Winter 2016 food and drink insights for growing businesses

Winter 2016
food
drink
&
Insight for food businesses

Old Mill Food & Drink contents
Knowing when you’ve made it 1
Finance for food 3
Hot topics 5
Boring old accounts 7
The Taste of Dorset awards – the finalists 9
Crackdown on sugar is a market opportunity 11
Cash is still king 12
Brexit – a case for Scenario Planning? 13
Next stage development 15
CLIENT PROFILE | Hanlons Brewery 17
A picture is worth a thousand words 19
Tis’ the season to boost your sales... 21
Old Mill at the food and drink trade shows 23

1 www.oldmillgroup.co.uk
Lorraine Bolland
Knowing when you’ve made it
Most of us work because we have to
and those who are truly inspired work
because we cannot leave it alone.
Personally, I fit into the latter category as
I am unable to resist helping others and
feel compelled to deliver on promises
made to clients and colleagues.
Money is always a driving factor for going to work or
starting a business, but how do we know when we’ve
made enough, or if we need more? Dreams provide the
impetus for actions, however in business, key decision
making drives success and provides clear direction to
staff. How often do we make time for our thoughts?
The holiday break can provide the ideal time to reflect.
Nowadays life seems very fast and there are constant
demands on our time, which invariably means that
we restrict time allocated to strategic planning and
just stick to dealing with operational matters as
and when they crop up. Over recent years, we have
recognised that our clients need to have clear personal
goals before they can set and clearly align business
objectives.
To this end, we encourage clients to have life plans so
that when they consider all new opportunities, or the
performance of their business, they gauge whether the
result is going to contribute positively towards their
ultimate goals.
Accurate financial data and reliable information
helps to make informed decisions, and therefore we
encourage investment in good accounting systems
and processes. Armed with nine month management
accounts, we are able to meet with clients and discuss
performance and short to medium term strategies for
the business.
The ability to utilise the final trading months before
year end to complete plans for investment in capital
equipment or research and development, is often
rewarded by a reduction in corporation tax. Just getting
the timing right can make some positive cash flow
advantages to expanding businesses. Having the life
plans mean that we can challenge clients on these
decisions to ensure that they are focussed and goal
savvy. With all term objectives headed in the same
direction our hope is that clients will be successful.
Life plans will of course be updated periodically but
provide a really useful guide to knowing when clients
have done enough to retire or achieve their ultimate
goals. They can provide clarity in times of uncertainty
and can help business owners have more enjoyable
working and later lives.
Many of these points are captured in the following
newsletter articles, which I hope you will find of
interest. If they help you, even in some small way, then
we will have succeeded in our endeavour; to help
make food and drink businesses in the South West
more successful. Should you wish to discuss any aspect
I more detail, please do contact us to arrange a no
obligation meeting.
Wishing you all the luck for a prosperous and happy
Christmas and New Year!

2
Dreams provide the impetus for actions,
however in business, key decision
making drives success and provides
clear direction to staff.

Finance for food
We’re often asked by our clients ‘what’s
the availability of finance like now?’.
Well, parking the anecdotal wisdom espoused over a
pint in the pub, there is a more scientific barometer
that can be used to gauge the availability of finance for
small and medium sized businesses. The SME Finance
Monitor publishes its findings quarterly following
interviews with over 4,500 businesses – it has now
interviewed over 100,000 businesses making it the
largest survey in the UK.
So what do the results tell us?
Well they make for interesting reading. Taking the
headline figure in the September 2016 quarterly
publication we can see that 81% of all renewals and
new loan and overdraft applications resulted in a
facility, but renewals of overdrafts cloud the figures.
Digging a little deeper we see that 66% applicants over
the past 18 months applying for new loan or overdraft
funding were likely to end the process with a facility, an
improvement from 49% for the 18 month period ended
in quarter four 2013.
On the face of it then, availability of finance is as
good now as it has been for some time. This leaves
me pondering two questions: what has led to this
improvement; and what’s it like for a food and drink
business in the South West?
I’ll take the last question first. Going back to the not-
to-be-dismissed pub wisdom, I’d agree that access
to finance appears to have improved for the clients
and businesses that I talk to. I’m hearing fewer stories
of businesses unable to obtain finance or only able
to obtain it at a rate that, commercially, cannot be
supported. This is borne out, to some extent the
annual SME Finance Monitor publication. The April
2016 publication shows that those running a small or
medium sized business in the South West are slightly
more likely to use external finance than the rest of the
UK (40% vs 37%). We can also see that SMEs in the
South West are marginally more successful than those
nationally (76% vs 73%) when looking for loan finance.
Unfortunately it’s a little more difficult to understand
from the survey how food and drink businesses measure
up. Whilst a sectoral analysis is given it’s limited to Hotels
and Restaurants presumably suggesting that all other
food businesses sit somewhere between the agriculture,
manufacturing, wholesale and retail businesses
surveyed. Back to the anecdotal analysis then. We’re
seeing that food and drink businesses are able to obtain
finance using a range of facilities – overdrafts and loans
yes, but also invoice discounting, asset finance and even
crowd funding. Critically though, where the lender fails
to fully understand the nuances of the business there
can be difficulty.
So what has led to this improvement?
A full socio-economic assessment is beyond the realms
of this article and beyond the ability of this author
– so I’ll stick to what I know. Borrowing is a more
sophisticated activity with a better range of products
available. Gone are the days when an overdraft could
and would be used to fund everything from working
capital requirements to the latest capital expenditure /
growth activity. Lenders will want to understand your
requirements and (hopefully) provide products better
suited to you needs.
There are also a greater range of funding sources.
Outside of the bank you may be able to get
crowdfunding, grant funding, funding from a specialist
lender or even from a ‘Responsible Finance’ lender (see
responsiblefinance.org.uk). As options have evolved
so too have businesses – the companies we talk to tend
to have a better grasp of the funding options available
and how best to go about getting the funding. So we
have better products, new and different providers and
greater awareness.
But does all of this explain why success rates have
improved over the past 18 months? With a greater
success rate in the South West we also see a greater
number of businesses seeking advice when applying
for lending. The Finance Monitor tells us that 17%
of businesses in the South West seek advice when
applying for finance, rising to 34% in the Hotel and
Restaurant sector – this is versus 15% nationally.
Phil Mills

