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Property Finance Success Story: Funding an £8million development

Development can mean high profits - but to achieve those profits a high scale of funding will be required. At Rangewell, we recently helped fund a development with a total budget in the region of £8million. TL:DR - Thanks to the pandemic, the number of lenders willing to finance property developments reduced substantially and those that would lend would only do so at a higher rate of interest. We found an accountant's developer client the funding he needed by carefully structuring the deal they needed - a £2million loan towards the cost of buying the site and, using the land as security, providing a 100% loan to cover the cost of the building work, with staged payments. When large sums are involved, lenders have to be cautious. Even those who are prepared to fund whole developments may have a ceiling on the amount they can lend on a single project. Others may be reluctant to offer funding for certain kinds of development. Those that will lend may require a high rate of interest. Getting the deal you need for your plans - and turning your ideas into profits - requires expert support.  Without in-depth knowledge of the lending industry, it can be extremely difficult to find the lenders who can provide the most competitive rates for specialised funding such as Development Finance. At Rangewell we have the necessary knowledge.  We recently helped an Essex-based developer accountant find a solution for a borrower who was planning a major development - which required a total of £8,000,000 in funding. In the current climate, such a high-value loan, may be difficult to arrange - and the developer realised that he would need help to secure the funding he needed at a rate which would allow him to retain sufficient profits. “I found a brownfield site in a bustling Essex town. The county has become very popular thanks to the good road and rail routes into London, and good sites for development have become hard to find. But I was certain that the location was ripe for a profitable development of luxury homes.” The site would be ideal for the development of two blocks of luxury flats, with apartments and penthouses, and the developer had outline planning permission for 35 new homes. The costs were substantial - it would cost £3.5million to buy the site, and building costs would be a further £4.5 million. “I needed to find the funding - and, of course, I needed it to be competitive. But the problem was that thanks to Covid, most lenders were simply not lending. The only lender I could find who was interested was only prepared to offer funding at 7% - and even then, they were reluctant to offer as much as I wanted.” Property Development Finance is aimed at experienced property developers Property Development Loans are a type of short-term lending that, at the lower end of the scale, allows a developer to finance renovation or refurbishment of a property. However, in theory at least, there is no upper limit to Development Finance, and much larger development loans may allow the funding of large-scale development projects, including the build of entire new estates. All lending is arranged on an individual, project-by-project basis. Projects fall into three broad categories: Small-scale loans to cover light refurbishment Lending to cover renovation and major conversion projects Funding for ground-up development, starting with an empty plot of land Lower-cost projects can be covered by a relatively straightforward loan, while for light and heavy refurbishments you might want a 'refurbishment bridge’ finance option, which funds 6–24 months of building costs and may include the option to convert into a mortgage once work is complete. Ground-up development may be funded in a number of ways. The key point to remember is that his type of property funding is always arranged on an individual basis. For more extensive projects, more complex finance arrangements will be needed. Funding is often sought by those who already own land and who will offer it as security to raise funds to cover both land purchase and building costs. Lending for property development can include a roll-up of interest and associated costs into the loan, which would be paid off once the development is sold. How much can you borrow? Lenders will often provide up to 60% of the Gross Development Value, or GDV, of a development project and may expect at least 40% equity of the GDV to be funded by the client with the acquisition of the site. Funding will then be provided on a phased basis to cover the costs of development or re-development. Very large multi-unit block developments, however, may require pre-sale of each phase before funding can progress to the next stage of the project. But if an experienced developer wants to buy a plot of land and build on it, a lender might finance 50% of the plot purchase and 70% of the build. If you are ready to find better answers to your business funding needs, contact the Rangewell funding hotline on 020 3318 2613 Finding a solution We looked at the deal that the client was wanting, and saw that his project was, in fact, very viable.  We knew that many property development funders had shut up shop until the post-Covid future became much more clear - but we did know of one that might be interested and still prepared to lend. We approached them with full details of the project and were able to get a positive decision. The deal we arranged We were able to negotiate funding at 6% - substantially lower than the developer’s only other quote - and to cover his entire lending needs. We were able to do this by providing a carefully structured deal. This would provide a £2million loan towards the cost of buying the site - in effect 60% loan to value. With the land as security, it would then be possible to provide a 100% loan to cover the cost of the building work, with staged payments. The total funding advanced would be £6.5 million, with a 15-month term, and with all interest to be rolled up and repaid at the end. “The funding was exactly what I needed and we started work immediately. It looks as though we were right about the desirability of the project. The first 10 units have already been sold off-plan, effectively covering the costs of the finance we took out - and letting us look forward to some very worthwhile projects with another 25 to sell.” Why we were able to help At Rangewell, we work with all the lenders in the UK market, and not only do we know which are most suitable for a particular type of deal or a particular sector, we know those that can offer the most cost-effective solution for an individual need. We were able to secure the funding required by our client at just 6% £8,000,000 at 6% over 15 months Getting the right deal for your business Finding the right lender for your development project can be crucial to its success and profitability. That’s why it is important to speak to the Rangewell team without delay. Our team is made up of industry specialists. Whatever your line of work, we have someone who understands the challenges you face - and the ways to answer them. Our team includes experts in Property Finance, and our service is personal. |It lets you talk to a property funding expert who understands your challenges sector to find a solution that is planned around your business needs. We will discuss your plans then call on our network of lenders, which includes virtually every name in the UK market, to get the funds you need quickly. And when the solution requires going the extra mile and out of the box thinking - you can rely on us for that too.  Just call us and one of our experts will be able to discuss your options and work out the most cost-effective ways to provide the funding you want - whatever the challenge your business plans present. And, in most cases, our services are absolutely free. To find out more call the Rangewell Property Funding team for an informal discussion on 020 3318 2613 or email [email protected] Property development costs less with help from Rangewell Individual arrangements tailored to your circumstances Adverse Credit – no problem Repayments geared to your revenue stream - including interest roll-up Understanding the funding challenges for your sector Personal service Talk to Rangewell – the business finance experts

Rangewell’s report on the economic performance of Independent Healthcare during the Coronavirus pandemic

