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What should independent retailers know when it comes to the sometimes intimidating world of finance and insurance? Priyanka Jethwa quizzes three experts to find out
RNHow important is getting financial support and insurance in place when running a modern convenience store?
JM: When insuring your business, it is essential you secure comprehensive insurance cover. Many businesses will benefit from access to quick and straightforward funding at some stage, either to assist with cash flow, make a one-off purchase or pay for expansion projects.
Unsecured loans enable you to borrow money for your business without providing any security against assets or property.
At Christie Finance, we can work with you to secure competitive unsecured business solutions. With more than 40 years’ experience in the commercial finance market, we know what lenders to approach to secure finance with a short turnaround time.
KBM: Successful retailers are measured by their stability, not necessarily profitability. A good retailer will know how to use different services to grow and solve their challenges and this includes identifying the right financing solution. Financing options available to store owners include standard bank loans, but these may require you to risk your personal assets. Alternatively, there are companies offering unsecured loans – also referred to as a merchant cash advance or royalty investments.
KH: We find that a lot of retailers don’t take out insurance because they don’t think anything will happen to them, or they buy on price and don’t always have the level of cover they need. More than a third of claims we receive are for shop theft, but a lot of retailers don’t consider the long-term impact or the relevance of keeping their stock levels up to date on their policy. Shop theft can happen when least expected and often in the early hours of the morning. A retailer might lose £2,000 worth of tobacco, but there can be significant additional repair costs for the gantry, till area and shopfront. For an independent newsagent operating on small margins, this alone can sometimes be enough to put them out of business.
RN What are the key considerations for retailers?
KBM:Business financing is not the solution for any business. If your business is new and cash flow is not stable, a short-term financing deal will not be the right move. Or if your business needs a bigger investment, you will likely want to secure a bank loan due to the lower interest and better payment terms.
JM: When you are thinking about buying a business, there are various factors that you and a potential lender will need to consider. Do you have a suitable level of experience to run the business? How well is the business doing? Is it in a good location? Is there enough profit in the business to repay the loan easily while allowing you to pay yourself a salary? What are you able to invest in the business? For example, savings, selling property, equity in other properties, existing businesses; and whether you have a clear credit history.
KH:In addition to your buildings and stock, it is important to check that your liability cover needs are met. If you employ staff, even on a casual or part-time basis, you may be required by law to have employers’ liability insurance.
Public and products liability cover will protect you in the event that a claim is brought against you for an accident or injury suffered in your store or as a result of a product purchased there.
Business interruption cover is also worth considering to keep your business afloat in the event that you are temporarily unable to trade. Lastly, don’t think cheaper is always better – the cheapest option could become the most expensive decision if you don’t have the right cover in place.
Why should retailers use your services?
As an independent commercial finance broker, Christie Finance is not tied to any lender. We have developed relationships with the UK’s lending institutions and know which ones are financing the retail sector. Engaging with an independent expert during the early stages of purchasing a business will enable you to set a realistic budget.
The Retail Mutual has been protecting independent retailers for 20 years and specialises in providing an alternative to traditional insurance for retailers within the news and convenience sectors. The Retail Mutual is run by retailers for retailers, and has an extended portfolio of products on offer to protect the businesses, home and livelihoods of its members.
Our main goal is to support business owners in every possible way. A dedicated representative is always available to discuss and help with a decision regarding the business, not just in terms of funding. Our team is experienced and seasoned, but, most importantly, they care about the businesses they work with.
Christie Finance Nisa store, Stoke-on-Trent
Christie Finance supported first-time buyers to purchase a Nisa branded supermarket in Stoke-on-Trent, sold by our colleagues at Christie & Co.
The new owners were experienced retailers, having worked for well-known companies, such as Burger King, 99 Stores and Shell. The couple relocated to the area to run the store and planned on extending the opening hours of the store to include a Sunday opening.
The new owner said: “It was great to work with Christie Finance on securing the funding needed to purchase the store. Initially I thought that the funding side would have been the problematic aspect to this transaction – however, Christie Finance were able to secure fantastic terms in a short space of time.
“Throughout the process there were issues, but Christie Finance were on hand to offer advice, support and resolutions to issues that arose. I think that without their help, I would not have been able to purchase the store.”
The Retail Mutual Ralph Patel, The Look-In, Surrey
When Ralph Patel opened his first store in 1986, he was quoted over £1,000 for a year’s cover, so it is easy to see why many of his peers opted to take the risk and operate with no cover in place.
When his store was targeted in 2018, he was happy that he had sufficient cover in place. Patel was aware of the rising incidence of ram raid thefts targeting cash machines in convenience stores, but never expected to become a victim himself.
Sadly, despite his own machine being located near the back of the store, this was not enough to deter the thieves. Instead they broke their way through the store’s protective grilles, window glass and entire front door using a 4×4 pick-up.
Fortunately, Patel had comprehensive cover in place with The Retail Mutual and was able to claim for his stock and contents, as well as the damage to the fixtures and shopfront. Within a week there was little evidence of what had occurred, though Patel no longer keeps a cash machine on the premises.
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