As a business-owner, keeping your head above water during tough economic times involves cutting costs. Unfortunately, for many businesses, the first thing that goes is the marketing budget – just at a time when they need to attract as much business as possible.
Businesses might not be able to afford to outsource their marketing, so it’s even more important that business owners learn how to generate as many leads as possible – and start adding money to their bottom line – without it costing a fortune.
That’s where the three no-cost ways to generate more profit and make selling easier can help businesses flourish – even during tough economic conditions.
This is where another business continually refers clients to you. Sometimes they are incentivised (ie you pay them for each referral) but the best ones are where you provide a solution for a problem they had that saves them time or money. This sounds great, but how do you convince someone to send their customers your way? The best way is to make an introductory offer so they can trial your products or services. Then once they have seen how great it is, they will happily refer customers to you. Using this system enabled my business to generate more than £30,000 from one phone call.
A strategic venture is where you and another business agree to send an email out to your database to promote the other. This is usually a one-off and you should think very carefully about what you want to achieve. The offer you give to your strategic venture partner should be enticing enough that you get people taking action and ultimately adding profit to your business.
For both the above systems to work properly you must approach businesses who already sell to lots of your potential customers and then think about how you can solve their problems.
You would probably already do this if you had an unhappy customer, so why not advertise the fact and reverse the buying risk for your customers? It will also make selling far easier. Imagine you were trying to give up smoking and were considering using a hypnotherapist. If they promised you they could help you quit and if it didn’t work within two sessions you didn’t have to pay anything – it would be a no-brainer.
Surrounded by the brightest and best of the UK’s entrepreneurs, business minister Mark Prisk MP launched rather a useful tool for the UK’s small businesses at BIS HQ – a definitive calendar of events to help small business throughout Britain for every month in 2012.
Targeted at pre start ups as well as established and new businesses, the calendar marks the first time all Britain’s best business events feature on the same site in a searchable format. There are 600-plus events listed already – and Mark Prisk is aiming to get 1,000 online in the near future. He said:
“We want 2012 to be the year of enterprise, where entrepreneurs can unlock their business potential. Enterprise events don’t just take place on one day, or during one week, but they appear throughout the year and across the country.
“We need to make sure people know that there is support and advice available, that it is easy to get, and it is often on their doorstep.”
The most up-to-date version of the calendar is online to search or download – and even upload your own event. Many events are free, so the calendar could well become an invaluable tool for you – and at the very least should benefit you with a couple of days of advice, inspiration and a range of handy new contacts. And if you're looking for local events, including workshops and networking, membership is free for small businesses. Get the benefits here.
There is an ever growing number of accounting software packages available to suit businesses of any size and many that are particularly suitable for small business accounting. Making accounting easy is crucial for those running their own business, at whatever stage of development. However, should you choose to purchase accounting software from the start or is it a cost that can wait?
Generally, it’s advisable to have an accounting system in place when you start running your business. Free advice is available online from Business Link (and other sources) and it’s a good idea to make the most of such resources. Additionally, I believe it’s important to employ an accountant, if only for advice, in the early days. As your business grows, using the right system for you and taking further advice is crucial.
For the smallest of businesses a basic Excel spread-sheet is likely to be an adequate way to record your costs and income. You’ll need to know what costs can be included in this and if you are unsure, take professional advice. Setting up a spread-sheet that contains functions to calculate figures on an on-going basis will make the process simpler. If you don’t know how to do this, find someone who does. In addition to keeping the spread-sheet up to date you’ll need to create your own invoices, a Word document set up as a template is a simple way to do this. Keeping your own accounts in this way is certainly cost-effective, but is also probably the most time-consuming.
This usually comes in two types – desktop accounting software or online accounting software. Desktop packages come in the form of a CD or download that you install onto your computer. If your accounts are simple, a basic software package should be sufficient, although consider which features you will need in the future. Payroll and VAT functions may not be relevant now, but check to be sure that the package you buy can be updated with different elements as your business grows. Online accounting software is considered by many to offer more flexibility than desktop software. Accessing your accounting system via a web browser, your records and data are stored securely, which can combat any loss by theft of computer crashes, and can be accessed wherever you are or whenever you like.
Accurate record keeping is essential when it comes to small business accounting. It’s also a legal requirement (you can be fined if you fail to keep truthful and accurate financial records).