Summary:  There is significant evidence to show that Healthcare, as a sector, was one of the hardest hit from the economic fallout of Coronavirus. The anecdotal testimony of the consequences of the crisis has been prevalent since February, and now the economic data seems to support the ‘word on the street’.   The GDP data indicates there is little difference between the output of the sector during the lockdown and after. GDP data in other sectors shows that some saw a 25% increase of output since the lockdown, while Health and Social Care saw its output remain below 25% of its February output.  This could be down to a number of reasons, including: Dentists and Opticians practices, on the whole, were legally obliged to close. Some firms say they were still spending £10k a month to just keep the business going even whilst it was closed.  There was a rise in drug prices, with many Pharmacies reaching their credit limits and even falling behind with the drug wholesalers. The Association of Independent Multiple Pharmacies forecasted in March that Pharmacies needed an extra £10k per pharmacy, per month to ease the cashflow squeeze.  One Pharmacist estimated that overtime costs were £5000 per week during April. The ongoing cost of Personal Protective Equipment (PPE) was costing a group of 23 care homes £70,000 extra per month in May. The IHS Markit UK Household Finance Index in September showed that there was a reduction in household spending, savings and personal credit availability. This may have caused a knock-on effect on cosmetic or non-urgent healthcare services. Healthcare GDP Like with all other industries, Health and Social Care saw a dramatic drop in output while the cases and Government restrictions rose. While other sectors saw output return to their February levels, Health & Social Care saw its output flatline at 25% below their February output.  Monthly output (March, April, May, June, July, August 2020) as a proportion of February 2020 output; February 2020 output = 100% Source: Office for National Statistics, GDP monthly estimate, UK: August 2020. PHE Weekly Cases data, people tested positive, UK Whole. The story behind the number During ‘lockdown’, Dentists & Opticians practices were legally obliged to close their doors, with patients, instead, being referred to hospitals for urgent care.  An independent high street Optician told one of Rangewell’s Healthcare Finance Experts that, even after taking the Job Retention Scheme into account, the firm was spending £10k a month just to keep the business going whilst it was closed. This was typical of all healthcare businesses who were required to shut their doors during the lockdown. The economic effect can be seen sector-wide, even with the businesses that remained open, such as Pharmacists. Due to the way the Government has changed the way Pharmacies are paid - that is the reduction of the payment they get from actually dispensing medicines to delivering services, which they are paid per-service or in a banded manner - the pandemic hindered their ability to deliver services and they became reliant on the fees paid for dispensing. To make this worse, the huge spike in prescriptions increased Pharmacist wholesaler bills at the same time as a rise in drug prices. As the NHS pays three months in arrears, the delay affected Pharmacists’ ability to balance the books. In March, the Association of Independent Multiple Pharmacies welcomed the loan from Public Health England of £300m to Pharmacies but forecasted that they would need an extra £10k per Pharmacy, per month in April and May to help with the additional costs and to ease the cashflow squeeze.  Staffing costs are adding further pressure onto Independent Healthcare providers. With a shortage of NHS testing, many professionals will have been forced to self-isolate. Speaking to Pharmacists in April, Mike Hewitson of Beaminster Pharmacy estimated the overtime costs for one week alone were £5000. The ongoing cost of Personal Protective Equipment (PPE) in health and social care has been yet another overhead that businesses have needed to factor into their costs. Derek Luckhurst of Agincare told The Guardian in May that PPE for his 23 care homes had cost his business an extra £70,000 a month.  The IHS Markit UK Household Finance Index also shows that there has been a reduction in household spending, savings and personal credit availability. This may well also have an effect on Healthcare as less might be spent on cosmetic or nonurgent services/sundries. 1 Wickware Carolyn ‘Leyla Hannbeck: ‘COVID-19 has many pharmacies struggling to keep their heads above water’, Pharmaceutical Journal, May 6 2020 https://www.pharmaceutical-journal.com/news-and-analysis/opinion/qa/leyla-hannbeck-covid-19-has-many-pharmacies-struggling-to-keep-their-heads-above-water/20207939.article?firstPass=false 2 Cox Thomas, ‘Crushing’ demand for medicines pushes pharmacies to the brink’, Chemist and Druggist, April 9 2020 https://www.chemistanddruggist.co.uk/feature/crushing-demand-medicines-pushes-pharmacies-brink-coronavirus 3 McDonald Henry, ‘Higher PPE costs of care homes passed on to clients’ Guardian, May 4 2020 https://www.theguardian.com/society/2020/may/04/higher-ppe-costs-of-care-homes-passed-on-to-clients-uk-charity-warns  4 IHS Markit UK Household Finance Index, 21 September 2020 https://www.markiteconomics.com/Public/Home/PressRelease/32ab67d3ae7d4b0bab35344cee1af94

​​​​​​Property Finance Case Study: buying below value

Buying property below market value may be a shrewd decision - but it can complicate your mortgage arrangements. TL:DR - When a client struggled to finance a bargain property purchase because it was valued below market rates, his 30% deposit was at risk. He turned to the Rangewell team who were able to arrange a second valuation, and were successfully able to negotiate a Property Development Loan at 7% fixed for two years, which not only allowed the purchase to proceed, saving the client's hefty deposit, but also meant that he could remortgage the property to a much lower rate once work completes.  When you apply for any kind of property finance or mortgage, the lender will want a valuation based upon the purchase price and not the value of the property. You will only be able to borrow a certain percentage of this price – this is called the 'loan to value ratio' (LTV). if you secure a property bargain - a property below market value - the lender may actually become wary, because their lending is secured on the value of the property as it stands, if it has to be sold on. Any property that has to be sold below market value, therefore, causes alarms bells to ring. If it can only be sold below market value, it may not be possible for it to be resold for the full price - or not sold at all. However, although there are some challenges, there are some major advantages to buying below market value. Buying property below market value gives you an immediate paper profit. If you sell at market value quickly, you’d make a good return on your investment. So if you paid £200,000 for a property valued at £200,000, you’d make nothing by selling quickly. But if you only paid £180,000 and then sold at the market value of £200,000, you would make a handsome return on investment (ROI). If your original investment was your deposit of £50,000, and you made £20,000, this means you enjoy an ROI of 40% - although you will have costs to pay. “You might think that lenders would be keen to help you buy a property that is below market value and obviously a bargain. But it seems that things don’t quite work that way. I had found myself a bargain, but I was having a real problem in finding the funding to buy it." At Rangewell, we recently helped fund a small unfinished block of flats which was sold off by the developer at below market price. This can be a common scenario when large developers run into cashflow difficulties. They may need additional funds to complete a large development, but rather than incur additional lending fees, they may offer a few properties for sale to provide the cash they need quickly. The client was offered the block of two-bed flats for just £115,000 - substantially below the market value for the finished flats, which should have been closer to £200,000, and possibly more as the development was completed and landscaped and the area became more attractive. “I knew that I had a good deal lined up - the area is up and coming and the property was aimed squarely at the young professional market who were starting to come into the town. It would be perfect for renting out for a year or two while values climbed some more - and then easy to sell the flats on. But I had not bargained for the problems. Buying a bargain makes lenders uncomfortable - and so did the Covid crisis." There would be work to be done. The block was a bare shell, with second fix electrics and fitting out of bathrooms and kitchens required. These might cost another £50,000, but our client was confident that he would still be able to turn a good profit from renting out the flats, and then go on to resell the properties when the time was right. He had secured the property with a 30% deposit. However, he would require funding to complete the purchase - and found that he had run into a serious problem. Because the flats were unfinished, lenders were reluctant to help. Without kitchens or bathrooms in their current state, they could not be sold on to buyers who would use them as a home. It is usually essential for a property to be sellable to act as security for a loan. The valuation provided by most property professionals working with lenders was either substantially even lower than the purchase price, or negative. It looked as though our client would be unable to raise the additional funds he needed and was, therefore, in danger of losing his deposit. He turned to us to find a solution. Why was there a problem?  In the current climate, financial uncertainties have made lenders even more cautious when large sums are involved - even when the security is provided by saleable property. Without property that could be resold to recoup the loan if the borrower became unable to pay, most lenders would not look at this deal at all. And those that would lend may require a high rate of interest - which would remove any profit from the deal. Without in-depth knowledge of the lending industry, it can be extremely difficult to find the lenders who can provide the most competitive rates for specialised funding such as below market value finance. At Rangewell, we not only have the necessary knowledge, but we can also put it - and our network of contacts throughout the property lending market - to work for you.  We found another valuer who was able to take a fresh look at the property - and a lender who was prepared to work not on the basis of the valuation of the property as it stood, but on the Gross Development Value or GDV. Gross Development Value may be used as part of a residual valuation, the process of valuing a property with development potential. It is essentially the value of the completed property, less the costs of the work required. We believed that the GDV of the property would be much higher, and found a local valuer who suggested a value of £180,000. Armed with this figure, we were able to approach a lender we believed would be prepared to offer the funding required. Some negotiation was required, and we needed to call on our own experts to provide opinions that the lender would be convinced by, but we eventually arrived at a deal that would allow the purchase to proceed - and save our client’s deposit. We sourced a 70% property development loan at 7% fixed for two years.  If you are ready to find better answers to your property funding needs contact the Rangewell property hotline on 020 3318 2613 About Property Development Loans Property Development Loans are a type of short-term lending that can allow an experienced developer to finance renovation or refurbishment of a property. All lending is arranged on an individual, project-by-project basis. Projects fall into three broad categories: Small-scale loans to cover light refurbishment Lending to cover renovation and major conversion projects Funding for ground-up development, starting with an empty plot of land We knew that many property development funders had shut up shop until a post-Covid future became more clear, but our knowledge of the market allowed us to go straight to the lender best placed to help - and to secure the funding in the shortest possible time. The cost of the finance was high compared to a straightforward Commercial Mortgage, but the client was able to proceed and will be able to remortgage the property to a much lower rate once work is completed. Fitting out the flats is already underway, and he hopes to have tenants in place before the end of the year. “The funding was exactly what I needed to move forward and to save the deal - and the money I had already put down. We were able to start work immediately despite the lockdown. The boost to the value of the property thanks to an unexpectedly buoyant market is making things look brighter than ever.” Why we were able to help At Rangewell, we have a team of property funding experts and we work with all the lenders in the UK market. We have built up close contacts with many of them, and not only do we know which are most suitable for a particular type of deal or a particular sector, we know those that can offer the most cost-effective solution for any individual need. This means that, whatever your property finance challenge, we can help you find the answers you need - in less time, and frequently at a lower cost.  What’s more, when it is a matter of Property Finance, our services are free. Getting the right deal for your property plans Finding the most appropriate lender for your development project can be crucial to its success and profitability. That’s why it is important to speak to an expert team without delay. Our team includes experts in property finance and our service is completely personal. It lets you talk to a property funding expert who understands the challenges you face with your project to find a solution that is planned around your business needs. It often means finding solutions that our clients did not know were possible - and it always means having a property expert working to save you money. We will discuss your plans and then call on our network of property lenders, which includes virtually every name in the UK market, to get the funds you need. If you have a property project in need of funding, or simply want to scope out a potential deal, call us and one of our experts will be able to discuss your options and work out the most cost-effective ways to provide the funding you want - whatever the challenge your business plans present. And in most cases, our services are absolutely free. To find out more call the Rangewell property funding team for an informal discussion on 020 3318 2613 or email [email protected] Property development costs less with help from Rangewell Individual arrangements tailored to your circumstances Adverse Credit – no problem Repayments geared to your revenue stream - including interest roll-up Understanding the funding challenges for your sector Personal service Talk to Rangewell – the business finance experts

