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."
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.
Most business people have one aim when they launch a company – generate enough turnover to produce a profitable business. No matter which path they choose to achieve this, they will need to grasp the basics of their business in order to maximise their sales effort.
If you are preparing to set up a business, first do the following:
Before approaching anyone else with your business idea you need to fully understand your business proposition. This sounds obvious; it’s your idea, after all. However, if you can’t verbally and succinctly convey your offering (in what is often called the elevator pitch), how can you communicate it to potential customers? It happens again and again. Entrepreneurs have great ideas, but wordy websites and offerings that are overly complicated and difficult to understand turn potential customers off.
You know what you’re selling - now you need to consider why you’re selling it. What value does your product or service add that no other business does? Start by listing your differentiators and then think about how you can best explain your “value-add” to your prospects.
Your business may be amazing to you, but you’re not the customers. You must identify your position in the market and consider the size of your prospective customer base. This will help you to assess the potential and viability of your offering. You need to be realistic. If your plan shows you signing up more than 10% of your target demographic in the first year, you are likely being overly optimistic. If your plan depends on this to be viable, it’s not too late for you to go back to defining the proposition and start again in order to identify your market.
Now you have the basics in place, begin thinking about your route to market. How will you communicate the values of your offering to the prospective customers you have identified? You can do this in a number of ways, depending on the type of product or service you’re selling. If you’re retailing products, you can open a shop in a location with a good concentration of prospective customers passing your shop front. If you intend to sell products online, you will need to develop a marketing plan to drive prospects to your site. Whatever you decide, make sure to do your research before committing any money.
It’s time to make some sales and build your turnover. None of this messaging and communication will be worth anything if it doesn’t lead to converted sales, so be determined in your pursuit of leads and execute your sales well.
A word of warning – maximising turnover is not always best for your business. You need to ensure that your sales are profitable and convert to cash quickly. However, if you get the above basics right, you will be in the best position to succeed.
Clive Kahn is CEO of CardSave, supplier of card payment services to small businesses in the UK.
Invoice finance benefits small businesses by: allowing business growth; protecting cashflow, because late payments and increased credit terms are no longer an issue; providing an alternative to overdrafts and loans that can be difficult to secure at appropriate levels.
This can be seen with two of the fastest-growing industries using invoice finance today. The construction industry has enjoyed an increase of 138% for construction businesses taking up invoice finance from 2007 to 2012, particularly affecting small builders' firms who find it most difficult to secure an overdraft at the levels they need. The manufacturing industry has seen a similar increase in adopters of invoice finance, with an increase of 120% from 2007 to 2012. So why are these industries choosing to take invoice finance as their funding solution?
Invoice finance is flexible; it requires little collateral and takes into account that customers do not always pay invoices on the date of the invoice’s creation. These are especially pertinent reasons for the construction industry, because these businesses are often paid 60 to 90 days after the job is complete.
Invoice finance provides them with a cash advance of any invoices created. By allowing the business to fund projects with the money they would have previously only secured once the job is complete, they can now pay costs such as wages and purchase raw materials, which are required throughout a project’s lifetime.
Banks are unwilling to lend to what is often seen as a risky industry for late and non-payments. This is probably due to construction projects being easily halted by problems such as bad weather, or simply because the job has not been finished to the customer’s satisfaction. These problems can be seriously harmful to cashflow, because the banks are looking predominantly at historical financial data to assess whether a business (particularly a small business or startup) is worth lending to.
Construction businesses that are turning a corner and are in fact profitable, have responded to this by seeking out alternative forms of finance – invoice finance, where funding is judged on the future income of a business rather than its historical records.
Two other extremely popular adopters of invoice finance, according to data from Touch Financial, are recruitment businesses and those in wholesale and distribution. Wholesale and distribution often suffer from late payments, and the nature of the wholesale business means they need a quick stock turnaround in order to maximise income and profits. In no other industry does time mean money more than in wholesale, and invoice finance allows protection against late payment, while strengthening cashflow to allow the purchase of further stock as quickly as possible. This gives the safety and flexibility smaller businesses benefit from the most.
