It’s been another memorable year for the Start Up Donut and its sister sites (Marketing, Law, IT and Tax). Time certainly flies. I can’t believe it’s little more than three years since we set out on this road aiming to create genuinely groundbreaking and inspiring websites packed with reliable, real-world information, advice, tools and resources for small businesses – free to use when needed.
Earlier this year, the Donut project reached the notable milestone of attracting its one-millionth site visitor. Since then, hundreds of thousands more users have been drawn to our sites, with many returning regularly for their fix of small-business advice, news and views.
In late August, following many months of research and development, the Tax Donut website was launched. It’s since become a popular destination for small firms in need of sound (yet accessible) advice on tax issues (Moira Stewart’s right – tax doesn’t have to be taxing).
Amazingly, 100-plus syndicated versions of Donut websites have been created for enterprise agencies, chambers of commerce, law firms and other sources of business support (more than half of these are versions of Start Up Donut). Hopefully, there will be many more in 2012.
Thanks must also go to those generous sponsors whose support helps to ensure that you don’t have to pay to benefit from our sites. Thanks also to those who provide our site users with access to special offers.
In 2011 we produced 12 Donut e-newsletters, which are emailed to tens of thousands of registered site users each month (sign up if you haven’t already – there’s no charge). I’ve really enjoyed writing 12 business-owner profiles this year for MyDonut, although personal favourites include Guy Watson of Riverford Organic, Goth accountant Psyche Coderre, Wendy Tan-White of Moonfruit, recession-battling restaurant owner Enzo Baldascino and the irrepressible self-publicist Ling Valentine of Viz and Dragons’ Den fame. I genuinely hope such profiles inspire you and others.
I’ve also enjoyed writing numerous case studies for Start Up Donut, which have made me even more convinced that the best way to learn about starting and running a business is to talk to those who’ve been there and done it.
The Donut project is backed by the knowledge of a small army of business experts. Special thanks to those of their number who went out of their way to assist us this year, especially those who helped us with Q&As or provided blogs. We’ll be recruiting more in 2012, so send us an email if you would like to share your expertise (and raise your profile).
This year, we’ve also built our Donut Twitter following to 30,000-plus souls – 7,500 on the Start Up Donut Twitter page alone. We hope you’ve enjoyed and benefited from reading our tweets this year.
We wouldn’t be able to do what we do without the enthusiastic support of our readers – people like you. We value your input on our forums and the kind comments and messages of support you’ve sent us throughout the year.
Have a great Christmas and New Year. See you in 2012…
Start Up Donut editor Mark Williams is a freelance editor, copywriter and journalist
This year the Start Up Donut has published the best part of 200 blogs. Many thanks to everyone who has produced content – we appreciate your willingness to share you knowledge, experience and opinions and look forward to receiving more in 2012. A bewildering array of topics have been covered on our blog in 2011. Here, for your delight, is a mere sample of the advice and information that was offered…
1. “Always employ the best you can afford. Spending extra on wages for certain skills or talents can be the difference between 5 per cent and 20 per cent growth in a start-up’s early years” – Six need-to-know start-up tips.
2. “Research by Regus suggests the number of UK businesses who would take on working mums has fallen significantly. More than 1,000 UK businesses were surveyed and only 26 per cent said they would hire a woman with children, compared with 38 per cent last year” – Who’d be a working mum, eh?
3. “Not being able to pay yourself in anything other than extraordinary circumstances is the first real sign that something is wrong. If having enough money to pay yourself becomes a persistent problem – close the business down and get a ‘proper’ job” – Is your business in trouble?
4. “Many online stores offer free delivery for larger purchases, which can be a real incentive to add some extra goodies to the shopping cart. If your visitors cannot see your delivery prices clearly, you risk them shopping elsewhere” – Three common e-commerce mistakes to avoid.
5. “Even if your primary motive in starting up isn’t to get rich, profit is vital. Think of profit as oxygen – without it, your business won’t survive” – Two tips to make a billion.
6. “If you want to raise money, think long and hard about how you can persuade the potential source that the risk is low and the reward is likely to be high” – Things you should know about finance, risk and reward.
7. “Only start a business if you genuinely have a passion for the idea. I’ve seen too many businesses struggle only for the owner to give up because they don’t have the necessary passion or motivation” – Five common start-up mistakes.
8. “Small businesses should aim high, but don’t overstretch yourself or try to run before you can walk. Grow your business on profit – not on loans” – Seek to grow your business on profit – not loans.
