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Business funding: it’s a matter of timing

Author: ICAEW Insights

Published: 09 Aug 2021

Food industry entrepreneur Laura Bounds knows when a business needs investment, and when it requires a different approach.

Laura Bounds MBE, entrepreneur and culinary connoisseur, has an impressive track record in turning around struggling food and drink companies. 

She joined 30-year-old food wholesaler, Curd & Cure, as a co-director to support the brand's transformation, raising its profile and reputation and earning them a place on the map in just under two years. Curd & Cure are now one of the South East's leading independent artisan food and drink distributors, specialising in cheese and charcuterie. 

Bounds also owns Kent Crisps, Kentish Condiments and A Little Bit Food Co, all companies she transformed into stable, profitable businesses.

As Bounds explains, it's taken a tremendous amount of work, the right people and quite a bit of careful bankrolling. 

But unlike some business owners whose knee-jerk reaction to struggling companies is to take out loans and overdrafts, thereby exacerbating the issue, Bounds has a cautious approach to business finance.

"My mindset to funding is very different to most business people," she explains. "I tend to err on the side of caution. All of the businesses I've taken on have needed to be recovered. None of them were highly profitable, and they certainly weren't cash-rich. Some needed restructuring, others needed investment, but all were struggling."

It meant that when she took on Kent Crisps in 2017, a small business in desperate need of restructuring, taking out loans or applying for overdrafts would have been the worst thing to do. 

"I would have been wary of taking out loans for this type of business because it just didn't need it for growth. I don't want to leave businesses more vulnerable, and it would have plunged Kent Crisps into more debt. My main approach is, 'how do you drive net profit from what you've already got in the business?' rather than, 'OK, we want to grow, so let's get funding to help us invest and get the returns later on.'"

Initially operating under a joint brand, Kent Crisps and Kentish Oils underwent a significant restructure, and the two arms split. Kent Crisps now operates under its own brand, while Kentish Oils has become Kentish Condiments. 

Although Kent Crisps was in a lot of debt when Bounds took it on, she was able to pay off the debts herself, and the brand's restructure eventually paid off, even despite the challenges the pandemic created. "Kent Crisps was the hardest hit out of all my businesses," says Bounds. "We supply to airlines, pubs and other areas in the foodservice sector. We'd just hit our turnover target in 2019 and we were due to grow by 40% in 2020, then the pandemic hit. But I was actually glad it was Kent Crisps that was affected and not the others. It's extremely stable. I built it to be lean and resilient, and it's absolutely solid."

A different approach was needed for her largest business, Curd & Cure. It was clear right from the start that the company required significant funding and investment to help drive growth: the brand needed a new warehouse, new facilities and a new senior management team. Bounds made use of bank loans, overdrafts and grants, funding which she says was the 'best thing ever to help grow the business, a process which was always going to take two to three years before there were clear returns. 

Curd & Cure is now in year two of business upturn: their client base is 80% retail and 20% food service, and retail has done well.

The business is now on the 'home straight' phase of recovery, the period after the 'cliff edge' phase where a struggling business either fails or survives. This phase, says Bounds, is about preserving cash, reinvesting and maintaining. 

While most business owners breathe a sigh of relief at reaching this stage, Bounds admits it's the adrenalin-filled 'cliff edge' which she enjoys the most. 

Overall, Bounds has used every available funding stream, from grants to loans to overdrafts to LEADER funding, a scheme that is part of the Rural Development Programme for England to help create jobs, business growth and benefit the rural economy. 

Yet throughout it all, her approach has been highly strategic: she's used loans where required for business growth but avoided financial support for the businesses which could survive without. 

"I've used funding in different ways because all of my businesses are at different stages and have very different needs," she explains. "At the same, I'm acutely aware that all the debt I've taken on is high risk and creates much uncertainty. You have to make sure the investment will work for the business and reach a stage where you can actually pay it back. If you don't think your business will ever reach that stage, you just don't do it. It's as simple as that."

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