Foundation East says: 'we have the money if you have the plan'


‘Don’t stop believing’ is the message from Foundation East. The community finance organisation has money to lend to people starting up and expanding their businesses and a review of the year shows that many have taken this opportunity to change direction.

However, there is a concern that ambitions are being stifled as people assume that they will have difficulties obtaining finance.

Peter Davis, Foundation East Business Loans Manager for Cambridgeshire, says that businesses that rise out of adversity are often the strongest.

“Our aim is to support people with sound business plans when they face a tough patch. We work to get them to a stage where either they can trade their way to success or become eligible for mainstream banking.

“Our focus is therefore greater than loaning the money; we want to ensure the long term viability of the company. This includes helping people to be realistic about their plans, so they avoid cash-flow problems, while also making it possible for them to take the next step.”

This year Foundation East has loaned over £0.78m to small businesses. It is a membership organisation, with individuals and companies purchasing shares in Foundation East and having the opportunity to get involved in the organisation.

All start-up companies are given coaching and this has greatly increased their success rates. This is evidenced by the increasing proportion of loan capital that is recycled – being repaid and then made available for further investment.

Foundation East wants to encourage more loan applications, and last year has been notable for the number of people that have seen an opportunity to take a new path.

Peter says: “Many of the people we have helped have radically changed their lives and made their ambitions a reality.”

Across the East of England this has included a 60-year old musician opening a thriving music shop in the centre of Cambridge, and a Cambridgeshire woman who had spent years suffering from agoraphobia and panic attacks setting up in business to supply ice and ice sculptures to customers around the country.

Foundation East offers loans of up to £50,000 for businesses that have been refused bank finance. The money is borrowed on flexible terms allowing early repayment without penalty and can be used for a wide range of purposes including purchase of vehicles and equipment, covering shortfall before payment of orders, training and for new business start-ups.

To gain a loan a company needs a sound business plan which sets out the market opportunity and how the company is going to service it. This needs to be a working document in order for the business to be successful.

Peter says: “Setting yourself up in business is hard work and needs the support of family and friends, but you also need to be objective about the market opportunity and assess if there actually is one, how big it is and how it is served at the moment. This is a key purpose of the business plan; it is not just to help raise finance.

“It is no good putting your plan in a drawer and forgetting about it, you need to regularly review how you are doing against the plan, assess what is working and what needs to be changed.

“Talking to a business coach can be very helpful in the early days and with the demise of Business Link we are keen to signpost people to where they can access the support they need. This advice often makes all the difference to the success of a company.”

Peter offers six management tips for people considering setting up in business.

1. Take time to make a plan, this will increase your chances of success and help define your business concepts, estimate costs, predict sales and control your risks. It tells you where you are going and how to get there. It should be a living plan - regularly review, reflect and react.

2. Understand your market, do some research and listen to what it is telling you. Family and friends will want to encourage you but for such a big decision you need objective information.

3. Look for a niche and become an expert in what you do best. Offer quality and service rather than sell on price. Check that you still have a profit margin on large orders and don’t let the headline figure cloud your judgement.

4. Cash is the lifeblood of a company - keep your expenditure low and look to build on your strengths. Extending an existing service or adding value to something you already do is less risky than starting something new. Ask your customers what they want.

5. Stick to your business plan; poor execution is a common reason for failure. For instance don’t let the ‘man in the pub’ advise you to spend your entire budget on Google adwords when your customers are located within 30 miles of your premises.

6. Don’t underestimate your competition; thoroughly research what they offer and do it better.

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