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The EU’s pot of gold for small innovative businesses

February 09, 2015 by Guest contributor

The EU’s pot of gold for small innovative businesses{{}}

Start-ups in the UK are booming, with Tech City now the third-largest technology start-up cluster in the world after San Francisco and New York. Start-ups also provide the main source of recovery growth in the UK and Europe. The European Commission knows this and has set aside billions of Euros for innovative small businesses. However, very few businesses in the UK seem to know about this pot of gold.

The EU’s new research and innovation programme, Horizon 2020, was launched last year and has €80bn to spend over seven years. Some 15-20% of this is earmarked for innovative businesses, either on their own or in collaborations with universities and other businesses. The grants are prestigious and can open doors, as a House of Lords report noted: “We believe that EU R&I programmes represent an excellent financial and networking opportunity for UK businesses”.

Funding for SMEs

The Horizon 2020 ‘SME instrument’ will provide €3bn over the next seven years to small and medium-sized businesses that develop products and services. This covers everything from feasibility assessment (€50k grants), to development and demonstration (up to €2.5m) and then access assistance to risk capital.

The €100m ‘Fast Track to Innovation’ pilot opened in January 2015. Frustratingly, you won’t find Horizon 2020 opportunities on Innovate UK’s main funding page; they are displayed through a separate resource centre called Horizon 2020 UK.

A much broader source of money opens up if you collaborate. The Eurostars programme, which boosts competitiveness and open markets, is for groups of innovative small businesses. However, the lion’s share of Horizon 2020 funds is available for big multi-national collaborations of universities and small businesses teaming to deliver solutions to societal challenges. More than 70% of projects funded so far have at least one SME partner.

Finding partners

To enter such collaborations you need to be in networks that enable you to find the right partners. If they have previous experience, that helps a lot. One such network is the Vision2020 Horizon network, which I work with. It has nearly 40 universities and more than 100 SMEs, all seeking to cluster into groups to target Horizon 2020 funding. Another network is the Enterprise Europe Network. EU grants and University-business networks are a great way to put booster rockets on your innovative start-up.

Copyright © 2015 Dr Mike Galsworthy. Mike is a consultant in research and innovation policy. Follow him on Twitter.

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Posted in Financing a business | Tagged Funding, EU | 0 comments

Time to switch banks?

January 08, 2015 by Guest contributor

Time to switch banks?{{}}It isn’t just personal current account customers who can take advantage of the free Current Account Switch Service to swap between banks, because small businesses up and down the country can make the most of the service, too.

Launched by the banking industry in September 2014, the service ensures that existing payments such as direct debits or standing orders will be moved to the new account automatically, and any transactions that do go through to the old account will be redirected to the new one for 13 months, so payments won’t go missing.

The company making or taking the payment using the old account details will also get a message instructing them to update their records with the new account information. On top of that, the service is backed by a guarantee that means that if something should go wrong during a switch, any charges or interest will be refunded.

Until the service was brought in, changing from one account to another could be a lengthy process, typically taking between 18 and 30 days after the new account had been opened. That was a huge hurdle for cashflow-reliant small businesses, with worries about invoice payments ending up in the right account or suppliers not being paid according to terms, with the possibility of late payment charges being incurred.

But that time’s been reduced to seven working days from the day the switching process starts to when the switch takes place.

One of the drivers behind the Current Account Switch Service has been to increase competition between banks and make it much easier for small businesses to vote with their feet when it comes to picking the account that works best for them.

So, is it time for you to look at whether you’re getting a good deal with your business banking? Here are the things you should consider…

Do I need a business bank account at all?

If your business is a limited company you must have a business account. If you are a sole trader or partnership, you could use your personal current account, but that can make your finances messy. Keeping personal and business accounts separate is the better option.

Am I spending too much on bank charges?

Some banks charge a fee for business banking services, some don’t. Other costs are transaction-based, such as fees for cash withdrawals, cheques, Bacs transfers and overseas payments. Think about what you need to use and check the charges for each service. Some providers offer free banking, either for a set time or with limits on the number of transactions per month. Look at the penalties for exceeding those limits, and any charges that kick in when the free banking period ends.

What if I need an overdraft?

Costs can be quite high but will vary between banks. Check interest rates, set-up fees and the amount you can borrow this way.

And what about a business debit card?

Many business accounts come with these facilities, but ask to see if you’re eligible for a debit card – and a cheque book, if you need one – before changing to an account where you might not qualify.

What if I’m not happy with my new bank?

With the new Current Account Switch Service you can change your provider again, quickly and easily.

Will switching affect my business credit rating?

Not as long as you repay any outstanding overdraft with your old bank or building society. If there are any problems with payments as part of the switching process, your new bank or building society will put them right and make sure your credit rating is not affected.

Further reading

Should SMEs look to alternative crowdfunding?

September 16, 2014 by Guest contributor

Should SMEs look to alternative crowdfunding?{{}}

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.

Don’t give your money away

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.

Know your investors

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.

When success also means disaster

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.

If not broken, breaking?

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.

Copyright © 2014 Tim Fouracre. Tim Fouracre is CEO of Clear Books. Clear Books is currently raising £3.3M, which will be the largest ever B2B crowdfund in the UK.

Further reading

Do small firms really need bank finance as much as we're led to believe?

June 16, 2014 by Guest contributor

Do small firms really need bank finance as much as we're led to believe?/English money{{}}I have a Room 101 nomination. It’s media headlines and political comment telling us that 'businesses are unable to access funding from banks, we have to get the banks lending again, we need to make alternative funding available'.

This has been so noisy since the 2008 sub-prime bubble burst that I’m convinced it’s merely a default utterance when political parties sense that 'business' hasn't been in the headlines of late. The tone sounds so desperate at times as to imply an imminent hiatus if this matter isn't addressed. I’m not convinced that the need for bank funding is as important as we’re led to believe.

We accept as fact that since 2008 the banks have reined in their lending, as a response to previous over-lending. A good entrepreneur will secure investment from other sources, because they will perceive the banks’ reluctance to lend merely as a challenge to overcome. Other sources of funding may even be more appropriate, because some can bring additional commitment and proven commercial expertise.

Interestingly, among my local business community there is no issue around borrowing from banks, it's a message that you mainly hear in the media and from politicians – but why?

Historically we’ve been programmed to approach banks for finance. 2008 caused a paradigm shift and while those of us running our own businesses on the frontline are comfortable with this, the banks and politicians haven't caught up yet. There are two reasons – ego and economics. The banks and the City have always been thought of as the 'big boys' to whom us small firms should turn for support. They’re used to being in control – to dominating us.

