Business tips and advice can help to steer your business in the right direction from the start and develop a growing business.
Below are a series of articles on How to…Develop your Business, just click on one of the links to understand how you could help your new business grow.
Do you need funds? How do you approach the bank? Do you need a business plan?
Do I really need the money?
Many businesses start life without investment from anyone other than the owner and even then, the investment amount is small. Starting out on a shoestring can have huge advantages: you won’t have a debt to repay, you won’t have to answer to an investor, and the profits of the business will be yours to reinvest. Don’t automatically assume that you need investment at the point of start-up; many entrepreneurs have started out with next to nothing and have gone on to be very successful. More important are factors such as your business idea, the amount of time you put into your new venture, your dedication and support from your family.
Costs can be reduced by keeping your operation simple at the start. Ask yourself if you could work from home or do your own book-keeping instead of employing a book-keeper. There is a wealth of information on the internet about tax, VAT and PAYE and, if you are prepared to do a little hard work, this aspect of business management can take far less time than you had anticipated or feared. Conversely, not getting the correct tax advice can prove costly so perhaps arranging a free consultation with a local accountant could prove beneficial.
Before you even consider options for funding you should have done the groundwork for your business; this includes an analysis of pricing and profit, market research and a SWOT analysis (strengths, weaknesses, opportunities and threats). In addition you should know how you are going to find your customers and sell them your product or service.
I’ve decided that investment is essential – who should I go to?
If you are starting a business that needs to hold stock, buy capital equipment, work from premises or employ people, then it is very likely that outside sources of finance will be essential from the outset. Alternatively, you may have been trading for some time and have reached the point where you want to grow your business to the next stage. In this case your reasons for needing finance will be different; perhaps you want to buy new plant or machinery, develop a new product line, overcome a short term cash flow issue, relocate to new premises, or acquire a competitor business. No matter why you want the funding, one principle remains: the money you obtain should be competitively priced and the terms of repayment should be appropriate for your business.
Why can’t I just get an overdraft?
In principle, you could do exactly that! But an overdraft is unlikely to be available to you for financing the business, only for short term cashflow needs. Ask yourself how long you will need the money for, how it will be spent, how – and when – you plan to repay it, and what the total cost (including interest payments) will be. You might be able to borrow from friends or family and pay them an interest rate that is lower than you would pay the bank but only do this if the basis upon which you plan to repay your loan is robust; many family disputes and broken friendships have started with non-payment of amounts due!
What will my bank want to see?
If you plan on approaching your bank for finance you will need a business plan. For new businesses (including those that haven’t yet started trading) this document is essential. It will show the bank manager what your business is about, who and where the market is, what your SWOT analysis revealed (see above) and how you intend to deal with the threats and maximise the opportunities, and it should outline your plans to grow the business over the next 1 to 5 years. Your business plan must include financial figures that show your unit selling price, profit and costs, and give an extrapolation of what will happens when sales increase; as a guide this could be on a monthly basis over the first year and subsequently show how sales and profits increase in years 2, 3, 4 and 5. Almost no business works out in the way anticipated in the plan, but at this stage it will be your best guess based on the information you have at hand and that’s what your bank will use to assess your worthiness as a debtor. The business plan will also contain a cash flow forecast that is key to understanding the business’s funding requirements and, therefore, how much you will need to borrow.
Banks will be ready to lend when they see good planning, thorough market research, a sound business idea (not necessarily a unique idea but one that is made attractive through a unique proposition) figures to support your claims, and feel comfortable in dealing with you. They will not respond to people who want funds to ‘tide them over’ or simply because they have ‘run out of money’. The bank is there to make money just as much as you are and they will be keen to understand how the money they lend you will become a good investment for their own customers. A bank may well require you to provide personal security against the loan to reduce the level of risk they are taking.
How do I draw up a business plan?
If you’re stuck and don’t know how to begin putting your plan down on paper there are a number of ways you can find help. There are online resources that will give you ideas and books that cover the subject in some depth but one of the best ways is to go on a course that not only introduces you to business planning but also introduces you to other entrepreneurs who, like you, are setting up their first business. Colbea’s business planning course covers all the essential areas you will need to know. It is organised on a flexible basis so that you don’t need to take a large chunk of time out of your existing employment or your new business start up to attend. At the end of the course you will have the wherewithal to generate a professional business plan document that you can take to a bank or any other investor.
Would a venture capitalist invest in my business?
Venture capitalists usually lend large sums of money to high growth start ups such as IT or bio-tech companies, or to people who have a completely new idea or invention. These types of businesses often need injections of cash to get them off the ground and are rarely the small ‘back bedroom’ start up. Venture capital can be funded either from one wealthy individual or, more likely, by a company who has collated wealth from many sources. Both will want to see a strong return over a fixed period of time. They view their investment as a calculated risk and will only put money into companies that show promise of significant growth.
The venture capitalist might become involved with the business in ways other than financial, perhaps opening doors to the market place or providing experience and skills. Unlike banks, who will want the original amount of the loan returned plus interest, the venture capitalist will ask for shares in the company. If the company does well the venture capitalist will benefit from the wealth that has been generated. Should you be considering investment from a venture capitalist or similar source you are advised to consult with a lawyer who is a specialist in this area. Venture capital can open up opportunities but you must be aware of the pitfalls and ensure you have a watertight agreement in place that reflects your ultimate objectives for the business.
My business will benefit the community – could I get a grant?
Certain types of business may be eligible for grants or interest free loans, for example to encourage development in poorer areas of the country, to generate tourism, to install environmentally friendly technology, or to benefit certain social groups. There is a wealth of information about what’s on offer on the website www.grantsnet.co.uk. Grants are available for ordinary commercial businesses but are more commonly awarded to social enterprises, charities, voluntary organisations and public sector businesses. The grantsnet website will tell you who funds the grants (e.g. the government, the National Lottery, etc.) as well as who can apply.
