Foundation East Are you looking for a loan and have a good business plan? Have you been turned down by a bank? Then Foundation East might be able to help
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One of the perks of my job as Marketing Assistant is to visit our client base in order to write case studies on their behalf to be released to local press. It’s great to see new and existing businesses flourish with the help of the finance and support that Foundation East has provided and know that our team has played a vital role in creating and securing jobs which in turn stimulates the local community.
In the last month I have been lucky enough to speak to one of our entrepreneurs, Carly Newton from Harelston, who has opened her own stationary shop in the small town.
When the previous owners of Pen and Paper decided to retire, Carly was faced with the daunting position of having to find a new job, a situation that is happening around the country for most people.
‘Having to find a new job would have been stressful and could have put my family at risk, but buying the shop has given me the satisfaction that I would never of had elsewhere.’
With this prospect Carly saw a new pathway to not only enhance her career but also help save and continue a business which has been running successfully in Harleston since 2001.
Pen & Paper is a small traditional stationery shop based in the thoroughfare in the small market town, and it has built up a strong customer base. Carly is seeing the shop going from strength to strength.
Carly’s passion for her job is evident in her plans for the future of the shop. Make and Take days are being planned for parents and small children to come in and have a fun day with art and craft. One day she is hopeful to have an Art and Craft Department in the store and to run day courses for the local town and artists.
When we look at an application at Foundation East it is the passion and drive as demonstrated by Carly that we look for and that provides a solid base for building a plan and an application for financial support.
Chris Honeyball, Marketing and Membership Assistant
 To be accurate, it was Willie’s birthday when I wrote this blog on the 30th of April, when he reached the ripe old age of 79 years old – or perhaps young?
So What? You may be saying. Or perhaps, Willie who? And why blog it?
For those of you who haven’t heard of him, Willie Nelson is primarily a singer/song writer – there are millions of them, two-a-penny , as my gran would say. Nothing unique about what he does. Yet he seems to have had some success:
• He has written and released more than 100 songs over 6 decades – not album tracks – “singles” in old language
• Many of his songs have been recorded or covered by other artists
• He has had more than 25 worldwide No 1 hits
• He has appeared in more than 30 films
• He is a published writer and poet
• He continues to be an activist for change in the things he believes in
Along the way he has had some interesting episodes – he has been married 4 times and has fathered 7 children; He has faced prison many times for his beliefs; He was faced with an unpaid tax bill of US$ 32 Million which he fought and cleared; He is a Black Belt in Tae Kwon Do amongst some of them!
And the most amazing thing is that he continues to do what he loves doing, playing music – he played 10 gigs in April and has 12 lined up in May. Not bad for a man of his years.
And “so what”?
Whilst I am happy to waffle on about what he has achieved, at the end of the day he is a business. Just like any other.
• He has a product – his writing skills and performance ability, which he constantly tries to improve
• He has honed and adapted the product to suit changing markets – he has issued albums with a country style, outlaw country, country rock, jazz and even reggae!;
• He has a high customer service ethic – He plays countless gigs to try to satisfy his customers
• He has shown tremendous resilience – Marital breakdowns, Tax issues and “disagreements” with US Laws
• In the early days, he had to have incredible Persistance – He did not have a No 1 Hit until his 27th single, 13 years after the first release.
From the many micro businesses I support, I would say it is the ones who display all, or even some, of the above that are having the greatest success.
So – take a look at your business. Is it a Willie Nelson, or perhaps an Adele – in the early stages, but showing incredible promise – if so, what are you going to do to keep evolving and developing to ensure you stand the test of time? I would hate to see you become a “one hit wonder” like Timbuk 3 or Chumbawamba!!
Bob Shimmon, Business Loans Manager – Bedfordshire & Hertfordshire
My brother-in-law died of pancreatic cancer on Thursday 29th March. He was 68 and up to the point where he started to feel ill (which was only a few months ago) he was one of the healthiest, fittest people I knew.
Two days ago I received a call from a work colleague, someone I have known for 40 years. In work he is recognised as an expert, the master in his particular area of expertise and he is very well rewarded. He has severe breathing difficulties. His lungs are functioning at 25% and probably going to get worse. Coupled with other health issues, he has had a very bad start to 2012. He is in his early 60’s.