9. “Much like the giant boxer undone by his faster, smaller opponent, a start-up can take advantage of market movements far quicker than larger competitors who often cannot make decisions without approval from ‘on high’” – Two ways start-ups can outperform the big fish.
10. “Malicious fraudsters have now started targeting .uk domain names with falsified domain expiry warnings. Many of those who fall for this con are small firms” – Protect your business from common email scams.
11. “Dropbox is a virtual hard drive. No matter where you are, as long you have synced with the cloud-based tool, you can access your files. It's also great for sharing files without having to worry about emailing large attachments. Dropbox offers free and paid hosting solutions and is a must have for any start-up” – My top ten favourite web applications and tools.
12. “There may be the opportunity to sell your sole trader business to your limited company. In doing this you may realise significant tax savings” – Should you turn your sole trader business into a limited company?
13. “Gone are the days when customers didn't talk to each other. Today, they're always talking to each other online. And as the marketing author Seth Godin has said: ‘the internet does not forget’” – Six key trends to bear in mind when planning your business.
14. “Listen to your team. They are the eyes and ears of your business. If you employ intelligent people, you should listen to them” – Essential advice for new businesses.
15. “In Suriname, on South America’s north east coast, according to the World Bank, 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)” – Global Entrepreneurship Week.
Mark Williams is a freelance journalist and editor of Start Up Donut.
As consumers, often we see January sales as a way for retailers to clear stock. If you run a business that doesn’t hold stock – be it a craft business where you make everything to order or a service based business where you sell your time – it’s easy to dismiss sales as not being for you. But is it worth looking at them from a different angle?
Sales are just as much about stimulating demand as they are clearing stock.
And when you think about it like that, it sounds a whole lot more attractive. If your business is quiet in January, rather than sitting and moping about it, should you be doing something about it? A sale could be just the thing – with one caveat – it needs to be planned and executed well.
Discounting can look desperate and damage your brand. It can also affect your pricing strategy in the long term, so I would only ever do it with caution. But it really can work.
A poorly planned sale also looks weak. 10 per cent off everything isn’t a sale – it just looks desperate. You need to give people a compelling reason to buy, and a blanket discount just won’t cut it. If you sell product, consider slicing between 25 per cent and 70 per cent off various groups of products rather than applying a discount to everything. Again, this gives people a more compelling reason to buy from you.
Last year, one of my clients, Clare Yarwood-White, ran a sale that started on Christmas Eve. Her sales increased by 600 per cent compared to the previous year, and it didn’t cannibalise her figures for the rest of the month.
Printing.com has run a January sale since 2003 and it works wonders for stimulating demand (although it certainly affects margin for the month). I’ve yet to see a serviced-based business pull this off, but I wonder – can it be done? Should it be done? What do you think?
Read more of Fiona’s advice and thoughts about running a small business on her blog site.
According to the government, three-quarters of all British businesses are sole traders, which amounts to about 3.6m businesses out of some 4.8m firms. Sole traders (aka the “self-employed”) drive the UK economy.
All you need do is call the HMRC ‘Helpline for the Newly Self-Employed’ on 0845 915 4515. You’ll be asked for your name, date of birth, address, telephone number, National Insurance number, business start date, name and type of business and whether you’re a sole trader or working with a partner. You can register even online or download and complete the HMRC form ‘Becoming self-employed and registering for National Insurance contributions and/or tax’.
You must register as self-employed with the HMRC within three months of starting your business or you risk a £100 fine. Best advice? Do it straight away, there’s no point in delaying.
As a sole trader, you are the business. It’s not a separate legal entity, as it would be if you formed a limited company. Therefore, you’re liable for your business’s debts. If you’re starting a business that won’t build up big debts, becoming a sole trader isn’t too risky. If you are likely to build up significant debts, you should consider setting up a limited company.
You have to pay to set up a limited company and running it requires slightly more administrative effort when it comes to tax. Registering as a sole-trader costs nothing, while accounting costs and tax liabilities are likely to be cheaper than if you started a limited company.
But if you do employ people, you must collect income tax and National Insurance contributions (NICs) from them and pay these to HMRC. You’ll need to operate a PAYE (Pay As You Earn) payroll scheme for this purpose.