It’s no surprise then that we’re increasingly being
asked to help businesses in developing an appropriate
strategy and supporting cash-flows to get the funding
that’s needed. Having spent a decade in London
working with banks, and a good chunk of time focussed
on how lending to businesses could be improved, its
really pleasing to see that businesses are seeking the
help that they need and it’s paying dividends.
Borrowing can be a key part of a business strategy and
there are great opportunities out there - interesting
then that amidst the lowest interest rates in history the
proportion of ‘Happy non-seekers’ (those that have not
had a borrowing event but that nothing had prevented
them for applying for new borrowing) has risen from
68% in 2012 to 83% in 2016 suggesting we’re all a little
more content with (our financial) life as it is.
4

Hot topics
We wanted to take this opportunity to
flag a couple of hot topics that could be
affecting you and your business! If you’d
like more detail on any of these or a more
in-depth conversation about how this
might affect your business then please let
one of the Old Mill team know.
Business rates
Your business rates are worked out on the ‘rateable
value’ of a property – this is an open market rental
value based on the Valuation Office Agency.
On 30 September 2016 a ‘Draft Rating List’ was
published and you will be able to view your new
2017 Rateable Values on the Valuation Office website.
However, for the first time you won’t have been
notified of this automatically – as such you should be
looking at this now so there are no nasty surprises. You
can find and check your rateable value on the gov.uk
website www.gov.uk/correct-your-business-rates .
As previously, it’s also possible to appeal the rateable
value of your property and it can potentially result in
some significant savings but be aware that the appeal
process has changed. Help is out there so if you’d like
to discuss further the please do get in touch.
Apprenticeship levy
From 6 April 2017 the way the government funds
apprenticeships in England is changing. This means
that employers operating in the UK, with a pay bill over
£3 million each year will be required to contribute to
apprenticeships. Employers with an annual pay bill of
more than £3 million will need to spend 0.5% of their
total pay bill on the apprenticeship levy.
However, a ‘levy allowance’ of £15,000 per year will
operate. This means that the total amount you need to
spend is 0.5% of your pay bill, minus £15,000.
So for example, an employer with an annual pay bill of
£5,000,000 will need to spend £10,000 on the levy:
levy sum: 0.5% x £5,000,000 = £25,000
subtracting levy allowance: £25,000 - £15,000
= £10,000 annual levy payment
As a result of the apprenticeship levy the digital
apprenticeship service will be made available to assist
in operating an apprenticeship scheme, with additional
benefits conferred upon employers who pay the levy.
Again, if you’re not sure then please do get in touch.
Kevin Wheldon

