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Finance
Easy SEIS
Invest in me

If you are a qualifying business looking for investment you MUST have SEIS or EIS, if you don’t then you are cutting out the majority of the SME investment market.

So what is SEIS….Seed Enterprise Investment Scheme and it is what it says.

SEIS is a means to encourage individuals to invest in small new and growing businesses, but what do they get?

Tax relief!

In varying forms

Income tax reduction to the extent that the investor has sufficient taxable income (up to £100,000)
Exemption from Capital Gains Tax (CGT) on sale of the shares after 3 years.
Relief for loses arising on disposal of the shares against income or chargeable gains.
Partial exemption from CGT on disposals of any assets in 2014/15 if gain reinvested in qualifying SEIS shares in the same year or 2015/16.
The shares must be held for 3 years and the conditions of a qualifying company must be satisfied throughout this period in order to qualify for the relief.

Pretty impressive but there are catches, several in fact

Must be an unquoted trading company not carrying on an excluded trade.
Trade carried on must be less than 2 years old
Gross assets of less than £200,000
Less than 25 employees
Only have 51% subsidiaries (or 90% if they carry on the trade)
Not be a subsidiary or controlled by another company
Have a permanent UK establishment
Limit of £150,000 per company
Company cannot be in difficulties
No EIS or VCT investment have been made.

And what of the shares themselves?

Non-redeemable fully paid up ordinary shares with no present or future preferential rights to assets on a winding-up.
No arrangements in place designed to produce the investment risk
Issued for genuine commercial reasons and not for tax avoidance purposes
Any other shares held by an investor in the company must either be shares issued on incorporation or EIS/SEIS/SITR compliant shares.

To be an investor you must

Investor (and associates) cannot hold more than 30% ordinary share capital, voting rights or assets on winding-up
Investor must not be in employment
Investor cannot ‘receive value@ from the company within three years

And use

Money must be used for a qualifying purpose
Must be used within 3 years.

And there you have it!

Food
The growth of street food.
A stepping stone ot your own restaurant

I am old enough to remember when street food was a burger van outside of a night club, my how things have changed.
There has been a revolution in recent years with the number and the variety of street food offerings and it’s now a very vibrant scene limited only by the number of viable locations.

So why is street food of any interest to us?

It’s an ideal spawning ground for upcoming restaurant talent some of whom have aspirations to move their concepts into a permanent site and roll it out from there. Whilst there are clearly a heap of differences between running a successful street food offering and running a permanent sit down site many of the fundamentals are the same. The ability to produce good food and build a fan base of regulars, menu management, stock, pricing, a welcoming face ..all of these would give an investor confidence if they were looking to back a new restaurant venture. There are certainly some traders now who would have preferred to have kicked off in a permanent site but the prohibitive costs of London have meant they have needed to focus on street food first and then build up some momentum before they go looking for a site.

I met with Richard Johnson some while back and he likened it to growing up. You can run a street food business on a seasonal basis, do well when the sun shines and then go travelling when it doesn’t. Then along comes commitments property, partners, children and the traders then need to step up from a lifestyle business to something which is more regular and consistent by way of earnings.

Having said that not all traders are the same, last week I met with Petra Barran of Kerb and her philosophy is more about street food being more of a social interaction and the traders being more focused on bringing good food to the world rather than making their fortune, thankfully there is room for everyone.

That’s not to say there aren’t tensions. If you were a restauranteur and you saw your business eroded by a street food vendor on a patch of land across the street, able to undercut you because of their low overheads, you wouldn’t be too happy.

I think there is something very British about our support of street food in that we will always back the underdog and get behind young growing businesses who we all want to see do well. You don’t get that same paternal feeling towards any number of American food brands you could name.

Finance
Pay back as you earn
The Merchant Cash Advance

When I first heard about Merchant Cash Advances I was a bit confused. From someone who is used to the world of instalment credit and asset security it was difficult to understand how the product works for all parties, the penny finally dropped.

Lenders will look at the last we 12 months merchant card service to establish a figure they are prepared to lend, normally equivalent to one month’s turnover. They then agree what in industry jargon they call the split. This is the amount they would need to take from any future card transactions to make sure the original amount loaned and their charges or the factor rate gets paid off in about 6 or 7 months. This split is taken automatically so the borrower would keep say 80% of the expected future card receipt with the other 20% going back to the lender. If you borrow less than the sum available then the split will reduce accordingly. Repayment is made at source from the card transaction so as long as the card machine is active then you will carry on paying back the lender until the loan is repaid, does that make sense?

So why is this a useful product in the restaurant trade?

Circumstances arise when cash is needed for fit outs or refits, stock, additional staff or to even out the general peaks and troughs in cash flow. Back in the day a call to the bank manager would have sufficed, regrettably those days have gone and if the bank is willing to help at all it will take a long time and is generally tied in with personal security usually on property. A Merchant Cash Advance can be turned around in matter of days. The product is also flexible enough that if turnover dips then less is taken through the machine so it just pushes out the loan period at no additional cost, you pay as you earn.

It’s not a cheap way of borrowing money but in reality you shouldn’t be asking what it costs but rather what would it cost not to do it as if the benefit of the loan is greater than its costs then it’s a no brainer.

London
Finance Kitchen on Tour
Meet and greet

In this age of hi tech marketing initiatives we thought we would be a bit disruptive and go back to old school methods. Starting tomorrow we will be walking the streets of London delivering our message personally by hand to independent restaurants, bars, pubs and clubs.

Where to start? We thought Noho (North of Oxford Street and therefore North of Soho) Fitzrovia and Marylebone. Heading South to Soho, Mayfair, St James and Bayswater..and on and on. We hope to cover all of central London with some of the outlying food hubs like Brixton, Bethnal Green and Camden.

