Another year over, eh? How did that happen? Seems like only yesterday we were enduring one of the wettest summers on record. Hopefully, it was a great year for you and your business (despite the weather).
It’s been another fantastic year in Donut Land. All of the sites – Start Up Donut, Marketing Donut, Law Donut, Tax Donut and IT Donut – continue to grow in profile and popularity, with visitor numbers reaching new highs with each passing month.
The Start Up Donut alone now receives thousands of visitors a day and even though the rate of growth this year has exceeded all our expectations, we have ambitious plans for next year.
Important websites and organisations, including www.gov.uk (the government’s main information portal), The Prince’s Trust and Start Up Britain, now refer their site visitors to Donut sites for more information, while a range of local councils, universities, chambers of commerce and business support agencies (aka Donut Partners) have their own version of The Start Up Donut. (Want to find out how you can get your own version of this site?)
What provides the most satisfaction is the many kind comments left by visitors about how useful they find the site. A lot of hard work (by a small but dedicated team) goes into making sure this site works properly, looks good and remains informative, engaging, accurate, fresh and in tune with the needs of people who are starting up or running early-stage businesses. Of course we welcome your ideas, so please let us know if there are things you think we should be covering.
A special thank you to all our sponsors for their support this year. Many thanks also to the legion of experts who freely share their knowledge and experience, particularly those who provide content which helps to ensure that our blog remains a popular source of information, advice and inspiration. Many busy people also spare time for interviews for articles for our monthly newsletter, for which we are also very grateful.
A big thank you also to our every-growing list Donut Partners – we value the faith you show in the Donuts and look forward to working with you next year and beyond.
Finally, a massive thank you to our readers for using this site in 2012. Whether you were thinking about starting a business and were looking for inspiration or you were starting a business and needed practical advice, we hope you found what you were looking for. Happy Christmas and here’s to a fantastic 2013.
All the best – The Start Up Donut Team
Setting up a business in the current financial climate can be a challenge, particularly for those with minimal funds. However, the recession has opened doors for many entrepreneurs looking to take advantage of gaps in the market to try and offer something different, while competitors flounder. Here are a few tips intended to help you set up your business if money is tight.
1 Keep borrowings to a minimum
It’s much better for your business’s long-term prospects if you don’t have to borrow to get off the ground. Your new venture is meant to provide you with a new source of income, not become a millstone of debt around your neck. However, there may be instances where you need to take on the right kind of debt, with a realistic plan of paying it back through the success of your business.
2 Only buy essential equipment
Put aside any thoughts of a fancy office space or the latest hi-tech gadgets. You should only buy what you need to carry out your day-to-day business. Much can be achieved with basic internet and telephone connection, a reliable computer and essential software.
3 Work from home
Why waste money on rent if you don’t need premises? Many start-ups can now be successfully operated from the comfort of the owner’s home. If necessary, you could even operate from a virtual office, perhaps with a more attractive business address.
4 Online marketing
You might be able to market your business online without paying a single penny if you’re clever. With powerful social media networks such as Twitter and Facebook you can reach out to potential customers and network with customers and possibly suppliers using online forums.
5 Keep it in the ‘cloud’
The last thing you want as a new business is to lose sensitive business information that is crucial to the day-to-day running of your start-up. A loss of data may also affect levels of customer service and cause embarrassment that could tarnish your reputation before you’ve even started. Cloud computing is a relatively new concept that enables users to rent storage space on an external server to guard against data loss in the event of natural disasters or crime.
Having your own business is difficult but going through the investment route makes things a lot more difficult. Here are my eight tips for getting investment into a business.
1. Do your research
When looking for investment, you will need to do your research. If you haven’t looked into potential investment organisations, such as LBA (London Business Angels), I suggest you do immediately. There are also a lot of ways to help secure investment, such as going through the Seed Enterprise Investment Scheme, which is what I did.
2. Have a great business plan
You won’t find investment for your business if your business plan is flawed. It is worth spending time and money on getting your plan right before approaching investors. The last thing you want is to build negative awareness before even securing any investment.
