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Two ways start-ups can outperform the big fish

March 15, 2011 by Matt Bird

There are very few certainties in life, but you’ll encounter one each time you start a new business – you will be smaller than your competitors. Whether by staff numbers, physical space or market share, unless you have a completely unique product you will be playing catch-up.

But this supposed shortcoming presents two opportunities. Take them and you’ll have a selling point your competition will struggle to match – agility and personal service.


Nothing hinders a business like size. Much like the giant boxer undone by his faster, smaller opponent, a start-up can take advantage of market movements far quicker than larger competitors. They often have their hands tied by hierarchy, limited by the fact they cannot make decisions without approval from “on high”.

A start-up will often be an individual/close-knit team trusted in their roles, with freedom in their responsibility.

It could involve writing a great new guide in response to a design flaw of a top-selling product or emailing an offer to trump a sudden price rise. It could even stretch to personally contacting a small number of individuals affected by a very niche item.

Whatever is necessary – you can get there first. First to market. First into customers’ minds. First to the rewards.

Personal service

You can’t help but feel like just another number when you buy from large business, which is fine and dandy until something goes wrong.

They can employ hundreds of customer service staff on the phone and dedicated instore support, but you always know they’re tied by a pre-determined script and unable to truly grasp your frustrations and how it impacts your life at an individual level.

Strip this scenario of size and you have a personal experience that can make a customer feel treasured and comfortable – even when a problem is encountered. The ability to ask for staff by name, or something as simple as being remembered when you get back in touch, is incredibly valuable to consumers in today’s technology-driven world.

If you ensure everything is in place for a customer, from pre-purchase information to post-purchase support, you can really provide a worthwhile experience. This, in turn, guarantees that the word-of-mouth you crave will spread, and you will not remain a small start-up for long.

Matt Bird of printer cartridge supplier, StinkyInk


Limited company director? Could you be earning more?

March 14, 2011 by Elaine Clark

Some of you may be operating your own limited company. It might be just you, maybe you and your partner/spouse or you and your employees.

So how much can you pay yourself? Did you know that from April 2011 you can pay yourself a salary of £589 a month without paying any tax or NI?

At this level:

  • You get National Insurance Credits towards some benefits (eg pension)
  • You must register as an employer and complete employer’s annual returns
  • You don’t have to pay any tax or National Insurance
  • This is a perfectly legal and acceptable way of paying yourself from your company.


One of the tax-efficient ways to operate* as a shareholder of a limited company is to pay anything over and above the salary as dividends. A dividend is the distribution of ‘after-tax profits’, so it’s essential that the company has sufficient retained profits to pay a dividend.

If this rule is not followed, the dividend could be viewed as an unlawful distribution of the company’s funds.

No additional income tax** is due on dividends received where the total income of the person is below the higher rate threshold.

The higher rate threshold from April 2011 is £35,000.

Assuming that you have no other income, you can pay a divided from the company of £31,866 before you pay any additional income tax.***

Other income covers interest received, rental income received, additional dividends etc


On an annual basis you can pay:

  • Salary of £589 per month = £7,068 per year
  • Net dividends from the company of £31,866
  • Total = £38,934


*Subject to your specific circumstances. Check with your accountant whether this is best for you. This is a guide only.

**Corporation Tax has been paid on the company profits at 21 per cent until 31 March 2011 and 20 per cent from 1 April 2011. So while the above is free from additional income tax, Corporation Tax has been paid on the profit where profit = income less costs (the salary is an allowable cost).

***Calculation for dividend – here’s the maths!

  • Personal allowance £7,475
  • Higher earnings threshold £35,000
  • Gives total income of £42,475 before additional income tax is due
  • Salary of £7,068 leaves gross dividends of £35,407 to be paid
  • Net dividends (the amount paid from the company) £35,407/100 * 90 = £31,866

Elaine Clark,


Protect your business from common email scams

March 11, 2011 by Daniel Offer

There are many types of online fraud, but email scams are among the most prolific. Thankfully, many people are now more aware of online scams, but email fraud is still rife and it often targets small business. Here are two of the most common types of email scams:

1 Domain name expiry scam

Malicious fraudsters have now started targeting .uk domain names with falsified domain expiry warnings. Sadly, many of those who fall for this latest domain name con are small firms, largely because they do their own in-house IT management and are not fully au fait with some of the technical aspects involved.

