The state of your personal finances says a lot about you. Do you ensure that your debts are well documented, filed logically and always paid on time? If so, you are probably a dependable person who is easy to do business with.
On the other hand, maybe you are messy, disorganised and constantly pay bills late? If so, you most likely will have a hard time keeping other aspects of your personal life in order. Friends and family might characterise you as unreliable – and even untrustworthy.
It's not just friends, spouses and family who may judge you based on the way you conduct your financial dealings. Banks and other credit providers are likely to question whether to lend you money based on your past history with other lenders.
For some, this assessment is nothing to fear. But if you have a shoddy record of unpaid bills and a trail of angry debtors, it is certainly cause for alarm. Your inability to get credit can wreak havoc on your personal life and prevent you from buying a home, taking a vacation or planning your wedding.
While the hindrances to your life that poor credit can cause are annoying, many people do not realise that the mistakes they make with money in their personal accounts can also have massive repercussions on their business. Small time entrepreneurs who have a brilliant business idea may be left frustrated and regretful when they realise poor money and finance choices from the past now prevent them from starting their own business.
Credit is crucial to any small-business owner struggling to get started. There is no doubt that banks will look at your past personal credit when determining if they should give you business credit, and without these loans it may be impossible to buy stock, rent premises or hire staff. Your dreams of starting your own business may be dashed before you even get your idea off of the ground.
If you're planning to start your own business, it's never too early to start focusing on the health of your personal finances. Here are some of the first steps you can make to assess your viability as a potential borrower:
Once you have started on your journey from credit zero to hero, you will increase your chances of receiving credit from banks and lenders when the time comes to start your own business.
Sponsored post brought to you by Experian, © 2015
You probably have big plans for your start-up, with an ambitious vision for the next five years. But ideas require investment in order to become actionable. So, how do you save enough cash to turn your dreams into a reality? Here are three ways to save money for your start-up.
Do you know how much you're able to spend or do you normally play it by ear? Having a realistic budget in place is essential for saving money for your start-up.
Without a budget, you could be spending far more than your turnover allows. For example, if in one month you spend £1,000 on office chairs, but only sell goods to the value of £500, you'll be making a loss (unless you've had significantly higher sales in previous months). You need to ensure your expenses make good business sense, staying well within the realms of your revenue so that you're making a profit each month.
Your budget needs to align with your business strategy and objectives, in which you'll specify how much profit you can expect to make and how you intend to invest back into your business.
To be able to save money, you need an effective bookkeeping system. This will allow you to keep track of the money coming in and out of your business, and anticipate future incomings and outgoings.
Good bookkeeping prevents you from overspending, and then facing outgoings you weren't prepared for. So, before you go and order new supplies, you'll be able to see how much you already owe suppliers and the taxman that month, what payments you're expecting, and limit your spending accordingly.
Not only does effective bookkeeping help you to spend realistically, but it also helps you keep on top of payments you're due to receive. Forgetting about invoices you've sent out could mean you miss out on prompt payments, which could leave you unnecessarily high and dry.
After a while, you're bound to find yourself dealing with the same suppliers on a regular basis. But rather than continuing at the same rates, you need to think about negotiating discounts with regular suppliers to get better value for money. You'll often find that suppliers would rather maintain regular business with you at a lower rate, than lose you altogether.
When you build long-term working relationships with suppliers, you should also think about asking for longer payment periods in particularly difficult months, which could be hugely beneficial to your cash flow.
Copyright © Babington Group, a "training provider offering a range of courses, from accounting qualifications to leadership programmes". Follow @Babington_Ltd on Twitter.
The ubiquity, democracy and power of the internet has enabled millions of people across the globe to enter the ecommerce marketplace, either as a consumer or a retailer. However, accessibility doesn't guarantee success and competition has never been so tough, so here are five top tips to give your ecommerce site the best possible chance of success.
Consumers are smart; consumers are savvy. More so every day. The average customer is capable of comparing prices online in very little time and stats show there is very little brand loyalty. The products you have listed on your site must be competitively priced in order to compete with other ecommerce sites. Unless you are selling a unique product, this should be a priority.
People expect an easy-to-navigate, mobile-friendly site in order to purchase their products. The key word here is expect. Online customers are presented with a plethora of consumer engaging sites that utilise call-to-action buttons, SEO-friendly content and tactically placed advertisements, none of which take away from the overall usability of the site. Quick, convenient and aesthetically pleasing should be your principle boxes to tick.
This is an obvious priority, but an interesting insight. Most products on the high street are priced between 70-80% above their production or purchase costs. This varies between product and marketplace, but ecommerce, as a general rule, is no different. Without the need to store products or pay for distribution (unless you do intend to do this), your costs are automatically lower. Understanding exactly what your costs are, your margins and thus your profit (creating a proper business plan helps crystalise this) is maximised. Every penny counts.
Unlike a shop, where the customer's experience is determined by the store aesthetics and shop staff, convenience and neutrality win the day in ecommerce. An essential aspect of this is quick loading times and engaging call-to-action buttons. A customer will lose interest quickly in your site if the page loading times are long. Customers expect a speedy website that isn't slowed down by dated tech. Time is money.
The customer is always right and engaging with them, either with complaints or requests for further information, is absolutely crucial. Don't leave them hanging on. Angry customers can easily spread bad reviews and negative comments online that dissuade potential customers. Remaining professional and friendly in the public's eye will control those negative reviews. Even bad can be spun positively if you deal with it quickly, efficiently and solve their problem or answer their query.
Alternative finance is fast becoming the go-to place for business loans, especially as there are so many options to choose from. A host of alternative lenders that provide invoice discounting, merchant cash advances, peer-to-peer lending, crowdfunding and online business loans have been popping up over the last few years offering their services to SMEs and investors, mainly because banks have turned these businesses away.
