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Growing your business

The business is established and you are ready to expand. Customer demand is increasing. The UK market is covered, so what about expanding overseas? This could take your business to the next level. Find a chartered accountant participating in the ICAEW Business Advice Service - receive an initial consultation at no charge.

Find a chartered accountant participating in the ICAEW Business Advice Service - receive an initial consultation at no charge.

But does expansion present too much risk? Do you have the resources – both human and financial – to meet the additional demand? Is the management team equipped to scale up operations? Can your information and communications technology offer the necessary support to an enlarged business? Should you bring in outside investors, or should you think about exiting the business through a trade sale?

Additional funding

Trying to raise finance quickly to exploit a business opportunity can cause headaches. Thankfully, this is the type of challenge to which the in-depth knowledge and experience of an ICAEW Chartered Accountant is ideally suited.

The source of finance most appropriate to you will depend on the nature of the business opportunity – be it a business acquisition, major project, market expansion or substantial customer growth. But it will probably depend even more on your company’s stage of development and the finance already available to you.

There are two main types of finance: debt and equity. Debt finance is more common and, in normal circumstances, it is easier to access. Debt finance includes bank overdrafts, bank loans, hire purchase and leasing, factoring and invoice discounting, asset finance, credit cards and schemes such as The Prince’s Trust.

However, the financial crisis has made it more difficult to access debt finance. Even smaller companies that are serious about growth have begun to consider external equity investment. Small-scale equity investment is available from business angels, venture capitalists and regional venture capital funds.

From pitching to due diligence, an ICAEW Chartered Accountant will be able to offer timely advice and help you to evaluate your options.

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Expansion and  restructuring

If your business is profitable and you are starting to think about expanding, the wide-ranging expertise and sound judgment of an ICAEW Chartered Accountant will come in useful. Your first step is to take an objective look at your operation. Assess its strengths and weaknesses, identify areas for improvement, examine what your competitors are doing and ask your customers for their feedback.

Selling more to your existing customers is a reliable way to grow; expanding into new sectors and adding more products and services to your portfolio is a riskier but potentially more lucrative strategy. With the right advice and support, you will be able to develop a strategy for growth that meets the changing needs of your current client base while reaching out to new audiences.

Restructuring is the term applied to the act of reorganisation of the legal ownership, operational or other structures of a company, for the purpose of making it more profitable, or better organised for its present needs. It is frequently used in terms of a business seeking to avoid insolvency by reducing its debts, such as by asking creditors to exchange a debt owing to them for a share of the business. Restructuring specialists seek to stabilise the finances of a business, ascertain the remaining value in the business and seek to maximise that value for the benefit of the creditors, business owners and employees.

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Exporting opportunities

With slow growth in the UK reducing domestic demand, ambitious businesses are looking at international markets for opportunities to expand. There are many factors to consider, and the advice of an ICAEW Chartered Accountant can prove instrumental to success in new and emerging markets. 

Before embarking on international expansion, it is worth considering the following points:

Research is critical – investigate new markets thoroughly on a social, economic and political level. Assess your product range and identify which products to export and the modifications that will be needed to enter different markets. Get your finances in order and adjust budgets accordingly. Be clear about your objectives and have a clear, realistic and durable strategy to achieve them.

Look at the big picture – try to consider all the options, even the most unlikely ones. Know your legal position in relation to UK Tax, export and import controls, and what documentation is required. Find out about the laws and tax system in your target marketplace. When exporting to the Gulf, for example, what impact will Islamic banking practices have on your business? Talk to freight/transport agencies to decide on the logistics of moving goods.

Consider the practicalities – how will you physically manage the operation? Will you recruit a team on the ground or have UK staff travel overseas? In some countries, companies are required to have a minimum number of local directors in the board. Will you operate through an incorporated body or set up a joint venture with a local partner? How do you intend to transfer funds from and/or to the UK? What impact will all this have on the UK operation?

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Exit or sale strategies

Many small business owners regard their business as their pension and intend to one day sell it to fund their retirement. These owners can become involved in a balancing act: they are keen to maintain their income from the business while also needing to dispose of it when it is best placed to achieve the desired price. An ICAEW Chartered Accountant will offer the expertise and sound judgment needed to address three important questions:

  1. When should I think about selling my business?
    Maximising the price from the sale of a business requires careful planning. The preparation of the business for the sale can be a long process. Poor performance could result in a reduction in the perceived value of the business. You may need outside help with arriving at a valuation, putting together a prospectus and conducting the sale.
  2. How will selling affect my staff?
    Many owners exit a business by selling it to their staff. You would need to ensure they have adequate management skills and then groom them for their roles. The raising of finance for a management buyout may involve complicated loan arrangements. The tax considerations can be complex, as both seller and buyer will want to maximise their tax benefits.
  3. How do I ensure an adequate pension?
    You will need to set aside sufficient money from business profits to yield an adequate future pension. Saving out of earnings to set aside a pension is usually highly tax-efficient and could give you opportunities for future investment.

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