The value of experience can be hard to judge. You only know for sure when you find yourself in a situation that demands it, and you perform – or not. The same goes for your staff. Will their lack of experience let them down? Or will their experience enable them to deliver in a tough situation?
When a challenge arises, staff with less experience tend to get bogged down in unimportant items and spread themselves too thinly, they don’t have the prior experience to just know what needs to be done and how.
Other symptoms of lack of experience include people coming into a situation with a belief that “the answer is X”, where X might be process mapping, improved accounting software or product line profitability, etc. It might well be that they are part of the solution, but a fixation with preconceived ideas is dangerous.
In many situations, you can work your way through. Experience is less important as you have time to consider your next move. It’s only in crisis situations, where there can be little margin for error, that experience is worth so much more than even its weight in gold.
Back in my auto industry days, I recall the words of the grizzled manager running the body assembly area, Derek Godsell. Talking about man-management skills, he said: “You need a good selection of tools in your box; you need to know how to use each of them; and you must know which one is for which job.”
I think it applies to many areas, though of course one can’t be expert in all of them. Bringing people into your team who have the relevant experience will strengthen your performance.
The challenge – with start-ups in particular – is often lack of resources. So fewer people (perhaps just you) have to cover many bases. Secondly, even if you want to recruit expertise, it can be hard to tell whether someone really has it. The truth is only revealed when that crunch moment arises and they’re put on the spot.
So what are the key benefits of experience? What I value most in experienced staff is:
For most people it’s inevitable that the older you get the more experience you have, so it really does pay to have older employees around you (preferably mixed in with younger ones).
Supplied by Hilary Briggs, a profitable growth expert with more than 15 years of industrial experience. For the past 10 years, she’s worked with SMEs to improve their profitability.
As an author of start-up books, I get very jaundiced when I start reading others. It’s professional jealousy and it’s childish. Most of these books (if not all) are better then mine, which reinforces my jealousy. I was prepared to be unimpressed by Entrepreneur Revolution – How to Develop Your Entrepreneurial Mindset and Start a Business That Works by Daniel Priestly, but after reading it I wasn’t.
The book is superb. Straight talking. Nothing complex about technology, social media or strategy, but some very simple home truths that are very difficult to argue against.
The book’s starting point is that the industrial revolution is over; the information technology revolution is about to be over; and we are entering the entrepreneur revolution. We are moving from hands and heads to hearts. The future is customer intimacy, delivered by entrepreneurs who deliver amazing value, love what they are doing and get paid for it.
New technology allows everyone to follow their passion, heart and dreams. And following your passion makes you able to compete against the “big boys”. It also allows you to be in charge of your own destiny without being controlled by “The Man”.
The key question here is whether you are a clinger (ie wasting your life, holding on to the industrial revolution-type of living, living in the past, etc) or a surfer (ie someone who follows the joy, opportunity and empowerment).
Daniel’s book introduces the term “Global Small Business”, because technology now enables you to go global overnight. And then he explains how:
Once you have that set up, you have to lean in, go for it with all your being and start building your reputation. And because you are enjoying yourself, the spark, the energy, the curiosity and passion will bring the rewards, one way or the other.
The icing on the cake is how Daniel gives you a business model that works. It’s called the Ascending Transaction Model and consists of a gift, a “quick-win product”, a core product and a logical next step. Each step has increasing revenue potential, with all steps having great emphasis on excellence, customer delight, client success and sales.
To quote directly from the book:
“Secretly, many small-business owners have a negative association to selling and they wish they could simply do extra marketing, extra servicing or extra networking rather than having to have the sales conversation.”
“Unfortunately, this is fantasy. Omega, Ferrari, Google, HSBC and Apple all invest in sales training so their staff know how to have structured sales conversations with prospective buyers.
“If the world’s biggest brands, with the world’s hottest products, need to have sales conversations, then so does every small business.”
