This week it’s the buying task. It’s something so simple, calling for fundamental business skills, and yet apprentice candidates seem to botch it every time. This lot are no exception.
Lord Sugar gathers the remaining seven candidates at Madame Tussauds where they hob nob with wax versions of Robbie Williams and Nelson Mandela.
The teams need to find ten items — accessories for the waxwork displays — and negotiate the best possible price for them. They’ve got to look the part but not cost the earth.
Lord Sugar shuffles the teams but leaves it up to them to pick their project manager. This is the result:
Lizzie is in charge of Harry M, Zara and Hayley.
Haya leads Harry H and James.
And the ten items? A small suit to fit little Justin Bieber; 100 helium-filled balloons; a left-handed guitar, a pocket watch, size ten red stilletoes, 40 metres of red carpet; a Dashiki; a bar stool; a moustache comb and a vanity case.
You can’t just wander around London and expect to trip over these items. So forward planning is essential. But Lord S has banned the internet. So the teams have to use something called the Yellow Pages.
Lizzie and her team let their fingers do the walking and start hitting the phones. But Haya doesn’t believe in planning. She immediately sends poor Harry H off to pound the streets of Shepherds Bush while she takes James to Portobello market. The strategy seems to be to wander around until one of the items pops up and says boo.
The fact that Harry H does happen to stumble across a bar stool is beside the point. What they should have done is called around and done some proper research.
Lack of research means the candidates aren’t really sure what the going rate for any of this stuff is. A few more phone calls could have done the trick here.
Another clever move would have been to find an area that is known for selling these sorts of items at reasonable prices.
Haya and James get this right when they visit London’s tin-pan alley for musical instruments. Being able to shop around in one street makes the negotiation process a good deal easier.
Showing us how not to do it is Harry M who suggests up-market Jermyn Street for the Justin Bieber suit. He seems to have forgotten that these items are essentially costumes — they have to look good, not cost the earth.
This task calls for some basic map-reading. Clearly, when time is tight, you’ll want to spend as little time travelling as possible. So why on earth are Hayley and Zara going to Croydon of all places to buy an extremely expensive gold pocket watch? And in a taxi. At least a train from Victoria would have taken them about 20 minutes instead of the two hours they spend in traffic getting there.
You need to be in a position of strength when you’re negotiating. But too many times, the candidates see this task as a treasure hunt and not a negotiation process. Simply finding the item is cause for celebration. And the sales people they encounter can spot this a mile off — putting them in the driving seat.
Despite the lack of planning, Haya’s team of three do well, sourcing seven items and spending a total of £969.10 including penalties for the items they missed. Lizzie’s team of four only managed to buy six items and with penalties, they spend a whopping £1,480.87.
Lizzie brings Hayley and Zara back with her into the boardroom and the accusations fly. Hayley and Zara’s day trip to Croydon has to be the biggest mistake of the day. In the end it’s quiet Hayley who takes the bullet.
Next week: Popcorn.
Your business is going to develop a reputation whether you like it or not, and this is likely to be determined by:
It all starts with you. You need to tell anyone who will listen what type of business you are. That’s half the battle. Then tell your staff (if you have them). They need to behave in a way that is appropriate to what you stand for, and what you believe to be right. They can only do this if they are told what is expected of them. And, of course, you need to behave that way yourself.
How much should you spend on sales and marketing and what is the difference between the tw0? In the purest sense, sales are purely financial transactions, and in theory they can occur in the absence of marketing.
Equally, marketing can generate a lot of activity publicising products and services, but not actually lead to any sales. In this respect they can be viewed as separate items, but in most companies they are not. The two disciplines are generally regarded as indivisible – marketing should always lead to sales, and sales usually need the help of marketing.
Much has been written about appropriate marketing investment levels. As a rough rule of thumb, mature companies that embrace marketing as a discipline spend eight-13 per cent of their turnover on it. They don’t do this for fun, but for hard-nosed commercial reasons that have been proven to improve their fortunes.
Most modern companies have concluded that there is essentially no difference between marketing and sales. As such, they believe that to have ‘no marketing’ is to abdicate from sales altogether. The answer for small businesses may be quite different. There is a huge difference between paid-for marketing and free marketing. Your most powerful weapon in the early days is you. You need to get out and about and promote what you do vigorously. To start with, you may not have to spend any money on marketing at all.
Start by saying hello to everyone who could help. It is extraordinary the number of people who haven’t even bothered to let everyone know what they do for a living. This is one of the most powerful forms of marketing, and yet many leave it out completely. Word of mouth is free, and much more persuasive than any marketing you might pay for. Everybody you meet could be a potential customer, but that isn’t the main point. Far more important is the fact that, even if they don’t want what you have to offer, they might know someone who does. Creating a buzz around what you do is important, and it needn’t cost anything.
The same goes for when you need help in the early days. Don’t be afraid to ask for small favours from people to get you going. This applies to marketing as much as to painting the walls of your first office or shop. Do you have any contacts that could help spread the word about what you do? Would they mind if you promoted your business on their premises? Think broadly about the possibilities – the chances are, they will say yes. And don’t forget to return the favour when they need one from you.
This extract is taken from Kevin’s recently published book – What You Need to Know About Starting a Business
Kevin Duncan – business adviser, marketing expert and author
Eight months ago, StartUp Britain was launched with a fanfare in London, as leading figures from government and the world of business met to promote the launch of another initiative aimed at helping people nationwide to set up their own business.
Cameron & co were out in force to lend their backing to the scheme and encourage British people to consider self-employment in this time of economic downturn. So, has StartUp Britain been a success so far? Has this initiative helped to persuade British people to start their own enterprise? And which areas still need some improvement?
Global Entrepreneurship Week
November’s GEW was supported throughout the UK with a number of leading figures from British industries getting involved in events and conferences about entrepreneurship and enterprise. Enterprise Nation’s Emma Jones and Tenner’s Oli Barrett – two of the eight entrepreneurs who set up StartUpBritain – were visible during the week, helping to promote the conferences and events taking place. GEW also helped to match up those who required advice on Twitter with those offering advice, using the hash-tags #GEWUK, #GEWask and #GEWoffer. It was fantastic to see how many people were keeping track of the hash-tags and lending support wherever possible.
National press coverage of the week was a little disappointing, suggesting that entrepreneurship still hasn’t caught our national imagination. And, despite GEW’s best attempts to get its hash-tags trending, none trended nationwide. The lack of public awareness of GEW illustrates that more could be done to help boost its profile in future years.
Television programmes such as The Apprentice and Dragons’ Den have given the general public greater insight into the world of business. Experts from these programmes have become celebrities in their own right, ensuring that business in the UK has a face. Programmes such as Peter Jones’ How I Made My Millions are encouraging people to blow their own trumpet once in a while and celebrate their success!
What these programmes still lack, though, is a link back through to initiatives such as StartUpBritain and the Start Up Donut, which are there throughout the year to support budding entrepreneurs. As it stands there is still a gulf between the annual televised quests for the next great British entrepreneurs and those who endeavour to help people start up all year round.