Since the recession, banks have become stricter with their lending and this has made it more difficult for small businesses to acquire much needed funding. Whether the finance is for company expansion, 'plugging a gap' or for future investment, alternative finance providers have been giving what businesses want: capital to grow.
While this type of lending can be a great solution, it's wise to look at all the risks - especially what might happen further down the line. The FCA recently revealed it was concerned with how certain crowdfunding websites presented information on risk, indicating there was an aspect of 'unrealism' and that perhaps these websites were being too optimistic in their wording.
If the borrower were to become insolvent, this could create a number of problems, not only for the directors and alternative lender or investor, but also for the insurer who underwrites the loan. The director of the insolvent company could also be personally liable for the business debt if they agreed to a personal guarantee with the alternative lender.
A personal guarantee (PG) is where an individual has guaranteed personally the amount owed will be paid back. This sounds obvious, but in many cases company directors have made PGs with a lender believing that because they've borrowed the money for the company, the debt would disappear if the company went bust. Of course, this is not the case.
When assessing a company for risk, you should bear in mind in that the company could have borrowed from multiple alternative lenders to pay back historic debts at high levels of interest. The issue is, of course, that traditional forms of company monitoring, such as payment trends, might be less effective if companies are just borrowing to pay suppliers. There is no register of personal guarantees and they do not appear on any credit check. In effect, lenders and suppliers will need to take the directors at their word.
A number of insolvent businesses we've seen have had at least three or four loans from alternative lenders. Is there a false sense of security due to the possible over-valuation of a personal guarantee?
Many lenders have underwritten their debts with an insurance company. Do these insurance companies realise that personal guarantees are being given out left, right and centre? The risk is if some businesses turn sour, the costs of insuring their debts will increase.
In another twist, it is now possible for companies to insure their personal guarantee. This means the insurer could be insuring both the borrower and the lender. If there is a sudden shock to the economy, such factors may well amplify the consequences, as everyone realises that the risk is not spread across the system.
The government will always want to protect the investor in the peer-to-peer lending system because they are not deemed as sophisticated investors. From April this year, peer to peer lending became regulated by the FCA, which will offer some protection to both the investor and lender. However, anyone over the age of 18 is still free to gamble, resulting in a strong pool of available money.
It is important that business owners are aware of the risks and don't just use alternative finance as a sticking plaster over the real problem. The business may not be viable or the business structure could fundamentally need to change.
Copyright © 2015 Keith Steven, managing director of KSA Group. He has been rescuing and turning around businesses for more than 20 years, working with firms in every industry. He is author of the site www.companyrescue.co.uk.
If you've decided to pay to have a website built for your business, it's important to choose an agency that will listen to your needs, involve you in the planning and then produce a website that exceeds your expectations and attracts new customers. You'll be entrusting them with your brand, so you must choose a professional and well-established team.
It can be quite overwhelming selecting which agency to use, because there are so many to choose from. However, here are six key questions you need to ask prospective suppliers.
A good agency will discuss your exact requirements before sending you a written proposal with a quote for the work and an outline of what's included. Ideally the proposal will be sent with terms and conditions.
You should fully understand what is and isn't included before you make any payments or agreements. Check the following:
It's likely that you'll be required to supply all content and images for your website, however a professional agency will be able to help with content or buying stock images if required. You should talk to them about this during the initial discussions to ensure that they include it in the proposal.
A well-established agency should have an impressive website that includes a portfolio of their projects. Check out other websites they've created to get a better idea about the quality of their work.
Most creative agencies will have testimonials on their website and they may even feature on review sites. Read these. You could even ask if it's possible to speak to a previous client to ask about their experiences.
You need to ask how long it will take for the design and build process, because you must ensure this is in line with your needs. Any time frames given will depend largely on your cooperation with regards to discussing design and functionality, as well as your supplying photos and content when required. The web designer may need to contact you during the development stage, so it's essential that you provide feedback promptly to avoid delays with launch.
You should trust your instincts and think about your first impressions of the agency. Bear in mind that you may be working with them for many weeks during the website design and build process, and possibly many months and years afterwards if they assist you with ongoing web maintenance and development. So, you'll need to have a good working relationship with them. Here are some questions that you should ask yourself:
If your business has unwanted technology and gadgets to get rid of, there's a new option for you to try: you can now trade them in at Argos stores
The retail giant claims this is the first initiative of its type offered by a generalist UK retailer. And it says it'll give you on the spot quotes for your old tablets and smart phones.
If you're happy with what they offer, you can have the amount credited to an Argos gift card, which you can then spend on anything in the company's famous catalogue.
Argos, in partnership with circular economy experts WRAP, has introduced the new service at all its 788 UK stores.
The programme aims to give customers an easy way to realise the value of unwanted gadgets, while also helping the high street store to build customer loyalty and brand value.
This new service is the result of the EU Life+ funded REBus project which, led by WRAP, helps companies implement resource-efficient business models. It's all about the circular economy, where products, and their materials, stay in use for longer.
WRAP's research estimates that UK householders have unused electrical equipment worth around £1bn. That's a huge number of gadgets and appliances sitting idle, so it's no surprise that two-thirds of people surveyed said they'd be willing to trade in tech products with reputable retailers.
Gadgets traded in at Argos are sent away and securely wiped. They then get refurbished and resold.
"As a leading technology retailer we know that our customers are looking for solutions to responsibly dispose of unwanted gadgets when they replace or trade-up devices," explains Amy Whidburn, head of corporate responsibility at Argos.
"Depending on the response from customers, we may extend the scheme to include other electrical items in the future, such as camera, sat-navs or laptops."
The scheme could be a convenient way to make use of any abandoned gadgets in your business. What's lurking in your drawers and cupboards?