Unscrupulous online criminals are manipulating this lack of knowledge. Many websites receive emails that warn of an imminent domain name expiry. A lot of small businesses, fearing they’re about to lose their domain name, pay extortionate fees to renew their domain unnecessarily.

The emails are usually called something like ‘Domain Registry Services’. They warn of an urgent renewal being required and will state the charge for a renewal. This charge will be much more than an average renewal. It will also be completely bogus.

Many small businesses don’t keep accurate records of when they bought or last renewed their domain name and they probably will not remember the original charge.  This is probably why this scam works so well. If you receive one of these emails and are in any doubt, contact (the .uk internet registry at

2 Phishing and password theft

Most small businesses tend to manage and respond personally to business emails and can become targets for this renowned, but effective, email scam. ‘Phishing’ is the practice of attempting to gather sensitive, protected information by persuading someone to enter their private details online. The most common form of phishing scam is the fake bank email.

Internet criminals clone an official bank email address or manipulate the recipient’s email inbox into believing the email has come from a trusted source. Often the sender of these emails will appear to be the real company. The email will often say that “owing to a recent security threat to the business’s account, to ensure there has been no fraudulent activity”, the business must log in to its account with its username and password.

The email will contain a believable login section that mimics the real bank’s website template. If the business owner enters their details, online fraudsters can access a business’s private accounts and steal money or make unwarranted transactions in the business’s name. Real banks will never ask for personal account information via email, of course.

Trust Your Instincts

Be cynical. If an email just doesn’t seem right – don’t open it. Then report it. Many email providers enable you to report spoof emails and phishing attempts. One of the best things a small business can do is use an email provider with high-end junk and spam filters. Many cheap web-hosting services provide email services, but their filtering software may be substandard. It may be prudent to invest in a reputable web host or use a generic email provider such as Gmail, Hotmail or Yahoo!. If you receive a domain expiry email, contact your domain name supplier. It’s that simple. They won’t take umbrage.

There are many more scams other than the two I’ve mentioned. Caution, common sense and a little bit of knowledge will go a long way towards reducing the likelihood you’ll fall for an online dupe.

Daniel Offer is a partner in the Facebook messaging application Chit Chat for Facebook


Posted in Business IT | 0 comments

How intellectual property can add value to your start up

March 10, 2011 by Maria Anassutzi

Intellectual property – also known as ‘intangible assets’ – comprises patents, copyrights, trademarks, design rights and registered designs.

Some intellectual property rights (eg patents, trademarks and registered designs) need a formal process of registration and payment of fees by the owner to the Intellectual Property Office, to provide protection and monopoly rights to their owner.

Copyright and design rights arise automatically upon creation, but do not protect the owner from a third party’s independent creation – only from actual copying.

Intellectual property rights differ in terms of duration and procedures, but their effect is to ensure the owner has the exclusive right to use its rights and decide how those rights are used and exploited, which includes preventing any other party from using the same rights. This is extremely important for start-ups seeking to protect their assets, to achieve growth and potential investments.

Intellectual property rights only protect the expression of ideas, not the ideas themselves, so appropriate confidentiality agreements must be put in place to ensure initial actions do not jeopardize future intellectual property.