3. Be transparent
When approaching Investors, you need to be transparent. There is no point going in there and avoiding difficult questions, they will see this as a weakness. If you don’t have the answer, tell them that, but also say you will be able to give them one. When answering negatively, give them a positive to work off, too.
4. Be realistic
Going back to the business plan, predicting your business worth at £1bn after two years isn’t going to appeal to investors. They will see this as overly optimistic and unrealistic. Give them numbers you can deliver.
5. Look at your team
One of the reasons why Gloople received investment is because we have a solid team. We have our whole team in-house and outside mentors who offer sound advice when needed. The investors need to see that your business has stability – which should include having a good accountant and lawyer.
6. Be prepared to negotiate
Going down the investment route, you need to be willing to change your outlook on your business. Take Dragons’ Den for instance; entrepreneurs go in looking for £150,000 but want to give away only 5% of their business. If they are lucky enough to get an offer, it, without a doubt it will be at a higher percentage than the business owner initially wanted to give away. This is an extreme case, because it is a TV programme, but you will have some hard decisions to make when negotiating with investors
You will find that some investors have a lot to say. You will need to sit there and listen. It is a great quality to have and will be looked at as an advantage when an investor feels their views are being taken onboard.
8. Risk over reward
An investor will be putting their hard-earned cash into your business, which is a huge risk. Make sure this risk is worth the reward. They will need to be able to see that their investment is being used to benefit the business.
I hope my eight tips will help you find investment for your business. I would love to hear about any investment success you may have had.
The economic downturn has been tough on most households, with the rising cost of living not being matched by a similar increase in earnings and many people facing redundancy as businesses look to cut costs.
For older workers, the situation can be extra-stressful. Quantitative easing has reduced the value of pension pots and annuity rates have fallen, while vacancies for experienced workers are at a premium. Yet many of those over the age of 50 affected by the downturn have sought to use being out of work as an opportunity.
Research from Nominet Trust has found that 32 per cent of workers over the age of 50 are self-employed, compared to just 13 per cent of those below this age. But just why are the over-50s more prepared to strike out on their own? Or is it just a case that older workers are better at running their own firm?
We’ve been looking at the issue of being an older entrepreneur and have found that older people are more likely to start their own firm than younger people, and even those beyond state pension age are giving it a go. In fact, around nine per cent of those over state pension age are still in work.
Our study also notes that "the desire to do something pleasurable" and "achieving a better work-life balance" are two of the main reasons older people strike out on their own, and that a lifetime of experience in the workplace is a valuable asset to the small-business owner. As report author Barrie Hobson notes, older workers tend to be "more mature, less stressed, usually [with] better interpersonal skills with customers [and] more reliable".
While older entrepreneurs may be more suited to starting their own business, everyone could do with a little assistance to get their start-up off the ground - especially financial help. The Community Development Finance Initiative is one possibility. It involves a non-profit organisation lending money to individuals, businesses, social enterprises and charities for the benefit of the local community. There are many such groups dotted around the UK, and you can find your nearest one here.
Supplied by over-50s home insurance specialists Castle Cover.
You might also want to read the following Start Up Donut case studies:
If there’s one thing the Japanese know a lot about, it’s effective car production. And that’s where the term “Lean” comes from. It all began at Toyota, when the car manufacturer found a new, more efficient method of producing cars. The principles learned at Toyota became known as Lean, and they are now more of a management philosophy that can be applied to almost any business.
At its core is the principle of creating value by reducing unnecessary risk and waste. More recently the term has become synonymous with start-ups, thanks to Eric Ries and his Lean Startup movement.
So what makes Lean lean?
OK, so how do I apply it?
Learn about your customers
A key component of Lean – customer development – is a method to help you find ‘product-market fit’, with the aim of delivering a product that people love. The best way of doing this is through interviews with prospective customers, conducting surveys, landings pages with email sign-up forms and demos to test various aspects of the business model (eg pricing, positioning, segments, and so on).
Build something to show them
Create your ‘minimum viable product’ (or MVP in Lean Startup jargon), which is the first version of your product that will enable you to learn the most. Perform regular testing with users, iterate and improve as you go. Make changes when there’s less risk and when you’re not too precious about what you’ve created.