Daniel leaves the best for last, by providing a few home truths:
This book gave me a jolt. It forced me to look at our business model, reinforced my belief in entrepreneurship and taught me a few new things – all the things you want from a good book.
With many UK start-ups finding it difficult to fund a new business, there is an alternative lending option that is currently gaining a lot of press coverage in the press for all the right reasons.
Peer-to-peer lending is a relatively new form of finance (it was established in 2005) and (as of summer 2012) peer-to-peer lenders have since collectively lent £300m.
Peer-to-peer lending is as it sounds, lending money to ‘peers’, without having to go through traditional financial intermediaries such as banks or other institutions. Peer-to-Peer lenders are everyday people who have money they wish to lend out in return for a competitive rate of interest (usually between 6-12% pa).
Currently, these are unsecured personal loans that aren’t subject to regulation, but this will all change in April 2014, after which the Financial Conduct Authority (FCA) will regulate the peer-to-peer industry.
New small businesses are still finding it tough to get a traditional bank loan, as many UK banks are unwilling to underwrite an unproven, new business with no established credit.
This leaves many start-ups in a conundrum, but there are several alternative business funding options worth exploring. However, before making any financing decisions you need to carry out sufficient research so you can carefully weigh up the pros and cons of each option. Choosing a source could be one of the most important decisions you’ll ever make as a new business owner.
New business owners pitch their ideas online via peer-to-peer lending company websites to individuals interested in lending to small businesses. The peer-to-peer lending platforms make the process of introducing lenders and borrowers very simple and the platforms are often exclusively web-based. They take much of the administration away that borrowers experience with their high street bank.
As a borrower, you register with a company and you are then put into a category based on your credit score. When grouped, the lender can decide where they want to invest their money based on the risk and return. As with any loan there is a risk, however, the rate of an unsuccessful loan is far lower with peer-to-peer loans than applying for a bank loan.
One peer-to-peer lending platform that has grown significantly since it started in February 2013 is Cornwall-based Folk2Folk. It has introduced £11m of secured loans largely to the business community, starting from £25,000 and up to £1m, at interest rates typically of 7-9%.
Loans introduced so far have gone towards projects such as house building, commercial leisure facilities and property acquisitions, together with various renewable energy projects.
If you plan to start a business but lack funds, peer-to-peer lending might just provide the start-up funding you require.
Market research and competitor analysis can be a start-up’s Achilles’ heel. Incorrect conclusions pulled from incomplete or inaccurate research often lead to dire consequences for start-ups that pursue a market segment that was inappropriately analysed.
So why do so many start-ups continue to get caught in this trap? Well, the answer is actually pretty obvious.
Thorough market research drains the two resources that are most precious to start-ups – time and money. Therefore, if you aren’t a research guru but still need thorough research, you can choose either to spend substantial cash on expensive services and tools to perform the research or to spend hours using conventional methods if you are trying to bootstrap.
So how do you produce compelling market research, but preserve your precious time and money? Well, the answer is pretty simple, just maybe not as obvious.
Primary research can be accomplished by using a variety of free online surveys such as SurveyMonkey. Another great option is to embed user polls directly onto your website. Fair warning, though, the majority of people who participate in these polls are usually the ones who are most dissatisfied.
For secondary research, you can use tools such as FindTheCompany. The database recently became available to the public for free and provides information on more than 30 million private and public companies.
For industry research, a great (and often overlooked) resource is public companies’ annual reports, which are often filled with hidden gems. They provide insight on an industry’s size and growth rate, as well as predictions on where the industry is heading in the near future. Public companies pay expert consultants lots of money to research and develop these reports. Essentially, they are paying for the data you need. And the best part – you don’t even need to be an investor to get these reports.
Finally, be a customer of your competitors. Look at their advertisements. From this, you can infer who their target market is, and which demographics they are trying to expand into. If your competition has stores in your area, pay them a visit. This sounds obvious, but many people don’t realize how much information they can gather simply by getting in their car and driving around town. This doesn’t mean you need to be deceptive, just be inquisitive.