Funding is sometimes available for businesses that start up in rural areas and promise to bring prosperity and employment to the local economy. More information can be found on the website of the East of England Development Agency at www.eeda.org.uk/rdpe.
Are there any other avenues I could pursue?
If you are between 18 and 30 you might be eligible for start-up funding through The Prince’s Trust, who act as lenders of last resort for younger people – you need to have been turned down for a loan by a bank before they can consider you. Their counterpart for more senior members of the community wanting business funds – over 50 – is Prime who, although they no longer offer loans themselves, operate as a gateway to Zopa, a UK loan exchange.
What do I do next?
If you are a business start up you should:
- Draw up a business plan. Colbea can help you with this – see details at the foot of this article.
- Decide whether you really need the funding. Things are always tough at the outset of a new business. Will having a loan turn ‘tough’ into ‘impossible’! Colbea’s business advisors will help you make this assessment in an impartial and professional way.
- If you need funding approach your bank armed with your business plan and be confident. Know what you are going to say, have how much you need, why you need it and when you will be able to pay it back.
If you are an existing business that wants to move on to the next step:
- Get an outside opinion about your plans. An objective view can be worth a great deal. Colbea’s advisors offer this service.
- Re-visit your business plan and update it to take account of your new plans.
- If you want to buy out a competitor or merge with another business, get your accountant and lawyer involved at an early stage.
- If you believe you have a unique idea that could generate wealth on a fast-track basis, consider venture capitalist funding.
- If you are supporting your community in any way examine what grants are available in your area.
Colbea provides confidential business advice on a 1-2-1 basis and organises courses that introduce you to business and teach you how to draw up a professional business plan. Call for details on 01206 548833.
Thanks go to Coblea Sponsors, RDP Partnership, for their assistance in compiling this article.
Make a Winning Pitch!
From pitching for business funds to selling your product or service to buyers, if you run a business you will, at some point, have to enter a “Dragon’s Den”. The following tips will help you slay your dragon with a winning pitch!
Look the Part
There is a saying that “people buy people” and this is a key part of any pitch. If you like someone you are more likely to buy from or invest in them (assuming everything else, and particularly the figures, stack up). Even if you normally dress casually for your business day, on these occasions you need to consider whether you look the part. Whether you are pitching for funding from your bank manager or for business from a brand new customer, think about how you look and what you are wearing. Your appearance needs to say “take me seriously” and “I will look after your business”.
Try to find out as much as you can about your “dragons”. For example, what are their names and job titles, and are there any specific items that they are likely to want to see covered in your pitch? Then do some research using any available sources, such as mutual business contacts who may be able to give you an idea about the style they adopt and what has worked for them in the past. The internet offers endless amounts of information from websites as well as useful titbits on company news. Look at social media sites such as LinkedIn, where you can research your “dragons” in more detail; personal profiles often highlight business and related activities, such as involvement with community projects or voluntary work.
Use your researched information wisely to achieve empathy with your audience. No one likes wasting their time with people who don’t understand what is required. So make sure you give them the information they want, and try to demonstrate that you have made an effort to understand a little about them and their organisation. But beware – do not give the impression that you ‘know it all’! Background information is useful but it won’t make you an expert on the person, the organisation or the sector in which they work.
The best advice is try to relax. Your audience will not be in the right frame of mind to support you or your pitch if you are agitated or not in control. Allowing your confidence to shine through will mean that you’re more likely to achieve a positive outcome from your pitch, and one of the best ways to overcome nerves is by being prepared.
No one slayed a dragon without a sword, horse and a shield! Equally, in the business arena you need to make sure you arm yourself appropriately and are fully prepared to win your pitch.
Practice really does make perfect. Those who don’t practice their pitch are more likely to fall foul of something unexpected on the day. Here are a few pointers:
- Be organised in your presentation – make sure your pitch has an introduction, key points and a conclusion.
- Check how long you have been allowed for your and make sure that you keep to time. You’ll find it useful to be able to see your watch or your laptop clock during your presentation.
- Make sure any IT kit you are using for your presentation works and that you have a back-up plan in case it fails.
- If you are using slides or handouts, ask someone else to check them. We often don’t see our own typos until it’s too late.
- Run through your pitch several times, out loud. You may feel daft, but it really works!
- Sort out what you’re going to wear and, if you have to make an early start, get everything ready the night before.
- Leave yourself plenty of time. Better to arrive early than in a panic.
- And during your presentation – remember to breathe! Don’t talk too fast as the dragons will need time to take in information step by step. Allow them the opportunity to ask questions.
Practice enables you to iron out any potential problems and make sure your presentation is as good as it can be. This will give you greater confidence in your pitch and in yourself
A pitch is like a journey. All audiences want to know what you expect of them and exactly where you are taking them. It is very important that your key messages are clear and that you understand what you are ultimately aiming to achieve.
If you come out of the Dragon’s Den slightly charred, don’t give up. The secret is to learn from your experience in the den so that next time your pitch will slay the dragon. So one last tip – ask for feedback!
Making the Right Start – Business Incubation Centres
In harsh economic times small businesses face many challenges. Most will be experiencing trading difficulties for the first time in their history, and entrepreneurs brave enough to begin a business in this climate will need advice and support from all quarters if they are to survive.
The Government is not slow to recognise the importance of small businesses to the British economy. Businesses that employ under 50 staff account for more than 99% of the UK’s workforce and contribute over 53% of its GDP; that’s 12.83 million employees and a massive £1.23 billion – undeniably significant to the economic health of the UK. Measures designed to help small businesses survive the fallout from the credit crunch are very much on the Treasury’s agenda, but it seems more will need to be done!
