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Advice For Small Business Owners: How to Avoid Closure

Unfortunately, there are a lot of small businesses out there which are currently struggling more than ever. It has been a busy year for business and now there are plenty of new companies cropping up each day. The competition is getting fiercer and is it becoming more difficult to stay afloat.

Most small businesses fail due to financial issues. Today, we will be discussing what small business owners can do to avoid closure whilst increasing that all-important profitability.

Assess Your Finances

To determine the success of your business and whether you can afford to keep operations running, it is important that you regularly assess your finances. Start by tracking how much money goes out of the business compared to what is going in. Ask yourself – is the cash flow steady enough?

If it is not, then you will need to start looking into areas where you can cut costs. Investigate all areas of operations and you will be sure to find areas that can afford a cut back. If you need to find ways to cut costs in your small business, then you can also turn to the internet for help. It is packed full of helpful blogs and articles which can steer you in the right direction.

Pay Off Your Debts

Any debt that your business owns will need to be paid. You can try ignoring them, but they won’t go away, and they will only make your financial situation a lot worse. When it comes to paying off your debts you should prioritise them. Some will be more important to pay off than others. Taxes are one of the most critical debts for small businesses. It is important to remember, tax money belongs to the government and not your business. So, you should always place this as a number one priority.

Failure to pay off your debts could result in the closure of your business. Future Strategy know all too well about that as they have helped hundreds of small business owners in the closing down of their businesses over the years. It is a complex process and one you want to try and avoid.

Don’t Hesitate to Talk to Lenders

Clear lines of communication are crucial in business. If you are in times of financial hardship it can help to have a good relationship with your lenders at it can help to ease the situation of a late payment. For example, if you are unable to make scheduled payments on your business loans then speak to the lender at your nearest convenience. If you default a loan, it can have serious consequences. You may be subject to a late fee or lower your credit score. You may be able to avoid this if you can promptly explain your situation to your lender.

Being confident with communication doesn’t come naturally to all business owners. This is why it is advised that you look into ways that you can brush up on these skills. You can learn more about how to get confident with communication through various online resources.

Hogan Lovells advises McCormick & Company on US$1bn debt offering

Global law firm Hogan Lovells advised McCormick & Company, Inc. (McCormick) on an aggregate of US$1bn of new debt issuances.

McCormick, which manufactures, markets and distributes spices, seasoning mixes, condiments and other flavourful products to the entire food industry, offered and sold US$500m aggregate principal amount of 0.900% notes due 2026, and US$500m aggregate principal amount of 1.850% notes due 2031.

The Hogan Lovells team advising McCormick was led by capital markets partners Alex Bahn (Washington DC; Philadelphia) and Eve Howard (Washington DC), tax partner Scott Lilienthal (Washington DC), capital markets senior associate Phillip Schuster (New York), corporate associate Sarah Branch (Washington DC), and tax senior associate Caitlin Piper (Washington DC).

The Hogan Lovells U.S. capital markets team regularly advises clients on complex and high-value offerings of debt, equity, and hybrid securities. Our issuer clients include some of the most recognisable corporate names in America. We are able to structure and execute capital markets transactions in order to maximise client goals, including developing innovative transactional structures.

Direct lending fell by 29% in Europe for the first half of 2020

Non-bank or direct lending saw a total of 140 European deals in the first half of 2020, compared to 197 for the same period last year, a decrease of 29%. The latest Alternative Lender Deal Tracker from Deloitte showed deal count dramatically slowing as the COVID-19 pandemic impacted the private debt markets, especially in Q2 when the volume of deals fell by 58%, compared to the same period in 2019.

The majority of the deals were M&A related with 67% of the European deals being used to fund a buy-out. Out of the 447 deals in the last 12 months, 83 deals did not involve a private equity sponsor, which is in line with the previous year.

Deloitte’s deal tracker also revealed that within the UK, business services (including Professional Services and the Infrastructure industries) have been the dominant user of Alternative Lending accounting for 29% of the total deals, followed by the technology, media and telecommunications sector (TMT) at 19%.

Floris Hovingh, head of Alternative Capital Solutions at Deloitte, commented: “One impact of the COVID-19 pandemic has been for direct lenders to hit the pause button during the second quarter of this year. However, they have become very active again in the second half of the year as pressure on deployment catches up and M&A activity rises.

Hovingh continued: “The lending market has become somewhat binary. Companies that have proven to be resilient in the pandemic are much sought after and commercial terms offered are not far off from pre-pandemic times. In contrast, impacted sectors have of course been given a wide berth.

“As predicted banks have been focussed on their existing portfolio during the turmoil. This has resulted in companies now seriously considering direct lenders as a refinancing option that had previously not been the case.”

Chris Skinner, head of the Debt Advisory team at Deloitte, concluded: “CEOs and CFOs need every option at their disposal to make sure they navigate the current uncertainty in the market. Direct lenders are a key part of that ever-expanding tool kit, perhaps even more so now than ever.”