Recruitment is a sector where invoice finance also appears to be thriving. Contractors often require payment before the customers settle their bills and invoice finance provides the working capital to achieve this. Recruitment companies often have few high-value assets, which makes securing a bank loan or overdraft difficult, particularly earlier on in the business’s life. Invoice finance provides cash you are to receive in the future through the invoices you generate today and usually requires little other assets to secure - something an overdraft cannot provide.
Late payments, poor credit history and a lack of assets are all common reasons for small businesses being unable to grow to their full potential. 2013 is likely to see a further increase in the amount of construction and manufacturing sector businesses moving towards invoice finance, while wholesale/distribution and recruitment SMEs should continue to benefit from the flexible funding that invoice finance has provided them throughout the years.
Written by GrahamTripp on behalf of invoice finance provider Touch Financial
Last year, Business Secretary Vince Cable floated the idea of a new business bank, a financial institution whose raison d'être would be to support the UK’s freelancers, contractors and small businesses.
Time after time, official figures prove it’s SMEs that are driving the UK’s recovery, so it only makes sense to support them in every way possible, while the wider economy lumbers back to its feet.
The main function of the business bank will be to help small enterprises raise funds and give them access to credit - something the high street banks are still monumentally failing to do.
There is a fundamental problem with Cable’s proposition, however. Back in September he promised £1bn in funding, plus a matching contribution from the private sector. Hang on a minute, you’re probably thinking, won’t those private sector contributors be the same institutions currently denying credit to small businesses up and down the high street? Quite possibly, yes.
If this new bank is to have private sector involvement, there is a danger the same risk-averse attitude the big banks have adopted will find its way into this organisation, rendering the whole exercise pointless.
As well as being easily accessible, any loans offered by the business bank must be available fast. I have seen many businesses disappear while waiting for loans to make their way through the maze of bureaucracy that blights most financial institutions.
Set up a scheme that allows access to funds within 30 days, guaranteed. Not only would this allow businesses to start up faster, it would allow owners to plan their spending accordingly, with a guarantee that funds will reach them by a certain date.
The government desperately needs to avoid another costly and under-subscribed business stimulus initiative. Past failures such as National Insurance holidays, and more recently the Funding for Lending scheme, will hopefully have given the Department for Business, Innovation & Skills a feel for what works and what doesn’t.
Details are still fairly sparse as to what form the business bank will eventually take, but with a bit of luck Vince Cable will listen to business owners and put together a sensible and useful establishment - and not one that exists solely to turn a profit for its commercial backers.
Written by Darren Fell, managing director of Crunch Accounting.
It’s a central plank of the Government’s policy to stimulate economic growth — supply cheap money to banks and building societies to encourage them to lend. It has come in many forms — from lower interest rates and quantitative easing to schemes like Funding for Lending (FLS), Project Merlin and the National Loan Guarantee scheme.
Not great, it has to be said. Recent data from the Bank of England reveals that lending to businesses and individuals in the final quarter of 2012 dropped by £2.4bn. Lloyds Banking Group reduced its lending by more than £3bn in that time, more than any other bank.
Dr Vince Cable called the results "deeply disappointing” and said that the scheme may need to be “adapted”. Critics argue that banks are simply taking the cheap money and using it for their own needs. But the aim of this scheme and others like it was not to prop up the banks — it was supposed to kick start the economy.
Meanwhile, apologists for the Funding for Lending scheme say things would have been worse without it and they urge us all to give them more time. But is time running out for small firms that cannot get the funding they need?
The British Bankers Association, representing the major banks, says many businesses are choosing not to borrow. A spokesperson actually said: "It is more of a demand issue than a supply issue.”
Try telling that to Mike Benson and thousands like him. He runs a business in Worcestershire supplying parts for air compressors and exporting to countries such as the US and Chile. The business was described in a BBC article this week as “quietly profitable for the past 15 years” — like many UK small firms that are just getting on with the job.
Mike wanted to borrow £10,000 to put towards the purchase of a new van. Knocked back by the Bank of Scotland, Benson wrote to Sir Mervyn King to tell him of his woes and got a “delightful” letter back that was full of sympathy.
The Governor of the Bank of England did have one piece of advice for Mike — try one of the UK’s new banks such as the Swedish firm, Handlelsbank. It echoes Vince Cable’s comments this week on BBC Radio 4's World at One programme when he said the Funding for Lending scheme is working “with some of the new banks” such as Aldermore.
