Would you like your business to reach £1m turnover? Most business owners would answer yes, but 96% of them will fail. Only 4% of businesses reach £1m turnover.
Why so few? Well, it has a lot to do with how you started the business and what pillars you have in place to allow you to reach that level.
Having worked with hundreds of businesses over the past few years, I have discovered that there are some striking differences between the ‘micro’ business owner and the owner of a £1m enterprise:
Starting a business requires no formal education or qualification. The process of going online and registering a new company is easy.
This ‘low bar’ to start also means that most people assume that what they know is likely to be enough. They then spend the entire first year bravely finding their footing and ‘learning to walk’.
The skills they develop at this early stage will influence their ability to break through the £1m mark later on.
Most businesses hit a ceiling because the way they began means further improvement and growth is too complex for them to handle and pursue.
Effectively, the business becomes trapped in what is sometimes called the ‘Hindu Rate of Growth’ – an average growth rate of around 3% each year – just enough to keep pace with inflation.
To break through this ceiling, new systems need to be employed to allow for growth to happen, while at the same time managing the increasing complexity of the business. What allowed many entrepreneurs to run a successful small business simply cannot support larger, more complex teams and issues.
It is at times like this that it helps to have an outside party shine fresh light on your business processes.
Every entrepreneur – ideally at the start-up stage – needs to become fluent in the language of business. This language is all about numbers; profit, sales, cashflow, receivables, assets, equity, ROI, average value sale, conversion rate – these are all numbers that the professional business person not just understands, but is also able to leverage for every business decision they make.
In marketing, sales, team management and leadership there are key metrics to measure, estimate and average to evaluate and justify decisions that will lead to sustainable growth.
If you want your business to break through the £1m threshold, review your techniques and decision-making processes now. Don’t wait until you hit the ceiling and get stuck.
I’ve often wondered whether you are born an entrepreneur or whether you can you be made into one?
Entrepreneurs see things differently. They’re happy to stick to their guns when everyone else tells them they’re wrong. They’re prepared to go it alone. Often they can spot a gap in the market that others don’t see. They’re also prepared to put in a lot of extremely hard work and cope with failure, however hard that might be.
Recently I’ve started working with a brilliant organisation called Founders4School. Its mission is to inspire the next generation of entrepreneurs in the UK. It sends founders or entrepreneurs to visit schools at no charge to talk to the pupils about their experiences, thereby giving pupils an insight into what being an entrepreneur is all about and making it a career option to consider.
I’ve had the privilege of visiting both of my old secondary schools, accompanied by some highly inspirational entrepreneurs. The format for the event is a brief overview of the entrepreneurs’ experience along with the lessons to be learnt and advice to be shared. After that the floor is open for the pupils to ask questions.
Here are some quotes from the entrepreneurs that might help you decide on the entrepreneurial nature v nurture debate:
Just as insightful were some of the questions asked by pupils aged 11 and 12, including:
What I’ve learnt is that some people are born entrepreneurs. It’s a calling: they can’t see themselves working for someone else, climbing up the corporate ladder. While there are others who get to a point, having followed a logical career path, where they would like to do something they’ve always dreamed of doing and are brave enough to take the plunge. How many people chose this path following a redundancy?
The question is what skills do you need? All of the entrepreneurs had a solid degree and it’s a given that numeracy and literacy are essential, but as for the softer people skills, I guess it’s the University of Life where those are gained. One thing is certain, though, entrepreneurship is as valid a career choice as any other and the UK is a great place to build a start-up business and support entrepreneurs.
Copyright © 2014 Marc Duke, marketing consultant and founder of Marc Duke Consulting.
2014 has been heralded as the year for crowdfunding. There are literally hundreds of platforms for people to choose from, but with share-based crowdfunding on the rise, consumers and small businesses are faced with a difficult choice.
Traditional crowdfunding platforms have huge user bases, tailored for product-based start-ups, which means that if you are lucky enough to make it onto the ‘Popular’ feed, your business idea will be viewed by millions. If, on the other hand, you don’t instantly capture the imagination of would-be investors, your chances of getting funded through these types of crowdfunding sites tends to decrease significantly.
While traditional crowdfunding platforms with product-based models might be good for getting consumer-focused propositions backed, they are less effective when it comes to B2B companies, which may have products and services that are less appealing to the traditional crowdfunding investor.
The biggest issue with well-established crowdfunding sites is the high commission demanded – typically between 5% and 10%. Bootstrapped start-ups need all the financial help they can get and this is one of the many reasons we and other small businesses are increasingly choosing to go it alone with DIY crowdfunding.
