Ancoris

A period of growth throws up numerous challenges, some of which are difficult to predict. Almost invariably growth consumes cash in the short term and this often leads to apparently successful businesses getting into financial difficulties just when they think things are taking off. It is crucial that Ancoris has the resources to cope with growth, whether that is people, systems or finance.

One key factor is the ability to attract, retain and motivate a team of sufficient quality to deliver the growth plan. Shares or option schemes can be an effective way of doing this, but of course this means giving up a share of the business which, for some entrepreneurs, is a significant and reluctant step.

In the current environment raising finance remains a major challenge. The banks are certainly less reticent about lending than they were a year or two ago, but tougher capital requirements and a tougher stance on risk means they are reserving their funding for business that can really demonstrate their quality. Amongst other things, Ancoris will have to demonstrate a strong management team and a quality business plan with robust cash forecasting.

There are other sources of finance available of course, and for hi-tech entrepreneurial businesses, venture capital can be attractive. Typically venture capitalists will fund businesses of higher risk, or at an earlier stage, than more traditional funders. Of course, this means they demand a greater return and greater say in the strategic direction of the business.

Alan Poole, Director, James Cowper LLP
0118 9590261 or email apoole@jamescowper.co.uk

March 2011