7 Top Tips To Boost Business Growth in Unpredictable Times – Osome

It’s been a difficult and unpredictable year or so for businesses in all industries throughout the UK and around the world. Nevertheless, we’ve heard many inspirational stories of success, determination, and versatility come through these tough times.

WLB Member Osome, leading bookkeeping and accounting software and service provider – recently hosted a panel discussion where they discussed how businesses can expand with a focus on when to raise funds, optimising your accounting and bookkeeping operations/management, and when to seek legal support.

The panellists included:

Alexey Potemkin, Managing Director at Osome UK

Rob Wilson, Portfolio Manager at Outfund

Frankie Mundy, Senior Legal Editor at Sparqa Legal

                     

 

 

 

 

 

 

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The key points are as follow:

1. Show as Much Traction as Possible To Raise Capital

Usually, a startup’s assets consist of the founder’s personal savings and sometimes loans from relatives and friends, says Rob Wilson of Outfund.

These funds usually cover the initial expenses and get the business’s wheels turning. The next step is to find external financiers to support the new businesses long-term growth.

“At that very early stage it is traditionally difficult to raise finance, whether it be through debt or through equity investors, and lenders as well. We’re always going to want to see as much traction as possible, proof that there is something in this business, that there is a product-market fit, and that you have sufficient margins.”
– Rob Wilson Portfolio Manager at Outfund

Startups need to prove they can fulfil the proposed product or service. Rob described how Outfund works with companies seeking funding. They can support businesses that have at least 6 months of trading history and are generating at least £10,000/month in online revenue. If the criteria are met, Outfund can offer funds for the startup’s marketing, inventory or various agency fees.

2. Get Your Documents In Order To Attract Potential Investors

However you intend to raise funds, you need to safeguard your company legally, advises Frankie Mundy. Predict what an investor or lender will require, and ensure you ready your business for these requirements so you’re as desirable as possible to them.

Firstly, consider whether you have shielded your business to stop other people from profiting from it. Protecting your intellectual property will also increase the attractiveness of your brand to potential investors.

“Your reputation and goodwill are actually valuable assets in and of themselves, and have a real financial value to you.”
– Frankie Mundy, Senior Legal Editor at Sparqa Legal

Secondly, make sure your records are up to date and basic filing requirements are met. Otherwise, you not only risk being penalised but you will make a bad impression on potential investors.

Next, review your employee’s work contracts to ensure your business has legal protections. Can you prevent your staff from poaching your customers or other employees after they leave? Can you stop them from becoming your competition? Is your confidential information protected?

As well as staying UK GDPR compliant, you should also ensure that you have official written contracts or appropriate terms and conditions with stakeholders, customers and suppliers.

It’s crucial you can satisfy these points before reaching out to investors, they may want an in-depth analysis about how your business is doing, and gathering this information can take time. “It can make a really bad impression if you’re not organised”, said Mundy.

3. Establish Accounting Processes To Know How Much Funding You Are Eligible For

Alexey Potemkin says basic bookkeeping and accounting knowledge can also contribute to successful fundraising. First, any lender or investor will review your business’ financial statements. “It’s a hygiene factor for you”, shares Alexey.

In addition, transparent and succinct accounting and bookkeeping will help you understand how much capital you can raise and at what price, and forecast the financial health of your business. It’s not uncommon for companies to reach out to investors with a certain valuation and then realise it’s invalid because they miscalculated their earnings. This, in turn, has an impact on how much money a business can raise.

“One of the things that we advise any company to do, even if you’re just starting, is to put proper processes and procedures in place around the finances and the bookkeeping.”
– Alexey Potemkin Managing Director, Osome UK

In short, good procedures will allow you to understand whether or not you are successful and what your financial situation is.

4. Diversify And Be Flexible To Adapt To Pitfalls Faster

Rob Wilson says the pandemic has shown that you can’t prepare for every possible problem, but that you should have a plan for what to do if you do encounter one.