Nowadays, start-ups cannot perform efficient and effective market research by sticking to outdated methods. They must innovate and make use of the new methods and free tools that emerge every day. Be smart about your research, it might save you more than just time and money – it might save your start-up.
Blog by David Schmidt, head of audience development at FindTheCompany.com
Happy people sell, according to Neville Wilshire, star of The Call Centre, BBC 3’s new fly-on-the-wall documentary. Wilshire may be a little unorthodox in the way he handles his staff, but he makes a very valid point. Happy staff are more productive. Practical jokes, X-Factor style competitions and in-office speed-dating are not necessarily right for every business, but fully engaging staff is the best way to ensure they generate results.
There are many ways to engage employees and boost productivity. These do not have to be outlandish and neither do they have to be a financial burden on the business. Offering rewards or benefits schemes, such as high street discounts, reduced-cost gym membership or free cinema tickets are a surprisingly cost-effective way to make a real difference to your employees’ attitude and your bottom line.
Consulting with staff about what sort of rewards would suit them is the ideal way to get them working at their best. There is no need to get as personal as Big Nev, but (providing your business can afford it) it’s worth finding out what incentives will help to bring the best out of your employees.
Once the most appropriate incentives have been decided, rewards and benefits can be easily and effectively put into place that will really make staff feel appreciated and give them something to strive for.
Enthusiastic and energised staff will have a better attitude to work, a greater sense of achievement and produce better results for their employers.
Should the owner of a growing business be a manager or a leader? The answer to this question is far from straightforward. Many would argue that they should strive to be both, but this is often not the reality, because business owners get dragged down by the pressures of the day-to-day running of the business. Consequently, they end up doing too much management and too little leadership.
There are substantial differences between leaders and managers:
The differences between leaders and managers are fundamental. Managers make sure that everything is controlled properly; leaders create the vision, the enthusiasm and the passion. The best leaders are those who inspire and create followers.
One of the biggest challenges facing growth businesses is how to mature from a small owner-managed business, where the owner is at the hub of everything, into a medium-sized business run by a board and a team led by a leader rather than managed by a manager.
The very characteristics that allow a start-up business to thrive can be detrimental when the business starts to achieve scale. An entrepreneur starting a business is usually a highly driven and determined individual. You need drive to get a business off the ground and you need to be incredibly focused. Many entrepreneurs ignore rational, risk-based arguments as they pursue something they believe in, which means that ultimately the business thrives because of that sheer drive.
Business owners therefore tend not to be easily swayed and as the people funding the business they are often very tight with financial control - which is fine when the business is small. However, as a business grows at some stage the business leader must begin to delegate, even some financial matters.
Likewise, small businesses leaders usually make all the decisions, but as a business grows to be 20-100 people strong, depending upon the type of business it is, this responsibility must also be shared to create space for the leader to lead rather than do. And as the business grows it is important that the leader’s vision is not drowned by their desire to control all aspects of the business.
One fundamental area that is key to business success is communication. For small businesses communication is not a problem – the boss just says what they want done! In a larger business it can’t work like that. The leader can’t communicate directly with everyone individually; there must be communication processes in place. So at some stage, internal newsletters, management meetings, department meeting and workshops become necessary, often to the great frustration of the entrepreneurial business owner who just wants to get on with doing ‘real work’, not realising that for a medium-sized business and larger, the real work for the leader is largely communication!
Entrepreneurs who started a business and grew it through its early stages often see such management meetings and internal communication processes as unnecessary overheads. Everyone should just know what they need to do. And the lack of such coordinating activity is what causes many businesses to plateau and stay small. By contrast, the leader who successfully grows a business of scale understands that management processes, communication and leadership are critical to successful growth.
Every small business of course has big dreams, but business leaders with a desire to grow must ensure that as they grow, they adapt their style of leadership to suit the stage of growth.
