Unlocking opportunity from uncertainty

“Fail to prepare – prepare to fail” an age-old statement I’m sure most of us have heard from parents or teachers along the way. Business is no different in a buoyant market it is important we are thinking about strategic planning and taking advantage of opportunities available to business as we enter unprecedented times. This article looks to explore, briefly, the market position for SME’s and things we can do to prepare for stages of businesses.

The BDO PCPI report produced quarterly shown below analyses the private company price index, meaning the value of multiple placed on private companies looking at the relationship from EBITDA to Enterprise Value. As seen below from the orange line, there was a downturn in this multiple from 2018 and further fall during Covid period. However, the emergence from uncertainty can be seen from this graph as we are back up to 2018 levels. There is an appetite in the market for investment with scepticism dwindling, cash reserves building during period of uncertainty & lending having been at its lowest rates since pre 2008 and perhaps beyond.

Further to this, we have seen existing businesses have either struggled due to cashflow issues over Covid or Covid has pushed owners to make the decision to sell prior to original retirement plans to deter from further risk and potential stress. This has had an impact in that there is a gap in the market for new and innovative companies to enter the SME market in many different sectors.

Investment, crowd funding, angel funding and many other avenues do not mean a loss of control. Added investment allows smaller SME’s to grow upon existing models, expand to wider areas outside existing scope, diversify product line and services, utilise funds for asset purchases to improve productivity and efficiency, increase resources to fulfil contract and many other positive impacts.

So, conditions are rife, why do we need to concern ourselves with strategic planning. Investment and funding can go a long way to boosting the development stage of your company or idea as stated above. We have all seen or heard of Dragons Den, the ones who haven’t planned, analysed strengths and weaknesses and critiqued themselves are usually those who receive no investment. This is the same for your business, forecasting, cashflow planning and business valuations can all be vital tools in your pitch deck to investors.

If we take an example “Bob Co”, as we move through the start-up stage, we can consider the capital raising options available specific to your company. This could be asset finance for purchase of equipment, working capital loans for fluctuating stock, WIP, debtors, etc or direct investment into the company for shares and many other avenues.

If you would like to discus the options that will be bespoke, please do get in touch with me.