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.
Not enough hours in the day but can’t afford to take on staff? Looking to focus on your passion as opposed to spending hours on time-consuming admin? Wish you could hire specific staff as and when you need them? Well, taking on a virtual assistant (VA) could be the answer.
A VA is a highly skilled professional who can provide a diverse range of administrative, technical and creative business support services to businesses operating in a broad range of sectors. Rather than hiring full-time employees to fulfil numerous job roles, businesses use VAs to provide a wide range of skills.
The VA industry is rapidly growing, as businesses wake up to the associated benefits. However, with varying hourly rates and so many to choose from, how do you know which VA is right for your business and what should you consider before taking one on?
Managers: Many VA companies operate a pool of assistants to complete work. Look out for companies that assign one account manager to complete the majority of tasks. It really helps to have a single point of contact.
Sole traders: Most VAs (72%) are sole traders who work with various clients, so make sure you are clear about specific deadlines so your VA can juggle workload appropriately.
Contract: Although there is no minimum commitment in terms of hours and VAs only invoice for work completed, protect yourself with a contract that includes clauses about confidentiality and data protection.
Fees: Although there are no recruitment agency fees or HR-associated benefits to provide, it is important to double-check what the hourly charge includes. For example, this rate usually covers all normal office supplies but excludes postage or anything bought in specifically for a job.
Workload: Weekly work for a VA ranges from general admin to bookkeeping, marketing to events; there is no all-encompassing job description. VAs are also starting to take on more social media responsibilities so make sure you are maximising a broad range of services.
There's no doubt that as a start-up you live on the entrepreneur diet of hard work and dedication. However, over the years I've also identified five other essentials that have been vital to our success…
My role is to direct the strategic growth of the company and leave the day-to-day management to senior staff. However, from day one I've maintained a keen eye on the 'front line'. Each morning I spend 25-30 minutes reviewing our customer service enquiries to understand what the complaints are, what's being returned, etc. I even listen into recorded conversations for greater detail.
Spending time at the customer-facing side of the business allows me to spot trends I might miss if I were to be removed from the heart of the business. Often trends are only understandable if you have insight into what customers want here and now.
This ethos has been essential to driving our growth. Now, all the decisions we make are based on cold, hard facts rather than instinct. As a result, we take an obsessive approach to data. We trial and test everything to finality, exploring each and every variable to develop the best possible system for all our services.
This means we evaluate all that we do, from comparing our competitor's prices to analysing our customer's feedback to one product over another. Furthermore, we define short-, medium- and long-term goals. With goals in place it's easy to work backwards to identify the stepping-stones needed to reach that success - and therefore all the elements we need to trial and test to get there.
All our analysis is done in-house, we never outsource. The ability to harness data is something all business owners should learn. If you can interpret figures, you can determine your business's strategy. And you don't want to put that power in the hands of someone else.
You can feel compelled to manage everything in-house to try to save money. In our experience, though, it can be a false economy. In your quest to cut overheads, you spend time you don't have striving to be a ‘jack-of-all-trades’, often leaving yourself vulnerable to mistakes. Outsourcing has been one of the best things we've ever done. It allows us to employ agencies, such as recruitment and PR, to deliver on our goals, achieving what we want, but don't have the time or experience to afford.
Recruiting the very best is great, but ensuring you can offer an ongoing, rewarding experience is crucial. We reward staff in a way that motivates. We have found that if you pay your employees market or above-market rate and offer them praise them when deserved, your staff will meet their targets. People are driven to do well and if you make sure you pay them enough so money is not a distraction, their focus will be that purpose.
It can be very instinctive to run from one great idea to the next. A short attention span seems to be the DNA of an entrepreneur. We soon learned, though, that it's best to focus on one business to the nth degree. We initially set up a number of sister companies alongside Cartridge Save. All were online retailers, built upon a similar model, so in theory, should run like one another. The reality was they were all equally demanding and we spread ourselves too thinly. So, we decided to focus on the cartridge ink business and operate in a market in which we knew we could really make difference.
Blog supplied by Sean Blanks, managing director of express online printer cartridge supplier Cartridge Save.
CIC Regulator Sara Burgess explains a key regulatory change due for introduction in October 2014 that will come as welcome news to good causes, Community Interest Companies (CICs) and their investors.
In 2015, the Community Interest Company (CIC) model will be ten years old. It has proved to be one of the fastest-growing structures in many years, in spite of some early reservations, hesitation and fears.
CICs have slotted very successfully into the mix of options for meeting social need and delivering social purpose. They have weathered the economic crash and the numbers continue to increase. By the time we get to the 10th anniversary in June next year, there will be well over 10,000 CICs across the UK and we are likely to see more growth following some key recent initiatives.
CICs limited by shares have always been able to distribute some of their profits in share dividends to private investors. Over the years it has become evident that the regulations around this created barriers to setting up a CIC limited by shares and to investment into them. We made some changes in 2010, but when we consulted on it again in 2013 it was clear there was more to do.
In October 2014, the regulations will change to remove the 20% cap on share dividends and as a result of this remove the peg to the paid-up value of the share, which amongst other things was making CIC shares of little interest to investors.
CIC shares will have greater value, but CICs will still only be able to distribute 35% of post-tax profit in dividends, everything else is kept in the company. The more profit the company makes, the more it can pay in dividends (within the 35% distribution cap).