A start-up must have a process for identifying and capturing its intellectual property. To this effect an intellectual property audit carried out periodically is always useful. Once a start-up has identified its intellectual property, it needs to:

  1. Manage its intellectual property portfolio by deciding which intellectual property to maintain, since intellectual property can be costly to maintain and protect. Remember that even when some intellectual property assets may not be of direct value to the business, they could still be licensed or assigned to third parties, bringing extra revenue and profits.
  2. Adopt effective policies for the capture and retention of innovative ideas, trade secrets, inventions, know-how and confidential information. Intellectual property is not only patents. Although patents can add significant value to an intellectual property portfolio, it is important to use appropriate agreements, such as confidentiality, consultancy or licensing agreements.
  3. Monitor and enforce its rights, which may create an opportunity to recover lost licensing revenue through settlement or damages awards. By contrast, a failure to take action to prevent and address intellectual property infringement may result in lost license fees and royalties. Similarly, being aware of the intellectual property assets of your competitors and implementing clearance policies for new products or services, helps to avoid unwanted and costly infringement claims by third parties.

This article is for general purposes and guidance only and does not constitute legal or professional advice. You can read more information about protecting your intellectual property here.

Dr Maria Anassutzi, Anassutzi & Co Limited

Posted in Business law | 0 comments

How to get off to a flying start

March 07, 2011 by Jonathan Rodger

Essentially, there two types of start-ups: the ‘pioneers’ that create a service, product or process that is unique and where there is no known competition; and the ‘settlers’, the more common type of start-up where the business enters a market where there are already many competitors.

The more mature a sector becomes, the greater the likelihood a significant number of businesses will be competing in that market, with a few, increasingly dominant businesses (sometimes called ‘Gorillas’) leading the pack.

What is key is the number and strength of competitors in relation to the overall size of the market you decide to target, along with your market’s rate of growth. If it is growing at twice the rate at which new competitors are appearing, your chances of success are high. However, pitch your startup against a growing number of strong competitors in a market that is stagnating or shrinking and your task of winning market share is much harder. And while it’s not impossible to do well, it means your offer has to be extremely compelling.

Market size is not something that increases or decreases in isolation. It is also influenced by the businesses that operate within it. For example, Europe’s air travel market was considered mature, with many established airlines operating within it. Then came along the low-cost carriers such as Ryanair and Easyjet, which not only took market share off the established players, but actually grew the market they served by encouraging people to take trips they might otherwise not have done if it had not been for the cheap fares on offer. In this way you can change the dynamics of the market you enter if your offer is significantly different.

My own business, Message Horizon, has entered a market that has many established competitors, but the market is still growing, albeit at a slower pace than previously. Here’s what I’ve learnt:

  • Study your competitors. Decide which parts of their offer you want to emulate. What are the things your customers will expect you to offer, too?
  • Then differentiate your product from theirs. This can be achieved through a combination of product innovation, market innovation (eg finding new types of customer not served by your competitors) and economic innovation (eg pricing plans).
  • Think differently from your competitors. If you can’t think of any obvious weaknesses in your competitors, search online for postings made by their disgruntled customers voicing complaints, criticisms and suggestions for improvements. You might be amazed to find that what you considered to be a mighty competitor actually has a significant number of unhappy customers, perhaps because of its service, technical problems or other ways it is failing to live up to its customers’ expectations. If you can nip in and cover the gaps left by your competitors, you will start to pick up the business they neglect.

Jonathan Rodger is managing director of email marketing service Message Horizon.


Why you’ve got to communicate confidence and professionalism

March 03, 2011 by Fiona Humberstone

We never had much money when I was growing up, but whenever my mum bought something, she made sure it was of the best quality she could afford.

I don't think we were alone – and I don't think that attitude is confined to the ‘80s. Most people would rather pay for quality than search out the cheapest. And the old adage "You get what you pay for" is just as true now as it was 25 years ago.

If you're good at what you do, you won't need to compete on price. People will recognise the value in what you offer and they'll be prepared to spend more. Or will they?

Often I meet small-business owners who struggle to earn a living because their customers won’t pay their prices. Consequently, they have to be the cheapest or discount just to make the sale because their customers don't recognise/appreciate the value of what they’re being offered. 

And this is partly down to the small business’s sales process, partly what’s written on its website/ brochure and partly (largely if you're not doing the selling) down to the fact that their brand isn't communicating confidence or professionalism.

Fiona Humberstone, Flourish design & marketing


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