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Winter 2016
Insight for food businesses
Old Mill Food & Drink contents
Knowing when you’ve made it 1
Finance for food 3
Hot topics 5
Boring old accounts 7
The Tas...
1 www.oldmillgroup.co.uk
Lorraine Bolland
Knowing when you’ve made it
Most of us work because we have to
and those who are...

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  1. 1. Winter 2016 food drink & Insight for food businesses
  2. 2. Old Mill Food & Drink contents Knowing when you’ve made it 1 Finance for food 3 Hot topics 5 Boring old accounts 7 The Taste of Dorset awards – the finalists 9 Crackdown on sugar is a market opportunity 11 Cash is still king 12 Brexit – a case for Scenario Planning? 13 Next stage development 15 CLIENT PROFILE | Hanlons Brewery 17 A picture is worth a thousand words 19 Tis’ the season to boost your sales... 21 Old Mill at the food and drink trade shows 23
  3. 3. 1 www.oldmillgroup.co.uk Lorraine Bolland Knowing when you’ve made it Most of us work because we have to and those who are truly inspired work because we cannot leave it alone. Personally, I fit into the latter category as I am unable to resist helping others and feel compelled to deliver on promises made to clients and colleagues. Money is always a driving factor for going to work or starting a business, but how do we know when we’ve made enough, or if we need more? Dreams provide the impetus for actions, however in business, key decision making drives success and provides clear direction to staff. How often do we make time for our thoughts? The holiday break can provide the ideal time to reflect. Nowadays life seems very fast and there are constant demands on our time, which invariably means that we restrict time allocated to strategic planning and just stick to dealing with operational matters as and when they crop up. Over recent years, we have recognised that our clients need to have clear personal goals before they can set and clearly align business objectives. To this end, we encourage clients to have life plans so that when they consider all new opportunities, or the performance of their business, they gauge whether the result is going to contribute positively towards their ultimate goals. Accurate financial data and reliable information helps to make informed decisions, and therefore we encourage investment in good accounting systems and processes. Armed with nine month management accounts, we are able to meet with clients and discuss performance and short to medium term strategies for the business. The ability to utilise the final trading months before year end to complete plans for investment in capital equipment or research and development, is often rewarded by a reduction in corporation tax. Just getting the timing right can make some positive cash flow advantages to expanding businesses. Having the life plans mean that we can challenge clients on these decisions to ensure that they are focussed and goal savvy. With all term objectives headed in the same direction our hope is that clients will be successful. Life plans will of course be updated periodically but provide a really useful guide to knowing when clients have done enough to retire or achieve their ultimate goals. They can provide clarity in times of uncertainty and can help business owners have more enjoyable working and later lives. Many of these points are captured in the following newsletter articles, which I hope you will find of interest. If they help you, even in some small way, then we will have succeeded in our endeavour; to help make food and drink businesses in the South West more successful. Should you wish to discuss any aspect I more detail, please do contact us to arrange a no obligation meeting. Wishing you all the luck for a prosperous and happy Christmas and New Year!
  4. 4. 2 Dreams provide the impetus for actions, however in business, key decision making drives success and provides clear direction to staff.
  5. 5. Finance for food We’re often asked by our clients ‘what’s the availability of finance like now?’. Well, parking the anecdotal wisdom espoused over a pint in the pub, there is a more scientific barometer that can be used to gauge the availability of finance for small and medium sized businesses. The SME Finance Monitor publishes its findings quarterly following interviews with over 4,500 businesses – it has now interviewed over 100,000 businesses making it the largest survey in the UK. So what do the results tell us? Well they make for interesting reading. Taking the headline figure in the September 2016 quarterly publication we can see that 81% of all renewals and new loan and overdraft applications resulted in a facility, but renewals of overdrafts cloud the figures. Digging a little deeper we see that 66% applicants over the past 18 months applying for new loan or overdraft funding were likely to end the process with a facility, an improvement from 49% for the 18 month period ended in quarter four 2013. On the face of it then, availability of finance is as good now as it has been for some time. This leaves me pondering two questions: what has led to this improvement; and what’s it like for a food and drink business in the South West? I’ll take the last question first. Going back to the not- to-be-dismissed pub wisdom, I’d agree that access to finance appears to have improved for the clients and businesses that I talk to. I’m hearing fewer stories of businesses unable to obtain finance or only able to obtain it at a rate that, commercially, cannot be supported. This is borne out, to some extent the annual SME Finance Monitor publication. The April 2016 publication shows that those running a small or medium sized business in the South West are slightly more likely to use external finance than the rest of the UK (40% vs 37%). We can also see that SMEs in the South West are marginally more successful than those nationally (76% vs 73%) when looking for loan finance. Unfortunately it’s a little more difficult to understand from the survey how food and drink businesses measure up. Whilst a sectoral analysis is given it’s limited to Hotels and Restaurants presumably suggesting that all other food businesses sit somewhere between the agriculture, manufacturing, wholesale and retail businesses surveyed. Back to the anecdotal analysis then. We’re seeing that food and drink businesses are able to obtain finance using a range of facilities – overdrafts and loans yes, but also invoice discounting, asset finance and even crowd funding. Critically though, where the lender fails to fully understand the nuances of the business there can be difficulty. So what has led to this improvement? A full socio-economic assessment is beyond the realms of this article and beyond the ability of this author – so I’ll stick to what I know. Borrowing is a more sophisticated activity with a better range of products available. Gone are the days when an overdraft could