Event recap – 5 commons pitfalls most SMEs make

Building a stronger business

What would happen if you couldn’t run your business tomorrow? If you fell out with your business partner? If your biggest customer walked away?

These aren’t always comfortable questions, but they’re important ones.

At our recent event in Belgravia, London, A4G joined forces with Loch, The Finance Hub and Heath Protection Solutions to bring together financial, legal and protection expertise.

Through an open panel discussion, we explored five risks that business owners should be thinking about as they grow, alongside practical ways to protect what they’ve worked so hard to build.

Whether you joined us on the day or couldn’t make it, you can watch the full discussion, revisit the key takeaways and find out how to get in touch with our specialists below.

5 questions every business owner should be asking

1. What happens if you can’t run your business tomorrow?

Many businesses rely heavily on their owner or a handful of key individuals. But what happens if someone becomes ill, takes an extended break or is no longer able to work? During the discussion, the panel explored the importance of:

• Identifying key people and understanding where the business is vulnerable
• Documenting roles, responsibilities and processes
• Developing a management team capable of making decisions
• Putting appropriate key person and business protection in place
• Planning for succession and unexpected circumstances

A particularly important point was that you should be building a business you can eventually step away from, not one that can only function when you’re there.

The question to ask: If you were unavailable for three months, could your business continue operating?

2. What happens if your business partnership breaks down?

When you start a business together, it’s easy to assume you’ll always agree. But circumstances change, relationships evolve and sometimes business partners want different things.

The panel discussed how important it is to have the right arrangements in place before problems arise.

This includes:

• Shareholder agreements that reflect the reality of the business.
• Clear arrangements for what happens if someone wants to leave.
• Provisions covering death, illness and other unexpected events.
• Appropriate protection to help fund the purchase of shares.
• Drag-along and other provisions that protect shareholders when the business is sold.

The discussion also highlighted the importance of making sure legal agreements and insurance arrangements work together.

The question to ask: If one shareholder wanted to leave, or something unexpected happened, would everyone know what happens next?

3. Do you really understand what’s happening in your finances?

Turnover and profit are important, but they don’t always tell you what’s happening in your bank account.

The panel explored why business owners need to look beyond their annual accounts and understand their numbers throughout the year.

Key considerations included:

• Regular management information and financial reviews.
• Cash flow forecasting and understanding peaks and troughs.
• Comparing actual performance against budgets and targets.
• Understanding the financial impact of growth.
• Planning funding requirements before cash becomes tight.

As Emma highlighted, businesses shouldn’t be waiting 12 months to discover that something isn’t going to plan.

The question to ask: Do you know how your business is performing today, or are you waiting until your year-end accounts to find out?

4. Are your contracts protecting the business you’re running today?

A contract that worked when you first started trading might not be appropriate as your business grows.

The panel discussed the importance of reviewing commercial agreements regularly, particularly where costs, services and responsibilities have changed.

Areas to consider include:

• Payment terms and supplier obligations.
• Liability and insurance requirements.
• Price increases and changing operating costs.
• Notice periods and automatic renewal clauses.
• Contract variations and changes in service delivery.

The important thing is to make sure the legal agreement reflects what is actually happening in the business.

The question to ask: If you reviewed your key contracts today, would they still protect the business you’re running?

5. What happens if you lose your biggest customer?

Having a large customer can be a fantastic opportunity, but relying too heavily on one customer can create significant risk.

The panel discussed how customer concentration can affect profitability, cash flow, lending and ultimately the value of a business.

Important considerations included:

• Understanding how much turnover and profit comes from individual customers.
• Identifying dependency on key suppliers as well as customers.
• Making sure contracts provide appropriate notice and protection.
• Understanding how a change of ownership could affect existing agreements.
• Assessing how customer concentration could affect a future business sale.

It’s not necessarily a problem to have a major customer. The problem is not understanding what would happen if that relationship ended.

The question to ask: If your biggest customer disappeared tomorrow, what would that mean for your business?

Meet the specialists

A4G – Accountancy and business advice

Emma White – Co-Managing Partner

A4G supports business owners with proactive financial advice, management information, business planning, cash flow and long-term growth and exit strategies.

emma.white@a4g-llp.co.uk | 01474 853 856 | www.a4g-llp.co.uk 

Loch – Legal advice

Emily Waterhouse

Loch provides legal and HR support to businesses, helping them navigate commercial agreements, shareholder arrangements, employment matters and the legal considerations of business growth and exit.

hello@weareloch.com | 0203 667 5400 | weareloch.com 

The Finance Hub – Commercial finance

Gillian Clarke 

Specialist commercial finance support, including business funding, cash flow solutions and alternative lending options.

hello@thefinancehub.money | 01892 280000 | thefinancehub.money

Heath Protection Solutions – Business and personal protection

Naomi Greatorex 

Whole-of-market protection advice for business owners and individuals, including specialist support with key person and shareholder protection.

contactus@heathprotection.co.uk | 0203 837 4941| heathprotection.co.uk