Hi
The UK banking industry is changing in a way that will impact all growing businesses.
The recent news that Barclays is ending its global investment banking strategy means that there are no UK investment banks left. A far cry from less than 10 years
ago (which some may say is a good thing). The market is now US dominated.
The government has started the process of selling its shares in the Royal Bank of Scotland and Lloyds Bank to return these banks to private sector ownership.
Both these recent developments mean that banks will be more
risk averse, short-term focused and probably starved of ability and aspiration. They will lend to large corporates, utilities and asset-backed businesses.
They will never again be the primary lender to small and owner-managed businesses.
If you aspire to grow your business, and
need finance to do so, you need to be developing a strategy now to engage with the investors and lenders who will be backing SMEs. Here's what you should be doing to prepare it.
- Understand the new players in the market: these will be crowdfunded equity (and business angels), peer to peer debt finance, credit unions and
asset-back lenders.
- Recognise that the needs of these groups, in terms of information, terms and returns be will very different from the 'old' requirements of private equity investors and clearing banks.
- Be prepared for a much greater emphasis on financial forecasts and cash flow and much greater scrutiny of your market,
marketing and management.
- Expect to pay more for a poorer banking service.
- Plan for how you will up your game to be able to produce the better and more frequent financial information your 'new' financial backers will require.
Lack of, or
poor, cash flow is frequently the reason businesses fail. Don't be caught out by these changes and expect your bank to help you through a cash flow problem: they will be looking the other way.
Make sure your business plan for the next 3-5 years includes a detailed plan for where your finance will come from. We shall be running a series of webinars in the autumn to help you address these issues;
drop me an email if you'd like to get on the early-bird list.
To your success
Noel Guilford
Noel Guilford is the principal of Guilford
Accounting a small business accountancy practice specialising in advising owner-managed businesses on current accounting, finance, and tax matters. You can reach him via email at noel@guilfordaccounting.co.uk or by phone at 
01244 660866. He is the author of the best selling book 'Figure it out - an entrepreneurs guide to understanding your business numbers' which you can obtain by visiting
http://guilfordaccounting.co.uk/figureit out. His forthcoming book 'Know your business numbers' will be published in the autumn.