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The 2008 recession might have been a few years ago, but the British population are still coping with the initial shockwave as well as dealing with the financial aftershocks. The economic downturn has made many businesses go bankrupt, and if you’re a small company looking to expand, it’s proving to be extremely tough to get a loan or financing.

Seeing as the banks started the problem in the first place, you’d expect a little help somewhere along the line in order to get your finances on track. However with the list of ‘high risk’ businesses on the rise, banks are closing up shop and refusing to lend to new starters who can’t produce a big enough return. If you’re a small business or you’re looking to start one up, here are a few tips on how to raise some much needed cash to get things going.

First things first…

Check out Social & Peer-to-Peer Lending

This type of borrowing has become increasingly popular over the last few years, with young entrepreneurs choosing to find finance online instead of camping outside the banks. Simply put, social lending puts your needs in touch with people online that are willing to help you out. A broker will determine the amount of money you need, and then put you in contact with people online that are willing to lend the same amount. Basically, you decide the type of the loan, the length and how much interest you want to pay, and then the broker matches your credentials with lenders. This way of lending has many benefits, most notably not involving any banks or institutions. Both borrower and lender get better rates than if they were to go through a bank too. Just sit back and let the site compile all the necessary paperwork and transactions!

Crowd-Sourced Funding

Similar to social lending, crowd-sourced funding also involves a network of people lending money. However instead of a set amount, the individuals involved in crowd-sourced funding lend as much or as little as they want, backing a project instead of loaning cash that could be for a number of things. For example, crowd-sources funders may lend money to a project they believe in, whether it’s a film, an album, or a product. In return for the cash loan, the investee will offer rewards related to the project, maybe a credit in the film, or a song title on an album. They may even name their product after an investor. The size of the loan will depend on the size of the project, and terms/rewards will have to be ironed out and put on paper before any cash is exchanged.

Angel investors

Relatively new in the lending business, put simply, these investors will front large amounts of money in exchange for equity in your business when the banks aren’t interested. If they believe in your business, they’ll back it, however they will need to see detailed and convincing business plans which show a return on their investment – if your pitch isn’t right, you’ll lose the cash!

Small companies are the backbone of UK corporate land and David Cameron, Britain’s Prime Minister, no less, has recently said that he believes that they are crucial in creating jobs, wealth and opportunity. Small businesses are seen as having a key role to play in play in the UK’s economic recovery – more major economic turmoil from continental Europe notwithstanding.

Even so it is still depressingly tough for small companies with a host of problems to overcome and it seems little in the way of real meaningful support from government or the banking sector. For them, it appears, that any kind of business lending is just still too difficult or unattractive.

Moreover, smaller companies are often finding that they are being squeezed financially by larger ones who are effectively using their size and power to dominate smaller companies and use them in effect as a source of finance. According to the Federation of Small Businesses’ statistics as many as 30% of small businesses say they are being paid late on a regular basis.

Whilst there is some legislation around to prevent this (late payment interest etc.) many small companies are reluctant to use these methods as they risk damaging the relationship with their customers.

There are a few practical things that all companies (even the larger ones) should do to help minimize late payments and reduce the pressure that this puts on cash and the ever increasing risk of default.

Firstly make sure that your terms of payment are agreed in writing. See a lawyer if you haven’t already got some well written and legally enforceable Terms & Conditions of sale.

Make sure you have a formal system in place for credit check all your customers. There are many ways to do this with a number of web sites available online, it doesn’t cost very much and it is quite an easy thing to do. This will help you to make informed credit decisions and many of them will tell you if your debtor has a track record for paying people on time.

Try to have a champion at your customer (usually the person buying your goods or services) who can help pressure the finance department if needed and will help smooth out any issues.

Make sure you get your billing right, errors and omissions are the commonest reasons for delayed payment. Don’t provide your debtor with any excuse; check and double check names, addresses, purchase order numbers, prices and all calculations.

Make sure that you or someone in your team calls your debtor well in advance of the invoice falling due for payment to make sure it has been received, is being processed and that there are no problems with it – don’t wait until it is overdue.

Review you overdue debts position regularly (create an aged debtors report) and make sure that all overdue debts are escalated for management intervention.

If you run a hair or beauty salon, or indeed, any customer facing business, market positioning and a robust business strategy is essential.

Understanding your unique selling point

Good marketing starts with knowing your customer and your competition. Start with your customer in your target market. Think about the services or products you are selling and who you’re selling to. Then look at competitors who are offering similar things to you. Where are they strong and where are they weak? Are their goals clear and how do they attract customers? Is there something that makes them stand out from the rest of the market?

You need to gather as much information about the market and the competitors in it as you can and work hard to understand them. When you have this information, you can start to see how you fit into the wider market and where you can stand out with your competitive edge and ideally a unique selling point that isn’t offered elsewhere in your target market. For example, you might offer a superior customer service that’s accredited to external standards and known by everyone who steps into your salon. Exceptional professionalism, service, friendliness and standards are key to attracting and retaining your customers. A great service strategy can allow you to charge healthy prices rather than targeting the price conscious section of the market that may simply chase the cheapest deals rather than build up repeat custom to a single provider.