If a CIC has sufficiently more profit to pay its shareholders, it is making sufficiently more profit to put back into the purpose of the company, to meet its community interest. If the CIC is paying millions in share dividends, imagine how much it will be putting back into its community interest! Shareholders will get a return on their investment and see a return on the social impact of the company. Once it is set up, the CIC will always be a CIC, unless it winds up so it won't be taken over by shareholders who want to take all of the profit.
If you’re a fledgling entrepreneur, starting your own business will be one of the most daunting things you’ll ever do. Whether it’s burning ambition, necessity or the fact that entrepreneurship is hardwired into your DNA, being one of the brave that takes this leap will be life-changing.
Being a new kid on the block can be overwhelming and you will meet people who will want to give you their advice. Picking your way through what’s good and what’s not is no mean feat, so Phil Sharpe, mentor at the University of Southampton Science Park Catalyst Centre, has identified four common characteristics successful businesses share.
In a new business, it all comes down to the people and particularly the leader. To run a successful team, a leader needs to be creative, logical, passionate and able to be compelling and articulate. However, you also need to recognise that you can’t do everything on your own, so you must get the right people around you.
Make sure you’ve looked at your business from every angle and worked out what your strengths and weaknesses are. It’s good to ask others and take on board their criticisms. A lot of people who are naturally passionate about their start-up seem to take criticism too personally, but actually it can be really powerful stuff. Just by recognising that somebody else has a different angle on your business – an angle you could never have because you haven’t got the same experience of life – could be vital. It’s important to turn negative criticism around and use it to your advantage.
You can make your own luck – and there’s a risk that you fail to spot it when it presents itself. So, being aware of opportunities worth taking is certainly part of starting out. Randy Komisar [venture capitalist and lecturer on entrepreneurship at Stanford University] has written a great book on being a successful start-up. He talks about how the basics of business have been written 100 times – the business plan, the value proposition, etc – but he thinks that all this is only about 30% of business. The other 70% is luck.
If you think you can put something off until tomorrow that can be done today – don’t even think about starting a business. To run a thriving start up, you must be able to persevere against adversity, because you’re going to get a lot of that. According to Alex Rovira and Fernando Trias de Bes, authors of Good Luck: Create the Conditions for Success in Life & Business: “Creators of good luck don’t give up or postpone. When a problem or situation arises, they act immediately to either solve it without delay, delegate or forget about it.”
The transition from being an independent freelancer to a business owner is a process of shifting responsibilities and needs. For me, moving from freelance copywriter to founder and MD of my own copywriting agency has been one of moving from one set of challenges to the next – and developing processes or recruiting people to meet those challenges.
As the business has grown we’ve increasingly moved from being reactive to proactive, and that has been crucial in ensuring the continuing success of the agency. I’d like to share with you seven proactive steps you need to take to move your business to the next level. Many of these are true not just for freelance copywriters moving into agency territory, but anyone making the shift from self-employed individual to business owner and boss.
To give clients the sense they’re dealing with a bona fide business rather than an individual, you need to market your business as such. Outline the core values of your business and shift from using ‘I’ in your promotional copy to ‘we’. Consciously create a brand image that leverages the strengths of your agency and sets it apart from the rest.
Once you’ve got staff, use them. There are only so many hours in the day, so to grow your business and focus on areas such as marketing, entrust certain activities to others. Once I’d taken on other copywriters, I found I spent most of my time being an editor. Later, I went on to recruit one of my senior writers to work full time as an editor, freeing me up work on expanding the business and developing processes to increase efficiency.
As a lone freelance writer you can weather the lulls and cut back on the groceries till that big client finally pays up. But if you’re employing other people (or even sub-contracting to other freelancers) you must have a much better handle on your cashflow. Nobody works just for praise and promises, and if you can’t afford to pay them, you may find that your business suddenly contracts again.
Continued business growth requires an investment of time and money in marketing. You also need to develop a cohesive marketing strategy that will exploit your business strengths and conform to current market conditions. If you fail to market sufficiently or effectively, you may find you’ve got an excess of manpower and a shortage of work.
To produce a consistent product, you need to have processes that ensure quality. This extends to everything from gauging client requirements and expectations to briefing writers, invoicing clients and dealing with problems that arise. Remember, delegating will give you the time to develop these processes.
One of the key transitions from freelancer to business owner is to redefine your offering. Where once we focussed solely on providing writing and editing services, now we offer PR, consultation and training. The larger your business grows, the greater the possibilities.
As a freelancer you are in direct control of the quality of your output. As a business owner your staff now play a crucial role in maintaining that quality. Effective recruitment and training policies will go a long way keeping standards high. Your staff are now one of you key assets. Look after them!
Blog supplied by Derryck Strachan, MD of content marketing and copywriting agency Big Star Copywriting.
Personal, yes. Political, certainly. Business focused? Not that I noticed.
Like much of the country, we’ve been glued to the Budget today wondering if there’ll be any surprises from George Osborne. As publishers of the Donut websites, we’re always particularly interested in what the Budget means for small businesses.
Mostly, the Budget came across as being a feel-good one, with an eye to individuals. The saver, the pensioner, the tax payer all have cause to feel uplifted by the Budget. Those pension pots that have hitherto been locked behind measly annuity schemes, unless you want to pay punitive tax levels to draw them down, suddenly seem within shiny reach at only a basic level of tax.
