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.
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 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.
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.
Online currency, you can use it to buy things such as domain names, electronics, food and professional services.
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.
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 MtGox.com 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.
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…
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.
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.
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.
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:
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.
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.
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:
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:
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.
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:
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.
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.”
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 cityindex.co.uk when Deborah recently participated in the city index celebrity trader challenge. Find out more about Deborah and her views by visiting her website.
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."
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.”
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:
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.
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.
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 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.
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."
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.
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.
This really depends what you need the money for:
Your business plan should set out the following:
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.
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!
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?
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?
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?
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.
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?
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!
For all previous years, the current year and projections for the next three years, you should know:
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.
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.
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.
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!
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…
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.
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.
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.
“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.
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
With many UK start-ups finding it difficult to fund a new business, there is an alternative lending option that is currently gaining a lot of press coverage in the press for all the right reasons.
Peer-to-peer lending is a relatively new form of finance (it was established in 2005) and (as of summer 2012) peer-to-peer lenders have since collectively lent £300m.
Peer-to-peer lending is as it sounds, lending money to ‘peers’, without having to go through traditional financial intermediaries such as banks or other institutions. Peer-to-Peer lenders are everyday people who have money they wish to lend out in return for a competitive rate of interest (usually between 6-12% pa).
Currently, these are unsecured personal loans that aren’t subject to regulation, but this will all change in April 2014, after which the Financial Conduct Authority (FCA) will regulate the peer-to-peer industry.
New small businesses are still finding it tough to get a traditional bank loan, as many UK banks are unwilling to underwrite an unproven, new business with no established credit.
This leaves many start-ups in a conundrum, but there are several alternative business funding options worth exploring. However, before making any financing decisions you need to carry out sufficient research so you can carefully weigh up the pros and cons of each option. Choosing a source could be one of the most important decisions you’ll ever make as a new business owner.
New business owners pitch their ideas online via peer-to-peer lending company websites to individuals interested in lending to small businesses. The peer-to-peer lending platforms make the process of introducing lenders and borrowers very simple and the platforms are often exclusively web-based. They take much of the administration away that borrowers experience with their high street bank.
As a borrower, you register with a company and you are then put into a category based on your credit score. When grouped, the lender can decide where they want to invest their money based on the risk and return. As with any loan there is a risk, however, the rate of an unsuccessful loan is far lower with peer-to-peer loans than applying for a bank loan.
One peer-to-peer lending platform that has grown significantly since it started in February 2013 is Cornwall-based Folk2Folk. It has introduced £11m of secured loans largely to the business community, starting from £25,000 and up to £1m, at interest rates typically of 7-9%.
Loans introduced so far have gone towards projects such as house building, commercial leisure facilities and property acquisitions, together with various renewable energy projects.
If you plan to start a business but lack funds, peer-to-peer lending might just provide the start-up funding you require.
Research carried out by my company, rebuildingsociety.com, suggests that 26% of people in the UK (or up to 12m) would consider loaning money to UK SMEs by joining a peer-to-peer lending scheme (“P2P”) in 2014, when the sector will be fully regulated by the Financial Conduct Authority (“FCA”).
Our research also suggests that 17% (eight million people) would consider P2P lending over the next 12 months, without additional regulatory protection. However, the added security should reinforce the sector, given that money lent through P2P is currently not covered by the Financial Services Compensation Scheme and lenders could lose cash if borrowers default.
Peer-to-peer lending – also known as person-to-person lending, peer-to-peer investing and social lending - is lending money to businesses or individuals online. The sector is set to boom, with as much as £12bn to be lent through SME P2P schemes each year, which roughly equates to one-tenth of total mainstream SME bank lending in 2012.
Our study underlines the attraction of P2P schemes to small firms, with about 24% (or 1.2m) believing they will struggle to access finance in the next 12 months. Given this, 16% of small firms would consider applying for a P2P loan over the next year.
