Pension Led-Funding Case Study 4: Lamont Jones
“Like many small businesses, I left a corporate career and set up on my own in my back room,” Heather explains. “My expertise is employment law, so I offered HR services along the lines of an outsourced HR Department.”
Heather Was Making Various Commercial Decisions As The Business Grew
From a sole trader came employees, then business premises and finally the big client win that meant a major decision.
“The business had grown to a comfortable level and was doing OK. But I reached another crossroads with the opportunity to do HR for a big supplier. I needed to think about support infrastructure – both staff and IT – to support this potential growth.”
Although mindful of not putting all her eggs in one basket, Heather also recognised the time had come to grow the worth and value of the business. Heather looked at her management accounts and realised she “needed to stop working in the business and start working on it!”
“As the main fee earner, I needed to be able to say ‘no’ and have the luxury of time and thinking space. But this was going to hit our cashflow.” It also meant further recruitment, particularly to handle a major client.
All Of This Required Funding – About £65,000 According To Heather’s Calculations
So, who to turn to? Fate intervened.
“I had been part of a Top 10,000 Small Business Group, run by Goldman Sachs,” Heather explains. “One of the modules challenged SMEs to look for finance beyond banks. I didn’t even know such a thing existed and we looked at different funding models. At the same time, by chance, I was introduced to pension-led funding.”
“I was very surprised at what the adviser told me about the funding alternatives, particularly pension-led business funding. I was interested and not afraid to look at my pension scheme as I had a large fund with a good pension from past employment.”
However, Heather was still cautious: “Nagging in the back of my mind was advice I had received from my pension advisor some years ago which was “never touch your pension fund.” But after meeting the adviser for the first time, I spoke to him again and to his credit he was very positive: “the pension world has changed and so has my advice.” So I looked at gaining control of my business from my pension, particularly as the percentage was very small in relation to the whole fund.”
Heather Chose To Use The Intellectual Property (IP) Within Her Business
This was the asset that would be bought by her pension fund. She had a reasonable awareness of IP before meeting the adviser through her contract work, as well as some understanding of IP valuations. But there was still work to be done.
“I was receptive because of the adviser. He wasn’t a pushy salesman. He was knowledgeable, got to know the business and gave us the facts, warts and all, with the pluses and minuses. Most importantly, he advised me to take the report to my own advisors, which I found honest and refreshing. I had a consultant that gave me sound advice and, no matter which department I spoke to, nothing was too much trouble and I didn’t feel afraid to ask for further explanation.”
With IP valuation in hand, Heather discussed the pension-led business funding with her accountant, IFA and a lawyer and took the decision to go ahead. “It was a smooth process and from first call to the money being in the company’s bank account took about three months.”
And The Result?
“I feel I’m in control of my business, rather than the bank,” Heather enthuses. “I don’t have to think about borrowing and I have my own bank if I need it, providing I’m sensible - after all, it’s my own pension we’re talking about. In fact, this is much better for my pension because I’m paying the interest payments back to myself.”
The IP-based, pension-led business funding has allowed Heather to put her growth plan in place and has already employed two extra staff, with three more likely to join Lamont Jones by the end of 2012.
“The whole experience has been positive; partly to do with the vehicle for releasing the funds, but also the delivery of it and that’s because of the adviser and the team. Their straightforward approach turns an extremely complex thing into something you can understand and use. For me it’s been great and I’m really glad I took this funding route.”
Find Out If Pension-Led Funding Could Help Your Business
If you're interested in using the money in your pension fund to support or grow your business, please get in touch using our contact form.
Popular Investments
If you’re looking to diversify your pension or other money beyond the stockmarket, or you want the best return on your deposit accounts with the highest level of consumer protection, here are popular investments chosen by SIPPclub Gold Members.
Recent SIPP & SSAS Articles
If you request an introduction to a pension or investment provider, you explicitly accept SIPPclub's Terms, and you acknowledge this is neither an endorsement by SIPPclub, nor a recommendation to invest or not to invest.
As SIPPclub neither advises on, nor arranges, nor recommends specific investments or strategies, we're unable to say whether a SIPP or SSAS or any investment is right for you. Ultimately, it’s your money and your decision, and you should only proceed once you're satisfied you've undertaken sufficient due diligence. If you need advice, you should speak to your trusted adviser, or you could find a local adviser from Unbiased.co.uk. Alternatively, we'd be pleased to introduce to a suitably qualified independent financial adviser.