As everyone knows, credit has been hard to come by for some time now, and we have noticed a definite decrease in the number of deals financed by any significant level of debt (e.g. company acquisitions, management buyouts, etc) in the last 18 months or so. We are not seeing any signs of recovery in the level of lending from any British banks, nor are we seeing anything to suggest that that is going to change in the near future.
Our clients are therefore largely either doing deals which do not require any significant up-front outlay from either party (e.g. royalty type deals which spread the risk evenly and are somewhat ‘self-financing’), or are looking further afield for financing. There are people out there with cash to lend, and they appear to be very keen to lend; they know that it’s a lenders’ market and that they can pretty much dictate terms. However, as these are not traditional lending sources for British businesses, they are not easy to come by. Personal relationships tend to be key, and the clients who are able to unlock these sources of lending tend to be the ones who have spent years building up varied contacts.
Apart from looking for new business opportunities, businesses should of course be vigorously attacking their cost base as well. Given that times are generally hard, you can currently drive a very hard bargain when procuring goods and services. This is obviously a double edged sword (because we all have clients who want to pay less for more), but any business which does not take advantage of the current climate to ensure that it is getting best value from its suppliers is missing a trick.
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