Property Finance for a pharmacy

Running a pharmacy as a high street chemist can be a particularly lucrative business, letting you use your professional skills whilst also providing a huge range of commercial opportunities. TL:DR - When two existing pharmacy owners decided to come together for a joint venture, they found that the scale of the funding needed, along with the additional challenge that the banks saw their new venture as a start-up, despite both having extensive experience in the pharmacy sector, meant funding challenges they could not overcome alone. We went above and beyond to help, calling in a team of accountancy specialists and valuers to support their application, and succeeded in getting them a funding deal of £1,900,000 at 3.75% above base rate currently 0.5% with a term of 15 years. Running a chain of pharmacies can be even more rewarding, letting you benefit from economies of scale. But whether you are opening a new pharmacy or taking over an existing chemist shop, being able to capitalise your business at the lowest possible cost is key to success. Acquiring an existing business or premises will need external funding tailored to your cash flow. At Rangewell, we understand the particular challenges you face because we work with pharmacists across the UK and help them find solutions to their funding needs. We recently helped two partners acquire two existing chemist shops to add to their existing businesses - and had some challenges to overcome when we provided the funding.  About finance for buying a chemist shop The high street chemist shop should be a relatively safe business. As a mature retail sector, the profits of any given shop in a particular area should be relatively easy to calculate based on some simple demographic calculations. If an experienced chemist shop operator takes over an existing business, the prospects for both ongoing trade and the potential of the business for growth should be easily predictable. However, the business is changing as competition from discount chains and the supermarket pharmacies increases. Some lenders may be more wary of funding chemist shop businesses than they might once have been. Buying a chemist shop, like any other type of business purchase, will mean costs that reflect the turnover currently being delivered.  Other factors, such as the location of the business and its potential for the future, may be taken into account. Whether the business is a leasehold or freehold will also influence your price - but although buying a business with a property may be more expensive in terms of the purchase price, it might actually be advantageous as the lending can be secured on the property rather than the business turnover.  Remember - if you are a professional in the pharmacy sector, you may be eligible for lending at particularly attractive rates.  We were approached by two pharmacists who both had small chains of shops in their own names but saw that the future was in scale - and decided to acquire a pair of additional shops as a joint venture. “Working in the pharmacy business for a few years had shown us the problems as well as the opportunities, and with the way things are going, we were certain that scaling up was the best solution for both of us. With our existing supplier contacts, we could reduce our input costs, and we knew that as well as increased buying power we could leverage our experience. We had experienced staff we could put straight in.” The partners had found two shops that were being sold by an owner ready for retirement. They were both in good positions and in locations which would complement their existing operations. “Basically, we were buying shops which would fill up holes in our existing spreads. We would be reinforcing our existing operations, not taking customers away from them - but at the same time, they were close enough for us to easily manage from our existing sites for delivery and the like. The challenge was the same as it always is - finding the right way to fund the acquisition.” The two shops were profitable and in owned premises and the current owner was under no illusion about their value. “He wanted £2million for the two shops. An independent valuer confirmed that the price was fair and, when we looked at the books, we had to agree. The businesses were profitable as they were, plus they had plenty of potential for the future. One was close to a large housing development that would mean plenty of extra customers walking past the door.” The partners first thought was to approach their banks - but it was then that things started to become complicated. They were both successful business owners, but they had not worked as partners before and setting up a joint venture was complicated. “Naturally, we had the support of our account and solicitor, but even with their professional skills, the application was looking complicated from the beginning. The bank wanted all kinds of documentation. It is understandable enough - we needed to fund £2million after all.” It soon became apparent that the partners would need more support than their advisors could provide. The needs of the bank they wanted to work with were highly specific, and they turned to our experts at Rangewell for help. As experts in business lending, we understood what the banks needed and began work on preparing a report which would provide the information required in the form that the banks would find the simplest to deal with for their purposes. When large sums are involved, lenders have to be cautious. Even those who are prepared to fund may have a ceiling on the amount they can lend on a single project in the current climate. And those that will lend may require a high rate of interest. Getting the deal you need for your business development plans and turning your ideas into profitable business realities requires expert support.  Without in-depth knowledge of the lending industry, it can be extremely difficult to find lenders who can provide the most competitive rates for your particular business needs. At Rangewell, we have that knowledge.  If you are ready to find better answers to your business funding needs, contact the Rangewell funding hotline on 020 3318 2613 Finding a solution We looked at the deal that the partners were looking for and saw that their plans were sound The asking price was £1million for each shop, which was a fair price for a practice with a combination of ample floor space and a turnover that was already excellent, with more than 5,500 prescriptions served each month.  However, the way the business would be structured was causing problems. Both partners had existing businesses, with debts as well as assets, but their new venture was technically a new business. Banks are often reluctant to provide funding for new business ventures - particularly at the current time - as there is no formal evidence that the business would be successful. We, therefore, had the task of creating a detailed report that would demonstrate the viability of the business plan, along with the skills and experience of the partners. We called in a team of specialist pharmacy accountants to support the application and assembled an application based around lending secured on the value of the property itself. There were several problems to overcome, not least that the valuation of the properties was found to be rather optimistic. We used our negotiating skills to reduce the price offered for the shops and found a new valuation which was closer to the amount required. Then at the last minute, we found that Covid-19 had triggered a crisis of confidence in lenders, who were concerned that they were being asked to fund a business acquisition which had no clear prospect of being allowed to open.  We found a lender who was hungry for business and able to make the required funds available when the first choice lender pulled out at the last minute. The funding Rangewell arranged  £1,900,000 at 3.75% above base rate currently 0.5% with a term of 15 years Getting the right deal for your business plans  Finding the most appropriate lender for your business acquisition plans project can be crucial to their success and profitability. That’s why it is important to speak to the Rangewell team without delay. At Rangewell, we work with all the lenders in the UK market and not only do we know which are most suitable for a particular type of deal or a particular sector, we know those that can offer the most cost-effective solution for any individual need. Our team is made up of sector specialists. Whatever your line of work and whatever pharmacy funding need, we have someone who understands the challenges you face - and the ways to answer them - at the most affordable rate. Our term includes experts in property finance and our service is personal. It means you can talk to a property funding expert who understands the specific challenges of your sector to find a solution that is planned around your business needs. We will discuss your plans and then call on our network of lenders, which includes virtually every name in the UK market to get the funds you need quickly. And when the solution requires going the extra mile and out of the box thinking - you can rely on us for that too. Plus, in most cases, our services are absolutely free. To find out more call the Rangewell property funding team for an informal discussion on 020 3318 2613 or email [email protected] Property finace costs less with help from Rangewell Individual arrangements tailored to your circumstances Adverse Credit - no problem Repayments geared to your revenue stream - including interest roll-up Understanding the funding challenges for your sector Personal service Talk to Rangewell – the business finance experts