Evidence is growing that businesses which start life in a business incubation centre have a far higher chance of survival and, ultimately, success. True Business Incubation Centres offer far more than serviced offices. There will usually be on site advice from accredited advisors, activities such as business or entrepreneur clubs, and useful opportunities to network – or inter-trade – with other young businesses.
So where do many businesses go wrong during those initial crucial months and how can business incubation centres help?
Poor decision making – The time leading up to and immediately after the business formation determines market position, customer base and trading culture; key elements that will linger for many years. New business owners can fall into the trap of starting off on a ‘high’, using existing contacts or gaining a contract that keeps heads above water for a fixed length of time, thus allowing events to carry them along whilst decisions are made by default. Whilst there is nothing wrong with using pre-existing work contacts, businesses that neglect the future will suffer. Looking ahead whilst living a ‘hand to mouth’ existence is difficult; professional advisors, especially those at incubation centres, will be close enough to see the detail but removed enough to take an objective view, using their experience of planning and strategy to the long term benefit of the business.
Falling at the first hurdle – Running a business can be lonely in the extreme. No longer are there colleagues to bounce ideas off, managers to give direction, structures within which to work or defined job responsibilities. The up side of course is that the entrepreneur gets to make the decisions, doesn’t get bogged down with office politics and reaps the rewards when things go well. But the down side can be fatal. Problems will occur that have not been encountered before; priorities will be tricky when every customer is important as the one before and perhaps most dangerous of all, the future of the business can take a back seat when time is fully occupied by ‘fire fighting’.
All of this can be overwhelming for the first time business owner. Advisors at Business Incubation Centres are on hand when problems strike, ready to act as mentors or simply provide a reality check. Advice at these times can be a literal life-line for the new business.
Over-committing the budget – Of all the businesses launched each year by far the majority have the financial resources of the proverbial church mouse. Managing money is critical in the first months of trading. Expensive premises and long term leases can bring the business to its knees. Business Incubation Centres offer flexible ‘easy in – easy out’ terms and competitive rates, often with on-site services included.
Lack of professionalism – Working from home can be perfect for some but spell disaster for others. If the business has visiting customers, they will expect a professional environment rather than a back bedroom turned into an office. Distractions caused by small children, spouses, even the garden(!) can prove too hard to resist. Just the clutter of the office and the inescapable workload can be a barrier to good business practice. Business Incubation Centres offer professional space with reception staff to greet visitors as well as facilities such as meeting rooms for hire. Image, as they say, can be everything!
Poor resources and facilities – Working for yourself means exactly that – from putting on the MD’s decision-making hat to sweeping up and brewing the tea. If the business start up is a sole trader (and many are) then expertise will be limited. Successful businesses are multi-skilled but only the very few are in possession of all of the necessary attributes. Taking a unit in a Business Incubation Centre will open doors to IT experts, financial advisers, solicitors, book-keeping services, heating engineers, car mechanics and plenty more. Knowing someone who knows someone can prove indispensable!
The UK economy shows no sign of shifting its emphasis from small businesses and service sector industries. In this light, business incubation centres will be a critical link in the chain of services required to nurture business start ups. As the country gets to grip with the recession and emerges from it, leaner and better equipped for the future, there will be a need for more incubation centres to support growing demand.
In Colchester, the Business Centre in George Williams Way (just off Magdalen Street) is a modern serviced building in the town centre that provides flexible space for start ups and on site car parking. There are 34 units available ranging from 200 to 400 square feet. For a tour of the centre and more information about the services on offer, contact Bob Baggalley on 01206 548833.
Choose Your First Premises
Choosing your first business premises can be like searching for a new home and unfortunately it can be just as stressful! Here are a few ideas to help make your search a bit easier.
Buy or rent?
Many businesses start at home, potentially saving a lot of money as “Business premises account for the second largest outgoing for small firms after staff”, says the Royal Institute of Chartered Surveyors (RICS).
However, there comes a time when you will probably need to take the next step to buy or rent/lease premises.
Buying can tie up your business funds, which may be better used as working capital in the early stages of your business. So most small businesses tend to rent property or lease space as it requires less investment.
However, when renting or leasing your premises you need to carefully consider several aspects such as monthly rental costs and who will be responsible for maintenance, decoration and communal areas. It is essential to check any rental contract thoroughly and gain legal advice before signing.
Growing Your Business
No matter what type of business you have you will need to consider the type and amount of space you may need now and in the future. Any premises you choose must provide enough space and the right environment to suit your particularly business requirements, for example, office, industrial, retail or a mix of all three!
As with your first home it is likely that at some point you will need more space. Does the premises give your business the room and flexibility to grow? If you need more space can your current location accommodate that need? Thinking ahead at this stage can save a great deal of time and cost later. Remember, any move will mean informing your customers, perhaps changing your phone number, telling all the directories and listings that your details have changed, and re-printing office stationery.
Location (Location, Location)
With the vast growth of business carried out via the web, office location for many businesses is now less critical. It is therefore vital to ask yourself do you really need to be on the high street or in the town centre, or would a business park suit your needs better?
However, if the products or services you are offering mean that you need to have ready access to your customers, suppliers or competitors then you need to consider things such as the:
- convenience of local transport links;
- accessibility to your premises by your customers and your workforce (remember legislation covering disabled access); and
- image conveyed by the premises – does it give an appropriate positive impression of your business.
What facilities do you need today? Are these requirements likely to change over time?
Your facilities requirements will vary depending on the type of business you have, but most business share common requirements, such as security, postal services, parking, heating, lighting, water and reception services.