My sister and brother in law fulfilled many dreams and had a fantastic life together .They had also ensured that my niece completed university without a financial burden and the same is happening with my nephew. Future plans included travelling, enjoying the grandchildren and special occasions and indulgencies based around their interests and hobbies.
It is good to make plans and have dreams but we all also have to accept that those plans might have to be changed or adapted. In our personal and business lives the unexpected will inevitably happen and surely we do not want everything to be predictable. It would be nice to benefit from pleasant surprises but some nasty shocks are also very probable.
You can and should prepare for situations as much as possible but one cannot second guess everything.
The one idea I really do support is that if you have an ambition and you have the means to fulfil it then go for it because you do not know what is around the corner.
In our work at Foundation East we meet people with business ideas and dreams that will never be fulfilled because they are waiting for the economy to improve. There will always reasons for waiting. At the same time we are providing loans to entrepreneurs now with passion, drive, plans and ideas. Our portfolio is strong and well controlled. The majority of our clients are repaying their loans on time and building their businesses.
There are some extraordinary people in this world who have made changes that most of us would never have thought possible. You don’t have to change the world but you may have the ability to change your life for the better before circumstances leave you saying;
‘I could have been a contender’.
Richard Glinn, Marketing and Membership Manager
 In part one of the blog that was published last week, I gave a bit of guidance for new business with regards to Business Structure and Liability. Following on from this I felt it may be useful for those businesses if I was to offer further guidance on Finance/ Tax and Intelectual Property. My name is Mark Gipson.
As a self-employed sole trader or as a partner, you will be responsible for your own tax so you will need to create a reserve to meet tax in arrears. Whereas if you are an employee of a limited company then the employer will arrange for the payment of tax through the PAYE system. In addition the profit of the company will be subject to corporation tax. You will still need to ensure that the liabilities are met on time and there is sufficient cash within the business to pay your liabilities.
A limited liability partnership, despite the implications of its name, has far more in common with a company than a partnership (the benefits of limited liability, for example), but when it comes to taxation, the members of an LLP are taxed individually in the same way that members of an incorporated partnership are.
Any ideas or inventions that you create as a sole trader or as a partner will belong either to you as the creator or author, or potentially jointly with one of your partners. However, if you are operating through a company or an LLP then it will be important to clarify whether the intellectual property rights (IPR) belong to you or to the company/LLP.
If you are engaged as an employee to develop IPR for the company then the default position is that the company owns the IPR, not the employee. The company may potentially be contractually obliged to assign these rights to a third party.
In the case of a partnership or sole trader it is difficult to sometimes borrow money or raise capital from an external party since there is no vehicle in which an outsider can hold a capital interest in the business, unlike a limited liability company where the external capital can be introduced in the form of share capital. In practice it will be easier to raise capital through a company.
As noted above the sole trader or partner will have sole or joint and several liability and will also incur personal liability for any monies that are borrowed. In the case of the company or LLP, the company/LLP will borrow the money, not the individual shareholders/members.
Furthermore, a bank may lend to a company subject to a fixed and floating charge meaning that it will not only have a charge over the assets of the company, including its goodwill and unpaid share value, but also a floating charge over its trading assets which can always be fixed at any time in the event of an insolvency situation. Note however a director of a company or a member of an LLP may also have to give a personal guarantee.
As far as property is concerned, as in other contracts the sole trader or partnership will have unlimited personal liability. In the case of a company or LLP, the company/LLP will be the tenant of a lease. If it is a new company the landlord may require a personal guarantee from the directors or members. When personal guarantees are required, the protection of limited liability is somewhat notional.
If you are operating from home, watch that there are no restrictions either in any tenancy agreement or planning, for example visitors and customers coming to your house.
As a sole trader or in a partnership you will need to still keep records and accounts particularly for tax purposes but also possibly as a requirement of any bank lending.
In the case of a company or LLP, depending on the size of the turnover and the number of employees and balance sheet, you will need to maintain proper records and accounts as well as comply with various annual obligations such as the filing of an annual Return telling the outside world the identity of directors and shareholders as well as filing the annual Accounts.
The filing requirements for companies and LLPs means that historic financial information is more readily available to interested third parties in the form of annual accounts which can be freely downloaded from the Register of Companies. This, combined with the more stringent regulatory requirements, is the price paid for limited liability.