Property Finance Success Story: Accidental landlords and Consumer BTL Mortgages 

At Rangewell we recently helped a new client deal with the problem of turning his home into a buy to let venture.  TL:DR - One client found they had become an 'accidental' landlord when they decided to rent out the property they live in rather than sell, when moving jobs for example. Because he had lived in the property, he was not eligible for a Buy to Let Mortgage, and due to his, understandable, lack of experience in the property finance market, he didn't know where to turn. We explained his options and found him a Consumer Buy to Let Mortgage which fit his needs perfectly, even getting the deal accepted during Covid, and negotiating the funding at 3% with 70% loan to value. Investing in Buy to Let properties have been on the increase for a number of years, but concern about BTL investors distorting the market and pricing out first-time buyers has led to tax changes which may make becoming a landlord much less rewarding.  But it may still be possible to buy and rent out a home or homes and show a profit - if you have done the necessary calculations and have a mortgage with a really competitive rate. However, there's more to getting the right mortgage than simply comparing rates.  Getting the right kind of property funding is essential - and there are several types to consider.  A consumer mortgage is designed to let people buy the home they live in. It requires the borrower to have an income which is sufficient to make to repayments on the mortgage, and the lender and the product they offer will be regulated by the FCA. A standard (or business) Buy to Let mortgage is secured against a property investment where you rent out the property for profit. A Buy to Let mortgage is assessed differently in comparison to a residential mortgage. It is mostly based on the profitability of the property, i.e. how much rent can be generated from it, unlike a residential mortgage which depends on your own financial circumstances. You will need to provide a slightly higher deposit amount for a Buy to Let Mortgage which usually would be 20% of the value of the property. A minimum salary of around £20,000 also applies, depending on the mortgage lender. But there is another type of mortgage - a Consumer Buy to Let Mortgage. We recently helped a property owner solve his property problems by helping him arrange a Consumer Buy to Let Mortgage. For landowners who have experience renting and deliberately want to rent out a property, Business Buy to Let Mortgages are ideal. However, many individual homeowners fall into the trap of becoming an accidental landlord - where they want to let out a property that they have lived in themselves. What is an 'accidental' landlord?  The term ‘accidental landlord’ is common in the lettings industry. It is someone who didn’t buy a property to let out but found that they needed to become a landlord because of unexpected circumstances. Those circumstances can also vary. One of the most common is when someone may own their home but get a job offer abroad and not want to sell. They also might not like the idea of leaving the property empty for an extended period of time. In such case, the best route is often to rent it out. Alternatively, someone might inherit a property and decide that letting it yields the best results financially. They might even wish to remortgage and borrow extra capital against it, so they have more funds in the bank. If you move away but keep the property you were living in to let out, you may be defined as an ‘accidental landlord’. The criteria for most Consumer Buy to Let mortgages are: The property was not purchased with intend to rent it out Renting property is not your main source of income  You do not own other properties that are being rented You have lived in the property A Consumer Buy to Let provides a great deal more protection than the regular Buy to Let Mortgage, which is arranged for business purposes. However, the requirements, as well as the application, will be stricter - about the same as if you were trying to apply for a home mortgage.  Are you struggling with a lack of property funding knowledge to know where to turn to with a complicated need? Have you aslso become an 'accidental' landlord? Contact our Property Funding team today for the solutions you need Solving our client’s problem Our client was in his late twenties and had bought a home in Bournemouth. However, when a career opportunity took him to London, he realised that the long commute was not going to be feasible. He wanted to let out the Bournemouth property while he looked at his position in London. He would initially rent but had plans to buy if the job went well. However, he was reluctant to sell his Bournemouth property and felt that the best solution would be to let it out for the short term while he decided what to do. He knew that his existing mortgage would prohibit letting out the property, but that it would be relatively simple to replace it with a standard Buy to Let Mortgage. However, when he started to look at the necessary arrangements, he soon found that things were not as simple as he had expected. Because he had lived in the property, most lenders that he spoke to would not consider him for a Buy to Let Mortgage. Their view was that as an owner-occupier, the existing homeowners' mortgage was appropriate. This was a regulated product, and lenders would be understandably wary of any conflict with the guidance provided by the FCA, the regulatory body for the lending industry. When large sums are involved, all lenders have to be cautious. Even those who are prepared to fund property may have a tight set of criteria that they will work to. Proposals that fall out of these restrictions may be rejected simply on principle. “I needed to find funding quickly - the cost of keeping up a house in Bournemouth and renting in central London was putting a strain on my finances. But I could see things would be very much better if the Bournemouth property started to generate an income. It might make it very much easier for me to buy in London. Plus there was always the possibility that I would want to move back in a few years' time.  But I had three problems to deal with. The first that I was a first-time landlord. With no experience in Buy to Let, I didn’t know what was possible and what was not and lenders seemed to have little faith in me. The second was that I was still living in the Bournemouth property, according to the electoral register, even if I was never there.  And thirdly, thanks to Covid, most lenders were simply not lending.” He had already spent weeks trying to secure the funding he needed to move forward and realised that he needed professional help to do so. Naturally, he turned to Rangewell. “I had heard that Rangewell have solutions when it comes to borrowing for property. Most lenders will only want to sell you what they have to offer but Rangewell work to find you the solutions you actually need.” We saw that this lack of experience would be a problem with many lenders, but we knew those who might be able to help. We also knew those who could act fast - despite the problems caused by Covid - and some ways to speed up the process. Finding a solution Consumer Buy to Let Mortgages are regulated as residential mortgages and are aimed at ‘accidental landlords’ and non-professional landlords. In 2016, The Mortgage Credit Directive introduced a legislative framework to regulate the mortgage market. Consumer Buy to Let Mortgages were part of this new change and offered consumer protection to individual landlords. Consumer Buy to Let Mortgages are regulated by the Financial Conduct Authority (FCA) in the same way as residential mortgages. The real reason for their existence is to offer protection to customers who find themselves running a property for income, by providing them with the same insurances all FCA regulated mortgages cover. We saw that a Consumer Buy to Let Mortgage would be the answer. “I had never heard of a Consumer Buy to Let Mortgage, so I had never asked lenders about the possibilities of arranging one. Rangewell’s expertise started paying dividends immediately.” We knew which property funders can offer this kind of mortgage, but we also knew that many had shut up shop until a post-Covid future became more clear - but we did know of one that might be interested and still prepared to lend. We approached them with full details and were able to get a positive decision. The funding we arranged We were able to negotiate funding at 3% with 70% loan to value. Our client already had built up sufficient equity in his home to cover the deposit, so arranging a remortgage was simple. “I never planned to be a landlord, but I was able to find a very nice family who were keen to have a home in the area and things went very smoothly. Now I am thinking about buying a flat in London, and having the extra income from the property I already own is going to make that very much easier.”  Why we were able to help At Rangewell, our focus is on funding for businesses - but we understand that some people become accidental landlords and don’t realise that they are running a business. Naturally, we are pleased to help them. We work with all the lenders in the UK finance market, and not only do we know which are most suitable for a particular type of deal or a particular sector, we know those that can offer the most cost-effective solution for any individual need. Our team includes experts in Property Finance and our service is personal. It means you can talk to a BTL funding expert who understands your particular challenges to helps to find a clear solution that is planned around your business needs. The world of buy to let and property investment has grown tremendously over the last few years, but while this means that more mortgages may be available, the current circumstances have increased the challenges of securing the mortgage you need.  As independent lending advisors, we can discuss all the available products and will scour the market to find you the most appropriate and, equally important, the most affordable deal for your needs. We will help you to decide which Buy to Let Mortgage product best suits your needs based on your individual circumstances and your long-term objective We discuss your plans then call on our network of lenders, which includes virtually every name in the UK market to get the funds you need quickly and simply. Just call us and one of our experts will be able to discuss your options in a clear and simple way, and work out the most cost-effective solutions to provide the funding you want - whatever the challenge your business plans present - and in most cases, our services are absolutely free. To find out more, call the Rangewell property funding team for an informal discussion on 020 3318 2613 or email [email protected] Property ownership costs less with help from Rangewell Individual arrangements tailored to your circumstances Adverse Credit – no problem Repayments geared to your revenue stream - including interest roll-up Understanding the funding challenges for your sector Personal service Talk to Rangewell – the business finance experts