Those people, and no, I’m not one of them, with a spare £15,000 per year to squirrel away will now be able to put it all into tax efficient ISAs. The personal tax allowance increase actually puts more real cash into a lot of pockets. Families could breathe a little more easily with transferable tax benefits and childcare allowances. Companies with up to £500,000 to invest in developing their business could also do well.
The continuing help for first-time buyers and the promised increase in housing stock is good news for associated companies including removals firms (who also benefit from reduced fuel duty), the construction industry and conveyancers.
So much for individuals and big businesses. But most micro-businesses and start-ups, who were singled out for attention in last year’s Autumn Statement, would still be straining to hear themselves mentioned.
Arguably, any Budget that makes people feel more optimistic and actually changes the amount of cash they have to spend, from tax cuts or accessible pension pots, will boost the recovering economy. And that, in turn, is good news for small businesses. It also, of course, won’t do any political harm to the Coalition.
Personally, I thought the tweet from Norman Smith, chief political correspondent at the BBC News Channel, summed it up nicely: "Booze, Bingo, Business and Savers. That's your #Budget2014 Folks."
As a teacher, enterprise policymaker or head of a government department, how do you get young people to consider starting a business as a possible career path? How do you explain the highs and lows, challenges and opportunities and realities of running a business?
The approach taken in Wales is to bring local entrepreneurs and young people together, from primary school right through to university, to raise awareness of entrepreneurship, encourage students to take part in enterprise challenges and competitions and provide them with the tools to start a business. It may not sound groundbreaking, but the Welsh Youth Entrepreneurship Strategy is seen as a success across Europe, and evidence suggests that the impact of the strategy is three-fold.
Young people who have taken part in enterprise challenges and events report that their aspirations have risen as a result. Research suggests that more than half of young people in Wales aged 16 to 24 now aspire to work for themselves – a significant increase from ten years ago. Interviews carried out by the Carnegie UK Trust with those involved in delivering enterprise education in Wales suggest that this stems from an increase in students’ confidence, and in some cases, their leadership skills.
Learning about enterprise from a young age and having the opportunity to take part in challenges that mimic starting a business equips young people with entrepreneurial skills. The Trust’s survey of student attitudes to enterprise found that 52% of Welsh respondents had sold goods online, while 64% had experience of selling face to face. Many students are using these skills to set up their own businesses. After the Welsh Assembly Entrepreneurship Action Plan was introduced in 2002, early-stage entrepreneurial activity among young people increased from 3.5% to 10% in 2011.
The final and ultimate support for budding businesspeople in Wales is the help made available through the Youth Entrepreneurship Hubs to develop mature cashflow and business plans before asking for financial support. This bridging stage between education and work helps young people to discuss their plans with business advisers on a practical, day-to-day basis. And in return for supporting enterprise from an early age, the Welsh Government is being rewarded with more graduate start-ups compared to other parts of the UK and Ireland.
Those involved in delivering the enterprise agenda in Wales are well placed to share their success with governments in other parts of the UK and Ireland. Sharing what has proven to work well across national boundaries might just be the starting point for UK start-ups of the future.
If you’re planning to start a business, you will need to decide how you want to trade, whether it’s as a limited company, partnership or sole trader. This will largely depend on how many people are involved, the type of business and how you want it to be run.
If you’re going into business alone, becoming a sole trader may be the best option. However, if you want to work with and employ a number of people, you can trade as a partnership or a limited company. But which one is best?
A partnership has a very different structure from a limited company in terms of accounts and liability. There are, though, advantages and disadvantages to both, so you need to know all the risks involved before you dive in.
A partnership is similar to a sole trader business but, of course, a partnership must involve two or more people to own the business and share the responsibility. This can have its upsides and downsides, but the main points are:
As licensed insolvency practitioners, we’ve come across numerous partners who have realised too late just how liable they really are. If a partnership is the preferred type of business, all partners must be aware of what’s at stake and know exactly what they are getting into from the beginning.
This is a corporate structure that gives partners limited liability and has similar traits to that of a limited company, while keeping the tradition of a partnership. It gives partners the benefits of a partnership, but allows them to be only partly liable if things were to go wrong.
A limited company is owned by its shareholders (usually the directors) and all profits generated belong to the company. The company debt remains separate from individuals.
It’s impossible to tell how well a company may do in the future. If the business is a success, a partnership can be highly beneficial. However, if the business were to fail, would you be prepared to pay off the entire debt and put your own personal finances at stake? Regardless of the kind of business you want to set up or how many people you want to involve, you must consider all the risks (as well as benefits).
This article provides only a basic introduction – it does not constitute legal advice. The law on partnerships in particular is complex, with little case law, therefore you should always consult a lawyer if you are worried about your personal situation in any partnership and indeed company.
As a newly fledged social entrepreneur who needed a constituted organisation, but who was also a headstrong and independent sole trader, having to think about boards of directors, reports, red tape, being told what to do and how to do, well, it was never going to be easy.
Previously, as a consultant, I’d seen far too many boards of directors and trustees who, rather than operate for the good of the organisation and its aims, were more about personal aggrandisement, power, status and a belief that turning up to meetings was enough (oh, and if they didn’t like the founder, they’d simply get rid of them).
So to even consider going into something that would possibly end up being the very means of my being sacked from my own project did not look that brilliant. Nevertheless, the pressure was mounting to become a robust trading vehicle for a social enterprise, something “proper” with which we could raise funds.