A company or LLP can be incorporated immediately and unlike other countries, there is no requirement for any share capital to be paid up or any minimum share capital. Nevertheless, anybody looking at a company from the point of view of lending money will be able to tell how long it has been trading and, looking at past accounts, its track record and therefore may seek personal guarantees if it does not have sufficient capital or asset base.
Although these topics may seem daunting, with appropriate consideration and research, and where necessary professional advice, the legal and commercial minefields can be overcome allowing your business to prospect and grow.
Mark Gipsson, Director
My name is Mark Gipson. I am a partner in the corporate/commercial department of Birketts LLP, based in our Ipswich office. For the last five years it has been a great privilege to be on the board of Foundation East, and to be part of Foundation East’s development during that time, witnessing the assistance which Foundation East can give to developing businesses.
Many of these businesses are in the early stages of their existence. Given my legal background, I thought it might be helpful to summarise some of the corporate structures that a new business might consider using and their advantages and disadvantages.
Legal Structures
The structure of the business will depend on tax, finance, your own position and attitude to risk, costs, as well as the industry or business you are involved in.
There are likely to be four types of structures to consider – sole trader, partnerships / joint ventures, limited liability partnerships (LLP) and limited companies.
It is important to take advice before you commit to any business structure especially from a tax point of view and beware that you may find yourself already in a partnership even though there is no written partnership agreement!
Trading Structures
At the same time as considering the legal structure you also need to consider whether or not you will be involved in a trading structure.
An agency is where you act on behalf of a named principal. The risk is that of the principal and you are merely introducing a customer to the principal. An agent will have protection under the Commercial Agency Regulations 1993.
A distribution arrangement is where you purchase from the supplier then sell on to the customer. This means that you have to bear the cost of purchase and carry the risk of holding stock before it is sold to the customer.
A franchise is where you have a licence to use a particular business model which has been proven (allegedly) – some franchises are quite sophisticated, and although you will have freedom to run your own business, you will be subject to the franchisor’s business practices, which can be both an advantage in terms of publicity and training, but a disadvantage in terms of operational limitations imposed by the franchisor.
A licence to use a third party’s intellectual property rights and to exploit in the course of trade. It is important to make sure that the licence covers the type of business you want to offer it in.
Liability & Business Structure.
In a sole trader / partnership situation there is unlimited liability for each of the partners or the sole trader. This means, in the case of partnership, that you must be aware of the contracts your partners enter into because you are likely to be liable for their actions.
As a member of the company or an LLP you may be an employee and probably a director. But as a shareholder you will have limited personal liability, namely the amount of your share capital. If your shares are fully paid up then there is no further liability as a shareholder. As a director, if you engage in wrongful trading, then you could potentially incur personal liability.
In both the case of a sole trader / partnership or limited liability company it is important to get the structure and agreements right from the beginning so as not to trip up at a later stage.
In the case of a partnership it is important to have a partnership agreement to override certain provisions of the Partnership Act 1890 and in the case of a limited company a shareholder’s agreement may be desirable to regulate the affairs of the members of the company in private rather than seeking to rely on the Model Rules (or Articles of Association). With an LLP a member’s agreement will be essential to override default provisions contained in the Limited Liability Partnerships Act, some of which are unhelpful.
At some stage in the future you may wish to sell your business; if you are selling as a sole trader or through a partnership you will be selling the goodwill and the assets of the business which will need to be identified and there will need to be an agreement for the sale.
In practice the sale of a business or of a company will involve a certain amount of legal paperwork but in theory, in the case of a limited liability company, your interest in the company could be sold by way of a stock transfer form for money.
This blog concentrates on differences arising through type of business entity. Regardless of the business structure you choose, any new business will have a host of additional concerns and considerations regardless of the form it takes, ranging from intellectual property to data protection, employment, property and contracts.
Though they may seem daunting, with appropriate consideration and research, and where necessary professional advice, the legal and commercial minefields can be overcome allowing your business to prospect and grow.
Mark Gipson, Director.
I was recently driving back from a weekend in the North East of England in snow, rain and wind only a few days prior I had been enjoying glorious sunshine and warmer temperatures, yes, that was in the UK in February…….
So one day the news is all about the drought in the South East. But a few days later, there is an absolute deluge of rain. After these reports of drought it seems hard to believe how quickly things can change.