Property Finance Success Story: Buying a bar during lockdown

Traditional pubs may have less appeal than they once had, but bars have grown in popularity. They thrive on individuality - and with the necessary funding, they can still be a lucrative business. At Rangewell, we can help you secure the necessary funding to acquire the property you need. TL:DR - When a business owner secured funding for his new hospitality venture, things looked good. Then Covid hit and the lender withdrew the offer. The client recognised the opportunity and turned to Rangewell to help with finance. We were able to secure a Bridging Loan at just 0.95% per month which enabled the client to go ahead with his business plans and refinance to a product with a lower rate in 12 months' time.  A successful bar needs the right combination of location, ambience, decor, drinks and service for its market. It needs to be on-trend to get customers in. But a tired bar can also mean potential for you. A bar in the right location which has fallen out of favour could easily be refreshed and turned back into a profitable business by a new owner with the right combination of energy, industry awareness and understanding of the market. At Rangwell we recently helped an experienced bar manager to buy premises as the basis of a new business.  Taking advantage of opportunities He had seen a property in his native Cardiff that he believed would be perfectly placed to take advantage of the regeneration of the area. It was a bar and restaurant with a flat upstairs, close to some major new housing developments. He negotiated with the seller and was able to agree on a price of £400,000. A loan with a 60% LTV would leave him with enough spare cash to renovate the tired interior and open for business. However, this was at the beginning of the Covid crisis and, not only were all bars and restaurants locked down, but there was also no date for them being allowed to reopen. Although lenders were initially positive, most withdrew offers as the crisis hit. Our client had been able to secure an offer of 60% LTV with a Commercial Mortgage. How Commercial Mortgages work Commercial Mortgages can be used to buy virtually any business premises or even an existing business. They work much like residential mortgages, although they are arranged on an individual basis. A lending manager will look at each application and will set the rate according to the risk. You may need a detailed business plan - the better your business proposition, the more likely you are to get a positive decision and the better the rates you are likely to be offered. It's also worth noting that all commercial property finance is arranged on an individual basis.  A problem due to lockdown However, although he was given the offer he needed, the lender withdrew the offer as the depth of the Covid crisis became clear. “I was buying property to set up a business that was not allowed to open. I could see why the bank suddenly got cold feet about the deal.” The position had actually been made worse by the fact that the property was being sold for substantially less than the initial asking price. Buying undervalue property can mean securing a bargain, but lenders may think that it will be difficult to sell on and, therefore, presents a risk to them if they need to call it in if repayments are not kept up. But despite their bank being nervous, our client was determined to press ahead. He believed that the lockdown would be short-lived, and that he could open his new bar as soon as it was lifted - and derive some income by letting out the flat above it. “I had hoped that an income from the flat would make the banks see things more favourably - but the Covid crisis had made them refuse to touch anything to do with the hospitality trade.” He came to us at Rangewell for help. Had difficulties with funding due to lockdown? Or struggling to fund a difficult property deal? Find out how our Property Finance team can find the solutions when others cannot  How we secured the funding he needed Our client had already talked to some of the key lenders for the licensed trade, and it looked as though a Commercial Mortgage would be difficult to secure at a reasonable rate. Commercial Mortgages are always the subject of individual assessments and although the value of the property is one of the factors considered, the performance of the business is also important. With the business not in operation - and not allowed to open - the figures that he provided were only projections. Lenders were not willing to take a chance of providing the funding required. Lending for the licensed trade has become difficult in recent years and the Covid crisis simply made things worse.  However, we believed we could find a solution by finding a lender who could offer funding with a Bridging Loan. With a Bridging Loan, the security is provided by the property - not the credit record of the borrower, or by the prospects of the business that may be run from it. They are versatile, but have a high cost, reflecting the risk to the lender. They are, therefore, intended to be repaid quickly, either by the sale of the property or by another finance product designed for the long-term, such as a mortgage. We knew that many bridging funders had shut up shop altogether until the post-Covid future became more clear - but we did know of one specialist company that might be interested and still prepared to lend. We approached them with full details of the bar and the business our client was planning to run from it - and full details of the upturn in the local area. Bridging lenders are able to make rapid decisions and funding was agreed within hours, with the funds released in a matter of days.  Costs for Bridging Loans can be high. Rates of 1.0% per month are not uncommon, and there would be arrangement and exit fees which will increase the costs. However, these fees and the growing interest could be rolled up into the loan and repaid with a new type of funding, such as a Commercial Mortgage, once the business had been running for a season and proved its profitability. Lending for property development can include a roll-up of interest and associated costs into the loan, which would be paid off once the development is sold. The deal we arranged We were able to negotiate funding at 0.95% per month and to arrange attractive terms by providing a carefully structured deal. We were able to persuade the lender to provide funding on the basis of the market value of the property, not the purchase price. With the property valued at £500,000, the lender would provide £350,000, allowing our client to have cash in reserve to equip his site. All interest for the 8-month term would be calculated on day 1 of the loan and repaid when the refinance was arranged. “The funding was exactly what I needed and, despite the lockdown, we were able to freshen up the bar and get ready for opening. As soon as we were allowed, we opened for business. As I had hoped, there were plenty of local people looking for a bar which could offer food, and even if the future is not as bright as it could be thanks to the ongoing Covid problems, I’m confident that the books will look good enough to switch to a standard Commercial Mortgage early next year.” Why we were able to help Finding the right lender for your property can be crucial to your success and your business’s profitability. That’s why it is important to speak to the Rangewell team without delay. Our team is made up of industry specialists, and our property team includes some of the leading specialists in the country. What’s more, at Rangewell, we have close relationships with all the lenders in the UK market. We know which are most suitable for a particular type of property - and those that can offer the most cost-effective solution for an individual need. We will work with you to discuss your plans and we can then call on our network of property lenders, which includes virtually every name in the UK market to get the funds you need at the most competitive rate. If you have a property project in need of funding, just call us and one of our experts will be able to discuss the options, and work out the most cost-effective ways to provide the loan you want - whatever the challenge your business plans present.  - and in most cases, our services are absolutely free. To find out more call the Rangewell Property Funding team for an informal discussion on 020 3318 2613 or email [email protected] Property deals cost less with help from Rangewell Individual arrangements tailored to your circumstances Adverse Credit – no problem Repayments geared to your revenue stream - including interest roll-up Understanding the funding challenges for your sector Personal service Talk to Rangewell – the business finance experts