However, 2008 showed that they aren't that great at managing their own businesses. Their validity to dominate has been undermined, but their ego has not been humbled yet. I’m not an economics expert, but I’d guess that the banks and the State are used to profiting from failing SMEs. Finding money from elsewhere takes away income from the 'big boys'. These are the real reasons for SMEs needing financing from the 'big boys' being in the headlines, it is their income streams that are being affected.

Our UK DNA as a nation of shopkeepers has prevailed and revealed its talent for resourcefulness and diversification. We don't need the 'big boys'. Question is – how long will it take them to adjust to their new relationship with us? Maybe we'll start asking for their investment once more when they’ve grown up and proved that they can run their businesses as well as they have expected us to run ours in the past.

Blog provided by Samantha Acton, who founded Domestic Angels in 2002, which provides home cleaning services across the Bournemouth, Poole and Christchurch areas.

Further reading

Electronic payment acceptance options for small firms

May 19, 2014 by Guest contributor

In recent years, electronic payments have grown in popularity along with the demise of the cheque and fewer consumers carrying cash in their wallet or purse. Card payments have become the preferred method for payments, with shoppers expecting small businesses to accept debit and credit card transactions in a physical (ie offline) environment. The need for secure online payments has also grown Electronic payment acceptance options for small firms/Stack of credit cards{{}}as more merchants look to ecommerce services in a bid to drive sales.

E-commerce is becoming more accessible and affordable for even the smallest businesses, and complete end-to-end solutions for web design, shopping carts, online security and even virtual terminals are available in this increasingly sophisticated marketplace.

Fixed or mobile chip and PIN acceptance is ideal for physical trading environments, such as retail, hairdressing, accounting, hospitality and other business that processes transactions. For tradesmen on the move there is a whole host of new innovative mobile related payment technologies that are rivalling cash.

Methods range from devices that attach to a mobile phone and are capable of accepting card payments, to the digital mobile wallet and a portable chip and PIN device that runs off GPRS. All of which allow companies and sole traders to receive payment for goods and services on the spot.

When selecting a payments provider, merchants should consider options other than their bank. An independent supplier is more likely to offer a cost effective solution, along with support and benefits. What businesses need to consider is what method would best suit their customer base. And what methods is their customer base familiar with and happy to use.

Innovative digital payment options are great when it comes to the younger tech savvy customer, but merchants must also consider more mature shoppers. Overall security and industry requirements are a top priority and must be thought about when deciding on a digital payment method.

When selecting a payment option, SMEs should work with a third party that can provide not only the technology – online or physical – but guidance and a transparency of capital costs and fees, both monthly and annual. What many small business may not realise is that there are other options available to merchants that are more beneficial than simply using their personal bank.

Whichever payment method is selected, if an SME trades in both a physical and online environment, by joining up their payment offering they can gain an overall picture of transactions and the customer, which provides valuable insight for business decisions and strategy planning.

Blog supplied by Gareth Poppleton, managing director at Retail Merchant Services.

Further reading

How to start accepting Bitcoin donations

February 19, 2014 by Guest contributor

How to start accepting Bitcoin donations /Bit coin - virtual money{{}}Does your business have a blog, website or video channel? If so, you could start asking people who visit your site to start donating Bitcoins.

What is a Bitcoin?

Online currency, you can use it to buy things such as domain names, electronics, food and professional services.

What is it worth?

The value changes a lot. In January 2013 it was only worth about £10, but by late November it had reached a high of £750.

How can I get some?

There are many ways. You could start donating your computer power to help run the network (a process called ‘mining’) or you could sign up to an exchange such as and buy some with pounds. Unfortunately, both of these options can take time and effort and you might end up losing money. A safer and simpler bet is to start taking Bitcoin donations.

Why should I bother?

The Bitcoin community is very generous. Bitcoin users know that the more people who own Bitcoin, the more plausible it becomes as an idea. Also, because it’s really easy to donate, you might be pleasantly surprised by how much you could earn.

Here’s a step-by-step guide on how to start…

1 Get a Bitcoin wallet

You’ll need a wallet to receive, send and store Bitcoins. There are three types of wallet: software, mobile and web. The Bitcoin website features a useful guide and a list of downloads to help you get started. For maximum security, we recommend that you choose one that doesn’t use a third party. To avoid cyber theft, you should always encrypt your wallet with a strong password. We recommend one at least eight characters long, using a combination of numbers, symbols and upper/lowercase letters.

2 Note down your wallet address

Once you’ve set up your wallet you’ll be given a wallet address. You’ll need this so people know where to send donations. It will be a string of between 27 and 34 numbers and lower/uppercase letters beginning with a 1 or 3.

3 Spread the word

Accepting donations is as easy as posting your Bitcoin address on your blog/website. You may want to provide or link to some info about Bitcoin too in case users without any Bitcoins also want to donate. When you have a donor, your wallet will message you a notification telling you how much has been sent. Your Bitcoins are then free to save or spend as you wish.

Blog contributed by Nick Chowdrey, finance and accounting writer for Crunch, online accountancy firm for freelancers and small businesses.

Posted in Financing a business | Tagged IT, Finance | 0 comments

Crowdfunding models explained

February 13, 2014 by Guest contributor

Crowdfunding models explained/Funnel accumulates small drops into big one{{}}With all the hype surrounding crowdfunding, knowing what the different options are and which specific benefits they offer can seem difficult. To help you remember you can use the acronym DREIM, which stands for:

  • Donation (philanthropy)
  • Reward (“pre-tailing”)
  • Equity (shares)
  • Interest (debt) and
  • Mixed.


Of the five models, donation is perhaps the simplest to understand. Basically, it’s a form of philanthropy, whereby people give money to a good cause. Donors are left with the warm feeling that comes from knowing they’ve done something positive by funding a project with social value.

Within the arts, this has traditionally been represented by the concept of a sponsor or patron of an artist or field of creative work. There are many of these in crowdfunding, perhaps the most well known being JustGiving, but others include Spacehive, which is dedicated to social or community causes, and Unbound, a special model where authors ask the crowd for funding to help turn an idea into a published book.


This is the model that most comes to mind when people think about crowdfunding. The crowd pledges money to a project and gets something in return, such as a poster or item of merchandise. The reward model is represented well on both sides of the Atlantic by the likes of Kickstarter and Indiegogo, but there are plenty of UK sites, such as Bloom Venture Catalyst and Crowdfunder, and these support projects ranging from artists to zoos.


This is where the project’s management (could be a business owner) offers a share of the profits to the crowd. Once money is made or the project is sold, the investors get a share (well, that’s the idea). This is risky, because start-ups often fail, so the likes of Seedrs, which specialises in this model, requires would-be investors to pass a test before they can invest. But the good news for investors (and entrepreneurs using this model) is the government has introduced the SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme), which offer tax breaks for investors. There are restrictions and the best place to learn more is by visiting the HMRC website.