Recently, the government announced new steps it will be taking to assist entrepreneurs, including the introduction of an Enterprise Champions Programme, encouraging schools in the UK to develop businesses, and the creation of an online tool where people can submit money-saving suggestions to aid the government in their aim to reduce the deficit.
What the government didn’t do was announce any significant investment in these schemes. Whilst George Osborne said that they might consider the expansion of its Enterprise Investment Scheme, there was little other financial offering. Surely, greater government spending on these initiatives would gain greater national press coverage, helping to kill two birds with one stone?
In my view StartUp Britain has been a success so far in terms of raising awareness of alternatives to conventional employment. The StartUp Britain website has received hundreds of thousands of hits since its launch and the term ‘start-up’ was frequently searched for on internet search engines after its initial launch and during GEW. More could be done however, if the government provided a little financial assistance to help raise awareness of the fantastic resources that are readily available to small and medium enterprises across the UK. It is a case of ‘so far so good’ for StartUp Britain, but if the initiative is truly going to revolutionise business in the UK and help boost the British economy, it will almost certainly need some contribution from the government coffers. Meanwhile, we await the next budget with interest.
On the face of it, employing family members can be a good idea. You know them well, so all of the issues of trust and reliance on a stranger should be eliminated.
However, the existence of the family relationship does not bypass any employment laws or any issues relating to tax. Knowing your duties in this area is essential to not falling foul of the law and incurring fines or penalties.
Regardless of your business structure (sole trader or limited company) you can employ your partner or spouse in your business.
The general rule is that your partner or spouse should be paid for the effort and hours worked in your business. You must pay your partner or spouse at least the national minimum wage (you can’t get away with paying less).
Where the amount earned exceeds the “lower earning limit” (currently £102 a week, £442 a month or £5,304 a year) you must register as an employer with HM Revenue Customs (HMRC), complete the required PAYE records and file annual returns.
So, just like employing anyone else, you must comply with the tax laws.
Directors of limited companies who hold office and do not have a contract of employment are outside of the scope of the national minimum wage (see the Directgov website for further information)
This means that a director can be paid an amount that does not incur tax or national insurance.
Subject to employment laws, you can employ your children in the business. Again you must pay them the relevant national minimum wage for the hours they work.
It may also mean that because of the payments made to your children you must register with HMRC as an employer. Be sure to check or else you could incur fines and penalties.
If you employ a student at any time other than their normal holidays, you operate PAYE as normal. However, if you have children at college or university and you employ them solely during the summer, winter or Easter holidays, you may be able to apply special rules to their pay which can make the administration simpler and negate the need for you to register as an employer with HMRC.
If you meet this criteria, you may be able to pay the student without deducting tax, although in most cases you will still have to deduct and account for national insurance. Full details can be found on the HMRC website.
Employing anyone is complicated and a minefield of rules and regulation. To ensure that you do follow the rules on this it is always best to seek specific advice from your accountant who will know and understand your circumstances and can make sure that you adhere to the tax laws and your solicitor for employment law issues.
Using 20 years’ experience spent working at some of the UK’s leading businesses, award-winning chartered accountant Elaine Clark is the founder and managing director of www.cheapaccounting.co.uk, an online accounting service aimed at small businesses with big ambitions.
See our Tax Donut for more detailed information on UK tax
There’s a nasty whiff coming from Wembley Stadium, according to Lord Sugar this week. He has gathered the troops there for a briefing on the latest task. With crowds of up to 90,000, things can get sweaty at Wembley. Lord S wants the candidates to do something about it by creating new anti-perspirant deoderant brands and making a TV ad.
This week, Lord S chooses the project managers. Harry M is leading James, Lizzie and Gbemi. And Zara is in charge of Hayley, Harry H and Haya.
“I knew I was going to be PM,” says Zara. It sounds like something Margaret Thatcher might have said to Denis over a G&T.
Like the iron lady, both Zara and Harry M are very dictatorial so it’s tough for their teammates to get a look in. Gbemi says Harry M might as well be in a team by himself. Mind you, she can’t talk. Her favourite phrase is “I don’t like it”.
Harry M and James clash from the start. Harry M wants a brand name, like now. James wants to come up with the concept first and choose the name second. He wants a brand that solves a problem and stands for something. He’s right of course.
Gbemi suggests the name Vanity. Harry M is pushing for a brand that is “fun”. It’s all a bit of a hotch potch — and it shows in the final advert.
Over on Zara’s team, they come up with a concept — a deoderant that takes you from day to night. But the focus team hates it. Harry H is the voice of reason here. He says, “The focus group was useful because it told us that we were wrong”.
As a team, they come up with a new concept — a street dancer. It’s simple but at least it works with their brand name, Raw.
Harry M and James, meanwhile, go to what Nick Hewer calls “a dark and smelly place”. It’s a small basement nightclub where they get a geeky girl to do some bad dancing and then impress two guys once she’s sprayed herself and most of the room with their deoderant, Vanity.
The teams present their work to a panel of ad execs at agency JWT. The pitches are pretty polished. However, Lizzie manages to put her foot in it by suggesting that teenagers have changed a lot since the panel were young. Just a suggestion Lizzie but try not to insult the people you are pitching to.
Remarkably, both teams manage to impress Lord Sugar with their ads. And Nick says both pitches were good too. Even so, there’s a clear loser. Vanity is poorly designed and the geeky girl ad appears to have nothing to do with the concept.
There’s the usual boardroom argy bargy. Harry M brings back James and Gbemi. Despite Harry’s hopeless leadership, everyone latches on to the fact that Gbemi designed the unfortunate packaging and it is soon apparent that she is to be this week’s sacrifical lamb.
Bye bye Gbemi.
The ones to watch: Hayley, Zara and James
Next week: The buying task.
The winner of Business Crayon’s Enterprise Now competition was announced at last week’s Business Startup Show in London. Enterprise Now , which was supported by Google, Experion and Simply Business, celebrated owners of small enterprises and would-be entrepreneurs around the UK, with a total prize fund of £27,500. Business Crayon were offering £4,000 of start-up kit, including PR services, accounting software and logo design, to the winning enterprise. Entrants had to pitch their business ideas in no more than 200 words, with the shortlisted than being put to a public vote via the Business Crayon website.
The winner was Enterprise Days; an initiative run by former BBC Young Apprentice contestant, Emma Walker. The 18 year-old, who graduated from the Peter Jones Enterprise Academy in Manchester this year with a Distinction, won the public vote with her business idea which aims “to bridge the gap between enterprise and entrepreneurship”. Enterprise Days provide one-day business challenges to primary and secondary schools to help young people gain entrepreneurial skills.
Walker was somewhat assisted in her quest for votes by business magnate Lord Sugar, who kindly retweeted the former Young Apprentice candidate’s plea for votes. But that’s not to detract from the hard work of this determined and ambitious young woman. Getting a taste for business aged 12 after selling sweets in her school playground, Walker has proved that she is a driven individual who wants to ensure that the next generation are business-focused, and equipped with the right skills to follow in her footsteps and set up their own enterprise. At a time when youth unemployment is at its highest rate for almost twenty years, Emma’s story is one to capture the imagination and lift the spirits of young people nationwide.
All of the team at Start Up Donut would like to congratulate Emma on winning the Business Crayon competition – we look forward to see what the future will hold for Enterprise Days.
