Investing to improve the business can be a sound move, but plan any big financial commitment carefully.
Consider, is this the right time to invest or expand? Can the business afford it? Will the investment add to the business’s value either by bringing more customers or improving quality. Is it necessary to comply with legislation?
Put the investment into the context of a long term strategy, work out the figures, and make sure that resources are not being overstretched.
Financing the deal.
Are you going to buy, lease or rent? Who will supply any extra funding?
There are three main sources of funding. Banks, investment partners, and specialist finance and leasing companies. The banks can seem good value and if you have a particularly good relationship with your own bank, you may feel this is a wise choice.
But do check out the small print before deciding to go this route, find out what guarantees are required and if there are any fees for arranging the deal.
An investment partner could prove a useful source of funds, but do you want to involve someone else in your business?
As with any partnership, there may be disagreements, so take legal advice in drawing up the terms.
Specialist finance and leasing companies can seem an attractive option, but get to know the company. See if you can talk to other customers and check what guarantees are required.
Prepare your funding application with thought. Be realistic about the business and its prospects. Be honest about any problems you have had in the past.
With any financial deal always read the small print and if necessary get it checked. This applies whether you buy outright, lease or rent.
If you buy outright, check the terms of the maker’s warranty. What does it cover? How long does it last? Who carries out servicing?
If taking out a leasing agreement, look at the small print. Check on the servicing arrangements, find out if there are any exclusion clauses. What will happen if the equipment life is shorter than the lease?
If you rent equipment, you avoid the costs of depreciation. Again check terms carefully, particularly if servicing is subcontracted. You should know what happens if the subcontractor stops trading or if equipment reaches a stage where it is beyond repair.
Cutting the risks
Even the best managed businesses can face problems and when those problems turn into disasters, a reliable insurance provider can be a valuable help on the route to recovery.
Like other aspects of the business, insurance should be planned both to make sure foreseeable (and even unforeseeable) risks are covered and that you are getting the best deal.
Registered broker
Seek independent advice from a registered broker who can advise on planning the cover you need and may provide help with any claims. Such companies will also be governed by a professional code of conduct.
Judging the quality of service, is difficult. Some trade associations may be able to advise. Talking to others in the same line of business may also help.
Choosing a company that specialises in the textile care sector will provide reassurance that the insurer bases advice on knowledge of your industry as well as of the insurance world, and that they will have industry specific packages to offer that can prove good value.
Deals to cover accidents to customers’ goods and cover damage to linen hire stock at the customer’s plant, are examples.
You can minimise some of the risks that all businesses face, and also get a better deal on premiums, with good management.
This will include strict adherence to health and safety procedures by both management and staff, and regular routines for maintaining safety equipment. Additional equipment such as CCTV, or burglar alarms could also help reduce costs. Regular maintenance routines for plant and equipment will also indicate a well managed business.
Good planning includes thinking of all the contingencies.
Righting a disaster may take time, and incur additional charges. Do you have sufficient cover to help meet bills if you have to suspend trading or contract work out at uncompetitive rates?