You pay income tax based on your business profits. You (or your accountant) must fill in a self-assessment tax return each year, detailing your income and expenses. You’ll also have to make flat-rate Class 2 NICs throughout the year (£2.50 a week payable every six months). If your annual profits are more than £7,225, you’ll also have to pay Class 4 NICs (9 per cent on profits up to £42,475; 11 per cent on annual profits above this figure). You pay this with your income tax and the figure is calculated from your self-assessment tax return.
That includes details of all your sales. You must also keep proof of any expenses (eg receipts, invoices, utility bills, etc). Anyway, they’ll help when you’re filling in your tax returns. Keeping basic financial records (aka Bookkeeping) doesn’t have to be as arduous as it might sound.
If your turnover exceeds the VAT threshold (currently £73,000 a year), you will need to register for VAT. When you’re VAT registered, you charge your customers VAT on VAT-able goods and pay it to HMRC. In turn, you can reclaim the VAT you pay on goods and services you buy.
The size and nature of your business can change quickly and for a range of reasons (including increased exposure to risk) you might want to set up your own limited company (“incorporate”) at a later stage. Providing someone else hasn’t already registered the name, you should be able to use your sole trader name (with Ltd added, of course).
Self-employed people pay tax on the 31 January following the end of their tax year. Crucially, HMRC will request payments on account for the following year’s estimated tax – on 31 January and 31 July each year. That means, after your first year in business, your tax bill could be 150 per cent of what you were expecting to pay, with another 50 per cent payable in July. If your business income is very low, you may not have to pay Class 2 National Insurance contributions.
When it comes time to pay HMRC, you’ll be glad you put a few quid away each month. Being faced with a large tax bill you haven’t saved for is a nightmare. Try to put 25 per cent of your grow earnings into a separate bank account (and don’t dip into it). Failing to pay your tax bill on time will result in penalty charges.
Crucially, you’ve got be good at sales and marketing. If you don’t make enough sales, your business will fail – simple. There will be admin tasks to take care of, too, including simple accounting/bookkeeping. Paying an accountant to do your tax return can save you time, but you’ll still have to maintain simple financial records. Having to manage employees for the first time could prove a big challenge, too.
Mark Williams is a freelance journalist and editor of Start Up Donut.
This topic is all about getting the basics right. You’d be surprised at how many businesses don’t and all the clever search engine optimisation tricks in the world will be futile if you can’t get these basics right.
Who are your customers? Sounds obvious? Not really. Are you selling to consumers or trade? You need to be clear about this at the outset. If you’re selling to trade, by all means keep your prices ex-VAT and fill up your pages with jargon (if you’re confident your customers will understand it). If you’re selling to consumers, prices should include VAT and your product descriptions should be user-friendly.
How do your customers want to buy? What journey will they go on to buy from you? What do they need to know before committing to a purchase? What do they need to see? Don’t overlook essential information such as product dimensions/installation instructions, etc. Something as simple as a light fitting is probably just a case of seeing a picture, liking it and checking the spec. Ordering something more complex such as wood flooring will probably involve sampling, checking the technical spec and understanding everything required to make it work.
Be clear about what you’re selling Give a clear description, decent product shots (detail, in situ/lifestyle and cut-out if relevant) and tech spec/full dimensions/materials, etc. People can’t pick up and touch online, so you need to be as clear as possible. Which leads me on to…
Use great photography. Beautiful, clear, well-lit and well-shot photography will do wonders for your ecommerce site. If you’re serious about building a decent business, this is something you need to invest in.
Show the relevant extras on the product page By this I mean not only delivery costs, but actually showing related products. This isn’t just about upselling.
Make it easy for people to buy. Use software that makes it easy for customer accounts to be created (and make sure the functionality works). Be clear about the ‘Buy Now’ button – simple things that make it easy for people to buy from you.
So there are six quick and dirty basics. What else would you add to this list?
Read more of Fiona’s advice and thoughts about running a small business on her blog site.
I’ve been running my online ecommerce site for ten years and have invested enormous amounts of time, effort and hard-earned cash into the website and software needed to run it.
Recently, however, I was talking to a friend who has just started to sell online and in very few months he’s taken his online business from zero to more than 100 orders a day. It took me nearly two years to achieve this landmark. How has he achieved this I hear you ask? The answer is pretty easily actually; he has used Amazon Marketplace as his selling medium and it’s working very well for him.
