If you're trying to get your business to break through to a whole new level of sales and productivity, then a critical component of that is setting up effective systems.
But in order to create powerful systems that optimise your output, it's vital to understand the three basic layers of systems.
What is your company committed to and how is it moving forwards? What are its values? What are the regulations in your business? What is the culture you want to build? What is the mission you have for this particular system? What determines value in this system?
We have a document that we call the "Rules of the Game" that we use to define our purpose, our goals and our expectations, of both ourselves and our clients.
This document explains the position of employees, any legal positions, any conditions or constraints, our contracts and policies. This should form a foundation that your entire company works from.
Many solicitor firms have templates of this document that are ready for you to use and will offer them for free as a way to encourage you to work with them on an ongoing basis.
There are two aspects here - the process and the procedures.
A process is a set of logically related tasks. So you have an input and an outcome, and everything in between is a process. A process sets out how your company is going to translate your rules and policies (from the first layer) into action.
A procedure is when you step inside a process and start providing detailed instructions on how that process is done at each step. The procedures ensure that the process remains consistent in its output.
Take computer back-ups. The instruction to "back-up the company account file" is a step in the process; the procedure will be a detailed explanation of exactly how to back-up the company account file, such as where to store it and how to name it.
Your tools include all the forms, checklists, guides, templates, standard documents and so on.
For example, in McDonalds's it might be that employees need to ask, "Would you like fries with that?" with a smile. The document that explains this for the employees is the tool. Tools will also include your how-to manuals and videos.
Remember, however, that your tools are not 100% instruction manuals. Every employee will have their own way of delivering the final result. What is important is that your tools cover the systemised routine parts of the job.
Gaining leverage in your business requires these three layers; your team will then be able to follow your systems with a clarity that will ensure much smoother automation within your business, reducing the need for your constant intervention.
Whatever the shop floor means to your business, when you started your company, you probably spent 90% of your time on it. As your business grows, the balance needs to shift; you should be spending more than 50% of your time on managing the company, not just working in it.
Your sense of ownership will be huge, and that may be an excuse to keep doing things yourself - but you must stop. You have to learn to work on your business, not in it.
To work on your organisation, you'll need to train yourself to spot a few things. Here's what to look out for:
Remember that people need to understand and buy in to the reasons for doing things in a certain way - and you need to learn how to help your staff do it.
Take the example of customer service. We've all received calls from call centre staff; how many of them sound like they're reading from a script? This is because a particular way of making calls worked for someone, and that method has been passed on - regardless of whether it's a good fit or not for everyone. Just because something works well for you, doesn't mean it will work for the people you employ.
Speak to your team. Instead of telling them how to do something, tell them what you want to achieve. Together you will come up with a variety of ways of achieving the original outcome. They'll feel empowered. And you won't need to watch them like a hawk.
Becoming your own boss, being completely independent and having the freedom to make your own entrepreneurial mark on the world has huge appeal. But making the decision to start a small business and then evolve it comes with its own particular set of professional challenges. Here are five key tips for success in a competitive world.
One of the most important questions you'll be asked as an entrepreneur is "why?". People will buy into your reason for starting your business; it's your story. As well as your product or services, define your reason for starting up from the offset - if your "why" is strong, so is your proposition.
As well as creating new opportunities for your fledgling business, networking is excellent for personal growth. Whether you're picking up marketing tips from a seasoned pro or accessing support on improving the health of your cashflow, constantly connecting with a stream of fresh faces is essential to help develop your business and your own skills.
Always keep your eye on the space for growth and exploration. If you notice that something in your business strategy works well, use it as a point from which to diversify and expand further.
The most successful people in business are those who never stop learning from their experiences. Make it your quest to learn something different about your sector, make a new contact or identify an interesting opportunity every week. Also, keep an open mind. Never close yourself off to an idea - it could be the one that changes your future.
If you're full of excellent ideas but capital is an issue, crowdfunding could be a great option. The projects that do well on crowdfunding sites are those that benefit the wider community, as well as the business or individual behind them.
By taking time to take on board these entrepreneurial tips and boosting your networking opportunities, you're putting the building blocks in place for a more profitable, more rewarding business future.
Sponsored post: copyright © 2016 Staples.
I recently listened to a brilliant podcast called "Start-up". Unsurprisingly, it's about a guy who's starting his own business. What is surprising - at least to someone who isn't in the middle of starting a company from scratch - is the sheer scale of what he had to do.
Coming up with a great idea was just the beginning; turning that idea into a business involved organising finance, creating a product, hiring staff, finding premises, negotiating contracts, making plans, managing crises - not to mention living on a shoestring until revenue started coming in.
But one thing that made it easier for this start-up business was the fact that other businesses weren't stopping him from starting up. This may sound obvious. But behind the scenes, the invisible hand of competition law ensured that he benefited from a level playing field.
Start-ups can be sabotaged when bigger, established businesses don't like a new competitor's cheaper prices, better products or innovative, more efficient business models.
They try to find ways to block them from advertising cheaper prices. They stop their customers from using them. Or they use their revenues from other products to fund discounted prices and squeeze their fledgling competitor out of the market - before hiking their prices right back up again.
At other times, start-ups are stopped or slowed because the suppliers they use are colluding on prices or dividing up markets. This artificially drives up prices, making a new company pay more than they should for essential services - the last thing they need if they want their business to be a success.
Hindering other businesses like this is unfair, anti-competitive and illegal. Indeed, healthy competition is the very reason why new businesses launch in the first place, and there are serious penalties for businesses and individuals who behave anti-competitively, including fines and prison sentences.
Before embarking on any new business venture, it is vital to know what anti-competitive behaviour looks like. On the one hand, this means that where you become a victim, you know to report it and you understand that it can be stopped.
On the other hand, you need to be able to recognise price-fixing, market-sharing, bid-rigging and resale price maintenance to protect your own business from getting into trouble with competition law.
The good news is that the basic principles behind competition law are quite straightforward. If you'd like to know more about it, you can follow this link to Competing fairly in business - a collection of free, bite-size materials, including one-minute videos on each aspect of how to compete fairly.
Make sure you know as much as you need to about anti-competitive activity - it's worth the few minutes it will take to read up on it.
Sponsored post: copyright © 2016 Susanne Quick, Competition & Markets Authority.
The New Year often means a review of what we want out of life and whether the time has come to take a risk and start that business you've often dreamt of. The recent recession saw record numbers of entrepreneurial start-up launches and this trend shows little sign of slowing down. What are the key statistics you might want to look at before taking the plunge?
Statistically, if you think you have found the perfect concept and formulated a sound business plan, and are in your thirties, then your start-up is more likely to succeed. That's what figures from a range of sources including Companies House, The Telegraph and Barclays tell us.
Whatever lies behind this age bias, be it energy, financial resources or simply enough experience of success and failure, the stats seem to favour this stage of life. Don't be disheartened, though, if you're younger or older than this - there are plenty of examples of success outside this peak bracket too.
