A helping hand
Investment in new kit and technology is critical for the success of all modern sign-making and wide-format print businesses if they are to keep pace with competitors and retain valuable customers.
However, given the upheaval of the last two years, many businesses are not in a position to invest, with their finances having taken a substantial hit following Brexit and the Covid-19 pandemic.
For those businesses keen to invest in kit but do not have the cash to spare, financing offers an effective way of securing the machinery that they need to succeed, without putting the future of their business at risk.
Pursue your goals
Compass Business Finance provides financing solutions to a number of specialist industry sectors, including sign-making and wide-format print. Director Mark Nelson says knowing your finance options, and ensuring you utilise the best possible combination of funding opportunities, can make a huge difference to a business.
Compass Business Finance director, Mark Nelson
“For many businesses going into lockdown, their immediate response was to reduce overheads and increase their working capital as far as possible,” Nelson says, adding: “Loans and the refinancing of existing assets supported by government funding schemes were critical in achieving this.
“In the quieter period that followed, there was time to take a closer look at where greater efficiencies could be achieved and identify new business opportunities. For many printers, this included replacing existing equipment, with machines that were faster and more versatile, or investing in additional equipment, software or marketing.”
Nelson goes on to explain that Compass Business Finance can work with its customers in all market sectors to gain a clear understanding of their business in order to help tailor-make solutions that allow them to achieve their strategic objectives, while at the same time increasing their strength and resilience.
Compass Business Finance provides financial support to sign-makers and wide-format printers
“We’ve supported sign-makers and wide-format printers in pursuing a wide range of strategic goals, including the consolidation and rationalisation of existing agreements to provide lower monthly repayments, refinancing existing assets to release capital, loans, new investments and even supported MBO (management buyout) and M&A (merger and acquisition) activities,” Nelson says.
We’ve supported sign-makers and wide-format printers in pursuing a wide range of strategic goals”
Nelson also offers advice in relation to wider financing assistance, including the extension of the Recovery Loan Scheme to June 30th, 2022. However, as of January 1st, the scheme is only open to small- and medium-sized enterprises with turnover less than £45m, with a maximum amount of finance per business capped at £2m, while the guarantee coverage that the government will provide to lenders will be reduced to 70%.
O Factoid: The average interest rate for the Recovery Loan Scheme is 6.16% per year for up to three years. For terms longer than three years, the interest rate jumps to 7.06%. O
It was also recently announced that the super-deduction – a temporary extension to the government’s capital allowance regime – will run through until the end of March 2023.
“In a nutshell, it enables you to claim 130% capital allowances on qualifying plant and machinery investments – that’s up to 25p for every £1 spent,” Nelson says. “To qualify for the super-deduction, assets must be purchased as new. If you’re investing in second-hand machinery, the 50% first year allowance may apply.”
Enhanced productivity
Elsewhere and looking at how suppliers can help businesses with their investment, CMYUK, which offers printing technology from a number of manufacturers, is able to offer a range of financing options.
Robin East, group sales and marketing director at CMYUK, explains that with the onset of the pandemic and the various government schemes that have been made available to help businesses, the company has been very busy helping customers capitalise on this financial support.
“There has never been such a good time for consolidated investment of internal equipment for efficiency and greatly enhanced productivity,” East says, adding: “Not only is CMYUK raising awareness for the government’s current incentives on capital allowances, but we are helping new and existing customers navigate the government-backed Recovery Loan Scheme.
(Above & below) Robin East, group sales and marketing director at CMYUK, says the company can help customers navigate the Recovery Loan Scheme
“No personal guarantees are required for finance up to £250,000 and, from January, 70% of the loan is backed by the UK government. A low deposit with a reduced initial 12-month payment profile is also available on agreements up to 60 months.”
East goes on to explain that CMYUK works with customers across the sign-making and wide-format print sectors in order to help scrutinise return on investment (ROI) models that he says justify capital investment, with customers often finding that the new finance overhead is less than the cost of current production outsourcing.
“A perfect example of this is a Kongsberg investment where farming out finishing to third parties can be significantly higher than purchasing a digital cutting table and bringing these services in-house,” East explains.
Careful planning
Industry trade body ISA-UK is also well placed to offer advice as to where sign-makers and wide-format print companies can look when it comes to financial support for their business. Interim chief executive Craig Brown says that companies should do their homework before considering financing any purchase and talk with their accountant prior to making any big-ticket acquisitions.
“It might not always be the most popular view but having cash in the bank and using low interest funding potentially gives a business the greatest flexibility to adapt and adjust to market trends,” Brown explains, adding: “If the financing route is open to your business and the rates make sense to your business plans it simply becomes a commercial decision to make the purchase.
“Financing that printer may well seem like a huge step and very daunting but forecasting workload and setting achievable and realistic targets to justify the purchase should be part of any business’ best practice process.”
Brown goes on to explain that new technology including printers will often speed up the workflow process and give the producer back the commodity that all businesses are desperate for: time.
“A prime example of this is direct-to-substrate printing, by simply removing the application time of applying printed vinyl to a substrate,” Brown says, adding: “The time saving created simply gives the business back more of their day for prospecting new clients, looking after current clients or the opportunity to produce more output.
“If these small gains can be replicated throughout the business on all production and output, we start to see a more organised, streamlined and productive operation.
“We often see older kit being run alongside the new purchased machinery, there’s nothing wrong with this but it can sometimes be a false economy as the extra money being paid on a service contract for the old printers can often be a large part of the repayment seclude on the new printers.
“New equipment may be more efficient, quicker and more versatile than what went before but before jumping in with both feet, doing some basic planning and costings to qualify your justification for the new equipment should be part of the decision-making process.
“Will the new equipment need extra space or a different environment to be operated in? What extra training will be needed? Will stockholding of extra materials be needed? Does your purchase make other equipment redundant? Does the new purchase open up other revenue streams to your company or just improve the efficiency of your current servicing requirements?”
“At the end of the day the simple facts you need to consider are, can you afford the new machinery you are looking at and does it make financial sense to invest in it?”
While expensive investments may seem out of reach for some sign-making and wide-format print companies, it is clear that trustworthy and relibale financial help is available if these businesses want to push ahead with a new purchase. However, as is the case with any new investment in the industry, any such move should first be carefully planned out if you are to ensure it is the right decision for your business.
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