If anybody asked me about setting up online these days I’d say that ecommerce must be a keystone of any business’s sales and marketing strategy. However, the cost of entry can be off-putting to many people, unless you consider eBay Shops and Amazon Marketplace. With very little upfront cost you can be up and selling from your spare room within a few days, and in a few months can be generating a sizable income.
For businesses such as my own, there are certain things that act as deterrents to Amazon Marketplace.
I operate in the consumables market selling printer ink cartridges, where margins are tight and competition is fierce, so for me to give up 7% margin, and more importantly not receive the cash for a couple of weeks, is a definite turn-off.
However, if you are a new business, just starting with an open mind and profitable product range, then checkout the top sellers in the various categories on the Amazon website and you will be absolutely amazed at the diversity and sheer range of products that are selling on there.
Personally, I’ve never been very comfortable with eBay, but its Shops feature is a similar process.
Don’t get too hung up about what you’re selling, but make sure you have a big enough margin to cover your costs and see you through the settlement period.
These marketplaces can be a great way to ‘test the water’. Once you’re established, it may be time to look at launching a ‘proper’ online shop under your own domain. This way you can start to market your own brand, but think long and hard before parting with hard cash for software, designers and hosting, etc. If the marketplace model works for you – don’t look to change too quickly.
As a business-owner who is always on the go, if you want to conduct business while on the road you have to find the best credit card processing services provider. Then you will be able to make transactions and complete sales even when you’re away from your premises or office.
Choosing the best mobile phone credit card processing company will not only ensure that you can accept payments on your phone, but it will also ensure that you pay the lowest swipe rates and fees – and that you pay the lowest rates on credit card processing services you choose.
There are many times when business people are on the road meeting a client away, without having a credit card terminal handy. For such meetings, making sure you choose the best mobile phone credit card processing company to authorise payments and complete transactions over your phone is something business-owners must consider, to make sure they never lose sales again.
There are many processing companies that offer these mobile services. As a business-owner, you need to find one that will allow you to take the payment anywhere, on your smart phone and make the transaction. Crucially, you need to find a processing company that charges the lowest rates for services. Not only will you be able to take the payment anywhere, but when you take the time to compare several companies that offer such services, you are also going to be paying the least amount of fees on transactions.
So, prior to choosing a processor, make sure you compare all available companies for such services on your mobile phone.
Shannon Martin on behalf of merchantseek.com, credit card processing services
With the firing of four candidates last week we are suddenly here — the final. It’s James “bull in a china shop” McCullagh versus Zara “cool, calm and collected” Brownless.
So for the last time in this series, the faceless voice picks up the phone and calls the house to ask them to be ready in 30 minutes. They are going to County Hall. Destination: London’s largest gaming arcade. Specifically: the dodgems. Sadly we don’t get to see Lord Sugar, Nick and Karren crashing about, releasing all that pent up tension.
And so the final task – the one that’s going to deliver a clear winner — is to create a video game and a viral internet advert to go with it. The good news is that Zara and James don’t have to do this all on their own. They get to carry on being bossy as the losing candidates are back to help them out.
Zara ‘s team includes Gbemi, Haya, Harry M, Mahamed and Ben
James’ team includes Harry H, Lizzie, Hayley, Lewis and Hannah.
James is on good form. He tells Harry H, “Get bloody thinking”. Later he tries to motivate the team with some words of encouragement. “I don’t want any rubbish and I don’t wany anyone messing around.” Got that?
Ideas for a video game are not in short supply on either team and include zombies and aggressive seagulls. Zara’s team uses a mind map to thrash it out. James calls for some market research to test two ideas and promptly ignores the findings. Twas ever thus.
So what do we end up with? Zara’s backing a cute pig that has to run away from a giant butcher. James has a time management game in which the player is the prime minister who has to keep his job. And so Piggy Panic and Crazy Cabinet are born and come to life thanks to some real work from some actual games designers.
The two teams then try to create some hilarious viral ads. James has a subtle plan “Nothing’s funny unless it offends someone,” he says.
The two finalists pitch their games to an elite group of online movers and shakers from the likes of Facebook and Disney. And it has to be said that James and Zara both do a great job — they are natural speakers and their pitches are really well-received.
In the boardroom, James is in confident mood. “I’ve beaten ten people in this proess and there’s only one to go.”
But what does Lord Sugar think? He is being pretty even-handed so it’s hard to pick a winner. When he’s judging the ads, he says James’ ad is “quite funny” while Zara’s ad is “funny, I suppose”.