The whole point of any enterprise is to be a successful and viable business, and with the “social” aspect, the income then becomes a vital energy resource for helping to achieve the social purpose, not an end in itself.
Faced with the tangle of options, I began to find out more about community interest companies (CICs), charities, not-for-profits, limited companies, mutuals, co-ops and how they differed. In the end, making the decision was easy.
A CIC allowed me to be a sole director and be a paid member of the working team. This gave me a voice on the board, which is difficult for paid employees of a charity. This would help me to remain in control of things, while the locked assets offered security for the future. By law, when running a CIC all profit must go back into serving the community and the social purpose defined in the CIC’s Memorandum and Articles. It was the perfect structure and said on the packet what we were.
But to be able to apply for funding I needed another director and so began the quest to find people who would advise more than direct. The complexity was that the wonderful people alongside me were by law responsible for the financial and legal integrity of the organisation and therefore had a right to their opinion about how the company should be run. I found that really difficult and learned a great deal about myself and about how the label of “director” changes the dynamic of meetings.
I have put that learning to good effect in constituting Music For All Zimbabwe as a CIC. We have only two directors, Fidelis Mherembi, whose vision it is, and me. Whilst allowing Fidelis free reign in his visionary decisions, this structure also secures the purpose of the company, which will continue to serve its community even if Fidelis and I both 'snuff it'. Any locked assets by law remain in service to the social purpose and cannot be sold to line the pockets of the next directors. That security of the future and the freedom in the present makes it a solid foundation from which to build.
CICs are becoming increasingly popular for many reasons and it will not be long before there are 10,000 of them in the UK. The influence of this dedicated social enterprise vehicle being adopted will be interesting to watch over the next few years.
Blog provided by June Burrough, founder and former director of the Pierian Centre, which opened in Bristol in 2002 as a centre for training and self-development and became a CIC in 2008, before closing in December 2011, and co-director of Music For All Zimbabwe.
For many reasons small and large businesses choose to outsource particular tasks or services to third parties and agencies. As outsourcing continues to evolve, so do the reasons for SMEs and bigger organisations to consider adopting those methods for the good of their business.
The primary reason for outsourcing and outsourcing immediately is to cut costs, because this is the main driver for many businesses that choose to outsource work. But let’s look beyond the pound signs and see some of the other popular reasons for outsourcing services in 2012 and beyond.
In demanding industries there are many instances where highly pressurised employees simply don’t have enough time to focus on core business functions that can drive long term growth.
Businesses need as many people as possible to be able to focus on the profit-driving areas of their organisation. By outsourcing certain tasks or services to third parties, companies can save valuable internal resource to devote towards moving the business forward.
Some businesses choose to outsource particular services or divisions of their business overseas to take advantage of greatly reduced corporate tax rates. Countries such as Hong Kong, Taiwan, Singapore and closer to home, Ireland, all boast very low corporate tax fees that can significantly improve a company’s bottom line.
There may be an area of your business that would require significant in-house and external training to get employees up to speed. Subsequently, it may be more cost-efficient to simply outsource the entire service to a third party or agency. It is quite possible they will add greater value than you even anticipate due to the skills and expertise they possess. Why spend time and money learning new services and skills if you can employ a professional to do it for half the cost?
In some cases, businesses choose to outsource services or divisions of their organisation to make sure they appear constantly accessible and available. To create the impression of operating 24-hours without closing down it is possible to outsource to an overseas partner that can do important work overnight, while catching up on much-needed sleep!
Although reaching agreement with outsourcing contractors can be unsettling and protracted, outsourcing work carries significantly less contractual risk than employing a full-time member of staff. Contractual agreements can be created to offer protection for both parties, while removing any difficult human interaction that can occur when in-house employees are dismissed. Outsourcing firms can be held just as accountable for poor performance and poor quality of work as a full-time employee.
While outsourcing requirements will naturally differ from business to business, there is no getting away from the fact that outsourcing is becoming a key component to the day-to-day strategies of successful businesses.
Blog written by David Campbell of Pall Mall Estates, “one of the UK’s leading providers of affordable commercial space to rent”.
This weekend is the UK’s first Small Business Saturday, an initiative originally founded in the US to raise awareness of small businesses. Its success in the US has been impressive with American shoppers spending £3.4bn in independent stores in 2012.
Small Business Saturday therefore represents a significant step for the UK in promoting, supporting and developing independent businesses. The UK can learn a lot from the US where there is a culture of entrepreneurialism and where advice, information and funding is readily available.
The UK economy looks set to improve, the Chancellor has pledged to help UK businesses in today’s Autumn Statement, and we have certainly seen an increase in demand for funding to assist with investment in small and independent businesses, which indicates that there is pick-up across this huge sector. This is good news for both individuals making a living out of these small and micro-businesses, and for the suppliers to them and their employees.
The small business sector is critical to the success of the UK economy so any initiative that helps drive the start up & growth of small businesses in the UK can only be a good thing.
Blog by Julio Vildosola, CEO of Liquid Finance
Ideas are in abundance. We all know people with passion, vision, ambition and a real desire to make a difference with their new ventures.
It’s been an honour for everyone involved in my organisation, Entrepreneurial Spark, to assist more than 300 start-ups, to help them realise their goals and turn some of these ideas into business. However, in this time we have also seen some stumble and their ideas dissolve away. Lack of effective execution is the number one reason for this, in our experience.
