Expenses are an unavoidable part of running a business. If you’re new to company ownership, you may be unsure what does and doesn’t constitute a business expense, and the best way to handle them. Hopefully, this brief guide will help you.
From a tax point of view, anything which benefits your business in terms of profit is an expense. This includes things like travelling to a client’s home from the office, or printing costs if you need to advertise in the local paper. This type of expense is tax-deductible, so you can disregard it from your total profits when declaring them to the tax man. Other costs, such as staff lunches or certain equipment, may not be tax-deductible but will still need to be monitored if your cashflow is to remain healthy.
Travel to and from work is not a tax deductible expense, unless the employee has to travel to a place of work they don’t usually go to. Travelling to and from places on company business is deductible, and you can claim 40p per mile if using your own car.
If you or your staff need to stay overnight in a hotel for business purposes, then you could claim this as a tax deductible expense – provided the costs are reasonable. Food, drink and accommodation are reasonable, claiming for a pub crawl around the local town is not. If it’s a place your company will use often, set up an account with the accommodation and have them send the bill directly to you.
The vital part of managing your expenses is to record everything. Receipts and invoices should all be kept, and ideally your costs should be tallied at the end of each working day so you know at a glance what you have spent. If you allow your employees to claim expenses, use claim forms which can then be filed alongside invoices. Business credit cards can make it somewhat easier than using expense claim forms, as the figures are all there on the statement, but you should only allow trusted staff to use these.
Keeping comprehensive records of all expenses (and any benefits your employees are given) is crucial as you will need them at the end of the tax year when filling in your P11D or P9D forms.
You may have your own ideas about the best way to record your daily expenses, but if not, you can’t go wrong with an Excel spreadsheet. You could either use a blank worksheet and build up from there, or search on the internet for a template – the Microsoft Office website holds many user-created templates for you to download and start using straight away. Excel allows you to set up calculation formulae which will keep a running total for you, making it much easier to see how your cashflow is doing on a daily, weekly or monthly basis.
It’s imperative that you have a separate bank account for any company money. Look for a bank which doesn’t charge high fees for business banking, and it’s a good idea to get an account with an optional overdraft in case of dire emergency. If you anticipate your expenses to be of a sizeable amount, you may wish to get a separate account for these, as a ‘petty cash’ account. It’s also a good idea to have an account with online facilities, which will make monitoring your expenses much easier.
Louise Tillotson is a financial author with Moneysupermarket, and has written a number of guides on finance in all areas from business to travel
I am sure we have all driven in fog. Near me, there is a notorious black spot. It’s often foggy, and when it is, it’s like pea soup. As I carefully pick my way along, I’m usually passed by a few nutters doing more than 70mph. There’ve got no chance if they come across anything solid. It’s a way of playing probabilities that doesn’t appeal to me.
I know quite a lot of entrepreneurs that have started their own businesses. The successful ones always seem to have a deep knowledge of the key numbers for their business. As soon as you are talking business, they start telling you their figures. But this isn’t boring, geeky stuff. The numbers at their finger tips are the ones that show if the business is starting to work. They’re usually about the cost of getting new customers and how many were recruited last week. Then they explain how profitable it is, and whether more money should be poured in, or plans changed.
Starting a business is hard. You have to be both driven and confident to succeed. But confidence must be tempered with the reality that we all make mistakes. We need to measure things all the time. That way we can correct those mistakes and make adjustments as soon as possible.
Entrepreneurs that do everything by gut instinct are missing a trick. Like the maniac drivers in the fog, they feel invincible. But unlike most of the drivers, the majority of them won’t survive, at least in business terms.
I have found that as an entrepreneur, it’s essential to recognise what I’m good at, my weaknesses and some gaps in my current business. I have really enjoyed reading Rachel Elnaugh’s comments to all three fishbowl businesses, because it really strikes a chord.
For example, her advice to Matt at Fishbowl 1 is about the cycles of a business, the ups and downs. She says “...feeling real joy for running your business - no matter what is happening – is the best way to keep your energy high and to stay positive”. I have no problem with this myself, not yet anyway, I do love Monday mornings- in fact, there are no Monday mornings for me, because I can’t remember the last Sunday I didn’t work, at least a few hours. It’s that endless motivation and passion and belief in what you are doing that will keep on going when the going is tough.
Rachel’s advice to me is about branding and brand execution, which I totally agree with. However, not a visual person myself at all, I need to work closely with people who are, and who have experience in branding. This is where the team player bit comes...