To top it all, on my journey back from the North East of England, the A14 was closed with a tailback of nine miles of traffic, and this was, to say the least, a great disappointment to me as I thought I would be home much earlier.
This is where the planning comes in. How can you plan for the unexpected you may say? I often hear comments like – it would have been okay if I had expected it…..
It reminds me of a friend of mine, whilst travelling home late one night from a weekend away, came across a very serious accident. This was before the advent of mobile phones and, realising that this was extremely serious, he needed the emergency services. He spotted in the distance a house with lights on and sent his girlfriend to go for help. He knew she would never cope with the carnage he felt was before him.
On arriving at the cars (or what was left of them) he went about his assessment. Two people dead – can’t help them. One person injured but capable of remaining in situe. The fourth person was dying and not going to be alive when help arrived. He sat with this person until they died so that at least they did not die alone.
On hearing this tale I commented ‘glad it wasn’t me, how did you cope’. ‘Easy’ he said ‘it is part of my training at work and I went into autopilot’.
The point here is he had not planned for this to happen but his training (planning) allowed him to cope with the unexpected.
Remember – life isn’t about waiting for the storm to pass, it is about being ready and prepared when the storm arrives. So those of you who run your own businesses (or another person’s business) plan and be prepared for the unexpected.
Valerie Jarrett, Business Loans Manager for Norfolk & Suffolk
 When I join an organisation I like to take part and contribute, there seems little point in joining just for the kudos of having your name against it. I have belonged to many professional organisations and I reflect and say “so what.”
When I first heard of Foundation East, I had little knowledge of who they where or what they did but after listening to the staff members and hearing the passion in their voices explaining what they do, it was not long before I realised the great potential this small organisation had.
It was then that I decided that I wanted to be part of this venture and help develop and shape its future. To join was easy, a small amount of money was spent gaining membership and being involved took only my valuable time which I will hastily add was not wasted, as I could commit as much or as little as I wanted according to what I was able to offer.
For businesses Foundation East takes the strain out of dealing with banks, especially when they have let you down as they inevitably do. Nothing gives me greater pleasure than knowing I have made a difference to a business, maintaining full employment for hard working business owners and their equally hard working staff and allowing them to grow their business against the odds.
Banks do not seem to understand small businesses; they ignore the passion and drive and only see balance sheets and profits. A small business owner does not get cash bonuses for failing to achieve so how could a bank understand the pressures and decision making processes small businesses go through.
Becoming a member of Foundation East is a commitment however small your contribution is in making a significant difference to local communities and businesses.
John Stenhouse, Director
 Do you really feel that there will be such a thing as retirement for the majority in the future?
The state retirement age is already being pushed higher as the state pension scheme struggles to attempt to balance the impossible scenario of people living longer and drawing their pensions for longer whilst less is contributed to the pot by those that are working. There is significant potential for state pension benefits to be further eroded as the pot will simply not be big enough to pay all of us in the future.
Under performance in the investment markets makes the potential benefits from most company and personal pension schemes much smaller than is required for a sustainable income in our twilight years.
Add to the lack of future pension income the possibility of the NHS not surviving and we all having to pay for our health service needs and the prospect of retirement looks bleak.
We will not be able to retire in the way that people have in the past. For many of us work will be a life sentence.
This could well lead to an upsurge in small businesses as we all battle to supplement our pensions.
Many people I have spoken to feel that they will become market stall holders, gardeners, cleaners, taxi drivers, consultants or caterers in the future.
Will the banks be willing to lend to the wrinkly self-employed the start up costs of their new ventures? Not unless there is a major change in underwriting policy.
Sounds like demand for funding from Foundation East will be massive in the future!
Peter Wood, Business Loans Manager – Essex
In last week’s blog, Richard threw his praise at the work that local and even national news agencies are doing to helping to increase the profile of Foundation East, not only across the six counties which we operating but also on a national level as well.
Not only is this publicity great for us as a company but it is also great for our clients with us as in turn we endeavour to promote them through our case studies and obtain a bit of free advertising for them.
This isn’t the only method we are using to increase awareness of Foundation East, it is as they say just the ‘tip of the iceberg’ with the next couple months being extremely busy especially for Richard being sent all over the six counties for numerous events which include:
21st Feb – Katy Ford, CEO is at Eastern Enterprise Hub for their Dragons Den Event.