But the majority of small firms bank with the big names and, according to the Federation of Small Businesses (FSB), a staggering 41% of small firms were refused finance by the high street banks in the second quarter of 2012.
Something’s got to give. We’ve been watching the Budget with interest. Over to you George.
Rachel Miller is the editor of Marketing Donut.
There is no shortage of start-up business advice out there that is anti-travel. We’re told to work online and use technology to bridge all kinds of gaps in our operation.
While this is sound advice for keeping costs down, there are still limits to what many businesses can achieve without travelling anywhere. If you cannot travel, you may be unable to deliver your product or meet your customers and suppliers, to build relationships and grow.
Transport is an inevitable expense for many businesses, but if you want or need to use a vehicle (or vehicles), you’re going to have to spend a lot of money up front, and factor in the depreciation of the asset into your ongoing operation.
This inevitably involves compromise: you’ll opt for the cheapest van you can run or scale back your aspirations elsewhere to afford a nicer car.
Getting a loan to pay for your vehicle is risky. You might stand to lose more than the car if you fail in your repayments. Unless your business has the cash in its account, you may be looking at dealer finance, and paying absurd total repayable amounts in the long term, with a large deposit and monthly payment in the short term. Thankfully, there is an alternative.
Vehicle leasing allows you to pay only for the years you use. Take out a two, three or four-year lease on a brand new vehicle and you’ll pay a low deposit with low monthly payments to follow. You might even get road tax and breakdown recovery as part of the package. Lower monthly costs will obviously appeal to start-ups, allowing them to afford to run new vehicles that take up less space on the balance sheet – vehicles that cost less in terms of liability and risk.
Leasing does mean that you won’t own the car or van that you drive, of course, but many businesses may find that this is a positive. Leasing companies are left to worry about the vehicle’s depreciation, so it never becomes a factor in the valuation of your business. You can even opt for plans that give you the option of purchasing the vehicle at the end of your lease period. Otherwise, as a more mature business you will be free to continue saving with leasing, or to purchase a new vehicle outright, if that fits your financial plan.
Stephanie Wood of Nationwide Vehicle Contracts
As more bridging loan lenders enter the market, the cost of borrowing short-term capital has fallen dramatically. This has allowed firms to borrow to buy stock, ease cashflow, expand and a host of other things.
Put simply, a bridging loan is a way to give individuals access to credit easily and quickly, by using assets such as personal or commercial property to release equity.
Primarily used in the property market, bridging finance can prevent buyer chains collapsing when other financial arrangements were in place. In the literal sense, it allows you to bridge the gap between shortages in capital. The majority of bridging financiers function solely online, allowing clients based anywhere to find them easily, making the market open and competitive.
The speed at which cash can arrive in your account is the greatest advantage of bridging loans, often being a very personal service that takes a matter of days. They will also be sure that bridging finance is the best option for you, because lenders want to be sure they will get their money back!
You can expect to pay an arranging fee, which covers all of the checks the financer has to make, such as application, legal and valuation costs. Lenders will offer varying rates of interest dependant on your circumstances (usually between 1 and 2% per month). However, if you have a lot of value in your assets and are not classed as high risk, you could see interest rates as low as 0.5% a month.
A good bridging lender will find out exactly what you are spending the capital on. They will then assess the resource that you are borrowing against and send an independent surveyor to value the asset. This will make up the loan to value (LTV) ratio that you receive, which can be anywhere between 40 and 80%.
Bridging finance is for short periods of time and can become an expensive option if you do not replace the bridge with a long-term financial option. This could be selling other assets, streamlining your business or refinancing with another loan.
If your business needs to raise money quickly to buy stock to meet a surge in demand, a bridging loan may be a perfect way to quickly get the money you need. However, if you are experiencing cashflow problems due to a high wage bill, unless you put a restructure in place, allowing funds to be available within months, a bank overdraft or other financing means may be more beneficial for you.
Overall bridging loans may not be for every business need, especially if you do not know how you can pay back the loan. However, in times of cashflow crisis, where you have assets with equity, they can offer you the breathing space to put longer-term financial options in place.