Property Finance case study: Funding within hours for a new glamping venture

The holiday sector has been hit hard by Covid, but some businesses are booming - especially staycation businesses. TL:DR - An experienced holiday home-owner saw the potential in a property with a large plot of land to create a glamping experience for holidaygoers. But when he went to his bank for help, they did not. He turned to the Rangewell property team who were able to think outside the box when it came to the funding he needed, securing a Bridging Loan at 8.9% within a matter of hours, with the funds drawing down in a matter of days. The client was able to see exactly how much he was borrowing as all interest for the 12-month term would be calculated on day 1 of the loan and repaid when the refinance was arranged. The business model is already proving itself, which means the client is not worried about refinancing with more conventional funding in a years' time. The holiday sector provides many opportunities for profit - especially with the recently renewed interest in staycations in the UK. There are many segments within the sector and one the fastest-growing is that of glamping. Glamping has moved from a novelty to a serious business model that gives holiday-goers the opportunity to enjoy all of the relaxed informality of camping with the added extras and comfort of a hotel. It also allows the owner to set up a hospitality business with great earning potential - but it can pose problems when it comes to funding. At Rangewell, we recently helped an investor fund and set up a glamping business. Our client was an experienced holiday home-owner, who saw the potential of a site in rural Yorkshire. “I was looking at buying a cottage initially, so when I saw the site I was sure that it was the ideal location for a holiday let. There were several acres on the plot, which had been used as a smallholding. If anything, there was too much land for the cottage. It would need a gardener going in every day, but with a little work, it could be a very attractive place to stay, with a good view over the moors and a small lake. Then I realised that with all the space available, it might also be perfect as a glamping site.” His other properties were more conventional, but with experience in providing holiday homes, he was able to look carefully at the costs involved and draw up a detailed business plan. He had also spoken to the local authority and discussed a licence, which is required if a site is to be used for more than 42 consecutive days or more than 60 days in a year. The council had no objections to the new venture and accepted his proposal based on a short business plan, which his consultant helped him prepare, which, as well as providing income figures, covered concerns such as drainage and the impact on wildlife.  With the existing cottage on-site, the costs of bringing in water for a shower block, electricity and a wifi link would be moderate and he already worked with an online booking service provider.  He also looked at solutions for providing accommodation. “I looked at several solutions. Treehouses are popular but they need the right kinds of trees and the insurance costs are high. Huts could mean year-round business, but the cost of a hut that does not look like a shed is high. In the end, I decided on yurts - the traditional kind, with a curved wooden frame.” He calculated could get six yurts for letting out, and a larger version to use as a social area with games and activities. The costs varied between suppliers but he budgeted on spending around £50,000, to include suitable furnishings and brought-in services.  Together with the income from letting out the cottage, his financial predictions looked favourable.   But they were still not enough to convince lenders that he approached. The problem is that a campsite has very little value as property. As a business it might be lucrative, but as a property it is little more than a field, and in the current climate, most lenders were reluctant to offer the kind of commercial mortgage which is usually used for this type of venture. “I had hoped that the presence of the cottage would make the banks see things my way - but the Covid crisis had made them even more wary than usual.” The property was on sale for £500,000 and he could offer a £250,000 deposit but, even with the ability to contribute 50% of the total price, he was unable to find a lender prepared to advance the funds. He came to us at Rangewell for help. Looking to fund property or or land for your business but not getting anywhere fast? Contact the Property Funding Team at Rangewell for help today How we secured the funding he needed We saw that our client had already been in touch with some of the key players in the holiday property market and that, despite his favourable figures, there would be little chance of securing a commercial mortgage for the site. Commercial mortgages are always the subject of individual assessments and, although the value of the property is one of the factors considered, the performance of the business is also important. Because the business was not yet in operation and all the figures were projections, lenders were not willing to take a chance of providing the funding required for the site, which was higher than it would merit as a field, despite the presence of the cottage. However, we believed we could find a solution by finding a lender who could offer funding with a Bridging Loan. With a Bridging Loan, the security is provided by the property - not the credit record of the borrower, or by any record of past developments. They are versatile as a funding source but have a high cost. They are, therefore, intended to be repaid quickly, either by the sale of the property or by another finance product designed for the long-term, such as a mortgage. They can also be used to secure a property which is not suitable for a mortgage. As the client had considerable equity in his other properties, we were confident that we could use a Bridging Loan to provide the funds he needed.  We knew that many funders had shut up shop altogether until the post-Covid future became much clearer - but we did know of one specialist bridging company that might be interested and still prepared to lend. We then approached them with full details of the project. Bridging lenders are able to make rapid decisions and funding was agreed within hours, with the funds released in a matter of days.  The deal we arranged Costs for Bridging Loans can be high and rates of 1.0% per month are not uncommon, and there would be additional arrangement and exit fees which will also increase the costs. However, these fees and the growing interest could be rolled up into the loan and repaid with a new type of funding, such as a commercial mortgage, once the business had been running for a season and proved its profitability. Lending for property development can include a roll-up of interest and associated costs into the loan, which would be paid off once the development is sold. We were able to negotiate funding at 0.89% per month and to arrange attractive terms by providing a carefully structured deal. With the property valued at £500,000, the lender would provide £350,000, allowing our client to have cash in reserve to equip his site. All interest for the 12-month term would be calculated on day 1 of the loan and repaid when the refinance was arranged. “The funding was exactly what I needed, and we were able to start work improving the site and bringing in the yurts. Despite the lockdown, we were able to open for business and take full advantage of the demand from people who had cancelled their holidays abroad. The business model is already proving itself - which means that I have no worries about securing more standard funding in a years’ time.” Why we were able to help Finding the most appropriate lender for your property plans project can be crucial to your success and profitability. That’s why it is important to speak to a property finance team such as Rangewell from the start. Our team is made up of industry specialists, and our property team includes some of the leading specialists in the sector. What’s more, at Rangewell, we work with all the lenders in the UK market, and not only do we know which are most suitable for a particular type of property, but we also know those that can offer the most cost-effective solution for any individual need. We will discuss your plans, then we call on our network of property lenders, which includes virtually every name in the UK market, to find you the most appropriate and affordable funds for your need. If you have a property project that needs funding, just call us and one of our experts will be able to discuss the options. We will work out the most cost-effective ways to provide the funding you want - whatever the challenge your business plans present - and in most cases, our services are absolutely free. To find out more call the Rangewell property funding team for an informal discussion on 020 3318 2613 or email [email protected] Property deal cost less with help from Rangewell Individual arrangements tailored to your circumstances Adverse Credit – no problem Repayments geared to your revenue stream - including interest roll-up Understanding the funding challenges for your sector Personal service Talk to Rangewell – the business finance experts