“It is really important that you put certain processes in place to ensure that you can adapt quickly and seize opportunities,” says Wilson.

For example, if you have enough money to pre-purchase inventory, that can have a huge impact on your bottom line. Additionally, you can stay flexible by making the most of new marketplaces.

“You should never rely on just one marketplace or one channel to drive your sales, even if you get a lot of organic traffic from it, so make sure that you diversify”, believes Rob. Trial different opportunities or niche marketplaces like Fruugo and OnBuy.

You can also make adjustments and tests with other parts of your business. In marketing, you should experiment with alternative channels and avoid relying on the same old sources like Facebook or Google. This will protect your business in the event of a breakdown or price increase.

This also applies to the way you deal with your customers. For example, if you have a good reputation, you can try new sales models like pre-selling your product. “It’s always worth trying these things out. If it works – great, if not – at least you know, next time”.

5. Keep Track Of Your Numbers To Know How To Grow

If you are in your first year of business and looking to grow, there are two things you should consider, says Alexey. Primarily, you need to know which of your products are profitable – this will help you determine which area of your business requires further investment.

“Make sure that you are putting good bookkeeping and accounting practices in place”, he shares. “So unless you’ve done a good distribution of the cost of goods sold, the good attribution of your ad spend, you’ll not be able to say what products are profitable and where you should be putting more money”.

Furthermore, the quicker you expand, the greater the risk of liquidity issues. Hence why it’s essential to start forecasting your cash flow. “The cash flow and liquidity problems are one single biggest cause for businesses going bankrupt”, explains Alexey. Keeping a watchful eye on your numbers will help you massively in uncertain times.

6. Get Your Legal Requirements Sorted From The Get-Go

Business owners also need to think about managing their risks. “It’s a really good idea to get your legal sorted, and ultimately, that will help you to protect your business in the long term and help it thrive”, believes Mundy. You should think about protecting yourself in case something unexpected happens. This can be done by putting in place strong terms and conditions that contain provisions protecting your brand, especially against copying or violating your rights.

A vital part of running a business is thinking about your people: they are an immense investment and one of your most essential assets. There’s been a lot of upheaval during the pandemic and we’ve had to come up with new work policies, so now it’s more important than ever to understand your employee’s rights.

“It’s really a good time to try and consolidate things and make sure your staff are employed under proper contracts, that you’ve got proper HR policies in place to make sure you’re dealing with the staff consistently and fairly”, she says. “It can be detrimental to you if you don’t treat yourself in the correct way, not least because you can face employment law claims”.

Additionally, Mundy emphasises the importance of staying adaptable. If a business has always done things a particular way, that doesn’t necessarily mean it’s effective or helping you grow.

7. Set Up Your Company Correctly And Do Due Diligence Prior To Expansion

If a business wants to expand into new territories, it’s crucial to make sure you’re properly established in the country you’re based in, says Rob. “I wouldn’t jump the gun and try to do a land grab and expand into every territory possible”, he shares.

As well as ensuring you have enough cash in reserve, you should also conduct thorough market research before trialling your new venture.

In addition, you must know and understand the rules and regulations of the market in which you wish to participate. Make sure you understand how foreign laws work, Alexey noted, and that you take care of all possible fees and charges. Things that work one way in the UK may work differently elsewhere, which can impact the growth and profitability of your business.

“Expansion used to be one of the most expensive business projects. With e-commerce, it may seem easier now but it can backfire if you don’t think through every step of the process”, says Potemkin.

It won’t hurt to get local legal advice, recommends Mundy. “After Brexit, just because you’re complying with UK law it doesn’t necessarily mean you’re going to be compliant beyond the UK”.

There you have it, 7 tips from Osome, Sparqa Legal and Outfund to help business owners manage through these unprecedented times.

Additionally, as part of our partnership with Osome, you can get access to Osome’s bookkeeping and accounting services with a special offer of £100 off, as well as a free consultation, simply sign up through the link here.

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