and would be used to fund everything from working capital requirements to the latest capital expenditure / growth activity. Lenders will want to understand your requirements and (hopefully) provide products better suited to you needs. There are also a greater range of funding sources. Outside of the bank you may be able to get crowdfunding, grant funding, funding from a specialist lender or even from a ‘Responsible Finance’ lender (see responsiblefinance.org.uk). As options have evolved so too have businesses – the companies we talk to tend to have a better grasp of the funding options available and how best to go about getting the funding. So we have better products, new and different providers and greater awareness. But does all of this explain why success rates have improved over the past 18 months? With a greater success rate in the South West we also see a greater number of businesses seeking advice when applying for lending. The Finance Monitor tells us that 17% of businesses in the South West seek advice when applying for finance, rising to 34% in the Hotel and Restaurant sector – this is versus 15% nationally. 3 www.oldmillgroup.co.uk Phil Mills
  6. 6. It’s no surprise then that we’re increasingly being asked to help businesses in developing an appropriate strategy and supporting cash-flows to get the funding that’s needed. Having spent a decade in London working with banks, and a good chunk of time focussed on how lending to businesses could be improved, its really pleasing to see that businesses are seeking the help that they need and it’s paying dividends. Borrowing can be a key part of a business strategy and there are great opportunities out there - interesting then that amidst the lowest interest rates in history the proportion of ‘Happy non-seekers’ (those that have not had a borrowing event but that nothing had prevented them for applying for new borrowing) has risen from 68% in 2012 to 83% in 2016 suggesting we’re all a little more content with (our financial) life as it is. 4
  7. 7. Hot topics We wanted to take this opportunity to flag a couple of hot topics that could be affecting you and your business! If you’d like more detail on any of these or a more in-depth conversation about how this might affect your business then please let one of the Old Mill team know. Business rates Your business rates are worked out on the ‘rateable value’ of a property – this is an open market rental value based on the Valuation Office Agency. On 30 September 2016 a ‘Draft Rating List’ was published and you will be able to view your new 2017 Rateable Values on the Valuation Office website. However, for the first time you won’t have been notified of this automatically – as such you should be looking at this now so there are no nasty surprises. You can find and check your rateable value on the gov.uk website www.gov.uk/correct-your-business-rates . As previously, it’s also possible to appeal the rateable value of your property and it can potentially result in some significant savings but be aware that the appeal process has changed. Help is out there so if you’d like to discuss further the please do get in touch. Apprenticeship levy From 6 April 2017 the way the government funds apprenticeships in England is changing. This means that employers operating in the UK, with a pay bill over £3 million each year will be required to contribute to apprenticeships. Employers with an annual pay bill of more than £3 million will need to spend 0.5% of their total pay bill on the apprenticeship levy. However, a ‘levy allowance’ of £15,000 per year will operate. This means that the total amount you need to spend is 0.5% of your pay bill, minus £15,000. So for example, an employer with an annual pay bill of £5,000,000 will need to spend £10,000 on the levy: levy sum: 0.5% x £5,000,000 = £25,000 subtracting levy allowance: £25,000 - £15,000 = £10,000 annual levy payment As a result of the apprenticeship levy the digital apprenticeship service will be made available to assist in operating an apprenticeship scheme, with additional benefits conferred upon employers who pay the levy. Again, if you’re not sure then please do get in touch. 5 www.oldmillgroup.co.uk Kevin Wheldon
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  9. 9. Boring old accounts Producing annual accounts is often seen as a compliance activity that adds unwanted costs to a business that would rather spend the money on the growth of the business. There is little getting away from the need to produce accounts for most businesses and until such a time as all information is reported ‘real time’ to the various government bodies that require them then accounts are here to stay. For many accountants this may feel like an ideal situation: a steady source of business and reliable income stream. At Old Mill we want more for our clients. Our ultimate aim is to make our clients more successful and as such we’re constantly looking for ways to do this. When it comes to preparing year end accounts there are two ways that we can really help – firstly we take the time to understand your business and evaluate how it’s performing, what the accounts are telling us about how you could be more successful; secondly, we seek to produce better value accounts in a shorter time frame. Happily, with technological advances there is a way that we can do both. Old Mill are platinum partners with Xero, the UKs leading cloud accounting software provider and the results are revolutionising how we look at accounts. Rather than waiting for receipt of the bag of invoices, matching them up and trying to resolve reconciliation differences Xero has the ability to process your payments and receipts as they occur, directly linking to your bank account and reconciling almost in real time. Why, as accountants then, would we want to promote a tool that seemingly moves us closer to the point that we are replaced by the computer? Well, at Old Mill it has long been our aim that we deliver great value compliance services and Xero allows us to do this. Potentially more valuable though is the information that Xero allows users to interrogate. Though we may not (yet) be filing accounts ‘real time’ Xero allows users to monitor business performance in real time. This means that when it comes to thinking about performance, rather than looking back over the financial year long since ended, we can be in a position, mid-way through the year, to discuss how your strategy could be shaped to influence the rest of the year, transforming your boring old accounts into a business management tool. Xero is simple, easy to use, fantastic value, attractive and is all geared up to interact with a huge number of other apps to unite your reporting in one place. 7 www.oldmillgroup.co.uk Jolyon Stonehouse
  10. 10. 8 At Old Mill we want more for our clients. Our ultimate aim is to make our clients more successful and as such we’re constantly looking for ways to do this.