Financial planning for travel agency businesses

The internet has changed the rules of the travel industry. Millions of Britons jet off at least once each year under normal circumstances, and many more take domestic breaks. And with Covid, many travel businesses have been severely disrupted. UK consumers normally spend around £81 billion on holidays each year and it is becoming easier for holidaymakers to book their flights, accommodation, hire cars and arrange insurance from their laptop or even their phone. But whilst the DIY online travel market has boomed in recent years, there are still opportunities for travel professionals. It is still possible to start out as a travel agent from home with a desk, a laptop and a telephone line – but, even in a post-covid world, you need to think bigger if you intend to build a business. You don’t need a shop on the high street. Successful new travel agents tend to work online and serve a national audience – and tend to specialise in the services and destinations they provide. For some, this can mean working in a niche such as business travel. If you can become the travel agent with the contract for a large corporation, with people needing flights and accommodation around the world, it will be lucrative. You have the ideal basis for a business that should be busy all year round. When travel and work both return to a more familiar pace, multinational companies will still need feet on the ground across the globe. The other approach is to specialise in travel to a particular location, or experience. Building expert local knowledge of a key destination could help you corner a lucrative market. But no matter what industry you’re in, a business plan is essential. You may not think that you need a formal plan if you’re not seeking a loan or investment funding for your business, but it will still be vital for you to understand the challenges and costs your business must deal with before it can start to generate a profit. “Running my own travel agency was a dream, but then I woke up and realised that I could do it - I just needed to get organised.” You need a financial plan. Not only will it let you ensure that your travel business can get off on a professional and businesslike footing, it can be vital if you do need to borrow to set up, or to keep your business afloat in the challenging first few months. What is financial planning?  Anyone setting up a business needs a Financial Plan. Financial planning takes the guesswork out of starting up your travel business.  It lets you work out on paper how your business will generate money in the real world. It lets you understand your fixed costs, variable costs, staff costs and how many customers you need. It helps you work out if your business is going to be profitable, it lets you see where those profits are going to come from, and the costs you will face as well. To do this, the Financial Plan needs to describe every aspect of the financial side of your business. That means estimating all the amounts involved, as well as the timeframes, resources and assumptions that support the figures.   Your financial plan also defines the funding you will need to get your travel business to take off – and lets you present your plans to lenders. The more detailed your plan and the more professional your presentation, the better your chances of securing the funding that you need. Your Financial Plan will help you to see how your business will: Bring in cash Cover its costs Generate a profit The financial target that you need to hit each month The investment you need to succeed “It looks like a lot of faffing about, but writing up a financial plan is time well spent. It shows you where potential problems may arise and that means you can avoid them.” Doing the groundwork You will need real-world figures to support your planning, and that will require some research. Your financial planning will need to contain the following sections:  Your income As you will already be fully aware if you work in the profession, the travel agent industry is based on commission. Every time you sell a holiday for a tour operator they will pay you a percentage of the fee. This commission varies a great deal – to get good rates you will need to become a member of a trade organisation and arrange an agreed level of bookings. There are also commission earnings from airlines, hotels and car hire and fees for things like arranging documents and foreign currency.  The more business you arrange the better the rates you may be able to negotiate with travel companies. Minimum commissions start at around 10% but the high street chains may be getting considerably more, with figures of 15% up to 18%. The fierce competition that is a factor of the travel business will mean that you will have to be content with small profit margins when your business is small. It is only when you have achieved sufficient volume to enjoy increased bargaining power to up your commission rate that you can start looking at large profits. The travel business is very seasonal and, although the customer will pay you a deposit on the holiday when they book, you will only receive your commission from the tour operator when they receive payment in full. Working Finance to maintain your cash flow during slow months may be essential. Be realistic about what your business will be bringing in - especially in the first months and years, while you start to establish yourself. “You need to be a negotiator to succeed - but if you don’t mind a little to and fro on the phone you can start out with rates that will offer you some kind of income, and you can always build on them once the work starts coming in.” Costs of running a travel businesses Your income is not the same as profits, and the next section of your financial plan will look at the costs. Some costs are fixed - you will need to pay regardless of how much work you are doing. Others will depend on the level of business you are doing, and you need to be clear about each. Work out your costs for different levels of customer - just like your income. Your travel business needs premises Walk-in business is now becoming rare, so you may not need costly premises on the high street. A desk or desks in a shared office or business incubator may be more than adequate. However, many people still prefer to deal with a friendly face and to arrange their holidays with someone they can feel they can trust. Many smaller agents work from easily-accessible office space where customers can call in. The cost of retail premises on a busy high street will vary across the country, however, leasing a suitable unit may cost £24,000 a year in a small market town and £60,000 or more in London. An office suite - perhaps over retail space - could offer the space you need for half the cost.  Talk to local estate agents to find out the costs for suitable premises in your area.  “I found a little office over a butcher's shop. Not ideal, but there were plenty of people coming past, and word soon got out about that we were here. But the main thing was that the costs were low.” The equipment you need in your travel business Thankfully, your equipment needs will be minimal. You will need a laptop for every member of staff, a mobile phone - and desks and chairs. The costs will depend on the scale of your business and how many staff you need to equip, but expect to pay £1500 for each employee's basic kit of computer, chair and desk, plus all the extras they need - from business cards to software licences - to get down to productive work. Draw up a list of the equipment you need, with the cost of everything. It may be worryingly high, but you may be able to use Asset Finance - leasing and HP - to bring in the equipment you need. “I was lucky - I found a business that was shutting down and bought in all the office kit I needed. I arranged some finance so I didn't even need to pay for anything up front.” Travel trade associations You will need to be a member of the relevant trade organisations. Being able to show the ABTA - Association of British Travel Agents - logo will ensure you are taken seriously from day one but start-up companies may wish to progress to ABTA when they are more established. Requirements include: Your business must demonstrate a minimum paid-up share capital or proprietor's/partners capital of around £30,000 (but this is flexible) All members are required to provide a bond to reimburse clients in the event of the member's financial failure Registration fee of £330 plus VAT to be submitted with the application form One-off entrance fee of £1,200 plus VAT You could also consider the Global Travel Group which is specifically aimed at start-up businesses and runs as a franchise to provide licensing and bonding to independent travel agencies. It provides support, IT booking system and national tour operator deals while allowing agencies to run as independent businesses under their own names. “I had to take out ABTA membership. You can’t be a travel agent and not.” Marketing yor travel business One of the biggest costs you are likely to face is your marketing. You have to make sure people call you when they are ready to travel. You can’t count on repeat business - competition is fierce and sales are price-sensitive, meaning that people will always shop around. Press advertising that will be seen by your target market is essential,  and online and social marketing even more so. Travellers have grown used to going online to arrange travel which means you need an effective web presence. If you are providing a specialised service, it can help to include material about your key destinations - it can also help ensure that it is your site that is seen when potential customers search online. Your website will probably be how most of your customers find you - and it can act as a sales channel, letting customers book online, automating your business and driving up your productivity and profitability. You need your website to be seen first when potential customers come online and search for your destinations or offers. It must look professional because people will make decisions about whether or not to do business with you based on the impression it gives about your service. And it must be 100% stable and absolutely secure if people are going to trust it with online bookings. A website that meets all these needs with multiple pages to showcase destinations, interactivity to help people enjoy planning their holiday online and secure payment and booking facilities could cost £10,000 or more. You will also need to support it with content marketing - details about trips and destinations - and social marketing. This will help drive site visitor numbers but will require further external support. Realistically, you should expect to pay a minimum of £1000 each month to provide the fresh content and social links you need. “I found a local agency who could set up a website for me. It felt like quite an expense, but I saw that a website was going to be the centre of my business.” Looking to start a travel business? Find out in more detail what funding options are available to you Staff for your travel business Staff can be crucial to building your business. Travel agency work tends not to be highly paid. Salaries may be similar to basic office work but you will need to pay more for people with languages or experience. Many good people come into the travel business for the perks, which can include heavily discounted, and even free, holidays. Getting the right staff will be crucial to running and building your business.  Expect to pay a minimum of £18,000 a year for a trainee, more for someone with industry qualifications and established skills, and up to £25,000 for people with languages or a few years experience. But remember that you will have extra costs, such as National Insurance and Auto-enrolled pensions on top of your basic salary costs. “I had some friends who were keen to come in and help - but even friends need paying every month. I knew I had to get the numbers right because they were depending on me.” Insurance for your travel business Adequate insurance is essential and a standard business policy will not suffice. Travel agents and their associated business may need insurance policies providing coverage for litigations, liabilities and a number of other risks that can arise when you least expect it. Your insurance package needs to include: Employers liability – this is legally required for any business that employs people. It will cover you in the event one of your employees is injured or becomes ill as a result of working for you. Public liability – this will cover you if a member of the public is injured whilst on your premises Professional Liability - no matter how diligent you are, mistakes can and will happen. If you have made an error while planning for your client’s vacation or business trip, the client could sue your business. Professional liability insurance protects your travel agency from such claims. Talk to an insurance broker with experience of the travel industry to see what your costs would be. “I’ve seen what can go wrong when I was working in a large agency when a large party of doctors was delivered to the wrong airport in Florida and missed the start of their conference. I made sure I had cover against that happening to us.” Putting it all together When you have your projected income and costs in place, it is time to start using them to create a financial plan. Look at the ‘planning horizon’ - the time period of your calculations. You may need to look at both a short-term (usually 12 months) or long-term (2–5 years) basis. There are some basic elements that you need to include 1. Start with a forecast of income. How many customers will you bring in during those crucial first few weeks and months? What kind of income will each one generate? Break your forecast down into every month for the first year and either on a monthly or quarterly basis for the second and third years. Be realistic. Your first year will probably not be very rewarding! 2. Create an expenses budget. You need to calculate gross margin. Gross margin is the sales - or revenue - your travel business generates, less the costs you incur generating them. You need to include fixed costs such as rent and payroll and variable costs such as most advertising and promotional expenses. This is a forecast, not accounting of actual figures, and you're going to have to estimate many of the figures you include, but you should include: Premises. The cost will depend on your location and the floorspace you choose, but you could easily spend £15,000 a year to lease a small office Running costs. You will be billed every quarter by the utilities. You can contact energy suppliers who may be able to give you an idea of likely consumption, based on the nature of your business, the location and size of your premises.  Staff. They will need a basic salary and you need to take into consideration all the extra costs such as NI and pension payments. Marketing. This will be an ongoing cost at least to start with, as you will need to attract a constant stream of new customers. 3. Provide a cash-flow statement. Cashflow is vital for any business. You need a positive flow - more money flowing into your business than flows out. Realistically, this may be impossible to achieve during the first few months and you may need to look at ways of providing additional working capital to make up the shortfall.  Begin by projecting a cash-flow statement broken down into 12 months. How many sales, how much income will they bring in, how much will be taken up by the costs you need to pay.  Some business planning software programs have formulas built in to help you make these projections. 4. A profit and loss statement, detailing forecasts for your travel business for the coming three years. Base it on the numbers that you put in your forecast, expense projections, and cash flow statement. This will help you ensure whether or not your business will actually be financially viable with the financial arrangements that you believe you will need to make, and the assumptions about the numbers of clients you believe are realistic.  The funding you may need You will inevitably face challenges when it comes to funding a start-up business. Traditional lenders are only interested in lending to established businesses with years of audited accounts. Even the new breed of online business lenders usually want evidence of a year’s trading, with online accounts and VAT returns before they will consider an application. As a start-up your business has no trading history - so they have no evidence that the finance they lend to you will be repaid.  Fortunately, there are solutions which can help start-ups, even in the current economic climate. At Rangewell, we have experts who understand the travel industry business and the challenges you face. Our team are always keen to discuss the possibilities and to work with you to find the solutions you need. To find out more, call us at Rangewell on 020 3637 4150 or email [email protected] 