Global figures published by Mashable indicate that the majority of the most successful new start-ups are launched by former CEOs and business founders. So, if your last concept didn't quite come to fruition or you have been burnt in the past, the figures indicate that you certainly shouldn't give up. Tenacity and an ability to learn from past mistakes could stand you in good stead.
Although the financial rewards of going alone may seem appealing, going solo can be hard work.
As well as sharing resources, having someone else to bounce ideas off and conceptualise plans gives you a fantastic alternative perspective. Even Bill Gates and Steve Jobs had business partners. If you are launching a start-up in 2016, don't let your ego get the better of you - two heads may well be better than one.
Our final tip for anyone contemplating their own start-up in 2016 is to think about location very carefully. On straight numbers, the majority of successful businesses hail from London, Birmingham and Manchester.
However, if you want to make your start-up as successful as it can be, then you really need to be in front of your demographic wherever that is. Do your research and find out exactly where the largest proportion of your target audience is going to be and then make sure you have a physical or online presence that can reach that audience.
Blog provided by Sage One online accounting and payroll software.
Efficiency and effective organisation are paramount for start-ups and entrepreneurs with limited resources. How can you grow your business and enhance your offer when all of your time is taken up by business as usual? The answer lies in successfully managing your workflow, and here are a few practical ways to do just that.
The first step to efficient workflow management is to set up a system that records what tasks need to be done as they emerge, and assigns an 'owner' to each task. Collaborative software tools like Trello are good for this, but you could just as easily use a large whiteboard and a series of Post-it notes. Whenever a new task comes over the horizon, capture it with one of these systems so it doesn't' get lost in the chaos of day-to-day business.
Once you've captured a number of tasks, you need to determine in what order they should be done. Factors to consider include when they actually need to be done by, whether you currently have everything you need to get it done and how long the task is expected to take. You can use a simple system to designate the priority of a task, such as one-three with one being a top priority. Record this alongside the task and change it as needed later on.
There are many different organisational systems that you can use for tracking tasks, but a simple one that can be highly effective for small businesses is 'Kanban', which was first developed by Toyota in the 1940s. With Kanban, workflows are visualised through a series of columns, with individual tasks flowing through these columns.
The simplest form of this is to draw three columns on a whiteboard - 'To do', 'Doing' and 'Done' - but you can customise this to suit your specific business needs. All tasks start off in the 'To Do' column, and from there they can either be assigned to or chosen by specific team members, depending on your organisational structure. In this way you can quickly see what tasks are currently being done and by whom, what's complete and what's in the backlog.
The less time that you spend carrying out mundane, simplistic, but nonetheless necessary tasks, the more time you'll have to spend on doing the things that develop your business. There are many software solutions you can use to automate tasks, such as Nuance's Power PDF, which allows for instant conversion of Office documents into PDFs and the ability to access them from anywhere via the cloud.
It's worth taking a look at what specific processes are currently slowing your work down, and then searching for what software solutions can be used to automate or simplify them.
Sponsored post: copyright © 2015 Nuance Communications, Inc, a leading provider of voice and language solutions for businesses and consumers around the world. Its technologies, applications and services make the user experience more compelling by transforming the way people interact with devices and systems. Every day, millions of users and thousands of businesses experience Nuance's proven applications. For more information, please visit www.nuance.co.uk.
If you met some of the latest bunch of candidates on the new series of The Apprentice – say at a networking event or a job interview – you’d be forgiven for running a mile.
"I'm disgustingly ambitious" says Elle with a sneer. "I'm the captain at the front of a cavalry," says Richard. Joseph says he wants the cars, the girls and the power. And, to the sound of deafening alarm bells, Dan says he has made every mistake in the book with his business, including almost losing his parents' pension.
But this is classic Apprentice. Nothing much has changed. And, anyway, Lord Sugar and his henchfolk, Claude Littner and Baroness "call me Karren" Brady, don’t give two hoots about this kind of talk. Actions speak louder than words, as Lord Sugar says himself.
And so we have the first task. It is, as one of the candidates astutely says in the boardroom, a "margins" task. Not that you’d know it from the way the two teams run at it like bulls in a china shop.
The day starts bright and early at Billingsgate market where the candidates have to buy fish to make two dishes and then sell them to the lunch crowd in London's Camden Lock and the City.
Both teams look pretty incompetent but Connexus (Latin for unite apparently) just keeps making one mistake after another. Dishes are selected with no apparent regard for potential profit. Team leader April won’t even discuss it — they’re making tuna nicoise and fishcakes and that's that. There's no discussion, no number-crunching, no analysis of what people actually want to eat.
And, for a food blog writer, April really doesn’t have her finger on the culinary pulse. What about a fish taco or an asian fish curry? Something that's cheap to make and which will sell all day long.
But this is just the start of their problems. At the market, April completely fails to negotiate; she just buys from the very first person she meets. Mind you, team Versatile's approach to shopping around results in their stocking up on some seriously iffy squid. When it comes to food, there is such a thing as a false economy.
April's team, which includes the hapless Dan, then proceeds to stuff up the preparation. Instead of making 300 fishcakes - upon which their profits projections are undoubtedly based – they only manage to knock up 89. But April is not deterred. She plans to charge crazy prices; that is if they ever get to their destination. Missing the lunch-hour rush is yet another rookie mistake.
Out in the field, Dan sells precisely nothing. April, meanwhile, is still insisting on charging astronomic prices. The rest of the team only sell anything by totally ignoring her price points.
Back in the boardroom, the results speak for themselves. Team Versatile, with its calamari and fish finger sandwiches, has made a not-too-shabby £200 profit. Team Connexus has made £1.87. Yikes…
April selects "desperate Dan" and sous-chef Brett to face the firing line with her. Lord Sugar clearly wants to sack April and tells her so but Dan's performance is just so bad - he says he can’t sell to the public as if that's just a small detail - and so it's goodbye Dan as he mutters "thanks for the opportunity" less than graciously.
Meanwhile, all eyes are on Claude this week. He is the man for whom the phrase "if looks could kill" was invented. And yet even he appears to looks proud when it emerges that his team did something right. It's almost a Bake Off moment.
And so begins another series of the show that buries its business lessons fairly deeply as a shower of wannabe's run around making fools of themselves. That said, I'll probably be watching next week.
Copyright © 2015 Rachel Miller, editor of Marketing Donut.
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Intended to help you if you have recently started your own business or currently work for someone else and you’re seriously considering it, here are seven key lessons I’ve learnt in my 20-year career in technology and communications, a journey that has taken me from more junior level to senior corporate positions to CEO of my own successful business.
If you enjoy what you’re doing and you’re learning – keep going. Working for yourself often means making sacrifices and having to work long, hard days is often par for the course. But don’t be a martyr. Don’t neglect your family or miss important family moments or events – they won’t come around again.