  11. 11. 9 www.oldmillgroup.co.uk The Taste of Dorset awards – the finalists Held on 1 November 2016, the Taste of Dorset awards promised to showcase some of the best that the Dorset food and drink industry has to offer and it didn’t disappoint. The Taste of Dorset awards afford us an opportunity to publicly recognise everything good about Dorset food and drink. As long time sponsors of this event, we see it as a key opportunity to take a step back and celebrate the continued success of the local food and drink industry. From bakeries to tearooms; fish and chip shops to pubs, The Taste of Dorset awards mark the diverse and ever-growing food and drink businesses in the South West. The awards were superbly attended with a packed George Albert hotel entertained by the astonishing tricks of award winning magician Craig Petty before sitting down to enjoy some fantastically prepared and locally sourced food – the pièce de résistance a stunning confit shoulder of Dorset Down lamb. With guests well fed (and watered) celebrity host Prue Leith ably led the audience through the 11 traditional awards categories with the style and panache that we’ve come to expect. While the cherry on top in the form of winning the award is a great achievement, the awards are only made possible by the quality of all of the Dorset food and drink businesses executing to the highest quality day in and day out. There has to be a winner though and it was Old Mill’s pleasure to present The White Horse in Stourpaine with the ‘Best Community Pub’ award – a category that was, as you might imagine, tough to judge! The award recognised the phenomenal contribution to the local community made by the White Horse which, as well as being a fantastic pub, hosts a small village shop and outreach Post Office service, acts as a crucial hub for local groups and societies and is a significant fundraiser for local charities. On visiting during the judging process we were taken by the number of people coming and going, all of whom seemed to have different reasons for calling in, which is testament to the dedication of Chris and Ali Sargent and their team in placing the pub squarely at the heart of the community. Following the evening we reflected on the factors that made the food and drink businesses a success. The unifying factor for each of the businesses was a common passion for delivering the very best to their customers, to bring that moment of joy when that pie, pint, or steak has satisfied the craving you’ve had all day. They all strive for perfection, work tirelessly and diligently, and it is for this reason that they are celebrated at the Taste of Dorset awards The Food and Drink team here at Old Mill are always excited to meet others who share an enthusiasm and commitment to this industry. Attending events such as the Taste of Dorset Awards gives the team an opportunity to sample some local delights whilst learning more about how the industry is evolving, what trends are emerging and most of all, what factors contribute to success. We then endeavour to share this information with our clients with the most up to date, relevant advice. Our sector-focused team gain a unique insight into the industry ensuring that we stay up to date on all matters affecting food and drink businesses, such that we can share the expertise to help our clients succeed. Rebecca Ingram
  12. 12. 10 The Old Mill Food and Drink team and guests enjoying the Taste of Dorset Awards. The award winners with their commemorative plates. Winners of ‘Best Community Pub’ Chris and Ali Sargent (centre) of The White Horse in Stourpaine. They’re joined by Phil Mills (left) from Old Mill and awards host Prue Leith (right).