Today is National Freelancers Day and according to event organisers PCG (“the Voice of Freelancing”) it’s “a day to celebrate the value of independent workers to the UK economy.” And what value my fellow freelances and I (about 1.4m souls and counting) contribute to UK GDP (some £82bn according to PCG).
A campaign that aims “to raise the profile of freelancing in the UK across all audiences”, this is the third National Freelancers Day. Launched in 2009 with a series of UK-wide events, last year Prime Minister David Cameron’s voiced his support, while a host of events are planned for this year.
Freelances (the grammatically correct form) go by many other names, of course, such as “freelancer” (frequently used but grammatically incorrect), “independent worker", “contractor”, “consultant” – even “interim”, “portfolio worker” and “own account worker”. Crucially, they are self-employed or operate their own limited companies, so they run their own businesses, as well as helping others.
The term “freelance” (“free-lance” or “free-lancer”) isn’t new. In fact, it was first coined to refer to mercenary soldiers in Medieval Europe (users of modern day high fee-charging freelances can make up their own jokes).
In the past ten years the number of freelances in the UK has grown significantly. In 1998 there were some 1.25m; by 2008 this figure had increased by 14 percent to 1.4m. Of these, 62 per cent were male and 38 per cent female (Source: PCG). It is likely that there are now comfortably more than 1.5m freelances in the UK.
Apparently, freelancing is much less common in many other parts of Europe, but there’s little doubt that its popularity in the UK continues to increase. Many of those who have lost their jobs in recent years have turned to freelancing as either their best or only option. Many more businesses (including small firms) now rely heavily on freelances, who are viewed as the more flexible (and often more cost-efficient) solution to staffing needs.
So why use freelances? Well, it enables you to buy in the extra help you need as and when you need it, often that involves specialist knowledge you don’t possess in-house. And if the freelance’s performance falls short of your expectations, you don’t hire them again. You don’t have to pay them holiday pay or sick pay and they usually look after their own tax affairs. So freelances can boost your productivity, efficiency and profitability. But businesses be advised: working with freelances and contract workers brings with it legal responsibilities (including compliance with health and safety and National Minimum Wage regulations).
Many experts predict that the current growth in freelance activity will continue and in the near future this is how many more people in the UK will work, either full time or part time. As well as being good for UK business, the freelance life (which can be demanding, harsh and unpredictable at the best of times, believe me) at least offers the possibility of greater flexibility and control over our lives – personal and professional.
According to PCG: “The competitive advantage afforded the UK by its highly skilled, highly mobile and highly flexible freelance workforce must be nurtured and protected.” I’m sure politicians, business-owners and freelances throughout the land would agree.
Want to find out more about becoming a freelance? Download the Guide To Successful Freelancing
The term “accountant” is not regulated, so anyone can call themselves an accountant regardless of their background, experience, training or professional qualifications.
Like any industry or profession, there can be cowboys or people who don’t have the ability to advise clients on all aspects of accountancy and taxation.
If the accountant gets it wrong it will be their client who ends up in trouble. This can result in HMRC imposing fines, penalties and at the very worst – a prison sentence on the client.
There are formal accounting qualifications and on gaining these, an accountant becomes qualified. Examples of qualified accountants are those that are members of recognised accountancy bodies such as:
An accountant who is a member of a recognised accounting body should adhere to rules/ standards/ethics/guidelines set by their professional body.
In addition, if they offer accounting and tax sources directly to clients, they must have gained sufficient experience to hold a “Practicing Certificate”, which is only issued by their accounting body once they have shown evidence of having the necessary experience.
Accountants holding such a Practice Certificate and providing services to clients must take out professional indemnity insurance, which gives their clients protection in the unlikely case of a complaint or litigation being brought.
Of course it may well be the case that a non-qualified accountant has the equivalent experience and insurance cover. It cannot be assumed that your accountant is qualified and you should always check.
There are many excellent qualified and non-qualified accountants around. Often an unqualified accountant is referred to by the term “QBE” (qualified by experience). The challenge lies in just how you measure the experience of a QBE accountant.
Formal training ensures that accountants have been exposed to many, if not all aspects, of accounting and taxation. While it is essential that the accountant keeps their knowledge up to date in a constantly changing space, at least they have a base knowledge.
A QBE learns by experience. If they have not experienced a particular aspect of taxation or accounting, they will not have learnt about it.
Qualified accountants who are members of a professional body must have a complaints procedure that explains what clients should do if they have an issue with their accountant.
Included in the complaints procedure will be the right for the client to complain to the relevant professional body if they aren’t happy with their accountant’s handling of their complaint.
In the event of a serious disciplinary matter, the accountant could be struck off by its professional body following a client complaint. Accountants who aren’t members of a professional body don’t need to have a complaints procedure nor is there any recourse to a professional body.
Traditionally, businesses have used a local accountant. However, businesses can now use remote/online accountants at a more affordable price.
Good remote/online accountants offer the same service and deliver the same quality as a traditional local accountant. They can be contacted, generally, by email and/or telephone when necessary.
Crucially, the credentials of remote/online accountants should be checked just as thoroughly as you would for a traditional accountant.
For a whole host of information about accounts, tax and finance, look at our Tax Donut.
It's Global Entrepreneurship Week and the economic news has been relentlessly dire all week. Youth unemployment has topped one million and the Bank of England has slashed the growth forecast to one per cent.
Would-be entrepreneurs — especially the young people that GEW is aimed at — could well be further encouraged to take steps towards self-employment, not least because other employment options are so limited.
Today’s Guardian newspaper highlights the young people, including graduates, who have been working for free stacking shelves at some of the big supermarkets under threat of losing their Job Seeker’s Allowance. This “free labour” is dressed up as “work experience” and with little prospect of a paid job at the end of it.
Surely this state of affairs must make self-employment a whole heap more attractive to young people seeking work. So how is the Government encouraging and supporting would-be entrepreneurs?
The good news is that inspiration and advice is not in short supply, judging by the number of new initiatives being launched this week. Business Minister Mark Prisk and Business Secretary Vince Cable have been doing the rounds during Global Entrepreneurship Week unveiling new schemes to help entrepreneurs, start-ups and SMEs.
Here’s a round-up of the latest initiatives:
There are some common threads here. Enterprise champions, rising business stars and mentors — presumably volunteering their time — are at the heart of many of these initiatives.
When it comes to inspiring and guiding new entrepreneurs, there is much to be said for learning from people who have been there and done that. But let’s hope that this “free labour” provides the necessary support for the next generation of entrepreneurs.
You may not think that exporting worldwide is for you but with David Cameron pledging to get 100,000 more small UK businesses selling overseas and a whole raft of exporting initiatives announced last week, it may well be time to think again. Certainly, this year’s Global Entrepreneurship Week has an extra bite and urgency given the worldwide economic situation.
As business journalist and TV presenter Declan Curry pointed out at Enterprise Nation’s Go Global conference on Tuesday, we have to “rebalance the UK economy away from Europe and towards growing markets such as China, Brazil and India”. Our biggest export market, the Eurozone, is teetering; our second biggest, the United States, is in a flat state of gloom; the statistics say we export more to the Republic of Ireland than to China, India and Brazil combined (though this isn’t the most trustworthy of stats when you take a proper look).
