Advising the SME Market

Whether you run a small, medium or large enterprise, there will be a need to consider the implications for you in the areas below. The AGL Corporate Services Team have many years’ experience advising companies of varying size, as well as advising senior management on their own personal circumstances.

Providing effective benefits for your employees and protecting your business in event of loss of key staff can be crucial to the smooth running of a business. The loss of a key person through death or incapacity or the death of a major shareholder can place a great deal of strain on the company and have serious implications for the finances. Good advisers alleviate these problems by establishing a clear strategy agreeing what would happen in the event of death of one of the business owners. Properly structured, these agreements can protect all parties and provide peace of mind.

Hopefully, this will not be the case in your firm and all directors will continue to work right up to their chosen retirement date, and this creates another planning need. Succession – Whether the business is to be passed on to family members or if the ultimate goal is sale to an unrelated party, there is a significant need for business planning to make this exchange as smooth as possible. In the instance of sale to an unrelated third party, obtaining the best purchase price is generally paramount, but what should this figure be. One approach is to employ the services of wealth planners using sophisticated tools to assess your income & capital needs in retirement, factoring in incidental costs, consider your desire to leave inheritance and from here determine the level of capital needed from the business sale. This is a very different approach to simply looking for the best sale price available. For one, it may highlight a significant shortfall in what you need compared to what you’re realistically able to reap from the business sale as it stands. If this is the case it is not the end of the dream, in fact there are companies and individuals who can assume positions on boards often as non-executive directors with a remit of making structural & operational changes aimed at achieving a specific sale price for your nest egg.

Preparing a business for sale is important but obviously it’s not all about marking time until the exit date. This is why it is vital to ensure 3 key areas are as comprehensively covered as possible. They are: Maximising return on surplus funds, minimising cost of borrowing of any description and structuring both business & personal tax positions as efficiently as possible. Assessing available term for investment and risk appetite for surplus funds is the starting point but whatever these are, there is invariably a better solution than leaving them in your business bank account.

When was the last time you reviewed not just your commercial banking, but how you structure your debt? Probably not for some time, and the main reason put forward for this is, “I don’t know any commercial banking experts apart from those with my current provider”. Professional advisers, with experience and connections in the industry will be able to seek solutions from all areas of the market, looking at overdrafts becoming invoice financing and fleet leasing being streamlined and reduced in cost as typical examples.

Tax mitigation for all employees but specifically directors and senior staff is an area where common sense and business acumen will not get you by. You need a specialist, you need to know if they’re good, and you need to know the sort of solutions you should be expecting to be presented with. It is the one area of business in which even those running the most successful businesses often don’t know what they don’t know. One very common complaint from successful business owners is their inability to extract profits from the business without incurring hefty tax bills. Advisers with a network of professional connections will know where to source this expertise even if they cannot provide it themselves.

Advising the SME market in 2015 would not be complete without touching on workplace pensions and employee benefits. Auto enrolment which began for the largest companies in 2012 but really gains pace for the SME market in 2015, is a compulsory cost which employers have to bear. But even here there is potential to turn this to your business advantage by utilising salary exchange and passing these savings onto your workforce via an employee benefits package. An employee benefits package does not have to involve parting with thousands of pounds for an online benefits portal and may be as simple as introducing group life cover, childcare vouchers, private medical cover and gym memberships. All this can be administered manually, part funded via salary exchange and created with minimal cost to you the employer.

A caring, paternalistic approach is often seen as a major yardstick in setting an employer apart.  We can review your current employee benefits package and assess it for competitiveness in today’s marketplace as well as advise on and implement any new aspects of the package. The aim of this is to add value to your offering and help to attract and retain the best staff. It is easy to view this as a nice to have rather than a must have, but care needs to be taken not to overlook the cost of replacing an employee. Studies suggest the cost of replacing an employee can range from £20,000 to £40,000 once the loss of productivity of a departing employee, input from HR & management, gardening leave, recruitment, induction and training are all factored in. Even if you estimate the cost to your business is only half or a quarter of this, it serves as an eye-opener compared to the cost of basic employee benefits aimed at keeping employees engaged and as a result less likely to seek alternative employment.

For more information on how we can assist you please visit our dedicated website or call us on either 0141 314 3765 or 0131 240 3830.