Pastures new going forward - Advice

[JDM2012]

Hi everyone.


So the decision has been made that in a few months I will be advertising my company for sale which I have been building up for the last 8 years. I have a couple of sideline companies which tick over nicely which I will spend more time on but always looking for other opportunities

Starting the company from scratch to a successful ecommerce site means I have a good understanding of the whole process and one of these is retail finance, we have used a few lenders over the years, familiar with the FCA process and have a good third party agent who manages a lot of this stuff who I will no doubt be using in the future.

In my sector there is one main finance lender who I would say covers around 60-70% of the market, we actually used them for a number of years until recently and were on the top tier pricing so I know their subsidy rates and so on.

Luckily I was introduced to the new business manager at one of the worlds largest banks who also offer retail finance, they were/are wanting to get in to our sector and we have just moved to them. We are the first and a bit of a guinea pig so we are going back and forth with ideas and built up a really good relationship.

The retail finance they offer (even at entry level) is a lot cheaper than the current industry leader and they also have other advantages such as lower loan value and no minimum subsidy fee. I have mentioned it to a couple of industry friends who were super keen on joining later down the line which got me thinking...

Is there is a gap for me to fill here, possibly been an introducer connecting shops to the bank direct for a fee/commission (if that is how it works) or even us becoming a middle man and investing in integration for companies (again we know a great integration team) so you might pay us a monthly/annual fee for the site integration and in store applications.

Has anyone done similar to this, if we were a basic introducer company (I know we/I would need to be FCA approved) do they typically work on a commission from each sale or up front fee?
Example, the bank charges 1% subsidy fee but I feel I could sell this on comfortably at 2.5% subsidy do I keep the 1.5%?

I haven't approached the lender yet with my idea until I have a firm understanding but I am confident they would take an interest in it. I feel we have the right connections and can talk on the same level to people which would attract them rather than a typical sales advisor who will promise you the earth (heard it all before), I can say first hand I have worked with these lenders, I know their fees, acceptance rates and we can beat that.


Any help appreciated.

 

[Tirion]

Hi. Very interesting question. Did you solve your problems?

 

[PugwashEQ]

Hi JDM,

Presmably you've seen what Klarna are up to at the moment?

Its certainly a sector attracting FCA attention right now, not that that should put you off, but just worth bearing in mind from a risk and compliance perspective.

The introduce model is incredibly common in things like insurance online, so its certainly one that works- in the insurance world it normally works on a fixed staged fee.

The integration idea is a really good one as its something that people often suffer with- if it were me i'd be wanting to take a % of all facilities run through the integration!

The introducer to shops idea would resonate less with me, as you may find that those people who are able to use retail finance already are, and those people who can't, need an integration rather than an introduction!

I am by now means a retail expert however!

Whatever happens, good luck and I hope you exit the e-commerce business well- 8 years of work deserves a reward!

 

[JDM2012]

Thanks for your input, appreciate it.

Having had a think today I agree on the integration side of things, if we could become the broker with our own ecommerce integration I am sure this would help us get more companies on board. We can basically offer them an off the shelf package, reduced rates, integration and great after sales.

It would be a higher initial layout but fingers crossed (depending on sale price) that wont be an issue and I dont mind investing in my projects however once that is done it should be rinse and repeat in a sense. We could even look at a small annual fee as a 'bonus' which could be used towards integration maintenance and updates, even £100 - £200 annually per company would help put money back in the company along with commission.

I will keep digging and hopefully put something together in the coming weeks/months to present to the lender.