I have met two other people who have much more experience than me in running a business but we have very strong common goals. It’s, as one of them put it, when 1+1+1 can add up to 10. One of them is very strong on the supply chain, the other is a celebrity chef very much into Mexican food and understands the cuisine as well as I do. It sounds great, but trying to meet and make important decisions with two other people is so complicated and it can take such a long time. We are working on the branding at the moment, but the process is complex and I’m finding this stressful... Maybe I shouldn’t worry so much about keeping everyone happy, but it’s important that everyone is on board.
You can find out more about Marcela on the new interactive business website www.inafishbowl.com
A recent report reveals the UK is less than half as neighbourly as it was three decades ago with 49% of Brits saying people know more about their favourite celebrity than they do about their neighbour. But neighbours can make for good business; Emma Jones suggests we get to know them and offers five business ideas that are plain perfect for the folks next door.
In releasing the report ‘Co-operative Streets’ Ed Mayo, Secretary General of Co-operatives UK, the organisation behind the research, said: 'We see our neighbours much less but we like them more!' If you faintly know, and like, your neighbours why not start a business that serves your local market. Here are five suggestions.
Community supported baking – form a baker’s dozen with neighbours to form a bread company that is owned by the community to service local needs. This model of community bread making is being championed by The Real Bread campaign which offers helpful information on how to get started.
Parcel collection – in the report mentioned above, one figure stood out. Over 30 million of us collect parcels on behalf of our neighbours. That’s a lot of parcels! With online retailers such as Asos.com wanting to be sure their customers receive deliveries (that are currently being missed on account of people being away at work during the day) why not create a local collection point and ask neighbours to pay a small holding fee.
Dog-walking – make canine friends by starting a business walking neighbours’ dogs when they’re away from home. That way, you earn money and stay fit and healthy.
Raring to Go! magazine franchise – if you’d rather buy in to someone else’s idea, there are a host of franchise opportunities based on selling to family, friends and neighbours. One of them is Raring to Go! a magazine that acts as a guide on where to go and what to do for families and parents in your area.
Telecoms – this one may seem a little extreme but it’s just what the residents of Rutland did when they couldn’t get the broadband speeds they wanted so decided to take matters in to their own hands, find the funds, start a company, and deploy their own broadband. Rutland Telecom was the result and the village of Lyddington can now boast having the fastest fibre-optic broadband in the UK for a rural village. Proof of what neighbours can do when they get together!
Lots of people on Twitter seem to have been talking about eating frogs lately. Whilst I am very much a fan of French cuisine and have been known to munch a few escargot while in France, what’s all this frog eating got to do with serious business people? Why should I join the crowd and start munching frogs? And what happens if I am a veggie?
This frog eating refers to a book and concept by Brian Tracy called ‘eat that frog’.
There’s an old saying that if the first thing you do in the morning is to eat a live frog, you’ll have the satisfaction of knowing that it’s probably the worst thing you’ll do all day. Brian Tracy, in his book, takes this saying as a metaphor for tackling the most challenging task of your day – the one you are most likely to procrastinate on, but also probably the one that will have the greatest positive impact on your life.
As a start up business owner, you will need to eat a fair few frogs before you can get a team around you to delegate and outsource tasks to. I normally have only myself to keep me accountable and focused on what really matters. Some days I wonder whether there is anyone worse than me for procrastinating on the jobs that I don’t enjoy doing. I’m not asking to go back into corporate life or get another boss (heaven forbid!). I’ve been looking for a solution to help me with my procrastination.
After all, I have a reputation and image as The Efficiency Coach to maintain!
I can honestly say that on the days I choose (and that’s the key) to ‘eat my frog’, I am more focused and productive. But it’s more than that... the sense of relief that I get from getting the job done that I was putting off is palatable. The momentum of getting the task out of the way normally gets me through the next few tasks in double quick time.
So, if you have some important tasks that you are putting off, why not try to eat your frog first?
Starting your first business can be a daunting task and raising finance can often seem impossible. So what are your main options?
1 Savings and self-finance
Start putting money aside soon as you can. If your long-term aim is to start a business, cut down on your spending and save as much as you can from your current wages. I moved in with my parents, paid a much lower rent and saved hard to ensure I had as much money as possible before starting my first business.
Cash in any ISA’s or savings accounts. If your business is successful, you may get a much greater return on your money than you currently get, with interest rates as low as they are.
If you have no capital, it is difficult to get finance, especially post credit crunch and with no trading history. Banks require a detailed business plan, preferably with three years projected forecasting and profit/loss models.
However, as interest rates are currently low, a business loan can be a reasonably cheap to borrow. The new Enterprise Finance Guarantee (which has replaced the Small Firms Loan Guarantee Scheme) is useful for start-ups with no capital. Under the scheme, the Government guarantees 75 per cent of the loan should the business be unsuccessful. The EFG is available for businesses with a turnover of less than £25m and offers loans up to £1m. If you borrow under this scheme, you will have to pay a set-up fee, plus a quarterly fee for the borrowing.