As a broad national policy, it makes sense to close our trade gap and to generate growth with increased exports. But in order for that to happen, we need many, many more of the UK’s smallest businesses to start exploring international markets in a purposeful way (rather than selling to the odd overseas customer via eBay or their website). Those 100,000 alone could, according to Linda Kozlowski, head of customer acquisition for the international B2B marketplace Alibaba.com, generate some £30 billion for the UK economy.
But it’s not easy for a small business, right? Well, yes –and no. Go Global was all about the practical aspects of selling overseas for small firms. With a broad selection of guest speakers and panellists – many of them from small businesses themselves – we got a rare insight into how household names and many small businesses you may never have heard of have actually done it and succeeded.
The good news is that it’s totally possible. Ecommerce, in particular, is one area where UK businesses excel – as Wendy Tan-White of Moonfruit pointed out, our fiercely competitive ecommerce sector is streets ahead of virtually anyone else worldwide. And this gives us a big advantage over potential competitors in international markets. Getting to the top of the search engine listings in Brazil is a breeze compared to the UK.
Kate Castle of Boginabag and Tony Curtis of Alago both talked about how Alibaba.com has taken much of the pain out of finding international suppliers and customers. Christian Arno of Lingo 24 noted that professional translation companies such as his have embraced the needs of online retailers to provide cost-effective website translation and keywording for that all-important search engine optimisation.
Richard Moross of Moo.com explained how creating overseas partnerships an give you the kind of market penetration and brand promotion you would struggle to achieve on your own. In his case, it was hooking up with the photo-sharing website Flickr that really launched his customised business cards. Rob Law of Trunki expanded on the theme of relationships by explaining how he supports his international distributors; friendly faces on the ground who understand the cultural nuances of your new marketplace can make an enormous difference to your chances of success.
It’s perhaps more possible than ever to take a small firm into international markets and many businesses are doing it as a matter of course. Tony Curtis, for example, will be launching his heated sports glove as a global product early next year and already has his supply and distribution chains set up and ready to go. “If you have a product that you think will sell and people will buy in other countries, then it’s common sense,” he said, matter-of-factly.
There are obstacles, of course. Freight forwarders aren’t the easiest people to deal with and IP protection can be drawn-out (tip: trademarking is quicker than patenting), several businesses explained; suppliers can let you down (there’s great value in due diligence) and if you don’t make an effort to understand the local culture you can make an embarrassing faux-pas. Richard Moross ran through a litany of errors he made as he tried to get Moo.com off the ground (the business was originally called ‘Pleasure Cards’. Hm); Rob Law described years of frustration with potential manufacturers who didn’t understand his product and overseas distributors who didn’t share his vision.
It’s not all plain sailing. But what the likes of Richard and Rob amply demonstrated is that with a marketable good product or service, determination and a sense of adventure, there really are no serious barriers preventing you from turning your ‘local’ business into a ‘global’ one. Both men now run award-winning international companies with multi-million pound turnovers. Frankly, these days you may not even have to leave home to run a global business - Kate Castle admitted that she rarely steps outside her front door. Now that’s a modern international small business for you.
Simon Wicks is a freelance journalist and editor of Enterprise Nation.
This week is the fourth annual Global Entrepreneurship Week (GEW) – the world’s biggest celebration of business innovation with backing from the Prime Minister and billionaire business tycoon Richard Branson. With more than 40,000 events happening in 123 countries this initiative demonstrates that despite the difficult economic climate, new businesses are springing up all over the world and entrepreneurs have a great deal of amazing resources at their disposal.
In the spirit of Global Entrepreneurship Week, Dell and StartUp Britain want hear about your business experiences as a start-up: what’s the biggest lesson you’ve learnt; what tech gadget can you not live without; and what’s the secret to funding? Take the short survey here and we’ll share the findings from Britain’s entrepreneur community in two weeks!
In the UK today there are nearly 100,000 more small and medium-sized businesses than there were at the start of 2010 and this year an anticipated 200,000 people will participate in GEW activities. Budding entrepreneurs can check which of the UK-wide events are happening in their area using the GEW map or get networking online via Twitter and Facebook for valuable business advice and to establish connections and share ideas.
The host of events this week will show that, with the right vision and support, any entrepreneur can make a success of their big idea – something that was reiterated this week by the CEO, Creative Director and founder of Mind Candy. At Evening with Michael Acton Smith – an event hosted by The Glasshouse – Michael was interviewed by David Rowan of WIRED Magazine and outlined how the social gaming company grew from a fledgling start-up to one of the world’s fastest-growing social gaming companies.
This week’s programme of London-based events range from courses that show you how to turn your hobby into a business, to workshops that teach you how to measure the effectiveness of your website and masterclasses on financing your enterprise. Organised as part of London’s Global Entrepreneurship Week, the Entrepreneurs Festival will give young tech and digital companies the chance to accelerate their start-up with an intense week of business boot camp training sessions with the industry’s most successful leaders.
Networking is a perfect platform for entrepreneurs to share ideas and was the thinking behind the Dell Women Entrepreneurs Network (DWEN) – set up to help entrepreneurs gain inspiration from other women to succeed and grow their businesses. Follow the #DWEN hashtag on Twitter and the LinkedIn group to join the conversation.
This is my third blog in a handful of months that is essentially about people issues in a start-up, but I make no apology for that. I will, however, admit that a few years ago, before I had actually started a business, I was a sceptic on this subject. But that was then, this is now.
If you are to be successful in a start-up, you need some self-confidence. If you don’t think you’ve got it, you won’t succeed. This is however, different from being like an X Factor contestant who believes he or she has a world-beating singing voice but sounds like an animal in pain. To be successful, you also have to be realistic and understand the balance of risks you are taking. Understanding your strengths – and playing to them – is part of that equation.
But how do you understand your strengths? Here I must recommend the book Strengthsfinder 2.0 by Tom Rath published by Gallup. I also suggest you take the online test that comes free with it. In my 30 years in businesses large and small, I’ve come across numerous tests, but this one is the best of all.
For a couple of my strengths, it says I should partner with someone who has particular complementary strengths. My first business partner had these strengths and our company, SellerDeck, reached the FTSE 350 within four years of starting out. My latest business partner also has these strengths, so hopefully watch this space.
The abilities of the founders are by far the most important factor in a start-up situation. Get these right and you’re well on your way to success. Enjoy the ride.
It was depressing to see Business Secretary Vince Cable quoted as saying that the economy was in worse shape than under the previous administration and that a double-dip recession was a distinct possibility.
While the opposition immediately seized upon his comments, it could be argued that this was rather hypocritical as the current debt crisis and poor bank regulation were a direct result of their own policies.
The feeling of most entrepreneurs is that government is essentially powerless to influence the economy at the grass-roots level. Rather than decreasing regulation as they always promise, any intervention on their part, however well meaning, always seems to create even more obstacles to enterprise.
The solution to our economic challenges is clear. Rather than sit on our hands and complain, now is the time for entrepreneurs to get out there and sell our way out of the recession, bringing the rest of the UK's economy along in our wake.
