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11/11/08

Funding Change
A family business can face all kinds of uncertainties. For example, if a family director leaves the business it could be extremely difficult to find a suitable replacement, and the director could well take money, securities and clients with them. In a management buy-out or management buy-in situation you will often have to act quickly to complete the transaction in the required timescale. A short term loan can be used to provide the capital that is needed to push the deal through or to maintain normal operations during a transitional period. This kind of cash injection can ensure that the business continues to run smoothly in the short term and then be repaid as soon as the dust has settled.

Seizing Opportunities
In family enterprises a strong value system often gives the business an edge over competitors. However, this must be balanced with the need for change in a fast moving climate. For example, the opportunity could arise to buy a competitor's business and stock, or to acquire property which has great potential and must be snapped up quickly. We've found that an increasing number of family businesses are taking out bridging loans to buy overseas properties, building up their assets while there are bargains to be had. It is vital that companies spend time thinking about the future and not just the current climate so they can take advantage of opportunities. Family businesses must be outward looking in order to stay ahead of the competition. Family businesses experience change not only from a business perspective, but also in terms of the relationships within the family. A common view of succeeding generations is: if it works then why change it? Many are reluctant to alter what earlier generations have done. However, change is inevitable and in order to prosper opportunities must be grasped if the commercial realities demand it.

Preserving Cashflow
An unforeseen issue could arise in the form of a bad debt or the loss of a big contract which puts a temporary squeeze on working capital. In a family business, when clients are often long standing and closely linked to the family, it may come out of the blue and leave you with bills that you struggle to pay. Similar problems can occur with unexpected demands from the tax man. These could be for an amount you cannot access within the time required and failing to pay on time will mean financial penalties. In either situation short term funding can help and meeting tax liabilities is an increasingly common use for bridging finance.

Action
Capitalising on opportunities and averting threats involves spending money. If you have funds to hand, fine. If not, short term funding can help. Reputable short term lenders can offer clients fixed interest rates, fixed time scales and rapid responses, often completing transactions within days. Transparency, clarity and speed of service have become the watchwords for the sector.

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