One of the greatest benefits of DIY crowdfunding is the information businesses receive about their backers. Where traditional crowdfunding focuses on getting the money through the door, you won’t know necessarily why or where your product adds value to those people.
By setting up your own crowdfunding site or even by looking for VC funding, that market research data is more readily accessible. Moreover, it enables the business to constantly better itself and innovate based on feedback from the customer, business or angel.
One of the biggest problems with most crowdfunding platforms that have recently been damaging start-up businesses is being over-funded. Although some of the most recently built sites such as CrowdCube are able to trade in shares, traditional product-based crowdfunding platforms do not. This means that businesses opt to give something else away in return for investment – usually the product itself.
This isn’t often an issue for most businesses because the funding provides the opportunity to scale production. However, when campaigns are grossly over-funded, this can cause problems with meeting the demand for products in exchange for funding, rather than focusing on ‘paying’ clients.
Examples of this can be found all over traditional crowdfunding platforms and can cause massive delays for the business. While some may view this as a justifiable sacrifice, there are risks involved with this that can impact on the successfulness of the business’ future. You can spend so long fulfilling those owed orders that you’ll never have time to fulfil any new ones.
The huge user bases of popular crowdfunding platforms still make them a very attractive option. That said, as fewer start-ups are willing to give up such a large percentage of their funding in commission it isn’t difficult to see a future in which start-ups primarily use their own platforms for serious funding.
In-house developers within tech start-ups make creating self-funding platforms a realistic proposition, particularly if it provides flexibility and information as well as funding. These DIY crowdfunding platforms also provide the consumer with a much more interesting investment opportunity: not only being able to buy the product, but also buy shares in it.
Perhaps the product-based crowdfunding model isn’t broken just yet, but with more and more small businesses creating self-funding platforms, to crowdsource more serious investment, it can certainly be argued that the writing may be on the wall – especially in the B2B space.
For many business owners, striking a happy work-life balance is like finding the pot of gold under the rainbow: it’s something we all strive for but never quite achieve. For anyone who works with family members, it can often seem like nothing more than a fantasy.
According to the Institute for Family Business, family firms now account for two thirds of private sector enterprises in the UK and family-run businesses experience a range of unique challenges. Here are my five tips to help you and your family create a healthy work-life balance, as well as create a more productive workplace.
Always communicate openly, calmly and clearly between yourselves during work hours. Resolving those inevitable disputes and clearing the air before you leave work is fundamental to not bringing the stresses of the day back home with you.
You’re family, but you’re also at work, so maintaining your professionalism is not only essential to the atmosphere you create for your employees, but it also helps you separate the two areas of your lives.
It’s easy to fall into the habit of only seeing the people you work with at work. But when your colleagues double up as your family members, it’s important to carry on doing what families do together – socialising and supporting each other.
There’s always a level of guilt that comes with leaving work before a colleague who’s up against it (even more so when it’s a family member). By all means offer support and stay late every so often, just as long as it’s not a regular occurrence, or resentment could easily build. Better to review workloads at the next staff meeting and make sure tasks are divided equally.
This is obvious - everything works better if it’s organised. As a family, decide upon a way of filing or structuring systems – and all stick to it. Better you all find a new efficient system, than each battle on with some archaic process that creates more harm than good.
© Copyright 2014 Ben Copper. Ben is the founder of family-run business Nutshell Construction.
How do small businesses started during the recession differ from those started before the economic downturn? Hiscox’s DNA of an Entrepreneur Report surveyed 3500 small businesses and the responses identified a new breed of business, dubbed Generation Recession.
These recession start-ups are innovative, positive about the future and more likely to be run by women. Find out how they shape up against pre-recession businesses in the infographic below.
From the Grumpy Boss to the Barely-There Manager and the “David Brent”, every manager has a different style of management. Officebroker.com looks at ten types of boss. Maybe you’ve worked for one. You may even be one of the following…
They put everything into their job and are constantly willing to “take one for the team”. They have no concept of the word “holiday” and are in work regardless of the weather or ill health. They expect their staff to meet their high standards, so employees can forget about leaving early. Ever.
They are smarmy and often get a little too close for comfort. Establishing friendships with employees can have many benefits, but relationships must always be kept professional.
The type of boss who yearns to be both friend and mentor to employees. They imagine their “people” find them to be “hilarious” and great company, while still looking up to them. In truth, employees find them annoying, frustrating, offensive and a bit of a joke.
Tends to lose focus, with employees having no clear idea of where the business is heading as a result. When the Barely-There boss does show their face they always try to take credit for other people’s hard work and success, before disappearing out of the door for another “meeting” or to “work from home”.