Boring old accounts
Producing annual accounts is often
seen as a compliance activity that adds
unwanted costs to a business that would
rather spend the money on the growth of
the business.
There is little getting away from the need to produce
accounts for most businesses and until such a time
as all information is reported ‘real time’ to the various
government bodies that require them then accounts
are here to stay.
For many accountants this may feel like an ideal
situation: a steady source of business and reliable
income stream. At Old Mill we want more for our
clients. Our ultimate aim is to make our clients more
successful and as such we’re constantly looking for
ways to do this. When it comes to preparing year end
accounts there are two ways that we can really help
– firstly we take the time to understand your business
and evaluate how it’s performing, what the accounts
are telling us about how you could be more successful;
secondly, we seek to produce better value accounts in
a shorter time frame.
Happily, with technological advances there is a way
that we can do both. Old Mill are platinum partners
with Xero, the UKs leading cloud accounting software
provider and the results are revolutionising how we
look at accounts. Rather than waiting for receipt of
the bag of invoices, matching them up and trying to
resolve reconciliation differences Xero has the ability
to process your payments and receipts as they occur,
directly linking to your bank account and reconciling
almost in real time.
Why, as accountants then, would we want to promote
a tool that seemingly moves us closer to the point that
we are replaced by the computer? Well, at Old Mill
it has long been our aim that we deliver great value
compliance services and Xero allows us to do this.
Potentially more valuable though is the information
that Xero allows users to interrogate. Though we may
not (yet) be filing accounts ‘real time’ Xero allows
users to monitor business performance in real time.
This means that when it comes to thinking about
performance, rather than looking back over the
financial year long since ended, we can be in a position,
mid-way through the year, to discuss how your strategy
could be shaped to influence the rest of the year,
transforming your boring old accounts into a business
management tool.
Xero is simple, easy to use, fantastic value, attractive
and is all geared up to interact with a huge number
of other apps to unite your reporting in one place.
Jolyon Stonehouse

8
At Old Mill we want more for our clients.
Our ultimate aim is to make our clients
more successful and as such we’re
constantly looking for ways to do this.

The Taste of Dorset awards –
the finalists
Held on 1 November 2016, the Taste of
Dorset awards promised to showcase
some of the best that the Dorset food and
drink industry has to offer and it didn’t
disappoint.
The Taste of Dorset awards afford us an opportunity
to publicly recognise everything good about Dorset
food and drink. As long time sponsors of this event,
we see it as a key opportunity to take a step back and
celebrate the continued success of the local food and
drink industry. From bakeries to tearooms; fish and chip
shops to pubs, The Taste of Dorset awards mark the
diverse and ever-growing food and drink businesses in
the South West.
The awards were superbly attended with a packed
George Albert hotel entertained by the astonishing
tricks of award winning magician Craig Petty before
sitting down to enjoy some fantastically prepared
and locally sourced food – the pièce de résistance a
stunning confit shoulder of Dorset Down lamb. With
guests well fed (and watered) celebrity host Prue Leith
ably led the audience through the 11 traditional awards
categories with the style and panache that we’ve come
to expect.
While the cherry on top in the form of winning the
award is a great achievement, the awards are only
made possible by the quality of all of the Dorset food
and drink businesses executing to the highest quality
day in and day out. There has to be a winner though
and it was Old Mill’s pleasure to present The White
Horse in Stourpaine with the ‘Best Community Pub’
award – a category that was, as you might imagine,
tough to judge! The award recognised the phenomenal
contribution to the local community made by the White
Horse which, as well as
being a fantastic pub,
hosts a small village
shop and outreach Post
Office service, acts as
a crucial hub for local
groups and societies and
is a significant fundraiser
for local charities. On
visiting during the
judging process we were
taken by the number of people coming and going, all
of whom seemed to have different reasons for calling
in, which is testament to the dedication of Chris and Ali
Sargent and their team in placing the pub squarely at
the heart of the community.
Following the evening we reflected on the factors
that made the food and drink businesses a success.
The unifying factor for each of the businesses was a
common passion for delivering the very best to their
customers, to bring that moment of joy when that
pie, pint, or steak has satisfied the craving you’ve had
all day. They all strive for perfection, work tirelessly
and diligently, and it is for this reason that they are
celebrated at the Taste of Dorset awards
The Food and Drink team here at Old Mill are always
excited to meet others who share an enthusiasm
and commitment to this industry. Attending events
such as the Taste of Dorset Awards gives the team
an opportunity to sample some local delights whilst
learning more about how the industry is evolving,
what trends are emerging and most of all, what factors
contribute to success. We then endeavour to share this
information with our clients with the most up to date,
relevant advice. Our sector-focused team gain a unique
insight into the industry ensuring that we stay up to
date on all matters affecting food and drink businesses,
such that we can share the expertise to help our clients
succeed.
Rebecca Ingram

10
The Old Mill Food and Drink team and guests enjoying the Taste of Dorset Awards.
The award winners with their commemorative plates.
Winners of ‘Best Community Pub’ Chris and Ali Sargent (centre)
of The White Horse in Stourpaine. They’re joined by Phil Mills
(left) from Old Mill and awards host Prue Leith (right).