Shop around for the best deal on any bank loans – interest rates can vary dramatically. With my original business loan, I naively accepted the first one I was offered (at an extortionate rate) as I was convinced I would not be offered another. Six months later I approached a second bank and moved it, saving me 5 per cent interest.
3 Investors – family and friends
It can be worth approaching family and friends to see if they will invest in your new venture. Discuss various levels of involvement; some may expect a share of your profits, while not wanting involvement in the running of the business (a silent partner). Others may be happy to lend long term, receiving only interest payments, as does one of my investors.
Whatever the situation, always make sure both parties take independent legal advice and draw up an agreement outlining the terms. This prevents any potential problems if the future relationship breaks down.
4 Investors – business angels or venture capitalists?
Look for financial involvement from established business people, either in the form of a business angel (ie a local businessperson who lends money to businesses) or a private equity provider (ie usually more suitable for larger businesses with higher turnovers). Both can provide a wealth of information and assistance, especially if they have relevant contacts. In return, they will expect a share of profits and possibly a share of the equity.
Be cautious about giving away too much control over your business. You must also find an investor that is right for you and the business – having a good working relationship is a must. If you feel this is unachievable, don’t take the risk.
Whilst notoriously difficult to gain Government or EU funded grants, it’s worth making enquiries in your local area to see if you are eligible for help. The EU has a wealth of grants available, especially in rural areas, but they are badly advertised and difficult to access.
The Princes Trust is useful to young people starting up a small business, but the loans offered are fairly small and the criteria strict – although they are helpful for people from disadvantaged backgrounds.
If you are restoring an older property as part of your business, see if you are eligible for support from the local council, English Heritage or local conservation trusts.
6 Reducing Costs
It pays to keep your start-up costs as low as possible, of course. You could get equipment on hire purchase or loan or use a ‘rent a desk’ scheme, for example.
Utilise your friends and acquaintances – perhaps you know designers, IT professionals or PR experts? Set up a social networking account (eg Twitter) and find others in your area who are setting up businesses – perhaps you can exchange skills. I’ve done this many times – exchanging free coffee for help with my website.
7 Don’t put all your eggs in one basket
Share the risk when starting up. Spread the borrowing and the repayment terms. This will make everyone – including you – feel less vulnerable.
Sadie Hopkins is founder of York Coffee Emporium
I’ve just had the website redone. It is amazing. Potential customers, it appears, can access it more efficiently than the old one.
This is exactly what I asked for, and furthermore exactly what the designers said they would do.
Has anybody come across this concept before? I think it’s revolutionary. Consider, for example, you call up to order some paper for your photocopier. The livewire at the other end of the phone asks you what you want. You explain. They send it to you and when it arrives it is, in fact, the paper you wanted. Better still; the accompanying invoice is actually for the amount you expected. I see a vision for the future.
Anyway, in case you can’t tell, for the past six weeks I’ve been feeling (and being) let down by a series of small errors and inadequacies. Occasionally a problem presents itself to you in the form of a spade across your forehead. You can duck or you can fight back. It’s the little niggly things that wind me up.
The solution, of course, involves never letting anything get to this stage. Ensure people do what they said, and ensure they were aware that what they said entails a little responsibility for completion of a task. I think because I tend to give people some leeway in their behaviour, I find myself in this situation too often.
Regular readers will know that Ross Campbell is the general manager of Bristol-based gym The Exercise Club
In her latest video blog, Marcela of Rico Mexican Kitchen asks questions about business finance.
Marcela in Fishbowl Two has never started her own business before. Nor has she seen anyone else start a business. And, being one of the first businesses to feature on inafishbowl.com, she has never had the opportunity to learn from the experiences of others.
In this video, Marcela asks how the finances of early stage businesses usually work during the first two years, and how she should be going about raising more finance.
You can find out more about Marcela on the new interactive business website www.inafishbowl.com
I would like to look at an aspect of starting a business that isn’t often considered. Mostly discussions are about finance, marketing, recruiting a great team, VAT, legals and all of the other stuff of start ups. But most people need the support of family, friends, and partners. Start ups are hard, and you must be sure that everyone is with you, everyone is supporting you, and everyone understands what you are doing.
My decision to start a new business was made jointly with my wife. Although she’s had limited involvement in the management, she was a full participant in the original decision. And as a result, she has supported me in every up and down since then, which has been a real help. Similarly, my sister and a friend both lent me money when we had an early cash flow crisis. They wouldn’t have done this if they hadn’t been taken on the journey beforehand.
