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Media Planner/Buyer
Exeter, Devon, South West Eng
Dependant on experience

Head of Broadcast
London, SE1
£negotiable

Inside (telephone) Sales Associate
OK
OK


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Business expansion

Financing a growing business

Your business has been growing successfully but is reaching the point where growth is being held back through lack of capital. How do you make that step from growing organically to growing through acquisition, whether it be buying new titles or acquiring a competitor? How do you fund working capital in a growing small business? How do you fund the launch of new titles?

Finding the most efficient financing solution that works for you can be a daunting task, especially in a independent business where the risks are perceived as that much greater for an investor.

The following points should help provide the best solution from the process of finding the finance you need.

• A well thought-out, detailed and concisely presented business plan is a given for any funding proposal and should cover as a minimum:
  • a brief history of the business;
  • details of the market in which it operates and competitors;
  • a section on the management team with brief backgrounds;
  • the broad strategy for growing the business;
  • previous sets of accounts and projections.
  Independent advice at an early stage in your growth plans, from a reputable corporate finance house or firm of accountants with a corporate finance arm, is usually money well spent. As well as acting as a sounding board for strategic ideas it will be able to offer invaluable advice on what is feasible from a funding perspective and help you think about how best to structure your funding package and put a business plan together.
• Senior debt finance (traditional secured bank lending) is designed to fund the lowest risk elements of a company's funding needs and as a result is usually short term (three to five years) and is repayable from a historic sustainable cashflow ie a business must be generating sufficient stable profit to repay the borrowing.
• Private equity or venture capital, often linked with loan stock or mezzanine debt (riskier debt often having a yield nearer to equity) is designed to fund growing businesses which are reliant on future earnings to repay the debt. As such, the funder will require an equity stake in the business to give it the level of returns needed for the risk. It will also want to redeem its equity stake in time, either through a sale of the business or a stock exchange floatation.
• Don't overlook grants or government-backed finance through the Small Firms Loan Guarantee Scheme - a good bank will be able to advise on the many sources of grants in the UK and Europe.
• An effective way of funding working capital in a growing small business can be through invoice discounting. The facility is more flexible than, say, an overdraft as it is linked to the size of a debtor's book and can therefore grow with it.
• Match the type of funding to the asset being funded ie long term debt or equity funding for longer term assets such as fixed assets and long-term working capital requirements such as the launch of a new magazine title and short-term funding eg for seasonal working capital needs.
• When selecting funders or investors make sure they understand your business, that they are looking to meet your needs and not thrusting a standard product on you which may not be appropriate.
• Ultimately the decision of a funder to invest will come down to their view of the strength of your management team as well as the potential of the business.

Buying and selling magazines

Owners of publishing businesses are inevitably faced at some point in their existence with either buying someone else's business or selling their own. It is an activity totally different from their day-to-day role as publishers of magazines.

The chief concern is how to go about it to achieve the best price without endangering the business in the process. The successful entrepreneur/publisher needs a knowledgeable and successful broker to make a market for them, a tax accountant who will ensure that he or she enjoys all the available tax breaks and a commercial lawyer who has media experience. Involving high calibre advisors pays dividends every time.

Using a professional broker will:

• Help evaluate the real value of the title(s) being transacted.
• Ensure proper marketing of the opportunity.
• Improve confidentiality by careful targeting of buyers.
• Control the deal negotiation.
• Enhance the chances of achieving a successful transaction. They are after all working on a contingency basis - no deal = no fee. A successful broker only becomes one by achieving completed deals.
• Significantly improve the price obtained. Just ask the large corporates - they would often rather deal direct as it increases their chances of acquiring on their terms rather than the seller's.

Attributes of a successful broker:

• Knowledge of the magazine publishing industry and intellectual understanding of the products being transacted.
• Well connected to the shakers and movers among prospective buyers - an ever changing situation.
• Established track record of deals.
• Serial clients - clients with whom they have conducted more than one sale.
• Sensitive to different situations - each transaction is different (characterised by the individuals involved on both sides) and requires a flexible approach by the broker to achieve deals.