Even when a situation is completely under control, the Stresser is always running around like a headless chicken. They’re first to panic when something goes wrong, and prefer to stress rather than find solutions. All employees agree that the workplace would be a much calmer (and better) place without them.
Never satisfied. They’re constantly leaning over employees’ shoulders commenting on everything they do. Lunch breaks are always too long and nothing is ever right. Grumpy Bosses damage employee mood, goodwill and confidence. And restrict their businesses as a consequence.
Has the biggest mouth of all. They probably don’t get the opportunity to voice their opinions outside the workplace, with employees’ eardrums suffering as a result. From moaning about their commute to sharing details of their divorce, they have no boundaries when it comes to telling others what they think.
Their mood determines their management. If they come in with a face like thunder, they’re best avoided – unless you want to have your head bitten off. Can be great when they’re in a happy mood, but can be extremely unpleasant at other times, when employees are forced to walk around on eggshells.
A totalitarian who rules by fear. Terror is their key weapon when seeking to motivate employees, often using the threat of the sack. They shout at their employees for whatever reason and treat no one with respect.
The Nice Boss gives praise where due and is always willing to muck in. They know where to draw the line when using their authority, which they’re not afraid to use when necessary. They don’t mind getting their hands dirty and helping out the team. They’re firm but fair and are respected by their employees as a result.
Copyright © 2014, Officebroker.com
So, the second televised Scottish independence debate has aired and many commentators awarded a clear points victory to Scotland's first minister Alex Salmond over ‘Better Together’ figurehead Alistair Darling. According to the BBC’s political editor, Nick Robinson: “From the start it was clear that Darling, who won the first debate, was edgy and nervy, while Salmond was better prepared and more confident.”
But, with the referendum soon due to take place on 18 September, where do Scotland’s business groups stand when it comes to independence: Och aye the noo or Och no?
In March the CBI criticised the Scottish Government's economic plan for independence, saying it “didn’t add up”. The organisation failed to see “how an independent Scotland would be better off economically from putting up barriers with its biggest export market – the UK.” The CBI believes the “best way to deliver jobs and prosperity to the people of Scotland is to remain part of the UK”.
John Cridland, CBI director general, commented: "The minute you draw a line between Gretna and Berwick, Scotland starts to drift apart from its biggest market and loses a significant amount of economic clout. Independence would force Scotland’s major industries to grapple with two lots of red tape and lead to Scots facing higher borrowing costs. Keeping the pound is the best option for Scotland, but that is only on offer through maintaining the union. An independent Scotland would also have to negotiate hard to get back into the EU, temporarily losing access to the world’s biggest trade area. Scotland’s economy has the independence and flexibility of devolution alongside the support of the union. Business is clear - we are stronger together.” Several Scottish organisations (including Edinburgh, Glasgow and Aberdeen universities) quit CBI Scotland as a result of its registration as a “No” campaigner.
Business for Scotland is a “co-operatively owned business network for pro-independence business people and professionals”. It says: “An independent Scotland can support Scottish business in tax, regulation, the labour market, innovation and global exports. An independent Scotland will prioritise the interests of business in Scotland following decades of Westminster prioritising London and the South East. This includes the opportunity to create a simpler tax system that supports Scottish business; reforming the labour market to improve employer/employee relations; encouraging migration to Scotland to balance Scotland’s unique demographic needs; and supporting Scottish exports globally through a Scottish diplomatic and trade service.”
Furthermore, it argues: “There is overwhelming evidence that Scotland will be economically better off as an independent country. Even opponents of independence have conceded that Scotland can be a successful independent country. Their own negative economic forecast estimated that Scots would be just £1 worse off a year.”
In July the FSB in Scotland published Scotland's Independence Referendum: Your business, your vote to “help Scottish business owners make their minds up”. The guide was written in partnership with the University of Edinburgh Business School and covered “practical issues business people say are not being adequately addressed in the [referendum] debate”.
Previous FSB research suggested that most business owners in Scotland “have sought information on the referendum, but [most] were disappointed by the material produced by both sides”. Andy Willox, FSB Scottish policy convenor, says: "Two in five Scottish small businesses say that better referendum information could sway their vote, but the information provided by the campaigns doesn't answer questions that matter to them.” The FSB describes the guide as a “non-partisan document”, reflecting its claim that “The FSB and the University of Edinburgh are strictly neutral bodies and profess no position for or against Scottish independence.”