  13. 13. 11 www.oldmillgroup.co.uk Crackdown on sugar is a market opportunity There is increasing pressure within the UK to tackle obesity and overall general health. One of the main areas for concern has been the level of sugar in our food and drink which has led to the targeting of products that are high in sugar through the introduction of legislation and levies. One much publicised levy has been the introduction of the so called ‘sugar tax’ which has been introduced to help tackle obesity, especially in younger age groups. These levies are likely to be just the beginning of a crackdown on what is perceived to be one of the main contributors to poor health in the UK. Many businesses will see the increasing introduction of legislation and levies as another layer of expense which will need to be factored into budgets and margins. Rather than a threat to your livelihoods, this crackdown on sugar should be seen as an opportunity to thrive and grow in what is a competitive and fast changing industry. Many businesses now have the opportunity to target these health conscious customers with low sugar, no added sugar or sugar free products. There are no doubt many businesses that believe they will not be able to take advantage of these opportunities as they simply cannot afford to invest the time, research and resources that are required to be successful with any new products. It is important to note that there is help out there for those companies that want to take advantage of opportunities when they present themselves. Two of the most important areas to consider are Research & Development (R&D) tax relief and R&D grant funding. The investment in new processes, products, ingredients etc. can all potentially qualify as relevant expenditure in order to claim R&D tax relief. There is a R&D tax relief scheme aimed specifically at those small and medium enterprises that are carrying out R&D activities which include activities such as those noted above. The effect of this relief is to reduce the cost of carrying out R&D by allowing companies to claim 230% of their qualifying R&D expenditure and therefore potentially significantly reducing the year-end tax bill. This makes the prospect of having to create new products to satisfy an ever changing market much more appealing and achievable. Perhaps less frequently thought of, but with significant potential upsides, grant funding targeted at R&D can play a crucial role for those small companies that simply do not have the funds to invest in the development of new products. Unlike many other grants, grant funding for R&D can be awarded for 100% of the cost of the project without any requirement for matched funding, though securing the grant that’s right for you is likely to take time, effort and energy. As with all significant changes in a business, in order to take advantage of these opportunities it is key that detailed plans are made as soon as possible. “With growing consumer interest for locally produced healthy food, smaller businesses should look at implementing a business strategy to address this,” suggests Chris Bennet at Old Mill. “It is worth getting the business plans drawn up early on, to jump ahead of the competition and avoid playing catch-up with larger businesses.” Old Mill have had a high level of success with assisting many clients in obtaining R&D tax relief and grant funding which has helped clients to grab hold of opportunities when they arise. Chris Bennett
  14. 14. Cash is still king Since our last instalment, Britain has voted to leave the European Union, Donald Trump is heading to the White House and Great Britain were second in the Rio Olympics. The world is changing but some things never seem to change: I’ll inevitably still get socks at Christmas and in business cash remains king. Interestingly, we’re seeing a greater number of food and drink businesses focussed on understanding their cash-flow – something accountants often advocate. Perhaps unusually though, there doesn’t appear to be any discernible trend or pattern driving businesses towards this end. There are often economic factors that drive patterns in behaviour. Before the financial crisis there was an appetite to understand how far cash could be stretched for the purpose of the next investment. During the financial crisis there was an appetite to understand how cost management programmes could influence cash flow as businesses looked to batten down the hatches and borrowing activities were rationalised. So what are we seeing at the present? Well, we are currently helping clients to understand and forecast cash flows for the purpose of: accumulating a cash reserve for future investment; in order to assess potential new ventures and capital expenditure; to support loan finance applications; to meet the requirements of grant funding applications; to reduce interest costs on existing finance; in valuing businesses ahead of a sale; and simply to better monitor current business performance. In some senses owner managers are always focussed on cash – after all it’s the cash that a business generates that ultimately rewards the owner. Underlying this though, there appears to be a greater desire amongst a lot our owner managers for a more granular understanding of the drivers of cash flow and the levers that can be pulled to tweak cash flows. Getting to grips with cash flow is allowing businesses to make more sophisticated decisions and understand the implications of their actions. In other words, rather than reacting to macro-economic factors, we are seeing businesses take a pro-active approach to cash management. This is great and it’s no surprise that this has coincided with the arrival of tools like Xero providing real time information and greater transparency. All very interesting but what does this mean? Well, not a lot if the strategy isn’t taking you where you want to be. The key is to move beyond understanding your cash flow and to use this information to drive the outcome you are looking for. In order to do that you need to understand your ultimate goal. Is it the sale of the business? Or to leave a profitable business as a legacy for future generations? Perhaps the goal is to retire aged 40? Or to buy a Ferrari. We are all motivated by different factors, driven by different desires. Understanding where you want to be has to be the first part of the jigsaw. So it holds true ‘cash is still king’ – but the clever part isn’t understanding that – it’s understanding how it can get you where you want to be. 12 Phil Mills