So what are the Top 20 business founders' fundamentals to enable successful transition from idea to business?
Recently I had the pleasure of meeting David Grevemberg, CEO of Glasgow 2014 [next year’s Commonwealth Games]. He has a deadline that cannot slip. He can’t shift the whole schedule a couple of days because of unforeseen circumstances or because “it’s not perfect yet”. He must execute with precision and his team are totally aligned to this goal. If we want success and a legacy, we must behave the same way.
Blog supplied by Brian McGuire, co-founder of Espark.
When I set up a technology company to help retailers, I knew we had to spend time developing our products, so I made practical help from business advice bodies and boot camps part of the plan. As a result, we enjoyed three big benefits. I believe any of them could potentially help transform a start-up’s proposition and how it is developed.
Firstly, build resources and practical assistance from government, local enterprise partnerships and business support programmes into your thinking. From the outset, I took our company into a local technology incubator. It helped us to focus on developing our software products in a supportive environment.
Universities and other big institutions such as the British Library are increasingly providing advice and space for start-ups – often for free. Cities such as Sunderland and Dublin are setting up citywide free wireless zones or making their databases available to entrepreneurs to encourage innovations. Could they make the difference to your start-up when cash is tight or you want to expand with modest funding available?
Secondly, take a look at accelerators that global firms such as IBM or Shell are setting up. Look beyond the publicity aspects, too. The biggest step up in for us was winning IBM SmartCamp, part of IBM’s Global Entrepreneur Programme, which supports innovative small technology start-ups over the longer term.
In this type of event, entrants make their pitch Dragons’ Den-style. It forces you to really focus on your value proposition and rework it. You get advice from experienced entrepreneurs and commercial managers and they’ll soon let you know if you’re trying to reinvent wheels.
In these accelerators, successful entrants open up strategic guidance, sales advice and IT support opportunities, not only at the event itself, but also in the months that follow. By winning our heat, we were given long-term office resources, such as software licences that enabled our developers to build products. Today’s big firms are opening their doors to start-up as never before.
Finally, think of the doors that large organisations’ events and advisers can open for you. The Scottish government helped our team get on entrepreneurship courses that instilled a "think big" mentality in our team. This helped us to draw up business plans, but more than that, gave us real confidence and ambition.
And, in entering start-up accelerators, firms can catch the eye of seed funds and angel investors. We gained product development that we would have missed out on otherwise. Business support, commercial advice and networking opportunities are out there ... and a surprising amount of them are free.
Blog supplied by Vicky Brock, CEO of Clear Returns, which provides predictive intelligence technology for retailers, targeting the costly problem of returned products.
The first thing to appreciate is that it is easier to fall out with sellers than to keep them onside. You will get a better buy if you can keep the seller onside at least for as long as possible. Once you fall out, mending fences is impossible.
Sellers usually have a sale figure in mind. Agreeing a sale price at the outset slightly above this figure gives the seller a feel-good sensation and makes him/her think that he/she has a margin to play with. It also means he/she is unlikely to start talks with other buyers.
You won’t. Once the nitty gritty negotiations start, you will ask for guarantees as to the business’ turnover and profitability for say the next 12 months and ask for money to be retained. If the business turns out to be a star buy and performs above your expectations, the full stated price is probably acceptable. If it does not, you will have held money back, which the business sale agreement will enable you to deduct from the purchase price.
As much money as possible – for as long as possible. The agreement can provide for money to be released in slices. Your seller is unlikely to agree to more than 50%.
Ideally you, although the seller might want money held by a solicitor in an escrow account.
See if he/she does. If he/she comes back to you it means he/she has not been able to. You can then push him further. Remember, they will be thinking about your headline figure, which they probably cannot get elsewhere. You can also tell the seller that if the business does better than they anticipate, you will pay more based on performance. This way you can tell them that they have an upside, as well as a downside, and an interest in making the transfer work.
When the seller goes very quiet and stops coming back to you. It is better for you if they respond angrily at this stage, because it’s a sign that they still might eventually sell to you. If they do not respond, they have either written you off or they are talking to another buyer. Most deals reach an “angry phase”, after which the deal happens or does not. The skill is to manage how and when the seller gets to the angry moment and how this moment is managed, so you stay in control.
The seller and any business transfer agent will be keen to get “Heads of Agreement”, which outline the deal. This will be what the lawyers drawing up the sale agreement will work from. Tactically, if you want to keep matters as fluid as possible, you should either delay agreeing the Heads of Agreement or ensure that they are drafted in a form that is flexible. This way, it will be impossible for the seller to refer to these as “agreed” when the goalposts start to move.
Don’t be shy – it’s your money you are spending. Get as much information from the seller as you can. Don’t rely on solicitors or accountants to do this. They can help, but ultimately it’s your call. If there are things that are unsatisfactory, you will want money held back or deducted from the price.
They will be thinking about their commission and will therefore be keen for the deal to happen. If you knock some money off, it won’t have a big impact on what they get, so they will be on your side. If the business doesn’t sell, they will get nothing.
Most are useless at negotiations. You are best not involving them at this stage. By definition, if they were good at negotiating they would be successful businessmen making much more money than solicitors.
It’s a crucial consideration. Sadly, there is always a third party trying to get money – namely HMRC, which people often forget about. At the outset, Get to grips with tax both from your perspective and your seller’s. It could make a big difference to you. Your seller may have tax angles and you need to factor this in. If you can do something that helps them save tax, use this as a negotiating lever. Do not lose the deal because you are insensitive to the seller’s tax position. Finding a way to pay HMRC the least tax is good news for you both.
