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Update 9th November 2020

When I wrote the below blog in May 2020 I didn’t think I would be updating the news in November with more of the same! It’s a miracle so many of us have survived so long to be honest, especially as now its clearer than ever that although the Government have extended the Self Employment Income Support Scheme until April they have no intention of updating the existing criteria - leaving 3 million small businesses (more than half) to fend for themselves for the long winter.

 

However the news isn’t all bad. The Government have extended the Bounce Back Loan scheme until January 31st, with the added bonus that if you applied back in the summer but not for the entire amount, you can now apply for a top up to your existing loan.

 

Back in May I suggested that the loan was a great idea whether you needed the money to survive or not??" never sniff at cheap money to invest in your business! However it seems that in a lot of cases this money has been used, where the SEISS has not been an option, to subsidise business and living costs through the pandemic.

 

This option has become even more attractive now that the government have extended the repayment terms from six years to ten. For those of you that borrow the entire £50,000.00 that brings your monthly repayments down from around £800.00 a month to around £400.00 a month.

 

Here is the full blog from May ??" still our most popular pandemic blog!

 
Originally Article Published 24th May 2020 - as always; please check all information is still relevant for your business. If you are unsure about any aspect of the article or have any questions please contact us.
 
More than 70% of small businesses have lost half their revenue or more since the coronavirus crisis began and many fear running out of cash altogether in the coming weeks.  
 
Many small business owners did not qualify for any financial support under either the SEISS or CBIL schemes previously announced.   So is help for these businesses here at last?  
 
The Chancellor Rishi Sunak has responded to calls for more cash from the small business community with a new ‘Bounce Back’ scheme designed to get banks to deliver rapid, government backed loans of up to £50,000.00 to smaller businesses.  
 
However ??" listening to the FT  Live Q&A on the scheme today it seems not all businesses are keen to take on more debt especially those who doubt their ability to ‘bounce back‘ within a year, when the interest free period ends.  
 
Some argue that it is unfair to expect them to take on more debt just to survive.  Others worry about the rate of interest on repayments after the initial 12 month interest free period is ended.  
 

Pros and cons of the Bounce Back Scheme

 
There are some other potential drawbacks for the small business community; for example the loan is for ‘up to 25% of turnover’ but it isn’t yet clear how the Government are assessing or checking turnover. This may mean that businesses who have been trading for under a year are not eligible for this most recent lifeline either.  
 
However closer to home many local business owners are surprised at such negativity, viewing this as a long awaited straightforward good news story for all involved.  
 
Local accountant Andy Tree is encouraging his clients to apply for this loan arguing that they would be mad not to on the terms offered. He suggests investing the money for 12 months or even using it for an acquisition. He writes:  
 
“There may be an opportunity here for anyone who does not need the loan as the terms & conditions/rates going forwards are likely to be very favourable and could mean it is worth borrowing the money to invest. For example, the current business interruption loan scheme lists "acquisition" as a legitimate purpose for the loan!” 
 
He adds “there will be lots of small firms up for grabs at low prices at the moment…its worth considering! The Government don’t just want us to bounce back they need us to and so this is an entirely legitimate way to proceed with the funds.” 
 
Daniel Priestley from business acceleration company Dent is of a similar mindset but suggests a different approach. He wrote to his online business community:   
 
“You should think seriously about seizing this opportunity but be sure to spend it wisely. I think anyone who goes to the bank with a serious proposal based on digital transformation of their business, will be approved. A £50K loan over 5 years will cost less than £1000 per month to repay, so if you spend it wisely, you should be able to leverage a solid ROI.”   
 
Daniel has written a list of investment ideas that could create this kind of ROI and deliver a solid Bounce Back for you and your small business: 
 
Here’s a list of sensible ideas… 
 
  1. Publish a book and give away 1000 copies per year. All up this strategy would cost you less than £10K and for many people in this group you would only need 2-10 clients to come in and you'd be miles ahead. Talk to the team at Rethink Press.  
  2. Create a scorecard. Our Key Person of Influence Scorecard has been taken 65,000 times and generated hundreds of clients. Our database is a huge asset because we know at least 50 things about everyone on our list. A scorecard will cost you about £2-4K to do it properly and then you'll spend money on ads promoting it each month (we get a lead for every £10 of ad spend). Talk to the team at ScoreApp.com
  3. Buy some AV equipment. I did a separate post on this talking about the gear I use. With £1000 you can get some good mics, tripods and lights and dramatically improve your ability to create videos for your business.
  4. Create a podcast. You'll need about £100-400 of microphones and a subscription to something like Buzzsprout for hosting (£12pm). I would encourage you to spring for a professional producer. It might cost you £150-500 per episode but it will be much better and less of your time. Create a unique intro and outro and you'll seem like a pro.
  5. Win some awards. Our digital agency (sotechnology.co.uk) won a major award for our e-commerce work. Ever since we've won almost 100% of the work we pitch for and we don't negotiate on price. Winning the right award can be transformational. There are agencies that can help you to find and apply for awards (eg: craftedbyaugust.com). I would add to this category applying for an Investors in People award (if you have staff) or an ISO accreditation (especially if you pitch to larger corps).
  6. Get professionally produced videos on YouTube. Creating an excellent showreel, explainer video, testimonial video or lesson could be a massive asset for your business. Even at this time, if you have existing footage you could get it professionally edited or you could create an animated video. Professional video starts at around £2K-5K but it is an asset that keeps yielding rewards for years to come. Talk to ReallyBrightMedia.com
  7. Get a proper business plan written. An externally produced business plan can unlock more than just funding. When you are too close to a business, you can miss the forest for the trees. Having a professional create a business plan can lead to a bigger vision for your business, unlock further funding and create a central document for your team to work towards. Talk to Add Then Multiply or Robot Mascot.
  8. Build some technology. An e-commerce store, an e-learning portal or a customer portal. Any thoughtful investment into technology will normally unlock scale and profitability. If it's created well from the start, it will also last for years. Talk to sotechnology.co.uk
  9. Take a course. The ROI on education and training can be as good as it gets. Every time you develop yourself or your team based on best-practices from a quality training provider, you are standing on the shoulders of giants. The most costly thing you could ever do is try to reinvent the wheel through trial and error. Talk to us at Dent Global to do a business accelerator (£6.5K) or maybe now is the time to do an MBA (£45K). *
  10. Create a small army of robots. Automation can be a powerful investment if you work with an experienced provider. You can automate your marketing, your operations, customer-service or finance functions. You can begin to automate areas of your business for as little as £5K.   
 
Thanks Andy and Daniel!
 
At SiGNAL we think these are all great suggestions and in themselves provide a lesson in positive business thinking. Shouldn’t every business owner worth their salt get excited at the idea of cheap money to invest?  
 
We especially like number 9 on Daniel’s list - the idea of investing cash in your own training. Being better trained than your competitors at absolutely everything to do with running a business is surely a great way to guarantee relevance and market share.  A year’s membership of the SIGNAL BizHub with weekly training events and round the clock peer-to-peer support is just £770.00  
 
What do you think? Is applying for the loan a great way to invest in your business and bounce back in style? A necessary survival measure? Or an easy way to saddle your business with more debt?  We’d love to hear your views. 
 
 
For the Chancellor’s announcement in full click here; https://www.bbc.co.uk/news/business-52445988    
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