Measure the response
Focus on metrics that really matter such as sign-up conversions, payments, referrals, returning visits and NOT vanity metrics such as total number of hits.
Rinse and repeat
Keep learning, building and measuring. It’s this feedback loop that ensures you get to where you want to be.
Some useful tools to help with running your Lean projects can be found here.
Lean in practice
We work with many start-ups and often get approached by entrepreneurs with a great idea, however, more often than not they have no validation to show that theirs could be a successful product or scalable business. It can be a painful lesson for many, that after spending lots of time, energy and cash – there's simply no demand for what they've built.
Our approach at Spook Studio involves exploring all aspects of our clients’ business models to ensure that we test out ideas at an early stage where there’s less at stake, which helps to reduce risk, create value and ultimately a better return on investment.
Now it's over to you...
Research published by StartUp Britain, carried out during its recent tour of Britain’s universities and further education colleges, suggests 63% of students “are now looking to start a business”. More freedom (29%) and wanting to “be their own boss” (29%) are the key reasons.
The research, based on feedback from 400 students aged 15-24, also suggests that a fifth of respondents believe starting their own business will be a route to higher earnings, but only 4% believe self-employment is their best way to avoid certain unemployment. A quarter of respondents hope to start a business in the technology sector.
Tellingly, more than 70% of respondents cited the laptop as “the most essential piece of equipment for starting up”, followed by a mobile phone, but the preference for working remotely or from home really is popular, as only 0.3% believe that “having an office was important”.
The survey was conducted as part of the 2012 StartUp Britain bus tour, which “aimed to inspire and support young people who are interested in starting their own business”. The tour stopped off at 40-plus colleges and universities in Britain (“from Plymouth to Cardiff to Edinburgh and everywhere in between”).
Should we find any of these figures surprising? Not at all. As a recent piece on Start Up Donut pointed out, graduates are now four-times more likely to be unemployed shortly after leaving university than they would have been six years ago. At the end of 2011, 18.9% of those who graduated in the previous two years were unemployed. Not good, but not as bad as the beginning of 2010 when the figure peaked at 20.7% (source: The Guardian).
Arguably, the very idea of being a successful entrepreneur is more appealing and more achievable than ever to young graduates. They’re inspired by the success of other young people who’ve started and grown enormously successful ventures, such as Facebook founder Mark Zuckerberg and a host of other extremely rich young entrepreneurs. Business reality TV programmes such as The Apprentice have also played a part, of course. Business is certainly not as naff or nerdy as it might once have been on campus.
Thanks to technology, businesses can now be started very easily and quickly, at little cost and with relatively little effort required to run them (if you come up with the right idea, of course). This site features numerous case studies and profiles of many fantastic businesses started by young people, often by uni mates who go on to become successful business partners.
A few weeks ago we published another very interesting blog entitled “What is being done at British universities to inspire budding entrepreneurs?” that, based on a Viking commissioned survey of 1,000 students, suggested that 70% of students found “the prospect of starting a business appealing, given the difficulty of the job market”.
The piece also shed light on some interesting support programmes, namely BaseCamp at Bristol University, The Hatchery at Sheffield Hallam University and HeadStart at Nottingham Trent University. There are many other such programmes in other seats of learning in the UK – and long may they continue.
Since launch, the Donut sites have also been a highly popular source of information for students and lecturers on university campuses and in schools and colleges, too. The challenge for government, universities, colleges, StartUp Britain and our very own website is to make sure that graduates get the information and support they need to help them start and grow their own successful businesses.
Mark Williams is editor of the Start Up Donut
As the retail sector suffers ever more and empty shops on the high street become another pop-up project, we may at least take some comfort from the crowdfunding phenomenon that is spreading like wildfire.
From projects on art to Zulu history, it seems nothing is taboo for this method of funding. Even ‘adult services' are now offered via some crowdfunding platforms.
Are there any business models that are not appropriate for crowdfunding? Not in my opinion. Now this doesn't mean automatic success for the campaign or the project leaders. But with the four main crowdfunding models now well established the concept is open for business and incremental shifts in our socio-economic patterns are beginning to emerge.
