Marc Glazer, Boost Capital CEO, appeared on Bloomberg to explain how Boost Capital has come to the UK to make a real difference to SME businesses and the UK economy.
Watch the interview in full or read a summary of the interview below.
What’s attracting Boost Capital to the UK?
Small business accounts for 99.9 percent of the business in the UK and for many, managing cash flow is an obstacle for growth.
However, since the financial recession – but particularly in the last four years -we’ve seen funding receding for growing businesses because they don’t match the risk profile of the banks. In fact we’re seeing lack of security as one of the biggest reasons for small business having their loan request rejected. We work differently than the banks and believe this puts us in a strong position to close the funding gap in the UK.
How could you help small businesses in the food industry?
The food industry is extremely competitive and we would look at existing businesses that require funding to see how we can help. We look at things like existing bill payments, current trends within the business and how passionate the owner is about the success of the business.
For instance, if someone was looking to open a new location we would propose financing to help them do so based on the financial history of the business.
Why should an SME approach Boost Capital for lending rather than the government or banks?
Funding For Lending (FFL) has produced a lot of liquidity for banks and has been great for large companies and markets such as real estate. However, banks tend to look for assets and extensive business plans that SMEs generally don’t have. At Boost Capital, we look for evidence of past performance and that the owner is passionate about the future of the business. This is the way we have worked successfully in the US and are confident that we can do the same in the UK and help towards the growth in the British economy.
So, what is attracting us to the UK is, we see the same opportunities as we see in the US, over the last 12 years, but recently in the last 4. Since the financial recession, we’ve really seen the banks kind of, seeding, even well run businesses, strong growing business, because it just doesn’t fit the risk profile. So we have had tremendous growth in the US, over the last 36 months and it continues, and now moving into the UK with what the market environments are here, and as things are firming up, we feel that we can help SMEs here.
And Jeremy, you open, you actually only operated during a recession in Britain, and you were a banker, just talk me through the thought, you had that this is going to make it, I’ll execute it right and despite people watching how they are spending their money on food, this is a successful business idea.
I think we have been planning on going into the food space for many years. It’s a great passion of mine, it’s a great passion of my business partners’ as well, And, in particular, we love Italian food, and we saw a gap in the market, if you like, and we felt that we felt that we had a concept that could fill that gap, and so, whilst we were aware of the macroeconomic environment, and we had concerns about it, we were confident that if we could execute perfectly, it would flourish in spite of that.
And, this is something, you know, what would be the three main questions you would be asking a business like Jeremy’s, in order to see, whether you are willing to lend?
So, we would be looking at Jeremy’s existing businesses, so you, I think, have three locations today, so we would want to see in his three locations, what kind of trends we are seeing, is his business steady, is it going up, is he meeting his bills, paying his taxes and what he would need money for.
So, in Jeremy’s instance, and we got to talk a little bit, is, they’re looking to open up a new location. So we would look and have a discussion about what’s the business plan, what do you think the costs are in the timeline, and we would propose financing to him, and then he would be able to take the cost and the opportunity there and then look into his model and say ok, here’s the cost I can generate an ROI in 12 months or 15 months, and then run from there, and you know, increase his business from there, and grow.
But Jeremy, you want to open up another location and we had some encouraging figures from UK GDP, are you looking at this or are you just looking at your success and seeing that you, you know that it’s better to be more aggressive, quicker, and then see how the economy is panning out or should a business follow what consumers are doing, what GDP figures are doing?
I think you, react to how you are doing at that time, erm, at the moment, we are very focused on our existing restaurants, and making sure that they are perfect, making sure that every customer that comes in has the best experience that they could find on the high street and if the opportunity arises, to open somewhere else, then we would certainly consider that, but it would never distract from what we already have, because that’s the foundation for any success going forward.
In terms of the macroeconomic environment, you know, if confidence is there, that’s definitely good news for us. It’s confidence for landlords, it’s confidence for potential flows of capital.
Jeremy, what’s your top tip for any, you know, someone like yourself, that wants to open up their own business, you’re in a very cut-throat business, it’s food, it’s popular, but there is so much offering out there, what would you need to do differently?
I think, first and foremost, it might seem quite basis and simple, but you have to, as a business owner and as a founder, you have to work extremely hard. You need to be all over the detail, you need to know how to do everything in the business, because if you don’t lead by example, all the people behind you, aren’t going to follow you and ultimately, our business is about great quality food, but it is also about the people. Erm, and so, you need to work, extremely hard, and be all over it, from day one.
And Marc, why do you think people would choose you and your firm, instead of going to the government or this funding for lending scheme. Is it just not working, what we put in place so far in the UK?
Yeah, I mean, I think the funding for lending scheme, has produced a lot of equity for banks, but at the end of the day, looking at Jeremy’s business, there are typically businesses that are smaller, I think the programs that are out there, that the government have done, have been great for real estate, for all that type of thing, I think it has been better for larger companies, but I think what has happened, is that when the banks are looking at a business, they are typically looking at assets, they are looking at, you know, extensive business plans, things that typically SMEs don’t have. Whereas we want to look at how Jeremy is doing as a business, is he passionate about it, does he have good plans. I mean, I would second to Jeremy that, what has made us successful in the US, is that, and I think what will make us successful in the UK, is that what will make Boost Capital successful in the UK, is really having a passion for what we do, and actually helping these SMEs grow, which ultimately will help you guys, help the UK economy grow.
OK, guys, thanks so much, and Marc and Jeremy, you never met before, so maybe there’s a business opportunity for you there.