make the shortlist have been offered opportunities including places at the West Country’s only Startup Weekend event, in Exeter in June, and free places on Business Modelling and High Growth workshops at Exeter Science Park.

    Luke Lang, Co-Founder and Chief Marketing Officer of Crowdcube, said: “It was great to meet some of the people behind the companies who have entered Fast Track to Growth. All are led by passionate people intent on learning, seeking support and growing their business. That’s incredibly encouraging and testament to the number of firms that are now looking at developing and growing their business in new ways, which has to be good news for the South West.”

    David Culshaw, senior associate, corporate team at Stephens Scown Corporate, said: “In our experience, the more that companies reach out for the right expertise to help them, the more it shows how passionate they are to succeed. Devon has a wonderful array of diverse businesses which is such a strength, but we need to do all we can to help companies fulfill their potential, which is what Fast Track to Growth is all about.”

  4. Have you registered who has ‘significant control’ over your company?

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    With effect from January 2016, companies have been required to keep a register of people with “significant control” over the company, the “PSC register”, although that information will not need to be made available on the public register at Companies House until April 2016.

    A person with significant control over a company is defined as an individual or entity that meets one or more of the following conditions:

    • they hold, directly or indirectly, more than 25% of the shares in the company or more than 25% of the voting rights in the company
    • they hold the right, directly or indirectly, to appoint a majority of the board of directors of the company
    • they can exercise a significant influence or control over the company

    So for example in the case of a subsidiary company, the parent company would probably have to appear on the register.

    The PSC register will need to be available for inspection at the company’s registered office (unless the company opts to keep its PSC information on the public register at Companies House only) and the information on it will need to be confirmed to Companies House at least every 12 months.

    Regulations also set out a “protection regime” enabling individuals with significant control over a company who are at serious risk of violence or intimidation as a result of the company’s activities, to be able to have their personal information protected from disclosure in the PSC register.

     

    Provisions coming into force from 1 April 2016:

    Annual confirmation of accuracy of information at Companies House

    The requirement for companies to submit an annual return is being removed. In its place, companies will need to deliver a confirmation statement at least annually, stating that the company has delivered all the required information in the last 12 months.

    The company must confirm, as part of the confirmation statement, that relevant events have been notified and these include details of a change of registered office and details of certain company registers.

    Option to keep information on central registers

    Private companies will have the option of keeping certain information on the public register at Companies House instead of in separate private company registers. The relevant registers are:

    • the register of members (i.e. shareholders);
    • the register of directors;
    • the register of directors’ residential addresses;
    • the register of secretaries; and
    • the new PSC register.

    The company need not update its historic registers with subsequent changes but it must continue to keep the historic registers.

    Private companies will need to think carefully about whether or not they want to maintain any of the registers at Companies House. Some information that would not otherwise appear on the public register (for example, members’ addresses and full dates of birth of directors) will be available for inspection on the registers kept at Companies House and companies may decide that they would prefer to keep that information off the public record by continuing to maintain their own registers.

    We are happy to talk to you if you need more information on what to do.

  5. Try our 15 point check list to get your business into shape for 2016

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    Business confidence is now generally high and we have finally climbed out of the recession. Britain’s GDP is now a few per cent above where we were in 2008 before the crash, which cut over 6% from the UK’s output. However, there is still plenty of uncertainty out there (look at China for a start) and the last thing any business should do is get complacent. Here is our checklist for helping you to review your business to ensure it’s as strong as possible going into next year, especially from a cash flow perspective:

    1. Review your budgets and set realistic and achievable targets.
    2. Get rid of won’t pay customers.
    3. Review your debtors list and chase up overdue invoices.
    4. Make sure your terms of business contain explicit payment terms.
    5. Assign responsibility to one individual for invoicing and collections.
    6. If appropriate, review banking facilities and discuss future needs. If you are going to require additional funding ask for it at least 3 months before you need it!
    7. Put extra effort into making sure your relationships with your better customers are solid.
    8. Review and flow chart the main processes in your business (e.g. sales processing, order fulfilment, shipping etc) and challenge their efficiencies.
    9. Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about productivity, outsourcing and cost reduction).
    10. Use ‘bottom up’ budgeting where everyone in the office gives input on areas over which they have control – target a 10% cost saving.
    11. Review your staffing needs over the next 12 months and deal with weak or unnecessary individuals.
    12. Get your members of staff involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
    13. Review your list of products and services and eliminate those that are unprofitable or not core products/services.
    14. Establish your key performance indicators (KPI’s) and measure them on a regular basis e.g.
      1. Sales Leads generated
      2. Orders supplied/fulfilled
      3. Cash balance
      4. Stock Turnover
      5. Debtor Days
      6. Gross Profit
      7. Net Profit
    15. Pull everyone together and explain the business strategy and get their buy-in.
  6. Doing it all yourself? The financial hurdles business owners face.

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    Start ups don’t transform into fully-fledged professional businesses with fully-functioning finance directors overnight. There’s an awkward metamorphic stage, where a business is too small to have the skilled finance director they need – but large enough to be facing many of the problems a finance director deals with.

    We’ve seen businesses suffer when they lack the understanding of what a finance director would help them with, if they had one in place. Even if a business has a revolutionary product or service, they can still run into cash-flow problems or ruin themselves through poor financial and organisational management.

    The overarching role of the finance director is to implement processes to improve your business efficiency. These processes, and the skills and knowledge underpinning them, can be split into five categories.

    Budgeting business spending
    You shouldn’t just record what you’ve bought and sold: your business should have a budget, if it’s going to succeed. Budgets often look 12 months ahead, and are continuously updated. Progress is measured against plans, and projections are proportionally adjusted using differences between budgeted and actual spend.

    Financial Planning

    A business’s budget should inform and be informed by the business plan. Like the budget, these should be continually updated. A well thought-out plan will help ensure your business balances growth and keeps up with demand. It’ll also ensure you don’t get in the messy scenario of cash-flow problems, and the destructive habit of oscillating between generating revenue and building the business. The two should be done together!

    Financial planning is a continual process – and should be used in steering the company’s decisions, examined regularly at board and major meetings. Normally, a financial director would stay on top of these needs – preparing the analysis and papers needed, for founders and senior management to understand the numbers needed to underpin their decisions.

    Managing Cash Flow

    One of the outcomes of effective financial planning, is knowing your income is enough to pay your overheads. It’s all well and good knowing, albeit with 90% surety, your invoice will be paid in the next 30 days – but what if you’re owing others money in 15 days? Internally or through external support, you’ll need the knowledge to balance the books and communication skills to negotiate payment deadlines, to ensure you’re not up no-cash-creek without a paddle.

    As well as ensuring payment timescales keep an organisation’s head above water, you need to understand how your cost of acquiring business customers compares to and effects your business’s loan to value ratio (LTV). By keeping your business acquisition costs low and your profit margins high, your business should have a strong value. This helps keep your LTV low, allowing you to borrow at preferential rates – ensuring the sustainable growth of your business. Understanding the relationship between these two factors for your business helps inform marketing decisions: whether to spend more on marketing, potentially providing a higher return, but over a longer period; or to invest less in marketing and have a faster payback period.

    Understanding HR & Legal Procedures
    Large companies have dedicated legal staff or even teams. For smaller but still professional businesses, the role of understanding HR and legal procedures often falls at the finance directors feet. For many founders and senior executives, legal and HR documents read like a foreign language. However, it’s important your business gets to grips with staff and subcontractor contracts.

    Businesses have hundreds of HR issues they must manage on an ongoing basis. Staff who are supported, through reviews and having the right reward mechanisms in place – such as the option to buy shares in the company – are more likely to stay loyal, acting as true ambassadors you can be proud of. You should be aware of the going rate your staff could expect in the wider market, and reflect this in reviews and rewards.