Many of us will have had them and you can learn much from their shortcomings. This can help you later on when you become an employer. Don’t normalise poor management or their unhealthy habits; it can prove very harmful when running your own business.
Values are important in business. If you think something is unacceptable, it probably is, so don’t do it.
Avoid the ‘but it’s always been done that way’ mindset. Be prepared to challenge established thinking; look for new ideas that will enable your business to be more successful. Bounce your ideas off people close to you who you can trust. And if you’re currently working for someone else but have an original idea you plan to turn into a new business, be very careful about whom you share your ideas with.
Nobody likes a quitter, but, equally, being successful at failure doesn’t help anyone. Set goals and judge your performance against them. Avoid deceiving yourself.
Sometimes brick walls are big red warning signs that you’d be foolish to ignore. Ask yourself why there is a brick wall or even if the brick wall is really there. Breaking through such barriers is part and parcel of being an entrepreneur, but if you see more brick walls than opportunities, starting your own business might not be the best option for you, at least for the time being.
When I came up with the idea for Compare Cloudware, the market wasn’t ready, so it was incubated for about a year so I could concentrate on creating a robust business model. After that, a visual concept was developed, followed by a working model, then a minimum viable product (MVP), then, finally, something I was ready to share with investors. I only gave up my day job once I had an MVP. I learned this diligence in my previous corporate life and getting to grips with large projects has also proved invaluable. So be eager to learn, but show patience when it comes to ideas that need cultivating and stress-testing.
Copyright © 2015 Gary Gould, CEO of Compare Cloudware, one of the first comparison sites for cloud applications.
Why do so many of us bother with New Year's resolutions, especially as so few of us ever stick to them?
Somewhat shamefully, about 2% of UK adults who make New Year's resolutions don't even get to the end of New Year's Day with their resolution intact (source: Think Money). Australian research published in December 2014 concluded that almost two-thirds of all New Year resolutions made Down Under are never achieved, while a 2007 University of Bristol study suggested a much higher UK failure rate of 88%.
If you resolved to lose weight in 2015, you're not alone, it is believed that almost a third of UK adults plan to become leaner this year. Almost a fifth want to improve their fitness by exercising more regularly, and more than a tenth resolved to improve their education or learn a new skill. Other popular New Year's resolutions probably included drinking less alcohol, quitting smoking and taking on more significant physical challenges, such as running a marathon.
As reported by Forbes, Facebook chief executive officer, Mark Zuckerberg, is well known for his ambitious New Year's resolutions. In previous years, as a result of his New Year resolutions "he learned how to speak Mandarin, met a new person every day who does not work at Facebook, wrote a thank you note every day, became vegetarian (except for animals he killed himself) and wore a tie every day." This year he has resolved to "read a new book every other week", with "an emphasis on learning about different cultures, beliefs and histories". He's created a Facebook page called A Year Of Books so you can "follow his challenge and read the same books".
Writing recently for Huffington Post, health and fitness coach Adam Strong says there are seven key reasons why we don't stick to New Year's resolutions. These include overly complex or ambitious resolutions; not creating a 'vision board' or diary to help keep us on track; keeping our resolutions a secret and (least surprisingly of all) – lack of will power.
Another common New Year's resolution is likely to have been to finally address lack of workplace contentment, fulfilment and reward. Job satisfaction research conducted last year by recruitment consultancy Robert Half suggested that a significant 40% of UK workers were not happy in their jobs.
Starting your own business could provide the ideal pathway out of your current employed doldrums. It's a growing trend. According to Start Up Britain last year 581,173 new businesses were registered in the UK, significantly more than the 526,446 registered in 2013.
Finally stepping out on your own and working for yourself could enable you to earn more money (although this isn't a given), enjoy a more favourable work-life balance and gain greater satisfaction and reward from your hard work. Who knows, maybe you could even join the growing legion of people who supplement their earnings by generating extra cash from their hobbies or interests? It's probably never been easier to start and run your own successful small business.
Maybe your New Year's resolution for 2015 was to finally start your own business – so what's stopping you?
Blog written by Start Up Donut editor and freelance SME content writer Mark Williams.
Enterprising university students who enter the StudentshIP Enterprise Awards 2014 could win funding for their projects thanks to a competition launched in October, but the deadline for entry is fast approaching.
The StudentshIP Enterprise Awards 2014 will provide funding worth between £10,000 and £100,000 for projects that “bring together enterprising students, businesses and their local community to work on innovative projects. In-house projects or collaborations with other universities or businesses that create, manage or exploit intellectual property will all be considered.”
The awards encourage the practical application of intellectual property (IP) skills by higher education students working in collaboration with higher education institutions and/or businesses. The main purpose is to recognise and reward “student-centric projects that support the use and understanding of IP in student enterprise activities”.
Minister for IP, Baroness Neville-Rolfe, says: "This new competition will encourage enterprising students and academics to collaborate, so that their ideas for creating and exploiting intellectual property can be turned into reality."
The competition is open until 12 December 2014. Finalists will be announced in January and the winners declared in March 2015. An application form can be downloaded from the Gov.uk website, as well as guidance and terms and conditions.
According to its organisers: “Global Entrepreneurship Week is the world’s largest campaign to promote entrepreneurship. Each year, it plays a critical role in encouraging the next generation of entrepreneurs to consider starting their own business.”
This year, Global Entrepreneurship Week runs from 17-23 of November and it will seek to inspire “people everywhere through local, national and global activities designed to help them explore their potential as self-starters and innovators. These activities, from large-scale competitions and events to intimate networking gatherings, connect participants to potential collaborators, mentors and even investors – introducing them to new possibilities and exciting opportunities.”
In the UK, GEW is hosted by Youth Business International (a “global network dedicated to helping young entrepreneurs get started in business”) in partnership with Barclays.
Last year in the UK, more than 6,000 GEW events took place, reaching “more than 300,000 entrepreneurial people across the country”. Global Entrepreneurship Week started in the UK as Enterprise Week in 2008, but it has since grown into a global campaign that takes place simultaneously in more than 140 countries, involving more than 33,000 activities worldwide.
This year, the organisers are inviting participants to “Get Connected!” by “turning your ideas into something amazing”. They add: “For many people, the thought of starting up their own business is overwhelming, and many entrepreneurs don’t make it to the next stage because they don’t make the right connections. Our research shows that aspiring entrepreneurs and start-ups are eager to access practical support and networks through Global Entrepreneurship Week.
“But Global Entrepreneurship Week is more than just an awareness campaign supported by world leaders and celebrity entrepreneurs. It is about unleashing ideas and doing what it takes to bring them to life – spotting opportunities, taking risks, solving problems, being creative, building connections and learning from both failure and success. It is about thinking big and making your mark on the world – doing good while doing well at the same time.”
