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Issue No.1 2014
Financial issues
FINANCIAL ISSUES AFFECTING OWNER MANAGED BUSINESSES

Many small businesses have experienced severe contraction in trade since the recession began in 2008. Those that have survived have done so due to significant cost cutting and improvement in efficiencies. Many business owners have taken significant cuts to income in order to survive. As a result many are now positioned to benefit from any upturn in the economy and consumer spending.


However many business owners borrowed significant amounts of money during the boom on a personal basis in order to fund property investments both at home and abroad. These were viewed as being a future pension fund investment which could be sold at a profit or the rental income used as a supplement to the state pension.


Following the collapse of the property market and reduction in business profits along with significant increases in effective income tax rates, many are now finding it difficult to fund the Interest & Capital repayments on these borrowings.


In many cases the borrowings are being funded from additional salary from the company which results in many cases in an Income Tax, PRSI and USC charge of up to 55%. This has put huge pressure on many small businesses which are deprived of funds for expansion and investment as well as putting huge pressure on working capital.


With the advent of reduced stamp duty rates on both residential and commercial property many businesses are now considering “buying” the property assets into the trading company, thereby allowing the bank repayments to be made from corporate profits of 12.5% as opposed to Income Tax rates of up to 55% as outlined above.


In many cases these transactions are being supported by the banks as it provides certainty as to the future source of repayments and allows for more cash to be available for debt reduction and possible reduction of the debt term.


At OBI our business planning tools can help you assess the financial benefits of such a restructure and allow you to make an informed decision. We will provide you with a detailed analysis of your business and provide “stress-testing” of various different scenarios. For example we will enable you to visualise the impact of the business taking on new debt or the impact of reduced turnover as well as providing a benchmark comparison report for your business against other companies in your sector.


We will prepare a detailed report for submission to your bank to maximise the opportunities for your business to succeed in obtaining a successful outcome and allow your business to thrive and grow into the future. Your business with a sound financial platform will be best placed to benefit from economic recovery and improved business sentiment. In addition much of the legacy costs associated with historical property investment will have been eliminated thereby freeing up valuable working capital to enable the business to expand.


For more information on how we can help your business please contact Leo Hudson or Colm Browne. We will be delighted to provide you with a demonstration of how our financial analysis tools can benefit your business.


AWARDS SUCCESS
Two OBI clients, Nualtra and Masterchefs Hospitality were delighted to receive awards at the 2013 Limerick Chamber Regional Business Awards.
NUALTRA
Nualtra

Dr Maria Hinfelaar, President, Limerick Institute of Technology, Paul Gough, Nualtra & Fergal Barry, Limerick Chamber President

Nualtra Ltd is an Irish-owned company which specialises in the delivery of food for special medical purposes to assist in the clinical treatment of malnutrition. The company's core values are centred on challenging the industry status quo by constantly innovating and thinking outside the box.

Through education, their goal is to empower doctors & health professionals in making the correct and most cost effective choice when prescribing nutritional support. The company was founded by Irish dieticians who recognised the vital role that taste plays if patients are to comply with their prescribed dose of oral nutritional supplements for the treatment of disease related malnutrition. Research shows that up to 50% of patients will not complete their prescription for nutritional supplements which is mainly due to not liking the taste of the products. The company founders set out to deliver great tasting, nutritionally complete, oral nutritional supplements to the market. General Practitioners and prescribers are under increasing pressure to reduce their prescription costs and Nualtra provided a solution in this regard by facilitating savings of up to 40% in their product categories. Their management team consists of highly experienced positive people who have a wealth of experience working in the healthcare industry across the length & breadth of Ireland.

In November 2013, Nualtra Ltd were honoured at the Limerick Chamber Regional Business Awards when they won the award of Best Start-Up/Emerging Business. Nualtra now employs 18 people and has experienced tremendous growth in its first year. Now expanding into their first export market and with a strong product development pipeline, Nualtra growth trajectory looks set to continue in 2014.

MASTERCHEFS
Masterchefs

Pat O’Sullivan from Masterchefs with Leo Hudson, OBI

Masterchefs Hospitality is one of the most well established and highly recognised catering companies in Ireland. Over the years they have successfully catered in some of Ireland's prime locations and have a proud history for catering at some of the most prestigious social events in Ireland.

The company holds the contract for Thomond Park stadium where it regularly caters for match day & concert patrons in large numbers. The company also operates restaurant & canteen facilities in both NUIG Galway and The University of Limerick. Their portfolio of services range from contract catering, event catering, weddings, corporate and outdoor catering. Masterchefs Hospitality can cater for any event and provide a ‘bundle of benefits' with every service, such as event management, interior design, menu tasting and much more.

Recently the company has centralised all its food preparation activities in a state of the art production facility in Delta Business Park in Limerick from where it supplies all of its events & customers. This facility will enable the company to continue its expansion plans into the future.

OBI cannot accept any responsibility for loss or damage arising to any person as a result of acting or refraining from acting as a result of information contained in this article. Professional advice should always be sought before acting upon any matter in this article.
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