And that’s the rub. If people close to you aren’t with you, they may be a source of discouragement. In the extreme, broken relationships can greatly increase the chance of business failure. I’ve actually seen this with a friend, where they ultimately ended up with nothing. On the other hand, constant encouragement and reassurance can be a real help – as can financial support.
If you start a business, it won’t only affect you, it will impact those close to you as well. They deserve to be told what that will involve and to be consulted for their opinions. Do this, and you will increase your chances of success significantly.
Although capital gains tax (CGT) is set to rise, we do not know when. The start date may be deferred to 6 April 2011, but the changes could also take effect from 22 June this year.
Property owners and investors can expect to bear the brunt of the increases. Trading businesses and shares in trading companies may continue to benefit from Entrepreneur’s relief, although that relief is fairly restricted compared to the old “taper” relief it replaced.
While it may be possible to sell assets by the end of the tax year, it might not be feasible to sell to a third party by 22 June. For this reason, it could be worth locking in the gain at the current 18 per cent using a family trust.
A transfer into most types of trust is treated as made at market value for CGT purposes. It should therefore crystallize CGT at the current rate on the accrued gain to date. Similarly, the trustees will be deemed to have acquired the asset at current market value, which is then their base cost used for a future sale taxed at the new higher rates.
There is, of course, a risk that if values fall, the trustees actually make a loss that cannot be offset against their gain going into the trust. However, this may be outweighed by the tax rate saving achieved.
The tax on the trust transfer will fall due on 31/1/2012, by which time the asset may have been sold to a third party. Alternatively, there may be scope to pay the tax in installments.
A gift of property into trust should not attract Stamp Duty Land Tax (SDLT), although SDLT would arise on any transfer of mortgage to the trustees (this representing consideration). Similarly, there should be no stamp duty on a gift of shares into trust. Stamp taxes will be incurred where there is actual consideration.
It is important to note that for inheritance tax purposes, gifts to trust are generally taxable at a 20 per cent lifetime rate once the nil rate band (£325,000) has been exceeded. The tax does not need to be incurred on larger transfers, but the process needs to be carefully managed.
Obviously there is a concern that if the asset is not eventually sold to a third party, a CGT liability has been triggered unnecessarily. There are strategies to mitigate the CGT charge on a transfer, if the asset is to be retained.
Those with property or shares likely to be sold in the not too distant future should think carefully about a transfer before 22 June. The position is uncertain, but if the CGT rate goes up to 40 per cent or even 50 per cent, individuals are going to lose a substantial part of their capital appreciation. This, in my view, is akin to retrospective tax.
The points raised above are only intended to provide general information. Professional advice should always be sought in specific situations before taking any action.
Justin is a partner at London-based chartered accountants and tax advisers Jeffreys Henry LLP.
Brendan Flattery, managing director of Sage’s Small Business Division, answers some key questions about the importance of maintaining healthy cashflow.
“Any successful small-business owner will tell you that healthy cashflow is critical to the smooth running and growth of their business. It’s been a challenging time for all businesses recently, regardless of size, and one that will have a lasting impact on the way businesses structure and manage their operations. One of the key lessons that many small businesses have taken from the recession is the importance of healthy cashflow.
“Put simply, cashflow is the movement of money within a business, but this seemingly straight forward concept can have detrimental effects if badly managed.”
“Healthy cashflow is vital for all businesses, but the consequences of not managing it effectively can quickly have a massive impact. A small business can only survive for a limited period with a negative cash flow. Ultimately, the business will end up insolvent, which means it will fail because it won’t be able to pay its creditors.”
“Cashflow forecasting software is an important business tool that can not only show payment patterns and forecast the year ahead, but also highlight re-occurring late payments.
“It’s been widely reported that most failed businesses have closed because of problems caused by inefficient cashflow management rather than anything else. If small businesses put into practice the correct processes they will be able to manage their financial planning effectively, forecast the year ahead and identify any potential cashflow issues early enough. Then they can take action to avoid any anticipated downturns. More effective cashflow management will help stabilise the business, as well as ensure the business emerges from the recession in a stronger position and cash positive.”
“Julia Boggio Photography is a Sage small business customer. The business has experienced first hand why accurate cashflow forecasting is a must. They used Sage 50 Accounts forecasting tools. MD Julia Boggio says:
‘When I was reviewing our cashflow forecasts in November of last year, I could see there was a dip due in February. We reorganised our finances, cutting down on advertising and came up with an alternative contingency plan, which we put in place. This ensured we were well positioned to account for the dip and even enabled us to have a better February than the previous year.”
“More than half of the 2,000 small businesses polled by Sage in our monthly Omnibus survey said they had been impacted by late payments over the past year. The Department for Business, Innovation and Skills reported that more than 4,000 businesses failed in 2008 solely because of late payments.