Research carried out by my company, rebuildingsociety.com, suggests that 26% of people in the UK (or up to 12m) would consider loaning money to UK SMEs by joining a peer-to-peer lending scheme (“P2P”) in 2014, when the sector will be fully regulated by the Financial Conduct Authority (“FCA”).
Our research also suggests that 17% (eight million people) would consider P2P lending over the next 12 months, without additional regulatory protection. However, the added security should reinforce the sector, given that money lent through P2P is currently not covered by the Financial Services Compensation Scheme and lenders could lose cash if borrowers default.
Peer-to-peer lending – also known as person-to-person lending, peer-to-peer investing and social lending - is lending money to businesses or individuals online. The sector is set to boom, with as much as £12bn to be lent through SME P2P schemes each year, which roughly equates to one-tenth of total mainstream SME bank lending in 2012.
Our study underlines the attraction of P2P schemes to small firms, with about 24% (or 1.2m) believing they will struggle to access finance in the next 12 months. Given this, 16% of small firms would consider applying for a P2P loan over the next year.
The biggest obstacle to the growth of P2P lending is lack of awareness, with 59% of consumers not knowing what the term meant, while 54% saying that this is the principal reason why they wouldn’t invest in a P2P scheme, with 46% fearing borrowers not repaying the loan.
Typically, individual lenders can earn between 8% and 15% interest through P2P platforms, which is significantly higher than the sub-inflation returns offered by many bank and building society accounts. Basic rate taxpayers currently need to earn 3% on savings and higher rate taxpayers 3.99% just to keep track with inflation.
I believe that P2P lending is well on its way to entering the financial mainstream, thanks to strong levels of interest from consumers and SMEs. The FCA’s regulatory oversight from next year will provide consumers with an additional layer of protection and our study shows this is very likely to boost take-up.
The evolution of this market will continue to generate value for borrowers and lenders beyond the financial transaction. It can be viewed as a marketing activity and businesses that borrow through P2P lending have effectively won a crowd of stakeholders with an interest in the success of those businesses. This is more powerful than institutional finance and both parties are slowly adjusting to this mindset.
Clearly not all individuals and small businesses that are considering using a P2P lender will end up doing so but as long as borrowing and saving conditions remain depressed, demand will rise.
Blog supplied by Daniel Rajkumar, managing director of peer-to-business lending platform rebuildingsociety.com
In this economic climate businesses everywhere are looking at ways to lower their costs. Your electricity bill is an easy place to start and there are a number of ways you can save money.
Talking to your current energy supplier is a great place to start. Most suppliers will be happy to discuss the tariff you are on and see if this is the best for your business. Shop around with other suppliers and energy brokers to see what’s on offer. Depending on what stage your business is at, it may be worth opting for a longer deal or something more flexible.
While talking to your supplier about tariffs, ask if they offer discounts for certain payment methods. For example, most energy suppliers will offer a discount or incentive for paying by Direct Debit.
Make sure you spend a couple of minutes checking your bill. Has your supplier billed you accurately on an actual read or have they estimated your usage? Check the read against your meter; it only takes a few minutes to send your read in. By giving regular reads you make sure your bills are accurate and that you only pay for the energy you use. Many suppliers are also letting customers trial a smart meter prior to government roll out, which will provide regular meter reads automatically, so ask your supplier if you can apply.
We have found that businesses are less likely to look at energy efficiency than our residential customers, yet there are some really quick and easy measures you can take, that can reduce the amount of energy you use:
Approximately 40% of all energy consumed in buildings is used for lighting, so here are a few simple steps you can take to lower your costs:
Most of us take heating and cooling for granted. Come rain or shine we expect our building to be at a comfortable temperature. Many of the best practice principles are the same for both situations.
There are some really easy steps you and your employees can take together to reduce consumption.