Blog provided by David Anderson (solicitor advocate and chartered tax adviser) and Alan Massenhove (commercial solicitor) at Sykes Anderson LLP. Please note that commercial and tax law are complex subjects and you should not rely on this article without professional advice on the facts of your case.
As an online retailer, how do you know how your product is going to sell in the 'offline' market?
With 60% of new businesses now started at home, this is a question being asked more and more frequently. PopUp Britain reckons it has an answer.
The private sector funded scheme offers start-ups a chance to put their products to the test on the high street. The campaign’s first shop, a former estate agent premises in Richmond, Surrey, which had been standing empty for a year, played host to more than 60 start-ups in its first five months.
The not-for-profit campaign intends to make use of the growing number of empty shops on the high street in order to encourage small start-ups to grow by providing an affordable opportunity to test the waters with a 'real' shop.
The scheme’s latest project is based on the iconic King’s Road. The shop is a former electronics showroom which has been empty for three months. It has the capacity to house twelve start-ups at a time, and each will pay £240 for a two week stint to cover costs.
The latest shop, which opens on 9th May, is designed give fledgling businesses from around the country a low cost opportunity to test their products in an area that has famously played a key role in supporting independent British brands for decades.
As retail start-ups begin to realise that in order to build a solid brand they need to be in bricks and mortar, interacting with their customers face-to-face, PopUp Britain could provide just the opportunity they need. It neatly helps them keep all the advantages of online retailers like Amazon, whilst having a low cost route to the high street.
If you think you fit the bill, it’s free to apply: www.popupbritain.com/apply
Research published recently suggests the average working adult in the UK is “59% happy in their current job role”. Researchers commissioned by Surbiton High School asked 2,000 employees to rate their level of contentment at work in 11 key areas, “from pay and company perks to relationships with colleagues and management”.
According to the study, workers are generally satisfied with their holiday allowance and relationship with colleagues, giving ratings of seven out of ten for both. Perks received four out of ten, the lowest score, with employees believing they should be entitled to mobile phones, laptops and even private health care.
Respondents were unhappy about their promotion prospects, which were rated just five out of 10. They gave a more encouraging six out of ten each for level of pay, relationship with the boss, work load, working hours, working environment, social life, size of team and hierarchy.
14% claimed they would be happier if they were allowed regular tea breaks, while 34% appreciated being able to manage their own workload. One in three said they liked the feeling of being able to make a difference, while 22% wanted to be able to talk to people every day. An easy commute was also important to 35% of people, while 18% said they would appreciate yearly bonuses.
When it comes to profession, teachers were happiest at work (presumably the poll took place before Education Secretary Michael Gove called for pupils to work longer days and have fewer holidays), with the “satisfaction they gained from working with children far outweighing the negatives”. Secretaries were second happiest group at work, followed in order by engineers, accountants, drivers, shop assistants, caterers, trades people, lawyers and those working in customer care.
Career dissatisfaction continues to be a key reason why people continue to give up their jobs to start their own business, with numbers continuing to rise. According to Enterprise Nation, there was a 10% increase in new businesses in 2012 (484,224) when compared to 2011 (440,600).
So you’ve done it – you have decided to leave your permanent job, follow your dream and start your own business – great news! But now what?
Starting a business – and keeping one going – can be incredibly challenging in what are still very tough economic times. As an entrepreneur with a clear vision you know exactly where you want your business to go - but it can take a lot to admit that you don’t know how to get it there. This is where many small and medium businesses come unstuck. Where can you find the expertise you need at a price you can afford? To solve this problem, many small businesses are turning to interim managers.
No longer just the preserve of large multinationals or global conglomerates, an interim manager is a flexible, affordable way of getting the knowledge and insight you need to guide your business in the right direction. Whether it is help with sales and marketing, assistance with finance and regulatory matters or day-to-day operational and HR advice, using an interim manager is a quick and easy way to obtain the skills you need.
The other key advantage is that interims operate as a controlled, daily cost – essential for smaller organisations. With no sickness, holiday, pension or other traditional benefits to pay for, it is very easy for SMEs to forecast how much an interim will cost over a specified period of time, with no hidden extras.
If you do choose to hire this sort of resource, small-business owners must also be prepared for the fact that the interim will more than likely be over-qualified for the role they are doing. Don’t be intimidated by this; their breadth of experience means they can deliver for your business faster and leave you with a sustainable best practice approach to grow your business successfully.
This post was written by Nigel Peters on behalf of Alium Partners – global provider of interim management solutions.
Life as an entrepreneur is always a learning process, and you won’t grow without taking risks. Sometimes, you need to trust your judgement, but there are some mistakes you can avoid altogether. Here are 10 common mistakes you need to avoid.
Don’t neglect to provide a detailed business plan showing your projected outgoings and earnings. You may have a great idea, but this is not a business plan. Investors may be intrigued by your ideas, but they will want cold, hard evidence of their viability.
Make sure you’re specific when advertising. Know what your unique selling proposition is and target a specific market rather than trying to be all things to everyone. There are hundreds of, say, interior decorators, but if you have a speciality in, perhaps, decorative paint effects, use it as a USP.
Don’t have hundreds of business cards and brochures printed. They go out of date very quickly and can be expensive to produce. If your contact details change, the cards and brochures need to be amended.