Would you like your business to reach £1m turnover? Most business owners would answer yes, but 96% of them will fail. Only 4% of businesses reach £1m turnover.
Why so few? Well, it has a lot to do with how you started the business and what pillars you have in place to allow you to reach that level.
Having worked with hundreds of businesses over the past few years, I have discovered that there are some striking differences between the ‘micro’ business owner and the owner of a £1m enterprise:
Starting a business requires no formal education or qualification. The process of going online and registering a new company is easy.
This ‘low bar’ to start also means that most people assume that what they know is likely to be enough. They then spend the entire first year bravely finding their footing and ‘learning to walk’.
The skills they develop at this early stage will influence their ability to break through the £1m mark later on.
Most businesses hit a ceiling because the way they began means further improvement and growth is too complex for them to handle and pursue.
Effectively, the business becomes trapped in what is sometimes called the ‘Hindu Rate of Growth’ – an average growth rate of around 3% each year – just enough to keep pace with inflation.
To break through this ceiling, new systems need to be employed to allow for growth to happen, while at the same time managing the increasing complexity of the business. What allowed many entrepreneurs to run a successful small business simply cannot support larger, more complex teams and issues.
It is at times like this that it helps to have an outside party shine fresh light on your business processes.
Every entrepreneur – ideally at the start-up stage – needs to become fluent in the language of business. This language is all about numbers; profit, sales, cashflow, receivables, assets, equity, ROI, average value sale, conversion rate – these are all numbers that the professional business person not just understands, but is also able to leverage for every business decision they make.
In marketing, sales, team management and leadership there are key metrics to measure, estimate and average to evaluate and justify decisions that will lead to sustainable growth.
If you want your business to break through the £1m threshold, review your techniques and decision-making processes now. Don’t wait until you hit the ceiling and get stuck.
The recent publication of Just the job – or a working compromise? The changing nature of self-employment in the UK by the Resolution Foundation (RF) offered a revealing glimpse into the world of self-employment in post-recession Britain.
RF is an independent think-tank that seeks to “improve living standards for the 15m people in Britain on low and middle incomes”. The findings of its report will prove less than inspiring for those considering self-employment, with the startling revelation that self-employed workers, on average, earn a measly 60p for every pound earned by employed people (in other words, 40% less).
Despite ever-increasing living costs, average self-employed earnings have fallen by a punitive 20% since 2007, compared to 6% for other employees. And, of course, many self-employed people don’t get sick pay, nor paid holidays or days off, despite taking responsibility for generating their own incomes.
So, why have self-employed incomes fallen so dramatically? Well, because of uncertainty and austerity since 2007/08, many self-employed people have probably thought it unwise to increase their prices, despite their own rising costs. Another reason is a reduction in work hours, a consequence of reduced demand and greater competition (ie more self-employed people).
Perhaps interestingly, it seems that many more ‘sisters’ and now choosing to ‘do it for themselves’. There has been a marked increase in the number of self-employed women in the UK, having risen from 27% (or 970,000) in 2005 to 30% (or 1.29m) in 2013.
Office for National Statistics figures show that between Q1 2013 and Q1 2014, the UK’s self-employed army increased by 375,000 to reach 4.55m (15% of the total workforce). But according to RF, self-employment has been growing steadily since the early 2000s, it’s not simply a consequence of recession and redundancy, but a matter of choice for many.
A survey conducted by Ipsos MORI for the RF report suggests that 73% of those who’ve become self-employed in the past five years have done so mainly or partly out of personal preference.
More people are now choosing self-employment, with fewer people heading in the opposite direction (including many more older people who can’t afford to retire completely). One-third of the part-time self-employed are aged 60-plus.
Interestingly, RF’s research suggests that the self-employed are now much better educated as a group, with many operating in service sectors, rather than manual trades, as previously.
RF chief executive Gavin Kelly, says: “Self-employment is often a highly precarious existence, which isn’t that well supported by public policy. High levels of self-employment seem likely to be here to stay and policy-makers have some catching up to do.”
Only 30% of self-employed people contribute to a pension, compared to 51% of employees. And, according to RF, a minority of self-employed people are “experiencing difficulties getting mortgages, tenancies and accessing personal credit and loans, due to being self-employed”.
According to RF: “For too many self-employed people, [housing and credit] are difficult to access, with many poorly positioned to cope with unexpected financial demands and retirement. Reform of the mortgage market, the pensions system and the introduction of Universal Credit should take into account the needs of this ever-growing group.”
Blog written by Start Up Donut editor Mark Williams.
Recently there has been a surge in the number of graduates choosing to work for themselves as soon as they leave university. Rather than becoming employees they are choosing self-employment. Armed with their entrepreneurial skills they are turning their talents and passions into businesses, the most popular of which being website design and mobile app development.
It seems graduates are plagued by gloomy thoughts of leaving higher education to compete for the restricted number of jobs available. The latest graduate unemployment figures from the Office for National Statistics showed that around 9% of recent graduates were out of work, while a significant 47% were forced to take ‘non-graduate’ jobs after leaving university.
So, with this in mind it’s no wonder start-ups are on the increase, after all, who wants to job hunt when you can be your own boss so easily, especially with advancements in mobile and online technology, which allows you to start and run businesses from anywhere.
Small-business owners can now tap into a global marketplace of highly skilled freelancers and run a flexible workforce, with flexibility to hire more staff on a temporary or one-off project basis without the overheads or office space requirements that come with taking on employees.
With that in mind there really has never been a better time to start a business, and it seems Britain’s young graduates are doing just that with the number of recent graduates registering as freelancers or micro-business owners increasing by 97% in the last twelve months. The number of male graduate entrepreneurs was up 110% and female graduates up 94%.
Considering the average cost to start a business from scratch is £632*, for a graduate leaving university with little or no start-up funds, the prospect of going it alone doesn’t feel as daunting as the days when you had to ask your local bank manager for a business loan. With low start-up costs and armed with all of the tools to get a business off the ground, the graduate entrepreneur is here to stay.
* Statistic from a recent survey of 1,000 start-ups by PeoplePerHour
Blog supplied by Xenios Thrasyvoulou, founder and CEO at PeoplePerHour (@PeoplePerHour)
I understand all too well the trials and tribulations of setting up a new business, which is why I agreed to become an ambassador for Britain’s Top Real Role Model 2014. The annual competition, launched by direct selling company Amway UK and now in its fourth year, is dedicated to encouraging new talent amongst the nation’s entrepreneurs.
Amway UK has already handed a total of £20,000 in funding to entrepreneurs for the business ventures they presented, but we now need a new wave of creative bravery in business to generate success and employment opportunities.
Recent research carried out by Amway UK suggests that more than two-thirds of us would prefer a female boss to a male one, with the stereotypically female attributes such as compassion, trust and loyalty coming out on top. These ‘softer’ attributes were favoured over more traditional ones such as courage, confidence and strong leadership.