The biggest obstacle to the growth of P2P lending is lack of awareness, with 59% of consumers not knowing what the term meant, while 54% saying that this is the principal reason why they wouldn’t invest in a P2P scheme, with 46% fearing borrowers not repaying the loan.
Typically, individual lenders can earn between 8% and 15% interest through P2P platforms, which is significantly higher than the sub-inflation returns offered by many bank and building society accounts. Basic rate taxpayers currently need to earn 3% on savings and higher rate taxpayers 3.99% just to keep track with inflation.
I believe that P2P lending is well on its way to entering the financial mainstream, thanks to strong levels of interest from consumers and SMEs. The FCA’s regulatory oversight from next year will provide consumers with an additional layer of protection and our study shows this is very likely to boost take-up.
The evolution of this market will continue to generate value for borrowers and lenders beyond the financial transaction. It can be viewed as a marketing activity and businesses that borrow through P2P lending have effectively won a crowd of stakeholders with an interest in the success of those businesses. This is more powerful than institutional finance and both parties are slowly adjusting to this mindset.
Clearly not all individuals and small businesses that are considering using a P2P lender will end up doing so but as long as borrowing and saving conditions remain depressed, demand will rise.
Blog supplied by Daniel Rajkumar, managing director of peer-to-business lending platform rebuildingsociety.com
In this economic climate businesses everywhere are looking at ways to lower their costs. Your electricity bill is an easy place to start and there are a number of ways you can save money.
Talking to your current energy supplier is a great place to start. Most suppliers will be happy to discuss the tariff you are on and see if this is the best for your business. Shop around with other suppliers and energy brokers to see what’s on offer. Depending on what stage your business is at, it may be worth opting for a longer deal or something more flexible.
While talking to your supplier about tariffs, ask if they offer discounts for certain payment methods. For example, most energy suppliers will offer a discount or incentive for paying by Direct Debit.
Make sure you spend a couple of minutes checking your bill. Has your supplier billed you accurately on an actual read or have they estimated your usage? Check the read against your meter; it only takes a few minutes to send your read in. By giving regular reads you make sure your bills are accurate and that you only pay for the energy you use. Many suppliers are also letting customers trial a smart meter prior to government roll out, which will provide regular meter reads automatically, so ask your supplier if you can apply.
We have found that businesses are less likely to look at energy efficiency than our residential customers, yet there are some really quick and easy measures you can take, that can reduce the amount of energy you use:
Approximately 40% of all energy consumed in buildings is used for lighting, so here are a few simple steps you can take to lower your costs:
Most of us take heating and cooling for granted. Come rain or shine we expect our building to be at a comfortable temperature. Many of the best practice principles are the same for both situations.
There are some really easy steps you and your employees can take together to reduce consumption.
Blog supplied by Richard Hughes, Director of SME at EDF Energy, which offers advice to businesses about the best ways to save money on energy bills. For a free energy efficiency audit visit www.edfenergy.com/business-fit. It’s available to all small businesses – even those that aren’t EDF Energy customers.
News that the British Chamber of Commerce (BCC) has raised its forecast for the UK economy confirms the optimism I’ve seen amongst the managing director members of my organisation, MD2MD, for some time. And indeed a recent straw poll survey of our members gave the same 0.9% expectation. Eurozone fears apart, for a long time our members have seen the outlook as positive, though subdued, predicting growth for the foreseeable future. They see this as the ‘new normal’.
They are, though, much more positive about the situation than the BCC. Our members believe that slow, steady growth is not a disaster. It’s apparent that life is difficult for a significant majority, but a tough market actually improves the economy for the long term.
If, to be successful, a business has to do a good job – indeed a great job – for its customers, then customers have choice. So, a tough economy tends to sort the good from the bad, with only the better businesses surviving and prospering. Tough though it is, business failure is a necessary part of the market economy that most people in this country believe in. Businesses that fail to deliver a decent product or service that delivers value to their consumers have to fail themselves for the market economy to work and society to benefit.
