09/05/2012

Mike Owen on business growth

Robust businesses are planning and investing for the longer-term to see their way through 2012-13.

With reports of bank lending to SMEs falling short of government targets but all eyes still on SMEs to drive economic recovery, pulling this off will take capital as well as a measure of adaptability and confidence.

Adapting to survive and thrive

I was recently asked to share my thoughts about growing businesses in tough times at Spotlight Mid Wales. We’re continuing to talk to good, established businesses who are thinking bigger and adapting their plans to cope with difficult trading conditions.

I think these businesses have a few things in common:

  • Strong management teams
  • Knowledge of their markets, competitors and customers
  • Efficient finance systems

Colin Arnold of Mangar, one of our portfolio companies, was also speaking at Spotlight and added his thoughts on how to stay ahead of the game in tough times:

  • Always flag up and deal with problems early
  • Develop robust management information and use it to make strategic decisions
  • Implement effective change processes

The bottom line is that the businesses succeeding right now are those which are actively looking for new market opportunities and adapting to satisfy them.

Adaptable capital

With access to capital getting in the way of growth for many SMEs, traditional debt investments aren’t always the answer. We’re continuing to invest in good deals, including a number of £500,000 plus deals.

Here are some examples of the types of deal structures we can do:

  • Cash flow-led debt investments.
  • Mezzanine and quasi-equity packages where we profile our investment to suit a company’s growth forecasts and future profits, sharing the associated risks and potential future returns.
  • Shorter term project finance, where we can provide working capital to finance individual projects.
  • Equity investments which can help to strengthen a company’s balance sheet allowing it to focus on strategic growth.

Expansion's in the air

Businesses with a steady nerve, a strong growth plan and Finance Wales’ backing include:

  • Viscose Closures Ltd (Manufacturing, MBI) - £2.3 million equity investment
  • Flame Spray Technologies Ltd (Manufacturing, Development capital) - £130,000 debt investment