21st Feb – Richard Glinn is Presenting to Essex University
22nd Feb – Richard Presenting at 24-7 Business Networking
22nd Feb – Richard is a Guest and presenting an award at Lloyds TSB Enterprise Awards at Colchester Town Hall
29th Feb – Presenting at the Stevenage Business and Technology Centre Event
29th Feb – Katy Ford is in the ISSBA hot seat at Stoke By Nayland
2nd March – Richard is speaking at Ipswich Connected Networking Event
7th March – Business East 2012 – Stand/Reception & Seminar at Colchester Weston Homes Community Stadium – Come and meet the whole team.
14th March – FSB Business Networking event – Tendering
15th March – FSB Business Networking event – Maldon
27th March – Exhibition Stand at John Innes Centre Norwich.
So as you can see it’s a busy month, especially for Richard, but if you would like to see us at any of these events or would like more information about Foundation East please contact us on 01284 757777.
Chris Honeyball, Marketing and Membership Assistant
The expenditure budgets corporate organisations allocate to Marketing are often figures which, because of their size, are beyond understanding for many of us; a bit like the roll-overs on the Euromillions draw.
The Marketing personnel responsible for these budgets must be experts and valued. A real challenge for them would be the concept of promoting their company, goods or services with little or no budget and judging who was the most effective.
A recent news article reported that there had been a general decline in this country in the use of credit cards in favour of pay day loan type arrangements. Many credit card companies undertake extensive advertising and sponsorship campaigns.
However, I don’t think that anyone could have missed the advertising currently in place for these loan organisations. There are puppets of old folk with amazing reflexes, initially worried but soon happy people solving that unexpected expense, football shirt sponsorships and pitch side advertising. It seems these days, that if we are not betting then we are seeking quick cash. These are very expensive but effective advertising and marketing campaigns which create massive awareness and acceptability.
As a not for profit company it would be totally inappropriate for Foundation East to enter into this type of campaign. We are therefore very reliable on referrals, our networking efforts, social media, testimonials and gaining interest which leads to publicity in the media. This year started with The Sunday Times Business Section publishing an article about our work and featuring our client Sailspar. The last edition of Anglia Business profiled our Chief Executive, Katy Ford in their regular section ‘The Boss’.
February also seemed to start positively with Channel 4 News requesting case studies for a report on businesses which had experienced difficulties in obtaining funding from RBS. We submitted several examples and the journalist was enthusiastic; the case studies were perfect. Unfortunately I received a message later informing me that they could not get a camera crew to our part of the world.
Nevertheless a new contact has been made and these situations often bear fruit in the future. However, it does now appear that the BBC’s Inside Out programme will be filming a report on Foundation East in mid-February, which will be broadcast at the end of the month. I use the word ‘appear’ because the Channel 4 experience indicates that caution is advisable. Fingers crossed.
This publicity really benefits our clients; it is fantastic free advertising for them. Of course our profile is greatly enhanced and it is vitally important that existing and start up businesses are aware that there are sensible and supportive options for business finance in the East of England.
A number of local MPs have expressed their support and offered assistance. The Federation of Small Businesses has been full of praise and has been successful in having articles about us published in several local papers. We will carry on attending and presenting at networking events and colleges, updating on linkedin and tweeting. We have just joined iPatter, a business social media organisation and our next newsletter is currently being worked on.
Are we effective? Robert Ashton said about Foundation East recently that ‘we were everywhere’. Thank you sir. What really is important is that enquiries and loan applications have increased. However, we can do more and have the funds available. So a big thank you to everyone who is supporting our work and God Bless the media. Long may it continue. It has to because please remember that the financing of our loans allows a small team of ten to provide more loans and create and save jobs. It does not fund pitch side advertising or puppets.
Richard Glinn, Marketing and Membership Manager
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Business Finance in the East of England
The Foundation East team 
Katy Ford, Chief Executive
Peter Jones, Chair, Board of Directors
Peter Wood, Business Loans Manager
Bob Shimmon, Business Loans Manager
Peter Davis, Business Loans Manager
Valerie Jarrett, Business Loans Manager
Phil Rose, Community Land Trust Development Manager
Rebecca Allen, Finance and Credit Controller
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