Crackdown on sugar is a
market opportunity
There is increasing pressure within the
UK to tackle obesity and overall general
health. One of the main areas for concern
has been the level of sugar in our food
and drink which has led to the targeting
of products that are high in sugar through
the introduction of legislation and levies.
One much publicised levy has been the introduction
of the so called ‘sugar tax’ which has been introduced
to help tackle obesity, especially in younger age groups.
These levies are likely to be just the beginning of a
crackdown on what is perceived to be one of the main
contributors to poor health in the UK.
Many businesses will see the increasing introduction
of legislation and levies as another layer of expense
which will need to be factored into budgets and
margins. Rather than a threat to your livelihoods, this
crackdown on sugar should be seen as an opportunity
to thrive and grow in what is a competitive and fast
changing industry.
Many businesses now have the opportunity to target
these health conscious customers with low sugar,
no added sugar or sugar free products. There are no
doubt many businesses that believe they will not be
able to take advantage of these opportunities as they
simply cannot afford to invest the time, research and
resources that are required to be successful with any
new products.
It is important to note that there is help out there for
those companies that want to take advantage
of opportunities when they present themselves.
Two of the most important areas to consider
are Research & Development (R&D) tax relief
and R&D grant funding.
The investment in new processes, products, ingredients
etc. can all potentially qualify as relevant expenditure
in order to claim R&D tax relief. There is a R&D tax relief
scheme aimed specifically at those small and medium
enterprises that are carrying out R&D activities which
include activities such as those noted above. The effect
of this relief is to reduce the cost of carrying out R&D by
allowing companies to claim 230% of their qualifying
R&D expenditure and therefore potentially significantly
reducing the year-end tax bill. This makes the prospect
of having to create new products to satisfy an ever
changing market much more appealing and achievable.
Perhaps less frequently thought of, but with significant
potential upsides, grant funding targeted at R&D can
play a crucial role for those small companies that simply
do not have the funds to invest in the development of
new products. Unlike many other grants, grant funding
for R&D can be awarded for 100% of the cost of the
project without any requirement for matched funding,
though securing the grant that’s right for you is likely to
take time, effort and energy.
As with all significant changes in a business, in order
to take advantage of these opportunities it is key that
detailed plans are made as soon as possible. “With
growing consumer interest for locally produced healthy
food, smaller businesses should look at implementing a
business strategy to address this,” suggests Chris Bennet
at Old Mill. “It is worth getting the business plans drawn
up early on, to jump ahead of the competition and avoid
playing catch-up with larger businesses.”
Old Mill have had a high level of success with assisting
many clients in obtaining R&D tax relief and grant
funding which has helped clients to grab hold of
opportunities when they arise.
Chris Bennett

Cash is still king
Since our last instalment, Britain has
voted to leave the European Union,
Donald Trump is heading to the White
House and Great Britain were second
in the Rio Olympics.
The world is changing but some things never seem
to change: I’ll inevitably still get socks at Christmas
and in business cash remains king. Interestingly, we’re
seeing a greater number of food and drink businesses
focussed on understanding their cash-flow – something
accountants often advocate. Perhaps unusually though,
there doesn’t appear to be any discernible trend or
pattern driving businesses towards this end. There are
often economic factors that drive patterns in behaviour.
Before the financial crisis there was an appetite to
understand how far cash could be stretched for the
purpose of the next investment. During the financial
crisis there was an appetite to understand how cost
management programmes could influence cash flow
as businesses looked to batten down the hatches and
borrowing activities were rationalised.
So what are we seeing at the present? Well, we are
currently helping clients to understand and forecast
cash flows for the purpose of: accumulating a cash
reserve for future investment; in order to assess
potential new ventures and capital expenditure;
to support loan finance applications; to meet the
requirements of grant funding applications; to reduce
interest costs on existing finance; in valuing businesses
ahead of a sale; and simply to better monitor current
business performance. In some senses owner managers
are always focussed on cash – after all it’s the cash that
a business generates that ultimately rewards the owner.
Underlying this though, there appears to be a greater
desire amongst a lot our owner managers for a more
granular understanding of the drivers of cash flow
and the levers that can be pulled to tweak cash flows.
Getting to grips with cash flow is allowing businesses
to make more sophisticated decisions and understand
the implications of their actions. In other words, rather
than reacting to macro-economic factors, we are
seeing businesses take a pro-active approach to cash
management. This is great and it’s no surprise that this
has coincided with the arrival of tools like Xero providing
real time information and greater transparency.
All very interesting but what does this mean? Well, not
a lot if the strategy isn’t taking you where you want to
be. The key is to move beyond understanding your cash
flow and to use this information to drive the outcome
you are looking for. In order to do that you need to
understand your ultimate goal. Is it the sale of the
business? Or to leave a profitable business as a legacy
for future generations? Perhaps the goal is to retire aged
40? Or to buy a Ferrari. We are all motivated by different
factors, driven by different desires. Understanding where
you want to be has to be the first part of the jigsaw.
So it holds true ‘cash is still king’ – but the clever part
isn’t understanding that – it’s understanding how it can
get you where you want to be.
12
Phil Mills