    Staff retention is especially important when you’re small. Unsupported staff, or those that feel they’re behind the iron curtain and living in George Orwell’s 1984, won’t hang around for long. Similarly without having the knowhow to handle legal threats, lease conditions, copyrights and intellectual property could leave your business becoming tangled in a legal web.

    Measuring Success and Failures
    There’s more metrics than just profit and loss. Understanding what to monitor when, and how this information infiltrates business plans and board meetings, is essential for efficiently running and growing a business. If your business hasn’t yet got a competent finance director, consider setting different metrics for different areas of your business. Speak to the teams or team-leaders involved, to understand how they informally track their progress – and use this to inform how and when to capture metrics. Like budgets and financial plans, business metrics should be analysed and reviewed on a regular basis.

  7. When and how does a business need a Finance Director?

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    Some businesses we work with are eager and exciting fledglings. To a layperson, they appear limitless in their enthusiasm and energy. They believe their product or service will change the marketplace, but they haven’t yet become fully immersed in their sector. They haven’t yet had to deal with complicated contracts, market competition, public relations strategies or selling to the mainstream.

    The fledgling stage of a business is exciting, albeit often messy in management. Founders and senior executives will often still be spending much of their time on business administration.

    You must not hold your business back. At some point, your business and financial management practices must scale up. The founders and senior executives should be a company’s most valuable resource – but they might not have the skills or experience needed to help ensure your office and financial transactions run smoothly.

    Their time should be focused on delivering what they’re best at. This means they shouldn’t be answering general enquiries, arranging transport or raising purchase orders and invoicing. Once your business can afford to, consider employing internal staff with the skills you need.

    Smart Business Growth Tip #1: Employing An Office Manager/Bookkeeper

    There are smart routes to growth. Combining roles within one staff member can help ensure you don’t bite off more overheads than your cash-flow can chew. Employing a skilled office manager with strong administrative skills adds many strings to your business’s bow.

    If chosen right, they should start tidying your business processes. This way, they not only ensure your office runs smoothly: but your business does as a whole, leveraging in greater revenue and providing stronger stability.

    It’s this process, where a business’s processes become more strategic, that a start-up metamorphoses into a serious business. Businesses should start focusing on supporting their staff to be more efficient, rather than allowing founders and senior executives to continue having free reign in changing processes and choosing what they put their efforts into.

    However, a smart office manager will only help a business in the initial stages of tidying processes. As businesses blossom, they must search for a trusted financial director to take control of the financial management wheel.

    Smart Business Growth Tip #2: Employing A Finance Director

    It is not always necessary, and for many businesses, unaffordable, to employ a full time Finance Director.  However whether you take on a part time FD, or place the responsibilities of financial management with an existing senior member of staff: your candidate should understand the needs of your operations, and how their actions can help or hinder business growth. In other words, your Finance Director needs to be operationally focused.

    For fledgling businesses, core financial responsibilities often still lie with the founder. It’s difficult for them to let go of this responsibility: but let go of it they must, if they are to free-up their valuable time – and be able to spend it on developing and strengthening business operations.

    In order to let go, they need a Finance Director (sometimes known as ‘Chief Financial Officer’) they can trust. Whilst some of this will be based on their character, and the strength of the relationship between the finance director and other senior business executives – much of it depends on their skill-sets.

    A good Finance Director should provide your business:

    Budgeting and planning: Finance Directors should know his or her numbers, not just for budgeting purposes: but for helping plan business development. It’s their job to ensure you’ve got enough income to cover your overheads now and into the future, by understanding the costs of acquiring new customers – and how they synchronise with the business growth costs of acquiring new assets and staff.

    Leadership: They should not be afraid to challenge the chief executive, founders or other senior executives. Their role is to ensure decisions are informed by the best financial knowledge of the company. They can often ensure processes are developed and implemented across the whole or entire sectors of business, helping businesses stay efficient as they grow. Not only can they have great input in board meetings, but they can also help prepare them: providing financial information, analysis and recommendations.

