From ‘rags’ to riches

Creative Apparel is a screen-printing, embroidery and transfer clothing business – from T-shirts and hoodies to work shirts and blouses. In addition, we offer computer-aided designing, labelling and branding services.

Traditionally a business-to-business (B2B) enterprise, we launched a consumer website last year and secured a £400,000 contract for the Olympic Games. Having recently signed a deal worth £165,000 with a supermarket chain for Comic Relief, we are now looking to get further bank lending for expansion of the business in the first half of this year.

It is undoubtedly a difficult time for small businesses at the moment. In the past, I have used various sources of finance, including overdrafts, business loans and invoicing finances. For Creative Apparel, business loans have been the best finance option to grow the business as it allows me to forecast better and manage my cash flow. I know exactly where I stand on my loan repayments and I’m happy to have secured a good interest rate.

We worked closely with the bank, which helped us restructure our finances, re-focus future growth plans and provided specialist advice

The six-figure cash injection we received from Barclays in 2012 really helped us to grow the business. Above all, it gave us the flexibility to invest the money instantly, into the areas we knew would generate the highest level of returns.

We used the money to build a new consumer-facing website and buy new equipment, which has enabled us to diversify into new types of printing. However, it’s not only the cash injection which has helped us to grow. We worked closely with the bank, which helped us restructure our finances, re-focus future growth plans and provided specialist advice. The combined effect of this help enabled us to enter into new markets and take the business to the next level.

The one form of commercial finance I wouldn’t use is factoring. While in some ways factoring is similar to many other forms of business financing, and businesses can reap the benefits of a faster payment cycle, it also poses risks, which I personally wasn’t prepared to take with Creative Apparel. Through factoring, you turn over your collections to a third party, which could affect your business reputation and your business relationships. I think they also have high management charges which can cut into your profit margin.

If other businesses are thinking of going down this route, I would urge them to think very carefully before proceeding. Despite what you may read in the press, there is a range of commercial finance options available to small businesses that want to grow, but business owners should know that they need to plan fully in order to secure this funding.

Moving into this new market has instantly grown our customer base and significantly helped our cash flow, as consumers are paying upfront for orders online. This is quite a contrast to trade sales which make payments up to 60 days after invoicing.

Throughout 2013, we are looking to expand further into new markets, now we have both a business-to-business and direct-to-consumer offering. We’d like to diversify even further and offer products in new areas, such as fashion and sportswear, instead of just promotional T-shirts.