Brexit – a case for Scenario
Planning?
In the previous edition of this newsletter
we considered some of the factors that
food and drink businesses should consider
when deciding which way to vote in the
referendum on EU membership.
Now that the country has decided which way it wants
to go, businesses need to be considering how an exit
from the EU might affect their future plans.
Much has been written and said, both in the run up to
the referendum and subsequently, about the impact
the ‘leave’ vote will have on the economy generally,
individual sectors and even particular businesses and
individuals. The opinions expressed have covered
the full spectrum of possibilities and provided little
real insight as to what we might expect and what we
should be planning for.
There were some immediate shock waves felt in the
days following the referendum. However, several
months after the vote, things are more settled but the
implications in the months and years to come are still
unknown. This does not mean that it is just a question
of waiting to see what happens before considering the
options.
What can businesses be doing?
Britain’s exit from the EU will clearly have different
impacts on different businesses depending on such
things as whether you are an exporter or importer to
and from the EU, whether you rely on foreign labour,
whether you are receiving (directly or indirectly)
funding from the EU and other variables such as the
wider impact it will have on the economy generally and
consumer confidence.
What all businesses should be doing now is taking the
time to undertake an impact analysis to consider what
the impact of an exit from the EU might be. Areas to
consider in your impact analysis might include:
1. Business strategy
How does coming out of the EU impact your business
strategy? For some businesses the decision to leave
the EU could have a fundamental impact on the
core business strategy. For others the impact will be
far less fundamental but could nevertheless require
reconsideration of certain aspects of your strategy.
2. Contracts
Do you have contracts which are specifically drawn up
with reference to EU legislation or regulation?
Whilst it will take a number of years for the country
to extricate itself from the EU, it would be preferable
to renegotiate these contracts as soon as possible to
ensure they are fit for purpose following our exit.
3. Laws and regulations
Many of the current UK laws and regulations are
derived from EU laws and regulations. It is likely to
take a number of years following our formal exit for
these to change if indeed they do at all. However, if
your business is subject to significant EU-originated
regulation the impact could be significant. Changes to
laws will also impact in the area of taxation, particularly
VAT and Customs duties on EU trade.
4. Staffing and skills requirements
Do you rely on foreign labour in your business or find
it difficult to recruit the skills you require in the UK?
If so, early consideration needs to be given as to how
you can ensure the necessary skills and resources will
remain available to the business in the future.
5. Customer or supplier base
If your customers and/or suppliers are EU based, now
is the time to draw up plans to widen that base to
reduce any potential impact. Consideration should
be given to current pricing and currency policies and
particularly which currencies you will price and trade
in going forward.
6. EU based subsidiaries and sales offices
If your business has operations based in other EU
countries you will need to consider how best to
undertake these operations in the future. What is best
now may not be optimal after we leave the EU.
7. Foreign currency
Sterling has already experienced volatility since the
referendum. Consideration should be given to the
impact this could have on the volume and value of your
company’s trade and how this might affect profitability.
Should you hedge your exchange rate exposure, and
if so, how?
8. Investment plans
Any investment plans should be reconsidered to ensure
the expected returns which were envisaged at the time
the plans were drawn up are still likely to be achieved
or whether your plans need to be amended.
Mark Shelton

9. Funding
The sources and cost of funding may change in the
future. An obvious example is the availability of EU
funded grants. It is not clear to what extent EU grant
funding will be replaced by UK funding.
Investment appraisal will need to take into the account
the likely availability and cost of funds. Alternative
sources of funds could be considered now. The
withdrawal of EU funding may also have implications
for research and development which many businesses
benefit from.
10. Communication
How will your staff, customers and suppliers be viewing
the potential impact of an exit from the EU? Many will
be looking to you for reassurance that it will not have
a negative impact on them. Silence runs the risk
of unsettling them further.
Scenario planning
As nothing is certain at this stage, the best advice
is to identify and frame the uncertainties and
proactively determine your possible response to
the opportunities and threats those uncertainties
present.
Scenario planning involves determining the
responses available to you given the uncertainties
you have identified.
Undertaking scenario planning now means you
have the opportunity to consider the implications
and your options whilst you have the time and
space to consider the alternatives and be as ready
as you can be as the future unfolds. The alternative
is having to react in a hurry and rely on gut instinct
as and when issues arise which will seldom result in
an optimum outcome.
14