Guide on How to Manage Business Growth

Your start-up has now established itself and the phone is ringing with potential new business. Revenue is increasing, profits are coming in and you’re making a name for yourself among your competitors. That initial worrying period when you were not even 100% sure that your start-up business was viable is over. But you may not be able to relax just yet. Growing your business can be every bit as much of a challenge as getting it off the ground in the first place. “The start-up stage was hard and meant plenty of headaches. But scaling comes with them too. They are different headaches certainly, but they are headaches all the same.” You know your business works but trying to make it do much more, and still only have the same amount of time to do it in, can be every bit as difficult as the first handshake and the first sale.   Maintaining your high level of service and overall customer experience actually becomes harder to do as your company grows. You’ll work hard to get to scale, but then you will find that when the market changes, it’s now harder for you to shift with it. You’ll find that you have two or three times the workload as you put on more business, but the working day is no longer and that there are physical limits on what you and your team can do. Being inconsistent with your service-level agreements (SLAs) as your business develops can have detrimental long-term effects on its success. So now that you have mastered business set-up, how can you manage business growth? Watch the money Keeping your finances in check is vital at any stage of your business' development. It’s all too easy to get complacent when your profits are rising but you’ll put yourself at risk of mismanaging your finances. The faster a business grows, the more important it is to plan future financial decisions. Take time to look at your finances, and realise that the financial models that served you during your start-up phase need to be redrawn. With growth, revenue levels, cost and overall cash flow change dramatically. You may be making more sales and more money – but you will be spending much more too. You’ll run into many unforeseen costs, such as broken equipment, the need to hire new employees or an unanticipated opportunity that requires you to act, which of course means spending money, quickly. It’s easier to deal with business costs and limit the number of financial surprises if you plan. You need to set benchmarks, forecast your business’ upcoming finances, profits and sales, and stay organised. You may also need additional investment. A fast-growing business needs capital behind it. New stakeholders will be much more likely to invest in your company if you have strong cash flow credentials. Above all, keep a tight rein on your cash flow. Just because your business is bringing in cash does not mean it is profitable, and good supplier management and stock control are vital – you want to free up money for growth, not have it tied up in outstanding debts or existing stock. Weekly financial monitoring and forecasting soon becomes essential – keep a close eye on what is coming in and what is going out of your business. Funding your growth Business growth does not just happen - and although it should, in theory, be possible to fund growth organically from the profits you make, in practice, it very rarely is. So, for example, you might require a second production machine to help you deal with demand. You may not yet have paid off the first one and a new machine will mean a large investment before it is installed and starts paying for itself. If you wait until you can afford the machine you need from your profits, you waste time – and precious opportunities which may not come again. There is a similar story if you want to bring in another member of staff.   The answer is, of course, to increase your borrowing and pay back the loan when your new machine or staff member is already working for you and helping you generate additional profit. As a business that now has a record of success, even though it may be a short one, this round of borrowing will be much easier, and probably cost much less than it did when you were a struggling start-up. It is simple to understand that as your business grows larger it will require a larger level of funding to keep up with new demands and run day-to-day operations. A Working Capital Finance loan can supply you with the supplementary funding needed to accommodate new orders, build inventory, update your production equipment, expand your office space and hire additional team members. There are many different loan options available, so it’s imperative that you get expert help to find the right type of loan for the and with terms and conditions that fit the needs of your business. Build the right team As your business expands, you will need to have the right people around you to support you. It is not just about plugging a skills gap or simply finding someone to do the job as fast as possible. It is about recruiting people who will fit into your company’s culture. Getting the right team is essential. The employees you hire make the difference between success and failure for your business. Regardless of the products or service features and benefits you want to offer, without the right team to provide them, your business will simply not thrive. Hiring employees that don’t fit in with your current or desired work culture will inevitably lead to poor performance and decreased levels of job satisfaction for all – and you will find yourself looking at the time and costs of recruitment all over again when you have to replace your unsuitable hires. Your team should reflect your vision of your company and represent the values, beliefs, behaviours and commitment that make up your business culture - which is precisely the thing that may set it apart from your competitors. To grow a business effectively, you must be able to trust the people around you. Growth can stagnate if, as a business owner or manager, you insist on overseeing every little detail. Allow yourself to step back from the day-to-day running and leave it to the people you have brought in. It gives you a chance to see the bigger picture to focus on business growth and development opportunities. Once you have a great team in place, work at retaining them, ensuring your employees feel valued and that their roles and responsibilities stay fresh and stimulating. Looking to make the most of your growth? Find appropriate and affordable finance tailored to your business' needs Know your market Have a strategy for growth  Growth does not just happen and, if it does, it will not be sustained unless you have a strategy to drive and support that growth. Focus on your strengths. As your business grows, you need to leverage these strength. It’s essential to capitalise on factors that make you stand out from your competitors and identify and focus on your target audience and their needs. Engage and entice your target audience with benefit-oriented marketing content, special offers, informative events and services that highlight the strengths of your business and connect the customer to your brand. Above all have a strategy for your growth. A growing business needs to be supported by a robust business strategy. Without it, your growth could simply stop at any time and you will have very little chance to do anything about it. Spend time thinking about what makes your business tick and what you’re good at, and try to understand the key factors: Understand your growth: It is vital to understand what the factors are behind your growth. What has sets you apart from the competition? What’s your differentiator? Is it cost, quality, location or something else? Understand your potential: How much more can you grow? How much more do you want to grow? Do you want to run a very large business, or would it be unwieldy, and doomed if the market changed? Creating a mission statement can be useful, as it will nail down your objectives. Understand your limits: You need to be realistic about what you can achieve. If you don’t have the resources or support in place to take on a huge contract or big international order, then don’t take it on. It is better to be honest with a potential new client rather than accept the work and do a bad job on it. Understand your goals: Having clear goals will help you take your business forward. You cannot just say, “I need to increase sales and cut costs”. Be clear about how much you want to increase your sales by and the particular areas where you want to cut costs. You may need to set targets and make those goals measurable. Exactly how many sales do you want? When do you want them by? What level of revenue will you expect from them? You need to be clear in your objectives, and making them measurable will let you be clear if you have reached them or not. Set yourself a specific timeframe. Work these timings into your business plan and stick to them. Know your growth market The final part of any growth strategy is to understand your market. Do your research and get a picture of how your customers behave and what they want. Remember, business conditions change constantly. You will need to do this on an ongoing basis. It is useful to do a SWOT analysis, where you assess your own company’s Strengths and Weaknesses, and then identify Opportunities open to you and any threats you face in the market that you serve. This will help you to identify a niche in your market. Safeguard your intellectual property If you’ve worked hard to establish a brand or product, you can’t have a competitor swooping in and copying you. Take time to get to grips with your intellectual property rights and ensure you trademark your product name and logo, and patent any new inventions or products. If unsure, it’s worth speaking to a legal professional. Funding to scale your business Getting the right funding to keep up with your business’ development is critical. What might have been successful when your business was smaller might not be as effective now.  The scale of investment in your business a year ago - when it could have been half the size - will be a drag on your growth rather than a support. For example, you may need to bring in new people, new machines and even new premises to keep up with the same high levels of service. It's crucial that you are aware of the new set of risks and opportunities presented to your company as well as your incoming and outgoing cash flow. Most importantly, put goals and deadlines in place to stay on track for further growth, including any necessary financing requirements. At Rangewell, we can work with you to help you access the funding you need as your business grows. We know all the lenders in the UK market and we can help you find those who are most appropriate for your needs - and help you with the application process. We can even help you determine what type of funding is most appropriate for your needs - and ensure that you approach the most competitive lenders to provide it. Plus, our services are free.   To find out more, call us at Rangewell on 020 3637 4150 or email [email protected]

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