Equity usually means giving away some control over a project or business, of course. This could be difficult for some people, which is why this model of crowdfunding needs careful consideration before you proceed. When you give away equity you will also need to seek legal advice, which costs money and takes time. Investors generally look for growth businesses they can scale up and sell in the future.


This model is similar to getting a bank loan except you get the loan from the crowd and it is on your terms rather than a banks. As with equity, you may find a lack of enthusiasm in your business unless you can prove its potential for major growth. Another problem could be higher rates of interest. The headline numbers might look the same as a high street bank, but you need to consider fees charged by the crowdfunding platform and the payment processor. This all adds up.


Mixed is just as it sounds – a mix of models. For example, the Crowdbnk platform offers reward or equity, which is why careful consideration is advised before crowdfunding your project. Plus, you need to check the provider is FSA regulated (Crowdbnk is), which will ensure you are covered should they go bankrupt or if you find out a campaign is fraudulent.

Blog supplied by Chris Buckingham, lecturer and founder of crowdfunding research agency minivation.

Further reading

Why it pays to fund your own new business

January 28, 2014 by Guest contributor

Why it pays to fund your own new business/wallet wrapped in a shoestring{{}}Running your own business can be exciting, draining, liberating, stressful and satisfying – all at the same time. Doing it without outside investment can be a risky proposition, but with risk comes reward. While some people might view having a small budget as a disadvantage when starting a business, in my experience it proved highly beneficial in the long run. 

I started market analysis consultancy White Space with my business partner Nick using just our individual hard-earned savings and no investor support or bank loans. We’ve now been running for eight years, rent a large office in central Oxford and work for more than 70 of the world’s most recognisable companies. There are many positives to funding your own business, and here I’m going to share some of my experiences and provide practical tips on how to overcome any disadvantages. 

Making the right decisions that benefit long-term growth

As a business owner, you’ll be under constant pressure to make decisions that are critical to the growth and direction of your business. Make sure you are clear about your overall strategic direction by applying the following principles: 

  • Develop a clear business proposition by becoming an expert on the competitive landscape and identify what you can offer that differs from your competitors, but that also meets the needs of your market.   
  • Reflect on what you are good at and bring your skills, knowledge and experience to the table.
  • Have a clear vision of what you want your business to look like in five years time, who your clients/customers might be and what you want to be known for within your industry.

Surviving on a shoe string budget

Self-funding your business will cause you to reassess and prioritise your personal expenses. In the early stages, you will be surviving off very little, without the comfort of a steady income. Many financial survival tips are obvious, such as ‘save money wherever you can’. Here are three that are less obvious, but just as important:

  1. Develop a cashflow forecast. You need to know what you’re going to spend and when, and plot this against when you’re going to receive any income.
  2. Build a ‘buffer’. Start-ups generally fail because of cashflow problems, so holding a buffer or company reserve is a much better way of protecting yourself from this than a bank loan or an overdraft.
  3. Be wary of committing to too many capital outlays that aren’t aligned with your business strategy (ie lease or hire, don’t always buy).

When and how to accelerate?

Despite wanting to conserve your cash without any major capital outlays, there comes a time when a business needs to accelerate. A steady growth model is far more scalable and allows you to fully test the market before expanding further. You are also much less likely to fall victim to the cycle of ‘boom and bust’.

The right time for growth is when your business is in the middle of a successful period, with a few strong months just gone and a couple more forecast to follow. Be aware that expansion will eventually require additional resources to succeed, including labour, equipment, finances and more micro-management.

My experience has shown that the old adage – ‘revenue and staff numbers for show, profit for dough’ – still rings true. It can be exciting to feel like you are expanding, but never take your eye off the bottom line. For the vast majority of start-ups that are not expecting to be the next Twitter, this is the only true measure of success.

Self-funding your business can provide many advantages, from enormous personal satisfaction to being able to take a greater share of the spoils when your business succeeds. Making sure you have the right business proposition, the passion to make it happen and being realistic about what you can and can’t achieve are key to a successful and scalable business start-up model.

Blog supplied by John Bee, managing director of Oxford-based market analysis consultancy White Space.

Further reading

How to keep your business's head above water

January 13, 2014 by Robert Craven

How to keep your business’s head above water /drowning businessman{{}}I ask every audience I talk in front of one key question: “What’s the most important thing to measure if you want to find out how well your business is doing?”

And, without fail, people always come back to me with the wrong answer! They call out ‘sales’ or ‘turnover’ or ‘profit’, but they hardly ever mention the right and probably only answer that really matters – ‘cash’.

In reality, it’s impossible to carrying on trading if you run out of cash.

In the current economic chaos there are plenty of casualties, the weak and vulnerable businesses will go bust. More worrying is the profitable businesses that go to the wall because they run out of cash.

So, how do you keep your head above water? In basic terms, sell something people want; make sure the difference between what you buy it for and what you sell it for is big enough; find a way to get people to buy from you, take massive action. And, of course, make sure you collect all the money you are owed: 

  1. Measure cashflow like a hawk.
  2. Do your cashflow projections.
  3. Have clear credit terms.
  4. Check all new clients’ credit records.
  5. Have a rigorous process for invoicing, following-up and collection.
  6. Hold on to your cash as long as you can.
  7. Get yourself a decent accountant.

As a self-confessed serial entrepreneur I hate the detail and intricacy of putting cash-flow processes in place, but you can’t afford not to.

Blog supplied by Robert Craven of the Directors’ Centre, who shows MDs and business owners how to grow their sales and profits. His latest book is Grow Your Service Firm.

 Further reading

The cost of doing business

January 08, 2014 by Guest contributor

Forum research suggests business costs rising 3.5% ahead of inflation

Business costs continued to rise during 2013, with energy costs still the most commonly seen increase among small businesses, according to the national business group, the Forum of Private Business.

The Forum's Cost of Doing Business survey, carried out among its members, shows firms are still facing an uphill battle to make ends meet, despite positive signs of an economic recovery as the infographic below demonstrates.

The results showed that 94% of businesses saw an overall increase in their business costs. 87% of businesses reported an increase in energy costs, 83% in transport costs, 78% a rise in marketing costs, and 69% a rise in the cost of raw materials/stock.

Worryingly, the report also identified that 41% of small business owners admitted to being unable to pass any rising costs onto customers, forcing them to cut their own costs to keep prices static. Just 2% were able to pass on costs in full.

Alexander Jackman, the Forum's Head of Policy, said: "The major reasons for increases in prices were predominantly down to transport and energy prices rising, coupled with the continued weakness of sterling for importers. The economic outlook may be better but costs still remain an issue for our members and a key focus of our lobbying and support services.”