Next stage development
Whether it’s investing in new kit to create
in house efficiencies or purchasing/
building new premises to increase
production, thoughts always turn as to
how it should be financed.
It is certainly always worth clarifying whether there are
any available government grants, pension funds can
be a useful tool, but generally at some point during the
company’s life cycle bank finance will be required.
The way in which you finance the investment could
very well impact the availability of capital allowances
for your business but why do they matter?
What are capital allowances?
When a business acquires an asset, the value of this asset
bypasses the profit and loss account and instead sits at
the top of the balance sheet. It is this value which can
attract tax relief through the capital allowance regime.
The Annual Investment Allowance allows a business to
write off up to £200,000 for acquisitions made during
its accounting period. Any value exceeding this attracts
a Writing Down Allowance, the value of which depends
upon the nature of the asset.
Using an example, a business acquires a bottling
machine for £625,000 and no other assets during its
accounting period. The business is permitted to make
a capital allowance claim of up to £276,500 in the first
year, attracting corporation tax relief of £55,300 (for
unincorporated businesses the relief could be increased
due to higher personal tax and national insurance rates).
A claim for capital allowances can then be made in
subsequent accounting periods on the remaining value.
What qualifies?
As a general rule, anything which performs some sort of
function (such as equipment and machinery) will likely
attract capital allowances in some form. The acquisition
or development of commercial premises is a slightly
different position.
Since the abolition of industrial buildings allowance (a
form of capital allowances), as a general rule buildings
do not attract capital allowances. There are however,
elements of a building which can still qualify for capital
allowances such as electrics, cold water systems,
heating, ventilation, data comms, security and fire
systems amongst others.
If considering acquiring (rather than building)
commercial premises, it is now critical that qualifying
expenditure is identified and values agreed with the
vendor. Following the legislative changes in 2014,
restrictive rules determine the value of fixtures and
should be considered as part of your solicitor’s pre-
contract enquiries.
How can finance options impact capital allowances?
Capital grants received in respect of an asset reduces
the value for which a business can claim capital
allowances. With commercial premises this therefore
provides an opportunity for discussion with the grant
provider as to which element of the build they are
willing to contribute towards (preferably the cost of
expenditure not qualifying for capital allowances).
Certain types of pension funds have the ability to lend
to the business to acquire an asset or indeed acquire
the asset in its own right, leasing the asset back to the
business. This can provide the business with additional
flexibility as to which assets it chooses to invest in.
If securing external finance is the chosen option, the
lender will no doubt request cash flow projections
to ensure the debt can be serviced by the business.
When factoring the costs of the business within these
projections, tax liabilities can be a significant cost
and put simply, maximising a capital allowance claim
reduces the tax cost of a business!
Before taking on the next stage of development, talk
with your Old Mill adviser about financing options and
the availability of tax reliefs.
Charlotte Smith

16
Certain types of pension funds have
the ability to lend to the business to
acquire an asset or indeed acquire the
asset in its own right, leasing the asset
back to the business.

Hanlons Brewery – consistent
award winning beer
Dan Taylor bought the then O’Hanlons
Brewery in December 2013 and then set
about restructuring and developing the
business.
Dan is a local farmer’s son and relocated the brewery in
a new purpose built building on the family farm at Half
Moon village between Exeter and Crediton in Devon.
The whole family is involved including Dan’s wife,
parents and even grandparents.
Old Mill were involved from the start. In particular it
was the work around the finances and family financial
structures that allowed the takeover and building to take
place – giving the business a sound base to work from.
The ethos of the business is simply to produce
wonderful beers which have a consistent taste brew
after brew. They rebadged the brewery as Hanlons
but kept their flagship beer brand, the award winning
Yellow Hammer, a distinctive golden pale ale which has
maintained itself as a very popular drinkable session
beer. Unlike some breweries they have resisted the
temptation to do a new beer every time the moon
changes and have built a tight range around four beers;
Firefly Bitter, and Amber Ale, Port Stout and Stormstay
Premium Ale – a 5% ABV amber ale.
In recent years the small brewery scene has seen an
explosion in new start up entrants with new breweries
appearing virtually every week. Dan comments that
there is plenty of competition but feels there is still
scope for growth in the sector. The vast majority of
their production is ale in casks for the pub and club
trade and the focus of the business is on producing the
right products for this market.
They also bottle their beers and the main outlet for
these is through their own brewery tap shop. As well as
off sales throughout the year they have a bar upstairs
which opens every Friday from 5pm for drinks and food
that contains their beer and they hold a programme of
special events – please check the website for details.
It is also used for many corporate events – Old Mill have
been known to utilise it.
OLDMILLCLIENTPROFILE
HanlonsBrewery

Christmas is an important time for the shop and
they attract even more people in by selling seasonal
products such as Christmas trees.
During the past couple of years there has been a lot of
investment in equipment to help them achieve their
aims for consistent quality of product and repeatability
of taste. They have been developing a ‘process panel’
and Old Mill are helping to see if this can qualify for
Research and Development Tax Relief. This can be up to
130% on top of the money spent and as Old Mill have
in house tax specialists sat alongside accountants we
are able to offer an integrated and efficient approach.
In March last year Hanlons won a bronze award for
their Port Stout at the Great British Beer Festival run by
CAMRA in London. They were the only brewery from
Devon and Cornwall who won an award. They have also
won numerous awards this year including a Great Taste
Award, SIBA Award, Food and Drink Devon and Taste of
the West Award. They have also been shortlisted for the
Devon Life Awards for Best Food and Drinks Producer.
If you are a fan of cask ales and see a Hanlons beer we
can certainly recommend you try it!
18