But this will need to be the UK's real-life entrepreneurs, not the get-rich-quick chancers we see in the media, an image actively fostered by offensive and unrepresentative programmes such as Dragons’ Den and The Apprentice.
And while it is always a joy to inspire young people into a path of entrepreneurship, this is a long-term policy rather than the immediate help that the UK's economy needs.
Real-life entrepreneurs first felt the effects of the recession in 2008. Those that have survived followed the best practice that all businesses should follow. This includes the banks, which are always quick to criticise small businesses for their lack of planning.
Successful entrepreneurship involves reducing risk wherever possible by concentrating on the core business of the organisation and, wherever possible, finding the most profitable niche or vertical market. While cost-savings are important, the main focus should be on generating revenue and reducing the length of the sales cycle.
Rather than chasing brand new customers who promise big orders from exotic locations, the place to find immediate revenue is always your existing customers. They may be equally affected by the recession but willing to discuss mutually beneficial outcomes with people they trust.
It is also a myth that there is no money out there. This is the strong message I have received across the spectrum of industry, from private equity and venture capital companies, angel investors and those companies who have managed to grow successfully in the last few years.
You only need to scan the regularly published lists of fast-growth companies to see which industries have thrived in a recession; all of these companies and others like them have money to spend with the right suppliers.
I am also determined to do my bit to help the UK's entrepreneurs. Starting on November 1st in Essex, I will be presenting at twelve branches of the Federation For Small Businesses (FSB), events that are open to everyone.
The FSB recently launched a new initiative “Championing The UK's Real Life Entrepreneurs”, which focuses on the key issues facing its members. These include increasing the routes to finance, improving cash flow, adopting a new approach to regulation, reducing and simplifying business tax, incentivising job creation and opening up export markets.
The FSB's Head of Policy and Public Affairs, Andrew Cave explained to me that the campaign is designed to galvanise the small businesses in the UK to take a forward-looking and positive attitude towards the economy by increasing their revenue and taking on staff, especially the increasing number of unemployed young people.
He argues strongly that the opportunities and skilled, hard-working people are out there; all it needs is a positive attitude.
Originally published in The Financial Times. Copyright ©Mike Southon 2011. All Rights Reserved. Not to be reproduced without permission in writing. Mike Southon is the co-author of The Beermat Entrepreneur and a business speaker.
This week, the target market is the over-fifties. Lord Sugar chooses the obvious place to gather the troops – somewhere filled with “the oldest creatures that have ever walked this planet” — the Natural History Museum.
James is his usual charming self. “I hate both nature and history but if it makes money I’ll get to like it.”
The task is to sell two products to the crowds at the Over Fifties fair at Olympia. There are eight products to choose from and the teams are in competition to grab the best products, so they need to put on a good show when they meet the suppliers. They also need to ask the right questions, especially about price.
Lord S redivides the teams and they set about choosing project managers. Who knows anything about the over-fifties? Good news — Haya has a grandmother and Harry M has parents who are over 50. Also James says, “People tell me I’m 17 going on 67”. Phew. I was worried that these youngsters might be out of touch with the older generation.
Here’s how the teams are arranged this week:
Atomic: Haya (project manager), Hayley, Harry M, Lewis
Kinetic: James (project manager), Harry H, Gbemi, Zara and Lizzie
The products are a mixed bag. One is actually a bag of sorts — or at least it’s a shopping trolley. The supplier is totally in love with his product. He purrs, “Let me introduce you to the Rolls Royce of shopping trollies. She’s sleek, she’s sophisticated and she actually comes from Barcelona.”
Both teams are keen on the Spanish trolley but it is Kinetic that impresses the supplier and gets the gig. Or at least, Lewis fails to impress with what Nick calls his “inane” remarks.
Talking of which, Lewis is on good form this week. He tells Haya,”I think old people are lovely like. Every time I see them I always feel sorry for them and I try to give them a big hug and just squeeze them.”
I’d watch out if I were you Lewis. Squeezing old people can be very dangerous. And they don’t like it.
Haya has a better idea — “squeezing the money out of them.” Nice.
Later Lewis says, with feeling, “I never ever want to be old.”
Gbemi has a different take on this high-spending market. “Old people, like, just do want to splash their money because they don’t see the point of saving anymore. If you just keep saving, you save to your grave.”
Has she heard of the pension crisis do you think?
Back to the task. Other potential products include a mini vacuum cleaner, a supportive cushion, a bird box with a camera inside and a pie maker that looks like a sandwich maker. Oh and an inflatable dog bath.
And the upshot is that Atomic take the bird box and the pie-maker to the show, while Kinetic sell the trolleys and the Mini Vac.
Lord Sugar has explained that this task is about sales volume rather than profit and each team has asked suppliers for both a list price and a bottom line price to give them room for negotiation.
The big ticket items — the trolley and the bird box — really struggle. Those cash-rich oldies really like a bargain it seems. And at the end of the day, it’s the Mini Vac that has flown off the shelves — a useful product at a reasonable £39.99.
Back in the boardroom, the numbers are in. Kinetic has brought in £1138.77 of sales thanks to the runaway success of the Mini Vac. Atomic has managed just £847.42.
Who will go?
For all the cross-examination and careful weighing up of the evidence that goes on in the courtroom (sorry boardroom), it is a foregone conclusion. Lewis is history. The fact that his phone went off last week — twice — in a pitch has already sealed his fate. And so it comes to pass.
Lord Sugar does one of his usual boardroom tricks. First he lays into project manager Haya for her failings. Then he says, “for that reason…”. Then he pauses. And then he fires Lewis.
Next week: Making a commercial for a deodorant.
Over 40,000 events, 115 countries and 10 million people taking part – as business events go, Global Entrepreneurship Week ranks a little bit higher than a sad ham roll and a warm pint at your local Rotary Networking Soiree. And it has government backing: - at Monday’s launch, Business and Enterprise Minister Mark Prisk said:
“Up and down the country, dynamic entrepreneurs are creating jobs and driving sustainable economic growth. It is vital that we do all we can to help them realise their ambitions and transform the economies of their communities.
“We know that events like Global Entrepreneurship Week can transform people’s appetite for enterprise. We want to help people develop the knowledge and confidence they need to pursue their dreams.”
We’re officially impressed - but how can GEW help your business?
There’s a lot more to the week than huge statistics and ministerial speeches. Keenly aware that only five per cent of people in the UK start their own business, GEW exists to encourage entrepreneurs to make the break and set up on their own, and to give really practical help to small firms.
From 14-18 November, the UK sees the brightest and best of its business talent offering you talks, exhibitions, seminars and networking events daily, as well as competitions with properly worthwhile prizes.
Highlights In England include investment shows, free training workshops on essential skills such as phone sales, Apprentice winners sharing their expertise, and online trading masterclasses trading from ebay and PayPal directors.
A lot of GEW events are free, or under £10, and thanks to the determinedly local bias, take place all over the country, with hundreds of organisations holding every type of event, from creative ideas workshops to HMRC officers giving advice to start ups.