I think this is a very interesting shift in attitudes. I feel that female bosses tend to have a slightly more ‘3-D approach’ to business and see the whole picture. They also tend to care more about their employees, which helps get the best out of people. You don’t have to scatter people out of your way to be successful.
Starting up your own business and backing your ideas can be very lonely and takes a lot of courage so it is crucial that we support fledgling companies. I can’t wait to see the finalists’ ideas and share their enthusiasm and energy. I have been fortunate enough to have people around me to encourage and share my dreams.
I ran Twenty8twelve with my sister Sienna for seven years, in what is a notoriously fickle and unforgiving industry. You need a bit of steel to go with the creativity, but it is important to be a good boss, as well as a good designer. Having Sienna in the business was an amazing help because of the profile she has. We made a good team, because she has incredible style and she forced me to take risks.
My current label, Savannah, is about finding out what my customer wants and meeting her needs. I’ve kept true to my mantra of providing style at an affordable price point.
I am a driven person because I love what I do, but I have space for other people and I don’t think you can run a business without understanding what makes your staff tick as human beings. I was brought up to believe that if you wanted something, you had to work for it.
So, my advice to would-be entrepreneurs is to roll your sleeves up, be prepared to start at the bottom, but once you have employees, let your softer attributes come to the fore – trust and loyalty can go a long way.
The recent publication of A Portrait of Modern Britain had some commentators questioning the motivation of its publishers – right-wing think tank Policy Exchange, which was founded by current Tory ministers Michael Gove, Nick Boles and Francis Maude.
Policy Exchange called for all political parties to better understand and recognise the “clear and striking differences” between ethnic minorities and stop “lumping them together” or risk appealing to none.
One of the study’s headline claims was that the five largest “distinct Black and Minority Ethnic (BME) communities” (ie Indians, Pakistanis, Bangladeshis, Black Africans and Black Caribbeans) will double in size from 14% of the UK population (eight million people) to 20-30% by 2050.
According to A Portrait of Modern Britain: “Ethnic minority businesses [ie where at least half the management team is from an ethnic minority group – about 7% of UK SMEs] are already highly successful and contribute £25bn to the UK economy. There are higher aspirations to start-up amongst ethnic minority groups, especially Black African (35%) and Black Caribbean (18%) groups (compared with 10% for White British), but ‘conversion’ remains very low.”
So what do we know about UK BME businesses? According to Black Women Mean Business:
So, why is the UK BME start-up rate so low? Last year, The Ethnic Minority Businesses and Access to Finance report, which was commissioned by Deputy Prime Minister Nick Clegg, concluded that “although the banking industry was working hard to ensure ethnic minority businesses have access to finance, there is more to be done to help under-represented groups”.
Clegg said that while there was no evidence that the challenges ethnic minority businesses face are due to racial discrimination, they still encounter problems accessing loans. “We know that 35% of individuals from Black African origin say they want to start a business, but only 6% actually do. Are they having problems accessing loans?” questioned Clegg. His friend, the Prime Minister, certainly seems to think so. Or at least he did in 2010 when he said black entrepreneurs were “four-times more likely to be denied a bank loan than white entrepreneurs”.
Race equality think tank Runnymede Trust welcomed the government’s review of access to finance for BME entrepreneurs and the UK banks agreeing to fund independent research into the experiences of BME businesses when seeking finance.
Dr Omar Khan, Runnymede Trust Head of Policy Research, commented: “Black and Asian businesses have long felt that they’re not treated fairly by lenders. We hope that government also engages in further initiatives to better understand why racial inequalities persist, not only to improve the lives of ethnic minorities, but also to grow the UK economy.”
Writing for The Voice in October last year, in an article called Want To Beat Racism? Start A Business, journalist Nels Abbey pondered possible reasons why more black people in the UK aren’t starting up. “In each of the home countries that black Britain’s lineage comes from, entrepreneurship is the norm,” he observed. “[Yet] for some strange reason, when black people arrive on these shores we seem to lose that entrepreneurial zeal and ingenuity. Not all of us. Just most of us.”
He puts this down to (perhaps) “a lack of confidence in our abilities in the face of more established business people”, as well as “actual and perceived racism maybe” and the “legacy of colonial structures”. Other possible reasons were “lack of resources, red tape, comfort, laziness even. Or maybe just a desire not to challenge the social order”.
Abbey concluded: “A single successful black business is worth more than any number of anti-racism demonstrations. A successful and respected business is a symbol of power and self-determination. You have to respect it, regardless of who runs it. Everyone loves a winner, no matter their colour.”
Blog written by Mark Williams, editor of the Start Up Donut.
Slightly more than three years ago, Tony Curtis' business idea for heated sports gloves was given short shrift on TV's Dragons' Den. Those Dragons must be fuming now, because Alago Heated Gloves is a hugely successful business, with thousands of its products warming the hands of gardeners, cyclists, kayakers, tennis players, horse riders and players at many premier sports clubs. Stick that in your pipe and smoke it, Duncan Bannatyne.
Determination, bad luck and a radical approach to funding have all played a part in Tony’s remarkable business journey. Recalling how he came up with the idea, he says: "It started seven years ago when I was watching my 12-year-old son playing rugby. It was a freezing day and no one could catch the ball – no one wanted to. He ran off the pitch at the end with blue hands and shoved them up my jumper for warmth. Once I'd got over the shock I thought, he needs heated gloves.
"That was my ‘light bulb moment’. I searched online to try to find heated gloves but nothing was suitable. Everything I saw had big bulky battery packs, electric cables – useless for sport.
"So I thought I'd have a go at inventing something and spent six months playing around with gloves, silicon tubing, a meat syringe and some heat packs at home. After destroying several kitchen appliances along the way, I came up with something that I thought would work. I took it to a brilliant design company and we went forward to prototyping. That's when it started costing money."
So how did he cover those costs? "I had a day job, but needed more money. I didn't think about investment, I found another way. I bought a camera and taught myself photography. I opened up a spare-time photography business, doing portraits, weddings, event, etc. I did that for four years, that’s how I paid for product development."
What customers did he have when launching his business? Tony answers: "Our mitts were bought by junior and mini rugby clubs throughout the country. Gradually, our full-length gloves were picked up by professional clubs, then we got emails from salmon fishermen, helicopter pilots, classic car drivers, obstacle race runners – you name it."
Was there a breakthrough moment? "We were asked onto Radio 4 for a five-minute interview with Liza Tarbuck. Within 30 minutes our website crashed due to demand,” Tony remembers. “Many people asked whether our gloves could be used for other purposes than just rugby, which was a crucial moment. Overnight we changed our website, product names, packaging – everything. We changed 'Rugby Mitts' to 'Classic Mitts', changed the descriptions, positioning, etc. Looking back, it was such an obvious thing to do - but we hadn't seen it."