Many businesses start life as tenants in small business centres (or business incubation centres) where a feeling of independence can be gained but extensive facilities are on hand and that all important ‘professional impression’ can be given to customers. The importance of the first impression cannot be over-stated. If customers, suppliers or business partners find your premises looking unclean, untidy, unsafe or old-fashioned, they are likely to attach similar attributes to your business – however unfair that might be!
They say there is no place like home and a Business Incubation Centre (BIC) can offer easy and ideal first premises for small business owners.
BICs offer you:
- the opportunity to develop your business with fellow start up businesses and share experiences;
- advice and support through on site professional business advisors and training courses;
- flexible rental terms;
- reduced running costs and overheads through fully inclusive rentals;
- a positive professional image for your customers and contacts:
- different sizes of units that allow you to gradually grow your business; and
- a range of on site facilities to meet your changing business needs, such as support services provided by a virtual office.
Creating a Winning Business Plan
You’ve got a business idea, but have never run a business before and want to turn it in to a reality. A business plan is the next step you should take.
Your business plan will set out what you want to achieve, how you are going to go about it and should be tailored to its potential reader. It also needs to cover five key areas as detailed below, which should help you to avoid common start up mistakes and give you a better chance of attracting finance for your business.
The summary of the entire plan it must concisely set the scene for the reader and should only be completed at the very end of the business planning process.
This section is one the most important parts, particularly if you are using the plan to gain finance from potential investors. They may have to read several business plans and you need to ensure your plan stands out positively from the rest.
- History of the Business Idea/Business
- Description of your product/service including why people will want to buy it
- Company name and address
- Legal structure (sole trader partnership, etc)
- Goals and objectives for the business
- Your customers (market research may be required)
- How you are going to contact your customers
- The marketing methods you are going to use (PR, advertising, etc)
- Your competitors (strengths and weaknesses)
- What makes your product/service stand out from the competition – Your USP (Unique Selling Point)
Financing Your Business
- Pricing Policy for your product or service
- Financial requirements – How much do you need and from what sources?
- Cashflow forecast
- Profit and Loss forecast
- Break Even Point
Managing Your Business
- Who and how the business will be managed
- Employees, equipment, premises and suppliers
- Administrative aspects – keeping your accounts, tax considerations
- Information technology implications
- Future plans/projections
Creating a business plan is a real skill and getting good guidance early on will help to ensure you get the greatest chance of starting a successful business.
Specifically designed to help you understand how to create a business plan, as well as what is involved in starting-up and trading as a new business, Colbea’s ‘EasyTrain Step Into Business’ Course in the next best step you can take.
Weathering the Economic Storms
The economic cycle has turned in the last year, and business life has changed. And for entrepreneurs above all, the environment seems harsher.
Harsher, because of the credit crunch (yes, even those words have now become commonplace in pub conversations). It makes banks less willing to lend money and certainly less willing to take risks.
Harsher, because house prices are falling and so the option of financing a business by mortgaging a home is far less available.
And harsher too, because consumers are facing a bit if a crunch of their own. It will probably become harder to sell to them as start to retrench on their spending, having saved rather too little for the last few years, borrowed too much and having relied too much on housing as a source of wealth.
Given all this, one might well expect that fewer new businesses will be created in the next three years than in the last three.
For evidence, go back to the last boom-bust cycle in the late 80s and early 90s. A crude indicator of the amount of new business activity occurring is the number of new VAT registrations that are made within a period. And that fell sharply from the peak of the last boom. From 259,000 registrations in 1989, the number had fallen by more than a quarter to 187,000 by 1992.
Are we about to see a similar decline in entrepreneurial activity?
This is an important question for Dragons’ Den. The venture capital TV programme has been a huge success since its first series in 2005. But the years since 2005 have been rather favourable for new businesses. For Series 6 of Dragons Den now entering production, the question is whether Britain’s entrepreneurs have the resilience to weather difficult economic times?
I suspect the answer to the question is “yes”.
If there are two things that generally characterise successful entrepreneurs, one is the ability to think positively, and the other is the ability to see an opportunity where others see a problem. This is clearly a time for those attributes to shine!
For example, I heard somebody on the radio the other day say that the good thing about current conditions is that the banks and other lenders will be more discriminating. The good news is that you can be sure that any companies which are formed, succeed or grow are ones that have real strengths.
What does that mean for the investors and entrepreneurs in Dragons Den and in the traditional world of business start-ups?
In principle, those investments are not usually about short term profit opportunities that will only survive benign conditions. Investors usually want to spot businesses with long term prospects, ideally those that can be scaled up into something large and valuable for a sale down the line.
So the tougher environment doesn’t change the job of the Dragons or other professional venture capital investors; it shouldn’t change the kinds of decisions they make. What changes is that the external environment is less forgiving of any mistakes investors make. The Dragons will find out more quickly in a harsh market, what they shouldn’t have backed.
That might make investors a little more cautious. If it does, it will have a consequence for entrepreneurs. They will have to go further than before to impress, to iron out any wrinkles in their business plans and to ensure they have preparations for all contingencies.
Some entrepreneurs will be deterred by the challenge; some will try and fail, but quite a few will still succeed in jumping over the bar even it has been raised a little.
Whatever housing market storms erupt, however crisis-ridden the banks, whatever the gloominess of consumers, I suspect there will be new ideas and innovations; there will be plenty of ambitious entrepreneurs and there will be some good new businesses.
What the next few years will remind us is that while flimsy ideas can fly in the upswing of a boom, they will pretty quickly flop when the economic going gets tough.
Robust ideas though, are those that can fly come what may.
This article has been written by Evan Davis.