Find the event that you - or your staff – could use on the GEW online search for activities in your area. You can filter by type of help that you need – eg sales techniques or tax advice – as well as by date and location. Or just browse for useful new local leads – Ladies who Latte, the women’s networking group, is holding coffee mornings throughout the South to welcome new entrepreneurs. And this year, special focus goes to young people who want to start, or at least understand, what running a business means, so check what’s happening at local schools too.
Some would have you believe that registering a company (“incorporation” – as opposed to simply starting a sole trader business) is an unnecessarily drawn-out ordeal in the UK. But, in fact, you can form a company in a day if you use the Companies House fast-track service. Otherwise, it should take 10-12 days.
As it’s Global Entrepreneurship Week I thought it’d be interesting to find out how the UK compares to other countries when it comes to incorporation. A quick Google search brought me to the World Bank’s Doing Business 2012 report, which compares regulatory conditions for “domestic firms in 183 economies”. It makes for fascinating reading, if you have the time. If not, the organisation’s website provides a convenient data summary of “the bureaucratic and legal hurdles an entrepreneur must overcome to incorporate and register [sic] a new [sic] firm.”
So what does it reveal? Well, things move much slower in South America and the Caribbean. In (socialist president) Hugo Chávez’s Venezuela it takes 141 days to register a company. In Brazil you’ll wait 119 days and in Haiti 105 days.
In Africa things can be similarly sluggish and Equatorial Guinea (137), Zimbabwe (90) and Togo (84) are stand-out examples. Intriguingly, in Republic of Congo it takes 160 days, yet only 65 days in the Democratic Republic of Congo (yes, democracy truly is a wonderful thing, folks). Incorporation takes a mere three days in Rwanda, the same time as in Singapore, but not as much as in the USA and Canada (both six).
In Afghanistan you can register a company in just seven days (apparently, there is a growing textiles sector). In Iraq it takes 77 days – ten times longer than in the Islamic Republic of Iran.
And what of communist regimes past and present? Despite massive entrepreneurial strides in recent years, in China it still takes 38 days to register a company. That’s eight more than in the Russian Federation, yet in Georgia it can be done and dusted in just two days. In Supreme Leader Kim Jong-il’s Democratic People’s Republic of Korea there are only about 200 private companies, each of which is heavily state-regulated. No data is available for how long it takes to form a company in North Korea or how much it costs…
In (the Socialist Republic of) Vietnam you can register a company in 44 days, while in the People's Democratic Republic of Lao it takes about twice as long. In Cuba there is estimated to be only 100,000 or so “cuentapropistas” (private business owners) out of a population of about 11.2m.
How does the UK compare to other European countries? Pretty good as regards Austria (28 days), Switzerland (18), Sweden (15) and Germany (15); not so good as regards Hungary (four), Belgium (four) Portugal (five), Norway (seven), France (seven) and the Netherlands (eight).
For the type of incorporation entrepreneurs might dream of you’re best heading off “Down Under”. In Australia it takes just two days and in New Zealand – less than one (it can all be done very quickly online).
During Global Entrepreneurship Week I urge you to spare a thought for would-be entrepreneurs in the Republic of Suriname, on South America’s north east coast. Here, according to the World Bank – astonishingly – it takes a mind-boggling 694 days to register a company. During that time there are 13 bureaucratic steps to negotiate (unlucky for some, indeed). Suddenly the prospect of having to register a company in the UK doesn’t seem so bad at all now, does it?
In a ceremony that gathered the best of young entrepreneurs of the future from across the world, Youth Business International (YBI) held its Entrepreneur of the Year awards last night in London. It's not often that a business event can have the audience rocking with laughter one minute and sobbing the next, but these awards are truly memorable for their inspiration – the ceremony held a few surprises, a lot of fun and not a few tears.
In a fitting prelude to Global Entrepreneurship Week (GEW), the awards celebrated some of this year’s brightest and best young business talent. Finalists included young people who have started and grown their own businesses from as far afield as Canada, Israel and India, often against hefty odds. The judges are principally YBI, the worldwide network that runs non-profit business-support initiatives for young people across the world, including support programmes in developing countries. With the Prince of Wales as president, the network helped 6,346 young people to start their own business in 2010.
Mrs Deki Wangmo, Woman Entrepreneur of the Year, has overcome centuries-old Himalayan tradition and rather more modern prejudices to create her thriving motor business in Bhutan. At the age of 15, faced with her family’s inability to pay for her education, Bhutanese schoolgirl Deki looked around for a local job, eventually training as a car mechanic.
Despite Himalayan tradition dictating that women stay at home, and startling those who felt car maintenance was not a job for a lady, Deki finished her training with honours in 2007 and left to set up her own tyre retreading business in Thimpu, Bhutan’s capital city. With the help of YBI partners, four years on Deki has established a profitable firm which now employs eight staff, including her husband. “Becoming an entrepreneur was my ultimate choice,” Deki says simply.
Now with three small children to look after, these days Deki also manages to act as an ambassador for local entrepreneurship – which itself is growing as enquiries are increasing from the interested ladies of Bhutan. She's famous now but "It's nice to be appreciated," is all she will admit, modestly.
Now Deki had made it to London, was she going to relax? a spa? manicure maybe? Sadly not – she was flying back to work after a lone day in the bright lights to rescue Mr Wangmo, who was holding the fort – the kids, the business and and their new baby daughter, Little Power – singlehanded. A strong man, I pointed out. "Oh yes," she said, beaming with pride: “Such a strong man. But he works for me.”
Winners had to show they had improved economic development in their community sustainably and measurably. And some of the YBI’s future stars have helped save the planet too – Environmental Entrepreneur of the Year Award went to Vaidhyanathan Rajamani, whose water projects firm V Cube saves 50,000 litres of water every day in India. Vaidhyanathan was so keen to be an entrepreneur that when his parents insisted he stay in education he ran away from home.
Selling T-shirts to make ends meet, he battled for years to get anyone to take his inventions seriously. Then YBI, in the form of a local Indian trust, did. Now he employs 37 full-time staff and 342 dealers. No mean feat, as Andrew Devenport, CEO of Youth Business International, points out: “Recent UN figures have highlighted the dire economic situation around the world, with record levels of youth unemployment blighting many countries."
In a moving speech that had assorted tycoons, self-made men and women and even flinty-eyed venture capitalists moist-eyed, Devenport highlighted the growing problem of youth joblessness and the risk of a 'lost generation' that looms ever nearer worldwide. He added: “It’s vital that more young people are encouraged into entrepreneurship to create jobs and drive economic growth.”
The main winner, claiming a prize of including $5,000 US, was Amir Asor, founder of Young Engineers in Israel. He's invented science lego – plastic models that show kids abstract maths and physics concepts in cheery plastic they can build themselves. He now hires 20 people and is training schoolchildren to be engineers through the lego games.
What inspired the Entrepreneur of the Year? Being diagnosed with learning difficulties as a child. As he sprang onto the podium to claim his $5,000 US dollars, the room of grandees exploded with applause and several people finally gave up and burst into tears. But Amir was, typically of his peers, concentrating on his job – quietly thanking his friends and mentors, and, of course, the kids he watches at play.