"Unfortunately, it doesn't look as if there is going to be any respite from energy hikes any time soon, despite the ongoing political pressure to take action to introduce more competition in the market, with many of the major players recently announcing significant increases and others expected to follow suit.”

While annual inflation continued to fall from 3% to 2.7%, the research also found that prices have continued to rise faster for micro, small and medium-sized employers at 6%, although this is less than the 6.7% figure reported by the Forum the previous year in research into business costs, suggesting things are improving – albeit slowly.

There was a significantly lower proportion of businesses concerned by credit restrictions last year, with a higher proportion seeing credit restrictions as having little impact on their operations. However, credit restrictions were still apparent, with 26% of businesses feeling they had less leeway in coping with business costs than they had the previous year.

81% of firms indicated that rising business costs had been detrimental to their business. 73% had cash flow issues as a result and it had a detrimental effect on 51% of firms when looking to invest. 51% also reported that it has been damaging for employment levels and 63% felt that it had inhibited their plans for growth.

Despite the recent positive news on the economy, rising business costs could continue to restrict the ability of many SME’s to take full advantage of the signs of recovery, with 83% of business owners quizzed expecting prices to continue to increase, and 16% expecting a significant increase.

The most frequently cited exacerbating factors were customers paying late (59%) and competitors offering products below cost price (51%). Excessive administrative demands forced on businesses by the government, banks and customers meant that 35% of businesses had not been able to focus on business activities. Changing payment terms had been a problem for 24% of businesses in dealing with suppliers, and 26% in dealing with customers.

“The findings suggest that significant action is still needed to tackle late payment, through strengthening the Prompt Payment Code to prohibit businesses from signing the Code if they have extended payment terms in the last 12 months. We would also like to see the government make it compulsory for PLCs to declare their annual payment time statistics in annual audits to support better payments.

“As well as positive action on late payment we’d like to see further steps to help small firms with business overheads. We’d like a freeze on business rates and small business multipliers in 2014. An extension of small business rates multipliers until the end of the current parliament would also be welcome and we’d like to see the government commit to undertaking independent research into business rates. While the Chancellor’s announcement of a fuel duty freeze at the Conservative Party Conference in 2013 was a welcome move, we feel that further action should be taken to investigate where further savings could be made across government to ensure that fuel duty is not raised again before the end of this parliament.” 

The cost of doing business - infographic and press release{{}}

Deborah Meaden on how to fund a new business

December 19, 2013 by Guest contributor

What advice would I give to someone starting out in business who may be worried about funding? Today, I think people in need of funding and hoping to start a new business tend to approach the banks automatically, by default. Then, if they’re declined, the big question is – ‘What next?’

To those people, I would say that I think it’s never been a better, more exciting time to explore different avenues.

The difficulty with the banks and getting loans through conventional methods has meant other opportunities have had to appear through necessity. There are plenty of different models and lots of people actually looking to invest in new businesses – look at crowd funding, for example.

It can be worth considering friends and family, too, and approach them for investment, although you’ve got be careful that you’re very clear on the terms early on.

Which investment am I most proud of? I find it really difficult to pick a favourite investment. When I’m visiting a business or I have to be especially focused on one in particular it has 100% of my attention. It becomes all that I can think of, all that I can see and it becomes the one that I love the most. But when I walk out the door or shift my focus to another investment, that becomes the one I absolutely want to do.

I’ve got a portfolio of 19 businesses that I’m currently invested in. It’s been known to flux up to a maximum of 30 and down to ten.

There is one that I’m very pleased I got involved in and it was a cloth mill called Fox Brothers, which started in 1772. It was the last cloth mill left in the South West and it was dead – absolutely on its knees. I didn’t know that when I invested.

I’m pleased to say that now it’s doing well and I’m really proud to have been involved. I like to think that if I hadn’t found it, and it hadn’t found me, it would have died and a part of our heritage would’ve been lost.

This exclusive insight was taken from an interview conducted by when Deborah recently participated in the city index celebrity trader challenge. Find out more about Deborah and her views by visiting her website.

Further reading

The worrying consequences of spiralling business costs

December 17, 2013 by Guest contributor

The worrying consequences of spiralling business costs/man showing empty pockets{{}}According to research published recently by membership organisation the Forum of Private Business (FPB), business costs in 2013 in the UK have increased at a rate of “3.5% ahead of inflation”.

The FPB’s latest Cost of Doing Business survey, based on responses from its members, concluded that “firms are still facing an uphill battle to make ends meet, despite positive signs of an economic recovery,” says the organisation.

The FPB reckons 94% of businesses have seen an overall increase in their business costs in 2013, with 87% having to cope with an increase in energy costs, 83% with higher transport costs, 78% with a rise in marketing costs and 69% with higher raw materials/stock costs.

Margins continue to be squeezed, with two-fifths (41%) of respondents unable to “pass any rising costs onto customers, forcing them to cut their own costs to keep prices static” (just 2% were able to pass on costs in full, says the FPB).

"The major reasons for increases in prices are predominantly down to transport and energy prices rising, coupled with the continued weakness of sterling for importers,” explains Alexander Jackman, FPB head of policy. “The economic outlook may be better, but costs still remain an issue for our members and a key focus of our lobbying and support services.

"Unfortunately, it doesn't look as if there is going to be any respite from energy hikes any time soon, despite the ongoing political pressure to introduce more competition in the market, with many of the major players recently announcing significant increases and others expected to follow suit."

Although annual inflation has fallen from 3% to 2.7%, prices have continued to rise faster for businesses (6%), although, says the FPB, this is less than the 6.7% it reported last year.

Almost three-quarters (73%) of respondents have experienced cashflow issues as a result of rising business costs, which has had a “detrimental effect on 51% of firms when looking to invest”, while “51% also reported that it has been detrimental to employment levels” and “63% feel that it has inhibited their plans for growth”.

Despite the recent good news on the UK economy, increasing business costs could hamper many business’s ability to take advantage of recovery, with 83% of respondents expecting prices to continue to increase and 16% expecting a “significant increase”, says the FPB.

"Businesses, like consumers, are facing a lot of upward cost pressures at the moment,” notes Phil Orford, FPB CEO. “When looking at how to dampen energy price rises and other cost pressures for households, the government shouldn't ignore the fact that businesses are facing similar challenges. Political efforts to positively impact on the cost of living should not be funded through increasing the costs of doing business."

Sites such as uSwitch, UKPower and enable businesses and individuals to compare energy prices and try to find a better deal.

Further reading

Mobile Chip & PIN payments: the secret to boosting your sales?

December 04, 2013 by Guest contributor

Mobile Chip & PIN payments: the secret to boosting your sales?/male showing credit card{{}}Mobile Chip & PIN payments are becoming more popular around the UK. This is mainly due to the fact that they are an inexpensive and modern way to increase profit.