Executive Redundancies – A Way Forward
Redundancy can strike anyone at any time, but perhaps the effects are more intense for those in senior executive roles. They may not have the financial constraints of a hand to mouth existence, but they face a difficult task in getting back into the workplace at a similar level, especially at a time of economic slow down. As a general rule, the higher up the career ladder you are the fewer the posts available and the less often they become vacant.
But redundancy doesn’t have to mean despair. Here are some brief guidelines from Colbea on how to move on and re-start your working life. We hope you find them thought provoking and useful:
Analyse your skills
You have gained a great many skills during your career – some immediately apparent and some less so. The ones you have developed through less formal means – for example, leadership, mentoring, practical application, could be vital when selling yourself at interview. You might like to draw up a skills audit on yourself, asking ex colleagues or friends to help – their views are likely to be more objective and positive than your own. At a time when self esteem has taken a knock, it is a good idea to remind yourself of past successes such as deals you have won, or crises you have managed, all of which will serve to highlight your strengths.
Take advantage of what’s on offer
Some larger companies offer redundancy counselling or the opportunity to meet with work placement consultants. Even if you think you’ve heard it all before, it’s worth taking time out to meet them and hear what they have to say. Sometimes all you need is to verbalise the options in order to reach a decision, but at the very least, such people are pools of valuable resource knowledge.
The knee jerk reaction to redundancy is to start searching for a post similar to the one you’ve just left, but this is a time when you can stand back and take an objective view of where you’re at and what’s important to you. If a business project hit a setback you would re-group, evaluate the situation and, if necessary, set new objectives. There’s no reason why you can’t apply the same management skills to your personal life. Redundancy is seen as negative but in reality it can be a chance to set off on a more fulfilling career path, go back to university to do that MBA you’ve always meant to do, set up in business, or simply look at ways of achieving a better work life balance. If you can afford to set aside financial considerations for a short time, redundancy could give you the luxury of a breathing space where you can examine the path that’s led you to where you are now and start to form a path that is fit for the future.
Be easy on yourself
In a world where we are defined by the job we do, realities tend to be distorted. Redundancy is often harder to deal with for its effect on self esteem than its financial impact. Any period of dramatic change is bound to cause stress; stress that is compounded by an choices that have far reaching consequences. Talk to friends and others who have coped with redundancy in the past – they’re the people who can identify with your emotions and help steer you through.
A golden opportunity
There are thousands who turn the misery of redundancy into the exhilaration of going it alone. It’s not for everyone, but if you’ve harboured an idea for a business venture or simply yearned to go it alone and forget the political wranglings of the boardroom, then now could be the time. You’ll need to set about the gritty tasks of market research, cashflow analysis and all the rest that’s required to start a business. Depending on your past experience, these might be things that you could do in your sleep, but whatever your background it is doubtful you’ll have all the information you need. Remember, there will be no resources to fall back on, no HR department to sort out the employment contracts, no company perks and no one to do the gofering. But what you lose in terms of corporate life you gain through the satisfaction of creating your own business and being responsible for your own career destiny.
Colbea offers business advice and start up business training for anyone considering setting up in business, from plumbers and decorators to entrepreneurs in hi-tech industries. All Colbea’s advisers are qualified and accredited and all have held senior management posts in financial, professional or commercial industries. They’ll advise on anything from finding an office to finding an investor. People who take accredited advice at the start of their business are 20% more likely to be running a successful organisation five years down the line. Initial advice is free and more in-depth specialist advice is on tap. Call 01206 548833 for details and to make an appointment to see one of the advisers.
How to…Make the Most of Your Advisers!
Starting up a business can be a worrying and lonely prospect, but fear not a team of advisers can help to make the experience much easier for you.
An adviser can be anyone that can offer you and your fledgling business a helping hand. When you start a new business this can mean advice on a variety of subjects from accounting and marketing, to premises, funding and the law. You may already have some existing skills and knowledge to provide what you will need for your new business. However, as they say two heads are always better than one, and you can’t be expected to know everything in business.
Fortunately there is a lot of advice available out there, but it is important that you choose the right advisers to support you and your business.
What Should an Adviser Do?
An adviser should be able to:
- analyse problems
- find and offer impartial information
- suggest innovative ideas
- develop action plans
- challenge you; and
- find you specialist help if they cannot offer it.
Finding the Right Advisers
Professional business advisers have either expert general business knowledge or expertise in a particular area such as marketing or funding.
Your local Enterprise Agency (such as COLBEA) can offer both these types of business advice, and can provide it in the form of one-off help, short-term support or an ongoing mentoring relationship. Specific advice is also available through organisations such as banks, insurance companies, solicitors and accountancy firms.
Recommendation is often the best starting point to choose your advisers – ask friends and contacts who they would recommend and also ask businesses around you if they go to someone locally. The Internet is also of course a great source for finding business advisers.
Whatever recommendations you are given or business advisers you may find, consider getting answers to some of the following questions before going any further:
- Are they qualified and a member of the relevant professional bodies e.g. Accounting Technicians, Law Society.
- Are they familiar with your business sector?
- Do they have special rates for smaller businesses?
- As an existing client what would you recommend about them and what are the weak points?
- Were they always on hand when needed?
Finally, why not also read some of the other How to… articles in this area, which will give you more information on what specific advisers could offer you and your business.
Making the Figures Add Up – Accountants
A guide for start-up, new and established businesses on building a successful working relationship with your accountant.
As a business manager you will find yourself wearing lots of different hats, one of the most important of which will be your financial hat. If your business is going to be successful you will need to understand about cash flow, projections and profitability and be able to identify trends that influence your revenue stream. Naturally, you will also need to know what the law says about how you should keep and file your accounts and, if you employ people, how you deduct PAYE and National Insurance. If you are a brand new business that could sound a little scary…but read on!