Next week GEW sees over 40,000 events take place in over 100 countries worldwide. Ten million of us will take part – among whom will no doubt be the secret stars of future business – and probably some people weeping at how great starting a business really is. Read our daily updates from Day 1 GEW Mon 14 November.
Figures show that more start-ups succeed when they start in tough times than those that don’t. This may be something to do with starting prudently and keeping things that way, rather than starting with a more relaxed or even cavalier attitude. There are certain approaches that start-ups can take to stand a better than average chance of success. Most of it is to do with attitude. It may be tough medicine, but it works. Here are six suggestions.
No one wants to listen to someone moaning. The circumstances might be difficult, but you don’t have to be miserable. If you are, you will probably lose customers fast.
Bad performers often use the context of a recession to claim their company’s poor performance is nothing to do with them – it’s the economy, apparently. This isn’t always true.
Complaining there is no work is like a man saying there are no women in his town. You only need one girlfriend or piece of work, so go and find it.
There is no difference between the things your business should do in a recession versus what you should be doing in any other circumstances. If you have to ask what to do differently in a recession, it may actually be too late.
Economies go up and down. You still need to earn a living, so you need to believe that your success is entirely in your own hands, and go for it.
You need to be dexterous enough to nip into the gaps that other businesses might have missed by being too cautious. Be flexible and keep coming up with new ideas.
This extract is taken from Kevin’s recently published book – What You Need to Know About Starting a Business
Kevin Duncan – business adviser, marketing expert and author
It’s two nil to the girls and time to mix up the teams a bit. Perhaps Lord Sugar feels that it isn’t fair to pit girls versus boys in what is effectively a flower arranging competition.
Or is that a bit sexist? Judging by the boys’ reaction to the task, it seems not. Lewis calls the task “my idea of hell” while James declares, “I hate flowers, nature and animals”. You’re probably opposed to world peace too, aren’t you James?
The teams split up like this:
On Kinetic: James, Harry H, Haya and Hayley. Lizzie is project manager.
On Atomic: Gbemi, Harry M, Zara and Lewis. Hannah is project manager.
It’s fairly simple. First of all, both teams have to pitch for three jobs. One is to provide a classy floral window display for Daniel Galvin’s hair salon. The second is to provide four bouquets for a theatrical opening night. The third job is to decorate a function room at a hotel with posies for the table and a larger flower arrangement for the mantelpiece.
Lizzie makes an early mistake in allowing James and Harry H to do the pitches — in order to excuse them from doing the girly flower arranging. These two comedians are hardly ambassadors for an upmarket florist and it shows.
On Atomic, it is Zara and Lewis who hit the road to do the pitches. Zara is impressive — especially at the hair salon. But Lewis looks incompetent with his phone going off twice in the meeting — an absolute no-no.
Atomic easily wins the theatre and hair salon jobs. But Zara manages to stuff up the hotel pitch. Project manager Hannah tells her to offer £165 for this job but Zara goes in at £200 — to allow room for negotiation, she says. But there is no negotiation. This process is more like sealed bids and the other team have quoted £175.
Much can be learned about price in this task. While Atomic has gone in too high on the hotel pitch, they then go too low when it comes to selling bouquets to punters in the street. This is where they might have road-tested a higher pricing strategy because they could always bring their prices down.
It’s close but Kinetic wins the task with a profit of £463.52 compared to Atomic’s £450.96. As Lord Sugar says, it’s all about margins. Mind you, I can’t help thinking that they never allow for overheads in these tasks — premises, staff costs, tax and so on.
Anyway, Hannah has to pick two team members to bring back into the boardroom and it’s here that she makes a fatal mistake. Lord Sugar has already given Lewis a bit of a hard time, signalling perhaps that he would happily point the finger at him given half the chance. But Hannah lets Lewis off and brings back Zara and Harry M.
So who has committed the biggest crime? Zara got the price wrong at the pitch; Hannah got the prices wrong on the street; Harry M can’t stop bigging himself up and annoying everyone else.
Poor Lord Sugar — he has to fire Hannah, the most likeable of the three. Surely Harry M is on borrowed time now. Every week, he is chastised for his arrogance and every week he sits there with a smug half smile on his face and gets away with it.
Next week: The over-50s.
To celebrate my son’s birthday, I ordered several items from various websites, both large and small. One of them, Papermash, completely blew me away with their customer service – so much so, that I just had to share it with you because I think there’s a great lesson in there for small e-commerce businesses.
I arrived home this evening to find a beautifully packaged set of paper straws along with a lovely note. It’s not a grand gesture, but it was personal and it gave me a warm fuzzy feeling inside.
I was also hugely impressed at the speed at which they despatched my parcel. Of the five or six orders I placed on Tuesday evening, just one of them arrived today – one working day after ordering. It’s not enormously expensive to implement that sort of turnaround, but it does make a big difference to customer satisfaction. I will certainly be shopping with Papermash again, and I would certainly recommend them.
So what can small retailers learn from Papermash?
Personalise. It doesn’t take a huge amount of effort to write a personal note – or if you’re larger, at the very least put in a pre-printed postcard saying thank you. Or you could write a thank you on your invoice. However you choose to do it – just make sure you do it.
Be quick and efficient. I know that despatching same day adds pressure to an already overstretched small-business owner. But, my goodness, does it make a difference to the customer, who will be sure to be much more keen to shop with you again (or perhaps even write a nice blog post about you).
Make sure people can find what they’re looking for. One of the reasons I went with Papermash in the first place was that when I searched for Stripy Paper Straws, they came up high in the search engines and they had an offering that represented good value for money.
These things really are fundamental, they don’t need to cost you huge amounts to get right, but they will make a very big difference when it comes to gaining repeat business through your e-commerce website.
Fiona Humberstone, Flourish design & marketing
The one-page business plan enables anyone who has been labouring for some time over massive forms and spreadsheets to simplify matters. This simple plan should unclog it all, and should not take more than twenty minutes to complete. You will need to be able to fill in the numbers to establish whether your business is likely to work.
Step 1: How much do I want to earn each year? _________
Step 2: A realistic expenditure per customer/visit/transaction/project is: _____
Step 3: A realistic number of customers/visits/transactions/projects is:
_________ per day
_________ per week
_________ per month
_________ per year
Step 4: How much money will this frequency generate?
£_________ per day
£_________ per week
£_________ per month
£_________ per year
Step 5: Now deduct all costs from the £ per year figure:
Per year total: £_________
Minus costs: £_________
(If your salary is included in these costs, then make sure it equals the figure in Step 1. If it doesn’t, see Step 6.)
Step 6: The figure remaining should equal or exceed the figure in Step 1. If it doesn’t, change something.
Step 1: State how much you want to earn. You might think: “How can I decide when I haven’t done the plan yet?” That’s the whole point. Most business plans are unhelpful because they build an income or profit figure from a set of hypothetical variables. That doesn’t help you to work out whether your business will sustain you.
Step 2: Now take a stab at a realistic cost per customer, visit, transaction, project, or whatever the appropriate description is for your business. For example, if you want to run a coffee shop, you might put in £5 per visit. If you think your customers will only buy one cup of coffee, it might be just £1. If you think they will stay for breakfast, it might be £5. If visitors come in for hours and work on their laptops, it might be £10. Or, if your business is installing boilers, the price might be £2,000 per installation with a £250 mark-up on each sale. The point is that no one would be selling boilers at the same frequency or price as cups of coffee, so work out the parameters that apply to your market and choose an appropriate average price per transaction.