  15. 15. Brexit – a case for Scenario Planning? In the previous edition of this newsletter we considered some of the factors that food and drink businesses should consider when deciding which way to vote in the referendum on EU membership. Now that the country has decided which way it wants to go, businesses need to be considering how an exit from the EU might affect their future plans. Much has been written and said, both in the run up to the referendum and subsequently, about the impact the ‘leave’ vote will have on the economy generally, individual sectors and even particular businesses and individuals. The opinions expressed have covered the full spectrum of possibilities and provided little real insight as to what we might expect and what we should be planning for. There were some immediate shock waves felt in the days following the referendum. However, several months after the vote, things are more settled but the implications in the months and years to come are still unknown. This does not mean that it is just a question of waiting to see what happens before considering the options. What can businesses be doing? Britain’s exit from the EU will clearly have different impacts on different businesses depending on such things as whether you are an exporter or importer to and from the EU, whether you rely on foreign labour, whether you are receiving (directly or indirectly) funding from the EU and other variables such as the wider impact it will have on the economy generally and consumer confidence. What all businesses should be doing now is taking the time to undertake an impact analysis to consider what the impact of an exit from the EU might be. Areas to consider in your impact analysis might include: 1. Business strategy How does coming out of the EU impact your business strategy? For some businesses the decision to leave the EU could have a fundamental impact on the core business strategy. For others the impact will be far less fundamental but could nevertheless require reconsideration of certain aspects of your strategy. 2. Contracts Do you have contracts which are specifically drawn up with reference to EU legislation or regulation? Whilst it will take a number of years for the country to extricate itself from the EU, it would be preferable to renegotiate these contracts as soon as possible to ensure they are fit for purpose following our exit. 3. Laws and regulations Many of the current UK laws and regulations are derived from EU laws and regulations. It is likely to take a number of years following our formal exit for these to change if indeed they do at all. However, if your business is subject to significant EU-originated regulation the impact could be significant. Changes to laws will also impact in the area of taxation, particularly VAT and Customs duties on EU trade. 4. Staffing and skills requirements Do you rely on foreign labour in your business or find it difficult to recruit the skills you require in the UK? If so, early consideration needs to be given as to how you can ensure the necessary skills and resources will remain available to the business in the future. 5. Customer or supplier base If your customers and/or suppliers are EU based, now is the time to draw up plans to widen that base to reduce any potential impact. Consideration should be given to current pricing and currency policies and particularly which currencies you will price and trade in going forward. 6. EU based subsidiaries and sales offices If your business has operations based in other EU countries you will need to consider how best to undertake these operations in the future. What is best now may not be optimal after we leave the EU. 7. Foreign currency Sterling has already experienced volatility since the referendum. Consideration should be given to the impact this could have on the volume and value of your company’s trade and how this might affect profitability. Should you hedge your exchange rate exposure, and if so, how? 8. Investment plans Any investment plans should be reconsidered to ensure the expected returns which were envisaged at the time the plans were drawn up are still likely to be achieved or whether your plans need to be amended. 13 www.oldmillgroup.co.uk Mark Shelton
  16. 16. 9. Funding The sources and cost of funding may change in the future. An obvious example is the availability of EU funded grants. It is not clear to what extent EU grant funding will be replaced by UK funding. Investment appraisal will need to take into the account the likely availability and cost of funds. Alternative sources of funds could be considered now. The withdrawal of EU funding may also have implications for research and development which many businesses benefit from. 10. Communication How will your staff, customers and suppliers be viewing the potential impact of an exit from the EU? Many will be looking to you for reassurance that it will not have a negative impact on them. Silence runs the risk of unsettling them further. Scenario planning As nothing is certain at this stage, the best advice is to identify and frame the uncertainties and proactively determine your possible response to the opportunities and threats those uncertainties present. Scenario planning involves determining the responses available to you given the uncertainties you have identified. Undertaking scenario planning now means you have the opportunity to consider the implications and your options whilst you have the time and space to consider the alternatives and be as ready as you can be as the future unfolds. The alternative is having to react in a hurry and rely on gut instinct as and when issues arise which will seldom result in an optimum outcome. 14
  17. 17. Next stage development Whether it’s investing in new kit to create in house efficiencies or purchasing/ building new premises to increase production, thoughts always turn as to how it should be financed. It is certainly always worth clarifying whether there are any available government grants, pension funds can be a useful tool, but generally at some point during the company’s life cycle bank finance will be required. The way in which you finance the investment could very well impact the availability of capital allowances for your business but why do they matter? What are capital allowances? When a business acquires an asset, the value of this asset bypasses the profit and loss account and instead sits at the top of the balance sheet. It is this value which can attract tax relief through the capital allowance regime. The Annual Investment Allowance allows a business to write off up to £200,000 for acquisitions made during its accounting period. Any value exceeding this attracts a Writing Down Allowance, the value of which depends upon the nature of the asset. Using an example, a business acquires a bottling machine for £625,000 and no other assets during its accounting period. The business is permitted to make a capital allowance claim of up to £276,500 in the first year, attracting corporation tax relief of £55,300 (for unincorporated businesses the relief could be increased due to higher personal tax and national insurance rates). A claim for capital allowances can then be made in subsequent accounting periods on the remaining value. What qualifies? As a general rule, anything which performs some sort of function (such as equipment and machinery) will likely attract capital allowances in some form. The acquisition or development of commercial premises