The reason you went into business – unless you are an accountant of course – is not to spend your time ruminating over the company books. It’s a fair guess to say that you didn’t want to become an expert accountant or spend your time adding up long columns of figures. That’s where your trained professional advisor comes in. A good accountant is essential to your business, bringing skills and knowledge that can be a real asset if you access and use them to their best advantage. Your accountant will help you with:
- setting up your business initially (for example, deciding whether you should be a sole trader, a limited company or another type of legal entity)
- registration processes with bodies such as Companies House and HM Revenue and Customs
- cash flow projections, budgets and trading forecasts
- sources of finance
- your relationship with your bank
- online and offline systems and processes to make it as easy as possible for you to keep records and ensure that those records help your accountant get the information he or she needs
- statutory compliance
- VAT, payroll, book-keeping, etc.
And as your business grows, there are other areas where your accountant will be a key part of your team, such as:
- employing staff
- taking on premises or moving to larger premises
- increasing levels of stock or product/service range
- setting profit margins
- mergers or acquisitions
- paying dividends to shareholders
- planning for the future
- minimising the tax you and your business has to pay
At the outset, you may be tempted either to do the accounts yourself or to hire a book-keeper to do them for you. Although there is nothing wrong with either of these courses of action, you should ask yourself whether doing your own accounts is a good use of your time. When your business is new you will need to focus on key areas such as getting your product or service to the market and building your customer base. Getting bogged down in paperwork is likely to be the last thing you need at a time when you’re going to be extremely busy. You will probably work more hours than you have ever worked in the past; do you really want to be the company’s Chief Financial Officer as well as all the other roles you will have to play? However, if you do choose to ‘do-it-yourself’ do use good accounting software such as Mamut and do talk to an accountant to find out what financial records you must keep.
Hiring a book-keeper may not be the right decision for you if you are a sole trader or run a very small business and you can ‘do-it-yourself’ using good accounting software such as Mamut. But if you intend to employ several people or want your business to grow, you will soon find yourself needing more skills than they are likely to be able to provide. A book-keeping service will allow you to stay on top of the paperwork and comply with your financial obligations as a sole trader or an employer, but it is doubtful that you’ll get the sort of advice that will help you make decisions over the direction of your business. For that, you’ll need a qualified accountant who specialises in helping businesses such as yours.
Doing Your Research
Like any service, accountancy firms have specialist skills. All will be able to help you with the fundamentals of accounting but some firms may have expert knowledge of your type of business, which could be very valuable. This knowledge might extend to a business sector, such as import and export, or a vertical market, such as residential care for the elderly or retail. Try to find out as much about the firm as you can before you make a decision as to whether it is right for you. Most accountants will be pleased to offer you an informal meeting where you can get to know them. It is likely that you will be trying to network in order to build up your business, so why not ask other business contacts who they would recommend?
Starting to Grow
As your business grows you will be faced with a multitude of decisions about everything from raising finance to who should be responsible for making the tea! Understandably, you might feel overwhelmed by the directions in which you are being pulled, while being very aware that the decisions you make now will have a lasting impact.
This is a stage at which businesses either thrive or die. Poor decision making – often linked to a lack of financial advice – can jeopardise the security of the business going forward. Whether your business grows organically or by merging with another business, you will have higher overheads that could expose you to greater risk. Your accountant should be your right hand man (or woman!) at a time like this. Discuss your plans with them so that you can get their input before you reach a point of no return. They have experience of business entrepreneurs and will have seen it all before, so why not benefit from their knowledge?
Most established businesses can afford to assume a degree of security – but only a degree! Even in a bullish market, complacency can lead to ruin. And in a recession, there is absolutely no opportunity to stand still.
Successful businesses look ahead. They examine their product or service life cycle and keep in touch with their customers. They anticipate need and how they’re going to fulfil it. All this requires investment of some form or other, whether that be in R&D, marketing, capital equipment or skilled personnel. Use your accountant as you would one of your Board. Make sure they are updated with your plans and understand how you want to take the business forward. They don’t have the benefit of working alongside you every day of the week, so don’t make assumptions about what they do and don’t know. Get them involved, invite them to your premises, introduce them to key staff and let them have access to your business and marketing plans. Only when they are truly involved will you reap the benefits.
Colbea’s business courses introduce you to the world of finance when you are first starting out in business. The Step Into Business course covers all the basics you will need to know and tackles them in an accessible way, without the use of jargon or complicated terms.
Established businesses can get advice from Colbea’s Business Advisors too. The Advisors are all people who have held senior management posts, many in finance. There are few problems or opportunities that they haven’t encountered in their own careers.
Colbea is sponsored by several firms of local accountants who will be pleased to talk to you about your business. You can find them on our Sponsors page.
Choose the Right Solicitor?
Over 75% of existing businesses have faced litigation in the last 12 months, so choosing the right solicitor for your business could be one of the most important decisions you make.
From data protection, health and safety issues and partnership agreements, to intellectual property rights, terms and conditions, property ownership and limited liability, staying the right side of the law can help save you time and money!
Choosing the right solicitor for you and your business is easier than you might think, and here are a few suggestions to help you make the most of the time (and money) that you will spend with them:
Finding A Solicitor
The Solicitors Regulation Authority (SRA) regulates solicitors in England and Wales; its main aim is to protect the public by ensuring that solicitors meet high standards. It works closely with the Law Society, which represents solicitors in England and Wales. Both organisations’ websites provide a good place to start with a search facility that will allow you to find your nearest solicitor based on the area of law (e.g. property, e-commerce, employment, etc) on which you need advice.