What advice does Tony offer to those with a great business idea but no start-up capital? "It's all about paying for prototype manufacturing and product development. I needed money, so I went on Dragons' Den a few years ago, but they just didn't get it. Of course, now I look back and I'm glad I didn’t give up part ownership of my business in return for their investment.
“For years I had no luck with the banks or other lenders either, so I had to do something radical. I discovered that I could move my pension fund into a self-invested vehicle and invested that money into my business. This was a new idea then, and some told me it was risky, but if you think about it, your pension is already being invested in someone's business. Why not invest in your own business? It certainly keeps me focussed and motivated!"
Tony says he now makes 95% of his sales through his website and the remainder through Amazon. “We don't advertise,” he adds. “When we launched our cycling gloves I bought cheap train tickets to major cities such as London, Newcastle and Manchester and spent days putting credit card-sized leaflets onto bicycles I came across in the street. I must have walked for hundreds of miles with a heavy backpack stuffed with leaflets. As a result, we sold three-quarters of our stock on pre-order before the product was even in our warehouse!"
Alago Heated Gloves has taken a standard product, adapted it intelligently to a niche requirement and delivered very high levels of customer service to make a successful business. It is currently partnering with the University of West England on some very smart (but ‘hush-hush’) new applications of its technology. Alago's innovations have already caught the attention of Lockheed, the British Army and a major car manufacturer, all of which have signed development deals.
According to government figures, more women than ever before are starting their own business and this has led to a steady rise in the number of female entrepreneurs. When it comes to the number of male and female entrepreneurs in the UK, the gender gap is narrowing, but there is still plenty of ground to make up before parity is achieved.
Previous perceptions about the typical profile of an entrepreneur would probably suggest that the person would typically be male and middle-aged, but business in the UK is changing and women are generally taking a more prominent role when it comes to business leadership.
It is interesting to note that at least 25% of registered self-employed workers in the UK are women and the number of female entrepreneurs is rising nearly three-times faster than the rate for men. There are understood to be more than 1.2m self-employed women in the UK who are involved in full or part-time work and according to the Office for National Statistics, the number of female entrepreneurs has risen by nearly 10% in the past two years, which compares very favourably to men (3.3% increase).
The term ‘mumpreneur’ is used to describe a woman juggling family commitments with running a business, but it is very much a ‘Marmite’ phrase as far as many woman are concerned. Some think it’s rather patronising, while others consider the term to be empowering, but whatever your view the fact remains that there are an estimated 300,000 mothers running businesses who contribute an estimated £7.4bn to the UK economy each year.
There are already annual ‘mumpreneur’ awards and numerous blogs and online directories aimed at making networking easier and opening up new opportunities and ideas for discussion for those women who are looking to start their own business.
The challenges for men and women are often different yet equally demanding in their own ways and sometimes it can be a struggle to achieve the right work-life balance.
Many female entrepreneurs become self-employed after starting a family and one of the winners at the last mumpreneur's awards is probably typical of what being a female entrepreneur involves.
One of the co-founders of Peach Pink, Vanessa Pinkney, was a former retail buyer for a large fashion retailer. She has used her contacts and industry knowledge to form a company that supplies luxury bags that are now sold in numerous well-known stores.
Her typical day will involve running her business around looking after her twin daughters, emailing suppliers in the morning, doing the school run and using Skype to communicate throughout the day, running her growing business empire from her kitchen table.
It’s almost impossible to identify the absolute ingredients to achieve success in business or we’d all be following the same path and formula. Good advice is essential for anyone starting a business and here are some key points to consider.
A robust business plan is essential and you need to test your business model to make sure it is sustainable from the beginning. Having little or no start-up capital can actually be viewed positively, because it ensures that you apply greater financial discipline.
It is important to have confidence in what you are doing and a positive can-do approach is in the DNA of most successful entrepreneurs. And as long as you always remember that the biggest asset is you and work hard at building a supportive network, the venture has a greater chance of flourishing.
There are many business opportunities out there and when you look at the examples of success from previous start-ups, it is easy to see why the number of female entrepreneurs continues to rise.
Blog supplied by business strategist Tim Brown. Tim blogs about news and trends for successful small businesses in the modern world, including the ImRubbish site.
According to the AAT (“the UK’s leading qualification and membership body for accounting and finance staff”), your business could be missing out if it doesn’t currently employ an apprentice.
The organisation reckons that every time a business takes on an apprentice, “its bottom line gets a boost of more than £2,000”, while lack of awareness of available government support is a key reason why more small and medium-sized businesses aren’t employing apprentices, who, it estimates, “delivered £1.8bn of net economic benefits to UK organisations in 2012/13”.
The claims are based on a research report called The Value of Apprentices, compiled by the Centre for Economics and Business Research (Cebr). It found that apprentices offer UK firms “a significant return on their investment”, with economic output usually far exceeding associated wage and training costs. Even after wages and training is accounted for, every time a business takes on an apprentice, on average, they gain by £2,000, according to the AAT.
But the research also found that awareness among businesses (particularly small firms) of government support for those who take on apprentices was poor. About 60% of small businesses surveyed by The Department for Business, Innovation and Skills in August 2013 lacked basic knowledge of the “government’s programme of support for businesses that take on apprentices”. For example, businesses with fewer than 1,000 employees that haven’t hired an apprentice in the past 12 months and take on one apprentice (aged 16 to 24) could receive a grant of £1,500 per apprentice from the National Apprenticeship Service.
Jane Scott Paul, AAT Chief Executive, comments: “Take-up of apprenticeship schemes has grown sharply over the past five years, as more and more organisations enjoy the benefits that apprentices can bring to the workplace. This is benefitting their businesses and bolstering economic recovery and growth.
“We now need to do more to engage with smaller businesses – to break down the misconceptions and make it easier for smaller enterprises to unlock the full potential of training apprentices and to gain specific skills relevant to their business.
“Our research clearly reveals that apprentices, far from being a cost to business, are often a tangible benefit and, what’s more, they’re flourishing in non-traditional sectors such as business, administration and law. By quantifying the value of apprenticeships in this way we hope to encourage all sectors of business to open up their recruitment policies and address the skill shortage.”
With it being National Apprenticeship Week this week, maybe it’s time you found out more about the business benefits of taking on an apprentice?
As an SME owner, I know that experiencing that inspirational moment that cements the purpose of your business is essential, but almost painfully difficult to find. The more you panic about finding your ‘Eureka’ moment, the more elusive it can prove to be. However, there are a few sure-fire ways that can help you to relax and find that moment. Take some time to find inspiration in some of the most unlikely of places and chances are you’ll soon be struck by the light-bulb moment you’ve been searching for.
Even if you’re the world’s most practical and business-minded person, sometimes you have to unleash your creative side to find true inspiration. From roughly sketching a meaningless object to spending hours working on a more challenging piece of art, you’ll find yourself lost and letting your mind wonder onto other subjects, which could lead to you being struck by an unexpected bolt of inspiration.
