A helping hand
Given the current global economic situation, it is understandable that many companies are cutting back on costs and not investing as much as they would like. However, as we know here in the sign industry, ensuring you are running the best quality kit is critical if you are to win and keep hold of valuable work.
Sign-makers in need of a helping hand when it comes to new investment have a number of options to consider in terms of financing and funding. There are plenty of cost effective and sensible schemes out there that will allow them to make the purchase they want without the traditional financial headache.
A careful approach
First, we speak with leading industry trade association ISA-UK to harness opinion on the best approach for sign-makers considering financing as an option. Craig Brown, chief executive of the ISA-UK says sign-makers should first consider if they are in a position to take financial support before exploring this route.
ISA-UK says sign-makers should consider their business plan before going down the financing route
“Most of the traditional routes available to get financial support are looking for propositions that are viable and with high probability of a return on that investment or loan,” Brown says, adding: “Financial support in our sector tends to be in the form of a loan, whether that be for kit, premises, or material, the asset has a value but it’s more about what revenue that asset can generate.
“Using low interest rate external money has long been a model UK business has followed, with interest rates rising and the companies offering loans looking at stress testing the loans being offered in more detail. We as business owners are going to need to go into much more detail about how the repayment schedules drawn up are going to be honoured.
“Is the financial support you are looking to take aimed at growing your business or plugging a gap? If the answer is ‘growing’ and your business can clearly show financial support will hasten that growth, why wouldn’t you explore that route.”
Before going down the route of financing and funding, Brown says sign-makers should ask themselves if the funding is really needed and does the business model drawn up stand up to scrutiny?
“I meet lots of people who are overly optimistic about the extra output a machine will allow them to create, without knowing how they are going to feed the sales pipeline first,” Brown explains.
“Any business plan you create needs to stand up to scrutiny, you almost need to be creating a mini prospectus for the people offering the loan. The larger the loan the more detail and evidence is required, which is often where a broker can be of assistance.”
For those looking at external finance, Brown recommends talking to the suppliers of the kit first about any offerings they have in place and use that as a benchmark when approaching your own bank or financial broker.
For medium to large purchases, Brown says brokers can be a worthwhile route to explore particularly if a business has a good track record and trading history. Brown adds that the Funding Circle, the government-backed business loans scheme, was another popular option many consider as they looked to grow their businesses.
“As a trade association our experience is largely based on what our members do, the sharing of knowledge and being able to talk to people and business owners that have already explored the path means that we often get unbiased feedback that can be passed back to other members,” Brown says.
“We are also fortunate enough to have knowledgeable industry members who are part of our board, these people tend to have good contacts within the supply chain and are happy to act as sounding boards when others are exploring the best options for their businesses.”
Reliant business
Turning to those providers that can offer financing, Compass Business Finance has worked with companies across both the sign and print industries. David Bunker, director of Compass Business Finance, says the good news for sign-makers, is that no matter what they are looking to achieve there are a number of solutions available to the market.
The team at Compass Business Finance can help sign-makers on the lookout for financial support
“As economic pressures increase, businesses are having to become ever more resilient, innovative, and adaptive,” Bunker says, adding: “Sign-makers are having to work smarter, and with technology evolving rapidly, investment is a key component to staying ahead of the competition, not just to provide a wider or improved product range but also to ensure they’re working efficiently, from both a production process and environmental perspective.
“Typically, businesses will utilise asset finance when purchasing large items of kit, enabling them to secure favourable interest rates, on either a lease or hire purchase agreement, however, it can also be an opportune time to review other finance agreements in place across the business. It’s possible to secure a more favourable rate and reduce monthly repayments by combining existing agreements into one new agreement.”
Bunker says if you are considering a new investment, or looking at refinance, the best place to start is to have a conversation with a finance provider like Compass Business Finance, as it is important to know your options and be able to make informed decisions.
In terms of the specific types of help available, Bunker points to the Recovery Loan Scheme (RLS), which, set up to help businesses during and after the pandemic, remains available until the end of June 2024. This, Bunker says, allows accredited lenders such as Compass Business Finance to provide finance to businesses that they may otherwise not have been able to, or to provide a better rate than they otherwise could have done.
“Tax incentives and grants also exist to support continued investment,” Bunker says, adding: “Also, mergers and acquisitions continue as commonplace, with many businesses looking for the opportunity to reap the benefits of consolidation, or to revitalise a business that otherwise has no continuation or exit strategy.
“We’ve helped businesses across the industry find and see opportunities like this through to fruition, supporting them with the finance required at various stages of the project.”
Profitable venture
Also in a position to provide financing and funding support is Close Brothers, a UK merchant banking group that offers businesses lending, deposit taking, wealth management services, and securities trading. Close Brothers has a specialist team dedicated to the print industry, with those operating in wide-format print able to speak with these experts about their funding requirements.
Close Brothers has access to the Recovery Loan Scheme until June 2024
“Seeking financial support will help manage cashflow and allow businesses to budget better and see how the machine will be profitable over the year,” says Joe Hall, regional sales manager on the print team at Close Brothers, adding: “It also allows them to pay when it best suits them rather than taking a large or fixed hit at a non-opportune time.
“As to what wide-format print companies, and indeed sign-makers, should consider when going down the route of financing, Hall says that they should ask themselves what they truly want to achieve rather than just what they know is available.
“They should see the assets they currently have as a vehicle for raising capital and helping fund ventures,” Hall explains, continuing: “Also, could a new piece of equipment help win new business or grow the current offering to existing customers?”
Adam Baldwin, area sales manager on the print team at Close Brothers, also weighs in with some advice for businesses in the sign industry, saying that they should seek out a funding partner that understands the market and can offer flexibility, such as seasonal repayment terms.
With this, Baldwin goes on to speak about some of the options available to sign-makers and wide-format printers from Close Brothers, saying there are a number of ways that the group can support.
“The options available to companies in the sign industry from Close Brothers include helping with investments in new equipment, raising cash to support growth or restructure, as we have also funded mergers and acquisitions in this sector,” Baldwin says, adding: “Now is also a great time to look at growth projects because we have access to the Recovery Loan Scheme.
“We can look to support businesses who are looking to carry out financial housekeeping, with a view to reducing overheads. This has been an incredibly common solution for a lot of our customers post-pandemic, as many businesses adjust to their “new normal.”
We can look to support businesses who are looking to carry out financial housekeeping, with a view to reducing overheads”
“The print team has an excellent track record of supporting businesses with more complex financial requirements.”
Hall concludes with two additional pieces of advice for sign businesses considering taking on some form of funding or financing. First, he says that they should consider agreements that offer seasonal payment plans to best suit their needs throughout the year, and secondly, by working with a trusted provider, this will allow valuable insight into equipment through Close Brothers’ relationship with numerous suppliers.
O Factoid: Tax incentives and grants are available to businesses to support continued investment O
In a perfect world, sign-makers of all shapes and sizes would be able to invest in what they want, when they want, and ensure they are offering the highest quality service to their customers. However, as we all know, we are living in a far-from-perfect world and sign-makers, along with companies across almost all sectors (perhaps with the exception of energy suppliers) are having to tread carefully when it comes to finances.
With the support of trusted providers, such as those mentioned here, sign-makers can make the investments they need to take their business to the next level. However, as is the case with any form of financial decision in business, it is critical that sign-makers consider whether they actually need the funding, if they can afford the repayments, and if it will truly help the business in the long run.
If the answers to these questions are “yes”, then there are plenty of reliable and approved providers ready and waiting to support you with your latest venture.
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