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How will Brexit affect your small business?

June 27, 2016 by Guest contributor

How will Brexit affect your small business?{{}}After the EU referendum, we have entered a period of extreme uncertainty. What is certain though is that the decisions made by small and medium-sized businesses (that make up about half of the economy according to BIS) over the next few months will determine more than ever their success in this new environment.

The likely pressure for entrepreneurs will, to varying degrees, include the depreciating currency, possible inflation, adverse movements of asset prices and labour market pressures.

I'm convinced, however, that the primary pressure on the UK's SMEs is going to come from negotiations with the bigger players in the market. For better or for worse, big businesses have been handed a powerful negotiation gambit to use against the small business owner.

SMEs generally have a low bandwidth when it comes to market information, cash flow and talent pool - all factors likely to be disrupted over the next few years. The pressure here can also quickly affect performance - and profit margins. For SMEs with little cash reserves and balance sheet strength, this could threaten the very survival of some.

Winners and losers

However, the confusion in the market will mean the best of times for those who are entrepreneurs in the true sense of the word - those who know how to make the most of new opportunities.

In time, commercial prudence will prevail over instinctive reaction. There are SME owners who are going to thrive under Brexit. These are the business owners who have the financial literacy to understand the numbers, those who are watching their margins closely, who are already planning how to cast a wider net to draw in better talent and who are constantly looking for ways to increase opportunities in their pipeline.

These SME owners will be learning how to protect their business well, strike when they have opportunities and develop their own skills and competencies to negotiate effectively with the big players in the market.

There may be many reasons to lament the UK's exit from the EU, but the SME owners who to come to terms with the reality of Brexit the quickest are the ones who are going to thrive and create the best of times for their business.

Copyright © 2016 Shweta Jhajharia is principal coach and founder of The London Coaching Group.

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Five questions to ask before you start up a business

June 27, 2016 by Guest contributor

Five questions you need to ask and answer before you start up a new business. Great advice here from business adviser Daryl Woodhouse.{{}}You've got a great idea. You've got the passion and the commitment. You're ready to start to start your own business. But wait! There are five questions you need to ask and answer before you start.

  1. Is there a commercial market for it? It might be a great idea but you can only be sure if you do your market research.
  2. Do you have the knowledge, experience and muscle (both influence and financial) to get it to market? Be honest in identifying your skills and knowledge gaps and then figure out how to fill them.
  3. What else do you need to know? Get advice on the areas you are unsure about from people who know. Also remember that: "you don't know what you don't know". Even if your business idea is going to see you working from your kitchen table as a sole trader, it's still worth getting advice from a successful business coach, a good accountant and a trustworthy lawyer.
  4. What kind of business set-up would be best? At the simplest level a sole trader status can be set up quickly but do you understand the implications of being a sole trader? Would your business be better suited to a limited liability partnership, a limited company, a charity or a social enterprise? You need to get advice on which one will be right for your business.
  5. If you're starting the business with someone else, think carefully: are you going to work well together? How do you structure the arrangement? Are you equal partners? Do you have an agreement on what will happen if circumstances change, because of a dispute or critical illness for instance? These are all things that need to be considered now while you are in a position to discuss these issues without emotion.

All these steps are crucial as the decisions you make at this stage are the foundations for what you build going forward. Of course you then need to focus on the operational aspects of getting a business started: the funding, the website, advertising, networking, a business plan and all the other activities that will become your daily focus as you establish your business. However, the importance of these pre-start-up considerations cannot be over-emphasised.

Once you've identified the need for the product or service, the price, volume/frequency needed and the route to market; and you're confident that you have the commitment, the stamina, the resources, the commercial knowledge and the support (family, friends and the right business team) to see the idea through, then you can get going with confidence.

There's no rule about which ideas will fly. You never know - it might be your great idea that becomes a winner!

Copyright © 2016 Daryl Woodhouse, ceo of Advantage Business Partnership and co-author of Creating Business Advantage: Setting Up and Running a Successful Business. ABP delivers performance improvement, top line to bottom line, through business coaching, mentoring and hands-on consultancy.

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Should I name and shame my late payers?

June 20, 2016 by Guest contributor

Should I name and shame my late payers?{{}}You wouldn't believe how angry some of the entrepreneurs and business owners we deal with get about customers that won't pay their bills. Well, perhaps you would!