For a while now, small-business owners have been unable to accept card payments due to problems with traditional card readers. This is due to the fact that they involve lengthy and expensive contracts, monthly fees and equipment that is bulky and hard to transport. Mobile Chip & PIN payments solve this problem by providing a non-contract service, with no monthly fees and a sleek modern design that fits with any business image.

There is no doubt that there are benefits to employing mobile rather than traditional Chip & PIN technologies, however, you may be asking yourself why it is necessary to even take cards?

One reason is that accepting cards gives your customers the option to pay by a variety of means. This might sound like a non-issue, however, one of the biggest reasons that merchants loose business is interrupting “customer flow”. Specifically in the situation where a customer wishes to buy a product, but has no cash on them, if the customer cannot pay by card they simply have no option but to leave. In this case, the merchant has not only lost out on a sale, buhas also lost a customer whose opinion is valuable to your business.

This brings us to the second benefit of accepting card payments – customer satisfaction. Most businesses strive towards providing excellent customer service, after all, for small businesses referrals are often the best advertisements of all. Disappointing the customer by not offering a convenient way to pay may come back to haunt you by damaging your reputation.

However, the direct benefits do not stop at the customer. Taking card payments means that your business does not have to run the risk of having large amounts of cash stored, it also saves on daily trips to the bank to deposit the money. Perhaps the biggest advantage to a small business owner, though, is that is allows for more efficient accounting. By accepting more cards and less cash, it means that your transactions are easier to keep track of, which is vital for financial planning.

Mobile Chip & PIN payments are secure, with all reputable companies required to pass rigorous security checks and verifications. They are also convenient for both customer and merchant, and are a great tool to increase profit. So why not find out more?

Blog supplied by mobile card payment solution provider payleven.

What are your key options after you've spent your initial start-up budget?

November 28, 2013 by Guest contributor

What are your key options after you've spent your initial start-up budget?/person with an empty wallet{{}}One of the earliest challenges faced by all start-ups concerns finance. No matter how great an idea you’ve had and no matter how well thought-out your business plan is, you’ll need to have enough funding to get your fledgling venture off of the ground.

Maybe you’ve pursued crowdfunding, borrowed money from friends and relatives, perhaps even turned to a high street bank for a business loan, or approached alternative finance providers for help. Whatever route you’ve chosen, before long you and your business will have to face the same daunting question – what to do when this money has run out?

You’ll hopefully be self-sufficient

Start-up funding is intended to give businesses a chance to get off the ground, of course. In the very earliest stages of a business’s life it’s almost guaranteed to be operating at a loss, and those expenses will need to be covered somehow.

You might need to invest in premises, staff, equipment and more besides, so start-up finance is a necessary step in order to see your business through those hard, frightening and exciting early months.

If all goes to plan, start-up funding should act as a stepping stone to help your business to become self-sufficient before the cash runs out completely. Very few start-ups operate at a profit for the first few years, but if you’ve played your cards right, you’ll be breaking even before your start-up funds are all spent.

You can actively pursue growth

It’s possible to pursue growth during the period when many fledgling firms find it difficult to compete, even when a challenging economy makes business opportunities difficult to come by.

Building momentum can be difficult at this stage, but if you’ve got the right people around you and have built a team of committed, hardworking individuals, it’s eminently possible to get moving in the right direction once more. Sometimes, however, it’s necessary to pursue another form of business finance if you are to move from stagnation to expansion once more.

You may need more financial assistance

The business world is built on finance, and until a business has reached the stage where it is sufficiently profitable to sustain itself and grow, it must rely on the assistance of small-business finance facilities instead.

Invoice finance providers offer facilities that can fund growth, based on your business’s internal sales ledger. Alternative lending options such as invoice finance and discounting are more flexible and thus more suitable for growing companies than traditional bank loans, so if you’re looking to move your business forwards without incurring additional debts, you’re likely to benefit significantly.

You could also look at peer-to-peer lending (ie the lending of money to unrelated individuals without going through a traditional financial intermediary), crowdfunding (ie the collective cooperation, attention and funding by people who pool their money and resources together to support other businesses or organisations) or possibly an overdraft.

The period immediately following your business’ first few months can be intimidating and confusing, and it may seem as though the last thing you want to do after your small business funding has all been spent is pursue yet more finance. Sometimes, however, it’s necessary to take the bull by the horns and actively pursue growth in order to spare your business from years spent merely treading water and making ends meet.

Blog provided by David Richards of Gener8 Finance Ltd.

Crowdfunding for business - a fad or the future?

November 11, 2013 by Guest contributor

Crowdfunding for business – a fad or the future?/Crowd, Funding road signs{{}}Financing a business has traditionally meant asking a few people for large sums of money. Crowdfunding – one of the most talked-about funding channels in recent years – turns this idea on its head by enabling businesses to use the Internet to ask a multitude of potential funders for defined, comparatively small amounts of money.

The question of how to fund and share profit more creatively was hotly debated at this year’s Dell Women’s Entrepreneur Network 2013 event. Speaking at a pre-conference workshop on accessing capital, Springboard Enterprises president Amy Millman stressed the importance of getting the right source of credit, suggesting that crowdsourcing can provide an innovative means of becoming a more social, community brand in opening a company up to a broader and younger pool of shareholders.

And with funding options drastically reduced in the wake of the global banking crisis, small businesses are jumping at the chance to get their finance from ordinary people: the crowd. But with little regulation, is this young credit market really a safe and viable option for businesses looking to meet their growth ambitions?

Crowdfunding essentially means asking a crowd of people for a fixed amount of money for a business venture or specific project in exchange for a reward. As a relatively new market, the credibility and stability of crowdfunding needs strengthening – something increased regulation will help bring about.

Currently, just a limited number of platforms are regulated by the Financial Conduct Authority, meaning many crowdfunding companies are handling transactions without adequate protection – even if the UK Crowdfunding Association has a practice code in place to protect those involved. Few sites can ensure an investor won’t lose money in the event of the platform collapsing.

Ensuring potential investors have as much information as possible about a start-up is essential for informed decisions. That’s why any business looking for funding via these channels must be totally clear about why they need the investment, how it will be used, and how much they need to reach their growth and profit targets.

Unlike traditional pitching, potential investors are unlikely to have met the start-up, so must be made to feel part of the success story. A company needs to tie-in their crowdsourcing outreach with a social and media engagement strategy. Of course, the nature of both social media and crowdfunding means that entrepreneurs must be ready to receive feedback – both the good and bad – in a very public domain.  

Ultimately, any business looking to raise funding through crowdfunding must do their due diligence before diving into these still largely untested waters. Not all crowdfunding platforms will be appropriate for the business or project in hand, so research is essential.

