Entrepreneurial businesses
Through our many years’ experience of dealing with all types of entrepreneur we understand how you think, and the various stages of the business cycle that your organisation will experience.
Kingston Smith is there for you every step of the way, with the business tax, audit, accounting services and strategic business advice you will require at each stage of your company's lifecycle from HR consultancy, to succession and exit strategies.
From start-ups to well established companies we offer effective commercial advice with a full understanding of legislation and statutory requirements as well as the operational and practical issues.
We offer the broad spectrum of company accounting and business advice services often associated with a large practice combined with the personal approach of a small firm.
Kingston Smith's understanding of owner/managers of family businesses means they have assisted far beyond day-to-day business activities. I like the close working relationship.
Bernard Nelligan, Managing Director
SLE Ltd
Insolvency is defined as when an individual has insufficient assets to cover his liabilities, or is unable to pay his debts when they become due. Individuals with little or no reasonable prospect of settling their debts have differing options, ranging from informal arrangements, Debt Relief Orders, an IVA or formal Bankruptcy. When insolvency threatens, immediate advice should be sought from a Licensed Insolvency Practitioner.
- A track record of sustainable turnover and profit growth.
- Visibility over future growth.
- Diversified customer base with low concentrations.
- Secure contracts in place with customers.
- High barriers to entry.
- Incentivised management team.
- Clean balance sheet to minimise due diligence problems.
External economic factors also have a strong part to play. The M&A market has been in a slump since the banking crisis but we are now seeing favourable changes in acquirers’ attitudes and when combined with the continuing tax benefits of entrepreneurs relief, could mean that business owners should consider selling their shares before things change again.
Taking on outside investment is a big leap for a business. It marks a step change in the culture and pressures on performance. Generally speaking if you can fund a business all by yourself or through manageable debt from high street banks and your own resources, you will own the business outright and there would be no reason to bring in outside investors. Once you take in that money you now have an obligation to grow fast and reward the investors with capital gains. If you own the business yourself you can grow organically, and go for long term profitability.
There are situations where external investors are appropriate, for example the requirement for growth capital in the absence of security for debt funding. This may be to allow you to seize upon a growth opportunity by taking first mover advantage. External investors can also provide expertise and guidance if they are individuals with knowledge of the industry that you are operating in. As a growing business you may welcome the advice and support that an external investor can bring; this may be in the form of a presence on the board or perhaps a strategic partner that will offer you resources and perhaps access to customers.
External equity investment is notoriously difficult to find and, when friends and family have been exhausted, many businesses turn to angel investors, venture capitalist and private equity houses. VC and PE houses need to understand the exit strategy and you should be certain that their goals are congruent to yours and that, if necessary they would be able to provide follow-on funding. The competition is tough and you need to ensure that you make your business as attractive as possible, but don’t’ be fooled, despite what investors may say, there are very few opportunities that represent good, solid, low-risk businesses willing to sell equity at below market rates. You will need to create this perception in order to gain the upper hand. Beware also the tricks that investors employ when structuring deals as they may play on your optimism and, if your targets are not hit, you may see yourself giving away more of the business than you originally intended.
If you would like to discuss this question in more detail please call one of our Corporate Finance Specialists
- Penalties imposed by HMRC
- Inability to recover VAT on any input VAT, i.e. VAT on purchases and overheads thus placing the company at a commercial disadvantage.
- Payment of VAT to HMRC on sales that the business may not be able to recover retrospectively from its customers.