“It is critical that start-ups and all other businesses to remain aware of exactly how much money they are owed and when payments are due. This helps to prevent late payments in the first instance. However, if they do occur, good management can ensure that they do not have a damaging effect on the business’s overall cashflow. These are all aspects that business accounting software can help you get to grips with.”
“Make sure all your employees – if you have any – are kept informed about the state of the business’s cashflow. This will hopefully prevent them from making purchases your business cannot afford. At times you might be waiting for a large invoice to be paid, so you may have to put spending plans on hold.
“Create accurate cashflow forecasts for the year ahead. It will enable you to plan for the future. Forecasts allow you to identify potential cashflow crises, for example, be identifying periods when your costs exceed your revenue. At such times, your business might need to seek financial help. To be fore warned is to be fore armed.”
Brendan Flattery is the Managing Director of the Small Business Division at Sage UK and Ireland
Most mums with businesses are serious and committed, but don’t always find it easy to turn this commitment into big bucks.
Many women need to change the way they think about money and how they feel asking for money. Research has shown that women are less comfortable to ‘name their price’ than men, and women in ‘helping’ professions are less comfortable than, say, women working in IT. Say how much you want for your service out loud: are you comfortable saying this or do you feel a bit apologetic? I know I do.
When I run courses the majority of women attendees are in business to HELP in some way. You can only be truly effective as a helper if your business is strong and making a profit will allow your business to grow and help more people.
If you are in the position of running a business that doesn’t make enough profit you could:
Follow these tips, stay in control of your finances and you will see your business grow.
Have you seen Julie and Julia? It’s a heart-warming (read cheesy rom-com if you’re a cynic) tale of a downtrodden woman in a dead-end depressing job who wants to make something of her life. She’s tired of her over-achieving friends looking down on her career and one day, decides to blog her experience of cooking all 575 Julia Charles recipes.
There’s a classic moment in the film when, on the verge of a nervous breakdown (or meltdown as she calls them) Julie is wondering why on earth she’s bothering, and whether anyone is even reading her. Then she gets her first comment… except it’s from her mother, asking if she’s the only one reading this and when she’s going to give it all up and start behaving like a wife.
Of course it all ends happily ever after. Julie gains an enormous following, she is inundated with calls from book agents, she’s now a writer AND she gets a film deal. Wow! That’s some happy ending.
When you start blogging (and even when you’ve been doing it for a while) it’s easy to worry about who, exactly, is reading you. Is anyone visiting your blog? Do they like what you have to say? Is it adding any value to your business or your life?
I remember talking to Karen Skidmore a few years back. She always used to have such vibrant conversations happening on her blog, and I’d be lucky to get a comment a quarter.
Karen told me that they’d start to happen. And once they started to happen that they’d snowball. And she was right. Although it took a little longer to figure things out than I’d hoped. Comments, retweets and people stopping me at a networking event to say that they love my blog is the ultimate validation for me that the hours I spend blogging are doing something. That I’m not just talking to my mum and dad through this blog, but that there are real people out there enjoying and benefitting from what I have to ramble on about.
And when I get new clients because they’ve been following my blog for a few months and love what we’re doing, that’s great. In fact, it’s more than great, it’s now a core part of my marketing strategy.
But how do you get your blog to a point where you have regular readers, subscribers and your blog has a real presence?
I think there are lots of factors. Design is key, think about blogs like decor8, designsponge or some of the foodie blogs I like to read such as Sweet Paul. The photography and design is utterly gorgeous – people keep coming back for the inspiration and escapism these blogs provide.
Content is king, but there’s more to a blog that people want to read than good content. We’re suffering from information overload. If your blog looks dull, it doesn’t matter what you’re saying, your readers are going to think your blog is dull. And it doesn’t matter how compelling your post, they’re likely to forget you. As people start to comment more you’ll be able to suss out what they want to know about.
When I started blogging I didn’t post much on what we’d been up to in the studio. I thought it would be too boastful, that people wouldn’t want to read about it. But actually, the more ‘In the Studio this Week’ posts I wrote, the more comments I received. Of course, I always make sure I intersperse with some “how tos” as well, or it would just turn into one massive online portfolio.
Your writing style also has an influence. I’ve found that the more I let my emotions loose in a blog, the more comments and dialogue I seem to gain. And uber-bloggers like Holly Becker seem to do the same.
One of the things that’s revolutionised my blog more than anything is my use of Twitter. By feeding my blogs in to Twitter, I’ve been able to “promote” my blog to my followers, who, if they like what I’ve written, have retweeted on to their followers. When I get this right, my hits shoot through the roof and I know I’ve struck a chord.