The pendulum appears to be swinging in James’ favour. James is not afraid to take risks. And he’s much calmer now — not such a wheeler dealer. “Has James the leopard changed his spots?” wonders Lord S.
It looks like James has got it sewn up.
But wait — Lord Sugar has just one more question. How would they spend the £25,000 prize money?
Zara says she would buy more film equipment to expand her business. She’s only 17 and she’s been making money at it for two years already.
By contrast, James says he’d spend it on his education, specifically in economics. It turns out — wait for it — he hasn’t ever even had a job, let alone run a business.
Lord Sugar is appalled. “I like enterprising people who realise the world doesn’t owe them a living.”
James’ face is a picture. He has fallen at the last hurdle and he knows it.
Sometimes it is an unexpected comment from a mentor that resets the course of a business. Fashion designer Pierre Cardin commented on Lesego Malatsi's menswear designs and wondered if he had seen them somewhere before.
For many South African fashion designers, this might be taken as a compliment. If they had produced work that looked similar to European designs at a lower cost base, this might open up a potentially very interesting market. But for Malatsi, it was clear that he had to produce something new and original, not just replicate other people's designs.
Malatsi grew up in Soweto and initially thought he would train as an accountant. But he had always been inspired by design, so enrolled at his local technical college. This only lasted one year, but he persevered and eventually graduated from a second college with a degree in fashion design.
His first retail job was with Woolworth's as a store manager but he could see no route towards designing his own clothes, so he left after a year to purse his own dream. Not having the resources to start his own company, he approached a group of women who had secured a sewing project and did a deal with them to provide machine time to generate garments from his patterns.
He was soon able to buy his own machines, and was invited to show his men's and ladies wear designs at a high profile fashion event sponsored by Volkswagen. This was attended by Cardin and his feedback inspired Malatsi to generate his own original afro-centric designs.
His vision was to take elements from the eleven different local cultures, modernise them and inspire a new generation of genuine, indigenous fashion design for both men and women. There would be the additional benefit of improving cross-cultural understanding both within South Africa and also abroad.
His early years had their inevitable ups and downs. He hired people before his revenues were secured, and had to leave his first set of premises, having underestimated the overheads required to run the business. Eventually, he set up an operation in his own flat, and after two years' hard graft was invited to show at the South African Fashion Week.
He learned the hard lesson that excellent reviews do not necessarily lead to firm orders and was soon struggling again until a big customer, who he now refers to as an 'angel', finally arrived with a substantial order.
But he was frustrated that his designs were being marketed under other people's brands, and in 2004 set up Mzansi Designs, as a vehicle for his own and other local fashion designers' work.
He was beginning to attract some large orders, including some blazers for the government and the national sports teams. This put pressure on his business operations so he approached the Branson Centre of Entreneurship in Johannesburg, which is supported by Virgin Unite, the non-profit foundation of the Virgin Group.
His mentors included a South African entrepreneur, Howard Harrison, who set up the Knomo brand of laptop bags and accessories in London and an Indian finance expert who often visits Johannesburg on business. They provide their mentoring face-to-face or via Skype.
Malatsi has just presented his designs at London Fashion Week, has seventeen people working for him and has opened his own retail store. He explains that there is much local talent who share his vision to break the stereotypes and perceptions people have about Africa.
Starting a business is always the hardest part. Now he has achieved international recognition, perhaps one day Lesego Malatsi's name will be as famous as Pierre Cardin's.
Mzansi Designs can be found at www.mzansidesigners.co.za
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.
What impact do you feel new bank, Shawbrook, will have on your business? In case you missed the news, Shawbrook Bank launched this October amidst a fanfare of publicity. One of their niches is in lending to small businesses. They claim to have the funding and desire to lend to businesses that have the confidence to grow.
Week in, week out, I meet with business owners who have big ideas for their businesses, and a good chunk of them have the confidence and investment available to see through the big thinking. The investment pays off in spades and it’s wonderful to see their businesses grow.
But at the same time I think back to the retailer I met in January, desperate to launch an online shop presence, who simply couldn’t get the funding to make her dream happen. And it’s not about dreams; it’s about good business sense. As markets change and consumer and client habits change, you need to have the money and confidence to invest your time, money and energy in your business. And you can only do this through investment.
There are things you simply can’t do well yourself – and whether that’s having an ecommerce site developed, investing in a new logo or website or buying a new piece of machinery or taking on staff. To really grow your business you need to think big, be bold and have the guts to go for it.