And it’s not for the faint-of-heart. It can be a lot of work to kick-start and maintain the momentum that will see a project through to its desired end. But crowdfunding can also provide a start-up with unique exposure and feedback from those who matter most – your target audience of ‘ordinary’ people.

Blog supplied by Sarah Shields, executive director and GM, consumer, small and medium enterprise, Dell UK.

Further reading

How to save money and the environment by becoming a paperless business

November 06, 2013 by Guest contributor

How to save money and the environment by becoming a paperless business/paperless office sign{{}}Becoming a paperless (or near paperless) business isn’t something that can be achieved overnight. It takes time, effort and patience from every member of your team. It was reported by The Guardian that more that 80 million tonnes of paper is wasted every year.

Going paperless will certainly benefit the environment, but what are the business benefits? Not only can it clear away clutter and create more space, you can also expect increased levels of productivity and lower long-term costs. So how do you become a paperless business?


The road to becoming a paperless business isn’t an initially cheap one. If you want to see results in the future, you have to be willing to invest in new technology now. After all, if you’re intending on banishing printing forever, your staff are going to need paperless alternatives.

If you invest in second monitors for your employees, they will no longer require printed documents to refer to as they work. Productivity will also increase thanks to shorter queues around the printer and the ability to multi-task.

Tablet computers are fantastic for displaying presentations, taking notes in meetings and referring to documents side-by-side while you work at another computer.

Cloud storage

If your filing cabinets are full to the brim, it may be time to start storing your documents in the cloud. All your files can be stored online and accessed anywhere, from any device. Services like DropBox and Google Drive allow you to save files online, eliminating the need for paper copies. You can also apply specific restrictions to the files, so that only certain documents can be accessed by certain people.

Finding documents becomes a lot quicker and easier too, because your employees can use the system’s online search tools. Staff members are able to access the files they need without leaving their desks.

Changing your printing habits

It’s time to clamp down on all unnecessary printing. Make it clear to your people that documents should only be printed if absolutely necessary. This is a much trickier process if you haven’t put new technology and other alternatives in place.

Take the time to look at your printing habits to identify particular bad practices or repeat offenders. Remove a couple of printers from your office and insist that documents are printed in mono and double-sided at all times.

Print management software allows you to take control of your printing output quickly and easily. It usually allows you to set monthly ‘printing allowances’ for each employee to foster better habits.

Rome wasn’t built in a day, so it’s important to remember that this process takes time. Stay positive and you will begin to see progress every day.

Blog supplied by office supplier Viking.

Small firms have a "remote relationship" with their bank

October 09, 2013 by Mark Williams

Small firms have a 'remote relationship' with their bank /bank of England and red bus{{}}A new report by “workforce management and SME support specialist” Optionis, based on a survey of more than 500 small-business owners, contractors and freelancers, suggests that only one-in-five small firms has received help and advice from their bank, with only one-in-ten regularly receiving “useful information about relevant products and services”.

When it comes to supporting growth, the research also found that respondents viewed receiving high quality advice from their bank as more important than finance, which is commonly held up as the area where banks fail to support UK SMEs. Indeed, high quality advice came second only to online banking in respondents’ list of banking priorities.

The research was carried out as part of Optionis’ Get on and Grow report, which set out to shed light on how banks could help support growth among the nation’s small firms. “Banks need to raise their game when it comes to supporting growth among emerging entrepreneurs and small and medium-sized businesses,” said Optionis managing director Derek Kelly.

He continued: “Emerging entrepreneurs and small business owners seem to be having an increasingly remote relationship with their bank. This is perhaps unsurprising, given the popularity of online banking. However, banks need to work harder to find ways to offer advice and support to [small business] customers, particularly on issues such as cashflow that are crucial to businesses survival.”

Respondents to the Optionis survey rated the current service they receive from their bank at a disappointing average of 4.6 out of 10. Bank charges were also criticised, with “fair charges” named as the third-highest priority for businesses, yet the current perception of fairness was a meagre 4.8 out of 10.

According to Optionis, the Get on and Grow report “tracks important indicators of growth relating to small enterprises in the UK. It tracks more than “7,000 freelancers, contractors and small businesses each month, looking at financial growth, entrepreneurial mobility, regional trends and gender variations”. The full report can be read here.

In July, the Bank of England announced that lending to small businesses in the UK had increased by £238m between May and June – the biggest monthly rise since statistics were first produced in 2011. The increase meant that UK SMEs borrowed £170.4bn in the year to June, however, compared with the previous year, lending had fallen by 3.3%. According to the BBC, UK businesses were borrowing “3.7% less than a year ago, and 1.3% less than in June.

In response, a spokesman for the BBA (“the voice of banking & financial services”) said: “In the current economic climate many businesses are building up their cash reserves and using this to fund activity rather than take on additional borrowing. Our own figures for small and medium-sized businesses show some £125.9bn is currently held in current and deposit accounts. 

“Banks are currently offering some of the lowest interest rates in history and there should be no doubt that now is a good time for businesses to go and see their bank if they want to borrow. If you run a business with a good business plan and want funding, our message is apply to your bank.”

Posted in Financing a business | Tagged Finance | 1 comment

How to make the bank say 'yes'

September 05, 2013 by Federation of Small Businesses

How to make the bank say 'yes'{{}}The Federation of Small Businesses (FSB) and the British Bankers’ Association (BBA) have collaborated during Small Business Advice Week (2–8 September) to give clear advice to small firms on what they need to do to get a loan.

With independent research showing that around three in 10 small firms are refused finance each quarter, the two organisations have joined forces for the first time to give top tips on what businesses need to do to give them a better chance of the bank saying yes to their application.

“The bank will base their decision on the information supplied to them, so making sure that it is robust is vital. Small firms need to give themselves the best possible chance to get finance so they can grow and help sustain the economic recovery”, says John Allan, National Chairman of the Federation of Small Businesses (FSB).

Here are John's top five tips:

Develop a robust business plan

A clear business plan is key, not just to get finance but for growing the business too. The plan should be a living document that evolves as the business grows and takes into account changes in the market as well as the financial situation of the business. A well thought-out, comprehensive plan will give the lender confidence in the projections made.

Build financial understanding

To have a successful credit application the business must be able to show they understand key numbers such as turnover, profits and existing debts as well as being able to show how the debt will be repaid.

Check your track record

When making a lending decision, the banks will look at how previous lending has been managed in the past — so knowing the credit ratings of the business owner as well as the business itself is vital as is having an understanding of what affects it.

Be honest

Be upfront about how much money the business needs as well as what it is needed for. Underestimating how much is needed may affect the lender's confidence in the owner’s ability to manage company finances, and overestimating profits and revenue could affect the ability to repay.

