10/01/2010

A model business?

The right business model is imperative and evolution not revolution reaps rewards when implementing it. It also means businesses are less likely to store up problems for the future.


"Recent economic conditions have been difficult," explains Peter Wright, Finance Wales’ investment director. "Some businesses haven’t made it, but those that have realise that creating the right business model isn’t an option, but key to their future success."

Opportunities knock

Numerous factors can impact business model changes. Helping your clients build a sustainable business model and the right growth strategy requires careful thought to turn perceived disadvantages into real opportunities.

Successful businesses constantly evolve their business models. It’s all too easy for businesses to do what they’ve always done and overlook the potential for their products as well as opportunities in existing and new markets.

Peter WrightFinance Wales' investment director

Diversifying your product range

"Diversifying your product range can be attractive for a number of reasons," Wright  continues. "Businesses can often benefit from economies of scale, exploit unused capacity and grow their revenues and margins."
 
Finance Wales has invested a number of rounds in Outlook Expeditions, the UK’s top youth expedition company. Outlook used Finance Wales’ £710,000 investment to achieve ATOL registration and evolve its business model by providing short as well as long expeditions. The company has not only grown its revenues but has shortened its sales cycle and reduced the effects of seasonality inherent in its key markets.
 
Find out more about our follow-on investments in Outlook Expeditions.

Exploiting untapped markets

There are clear cost and efficiency benefits to exploiting untapped potential in existing markets and Finance Wales has worked with businesses and their advisers to consider these and structure suitable investment packages.
 
UK aerospace supplier, Ramp Industries, used a £200,000 investment from Finance Wales to establish a new manufacturing division. The company will now use this additional capacity to expand its range of services and exploit new and existing UK markets.

Taking an international view

Increasingly crowded domestic markets, the strength of the pound or the potential for greater margins can make expansion into international markets worth considering. Such markets may have fewer competitors or offer the potential for higher margins and the opportunity to achieve increased economies of scale.
 
"We’ve worked with businesses to structure suitable funding packages to help evolve their business models. By being ambitious businesses can accelerate their growth plans and turn perceived disadvantages into real opportunities." Wright concludes.
 
Many of our portfolio companies are finding new opportunities outside their domestic markets.