Certainly even for the smallest business, online accounting software packages can help to ensure that records are available when needed. Accounting software of both varieties will also help you to prepare simple and professional accounts for your accountant, saving them time – while saving you money. Professionally prepared accounts, invoices and reports are also well received by banks and other potential sources of funding.
Start-ups and small businesses need to ensure the records they keep are accurate and up-to-date. They also need to give serious thought to the systems they will use as part of their business planning. Preparation and accuracy in the early stages of planning and running your business will pay dividends in the future and may well be the two most important tools that will help you to establish your business.
See the Tax Donut for more information on business finance
The London launch of Sir Richard Branson's new book Screw Business As Usual was a very jolly affair. The man himself said all the right things and was ably supported by Jean Oelwang CEO of Virgin Unite, the not-for-profit foundation of the Virgin Group.
The audience included several notable social entrepreneurs, including John Bird, the founder of The Big Issue, whose scene-stealing cameo made my job of running the question and answer session very easy indeed.
The room was also packed with the world's press and media, but I was concerned that some might take a negative view of the proceedings. This was aptly demonstrated by Lucy Kellaway's review of Sir Richard's book in the FT. Her view was that Branson is an attention-seeking egomaniac prone to shameless name-dropping, and the book was unstructured, even if Sir Richard's charisma was undeniable.
Kellaway does have a point. Many of the very successful entrepreneurs I have met and interviewed were prone to attention seeking, name-dropping and the generation of unstructured books. I also think Kellaway's review is unlikely to change anyone's opinion of Branson himself, the Virgin Group or social enterprise, the key premise of the book.
There can be no argument about the general benefits of all three; Branson is successful, the economy needs driven entrepreneurs and social enterprise is now a proven vehicle for running businesses that have an overall benefit to society.
My own take on Screw Business As Usual is that between the anecdotes and name-checking in the book, there are real-life examples of every flavour of social enterprise.
The book explains how companies such as Virgin Atlantic are reducing their carbon footprint and details charitable entities that are bringing people out of poverty, as well as highly successful and profitable businesses that are improving rather than destroying the social fabric of the world.
If you are inspired by Branson and aspire to be a social entrepreneur, you will find a model in his book that suits your purpose. If you cannot stand him, you will probably continue to avoid his various products and services. If you are an entrepreneur in high dudgeon about unsympathetic press coverage, you need to get over it.
Twenty years ago I launched spoof ‘60s rock star Mike Fab-Gere on an unsuspecting public. I was thrilled to secure a major profile in a national newspaper, but incandescent with rage when the journalist, who had nodded sympathetically at my every utterance during the interview, then wrote what I considered to be a negative piece. Their argument was that my belief in 'peace and love' as a viable strategy for a happy and successful life was unrealistic and naïve.
Everyone else who read the piece took a different view, pointing out the number of column inches and the size of my photograph. The article certainly had no adverse effect on my musical or entrepreneurial career over the next twenty years.
As someone who successfully entertains and informs her readers, Kellaway is entitled to her opinion about Screw Business as Usual. I have also resisted the temptation to track down my journalist from twenty years ago and point out the subsequent error of their ways.
As we said in our own book, entrepreneurs are often over-sensitive and prone to insecurities, which can lead to an obsession with appearing on television and a desire for revenge against those who they feel have crossed them.
But as we also pointed out, the best revenge is not "a dish served cold", but "a happy life", and everyone agrees that Sir Richard does seem to be having very good fun indeed.
Screw Business As Usual by Sir Richard Branson is published by Virgin Books.
Originally published in The Financial Times. Copyright ©Mike Southon 2012. 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.
I don’t think that I am alone in thinking 2011 was a difficult year. In fact, I’d go as far as to say it was flippin’ hard work. So what have I learned from my experience during 2011 that will benefit me in 2012?
I seem to remember the Royal Wedding being declared as an event that would stimulate growth and now it is being blamed for a poor second quarter!
There are two more big occasions in 2012 – the Queen’s Diamond Jubilee and the Olympics. The first gives us another four-day-long weekend, which isn’t great for employers because we have to pay staff for another day off. However, I say smile and take it with good grace – and use the opportunity for a themed promotion or sale.
What benefit will the Olympics bring to small firms? It could be two weeks of utter misery as everyone watches the telly and I’ve already got people queuing up to book time-off for the games. Again, you can market yourself around an Olympic theme, make it work for you, start planning what you will sell, how you will go to market and use the opportunity to boost your sales. Don’t forget to also think ‘against the flow’ by trying to appeal to those who are fed up with the Olympics.