Another great differentiator is product, particularly in the health and beauty industry. For example, you might look to offer innovative services such as micro-dermabrasion and bee ‘venom’ facials, or gigi brazilian wax products to tempt in your customers. Innovation in this industry is a vital marketing strategy, as many customers love to try out the latest products and services and keep up to date with trends and developments in the market.

Marketing yourself

Make sure you understand your proposition and positioning before you begin to market yourself, then work with a designer to create a simple brand and logo for your business. This should then be used across your marketing channels, with everything from your business cards, staff uniforms and promotional flyers to signage, car livery and vouchers. Show a consistent brand experience by using the visual identity and language that expresses who you are. An online presence is also a vital marketing tool and getting onto social media can really boost custom. Look at working with a developer to build a simple website that explains your services and offers rapid contact for customers to book. Consider a call back system, if possible, to show that extra service.

Further considerations

As well as spending time and money on your promotions, the full customer experience will be affected by the other decisions such as how effectively you manage your salon operations, purchasing and stock, health and safety, company finances, legal and insurance requirements, staff training and more. It’s worth joining any local business support and networking groups to learn from other business owners. Think about a mentor or a knowledgeable business partner or salon manager if you are new to business ownership. The learning curve is steep, but it’s also fast and extremely rewarding!

No one ever wants to think that something terrible might befall them or their family, or even their car, flat or home, but unfortunately, these things do happen. Many wind up in quite large amounts of debt, or even bankruptcy, simply because something that they were unprepared for happened, be it an illness, a car accident, or even a home repair disaster.

In most cases, insurance will cover the necessary damages, but not always, and that is where the concept of having an emergency fund comes into play. An emergency fund, also called a rainy day fund by some, is basically just as it sounds a stash of money which has been saved and is to be used in the event of an emergency.

Many people stockpile their emergency fund for things like sudden car repairs, say on the way to the office the brakes on your automobile start squeaking, unless you have planned for brake replacements, or have your rainy day fund in place, it could be quite difficult to just reach into the wallet and fork over hundreds of pounds for an unexpected issue. Home repair problems are another big source of uses for any emergency fund, a flooded shower, a termite infestation, a hole in the roof, are all things that can put any sort of emergency fund to use quickly.

And in this volatile economy, building up an emergency fund is an intelligent idea for if another deep market fluctuation occurs and jobs are made redundant, getting sacked, while certainly an unexpected disappointment, might not be quite as terrible if a few months mortgage were sitting in the rainy day fund.

So how to get started, right then, first things first, take a look at your budget and determine just how much funds you will be able to put away. Next, set up an automatic withdrawal from your account, preferably right at the same time you might receive each pay check, then you won’t even know the money was ever there. Set up these withdrawals each month, or even every two weeks. After six months or so of saving, you will be pleasantly surprised to find such a tidy sum sitting in your emergency fund.

The goal of this fund is really to never use it. Do not borrow from the emergency fund to go on holiday, or buy the family Christmas gifts, the funds in that account are only be used in case of an emergency. Once this fund is set up, you will be able to rest easily that if any unexpected crisis were to occur, you would be able to finance it with the money in your emergency fund (or at least partially finance it), and not skip much of a beat in your regular financial life. It is a piece of mind that is relatively painless to set up and get going.

Many new business owners think their business credit score is just numbers that fluctuate. Well it is much more, your business credit score can make or break you financially. Your credit score is numbers that tells lenders how well you have been at paying your bills and helps them to determine if they would like to offer you a loan. A low credit score lowers your chances but with a high credit score you are open up great financing options to your business.

What is a Business Credit Score?

Your business’s credit score is number that shows lender just how well you have been at meeting your payments and how heavy your business debt is. Lenders or other agencies looking to do business with you can take a quick look at your business’s credit score and determine if they would like to offer you a loan or what type of loan you would qualify for. Your credit score lets these lenders know if your business is a good risk or not, if your worthwhile to invest in.

The Importance of A Good Business Credit Score

In our ever changing economy lending is not what it once was, today your business needs a high credit score just to be considered for a business loan. The higher your credit score the more financing benefits you will have such as low interest rates, better terms and conditions, larger loan amounts as well as better odds of approval.

How to Maintain A Good Business Credit Score

Keeping track of your businesses finances, not over borrowing and making large payments early or on time is great for your credit rating. Your credit score is based off your business payment history and borrowing history so if your business borrows beyond your means and makes minimum payments late or not at all your credit score is going to suffer. To keep a good clean credit score keep up your finances with on time or early payments for over the minimum amount, then you can sit back and watch your score increase as well as increase your businesses financing options.