Blog supplied by Richard Hughes, Director of SME at EDF Energy, which offers advice to businesses about the best ways to save money on energy bills. For a free energy efficiency audit visit www.edfenergy.com/business-fit. It’s available to all small businesses – even those that aren’t EDF Energy customers.
We’re often exposed to the idea that the UK job market is a bleak, uninspiring and uncertain landscape. With more than 900,000 young people out of work in the UK it’s hardly surprising that images of empty high streets, businesses closing and overcrowded job centres continue to dominate.
However, things may not be as grim as they appear, with recent statistics suggesting that the number of young self-employed people in the UK has risen by more than 70,000 since 2008.
Many young people in the UK are fighting back against the current economic climate by making the brave decision to start their own businesses. This kind of entrepreneurial spirit is admirable and with the right support, these young start-ups can achieve great success.
Self-employment can present many benefits and opportunities to young people who dislike the notion that the job market is limited, unpromising and highly competitive.
The option to choose your own hours shouldn’t be an excuse to sleep until noon, of course. However, a lot of young people enjoy the freedom of being able to choose working hours that better suit their work patterns and personal commitments.
Being your own boss allows the chance to try new things and offers the flexibility and creativity that isn’t often found while working for someone else. Even if the idea isn’t a success the first time, it becomes a valuable lesson that the budding entrepreneur can carry into new ideas.
Passion is often the driving force behind many successful entrepreneurs. Being able to do something that you’re passionate about is one of the best things about starting your own business. A lot of new business ideas are rooted in hobbies and when people are doing something they’re interested in, there can be an increase in productivity and a greater desire to succeed.
Everybody loves the feeling of a job well done. When you work for yourself, there is no one to take credit for your success other than you. Going it alone means you are in charge of setting goals and working out how you will accomplish them. While this is challenging, there is a lot of satisfaction to be gained when you achieve your goals.
Written by Lisa Gagliani, CEO of Bright Ideas Trust, the London-based charity that aims to help people aged 16-30 who aren't in employment, education or training to start their own businesses. It can provide funding, advice and support from dedicated business mentors and expert advisers.
Starting a business can be an amazing time. The excitement of new opportunities and that fabulous feeling when you land a big new contract are unrivalled. However, it’s a sad fact that most businesses fail in their first year or two - so by getting through this challenging period you can dramatically increase your chances of success. So how do you do it?
Many one-person businesses suffer from this phenomenon, caused simply by a lack of capacity for business development. You win a contract; work flat out on it for three months; get paid and then… Nothing. And you’ve been so busy doing the work that you haven’t had any time to line up new customers or source some new leads. Given it can be weeks or even months before a new lead can provide you with any work, you’re now faced with the prospect of a difficult fallow period and possibly a rapidly dwindling bank balance.
The best way to avoid these problems is to set aside a dedicated time every week for business development. This could be anything from emailing prospects to attending networking events - anything to keep your pipeline full of potential work opportunities.
When you start your own business the only thing that’s really changed is your business cards. Do you need to rent a desk or office or can you work from home until the business is more established? Do you really need that plaque to go on your wall or could that money be used better elsewhere?
Being your own business cannot be improved by unnecessary physical ‘accouterments’, so think carefully about any purchases you think you need to make because you’re now ‘a business’.
Some businesses fall over simply because their founder was so busy ‘being the business’ they forgot the legal fundamentals. Get set up as a limited company straight away - this can be done online quickly and cheaply. This will provide legal separation between you as an individual and your business, so should you go under with a long line of creditors you only stand to lose what you invested in the first place - not your house or your car, for instance.
Secondly, get contracts in place for all your work. These will vary depending on the kind of work you do, but standard pro formas can be found online easily. These can protect things like intellectual property and usage rights to your work.
Lastly, get insurance. In many cases this is legally required and many business owners simply don’t realise until it’s too late!
Blog supplied by Darren Fell of small-business tax specialists Crunch Accounting.