Written by Jonathan Dempster of bridging loan specialist Balmoral Bridging
The business plan is going well, your idea seems to have feet but you face a major problem. You need money to get your new business off the ground.
Securing funding is one of the most common start-up problems. There are various ways to raise finance, which is a good thing, but many people are unaware of all of the options available to them or are unsure about how they work. Do your research to find out how you can raise the funds you need in a way that best suits your business. Here are the pros and cons of some key start-up funding options.
Banks and building societies
Venture capital trusts
Crowd funding and peer-to-peer lending
By Erin Walls of Ward Williams Chartered Accountants
Setting up a business in the current financial climate can be a challenge, particularly for those with minimal funds. However, the recession has opened doors for many entrepreneurs looking to take advantage of gaps in the market to try and offer something different, while competitors flounder. Here are a few tips intended to help you set up your business if money is tight.
1 Keep borrowings to a minimum
It’s much better for your business’s long-term prospects if you don’t have to borrow to get off the ground. Your new venture is meant to provide you with a new source of income, not become a millstone of debt around your neck. However, there may be instances where you need to take on the right kind of debt, with a realistic plan of paying it back through the success of your business.
2 Only buy essential equipment
Put aside any thoughts of a fancy office space or the latest hi-tech gadgets. You should only buy what you need to carry out your day-to-day business. Much can be achieved with basic internet and telephone connection, a reliable computer and essential software.
3 Work from home
Why waste money on rent if you don’t need premises? Many start-ups can now be successfully operated from the comfort of the owner’s home. If necessary, you could even operate from a virtual office, perhaps with a more attractive business address.
4 Online marketing
You might be able to market your business online without paying a single penny if you’re clever. With powerful social media networks such as Twitter and Facebook you can reach out to potential customers and network with customers and possibly suppliers using online forums.
5 Keep it in the ‘cloud’
The last thing you want as a new business is to lose sensitive business information that is crucial to the day-to-day running of your start-up. A loss of data may also affect levels of customer service and cause embarrassment that could tarnish your reputation before you’ve even started. Cloud computing is a relatively new concept that enables users to rent storage space on an external server to guard against data loss in the event of natural disasters or crime.
Having your own business is difficult but going through the investment route makes things a lot more difficult. Here are my eight tips for getting investment into a business.
1. Do your research
When looking for investment, you will need to do your research. If you haven’t looked into potential investment organisations, such as LBA (London Business Angels), I suggest you do immediately. There are also a lot of ways to help secure investment, such as going through the Seed Enterprise Investment Scheme, which is what I did.
2. Have a great business plan
You won’t find investment for your business if your business plan is flawed. It is worth spending time and money on getting your plan right before approaching investors. The last thing you want is to build negative awareness before even securing any investment.
3. Be transparent
When approaching Investors, you need to be transparent. There is no point going in there and avoiding difficult questions, they will see this as a weakness. If you don’t have the answer, tell them that, but also say you will be able to give them one. When answering negatively, give them a positive to work off, too.
4. Be realistic
Going back to the business plan, predicting your business worth at £1bn after two years isn’t going to appeal to investors. They will see this as overly optimistic and unrealistic. Give them numbers you can deliver.
5. Look at your team
One of the reasons why Gloople received investment is because we have a solid team. We have our whole team in-house and outside mentors who offer sound advice when needed. The investors need to see that your business has stability – which should include having a good accountant and lawyer.
6. Be prepared to negotiate
Going down the investment route, you need to be willing to change your outlook on your business. Take Dragons’ Den for instance; entrepreneurs go in looking for £150,000 but want to give away only 5% of their business. If they are lucky enough to get an offer, it, without a doubt it will be at a higher percentage than the business owner initially wanted to give away. This is an extreme case, because it is a TV programme, but you will have some hard decisions to make when negotiating with investors
You will find that some investors have a lot to say. You will need to sit there and listen. It is a great quality to have and will be looked at as an advantage when an investor feels their views are being taken onboard.
8. Risk over reward
An investor will be putting their hard-earned cash into your business, which is a huge risk. Make sure this risk is worth the reward. They will need to be able to see that their investment is being used to benefit the business.
I hope my eight tips will help you find investment for your business. I would love to hear about any investment success you may have had.