Over-thinking something often means that the ideas you come up with are forced and unrealistic. Watching an unchallenging film or TV show can allow your mind to switch down a gear and come up with something much less forced.
Unwinding with a great read has numerous benefits, but is also a brilliant way to learn and let your mind wander. It doesn’t have to be related to business in any way. Pick something or someone in whom you’re interested and passionate about or even something that will spark debate or opinion in you. Annotate as you go along with points that you find interesting, inspiring, enlightening or even empowering. You could even write short reviews or points you have learnt.
As more people move to TV that allows viewers to pause, rewind and fast-forward, it can be easy to think that adverts are a total waste of time and money. However, there are adverts that make people stop, look and listen. Take notes about what makes these ads successful. How are they able to convey a story in a short amount of time and how do they connect with their audience? Apply these observations to your own work and think about how you can make it your own.
How you become inspired is up to you. We all have our ways that are as unique to us as our business models, but if you’re lost for ways to expand your mind, these are some easy tricks that are sure to get the creative juices flowing.
Blog supplied by Paul Lees, founder and CEO of business conference call services provider Powwownow. You can see Paul talking about his experience of starting a business below.
With record numbers of people starting their own new business, hopefully 2014 will be another triumphant year for start-ups in the UK. If you want to make the leap, finding your feet may seem daunting, but don’t let fear prevent you from stepping out on your own. To help those who are thinking of starting their own business, Aisling Brennan of eFax and Rory Whelan of eReceptionist share their top ten start-up tips.
If you fail to plan, you plan to fail. You should have a succinct and clear business plan. Not only will it enable you to monitor your business’s success, but it will also prove useful when asking outsiders for funding. Conversely, don’t be beholden to the plan. The pace of change in business can be rapid, so make sure you’re able to adapt. The joy of entrepreneurship is often the ability to make decisions ‘on the fly’.
Why waste precious money on renting an office if you can run your business from home? A proportion of your electricity bills and mortgage payments can be offset against your business tax bill and it’s now simple and cost-effective to set up a second phone line for business calls. When you bundle your number with a virtual office phone system you can even have a real-time receptionist answering and directing your calls, so you never miss a business opportunity.
Hopefully, the money will be flowing in from the start. However, don’t get too carried away, always keep good track of your financial status. Do you have savings that can be invested and will these be enough? If you don’t, approach potential investors and lenders early on. Don’t rule out considering government-backed funding, too. Investigate the many business incubator services that are on hand to advise you, and in some cases they offer financial backing.
Taking on the responsibility of running a business all by yourself might be too much, especially if you have a family. Find a business partner who shares your goals, but perhaps someone with different skills and knowledge, so you complement each other.
If you don’t shout about your new business – who will? Make the most out of social media to spread the word. Similarly, something as simple as asking your customers to tell others about you can make a big difference to your sales. Also, network like mad. This doesn’t have to be at networking events, but just in your daily activities. Keep telling people about your business and in some cases you may find yourself talking to someone who wants to buy from you.
A good business name, business cards and a professional website all contribute to how your business is perceived, but don’t underestimate the power of your telephone number. By setting up a national 0800 number, you can look bigger, but having a local phone number need not limit your ambitions. For example, should you want to appeal to customers in Birmingham despite being Manchester based, it’s easy to have an 0121 number with calls routed to your existing Manchester landline.
Customer like 0800 numbers, because they are free to call from landlines and will soon be free from mobiles. Our research shows that UK businesses experienced a volume increase of 167% when they switched to an 0800 freephone number.
Keep your start-up costs to a minimum and look to invest in cloud-based services. Investing in the right fax software will make running your business smoother, less time-consuming and more cost-efficient. Digital faxing eliminates the need for fax hardware, while allowing you to sign orders or contracts through a digitised signature anywhere from your mobile.
Customer care, business development and administration are the three key areas you should concentrate on. They are all equally important, so all require equal attention. If you neglect one, it will have an impact on the business as a whole. No one likes doing paper work – but it needs to be done.
Learn from your mistakes and adapt accordingly. Be prepared to continue refining your methods as you encounter new hurdles. No one successful ever launched with the finished product, so keep tweaking and adding. You’ll learn so much from your first few sales and customers to help you refine the way you do business and make things easier for the future. Keep motivated and don’t lose sight of why you started the business in the first place.
In six months of trading our company has been through some pretty turbulent times. In the true spirit of supporting other start-ups small businesses, we’d like others to be able to learn from our experiences. In no particular order, here are five pieces of insight we gained in our first six months of trading. Each is fairly universal, so some or all should also apply to your business.
Building a business is a long and hard task and it requires a lot of patience. Anyone who expects to make an instant return is probably being overly optimistic or not taking into account all of their start-up costs. You need to account for everything you spend money on when starting your business, which could include a website, marketing/advertising, stock, premises, staff and quite possibly many other things. Even if you have a high margin product or service, it will take time to recoup all of your start-up costs.
This point closely links up with the first; you need to know your break-even point and when you need or want to reach it. Year-end targets are good, but you must work out how to meet them, because demand for a growing business is not linear. For example, if you want to sell 120 product units in your first year of trading, you might not sell the necessary 10 units every month from launch. That means you’ll later need to sell more than 10 units each month if you are to achieve your yearly target.
When you create your initial business plan you’ll probably look at what your competitors have done to get to where they are. It’s also likely that you’ll set goals to build a business around a similar (but hopefully better) structure. But don’t forget that while you’re doing so, your competitors will be trying to progress from where they were when you started. So keep an eye on your competitor’s activity and remember – they’re moving targets.
When building a new business you’ll need some capital behind you. Unless you’re in a space that’s really open to creativity and you can get a lot of free media coverage and word of mouth, you’ll struggle to gain momentum if you don’t have a reasonable start-up budget.
New businesses are a prime target for predatory salespeople (especially telesales). If you’re in the online space you can expect companies that host business directories, sell email data, run pay-per-click ad campaigns, etc, to contact you. Most of them will press really hard and rattle off impressive-sounding numbers, but the fact is these direct sales services rarely convert to sales. If you are thinking of investing in any of the above channels, do your homework so you are able to find the best service provider.
Blog provided by Pete McAllister of Intelligent Car Leasing.