is a slightly different position. Since the abolition of industrial buildings allowance (a form of capital allowances), as a general rule buildings do not attract capital allowances. There are however, elements of a building which can still qualify for capital allowances such as electrics, cold water systems, heating, ventilation, data comms, security and fire systems amongst others. If considering acquiring (rather than building) commercial premises, it is now critical that qualifying expenditure is identified and values agreed with the vendor. Following the legislative changes in 2014, restrictive rules determine the value of fixtures and should be considered as part of your solicitor’s pre- contract enquiries. How can finance options impact capital allowances? Capital grants received in respect of an asset reduces the value for which a business can claim capital allowances. With commercial premises this therefore provides an opportunity for discussion with the grant provider as to which element of the build they are willing to contribute towards (preferably the cost of expenditure not qualifying for capital allowances). Certain types of pension funds have the ability to lend to the business to acquire an asset or indeed acquire the asset in its own right, leasing the asset back to the business. This can provide the business with additional flexibility as to which assets it chooses to invest in. If securing external finance is the chosen option, the lender will no doubt request cash flow projections to ensure the debt can be serviced by the business. When factoring the costs of the business within these projections, tax liabilities can be a significant cost and put simply, maximising a capital allowance claim reduces the tax cost of a business! Before taking on the next stage of development, talk with your Old Mill adviser about financing options and the availability of tax reliefs. 15 www.oldmillgroup.co.uk Charlotte Smith
  18. 18. 16 Certain types of pension funds have the ability to lend to the business to acquire an asset or indeed acquire the asset in its own right, leasing the asset back to the business.
  19. 19. Hanlons Brewery – consistent award winning beer Dan Taylor bought the then O’Hanlons Brewery in December 2013 and then set about restructuring and developing the business. Dan is a local farmer’s son and relocated the brewery in a new purpose built building on the family farm at Half Moon village between Exeter and Crediton in Devon. The whole family is involved including Dan’s wife, parents and even grandparents. Old Mill were involved from the start. In particular it was the work around the finances and family financial structures that allowed the takeover and building to take place – giving the business a sound base to work from. The ethos of the business is simply to produce wonderful beers which have a consistent taste brew after brew. They rebadged the brewery as Hanlons but kept their flagship beer brand, the award winning Yellow Hammer, a distinctive golden pale ale which has maintained itself as a very popular drinkable session beer. Unlike some breweries they have resisted the temptation to do a new beer every time the moon changes and have built a tight range around four beers; Firefly Bitter, and Amber Ale, Port Stout and Stormstay Premium Ale – a 5% ABV amber ale. In recent years the small brewery scene has seen an explosion in new start up entrants with new breweries appearing virtually every week. Dan comments that there is plenty of competition but feels there is still scope for growth in the sector. The vast majority of their production is ale in casks for the pub and club trade and the focus of the business is on producing the right products for this market. They also bottle their beers and the main outlet for these is through their own brewery tap shop. As well as off sales throughout the year they have a bar upstairs which opens every Friday from 5pm for drinks and food that contains their beer and they hold a programme of special events – please check the website for details. It is also used for many corporate events – Old Mill have been known to utilise it. 17 www.oldmillgroup.co.uk OLDMILLCLIENTPROFILE HanlonsBrewery
  20. 20. Christmas is an important time for the shop and they attract even more people in by selling seasonal products such as Christmas trees. During the past couple of years there has been a lot of investment in equipment to help them achieve their aims for consistent quality of product and repeatability of taste. They have been developing a ‘process panel’ and Old Mill are helping to see if this can qualify for Research and Development Tax Relief. This can be up to 130% on top of the money spent and as Old Mill have in house tax specialists sat alongside accountants we are able to offer an integrated and efficient approach. In March last year Hanlons won a bronze award for their Port Stout at the Great British Beer Festival run by CAMRA in London. They were the only brewery from Devon and Cornwall who won an award. They have also won numerous awards this year including a Great Taste Award, SIBA Award, Food and Drink Devon and Taste of the West Award. They have also been shortlisted for the Devon Life Awards for Best Food and Drinks Producer. If you are a fan of cask ales and see a Hanlons beer we can certainly recommend you try it! 18
  21. 21. A picture is worth a thousand words Arriving home from a long day at work recently my daughter greeted me at the door “Daddy, Daddy, Daddy” and jumped up to give me a big hug. Of course there was an ulterior motive to her affection and having recently discovered jigsaw puzzles she dragged me through to the next room and pulled out a new puzzle for us to do together. As the adult, I got right into sorting the pieces out and asked her where we should start, the corners or the sides? “No Daddy, first we have to look at the picture on the box”. Dealing with your finances can be like that sometimes. It is easy to jump in to look at the “stuff” and forget that the first step is the picture on the front of your jigsaw. Many of the people who seek advice from us will come along with a problem, “can you tell me about my pension?” or “how have my investments done?” but our starting point at Old Mill is always to consider what you are trying to achieve with your money. The media doesn’t help, with the little financial information it provides often having a strong bias towards products, e.g. pensions or a sensationalist headline suggesting involving the stock market (it crashes, it soars). How does this make you feel? It’s more than just the focus of people’s attention. More often than not your picture won’t be that clear. You may have a rough idea of what you want to do in the future but little reference as to whether you can afford that lifestyle. If this is your situation you are not alone. Life goes by so quickly and many people go from year to year making ends meet rather than thinking too much about what the future