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Keeping up with an evolving market can be financially straining, but a necessary evil. Carys Evans explores alternative finance options to help maintain business security while you grow

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Various finance options are available to help businesses expand and grow

Help to grow

A survey of over 1,000 business decision makers conducted by Signs Express found that 83% of those surveyed said that signs, graphics and displays form an important part of their marketing strategy. With the sign industry going from strength to strength, it is natural for businesses to grow and evolve with the market. This could involve moving into new sectors such as direct-to-garment and sublimation, or even from wide-format to super wide-format. More often than not, purchasing new equipment is a necessary step in growth and this is where financial support can help.

The options

Hire purchase is a simple way to buy an asset and spread the cost over a defined amount of time. A payment plan allows businesses to pay in instalments.

When the plan is finished, the firm has full ownership of the item.

The benefit of a hire purchase is more flexible than a conventional loan and is often used to purchase larger pieces of equipment with a resale value. A flexible payment also makes room for fluctuations in business.

Another option is a finance lease. Similar to a rental agreement, the finance company buys the asset and rents it to the business over the duration of the lease contract. This means it can be accessed straight away and will only cost a fraction of the total amount up front.

Finance options can help businesses to remain financially stable whilst growing and expanding

At the end of the contract the business can continue renting, return or replace the equipment, sell the asset or return the asset and terminate the rental agreement. Through finance leases, businesses can protect working capital by accessing equipment quickly without any significant initial investment.

Pre-owned equipment can be another way to make savings compared to purchasing new equipment. Investing in pre-owned equipment can sometimes mean you save money twice – with both a reduced purchase price, and secondly, by spreading the cost of finance.

In order to expand and increase the services a business can offer, a strategic step can be to move into larger premises. This is particularly important if a business is planning to invest in large equipment. Leasing a suitable industrial unit can be the simplest option. However, once established, it is possible to purchase suitable premises with a commercial mortgage – this decreases monthly outgoings and provides businesses with a valuable asset for the future.

Seek advice

An example of a financing firm that serves the sign industry is Time Payment – a financing company which specialises in a range of industries including speciality graphics and signage equipment. The firm helps sign companies with the finance needed to complete jobs such as building signage, vinyl wraps for commercial vehicles, custom signage and speciality graphics. Time Payment offers turn-key financing for 3D printers to storefront signage, as well as providing financing for installation, delivery and design.

David Bunker, Jamie Nelson and Mark Nelson, directors of Compass Business Finance

Compass Business Finance is an independent company specialising in asset-based finance with a well-established presence in large-format print. Every business it works with is unique which reflects the individual nature of each finance solution it offers.

Mark Nelson, director of Compass Business Finance explains that while businesses require varying types of finance to support them as they grow and expand, there is a whole range of finance options available.

Nelson says: “Compass works with our customers to understand their business and their aspirations in order to help them select the right option or combination of finance options to help their business go further.

Navigating the financial landscape can be daunting, there is an ever-increasing range of options available and it’s important to be able to understand what’s going to be best for you

“Navigating the financial landscape can be daunting, there is an ever-increasing range of options available and it’s important to be able to understand what’s going to be best for you.”

Getting down to it

According to Parliament UK, there were 5.7 million small or medium enterprises (SMEs) in the UK in 2018, which was over 99% of all businesses. With figures such as this it is no surprise that the majority of sign companies are SMEs.

83% of business decision makers say that signs, graphics and displays form an important part of their marketing strategy

Although counterproductive, accessing finance can be tricky for smaller businesses with limited funds. Asset-based lenders often prefer to make larger loans because the cost to monitor an asset-based loan is the same whether it is large or small. Despite this, securing a loan is achievable with the right documents. Make sure you have up-to-date financial statements, good reporting systems, an inventory of commonly sold items, and ideally, a proven track record of paying bills on time.

American business and finance magazine, Entrepreneur says that the key is to seek out the lenders that are willing to lend credit to younger companies, even if it means searching around for a while until you find the right one.

Advising companies on how to go about attaining asset-based loans, the publication says: “To secure an asset-based loan, come to the table with financial information that is detailed and accurate. The key is to make the lender comfortable with a credible case for long-term viability, as well as professionally-prepared financial statements that prove you have a handle on the business.”

An alternative approach

If you are met with challenges when seeking finance, there are always alternative routes. Compass Business Finance is also an accredited lender under the British Business Bank’s Enterprise Finance Guarantee (EFG) programme and is able to offer finance to businesses that previously would not have been able to access the finance they require.

Close Brothers Asset Finance offers all of the traditional types of finance including hire purchase and leasing, however, in conjunction with certain suppliers it is also able to offer Consumable Agreement, which – if structured properly – can help a customer match their equipment purchase repayments to cashflow and the consumables they use with it.

Paul Philbrick of Close Brothers Asset Finance

Paul Philbrick of Close Brothers Asset Finance’s print division explains: “Most business owners are fully aware about the various funding sources available to them and our own research confirms that, but it’s not always about finding an alternative ‘way’ to access finance but instead an alternative ‘approach’. With the high cost of capital equipment most companies tend to finance the equipment they purchase over its economic life. This protects their cashflow, which in turn gives a company more financial flexibility in the long term.

“Speaking from the Close Brothers Asset Finance perspective, we spend time engaging with our customers to find meaningful ways to help them. The truth is that sometimes a standard 10% deposit over 60 months isn’t always the best solution – by taking time to understand our customers and their business we try to take the pressure away from any transaction so that they can get on and run their company.”

Support in all areas

Wide-format and large-format print runs can be tricky with challenges such as high margins and difficulty finding a competitive advantage such as being able to turn around jobs as quickly, if not quicker than others in the sector.

Factoid: According to UK finance, support for businesses through invoice finance and asset-based lending at the end of 2018 stood at £22.7bn..  O

Due to the wide array of technology now available, and financing options making purchasing such technology accessible for more companies, even niche sectors such as large-format décor printing risks becoming commoditised.

In situations such as these, print management software can be a saving grace when it comes to freeing more time to focus on running the business rather than a fleet of printers, as well as reducing costs by streamlining the printing process.

Every business has its own unique set of requirements whatever industry it is in. Due to the rapid rate at which software is developed, it can be hard to keep up-to-date with the latest technology.

Finance options are not just available for machine purchase, or site expansions. There are companies on the market which offer finance support for purchasing software.

Support and advice is available to navigate through the many options

With the wide range of finance options, support and expertise available at your fingertips, accessing finance can be a really achievable way to access new equipment, manage cash flow and expand and grow your company, no matter how big or small.

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