As with any service provider you are about to engage, word of mouth can help enormously. Ask fellow business people who they use for legal advice and what they think of the service they receive.
Time is Money!
Many solicitors offer a free initial consultation, but after that it is important to realise that you will be charged for every minute of time they spend advising you. Solicitors’ hourly rates can range from £120 upwards and as they tend to record in 5 to 10 minute units it soon adds up! So don’t waste time, prepare your paperwork before the meeting and make best use of electronic communication.
Just as with any service or product you plan to buy, you should be able to confirm the likely costs involved before starting the work with them. There is also no reason why you can’t set limits on what you spend so that your solicitor will work up to that limit, and then you can decide whether to stop or carry on..
Be Proactive Not Reactive
Getting legal advice early and being proactive might seem like unnecessary expense but in reality it can often save you a lot of money, time and stress. For example, taking advice on employment law could mean you avoid possible claims from employees and the associated negative impact that would have on staff morale. If you are facing any form of claim or litigation, you will find that resolving matters before they get to court is encouraged nowadays, through mediation and other methods. Your solicitor will understand that going to court is expensive and time consuming for you and can have serious effects on commercial relationships that may need to continue into the future. Although what your solicitor tells you may not always be what you want to hear, you can rest assured that they are responsible for informing you of the most appropriate course of action to resolve the matter and achieve the best possible outcome for you, their client.
Do You Need a Specialist?
Most businesses need advice on common areas of law such as partnership agreements, leases, terms and conditions and contracts of employment, but what if you need more specialist advice? Solicitors and law firms often specialise in specific areas of law such as patents, e-commerce, environmental law, and so on. So if your business needs specialist legal advice it is often more cost effective to choose a solicitor or law firm that meets your specific needs as they are likely to have the experience you need which, in the long run, could save you the expense of having to look elsewhere.
These suggestions should help you to choose a solicitor wisely, ask the right questions at your initial interview, and embark on a long lasting relationship that will help your business develop on a sound footing.
Marketing Your Business Effectively
The first question you need to ask is – What is Marketing?
The Chartered Institute of Marketing define Marketing as “the management process responsible for identifying, anticipating and satisfying customer requirements profitably.”
In practice this means marketing is an important management tool for gaining new customers and developing existing sales. To make the most of this tool you need to do one key thing, create a Marketing Plan!
There are no hard and fast rules for the best way to create a marketing plan for your new business, but there are some basic activities you need to carry out as follows:
- Ask yourself where do I want my business to be in a year, two years and five years and how marketing can help you
- Define your target market/customers
- Investigate the best ways to communicate with your target market/customers about your product or service e.g. Yellow Pages advertising, mailshots, articles in specialist magazines, etc
- Identify the costs involved and set a budget
- Set clear objectives of how to get where you want to be in a year, two years and five years in terms of marketing
- Devise a timetable
- Decide how you will identify and measure your marketing success, for example, increased sales and coverage in local press
- Implement your marketing plan
- Monitor and review results to decide what works and what doesn’t, revise your plan!
When you are creating your marketing plan you need to make sure you cover what is known as the marketing mix or 4Ps:
- Product – the specifications of products/services, and how they relate to your customers needs, including warranties, support e.g. helplines, online information
- Price – setting a price including discounts and offers
- Place – how the product/service will get to the end consumer, e.g. online, retail, face-to-face this also covers which target market e.g. teenagers, families, pensioners, businesses
- Promotion – the way in which you are going to promote your product/service e.g. advertising, face-to-face sales, publicity
Planning your marketing activities is very important – if you don’t make good use of marketing your competitors will. Make marketing work for you!
Evaluating Your Business Idea – Market Research!
The first of many questions you will need to ask yourself, and the answer – Market Research!
Why do Market Research?
There are several very important reasons to carry out market research before launching your new business idea as follows:
- minimises risk
- helps you understand your potential customers and their needs
- finds out in advance likely reactions (positive and negative!) to your product or service
- can identify gaps in the market
- can let you know what price people will be willing to pay
- improves your chances of success!
What is Market Research?
There are two types of market research:
Primary Research – Information collected for you or by you through surveys/questionnaires and interviews.
Secondary Research – Information gathered for other purposes, such as government statistics (socio demographic – age, income level, interests, etc), trade publications.
Much of this information is freely available on line or by using some of your best free resources – interview friends, family and neighbours about your product or service. Also make best use of professional advice from business resources such as those provided by COLBEA.
How Do I Carry Out Market Research?
Market research can be extremely expensive, but it can also be done effectively if you do it properly yourself, even on a tight budget!
Again another question I’m afraid, but one of the most key questions that you need to ask yourself before starting your market research is – What is the aim of your research?
Once you know this you can go to the relevant primary and secondary resources and as the British Chambers of Commerce say “Once you’ve researched your audience, you can go from there. It depends on your target clients how you move forward.”
Conquering the Competition with Knowledge?
Building a successful business is dependent on having an in depth knowledge of your market, customers, product/service and most importantly your competition!
Competitor knowledge can help you to:
- maximise opportunities in the market
- minimise the risk of competitors
- identify your market position (the place you occupy in the mind of your prospective clients) compared to the competition.
Market research in relation to customers has already been covered in the article “Evaluating Your Business Idea – Market Research!” This type of research can also provide answers to questions about your competition, such as:
- Exactly what do your competitors offer?
- How does their offering/price compare to your idea?
- What it is that clients like about your competitors?
- In what areas are clients not as satisfied by the competitions offerings?
- What does/will distinguish you from the competition?
Competitor information can be more difficult to research, but there are some simple methods you can use and at a minimal cost.