Keep talking

Communication with the lender and getting feedback is important, as a 'no' now might not mean 'no' in the future. The lender should be able to advise how to change the business model to secure funding and what elements of the business plan could be more robust.

For those businesses still refused there is an independent appeals process which has been agreed by the main UK high street banks.

As John says, “Businesses that are refused finance can appeal the decision. The latest figures show that many firms that do appeal have the decision overturned which is great news. We would encourage more firms to look at the process.”

Irene Graham from the British Bankers’ Association supports John's advice. “If you run a business with a good business plan and want funding, our message is go and talk to your bank. There should be no doubt that now is a good time for businesses to go and see their bank if they want to borrow.

“The UK’s banks are currently offering some of the lowest interest rates in history. We hope these top tips will help businesses to be successful when they apply for finance.

“The independent appeals process is helping the banks to improve the service they give to customers and is also helping to educate businesses about the different finance options available and what they need to do to improve their chances of successfully applying for borrowing."

What to do before you seek finance

September 04, 2013 by Guest contributor

What to do before you seek finance/accounting{{}}What key points should business owners think about when prepping their accounts?

Accounts should be both a factual document – prepared in accordance with the relevant legislation (eg if a company, then the relevant Companies Acts) – and a sales document. If the accounts show a poor result due to the loss of a key customer, say so, but explain how this is being overcome.

What do finance providers look for when deciding whether to provide funding?

Finance providers need to understand firstly why you need the money, how it is going to be spent, what contribution you and the company are making and most importantly how they will be paid back and over what period.

What do you think is the best form of finance and why?

This really depends what you need the money for:

  • If it is to buy a piece of equipment that is going to be used in the business then consider a medium term loan/hire purchase.
  • If it is to fund a growing business, to buy stock, fund trade creditors, etc, an overdraft or even invoice discounting or factoring might be the most suitable option.
  • If it is to develop a building project, then project finance that can be drawn down at key stages of the project should be considered.
  • If you are undercapitalised, maybe a medium-term investor.

What should your business plan include when seeking finance?

Your business plan should set out the following:

  • What the company does.
  • Who owns the company and what are their expectations.
  • Who runs the company and what is their experience and loyalty.
  • Who are the company’s main competitors – why are you better/how will you become better/get a larger share of the market.
  • What are the historical financial results of the company.
  • What are the projected financial results of the company.
  • How are you going to get there (ie if by more sales -  how are you going to get these extra sales?).
  • What could go wrong and what would be the effect if it did and how are you planning to minimise this risk?

You must do this yourself – it is a hard soul-searching exercise but by the end of it you will know your business in more detail and, in particular, you’ll understand its strengths, weaknesses and their trigger points.

Blog supplied by Carol Cheesman, Principal of London-based Cheesmans Accountants.

Posted in Financing a business | Tagged Finance | 0 comments

A message to Vince Cable - please do not ask for credit as refusal often offends.

August 13, 2013 by Elaine Clark

A message to Vince Cable - please do not ask for credit as refusal often offends./cashier with people{{}}It seems that all recent campaigns and attempts to get big businesses to pay their bills on time have failed and an outrageous figure of over £30 billion is owed to small businesses, meaning that they are providing funding to bigger businesses - that is just plain wrong!

Culture change

The Business Secretary, Vince Cable, seems to think that the solution is to impose fines on businesses that fail to pay their suppliers on time, although that does rather seem like closing the stable door after the horse has bolted and provides little help to the cash flow of the small business with the outstanding and unpaid debt. 

The problem seems to be that business culture has developed into one of accepting that 30 and 60 day credit terms are normal; and that has to change. We have moved far away from the days when it was commonplace for a sign to be hanging behind a shop counter with the words “please do not ask for credit as refusal often offends”. The time has come for small businesses to push back; they cannot afford to bank roll the cash flow of big businesses nor can they afford the overhead of a credit control function. And why should they?

Fear factor

There seems to be a fear that if credit is not offered then a sale will not be made to a customer, but is that fear really valid? Surely a customer worth having is one that buys a product or service from you and pays for it to the agreed payment terms. If they don’t pay on time then is that business you should really be chasing?

Thinking outside the box

I run a business in a very traditional industry – accountancy. The norm is very much that the work is done and the invoice raised with the client paying some time in the future. The result is what is termed “lock up”; a large 'debtors and work in progress' balance. When I started my business six years ago lock up was something that I was determined to eliminate in my business model and I did exactly that with clients paying monthly fees. The result is that as we prepare and submit their annual accounts and tax returns the fees have already been paid. They're happy as the accountancy cost is spread throughout the year and we’re happy as we’ve been paid for the work done and do not need to worry about debtors and bad debts. In fact in the six years that we’ve been operating we’ve had only a handful of bad debtors out of nearly 2,000 clients; not a bad result given the recessional times we’ve just experienced.

Accountancy is an industry that changes very slowly but if the elimination of credit can happen here then why can’t it happen in every industry?

Let's go Escrow

I recently came across an innovative solution to small business payment processing offered by People Per Hour (PPH) who “have a community of talent available to work, online, at the click of a button”. Simply put the web site provides a resource for buyer to meet sellers and transact. Once a sale is agreed a proposal is created and, if the buyer accepts it, payment is made with the amount being put into Escrow meaning that the money is held by a third-party, PPH in this case, on behalf of transacting parties. The funds are released to the seller once the sale has been completed, an invoice raised and the buyer agreeing that the work has been done. Funds can also be released if an invoice is overdue or as an outcome of a dispute resolution. 

So all round it seems a rather good solution for a small businesses to ensure that they will be paid for the work that they’ve done as well as providing the buyer with an element of protection for shoddy workmanship or other disputes.

Vince Cable’s Business Bank

It seems obvious to me that the solution to businesses not paying bills on time is for an easy and free to use system of Escrow to be available to ALL small businesses in this country via Vince Cable’s new Business Bank. Rather than spend his time proposing a system of fines I’d like a call to action for him and the Government to really support small businesses in this country and make it compulsory for all sales to be paid on or before delivery or for the sale to be transacted via the Escrow system ensuring protection for both the buyer and the seller.

What objections could possibility be raised to such a common sense and practical solution? 

Using 20 years’ experience spent working at some of the UK’s leading businesses, award-winning chartered accountant Elaine Clark is the founder and managing director of

Essential Dragons' Den Crib Sheet - your guide to slaying them with numbers

August 13, 2013 by Elaine Clark

Essential Dragon's Den Crib Sheet - your guide to slaying them with numbers/financial report and statistics{{}}The start of Series 11 of Dragons' Den kicked off last night with yet more ridiculous business valuations and lack of financial knowledge.