But how about you? What do you do to promote your blog? How do you engage with your readers?
Fiona Humberstone, Flourish design & marketing
In the latest installment of Marcela from Rico Mexican Kitchen's startup story, she employs her first member of staff and decides how best to distribute the everyday responsibilities.
Marcela was advised that her new employee would be extremely important to her business so she wanted to find someone she could trust and who could take on some of the responsibilities to allow her to concentrate on making Rico Mexican Kitchen a success. Having found that employee, can they find the right balance between friendship and work relationship?
With her new employee in place, they created a mind map to help them list all of the jobs that need to be done, who will be responsible for what and how they can support each other.
Do you have any advice for Marcela on her new employee and how having him around may affect her and the business? How can she ensure she is aware of what needs to be done at all times? How much input should she have in the work done by her employee now that they have split their responsibilities?
You can find out more about Marcela on the interactive business website www.inafishbowl.com
My business, Something Big, works with a large number of start-ups and established businesses. We help them to focus their marketing efforts with the aim of achieving growth. Often, I draw on my own experiences, of course, gained while running our business for ten years. I’m also able to draw upon seeing how other clients get over the hurdles they face. Here are the five key start-up lessons, marketing and otherwise, I’ve learnt.
1 Have a plan
It’s an obvious one and something everyone will advise, however, you’d be surprised at how many businesses have come to me in the past ten years with a list of marketing “ideas” yet no idea of budget or likely return on investment.
Your marketing plan doesn’t need to be ‘War and Peace’, but it should contain: a detailed description of the service/product you’re offering; a profile of your target customers; and a broad set of activities that will enable you to communicate with them.
2 Sweat before you spend
In the early stages it’s easy to get excited and run down to the local agency to brief the designers on your new flashy logo, business cards, website and launch campaign, but before you dash out the door, I urge you to sweat a bit first.
By this I mean make those uncomfortable cold calls; knock on a few doors; trawl the net signing up to every free online directory; make the most of social media and bring in some business before you spend your valuable start-up budget. All of the above will help you decide how to position your business better anyway, as well as pay the designers.
3 Don’t give up your day job too soon
Many people, as I did, leave their jobs in large companies to start new ventures, which is a good plan, but don’t resign too early. In those precious early stages of your business it’s great to know you can still afford to pay the mortgage. You may feel that doing a day job holds you back from getting on with your new business, so make use of your time, whether it’s getting up half an hour earlier to do some online research, making five targeted telephone calls during your lunch hour or banning yourself from TV a few nights a week. If you have the focus and determination, you can do a lot of business planning while holding down your day job.
4 Take good advice and listen to it
This has been one of the keys to unlocking the success of my business. I might be an expert at what I do, but that’s design, marketing and print, not being a financial director, HR manager, landlord, business strategist or any of the other hats I must wear everyday. I take the “ask an expert” option everywhere I can and 99 per cent of the time it gives me an approach I wouldn’t have otherwise taken. Seek advice from people with the necessary knowledge and experience and listen to them carefully.
5 Work “on” the business as well as “in” it
This is one of the golden rules that is usually hardest to achieve. It’s easy to get stuck into the day-to-day of running your business, because that’s what your job is, but in a small business, you’re also responsible for keeping an eye on the future and that means knowing what your competitors are doing, knowing what market trend is about to hit you where it hurts and being at the forefront of your sector, so stick your head out now and again. Good luck.
In business, as in the popular TV show X Factor, more people fail than succeed. If this can be attributed to luck, some people seem to have more luck than others. So it’s reasonable to ask if there is such a thing as the ‘business X Factor’ or is it all about being in the right place at the right time?
Make your own luck
I guess I should know all about luck. I co-founded ecommerce supplier SellerDeck and we managed to float our company on the London Stock Exchange during the dot com boom, raising £25m and valuing the company at £100m, despite at that point having never made a profit.
Looking back, it is all rather ludicrous, so we were definitively in the right place at the right time. Having said that, we didn’t get there by accident. I had carefully looked at technology trends for several years before starting the company, concluding that the internet in general – and ecommerce in particular – offered a tremendous opportunity. At the time, even Bill Gates wasn’t a believer.
Know where you are going
Simon and Amanda Walker sell specialist pens online. Their original target was people who are interested in unusual pens, so they knew that to interest these people, they would have to provide a massive range. That’s why their website states that they offer the “widest choice of pens on the planet” – more than 6,000 at www.cultpens.co.uk. They understood the customer requirement; they created a plan that would satisfy it; and now they have a highly successful business. Textbook stuff.