These seemed to be the overriding media stories at the end of 2011, and this sort of stuff can really get you down. You can’t ignore it because it is important and if one thing is for certain – 2012 will be even worse – according to our leaders.
Robert Peston and Faisal Islam will be looking lugubrious on the BBC and Channel 4 news respectively and making hefty pronouncements, but I say – don’t let the b******s grind you down. Life will continue and people will still buy stuff, so stay focused and keep working. You might need to move out of your comfort zone and think ‘out of the box’, but both can be good things for business owners?
I’m an absolute idiot and a disgrace to my profession. I run an online business and have always considered the Christmas shutdown to be just that. We have a skeleton staff on and do enough business to justify opening the warehouse. In 2011, it was pointed out to me that Boxing Day is the busiest online shopping day of the year. So we held a warehouse clearance sale over the holiday and increased our turnover by five times. In 2012, I am going to be really looking forward to the Christmas break and will definitely NOT allow just a skeleton staff to be on duty.
So there you go, three opportunities for the coming year. The bigger picture on the economy is that small business closures – although climbing – aren’t climbing exponentially. Interest rates are non-existent and likely to stay that way. The Government can’t really cut much more. In fact, the only thing it can really do is tinker at the margins and try to make life better for us wealth and job creators. We are constantly told that we are the backbone of the nation – let Government forget that at its peril!
Read more of John's published posts on his Google+ page
About half a million people in the UK start a business each year, although this number could be significantly higher in 2012, because of high numbers of redundancies and a shortage of jobs. Most new ventures fail within a year or two, but according to government figures there are about 4.8m businesses in the UK.
Not everyone is up to the challenge of starting and running a successful business. Although your knowledge and experience will grow, if your new business is to succeed, much will depend on your personal qualities. Do you really have what it takes to run a business – especially when the going gets tough?
Don’t believe those who tell you registering a business is difficult. Making it a success is the hard part. Registering as a sole trader is immediate, easy and free. Call the HMRC ‘Helpline for the Newly Self-Employed’ on 0845 915 4515 or register online. Setting up a limited company is simple, too, (especially if a formation agent or accountant does it for you), although it takes up to 10 days and involves paying a fee.
If you think working for yourself will mean you can take it easy, you’re probably in for a rude awakening. You’ll probably have to work harder. If you want to know what running your own business is like, speak to others who do it. Then answer the crucial question – is running a business really for you?
As with most meaningful things in life, what you get out of your new business will be determined by what you put in. The only way you’ll be prepared to work hard and overcome the knockbacks is if you’re totally committed. You won’t be able to just walk away.
You need to minimise your start-up costs and run your business in the same way if you want to maximise profits. Inevitably, starting a business will generate some start-up costs. You might have to invest personal savings. You might need to borrow money from friends or family (but only ever after carefully considering the implications). Calculating your start-up costs should be one of your earliest start-up tasks.
Even if you work hard, are totally committed, have a great business idea and you’re well suited to running a business – success isn’t guaranteed. Many new businesses fail. Even if it doesn’t, it could take years before your business generates profit. But the good news is – many new businesses succeed. You simply need to be aware that there is a risk of failure.
You might have to work long days, nights and weekends, which will impact your relationships. Your social life might also suffer. It might be a while before you earn a livable wage – or any money, so your nearest and dearest might need to cover some or all of your living costs. You might have to cut right back and get used to doing without before you reap the rewards of running your own successful business.
Overcoming challenges when starting up is satisfying – especially if it’s the first time you’ve done it. Some tasks are hugely enjoyable, while showcasing abilities you didn’t know you had can also be gratifying. One day, you might look back on your start-up days as among your most enjoyable.
Although things might not work out as you expect or want, starting your own business can give you a better work-life balance. It can make you wealthier. It can help you to escape the commute, free you from a job you hate or working with/for people you don’t like. It can give you greater job satisfaction. Some days you might regret starting your own business. On others – you’ll think it’s the best thing you’ve ever done.
Start Up Donut editor Mark Williams is a freelance editor, copywriter and journalist
I have a theory that each of us makes at least one big mistake when they start their businesses. The trick is to not let that mistake overshadow your entire business but learn from your mistakes and move on.
I’ve spoken to too many business owners recently who have spent scary amounts of money on ineffective websites or logos only to be too afraid to create something that is going to work because they’ve “had their fingers burnt” in the past and are worried about the same happening again.