brings. But it is important to take some time to consider the future. You may well be on target to achieve your objectives already, but if you are not it is better to give yourself as much time as possible to get back on track. Everyone will have different requirements, and they will be varied, often relating to what you want to achieve personally, what you want for your family, perhaps leaving a legacy for future generations or to charity. Many objectives will not involve money, but other than for the fortunate few you will at least have to consider money in achieving these goals as well. So the start of the process is helping you to paint your picture. Once we know what the picture on the puzzle looks like it is only a matter of putting all the pieces in their correct places – working with you to ensure your financial strategy is robust, tax efficient, and give you the best chance of meeting your objectives. Of course life does not always happen as we would wish it to and we also explain the obstacles you may face and the ways in which you can overcome potential pitfalls. Over the festive season, think of me, sat on the floor making jigsaws with my daughter and the smile on her face when the jigsaw in front of her is the same as the picture on the box. Then look around at what is important for you. We are here to help and an initial meeting is always without obligation or cost. Merry Christmas. 19 www.oldmillgroup.co.uk ...our starting point at Old Mill is always to consider what you are trying to achieve with your money. Barry Martin
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  23. 23. Tis’ the season to boost your sales... “It’s beginning to look a lot like Christmas” is something you probably said at the start of October and is more than likely the reality in most businesses. Amidst a plethora of festive activities and events and of course food and drink there are some important strategies businesses could and should be considering. We’ve set out a few of our thoughts in order to help you make the most of the season and ensure it truly is F.E.S.T.I.V.E: Financials Perhaps the key way to improve sales is to ensure your pricing framework is appropriate. Pricing strategy merely refers to methods companies use to price their products or services – most companies will base selling price on production, labour, and other general expenses before adding on a certain percentage enabling them to make a profit. However, the festive period presents an opportunity for businesses to adapt their typical pricing strategy seasonally to make themselves more competitive, drive higher sales volume or realise an improved margin. Getting this right is going to be key to success. Extend sales and entice customers For food and drink businesses getting the January period right can be as critical to the success of the year as the build up to Christmas; there is very little time to rest. If you’re a retailer then you should be thinking about the January sales in order to keep people coming through the door but make sure you’ve thought your strategy through – can you afford to sell at that price? Is it low enough to generate the additional interest you’re after. Trying to attract everybody is often a strategy for failure and can result in myopic pricing strategies. Sales in food will inevitably drop away in January so limiting the effect of the January blues is essential. Staff and stock management Selling twice as much, or even more, in a month as you typically would, naturally adds pressure to the business as a whole. Staff are likely to see a large increase in both workload and hours in a period that many would rather spend at home with their friends and family. It’s critical then that steps are taken to keep staff morale high – you’re relying on your staff to deliver for you at this critical time. The other pressure point will almost certainly be stock. Too much and you face costly wastage; too little and you’ll fail to capitalise on your seasonal window of opportunity. Clearly it is imperative you get it right – simple budgeting can help and comparing to last year should give some useful pointers. Targets One of the most effective ways to evaluate performance through the period is to think about what your targets were to begin with – in order to do this it’s important to set some. These could include: n A sales volume target or sales value target n A profit target n A repeat customer target n A footfall target Whatever it is – make sure you’ve got one – only then will you know whether you’ve performed as you wanted. Evaluating the drivers should also help you to evaluate for next year. Innovate and experiment Introduce new sales strategies to your repertoire and get rid of the useless ones! For example increase sales using cross-selling and upselling. Cross-selling is persuading a customer to buy additional items related to their purchase, whereas upselling is persuading a customer to purchase a more expensive version of the purchase they are considering. In order to use them to your advantage it is important to categorise groups of products/services that are subject to an upsell together or can be cross-sold. Monitor these strategies and change them as required. Success is likely to be a factor of well trained staff so invest time in ensuring they sell what you want and how you want. You might also look at customer trends the way websites do. We’ve all seen the phrase; “people who bought this also bought these items” – not being online doesn’t preclude you from using this tactic. 21 www.oldmillgroup.co.uk Lucy Bennett
  24. 24. 22 As with all strategies don’t forget to pay attention to failed attempts and eliminate ineffective attempts. If used correctly and effectively this likely to increase sales but it is also likely to increase customer satisfaction and happiness. You might also think about: n Discounts n Coupons n Samples n Subscriptions as gifts n Events n Experiences days n Trial offers Value the competition Despite the intense demand, businesses should avoid short-sightedness – stay alert to your direct competition. Although you may be bogged down focusing on your own business it’s vital to keep tabs on what your competition is doing. Obviously directly copying competitors every business move is not going to impress anyone but making sure you’re not radically different to other similar and successful businesses on key items such as price will usually stand you in good stead. Evaluate for next year If you don’t evaluate then how will you know how to improve? You’ll need to understand what would you do/should you do differently next year and make a note of it. In the passage of time it’s easy to forget what worked and what didn’t, and you’ll want to get it right, so ask yourself: n Why did you do that? n Did you hit your targets? n Were your sales strategies effective? n How do your staff feel it went? n Did you do better than expected? n Did you use your time effectively? n Did you start planning early enough?