The unfortunate reality is that, during the boom times, the oversupply of cash as a result of poor lending meant it was possible to survive without really giving value and without really being efficient and effective. We should not be wishing ourselves back to this time or business ethos.
So, I welcome a proper competitive market – with winners and losers – that develops and supports well-run, efficient and effective businesses that deliver great value to their customers over the long term in return for their profit.
Through MD2MD I meet many managing directors every month and most business leaders are, in my experience, passionate about their business and are trying to do a great job for their customers, while being good employers of their staff and good citizens in the community. They plan to be there for the long term. They understand that they are part of that community and can only prosper if the community prospers.
Let’s welcome a return to a market economy where the ethic of “I succeed and earn a good living by delivering real long-term value to you and to society” is prized over the selfish “I can get rich quick without working hard and giving value back” ethic that emerged in both private and public sectors around the millennium.
Written by Bob Bradley, chairman of SME membership organisation MD2MD
The Start-Up Loans Company, part of the government’s solution to help kick-start enterprise in England and create more jobs for 18-30 year olds, is being championed by tech whizz kid and serial entrepreneur Josh Buckley (@joshbuckley), CEO of gaming giant MinoMonsters. Although born and raised in Kent, in 2010 Josh moved to Silicon Valley to start up MinoMonsters, aged just 18.
Now a web veteran at the tender age of just 21, Josh already has a decade’s wealth of experience behind him, and now he is looking to help other young people like him realise their potential by becoming their own boss.
Josh started freelance coding at the age of 11 after his family bought a computer. He sold his company first company, Menewsha, a virtual world, for a six-figure sum at the age of 15. Josh then went on to create the global kids phenomenon MinoMonsters in 2011. This gaming venture has been called “the next Disney” by many commentators. Buckley raised $2m for the company at the age of 19 from leading venture capital firms.
Leading entrepreneur, former Dragon and Start-Up Loans Company chairman James Caan is hugely impressed by Josh’s business journey and believes it will inspire other young would-be entrepreneurs across many sectors. And with more than £100m to give to young people across England, such aspirations can find the financial backing it needs.
Caan believes that Josh’s story shows that business success is achievable for people of all ages, providing you have a good idea and the passion to make it work. He is delighted to have Josh’s support to help inspire young entrepreneurs in England.
The Start-Up Loans Company has already backed numerous tech enterprises, including a wide range of app developers. Now is a fantastic time to turn your passion into a business. With the help of Josh Buckley and James Caan, The Start-Up Loans Company is in an even stronger position to help young aspiring entrepreneurs to achieve their dreams. Apply today at www.startuploans.co.uk.
All businesses are different, whether it is size, sector, location, or speciality – there is always an element that sets one apart from the other.
But there is one thing that is common to every business in every country and sector around the world – finance. It determines the income coming in and the expenditure going out, inputs and outputs, the size of an organisation, and more importantly if it will be financially successful and sustainable.
Before making the decision to branch out and step into the unknown, it’s important to understand the role the finance functions play in the world of business. It forms the basis of effective business management and will ultimately affect the bottom line.
Many businesses that succeed don’t make a profit for the first couple of years. If you are hoping to get rich quick, you may need to think again.
Consider a short course on the fundamentals of finance. Training will be one of the best investments you’ll make and you’ll find yourself using your new skills and knowledge on a daily basis.
Tax legislation changes at a never-ending pace and it’s important for new businesses to keep up. For example, the new reporting system for PAYE (RTI) introduced in April this year will affect the way employers submit tax information. These are the types of issues you’ll need to be aware of.
Implement an accounting system and make sure it works. The law requires all businesses to have proper accounting records. By doing this you’ll manage your business better and help stimulate business growth. Startups that don’t do this put themselves at a serious disadvantage.
Train up and read as much as you can but at the end of the day – don’t be afraid to ask for help from a professional accountant.
Tom Kelman has been director of finance and corporate resources at AAT (Association of Accounting Technicians) since July 2005. He has worked in finance for more than 28 years, covering both accountancy practice and industry and commerce.