When I started my business in 2005 I did my own books because I was advised that I should. I was told not to waste money on a book keeper, that I needed to know what was going on in my business and that it was easy. Well it might be for some, but it crippled me. I do not have a logical mind and it absolutely knocked me sideways. In fact, I got into such a mess that by October (four months into my business) my accountant advised me to get some professional help. To be fair, he did suggest that I get myself a book keeper who would be cheaper, but for some reason I persevered with him. I paid an accountant £80 an hour to sort out four months of bad book keeping.
£4,500 later (I seem to remember it was £4,500 + VAT?), as I handed over the last cheque he told me it “probably would have been cheaper to have just started again”. Clearly this was just what I needed to hear, money well spent.
I had made a huge mistake, and I needed to take responsibility for it. A good book keeper probably would have charged me a fraction of what this accountant did and I’d certainly had my fingers very badly burnt.
But did this mean I would never use an accountant again? Absolutely not! Accountancy and book keeping isn’t strength of mine and I knew I needed to use a professional to help me in my business. If I’d buried my head in the sand and sworn never to use an accountant again I probably wouldn’t have a business left. I have always used a book keeper to do the detail in my business and I review the monthly (as well as daily and weekly) figures but I don’t ever put myself through the torturous process of doing the books because I know it’s not helpful.
Fortunately I’ve never met anyone who has spent quite such an eye-watering amount of money on 4 months’ worth of trading history books. But I do meet business owners time and again who realise they are losing opportunities through an ineffective website. They spend days and hours debating what they might do if they had the chance to change their website but they feel paralysed to do anything about it because they’ve already spent so much on something that clearly doesn’t work.
Hanging on to something ineffective for the sake of “getting value out of your mistake” just doesn’t make sense. For many of us, our websites are our shop windows: they have to be right. And if that means facing up to the fact you’ve made a mistake, perhaps that’s what needs to happen for the sake of growing your business?
If past mistakes are holding your business back, ask yourself: What can I learn from this and how can I move on?
Read more of Fiona’s advice and thoughts about running a small business on her blog site.
The news has been dominated recently by the Government budget and its spending cuts. Austerity measures appear to be in place for large swathes of the population and growth prospects are poor, set in the context of rising inflation, employment and debts.
With this in mind, is it a bad time to set up a new business or are there good opportunities for savvy business people who are prepared to take a risk and capitalise on new opportunities?
Let's examine the evidence. The Government has revised its growth estimates down to less than 1%, with growth rates of 3% not expected until 2015.
More bad news - public sector pay rises are capped and pensions are under review. Additionally, public sector job losses are likely to top 710,000.
So, there is an environment of low growth and high unemployment, which means that potential entrepreneurs may be forced into starting new businesses rather than walking into new jobs!
Yet, there are rays of light on the business horizon. The budget included a credit easing programme for SMEs and start-ups to access new funding and business financing partnerships are to be put in place nationwide. Apprenticeships and young people will have extra funding, which offers opportunities for potential employers.
So, although the economic outlook is grim, there are positive things to focus on, particularly in terms of start up funding, to plug the gap that banks have left.
New businesses will generally look at finance as their first port of call, using their business plans as a basis for raising start-up cash and investment.
With a good business plan and a viable model, along with persistence and a lot of hard work, successful businesses can still be built and are being started up in droves, as more people lose the security of employment.
If you're looking to set up a new business, speak to a Government sponsored finance provider or a listening bank. You'll need to set up accounts for your initial loans and day-to-day transactions and there are a wide range of business bank accounts to choose from.
Speak to advisers about possible grants, as well as the Government sponsored advice schemes such as the national Business Link. There is a range of localised not-for-profit Government partners and privately run organisations that exist to help businesses start up and grow.
Get a mentor or business angel to help coach you in the early days. Network like crazy and build up contacts. Attend seminars, groups, coaching sessions, skills training and anything to build your experience, abilities and network.
Use technology to make your routes to market quicker, more direct and often cheaper than traditional face-to-face or direct print marketing routes. Look at online advertising and social media usage to generate publicity for your product or service.
Get good staff in. It can be part time or contract if you can't afford full-time, or employ young people and train them up. There's a generation of graduates at risk from becoming 'lost' to the economic downturn and they possess enthusiasm and raw talent, as do young apprentices.
Ultimately, there will never be a perfect time to start a new business. Some industries contract and others expand, even in a downturn. Opportunities will still arise. One other good tip is that if you work full time and don't want to risk giving up your job to start a new venture, build it up in your spare time initially until it's successful enough to go full time!