Be profitable to survive
There are a variety of reasons for starting a business. Some start because they want to get rich, others want to change the world, but no one wants to fail. Avoiding failure means making a profit. Profit is the oxygen of business. Even if the principle objective isn’t about money, you still must make a profit. There’s no need to worry about the X Factor if you don’t make a profit – you won’t be around long enough to find out whether you’ve got it or not.
Focus on customers
One of my company’s customer’s grew his business from a front room start up to a business with £23m sales. Chatting to founder Steve Hanbury recently, I was reminded of how important his total commitment to customer service and value was to his success. Customers pay the wages; if we forget this we’re in trouble. All successful businesses need to focus on their customers.
The press delight in stories of hapless travellers whose satnavs took them up a track or to an impassable river. The drivers thought that they knew where they were going, but more attention was required. It’s no different in business; when disaster is imminent it’s critical to be flexible and not insist on sticking to the business plan.
The true X Factor
It’s worth asking yourself whether practising the business virtues mentioned above comes naturally. Focusing on customers, setting a plan yet remaining flexible to change and also enjoying yourself while doing it seems a big ask. Are these the key to success?
It’s unfashionable to admit to watching X Factor, but I hold my hand up and say that it’s interesting to note that many of the talented contestants are sometimes hesitant about their capabilities, while those with least talent are often convinced they have great ability. The best are generally humble and are looking to improve. The true X Factor might be a willingness to receive input, take it on board and strive to get better.
In the latest of our weekly blog posts from Marcela of Rico Mexican Kitchen, she'd like to hear your feedback on her new packaging.
I’d like to ask for your thoughts on branding and what messages the packaging is communicating and their appeal to you as consumers.
On the left hand side of the label, there is a stamp which reads “2 of your 5-a-day”. On the back of the label there is information about ways to use the product. We really want to communicate our passion for authenticity, healthy food, provenance and ethically sourced ingredients. We work with local growers and co-operatives in Mexico, but we don’t want to saturate the packaging with loads of writing!
Do you have any thoughts to share with Marcela? Add them to the comments section below.
You can find out more about Marcela on the interactive business website www.inafishbowl.com
Every year it seems like the coaching and training world gets really excited about the importance of setting meaningful and achievable goals. Whilst I’m not going to disagree with the importance of goal-setting, I believe that it is more important to actually achieve your goals.
Take a moment to reflect on how many times you have set business or personal goals which you've lost interest or focus in after a couple of months. As a business owner, it is your role to keep your organisation focused and energised on working towards your vision.
My question is, how do you make sure your organisation actually achieves the goals you've set?
Firstly, you have to have some goals set to achieve. Is everyone within your business targeted to working towards the goals of the organisation? If I were to talk with your employees could they tell me what their personal goals are and how these will help achieve the company's goals?
For goals to be achieved, they need to be visible for everyone within your company. Do you have visual reminders for staff about the organisation’s goals? Are your line managers regularly sitting down with their team and talking about the individual, team, departmental and company progress against these goals? In your regular updates to your staff are you talking about company progress against these goals? More often than not, team and individual goals and objectives get written on a piece of paper and stuck in a drawer getting dusty until the next annual performance review. (And that’s if your organisation actually does them!)
The only thing you can rely on in the business world is uncertainty. Far too many companies go through an annual goal-setting process and then tenaciously stick to these goals for the next twelve months, regardless of market or trading conditions. Goals are made to be reset and reassessed as you go through the year. Whilst I’m not advocating resetting your goals every week, it’s worth looking at your company’s goals quarterly and when your results and evidence suggests it, readjusting these goals. Many a company has gone under by spending to a sales forecast level which they are never going to meet.
You have more chance of achieving your company’s goals if your staff feel some attachment or ownership of these goals. To get this feeling of attachment, how about involving them in the decision making process of how the company is going to achieve its goals? Or, and this is the slightly controversial part, how about setting up a bonus pot to be distributed amongst all staff if the company achieves it’s goals?
Many individuals and companies are forever looking and driving forward. Whilst this is a very positive attitude, it is worth looking back to learn and taking time out to celebrate successes. Reflecting and reviewing is vital to help your company achieve its next set of goals.
What are you going to do slightly different this financial year to increase your odds of achieving both your personal and business goals?
This post was first published for Clear Thought Consulting Ltd
If you’ve set up a Facebook page, you’ll probably be wondering how to (a) attract fans and (b) keep the fans you already have interested. You need to focus on the fact that your fans are people like you and me, so this isn’t a ‘business to business’ transaction. You need to be fun and keep it light.
The idea behind a Facebook page is to create a public profile that enables you to share your business and products with Facebook users. They’re very easy to create by going to Facebook, clicking on “Advertising” at the bottom navigation, and then on “Pages”.