The SCC has also remained impartial. Writing in Business Scotland Magazine, Garry Clark, head of policy and public affairs at SCC, commented: “Scottish Chambers of Commerce have adopted an impartial approach, seeking to inform members of the issues and communicate members’ views to politicians.”
A recent SCC member survey found that more than half of respondents believed independence would bring opportunities, but “three quarters identified risks”. If Scotland ultimately remains within the union, 68% of responding firms wanted more power devolved to the Scottish Parliament. Clark added: “There would appear to be a clear mood among businesses for more decision making in Scotland, whatever the outcome”. According to Clark, most respondents also gave a “clear message” that Scotland having to leave the EU, either as an independent country or as part of a want-away UK, would have a negative impact on their fortunes.
In July, BBC economics editor Robert Peston wrote a piece trailing a BBC2 programme he’d just made called Scotland: for Richer or Poorer. He concluded: “If I had a vote, I would not be casting it purely on the basis of the economics - because it does not seem to me that the income and wealth at stake are life-changingly huge.
“Scotland, certainly in the longer term, is likely to be a relatively rich and successful economy. What matters far more, arguably, is how Scots [currently] see themselves in a much broader sense, either as a confident nation that is proud of being part of a bigger country, the United Kingdom, or as a people stifled and limited by the historic union.”
For many sole traders, their biggest initial outlay is a company van. This infographic from Premierline Direct Insurance looks at the true cost of owning a van over four years.
Click on infographic to enlarge.
Infographic © 2014 Premierline Direct business insurance
They say that it takes a village to raise a child. For those in business, it takes a company to raise a workforce. Here are some guiding principles that help me keep our annual staff retention rate at 94% – something we’re particularly proud of!
The first step is to match new staff to the corporate culture and the recruitment process is critical. It's important that a number of different people within the business interview the candidate, allowing a multi-dimensional view of their ability to fit in and transferable skills to do the job advertised.
It is up to the business to invest in its staff and give them the tools to grow. Still, this cannot be a walk in the park and, at alldayPA 75% of staff don’t complete the three-month training period. For those that succeed, the return is a team that will invest themselves in the business, propelling the company forward. A structured training programme that maps to a clear set of roles and responsibilities is an inspiration to the workforce.
Office life has changed thanks to the arrival of new technology and consumer expectations of an “always on, always available” point of contact. People want to talk to a person regardless of the time of day rather than leave a voicemail – 80% will not to leave a message. The standard nine-to-five working day is long gone. As long as the right number of people is working at the right time, it doesn’t matter if they swap shifts around between themselves. If you can allow a margin of flexibility, where they can swap shifts to cover child care or different religious holidays then you, as a business, will be a much-loved employer by demonstrating trust.
Does anyone else feel like the Jeremy Kyle of the business world? By building an atmosphere of trust, this can open the door to being an agony aunt. While this is good because the team feels they can talk to someone, it is very important to remove the emotion from the situation. As the employer, there are certain practical things that the business can help with for example a short-term interest free loan to bridge a difficult time or move team members around if there is a problem.
By establishing a climate of trust and team spirit it allows the team to form tight bonds like a family. Be realistic, you are looking for a ‘real’ family atmosphere and not a polished Hollywood version. Things can get heated because people care about each other and the business, however, this brings people closer to support each other and bring a top class attitude to the office.
Copyright © Gareth Jeffrey 2014. Gareth is operations manager at professional telephone answering service alldayPA.
The excuses for not buying now are many: too small, too big, too soon, too fast, too slow, too expensive, too complicated. But sometimes hesitancy to buy is not about the seller and the seller’s service, but the buyer’s internal thought processes.
More specifically, I am curious about why people don’t buy into a process that they know, in their heart of hearts, is one that they not only want, but also need for the development and growth of their business.
The need for what is called ‘strategic planning’ is recognised as being a cornerstone of developing, running and growing an organisation. There are plenty of trite quotes, such as, “failing to plan is planning to fail” and so on. However, at the core it is pretty much universally recognised that it is better to have a plan than no plan. And it is better to have considered the various options while being aware of the changing pressures in the business environment. I call it making your mistakes on paper.
Despite strategic business planning being almost like “motherhood and apple pie” (in other words, a good thing, something that is required), I’m still astounded at how so many people manage to delay or put off the process. This is madness, because a little bit of thinking and reflecting can help to direct and focus one’s actions on what is important and understand one’s priorities.
Copyright © Robert Craven 2014. Robert Craven is a keynote speaker and author of business bestseller Kick-Start Your Business. His latest book is Grow Your Service Firm.
He also runs The Directors’ Centre, helping growing businesses to grow.