Make use of existing contacts in your network such as friends, family, business partners, business advisers and suppliers. Ask them about their experience of the competition.
Use the internet to check out how competitors are positioning themselves. Often competitors list on their website key competitor information such as, mission statements, service/product details, prices, etc.
You should also not just limit your search to locally based competitors. The internet opens up your marketplace and therefore your competition to potentially the whole world!
Literature and Customer Service
Ask a friend to request their literature – price lists, brochures, etc. Also make use of this opportunity of contact with your competition to assess how the business deals with their customers. Good and bad practice will help you to formulate your market position ahead of competitors.
If you take the time to research your competition you will gain a valuable insight, which will help you to provide a better offering and gain a stronger market positioning over your competitors.
In order to succeed you need to know your competition, and you must continue to research them, as they will be researching you too!
Promoting Your Business on a Tight Budget
There are numerous marketing tools that are available to promote your business, and yes you can get the experts in, but you can also do a lot yourself.
Below are some of the tools you can use and suggestions for simple plus low cost ways to use them effectively to develop your new start up business.
Word of Mouth – Ultimately the best and cheapest form of publicity! Make use of existing contacts, family, friends, business acquaintances let them know about your business and ask them to help promote it by recommending it to others.
Networking – Join your local business clubs, which have regular networking events. Plus don’t forget to make the most of perhaps the less obvious types of clubs that you may already belong to such as your local sports club.
Exhibitions – Investigate what exhibitions are available that might suit promotion of your business (use the Internet and contacts). Ideally visit the exhibition beforehand and don’t commit to anything until you have identified what you might achieve from it and compare its likely benefit to the other promotion tools on offer.
Internet – Ideally create your own website as it is an amazing market place to promote your business. However, if you don’t have a website investigate the numerous online directories that are linked to your product or service. Whatever you choose make sure you review the leads you gain from them on a regular basis to determine their benefit and future use.
Press Releases – Identify the media (tv, radio, newspapers, magazines) used by your potential target market and then think of stories about your product or service, which will be interesting to them. To get further ideas look at previous editions to see what gets in. Then write a short press release, not forgetting to accompany it with an eye catching photo and submit them to the relevant media. You will need to persevere with this as writing a press release doesn’t automatically mean it will be published, but it might!
Advertising – Most businesses as a base need to have adverts in the key directories Yellow Pages and BT, which can range from a free directory listing upwards in size and cost! You also of course have newspapers, magazines, tv and radio, but don’t forget the less costly options of parish magazines, noticeboards and shop windows.
It may not cost you the Earth, but you need to understand that promotional tools do not provide a quick fix. It is about building awareness of your business over time by identifying and using the right promotional tools for you!
Writing Successful Press Releases
First the bad news! Producing a press release does not guarantee coverage of your business story in the media. Now the good news! You can easily produce a press release at no cost to yourself except your time, by just taking the following 8 easy steps to create a potentially successful press release.
Step 1 – Key Questions
Before you write any press release you need to ask yourself a few questions, such as:
- Why are you are writing a press release?
- What would you like the audience to take away with them?
- Is it topical/newsworthy?
- What mediums (newspaper, magazine, tv, radio, specialist publications, etc) might make use of it and can reach your target audience?
Step 2 – Know Your Medium
Contact the newsdesks to find out the key contact details for the mediums you are intending to send your press release to and their deadlines.
Make use of the access you have to previous editions of the medium, so that you gain a full understanding of the types of stories that get used and the way they like to write or present them.
Step 3 – Content
Make sure the release doesn’t contain any spelling mistakes or errors and is grammatically correct.
Sources and quotes also need to be accurate. If you include quotes from others then you should run the final draft past them for checking and approval before sending it as they may also be contacted for further comment.
Keep to the point; make it punchy and easy to read. You need to think in the position of the reader, ask yourself would you, your friends or family want to read it.
Step 4 – Format
Remember journalists receive several press releases every day so you need to make it easy to read and grab their attention. It should be clearly headed up as a press release and if you have a company logo make use of it at the top of the document.
Every press release usually has large margins for journalist’s notes, text is one-and-a-half line-spaced and is 1 to 2 sides of A4 maximum. Generally the format is split in to 6 main areas/paragraphs as follows, with each paragraph containing two to three concise sentences:
- Headline – snappy, but not too clever!
- The Grabber – Explains the story and sets out the main facts (Who, What, Why, When and Where).
- The Details
- The Quote(s)
- Additional Paragraph – Not always necessary, but it you have further relevant background or related information to include then you can add a further paragraph after the quote. However, again keep to the point and make it concise.
- Notes for Editors – This can include several additional pieces of information as detailed in the next step, and can differ in size but ideally needs to stay within the overall 2 pages of A4 maximum.
Step 5 – Notes for Editors
If you need to provide even more background information for longer stories then you can include it under this last area. The main point of this area is generally to provide editors/journalists with:
- Outline of photo/interview opportunities relevant locations, dates and times.
- Contact details – name, position, email, phone, website.
Step 6 – The Photo
They say a picture paints a thousand words and a good one will grab the reader’s attention! Similar to the word content you need to think in the position of the reader, ask yourself what photo would positively grab their attention.
Step 7 – Embargoes
Most press releases can be released immediately and this needs to be clearly stated “For Immediate Release” at the top of the document under where it says it is a Press Release.
If you don’t want your press release published before a certain date then you need to include an embargo statement “Not for publication before xx/xx/xx” at the top of the document. The majority of journalists will respect this unless you are being unreasonable.
Step 8 – Don’t Be Put Off!
If your press release doesn’t make it in to print or on to the air, then try, try again. Use it as a learning exercise find out why the journalist didn’t use it and ask how you could improve the chances of it becoming a successful press release.