Here are some top tips on creating an interesting page with updates that people will want to read:
1. Make sure you add an eye-catching profile picture to your page that represents your business.
2. Add pictures, photographs or videos to your page as you would with your personal account. Images of your products, events, services, employees or even the office dog will add interest to your Facebook page and give it a personal feel. Remember to tag your friends!
3. Before you start inviting your friends or business leads to become fans of the page and recommend you to others, try to pre-populate it with relevant and interesting updates. You could even ask friends and colleagues to start up a discussion or wall post that fans can get drawn into.
4. And this is intrinsic to point 3: Make sure your updates appeal to your fans. Bear in mind that your fans could be teenagers, pensioners, builders, bankers or bakers so it’s essential that your updates are inclusive, and friendly with a distinct tone of voice.
Let’s use a chocolate shop as an example.
BAD status updates:
10am: “Buy our chocolates! They’re delicious!”
2pm: “Have you tried our chocolates yet? They’re delicious!”
4pm: “Check out our website!”
6pm: “We love chocolate.” and so on…..
GOOD status updates:
10am: “If you could invent your very own chocolate, what would it be? The most inventive answer will win a bag of our delicious Pecan Pralines!”
2pm: “Did you know a piece of dark chocolate a day is good for your heart?” (link to a news story)
4pm: “Stop press: New shipment of Willie’s Chocolate now in! Get yours before they’re snapped up!” (link to relevant page on your website)
6pm: “Order anything in our shop between 1pm and 2pm GMT tomorrow and we’ll give you 20% off! Quote ref: FB03” (link to your website)
Hopefully you get the idea. Put yourself in your fans’ shoes – if they get inundated with mundane, corporate sales messages they’ll soon switch off. But make your updates varied, interesting and interactive, and your updates will be shared, commented on, and recommended to others.
5. Check in to your page regularly and respond to comments from your fans. It’ll reinforce your brand and personality as well as proving that you’re not just logging in to make updates now and then.
6. Don’t neglect your Facebook page. It’s all too easy to forget about it when you’re busy and you could end up leaving it sad and lonely for a few weeks. In the meantime your fans will have forgotten you exist or they might even “cull” your page if they don’t deem it interesting enough. Like a pet, keep your page fed and watered!
7. On the other hand, don’t over-do it either. If your fans are getting 30 updates a day clogging up their news feed, they’re not going to be impressed. It’s all about quality rather than quantity.
8. Have a go at “hacking” your profile picture. You can make so much more of the space available if you have the time to learn to do it. A simple Google search will find plenty of websites that can teach you how to do this.
9. Upload pictures or videos that you can tag your fans in. Unfortunately you can only tag your Facebook friends, but if you’re inventive you’ll find a way.
For example if our chocolate shop awarded a bag of Pecan Pralines to a fan they were also Facebook friends with, they could post a picture of the bag and tag it with the fan’s name and a caption “Congratulations Joe Bloggs! You’ve won!” Joe Bloggs’ various Facebook friends would receive the news in their feed and it could tempt them to also become a fan of your page.
10. Although you’ll ideally grow your page and fan base organically, if you want to kick start your Facebook fan attraction campaign, advertise your page by using this link. Make sure your advertisement is eye catching and unique or your investment could be wasted, and above all do some research on your target demographic before you start your ad campaign.
A few months ago, I got an Innovation Support Grant (ISG) from the Food and Drink iNet. The purpose of the grant was to help me improve my marketing and PR. Here are some things we did with the ISG grant:
This is a small mention but I hope we can build from here.
The best thing about this grant was its emphasis on working with experts so we learned the tools required so we could sustain the work they had funded. And yes, I learned lots about copywriting for the website and packaging. I also learned that if you want to be in magazines, this is a labour of love and perseverance: you need to contact each magazine, phone the right person, agree to send them samples, then the samples get lost, you follow up, and start again.
Imagine what I felt when I opened the magazine in the shop... and yes, there it was, the article “Olé for Mole” feature and a photo of our Mole (pronounced Moleh, a wonderfully rich Mexican cooking sauce). I got on the train and I wanted to show everyone the feature, but I resisted the temptation.
Now we are going to appear in some glossy magazines, the question is: How can we turn these articles into real, tangible outcomes, e.g. sales?
Well, as it happened, I was visiting our newest stockist, Partridges of Sloane Square in London. He said he would stock salsas, but not the Mole sauce because people wouldn’t know what to do with it. I showed him the Olive magazine and he suggested I laminate it and place the article by the chiller. Perfect. However, I won’t be able to do this everywhere, so the question comes again, how do we use these articles and turn them into sales?
Do you have any suggestions for Marcela? Add them to the comments section below.
You can find out more about Marcela on the interactive business website www.inafishbowl.com