Be careful whom you hire. It may seem like a good idea to get friends or family involved in the early days, but if they don’t have the qualities you really need, it will impede your progress. Identify the mix of skills you need and look for people who can provide long-term value to the business.
Avoid expensive websites and domain names. You could even try building your own business website using one of the popular DIY solutions, you might even know someone with more knowledge who could help you put together your own website. Don’t clutter up your website with information customers don’t really need to know about. Instead, tell them how you can solve their problems or provide them with things they need or want.
Don’t neglect planning and research. These are vital in ensuring the viability of your business idea, and a frequent cause of failure is not spending enough time finding out whether there is genuine demand for what you sell. Your pricing must be competitive and capable of providing a viable return.
Try not to set your sights too high, because inaccurate forecasting of market size is a common mistake for start-ups. You will need reliable cashflow and income projections to avoid expensive mistakes such as over-staffing, purchase of unnecessary equipment and lavish business premises.
Beware of the dangers of over-trading, which happens when you take on more orders than you can comfortably fulfil, or that can be supported by working capital and net current assets.
Make sure you have good practices to avoid tying up your capital as a result of poor stock control. Efficiency here means you have the right amount of stock in the right place at the right time – instead of the chaotic opposite.
Never take your eyes off the competition. You’ll need to respond to your competitors continually, so you need to remain aware of what they’re up to. To wrongfoot them, you could introduce new products or services. Always try to outperform your competitors. Find ways to be more special that they are.
Have you got any tips to add or any stories to share? We’d love to know what you think…
Liz Madden works for Champion Accountants
Fascinating research reveals that only 4% of small business owners call themselves entrepreneurs. Yes, just 4%.
A survey of 1,200 business owners, conducted by business software and services provider Sage, found that the vast majority of people on the small business front line feel no connection with the term “entrepreneur”.
The terms “business owner” (53%), “self-employed” (26%) and “businessman/woman” (15%) were the most popular terms people used to describe themselves.
Government enterprise campaigns galore have featured self-proclaimed and charismatic entrepreneurs as role models for those that are thinking of working for themselves. The fact that the word entrepreneur has been shunned by so many might call into question the idea that extraordinary success stories are the best inspiration for ordinary business people.
And TV programmes like The Apprentice and Dragons’ Den are, perhaps, part of the mythologising of the 21st century entrepreneur. Do you really need to aspire to be a multi-millionaire with a massive media presence to call yourself a entrepreneur? Or are small business owners being too modest in rejecting the term?
What do you think? Do you call yourself an entrepreneur?
Have a look at Sage’s infographic (click to enlarge) on the subject and tell us what you think below.
This question is particularly close to my heart. When I started my very first business venture at the age of 17 in Communist Hungary – where at that time 'entrepreneurship' was virtually unrecognized – some of the points you will read below were key to my survival. Now, 22 years later, having set up numerous enterprises and working with various entrepreneurs - I often ask the same question to my clients – what is the key to surviving your first year in business?
The points below are the result of my own experiences and those of others. I hope it will be of some value to you. So what is the key to survival?
1 Cashflow – nobody mentioned this when I started out, even nowadays when there is much more awareness of cashflow, people still focus too much on profit. Potentially, this could be a big mistake, especially in your first year of trading.
2 Determination – well, this is something I’ve always had, even as a child. In the first year some people around you will often say: “It will never work”. If your business idea is viable – go for it – and keep going until you succeed!
3 Resilience – I often say to my clients you have to be like a 'bouncy ball' when you are an entrepreneur… There will be ups and downs, but the resilience you have to bounce back will determine your success
4 Support by a coach/mentor – back in early ‘90s I didn’t have a mentor or coach – I do now. This is something I hear very often from my clients: lack of experience and clear goals are where a coach/mentor can help and save you lots of money by encouraging you to make the right decisions and helping you to grow with your business while reaching your own potential.
5 Ability to identify and focus on priorities – an entrepreneur’s life is a very busy one. In your first year of trading you’ll be particularly overwhelmed by opportunities and offers, which are very tempting. At times, you’ll find there aren’t enough hours in the day. That is the time when you need to consider what are the priorities and focus your energy on the most important ones.
6 Sense of humour – probably among the most important things you’ll need to survive your first year in business. There will be lots of happy, funny moments, but also slightly scary and stressful ones. This is when putting things into perspective and having a sense of humour is vital. It’s certainly helped to keep me going for the past 22 years!
Agnes Cserhati, entrepreneur, mentor, CEO and founder of AC PowerCoaching
Making the leap into business is a big one and all would-be franchisees should have a good tick-list of what they need to consider before making the leap. Here's what to do when considering buying a franchise:
1. Research the franchise
2. Research the franchisor
3. Research the demographic
4. Crunch the numbers
5. Talk to other members of the franchise
6. Ask to see their figures
7. Get a good business plan
8. Be conservative in your estimations for the first year
9. Read the small print
10. Research the competition
11. Grill the franchisor
The last point is important. This should not just be an interview to see whether you are a suitable franchisee, it should be an interview by you to see if you are able and willing to work with the franchisor.
If your franchisor is not behind you 100 per cent and providing continued support it should ring alarm bells. The best franchisors are the ones who know that you have to succeed for the franchise to succeed and will do their very best to make sure that happens. Happy hunting.