A picture is worth a thousand
words
Arriving home from a long day at work
recently my daughter greeted me at the
door “Daddy, Daddy, Daddy” and jumped
up to give me a big hug.
Of course there was an ulterior motive to her affection
and having recently discovered jigsaw puzzles she
dragged me through to the next room and pulled out
a new puzzle for us to do together.
As the adult, I got right into sorting the pieces out and
asked her where we should start, the corners or the
sides? “No Daddy, first we have to look at the picture
on the box”.
Dealing with your finances can be like that sometimes.
It is easy to jump in to look at the “stuff” and forget that
the first step is the picture on the front of your jigsaw.
Many of the people who seek advice from us will come
along with a problem, “can you tell me about my
pension?” or “how have my investments done?” but our
starting point at Old Mill is always to consider what you
are trying to achieve with your money.
The media doesn’t help, with the little financial
information it provides often having a strong bias
towards products, e.g. pensions or a sensationalist
headline suggesting involving the stock market (it
crashes, it soars). How does this make you feel?
It’s more than just the focus of people’s attention.
More often than not your picture won’t be that clear.
You may have a rough idea of what you want to do in
the future but little reference as to whether you can
afford that lifestyle.
If this is your situation you are not alone. Life goes by
so quickly and many people go from year to year
making ends meet rather than thinking too much
about what the future brings. But it is important to take
some time to consider the future. You may well be on
target to achieve your objectives already, but if you are
not it is better to give yourself as much time as possible
to get back on track.
Everyone will have different requirements, and they will
be varied, often relating to what you want to achieve
personally, what you want for your family, perhaps
leaving a legacy for future generations or to charity.
Many objectives will not involve money, but other than
for the fortunate few you will at least have to consider
money in achieving these goals as well.
So the start of the process is helping you to paint your
picture. Once we know what the picture on the puzzle
looks like it is only a matter of putting all the pieces in
their correct places – working with you to ensure your
financial strategy is robust, tax efficient, and give you
the best chance of meeting your objectives. Of course
life does not always happen as we would wish it to and
we also explain the obstacles you may face and the
ways in which you can overcome potential pitfalls.
Over the festive season, think of me, sat on the floor
making jigsaws with my daughter and the smile on
her face when the jigsaw in front of her is the same as
the picture on the box. Then look around at what is
important for you. We are here to help and an initial
meeting is always without obligation or cost.
Merry Christmas.
...our starting point at Old Mill is always
to consider what you are trying to
achieve with your money.
Barry Martin

Tis’ the season to boost your
sales...
“It’s beginning to look a lot like Christmas”
is something you probably said at the start
of October and is more than likely the
reality in most businesses.
Amidst a plethora of festive activities and events and
of course food and drink there are some important
strategies businesses could and should be considering.
We’ve set out a few of our thoughts in order to help
you make the most of the season and ensure it truly is
F.E.S.T.I.V.E:
Financials
Perhaps the key way to improve sales is to ensure
your pricing framework is appropriate. Pricing strategy
merely refers to methods companies use to price
their products or services – most companies will base
selling price on production, labour, and other general
expenses before adding on a certain percentage
enabling them to make a profit. However, the festive
period presents an opportunity for businesses to
adapt their typical pricing strategy seasonally to make
themselves more competitive, drive higher sales
volume or realise an improved margin. Getting this
right is going to be key to success.
Extend sales and entice customers
For food and drink businesses getting the January period
right can be as critical to the success of the year as the
build up to Christmas; there is very little time to rest. If
you’re a retailer then you should be thinking about the
January sales in order to keep people coming through
the door but make sure you’ve thought your strategy
through – can you afford to sell at that price? Is it low
enough to generate the additional interest you’re after.
Trying to attract everybody is often a strategy for failure
and can result in myopic pricing strategies. Sales in food
will inevitably drop away in January so limiting the effect
of the January blues is essential.
Staff and stock management
Selling twice as much, or even more, in a month as you
typically would, naturally adds pressure to the business
as a whole. Staff are likely to see a large increase in both
workload and hours in a period that many would rather
spend at home with their friends and family.
It’s critical then that steps are taken to keep staff morale
high – you’re relying on your staff to deliver for you at
this critical time. The other pressure point will almost
certainly be stock. Too much and you face costly
wastage; too little and you’ll fail to capitalise on your
seasonal window of opportunity. Clearly it is imperative
you get it right – simple budgeting can help and
comparing to last year should give some useful pointers.
Targets
One of the most effective ways to evaluate
performance through the period is to think about what
your targets were to begin with – in order to do this it’s
important to set some. These could include:
n A sales volume target or sales value target
n A profit target
n A repeat customer target
n A footfall target
Whatever it is – make sure you’ve got one – only
then will you know whether you’ve performed as you
wanted. Evaluating the drivers should also help you to
evaluate for next year.
Innovate and experiment
Introduce new sales strategies to your repertoire
and get rid of the useless ones! For example increase
sales using cross-selling and upselling. Cross-selling is
persuading a customer to buy additional items related
to their purchase, whereas upselling is persuading a
customer to purchase a more expensive version of the
purchase they are considering. In order to use them to
your advantage it is important to categorise groups of
products/services that are subject to an upsell together
or can be cross-sold. Monitor these strategies and
change them as required.
Success is likely to be a factor of well trained staff so
invest time in ensuring they sell what you want and
how you want. You might also look at customer trends
the way websites do. We’ve all seen the phrase; “people
who bought this also bought these items” – not being
online doesn’t preclude you from using this tactic.
Lucy Bennett