In my experience there are numerous examples of businesses that need to make the investment, but don’t. Now it may be about a physical lack of money, but I suspect in many cases it’s more about fear. Fear of not seeing a return instantly, fear of needing that money for something else. And perhaps we’re all a little more sober about what we do with our money these days?
So tell me, if you could get your hands on some funding, would you use it? Do you think it would make a difference to your business? And do you think there’s any likelihood that the bank will live up to their claims and lend, or is it just a marketing ploy?
What has come over Lord Sugar? It’s no more mister tough guy this week. He’s living up to the sweetness of his name for once.
OK, so four of the six remaining candidates are being booted out. Fair enough. But it’s the way he does it.
He’s becoming less like Simon Cowell and more like Louis Walsh by the week. “You’ve got a great recording voice and you deserve to be in the final” Louis tells every single X-Factor act. Now here’s Lord Sugar dishing out the compliments left, right and centre and even giving them his personal business cards.
But I am getting ahead of myself.
This week it is the big shake-up before the final. Four people have to leave. How’s that going to work the nation asks? Well, it’s pretty ruthless — the entire losing team in this task have to go. End of.
So here’s how it looks in this crucial week:
Kinetic: James, Haya and Zara
Atomic: Harry H, Harry M and Lizzie
The candidates are then left to decide on project managers. Not surprisingly, on team Kinetic, James and Zara are both keen. And the two Harrys are battling for pole position on Atomic. Which leaves Lizzie and Haya to be king makers as Lizzie cheerfully describes herself. And it’s immensely satisfying to see the marginally more annoying candidates — Harry M and Zara — lose out in this process. Which means Harry H and James are PMs.
The task is a little strange. They have to create new flavours of popcorn and sell them to various retailers. I’m not sure there’s actually any demand for new flavours of popcorn. But that’s probably what people once said about crisps and ice-cream. What’s wrong with salt and vinegar and vanilla anyway?
Team Kinetic decide to create mediterranean flavours — using ingredients like olives, feta and chorizo. Or at least they mix strange powders that taste like them. Atomic go down the all-American route with BBQ chicken and pancakes with maple syrup.
With brand names, slogans and packaging sorted, the teams go into bat in front of Odeon Cinemas, Jet2 airline and Morrisons.
In the board room, the numbers are in. The results are given the usual slow reveal and presented in such a way that it looks like one team has won when in fact it’s… the other team. Classic Apprentice.
The two Harrys and Lizzie have lost. They are gutted. But Lord S showers them with compliments. Harry M shouldn’t be dis-heartened. Lord Sugar says he’s never met anyone as unlucky as him — what with him having been on the losing team seven times out of seven. And Lizzie is as honest as the day is long. “Don’t ever change”, he tells her. Harry H has been a “general all-round great performer”.
“I’m sorry that we’re parting in this way,” Lord Sugar adds. And that’s it. No finger pointing. No “you’re fired”.
But it’s not over yet. One of the candidates on the winning team has to go too. It’s no surprise that he picks Haya. James and Zara are just the bigger personalities at the end of the day. Whether their personalities are better is another matter altogether.
So Haya is told in no uncertain terms — “I’m sorry to ask you to leave the process.”
Lord Sugar sums up: “Well guys, that’s life I’m afraid”.
Next week: The final — something to do with video games.
Many of you will be familiar with the statistic: “One-in-three businesses fail in their first three years of trading”. It’s often when finances have been handled badly, whether it’s poor forecasting or poor cashflow management. Failure because of something as simple as poor financial management is a travesty, which is why I want to encourage you to evaluate how your finances are managed.
Recent research (taken across 500 start-ups less than five years old by Intuit) suggests that only 11 per cent of start-ups feel they handled finances badly in their first year. This leaves 22 per cent in line for a shock at some point in the next two years – how annoyed will you be if you’re one of those businesses?
Sensible forecasting, with reasonable targets and sales expectations, make the early years much easier. Do your research. Make sure your offering is beneficial, customers want it, it’s worth the price and – crucially – that you can get into the market.
64 per cent of survey respondents managed to maintain their businesses with less than £5,000 of start-up funding – so it’s not impossible!
Once your business is up and running you need to monitor your finances or pay someone to do it for you.
