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vehicles when these came up for renewal. The lease costs for a basic model costing
£8000 was £300 per month, with no residual value.
Pension fund. The company had over-funded the pension fund over the previous 3 years.
It was estimated that there was around £25,000 that could be brought back into the
company finances.
Factoring. The company had been approached by a large number of financial services
operations who would be prepared to handle the collection of all invoices for Herbert
Engineering. They would provide 80 per cent of the invoice value immediately, and 15 per
cent on collection of the payment from the customer. They would not deal with business
outside Europe, nor would they take on existing bad debts.
Local government funding. There were several grants available for companies setting up in
particular towns within the local area. At present, Herbert Engineering did not qualify for
any. However if it was prepared to move 50 miles, it would be entitled to a £100,000 grant
to establish itself in an enterprise area. Rents within this enterprise zone were
approximately 50 per cent of commercial rents in other areas. The management were not
sure what the additional costs of re-location would be; whether it would have to pay staff
for house moves, and whether there would be any problems selling the existing lease in
their current premises.
National government funding. The national government had announced, 2 years
previously, the availability of grants for high technology funding. These grants were for up
to £75,000, on a pound for pound basis, for companies prepared to invest in specific high
technology projects, of which energy management was one. The application procedure
was complex and lengthy, and the experience of other companies suggested that Herbert
Engineering had only a small chance of getting one of these grants, with a realistic
estimate being 20 per cent.
Transnational government funding. The EEC had established a programme called EXTOC
to accelerate investment in environmental management. The grants were substantial; up
to £250,000 was available for suitable projects, though the average grant for a small to
medium sized company was normally in the area of £40,000. Specialists in EEC funding
suggested that the company had a 50 per cent chance of getting one of these grants,
though it was likely to be 18 months before the decision would be taken.
Franchising. One possibility that the company had considered was the creation of energy
control franchises. This would be based around geographical areas in which franchisees
would develop business based around the integrated control panel that Herbert
Engineering were developing. The company would provide the panel on a cost plus basis
to the local individual or organisation, which would also pay a royalty of 10 per cent of
sales together with an initial franchise fee of £12,000. The management estimated that
they could set up around 50 franchise centres throughout Europe over a 5 year period.
The investment required would be an additional sales representative and promotional
investment of around £40,000 per annum in magazine and exhibition activity. For
individuals or companies in the energy management business, Herbert Engineering
considered that the sale of 8 systems in the first year, rising to 12 in the second, and 16 a
year thereafter would be feasible.
Supplier financing. The main supplier of the electronics for the control panel was
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