Step 3: The number of customers/visits/transactions/projects will depend on the nature of your business. Look at it by day and then multiply by the number of days in a week, month or year you will be trading. In the case of a coffee shop, the business might sell 20 cups of coffee per hour in an eight-hour day. Assuming a five-day week, allowing four weeks a month, and one month off for holiday, the maths looks like this:
• 160 per day (assuming 20 per hour, and an eight-hour day)
• 800 per week (assuming five days a week)
• 3,200 per month
• 35,200 per year (assuming one month off for holiday)
Every variable is critical. If your pricing is wrong, so is the whole model. If you open for an extra day per week or hour per day, what happens to the figure?
Step 4: Once you have completed step 3, it is a simple matter to multiply your figures by the price per customer, visit, or transaction that you settled on in step 2. In this example, it is:
• £800 per day (assuming £5 per visit)
• £4,000 per week
• £16,000 per month
• £176,000 per year (assuming one month off for holiday)
Step 5: This total income figure is not profit. It is what the business takes in. Now you have to work out what your costs will be, either by:
1. Subtracting from the expenditure per transaction every element of cost needed to fulfill that transaction. What’s left is the margin. If there is nothing left, your pricing is wrong or the business plan is fundamentally flawed. For example, if you have a 20 per cent margin on every coffee shop transaction, then for each one £4 is cost and £1 is margin.
2. Alternatively, look at the entire business over the whole year. Add up everything you will need to pay for. Now subtract that figure from the ‘per year’ figure in step 4.
Step 6: The figure remaining should equal or exceed the figure in step 1. If it exceeds it, you may well have a successful business model. If there is a ridiculously massive profit, check your assumptions and figures again. If it doesn’t equal or exceed your expectation, don’t panic yet, but you will have to change something, possibly expenditure per customer, number of customers, costs, the amount you want to earn each year or all of the above. If, after many attempts, the plan never generates the surplus you want, you may have to conclude that the proposed business isn’t going to work.
This extract is taken from Kevin’s recently published book – What You Need to Know About Starting a Business
Kevin Duncan – business adviser, marketing expert and author
So you’ve decided to start a business. Maybe you’ve concluded that setting up a company is the best route for you to follow. There are a number of different methods of company registration, and a number of people favour the direct path that is registering through Companies House. After all, any incorporation application must go through Companies House at some point, and this is a relatively inexpensive method. However, in the long-run this might not necessarily be giving your business the best start possible.
The Companies House website has a number of pages that provide basic guidance about the incorporation process. However, you are limited in the level of advice you will receive. Beyond the initial formation, Companies House is unable to give you advice on important considerations for you and your newly set-up company. Conversely, many online formations agents offer free consultations with accountants and tax advisors as part of their service, to answer any questions you have as you start-up, for example, whether you need to become VAT registered.
An important part of incorporating a company is deciding on the Articles of Association – effectively, the rules that govern the running of the company. Formation through other channels, such as an agent or your accountant, may allow you to alter the company’s Articles of Association to suit your needs. Unfortunately, this cannot be done as part of the Companies House registration procedure, because model articles are forced on all new formations.
Additionally, the service that is offered is a basic incorporation. Although this will provide you with the minimum requirements when starting a company, you cannot purchase any of the extras offered through other channels. A Registered Office address, for example, is particularly important if you are forming a UK company from abroad or if you wish to protect your privacy when trading from your home. Although this is unattainable from incorporation through Companies House, many agents will provide this.
The major benefit that most start-ups see with registering at Companies House is the comfort that they are filing the application directly. Companies House is a UK government department, and therefore, a trustworthy source to hold all of your important data. On the other hand, it is not required to make stringent anti-money-laundering checks, as an agent would. Although some may see this as necessary to speed up the process for the individual, it does increase the possibility of your details being used to fraudulently set up a company.
Whichever method you use to register a company, it’s important that it is the right type of business for you. Although the process has been made easier with online applications, it is vital that start-ups know the obligations that come with a limited company.
Regular readers of this blog will know that a few weeks ago we made a last-minute appeal for entrants for the Enterprise Now competition, which was on the hunt for applications from would-be entrepreneurs with innovative business ideas and existing small-business owners with a clear vision for business growth.
The competition has been organised by business-to-business group-buying website Business Crayon and is supported by Start Up Donut.
One lucky overall winner will receive a selection of products and services (“business kit”) worth £4,000. Their name will be announced at the Business Startup Show in London on 18 November. In addition, 50 runners-up will receive at least £400 worth of business support (although the deadline for entering has passed, you can find out more about the prizes here).
The judges have considered all applications and you can find out more about those shortlisted by visiting the Business Crayon website. From here, you can also vote for who you think should win by clicking on the logo or business name and then clicking on the ‘Vote Now’ button at the foot of the entrant’s extended entry profile.
Years ago I had a friend who lived with his parents, held down a good job and saved prodigiously. The result was that he had tens of thousands of pounds to invest as he saw fit.
One day he announced to me that he was starting his own business and had been looking at some warehouses. He didn’t know what would go in the warehouses or who would buy the goods. But they were fine warehouses available at a good rate.
This is an extreme example of the wrong way of going about starting a business. When you begin in business, you mustn’t do anything that isn’t vital at that point in time.
Do you need business cards? Not if you’re selling on the phone. Do you need premises? Again, maybe not if you’re selling over the phone. Do you need an expensive list of national contacts? Not if you’re selling from a local shop. Do you need an equal opportunities policy? Not if you’re not employing anyone.
As well as doing things they don’t need to, some start-up owners don’t do vital things well enough. Regularly I see new shops open up that have an appearance that is, quite frankly, tatty. They haven’t spent money in a vital area so these shops never last. They are taking their most potent marketing message – the look of their shop – and almost begging their potential customers not to enter. These shops don’t succeed either because the owner didn’t realise the importance of appearance or because they didn’t have enough capital to get it right.
Incidentally, I believe that anyone considering starting a retail business should consider a web-based one. The start-up costs are much lower and it’s a field where sales are still growing. This can’t be said for traditional high street retail.
There is an easy way to decide what must and must not be done when starting up. Simply answer the following questions:
A small business is like a flame struggling to stay alight on a cold, wet night. Everything must be done to nurture that flame and there is no time or money to be wasted. That’s why we cannot afford to do things that aren’t related to the critical questions above.
Chris Barling is Chairman of SellerDeck
If your business offers credit, you must make sure customers have a good credit history, as this will increase the chances they will pay you on time, every time. You could save yourself a lot of time and worry in the future by researching them at the start of your working relationship.
Ways you can check a new customer’s credit history include:
If you really want to do business with a new customer but your research makes you less inclined to grant credit, you can request advance payment.
Anita Brook is a chartered accountant and owner of accountancy firm Accounts Assist. She also helps businesses regain control of their cash flow with Debts Assist and helps entrepreneurs launch their own bookkeeping businesses with Brilliant at Bookkeeping.