The personal touch we feel is important, it’s easy to just ping out an e mail these days, physically stepping across the door step of a restaurant and saying “hi” is a whole different experience. Our belief is that if you go out of your way to contact someone they are more likely to respond.

We have no preconceptions of the likely success of this initiative; it’s clearly important but in some respects not the point. We are looking to embed ourselves squarely in the middle of London’s developing restaurant culture. Having committed to a healthy January the miles walked won’t do any harm either. Pray for good weather!

London
Why London?

Maybe it's because......well I am, Denmark Hill to be precise although that’s a long way from being the main reason why Finance Kitchen is very much a London business.

London has become a global hub for food, not bad for a city which has almost no food history worth talking about. What it did possess was a blank sheet of paper, drawn all over by every ship that entered the docks and every immigrant who made this wonderful city their home. Paris never had this problem; its food culture was so strong it defended itself against all comers.

What London has now is 17,000 food outlets from Chinese takeaways to Mexican street food to French Michelin star cuisine.

When setting up a finance business to serve the food and drink trade you need to understand the dynamic of investment. A high percentage of investors are London centric particularly those from outside the UK who couldn’t name you a handful of provincial towns if they tried. They are also looking for scalability and any worthwhile concept can comfortably handle half a dozen or so London sites before then even contemplating heading to the wilds of Bristol, Birmingham or Manchester. Some concepts travel the other way but it is very much the exception. London has competition but it also has a huge footfall so if you’re good and in the right location you’ll make it in London.

It’s not all plain sailing though; rents are currently extortionate which is a major barrier to entry unless you can find £1million to get a site open anywhere worth having in central London. Interesting recent developments have proven that those looking to expand are more likely to have a central flagship site and then head out for what comes under the realm of neighbourhood restaurants where the rents are lower and it’s where Londoners live.

The diversity of food outlets is huge, any food from anywhere on the planet is likely to be sold in London somewhere not something that many world centres could match.

Now to the personal reasons, yes I’m a Londoner and proud of it, Finance Kitchen is even a Dot London which we thought a smart way of weaving the identity of the business into its address. We intend to be number 1 for finance in London’s food and drink market and we are already well on the way.

Finance
Why Finance?

Because its what I do,well what I have nearly always done, like most people’s careers it’s been fairly unstructured and hugely opportunistic. After school I went off to work at the city office of a US tractor manufacturer, not an inspiring start but it did pay £2600 pa which in 1977 was top money. After 3 years they decided to start their own finance company and as they hadn’t yet found what I was good at they gave me a shot at it. Being very much a townie a career in agricultural finance was never going to be a long one so at 21 I moved into the world of asset finance picked up a Ford fiesta and a copy of the yellow pages and off I went.

By 26 a Branch Manager, by 29 a General Manager (and my first New Start) I made the transition from salesman to boardroom although in truth you never stop selling. Following this was setting up a corporate division for Nissan and a new finance company for ABN AMRO, this included a JV with DAF Trucks who were at the time Europe’s biggest truck manufacturer. The time had then come to throw off the shackles of corporate life and set up Now Street my own new start and a business which set up new lending businesses for private investors. After being made an offer I couldn’t refuse to join Benfield I returned to the City to be involved in a funder of insurance premiums, a new market for me but one that played to old skills. The sale of the business and my shares in 2004 meant money and no job. After playing round with a few opportunities I decided to dig out the Now brand and launch a Business Rescue Funder, a sort of company doctor with access to money.

There then followed 10 successful years which included being recognised as National Business Rescue Funder of the year in 2009 and a finalist in 6 subsequent years. Nothing is for ever and that includes Business Rescue, by 2014 we had literally run out of people to help.
A veteran of new starts and a bunch of broad business and finance experience then went looking for a market, it found food. Not only a viable vibrant market but one that needed help and for the first time since the start an entirely personal choice, I am a foodie!

It’s called Finance Kitchen.

Food
Why Food?

I can’t tell you how satisfying it has been to be able to use the financial experience racked up over 30 years in an industry where I have a passion and interest.

The thing is the business was also founded on some solid principles; it wasn’t just an amateur cook wanting to rub shoulders with some seriously talented people, although that’s cool, after six months of painstaking research I reached the conclusion that the business of food needed something like Finance Kitchen.

The restaurant sector in particular has a skeleton filled past with a number of businesses not making it past their first year for a variety of reasons. Who was there to help? When you set up a business the first question you need to ask yourself, is there a need for what I do? There was definitely a need for a reliable access to finance for new food entrepreneurs; everyone wants to know you once you’ve made it but by then you don’t need them!

Having established that the food industry was where to set up shop, the next question is how busy is it? The answer is very. There’s a combination of factors which have made food the place to be.

The rise of Masterchef and the legion of celebrity chefs have made food both fashionable and accessible; everyone thinks they know there way round a menu and a wine list. Add to this after years of recession and financial limbo, diners are now out in abundance and confident enough to spend money again. After 8 years of staying in watching X factor with a pizza people want to escape and why not.

Where that money is spent is fascinating, people haven’t necessarily headed off in the direction of the nearest Michelin star but instead its casual dining where the real growth has come. People will spend a few quid more for a better burger and an interesting craft beer with a story if they feel they are getting quality and a good experience to the point where it has stolen business away from the night club scene as the new night out. The birth of the concept, some are great, some are bonkers and wont surely last but the creativity is immense. Then again there is street food, a new genre born out of not being able to afford a permanent site or frankly not wanting to be saddled with one.

Back to the title, Why food?
Demand for finance? Tick,
Opportunity? Tick
Fun? Double tick!

It almost doesn’t feel like working.

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