If you've experienced a customer that's given you the run-around on payment you'll know just how infuriating it can be. After all, there's plenty at stake - even highly profitable firms can be put out of business when the cash stops flowing.

Is naming and shaming really a good idea?

Social media has transformed how easy it is to make it public just how annoyed you are with a customer who isn't paying their bills. I have seen a fair bit of discussion online about naming and shaming of late paying clients in recent months, but is it really such a good idea?

Trevor Tierney, a sole trader, obviously thinks so. He was so annoyed by late paying customers that he set up a website (called 60 days.com) where you can name and shame customers. For a small fee you can log in and report a late-paying offender, and have a look to see who else is there on the list.

Going public with your feelings about your customer might make you feel a bit better - and you could even see it as a public service to help make other business owners aware - but I strongly believe that you should keep your grievances to yourself. There are far better ways to work behind the scenes and bring in the payment, and there are good reasons not to wash your dirty linen in public.

Reasons to be cautious

First, there may be a good reason why your customer has not paid you. They may not have received your invoice or there may be some errors on it that they haven't told you about. How embarrassing would it be to go public, only to discover that there was a reasonable explanation after all?

Secondly, you might open yourself up to legal action by dishing the dirt on your customer. Lesley Kemp, a freelancer from Milton Keynes, tweeted about a Qatari client that had not paid her. As reported on BBC news recently, she was hit with a legal claim of £120k for defamation.

Thirdly, you risk harming your own reputation. Would you want to do business with a company that takes to Twitter or Facebook every time it has a disagreement with its customers?

I do not advocate naming and shaming your debtors. I believe it is almost certain to annoy them and lower your chances of collecting an overdue invoice. If you have a problem with an overdue invoice, why not look for professional outside help instead?

Copyright © 2016 Samantha White, ceo at My Credit Controllers, outsourced credit control and business debt collection specialists.

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Why market research is vital for start-ups

June 13, 2016 by Guest contributor

Why market research is vital for start-ups{{}}To be successful, start-ups need to know the ins and outs of the market they're operating in. Market research is a vital tool to help you launch and grow your business; it gives you valuable market intelligence that you can use to plan and develop your strategy.

By conducting market research you get insights into how your target audience thinks and acts - including their buying patterns. It can also provide information on current market trends as well as shifts in the economy and changes in your demographics.

Launch successful marketing campaigns

Market research allows you to identify new business opportunities. The information you obtain by carrying out market research will help you to build engaging marketing campaigns that reach your niche audience. This is because you can target the specific interests of your current and potential clientele - the information you gather from research will help you better decide who to target and when. It will also provide you with more lucrative opportunities to help you expand your business.

Learn more about your competitors

Market research is not just a great tool to get to know your audience; it can also give you a useful insight into your competitors' strategies. You can compare your business with others, enabling you to track your own progress and growth as well as theirs. Keeping ahead of competitors can be challenging at times, so through understanding the market you can create more concise and focused business strategies.

Improve your decision-making

When you know your market, your audience, your competitors and your products, you can make decisions with a greater degree of confidence and precision. This allows you to minimise the risk of failure. Market research should always be part of your growth plan, since it can help optimise your brand strategy and, by focusing your efforts where they matter, you will maximise your return on investment.

Optimise your communications

By researching your market you can create a powerful brand personality, enabling you to generate promotions and messages that resonate best with your target audience. You want your words to ring true to them, whether that's through your website, social media, advertising or promotions.

Test your messages

With market research you can also test ideas and messages, streamlining your marketing by selecting those that best address the needs, attitudes and aspirations of your customer base.

Every entrepreneur wants their start-up to be successful; the safest way to achieve this is through knowing your market.

Sponsored post

Copyright © 2016 Graeme Donnelly of Quality Formations, part of the Rapid Formations Group, offering a specialist company formation service for a diverse range of company structures.

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Self-employed? You're not alone

June 09, 2016 by Rachel Miller

Self-employed? You're not alone{{}}If you work for yourself in the UK today you are not alone. OK, strike that - you may work alone; but you’re not the only one. The number of people choosing self-employment over a regular salary is rising fast. Estimates suggest that one in seven workers in the UK now work for themselves.

There are plenty of stats to back this up but it’s hard to get a complete picture because the world of self-employment is so diverse, including as it does everyone from a part-time freelancer to a company director with a staff of one.

So what do you call yourself? Are you a freelancer, a contractor or a consultant? An entrepreneur, sole trader or one-man-band? And does it matter?