This isn’t a call for all start-ups to get online and find the most appropriate platform, but it is a call for deeper consideration of the model in any stage of a business.
Warnings have been issued by the Department for Business, Innovation and Skills over the potential for funders in the equity model to invest blindly in businesses that stood no chance of success. But is this simply another instance of the government playing catch-up with market trends and forces?
Across the pond these issues are coming to the fore under the aptly named JOBS Act (Jump Start Our Business Start-ups), where again the issues of risk are being cited as a reason to attempt to limit the market on behalf of the consumer.
Our government shouldn't be given an easy time on this issue. We are talking about a minority of people in the population who would be willing to seek out and invest in these kinds of opportunities. Even if these numbers increased significantly, each individual would probably only be investing relatively small amounts.
Guidelines are certainly needed but guidelines are different from enforced restrictions.
Chris Buckingham is a PhD candidate on crowdfunding at University of Southampton and has taught crowdfunding and entrepreneurship at the University of Winchester at both undergraduate and postgraduate levels.
While many people like to think of themselves as good negotiators, many do not understand some of the simple rules, which can quickly label you as inexperienced, which of course is not a position you wish to be in, especially when pitting yourself against a skilled and seasoned negotiator. By steering clear of the following five pitfalls, you should be able to navigate your way through any negotiation with ease.
1. Don’t negotiate blindly
Before beginning any negotiation, you must determine two things: your desired outcome and your bottom-line tolerance level. If not, you will have no direction and will likely be dissatisfied with the outcome of the negotiation.
2. Don’t start the negotiations
If at all possible, have the other person put the first number on the table. The reason for this is simple, as illustrated through a hypothetical example. X is willing to sell his widget for £100. X asks Y what he is willing to pay for the widget and he says £150. By Y bidding first, X earned an extra £50 even before the negotiations were underway.
3. Don’t avoid the process
Negotiating is a back and forth process that takes time. Many people who are uncomfortable negotiating try to avoid the process by being upfront with their real bottom-line number. This causes negotiations to break down, because the other side simply will not believe you. The expectation is that your opening number will be high/low and move from there. In fact, if you are responding to an opening bid, it is assumed that your target number is the number exactly between the two currently on the table. If you step up to the negotiation table, be prepared to play the game.
4. Don’t bid against yourself
A skilled negotiator will try to get you to bid against yourself and a rookie negotiator will fall for it. This happens when the skilled negotiator gets the rookie negotiator to increase his bid without moving himself. To gain respect, say: “I’m not going to bid against myself. I’ve put a number on the table. It’s your move.”
5. Don’t be afraid to walk away
When people are negotiating, they can easily become caught up in the moment. When this happens, there is a very real possibility of committing to a position one later regrets. The way to avoid this trap is to be prepared to walk away when you reach your predetermined tolerance. It is important to do this for another reason. The other side may be bluffing. By walking away, you clearly indicate your position to the opposing party. Understand that many negotiations are completed after several sessions. This will allow you to walk away with the confidence of knowing that if the deal happens, it will be on your terms.
Having a website is only part of the marketing jigsaw. To make it purr you need to keep it updated with fresh, relevant content; optimise it for search engines; build a social presence, etc. A large part of the digital marketing puzzle is link-building, which increase the search engine equity of your website. One of the primary ways of doing this is by encouraging other relevant websites to link to it.
New websites and new businesses don’t need to invest thousands of pounds in SEO and link building campaigns. There’s a lot you can do yourself to get the ball rolling, which mostly involves a bit of hustle and some common sense.
Here are my three DIY link building tips for small businesses:
1 Who do you know?
One of the best places to start is by utilising existing business relationships. Chances are your suppliers, customers and other contacts will be more than happy to link to your website, it’s just a case of asking the right person.
List everyone in your existing business network. Ask them to link to you. Don’t discount those who don’t have resources pages. Ask to write a testimonial about their services or even contribute a case study about your experience. This way you’ll create value for them, as opposed to simply requesting a link.