  25. 25. 23 www.oldmillgroup.co.uk Old Mill at the food and drink trade shows The Old Mill Food and Drink team are delighted to be continuing our attendance at the trade shows across the West Country organised by our clients Hale Events of Axbridge in Somerset. These large trade shows are a superb opportunity to discover what is new in the world of food and drink. As well as direct attendance by large numbers of producers, large and small, and independent food retailers, deli’s restaurants and public houses, many food service distributors and wholesalers take part. These shows are an excellent place to meet contacts and identify outlets to enable your business to grow. Please come along to our Old Mill stands to meet members of our specialist food and drink business and accountant’s team. They will be delighted to talk to you about the active Old Mill approach as to how we can use our specialist knowledge to help our clients in this sector. Trade shows in 2017 If you’re involved in the food & drink business, wherever you’re based in the South & South West, Hale Events have got the trade show for you: The Source trade show takes place at the Westpoint Exhibition Centre in Exeter on Wednesday 8th and Thursday 9th February. The Source is the South West’s biggest and best show for anyone with a serious interest in speciality foods, quality drinks, profitable catering and inspired hospitality. Give your business the impetus it needs going into the new season with this huge spread of comparative tastings, networking opportunities and inspirational experiences. Expowest Cornwall takes place in Wadebridge from Tuesday 7th to Thursday 9th March. This trade show is the region’s foremost hospitality and catering trade show - an absolute must for those eager to see, touch and taste the latest products, and to get a feel for the trends shaping the market. If you want to get straight to the heart of the Cornish business community then this is one show you cannot afford to miss. The Food & Drink Trade Show takes place at the Three Counties Show Ground, Malvern, on Wednesday 3rd and Thursday 4th May. The show offers a unique mix of inspirational speciality food and drink products, from a wide range of exhibitors; from the small and regional, to those who trade throughout the UK and internationally. Hale Events are sure one of their shows will benefit your business. Register for FREE trade entry now on the shows’ websites: www.thesourcetradeshow.co.uk, www.expowestcornwall.co.uk, www.thefoodanddrinktradeshow.co.uk or call 01934 733456. If you’re interested in a stand, please call 01934 733433 or email stands@hale-events.com.
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  27. 27. Contact Old Mill You can contact the Old Mill Food & Drink team directly by emailing food.team@oldmillgroup.co.uk Melksham Wessex House, Challeymead Business Park, Bradford Road, Melksham, Wiltshire SN10 8BU Tel: 01225 701210 Fax: 01225 709817 E-mail: melksham@oldmillgroup.co.uk Exeter Leeward House, Fitzroy Road, Exeter Business Park, Exeter, Devon EX1 3LJ Tel: 01392 214635 Fax: 01392 214690 Email: exeter@oldmillgroup.co.uk Wells Bishopbrook House, Cathedral Avenue, Wells, Somerset BA5 1FD Tel: 01749 343366 Fax: 01749 344986 Email: wells@oldmillgroup.co.uk Yeovil Maltravers House, Petters Way Yeovil, Somerset BA20 1SH Tel: 01935 426181 Fax: 01935 431852 Email: yeovil@oldmillgroup.co.uk www.oldmillgroup.co.uk The content of this newsletter is for general information only. It should not be relied on and action which could affect your business should not be taken without appropriate professional advice. Please contact your usual Old Mill contact or local Old Mill office.