A report published by the Association of Independent Professional and the Self-Employed (IPSE) in April this year describes freelancers as "important but hidden".

Focusing on professional freelancers in sectors such as media, education, IT and sport, the IPSE report says there are an estimated 1.91 million freelance workers in the UK. By this measure, 6% of all UK workers in employment are freelance.

But this is not the whole story.

Figures from the Office of National Statistics (ONS) released in May report that the number of self-employed people in the UK increased by 182,000 to 4.69 million between Q4 2015 and Q1 2016.

The ONS uses the Labour Force Survey (LFS) to gather its data and its definition of self-employment is based on the respondent's view - in other words those surveyed are simply asked if they are an employee or self-employed.

Allowing workers to define themselves is a sensible approach. No matter what type of business you are in, if you work for yourself, then you identify as self-employed - whether you happen to be a freelancer or the director of a limited company.

Meanwhile the Federation of Small Businesses (FSB) reports that of the 5.4 million SMEs in the UK, 4.1 million are "non-employing businesses". In other words, 76% of small businesses do not employ anyone apart from the owner.

And FSB statistics show that these "non-employing businesses" account for 90% of the 1.9m increase in SMEs since 2000. What's more, the number of sole proprietorships has increased by 50,000 in the past year alone.

So the one-man-band, for want of a better description, is becoming more and more popular. But the jury is still out on the reasons for this.

Clearly the recession has played its part and necessity has been a factor for some; but there's also evidence that self-employment is a key part of the changing world of work. The proliferation of freelance jobs sites is certainly testament to an evolving labour economy.

What's clear is that there is no single type of freelancer. Some may fall into self-employment; for others, it’s part of a specific career plan or lifestyle choice.

Then there are entrepreneurs who start small but have no plans to stay that way. But not every freelancer wants a growing business. Indeed, what attracts many to self-employment is the autonomy and flexibility not just of having no boss but having no staff either.

And that's where all sole traders have something in common. They are both employer and employee in one and that brings its own challenges as well as rewards.

The Government-commissioned Self-Employment review published by Julie Deane in February picked up on many of the challenges facing sole traders and made these recommendations:

  • More specific Government support for the self-employed;
  • More appropriate financial solutions (including mortgages and pensions);
  • Equal treatment for the self-employed including maternity allowance;
  • The establishment of a single clear definition of self-employment;
  • A review of tax and other administrative burdens for the self-employed.

It's high time the Government focused on this important group of workers and came up with policies to make their lives a little easier. Julie Deane's recommendations are a good place to start.

Copyright © 2016 Rachel Miller, editor of Marketing Donut.

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Best ever business advice - competition results revealed

June 02, 2016 by Rory MccGwire

Best ever business advice - competition results revealed{{}}A few weeks ago we asked Donut readers on Twitter and Facebook to share with us the best business advice they've ever received. We were really pleased with the response - thank you all for taking part! We have chosen our top three bits of advice, and the winning contributors have each received a box of doughnuts (what else?) as their prize.

Read on to hear what our winners had to say...

1. 'Asking questions will get you the performance you are after far more than dictating demands.' Tamar Telecom

Rory's comment:

This advice is spot on and is not heard often enough. Clients can give you brilliant insights into the market as a whole and what they really want themselves. Employees can give you insights into every aspect of your business. And suppliers can give you suggestions on how to get better value for money from them. A killer question is always “What would you do differently if you were me/us?”

2. 'Make time to work ON your business as well as working IN your business.' North Somerset Enterprise Agency

Rory's comment:

It is no coincidence that this snappy item of advice is a popular mantra: it is so true. Time and time again one sees businesses that spend the whole day every day lurching from one crisis to another. Plans and systems may sound dull, but they are a vital part of success. Likewise, it pays to make time regularly to go and talk to customers and other people who can give you good advice.

3. 'Don't undersell yourself. You want people to come to you for the best value, not for the best price!' Chris Toshi

Rory's comment:

Yes, people buy from people. The biggest selling point of any small business is usually YOU: your expertise, your enthusiasm, and the care you give to each and every customer. Buyers are prepared to pay the right price if they believe that you are the right person to buy from. If you cannot charge a sensible price, you are probably in the wrong market in the first place.

Thank you all for your brilliant entries and for taking part. For more pearls of wisdom visit our Donut sites.

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