2 Niche and local directories
‘Directory submissions’ have become dirty words in digital marketing, predominately because of the swathes that have been created solely for those looking to build links. Most will advise you to avoid them, because they tend to be flagged as spam by search engines. By submitting to them you risk wasting your time or worse – being penalised for overtly trying to manipulate the rankings. This doesn’t mean that all directories should be avoided – far from it.
Chances are they’ll be a few directories curated by people that are specific to your industry. These represent a relatively straightforward means of listing your business and getting a link. Try simple queries related to your niche and see what comes up. For example, if you manufacture pumps, just try ‘pumps directory’. Once you’ve mined that, search for something more general, but still relevant (eg‘process industry directory’ or ‘British manufacturers’ directory’).
3 Organisations and associations
Once you’ve cleaned up the directories in your niche, start thinking about industry bodies and associations. Check that any associations you’re a member of link to you from their website. If not, ask them to. Again, it might be useful to think beyond just asking for a link. How can you add more value to that community? Perhaps you could get involved more by sharing your business experiences on their websites. Are there any organisations relevant to your business that you’re not a member of that it might be worth joining?
Once you’ve boxed off your connections, niche directories and organisations, you’ll have built strong linking foundations for your website. You might even have whetted your appetite to try a few more advanced tactics. If you’re ever unsure about whether it’s a good linking opportunity, just follow link building expert Eric Ward’s Litmus test: ‘Would you pursue the link if there were no search engine at all?’ In other words, would you want a connection between yours website and someone else’s, even if you weren’t doing it simply to build the value perceived by search engines? Follow this rule and you won’t go far wrong.
Michael Smith is a marketer at Leeds-based SEO agency 9xb.
Visit the Marketing Donut for more advice about optimising your website for search engines.
All businesses, whether small or large, need to implement safety measures and provide a safe working environment for those who work for it. What level these security measures take will depend on the size of the business and of course the budget available. No matter what size your business, there are some important and basic and common sense security measures that can be easy and cost-effective to execute to safeguard staff, equipment and other valuables.
1 Risk assessment
As soon as you possibly can, assess which areas of your premises could be vulnerable to crime or disaster. If you operate from a property on a busy high street, shutters for the windows may be a good idea, while if you are in a remote location, CCTV may be the best way forward. Do your research and identify the places that could be vulnerable to crime and come up with a solution quickly. It may just be that a window or door requires an extra lock, but even that could make a big difference.
2 Safety training
Staff members should have adequate training on safety procedures in case of an emergency. Safety drills need to be practiced regularly and a fire extinguisher readily available and tested to ensure it is in working condition. Fire exit doors should be clearly visible and not obstructed and facilities for any employee who has a disability should be in place for evacuation. A two-way radio device can be of use in coordinating and communicating in such an event. It is important to have a list of emergency numbers for the police, ambulance services and the fire brigade to hand and a safety manual or a safety notice pinned up to advise staff of what to do in an emergency.
3 High-value goods
If you keep stock, money or high-value goods such as laptops or televisions onsite, it is vital you secure them – in a small business, having high-value items stolen can be disastrous. If money is kept onsite, invest in a good quality safe and make sure you bolt it to the floor. If high volumes of stock are left overnight, make sure they are stored out of sight and towards the back of your premises, ideally in a room with few or no windows. Heavy-duty locks or bolts will do the job on any entrance.
Lighting is an effective and cheap way to secure premises. Motion-sensitive lighting will ensure that any dark corners that could provide cover for criminals are illuminated. They will also help enhance surveillance.
According to the Office for National Statistics, thefts from homes and other businesses went up by five per cent between 2010 and 2011, making it more vital than ever to make sure you are properly protected. They can be somewhat pricey, but having a good alarm that will automatically inform the police of a criminal act while it’s happening could one day more than pay for itself. If you already have one, make sure it’s working properly.
6 Asset tags
Security tags enable you to monitor any valuables on your premises, so that if they’re stolen, they are much easier to locate and eventually get back. Label all your goods and log all the details. If something goes missing, you can report it as lost or stolen. Some labels come with built-in trackers, so you can actually see where your goods are and get them back.
Guest post by Charlie Curtis-Jones who writes for Brentwood Radios, leading supplier of two-way radio communication equipment for business safety needs.