    Legal and HR: a great Finance Director shouldn’t just bring knowledge of financial processes and how they relate to your business. Ideally, they should have good knowledge of legal and HR protocols. This provides that efficient combined-role again, helping your business run smoothly and adding strengths to multiple areas of your operations under one hat.

    Monitoring success: different businesses are suited to different monitoring metrics. If designed and established well, they’ll produce the most informative of analysis. For the strongest of foundations, finance directors should be highly skilled in monitoring, understanding what metrics best measure your business – and using them to inform all of their other actions.

     

    Find out how your business could benefit from a SouthWestfd Finance Director resource.

     

  8. New advisors on Enterpise Nation Marketplace Growth Voucher Scheme

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    SouthWestfd are delighted to have been accepted as advisors on the Enterprise Nation Marketplace and Growth Vouchers Scheme.

    What is the scheme about?

    The Enterprise Nation Marketplace is part of the government’s £30m Growth Vouchers programme, recently launched. The programme is a research project to test how best to help small businesses grow through the use of subsidised business advice.

    How do I apply?

    Businesses looking for advice can apply to the programme online and they will be randomly assigned to an online questionnaire or face-to-face business advice assessment.

    Some businesses will be randomly chosen to get a voucher for up to £2,000 to help pay for business support in one of the specialist areas. You’ll have to match the amount with your own funds.

    What can I use the vouchers for?

    Growth Vouchers should be used for strategic advice, so the activities funded by the scheme should result in securing long-term change in the business, its operations and its capabilities.

    Once you have your voucher please contact us to discuss how we help move your business forward.

    Here’s some examples of how we can help your business:

    • A financial healthcheck – consultancy to review the financial health of your business and developing a strategy for growth
    • Financial planning, creditworthiness and investment-readiness
    • Cashflow and credit management
    • Basic business planning for debt finance
    • Enhanced business planning and evaluation for equity finance
    • Strategic management accounting

    Download the Enterprise Nation Marketplace information sheet to give you more details of the scheme and how to apply.

  9. ’11 step pain relief plan’ for your auto enrolment administrative headache

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    The time involved, not to mention the cost of auto enrolment is a prospect you and many other small businesses have not been looking forward to and in some cases been causing sleepless nights. You may have been putting off doing anything about it but the staging dates for completion are now fast approaching for employers with 50 or less employees.

    The need for employers to meet their new duties in the months ahead is likely to lead to a corresponding increase in enforcement action and penalties (currently The Pensions Regulator has issued 177 compliance notices and one unpaid contributions notice, as well as three fixed penalty notices).

    Are you aware of how automatic enrolment will impact you and your employees? Do you know when your actual staging date is?

    We don’t want this to happen to you so have devised an ‘11 step pain relief plan’ to help you get ready on time and avoid errors such as these:

    • Registering with the Government Gateway and assuming that this is adequate – employers on or before their staging date must then also make a ‘declaration of compliance’ to the TPR.
    • Omitting employees in a second, smaller PAYE scheme (eg, a directors’ scheme) – the larger scheme determines the single staging date for the employer, so all employees in all schemes must be enrolled by that date.
    • Omitting self-employed workers who provide personal service without being in business on their own account – they are ‘workers’ in AE terms and must be enrolled like employees.
    • Completing a declaration of compliance without nominating a pension provider – some employers incorrectly assume their payroll software handles the necessary submissions automatically, but they also need to set up a scheme.

    Key dates to be aware of:

    Number on payroll (at 1 April 2012) & staging date

    50 – 61: 1 August 2014 – 1 April 2015

    40 – 49: 1 August 2015

    30 – 39: 1 October 2015

    Under 30: 1 June 2015 – 1 April 2017

     

    How much will the plan cost?

    Our part within the process is to simply help you get through the administrative tasks involved in getting ready for auto enrolment. We are a totally independent organisation, making us unbiased and able to provide you with details of a range of pension schemes providers.

    The fees below are one off charges for consultation and administrative support only:

    30-50 employees = £500+VAT

    1-29 employees = £250+VAT
    Don’t put it off any longer. Call us on 01392 432654 and let us help.