Surrounded by the brightest and best of the UK’s entrepreneurs, business minister Mark Prisk MP launched rather a useful tool for the UK’s small businesses at BIS HQ – a definitive calendar of events to help small business throughout Britain for every month in 2012.
Targeted at pre start ups as well as established and new businesses, the calendar marks the first time all Britain’s best business events feature on the same site in a searchable format. There are 600-plus events listed already – and Mark Prisk is aiming to get 1,000 online in the near future. He said:
“We want 2012 to be the year of enterprise, where entrepreneurs can unlock their business potential. Enterprise events don’t just take place on one day, or during one week, but they appear throughout the year and across the country.
“We need to make sure people know that there is support and advice available, that it is easy to get, and it is often on their doorstep.”
The most up-to-date version of the calendar is online to search or download – and even upload your own event. Many events are free, so the calendar could well become an invaluable tool for you – and at the very least should benefit you with a couple of days of advice, inspiration and a range of handy new contacts. And if you're looking for local events, including workshops and networking, membership is free for small businesses. Get the benefits here.
It's Global Entrepreneurship Week and the economic news has been relentlessly dire all week. Youth unemployment has topped one million and the Bank of England has slashed the growth forecast to one per cent.
Would-be entrepreneurs — especially the young people that GEW is aimed at — could well be further encouraged to take steps towards self-employment, not least because other employment options are so limited.
Today’s Guardian newspaper highlights the young people, including graduates, who have been working for free stacking shelves at some of the big supermarkets under threat of losing their Job Seeker’s Allowance. This “free labour” is dressed up as “work experience” and with little prospect of a paid job at the end of it.
Surely this state of affairs must make self-employment a whole heap more attractive to young people seeking work. So how is the Government encouraging and supporting would-be entrepreneurs?
The good news is that inspiration and advice is not in short supply, judging by the number of new initiatives being launched this week. Business Minister Mark Prisk and Business Secretary Vince Cable have been doing the rounds during Global Entrepreneurship Week unveiling new schemes to help entrepreneurs, start-ups and SMEs.
Here’s a round-up of the latest initiatives:
There are some common threads here. Enterprise champions, rising business stars and mentors — presumably volunteering their time — are at the heart of many of these initiatives.
When it comes to inspiring and guiding new entrepreneurs, there is much to be said for learning from people who have been there and done that. But let’s hope that this “free labour” provides the necessary support for the next generation of entrepreneurs.
It was depressing to see Business Secretary Vince Cable quoted as saying that the economy was in worse shape than under the previous administration and that a double-dip recession was a distinct possibility.
While the opposition immediately seized upon his comments, it could be argued that this was rather hypocritical as the current debt crisis and poor bank regulation were a direct result of their own policies.
The feeling of most entrepreneurs is that government is essentially powerless to influence the economy at the grass-roots level. Rather than decreasing regulation as they always promise, any intervention on their part, however well meaning, always seems to create even more obstacles to enterprise.
The solution to our economic challenges is clear. Rather than sit on our hands and complain, now is the time for entrepreneurs to get out there and sell our way out of the recession, bringing the rest of the UK's economy along in our wake.
But this will need to be the UK's real-life entrepreneurs, not the get-rich-quick chancers we see in the media, an image actively fostered by offensive and unrepresentative programmes such as Dragons’ Den and The Apprentice.
And while it is always a joy to inspire young people into a path of entrepreneurship, this is a long-term policy rather than the immediate help that the UK's economy needs.
Real-life entrepreneurs first felt the effects of the recession in 2008. Those that have survived followed the best practice that all businesses should follow. This includes the banks, which are always quick to criticise small businesses for their lack of planning.
Successful entrepreneurship involves reducing risk wherever possible by concentrating on the core business of the organisation and, wherever possible, finding the most profitable niche or vertical market. While cost-savings are important, the main focus should be on generating revenue and reducing the length of the sales cycle.
Rather than chasing brand new customers who promise big orders from exotic locations, the place to find immediate revenue is always your existing customers. They may be equally affected by the recession but willing to discuss mutually beneficial outcomes with people they trust.
It is also a myth that there is no money out there. This is the strong message I have received across the spectrum of industry, from private equity and venture capital companies, angel investors and those companies who have managed to grow successfully in the last few years.
You only need to scan the regularly published lists of fast-growth companies to see which industries have thrived in a recession; all of these companies and others like them have money to spend with the right suppliers.
I am also determined to do my bit to help the UK's entrepreneurs. Starting on November 1st in Essex, I will be presenting at twelve branches of the Federation For Small Businesses (FSB), events that are open to everyone.
The FSB recently launched a new initiative “Championing The UK's Real Life Entrepreneurs”, which focuses on the key issues facing its members. These include increasing the routes to finance, improving cash flow, adopting a new approach to regulation, reducing and simplifying business tax, incentivising job creation and opening up export markets.
The FSB's Head of Policy and Public Affairs, Andrew Cave explained to me that the campaign is designed to galvanise the small businesses in the UK to take a forward-looking and positive attitude towards the economy by increasing their revenue and taking on staff, especially the increasing number of unemployed young people.
He argues strongly that the opportunities and skilled, hard-working people are out there; all it needs is a positive attitude.
Originally published in The Financial Times. Copyright ©Mike Southon 2011. All Rights Reserved. Not to be reproduced without permission in writing. Mike Southon is the co-author of The Beermat Entrepreneur and a business speaker.