44 per cent of respondents either ran out or came to the brink of no money within five years of their launch. A further 20 per cent missed their payroll because of insufficient funds. This is just poor management of your finances – and it is avoidable.
An amazing one-in-three businesses made tax mistakes, and nearly half of these mistakes ended up with fines from HMRC. Can you afford costly mistakes such as these?
One-in-ten business-owners stated they spend an entire day a week doing financial admin work. It needn’t be this high, if you get a structure and plan in place, so look at areas you can improve now.
Interestingly, a fifth of respondents use pen and paper for their financial record keeping. Even if you’re not using proper accounting systems (which are recommended and readily available), at least set up a spreadsheet document for your finances. With computer copies, easy manipulation and forecasting capabilities you’d be crazy not to.
This post is not meant to scare you off starting up. Starting up is one of (if not the) most rewarding thing you can do in business. It’s something to be proud of. Not to mention that over 99 per cent of the UK’s total number of businesses is accounted for by small firms, so they’re the lifeblood of this country.
Read more of Matt's published posts on his Google+ page
If you own a business, you almost certainly need a website. Even if you aren’t selling products online, the web is where people go to search for businesses – it’s the new Yellow Pages and fingers are still doing the walking. So it was surprising that our national survey of small-business owners revealed that 41 per cent of them don’t have a website.
Your website is an investment, but how much should you spend on getting one? For a new small business, it’s a difficult decision. It will depend on your resources and how much value you place on your website. Our poll of 400 small businesses across the UK suggested that one-in-five self-employed professionals spent more than £1,000 on getting their website up and running. But what are the options?
If you have a good turnover/profit, and a good portion of that can be attributed to your website, hiring a professional web designer could be a smart move. Generally, a designer will give you something better than what you thought you wanted. The only problem is the price tag. Good designers don’t often come cheap and can spend days perfecting your website. If you’re a small business owner and can’t afford a professional designer, you can minimise the risk of spending too much money by creating your own site.
Some of the most popular platforms for web developers at the moment are WordPress, Joomla! and Drupal (there are lots of others). They’re great for business-owners who know, or want to learn, a bit about web design and, best of all, they’re free (although you still need a web address and hosting). Be prepared to devote a large chunk of time to getting a bespoke website though.
If you’ve bought your own domain name, know which web host is right for you and can set up an FTP, WordPress is worth looking at. If you didn’t understand half of the last sentence – and not many people would – there are other ways.
Despite 36 per cent of respondents saying they don’t think they have the time or skills to create a website, it’s not as hard as it sounds. Easy-to-use web design software makes getting a website live online simple – and quick. You don’t need to know any programming language – they often have templates made by designers so if you can use a mouse and keyboard, you have all the skills you need to create a professional-looking website.
Being in charge of your own website makes updating quick, easy, and free. You don’t have to communicate changes with anyone, wait around for them to get it done, and then pay them for it. You’ll find that most of these types of programs sort you out with a domain name and hosting, and usually cost less than £100. It’s great value, however you look at it.
For the cash-strapped start-up, using a DIY website program provides excellent value for money and won’t eat up much of your time either. It’s a safe way to get online without a huge initial outlay. If you feel the need, you can always get a professional to redesign it for you when you have the money.
For more information on Serif visit www.serif.com/webplus.
Dale Cook is product marketing manager at Serif.
I’ve written in the past about many aspects of a successful start-up, including playing to your strengths, being realistic with your plans, utilising your skills and properly working out your business proposition.
But when all is said and done, there is one critical question you need to ask: are your customers happy? In the rush to get sales started, you can celebrate your first sale and then quickly move on, but that’s not the right thing to do. Instead, with your first (and probably next few) customers, make sure they’re really, really happy and that you totally understand them.
Nothing helps a business more than happy customers telling their friends and colleagues about you. Nothing destroys a business more quickly than customers that bad-mouth you, refuse to order again, clog up your sales lines with complaints and even sue you for failed service.
When your product or service hits your first customer, that’s when reality sets in. All start-ups are desperate for sales, but you’ll get the most value from the real-life testing of your product and service. You can also glean intelligence from how your customer found you, understand their profile and why they bought from you and not a competitor.
And don’t stop there. Make it your business to continuously seek out customer reviews and feedback and to compare yourself with the competition. Encourage comments on blogs and Facebook, introduce forums, mystery shoppers and independent feedback systems.
Put simply, a business can’t succeed in any meaningful way without happy customers. And you should start as you mean to go on.