22
As with all strategies don’t forget to pay attention to
failed attempts and eliminate ineffective attempts.
If used correctly and effectively this likely to increase
sales but it is also likely to increase customer
satisfaction and happiness. You might also think about:
n Discounts
n Coupons
n Samples
n Subscriptions as gifts
n Events
n Experiences days
n Trial offers
Value the competition
Despite the intense demand, businesses should avoid
short-sightedness – stay alert to your direct competition.
Although you may be bogged down focusing on
your own business it’s vital to keep tabs on what your
competition is doing. Obviously directly copying
competitors every business move is not going to impress
anyone but making sure you’re not radically
different to other similar and successful
businesses on key items such as price
will usually stand you in good stead.
Evaluate for next year
If you don’t evaluate then how will you know how to
improve? You’ll need to understand what would you
do/should you do differently next year and make a
note of it. In the passage of time it’s easy to forget what
worked and what didn’t, and you’ll want to get it right,
so ask yourself:
n Why did you do that?
n Did you hit your targets?
n Were your sales strategies effective?
n How do your staff feel it went?
n Did you do better than expected?
n Did you use your time effectively?
n Did you start planning early enough?

Old Mill at the food and drink
trade shows
The Old Mill Food and Drink team
are delighted to be continuing our
attendance at the trade shows across the
West Country organised by our clients
Hale Events of Axbridge in Somerset.
These large trade shows are a superb opportunity to
discover what is new in the world of food and drink.
As well as direct attendance by large numbers of
producers, large and small, and independent food
retailers, deli’s restaurants and public houses, many
food service distributors and wholesalers take part.
These shows are an excellent place to meet contacts
and identify outlets to enable your business to grow.
Please come along to our Old Mill stands to meet
members of our specialist food and drink business
and accountant’s team. They will be delighted to
talk to you about the active Old Mill approach as to
how we can use our specialist knowledge to help our
clients in this sector.
Trade shows in 2017
If you’re involved in the food & drink
business, wherever you’re based in the
South & South West, Hale Events have
got the trade show for you:
The Source trade show takes place at the Westpoint
Exhibition Centre in Exeter on Wednesday 8th and
Thursday 9th February. The Source is the South
West’s biggest and best show for anyone with a
serious interest in speciality foods, quality drinks,
profitable catering and inspired hospitality. Give
your business the impetus it needs going into the
new season with this huge spread of comparative
tastings, networking opportunities and inspirational
experiences.
Expowest Cornwall takes place in Wadebridge from
Tuesday 7th to Thursday 9th March. This trade show
is the region’s foremost hospitality and catering trade
show - an absolute must for those eager to see, touch
and taste the latest products, and to get a feel for the
trends shaping the market. If you want to get straight
to the heart of the Cornish business community then
this is one show you cannot afford to miss.
The Food & Drink Trade Show takes place at
the Three Counties Show Ground, Malvern, on
Wednesday 3rd and Thursday 4th May. The show
offers a unique mix of inspirational speciality food
and drink products, from a wide range of exhibitors;
from the small and regional, to those who trade
throughout the UK and internationally.
Hale Events are sure one of their shows will benefit your business. Register for FREE trade entry now on the
shows’ websites: www.thesourcetradeshow.co.uk, www.expowestcornwall.co.uk,
www.thefoodanddrinktradeshow.co.uk or call 01934 733456.
If you’re interested in a stand, please call 01934 733433 or email stands@hale-events.com.

Contact Old Mill
You can contact the Old Mill Food
& Drink team directly by emailing
food.team@oldmillgroup.co.uk
Melksham
Wessex House, Challeymead Business Park,
Bradford Road, Melksham, Wiltshire SN10 8BU
Tel: 01225 701210 Fax: 01225 709817
E-mail: melksham@oldmillgroup.co.uk
Exeter
Leeward House, Fitzroy Road,
Exeter Business Park, Exeter, Devon EX1 3LJ
Tel: 01392 214635 Fax: 01392 214690
Email: exeter@oldmillgroup.co.uk
Wells
Bishopbrook House, Cathedral Avenue,
Wells, Somerset BA5 1FD
Tel: 01749 343366 Fax: 01749 344986
Email: wells@oldmillgroup.co.uk
Yeovil
Maltravers House, Petters Way
Yeovil, Somerset BA20 1SH
Tel: 01935 426181 Fax: 01935 431852
Email: yeovil@oldmillgroup.co.uk
www.oldmillgroup.co.uk
The content of this newsletter is for general
information only. It should not be relied on and
action which could affect your business should
not be taken without appropriate professional
advice. Please contact your usual Old Mill
contact or local Old Mill office.

Winter 2016 food and drink insights for growing businesses

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