1 “Being your own business cannot be improved by unnecessary physical ‘accoutrements’, so think carefully about any purchases you think you need to make because you’re now ‘a business’”
2 “In the UK, anyone can call themselves ‘an accountant’ – even if they aren’t qualified. So, ensure that the one you choose is suitably qualified and part of the relevant professional body”
3 “Spend 30 minutes each day thinking. It seemed to work for Bill Gates. He’s reported to have spent one month every year thinking up ideas for his business”
4 “Managers make sure that everything is controlled properly; leaders create the vision, the enthusiasm and the passion. The best leaders are those who inspire and create followers”
5 “It's funny how the best ideas can come to you by accident – literally, in my case”
6 “Let’s be honest, a boring, drab, dark office has never inspired anyone to do anything”
7 “Think about issues that people are faced with every day and write them down. Helping to solve such problems could enable you to come up with some excellent ideas”
8 “Look for a business mentor to help you stay on track and advise if things get tough”
9 “In 1919 a man called Jack Cohen decided to sell more than just syrup and fish paste. He started selling tea and laid the foundations for what we now know as Tesco”
10 “Nobody wants to think that what you thought was the perfect hire could result in a costly tribunal case, but one in six disputes do – at an average cost of £9,000”
11 “According to Experian, there are some 900,000 businesses in the UK that have real potential to start exporting and yet they are still only serving the UK market at the moment”
12 “Never sit back and admire what you’ve achieved – look forward to what’s next. Have the courage of your convictions and think about what you need to do to reach new markets”
13 “Up to £150 per head of the cost of holding a Christmas party is an allowable tax deduction and VAT can also be recovered on staff entertaining expenditure”
Thank you to our sponsors for their support last year. Many thanks also to the experts who shared their knowledge and provided content that ensures this blog remains a popular source of information, advice and inspiration. A big ‘Thank You’ also to our ever-growing list of partners – we look forward to working with you this coming year and beyond.
Finally, a massive ‘Thank You’ to all our readers in 2013. Whether you were thinking of starting your own business and were looking for inspiration or were starting your own business and needed advice, we hope you found what you were looking for.
Happy New Year and here's to a superb 2014…
Starting a business involves making an often tough, but amazing journey. I was fortunate enough to have started ‘tinkering with the internet’ right when affiliate marketing was just starting to evolve. At that time eBay, for example, would pay for every website visitor they received, even if they clicked straight back off. I could see the enormous opportunities and decided to pursue them.
I completed a degree in computer science before going into business with my best friend, using the money I made designing and selling my first website. I developed a very basic affiliate programme and learned all the basics to being a single Internet marketer, website management, design html and online marketing. I did not know it at the time but this would eventually become MoreNiche, the affiliate marketing company of which I am managing director. We decided to specialize in the growing health and beauty industry.
The business really started to take off and in 2007-2008 we grew sales to such an extent that we broke the £5m per year turnover mark. All our growth came organically from our own affiliate work, but later from partnerships.
We’ve certainly learned lots of lessons getting where we are today. Every business has its challenges. One time I had to work solidly for 36 hours because someone had managed to paralyse our systems, which meant that none of our websites were working. After much soul searching and a severe lack of sleep, I eventually managed to get us up and running again.
We’ve had numerous other bad experiences, including a credit card processor going bankrupt, which severely dented our profits, as well as a supplier selling us tens of thousands of units of product that simply were not as described. The important thing is that you learn from such things, deal with them and make sure they don’t happen again.
One of the most important lessons I have learned since starting MoreNiche is that success cannot be achieved alone. A business, no matter how big or small, is really just a collection of people working towards a common goal. It’s these people that will either make you a success or not. I have some superstars who have worked with me for many years and I would not be here without them. Rewarding key staff for their dedication is critical.
Having the creative freedom and the technical foundation to try ideas out has allowed me to enjoy business and continue to thrive on tomorrow’s challenges. It would be very easy to take the foot off the gas and relax a little, but that’s just not in my DNA. For whatever reason, I just want to go further.
Blog supplied by Andrew Slack, managing director of affiliate marketing business MoreNiche, which specialises in the health and beauty industry.
As the high streets prepare for a shopper-invasion and the countdown to festivities begins, businesses that traditionally feel the financial impact of the peaks and troughs of seasonal trading are once again preparing their strategies to manage cashflow.
Research published earlier this year by Santander Corporate & Commercial suggests that 61% of UK small and medium-sized businesses are impacted by seasonality – with 37% suffering as a result.
But the truth of seasonality is that it doesn’t always fall at Christmas, nor is it industry specific. For businesses across the country, delayed receipt of revenue and seasonal fluctuations in demand can lead to serious cashflow problems that existing finance arrangements cannot accommodate. Even for the most hardy business management team, a significant slowdown in business or revenue can make for a tough time.
Management strategies that have been agreed in advance can help to soften the blow when a seasonal dip is on the horizon. Here are four ways to stay on top of cashflow when things get tight:
One of the biggest issues facing businesses today is that of late payment. According to the Forum of Private Business, more than one million UK SMEs currently face difficulties with late payment – about 20% of the UK’s business population. The total amount of late payments across the UK now stands at just below £37bn.
Of course, you want to keep the customer on side and encourage future business, so a slick invoicing and payment processing operation can keep relationships harmonious and reduce the chances of late payment. Make sure invoices are sent out promptly, chase due and overdue payments regularly. Consider introducing an incentive scheme where discounts are given for early payment. Interest charges and financial penalties can be applied for late payments.
Cashflow forecasting, as part of the wider financial planning process, is essential for all businesses – not least seasonal ones. Healthy and detailed insight into anticipated fixed and variable business costs, set against data gleaned from your sales forecast, can help predict the future cash needs of your business and allow you to put financial back-up plans in place.
Not only will this process keep you aware of your business’s cash position at all times, it will allow you to creatively map and move around payments and budget allocation during leaner months.
While you need to manage and improve cash inflow, there are creative ways of managing cash outflow, too.
When entering into a new supplier agreement or looking back on existing ones that can be improved, make your suppliers go the extra mile. Negotiate favourable payment terms, work to drive down the price, arrange purchases on a sale or return basis, or settle on a bulk discount agreement. If you can, work to spread out recurring expense payments throughout the year so that they fall outside of your slowdown period.
Many vendors and suppliers are flexible, since it is in their interests to retain your business and put an affordable and sustainable agreement in place that will also prevent them receiving late payment from you.
Seasonal trends are beyond our control. One-in-20 UK businesses closes their business during seasonal periods to reduce costs; 6% of UK businesses admit to relying on credit cards to manage seasonal fluctuations in supply and demand; 4% use business loans; while 17% either increase or decrease staff numbers.
For stability during seasonal slowdowns or growth management during speed-ups, short-term cashflow facilities can be an invaluable lifeline. These funds offer a precious injection to pay off creditors, pay staff and maintain an overall healthy operation.
In the £250-500k annual revenue category of businesses surveyed by Santander Corporate & Commercial earlier this year, 30% of those that suffered from seasonal fluctuation said invoice or supply chain finance was used to ride out seasonal downtime.
Invoice finance has now evolved through crowd-funding into invoice trading, a facility that creates a market between businesses and investors to give flexibility to businesses in need of short-term working capital finance, without the need for long-term contracts or a whole of ledger commitment.
Blog supplied by Beth Nicholas, writing on behalf of Platform Black, provider of complementary and alternative finance solutions.