This first episode saw one of the best so far ... “Mr Wrap It Up” asked for a £500,000 (yes half a million!) investment for 11% of his business. That makes his business worth over £4.5m - in his mind. I must admit that his knowledge of his finances was rather impressive – the previous and current turnover and profit figures just rolled off his tongue as they should do for ANY and ALL business owners.

However, whilst making good profits, £180k in 2012 and projecting £250K in the current financial year, the finances just didn’t add up and the Dragons agreed. Surely with all that profit the business would be able to secure some bank or other financing for the building of premises without giving away any shareholding.

All that aside, the lack of financial acumen for some “entrepreneurs” going into the Dragons’ Den beggars belief. OK, so not every business owner needs to be an accountant but by golly if you are trying to persuade someone to invest huge amounts of money in your business you ought to know your finances better than you know the names of your other half, your children, your mother and anyone else important in your life!

What you need to know

For all previous years, the current year and projections for the next three years, you should know:

  • Turnover
  • Gross profit = Turnover – Cost of sales & direct costs
  • Gross profit percentage = Gross profit / turnover x 100
  • Net profit = Gross Profit – Indirect costs & expenses
  • Net profit percentage = Net profit / turnover x 100

It would also be useful to have your cash, bank and any liability figures to hand – in fact an understanding of the balance sheet and the ability to talk through the position to anyone asking about it.

Of course, you need to make sure that the projections are realistic and based upon robust assumptions such as signed orders and new contracts – you may well be challenged if you spout ludicrous figures.

Does your Business Valuation stack up?

Taking a hard look at those figures you need to ask yourself if the valuation that you are putting on your business really stacks up or have you valued “vapour wear”!

Remember that the current business valuation is without the investment and without the expertise of a Dragon investor.  Can you really justify the valuation figure or have you plucked it out of thin air?

The pitches to the Dragons often lack information on how the valuation was arrived at and why the entrepreneur thinks the business is worth that much.

Remember that this is a business investment decision – pure and simple.

The fact that the business may be “your baby”, your pride and joy, something that you’ve invested thousands of pounds in or whatever emotional reason you’d like to present is of no interest whatsoever to the Dragons. They just want to see when they will get a return on their investments and how much they are likely to multiple their investment by.

What do you need the money for?

And finally, if you’re asking for a pot of money you need to be able to articulate where the money will be spent and what return that spend will yield.

Not good TV

Clearly you may not know all of the figures or even all of the terminology that I have used here but before you make an appearance on national TV I would suggest that you “learn your lines” otherwise be prepared to be made to look a fool.

But of course if you did present all of the above it wouldn’t make very good TV – would it!

Using 20 years’ experience spent working at some of the UK’s leading businesses, award-winning chartered accountant Elaine Clark is the founder and managing director of

Five smart ways to start a business on a budget

August 06, 2013 by Guest contributor

Five smart ways to start a business on a budget/bankruptcy {{}}When setting up a business it pays to limit your start-up costs. It’s reassuring to know there are affordable options for start-ups. Here are five ways you might be able to minimise your start-up costs, while still hitting the ground running…

1 Home from home

If your business is new, it’s unlikely you’ll be able to splash out on premium office space. Setting up a business from home has been made easier thanks to smart technology, super-fast broadband and the flexibility to work when you want. But when your four-year-old picks up the phone to your new client, it can end up costing you.

Entrepreneurs are now combining the flexibility of home working with the use of a local, managed workspace. This way they can benefit from a fully equipped office and meeting space as and when they need it.

2 Coffee shop temptation

When you first start out, you’re keen to follow any lead, and research we carried out suggests entrepreneurs would meet almost anywhere to secure a deal. When asked where the strangest places they’ve ever held a business meeting some of the weird and wonderful answers included the back of an ambulance, a navy warship and a cave! Coffee shops are a tempting meeting place, but negotiating while surrounded by talkative shoppers could prove tricky. Our research suggests 64% of business people would choose business centres over coffee shops when they need to be professional and productive.

3 First impressions last

When a prospective client contacts you, you must seize the opportunity. But important calls can come through to you when you’re queuing at the bank or boarding a plane. A ‘virtual’ receptionist is an independent contractor and more affordable than a member of staff. The receptionist, who’s often multilingual, will answer with your business name and can extend hours of availability so you never miss a business call again.

4 Be sociable

“Social media is to marketing as eye contact is to a handshake,” says social media guru Meg Fowler Tripp. Around 1.1bn people use Facebook every day and 200m go on Twitter, according to BuzzFeed. No new business owner would turn their nose up at free marketing, that’s why so many businesses now use social media channels to promote their products or services. But don’t ignore channels such Pinterest, Instagram and YouTube, particularly if your business has a visual aspect.

5 Secure your place in the den

Even some of today’s most successful entrepreneurs, such James Caan (formerly of Dragons’ Den), didn’t start out in their own office space. He, like many other new business owners, opted for a virtual office, complete with a virtual address.

This affordable solution is increasingly popular among start-ups, home-based businesses and companies expanding into new regions. It eliminates the expense of renting while offering a business presence. Providing you with a local business address and phone number, it’s a convenient stepping-stone to a physical office.

By Anna Smith of serviced office provider Regus

More reading

Peer-to-peer lending: a funding solution for your business

July 18, 2013 by Mark Shaw

Peer-to-peer lending: a funding solution for your business/twenty pound notes{{}}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.

How to get a peer-to-peer loan

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. 

Could P2P lending provide a funding solution for your business?

July 08, 2013 by Guest contributor

Research carried out by my company,, 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

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How to lower your business energy costs

July 03, 2013 by Richard Hughes

How to lower your business energy costs/energy chart{{}}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.

Call your supplier

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.

Check your bill

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.

Energy efficiency

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:

1. Lighting

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:

  • Switch off lighting when you don’t need it (ie in spaces you’re not using and out of hours). Light sensors are readily available, so you don’t even have to worry about switching off manually.
  • Swap your light bulbs. Compact fluorescent bulbs are widely available in a broad range of shapes and sizes. They use 80% less energy and last up to 10-times longer.

2. Heating and cooling

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.

  •  Most heating and cooling systems are fitted with regulators and most of us don’t know how to use them properly, so get to know your controls.Set temperature controls to match the season and weather conditions.
  • Set time controls to match occupancy.
  • During colder months, keep windows and doors closed where possible and check to make sure they are properly sealed.

3. Office equipment

There are some really easy steps you and your employees can take together to reduce consumption.

  • If you’re gone from your desk for a while, switch off your computer or at the very least switch off your monitor.
  • Switch off any office equipment when not in use and at the end of day. Many still draw power even when they are in standby mode, this includes photocopiers and mobile phone chargers.
  • When purchasing new equipment opt for makes and models that have an A energy efficiency rating. These will improve your overall consumption for the lifetime of the product.

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 It’s available to all small businesses – even those that aren’t EDF Energy customers.

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