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Spend wisely at the start

July 28, 2010 by Chris Barling

When starting a new business, the way that you spend your limited resources is critical to your chances of success. There are places where you can’t afford to scrimp, and there are places where you simply must not waste. You need to keep the chance of failure down by spending what you have very wisely.

  1. For a business with any risk, forming a limited liability company is a must. Then if the business goes down, loans and debts owed by the company won’t follow you. So set up a company by searching for “Company formation” on Google. It’s unbelievably cheap.
  2. There are other things to consider too. You need to keep all of your paperwork, including sales invoices and supplier charges, so that you will be able to do accounts and tax returns. But this doesn’t mean setting up a complex and expensive accounting system. It means employing a cheap book keeper for a few hours a week, or even keeping all of the paperwork in one tidy pile, so you or an accountant will be able to do the accounts when the time comes around.
  3. Registering for VAT, the Data Protection Act and possibly other specialist health and safety laws are other start up activities. Do these at the minimum possible cost and effort. These are overheads, not keys to your business success. You can nearly always find out everything you need to know with a few hours of research online. Everything possible like this should wait if it can.
  4. Don’t spend money on things that you don’t need yet. In a start up situation, tomorrow can take care of itself. The critical thing is to concentrate your money on getting your product right, making sure that your customers are happy, then selling like crazy. This is much more important than a slick operation. I’ve seen a number of people spend precious resources on preparing for massive success, only to have that success elude them because not enough attention was paid to sales growth.
  5. When you have a growing business with satisfied customers, then it’s the time to get better organised. As you grow, you will need to invest in systems to maintain quality, and you should also be able to drive down costs as a proportion of your sales. But all of that is for later.

It sounds easy, which it isn’t. However, following these tips will increase your chances of success. Good luck.

In summary:

  • Spend the minimum on being legal and decent
  • Focus on getting something customers want, and make sure that they are happy
  • With that core in place, sell, sell, sell
  • With sales growing strongly, invest in operations to maintain service and reduce costs

Chris Barling is CEO of ecommerce software supplier Actinic

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How to commission a website designer

July 26, 2010 by Brian Copeland

The first thing a potential customer is likely to do after meeting you, or hearing about your business, is look at your website.

If it makes the right impression, hopefully, you can move onto making your first sale and build the relationship from there. If your website falls short of the mark, it’s likely to put them off and they will go elsewhere.

So where do you start? If this is the first time you’ve needed a website, it can seem overwhelming. But, if you get a good designer onboard, it shouldn’t cause you any problems. You can benefit from their knowledge and experience, providing you commission them effectively. But how?

Your website must reflect your brand. It should be a tool that enables you to achieve your marketing goals. So before you even think about commissioning a web designer, you must know what your brand stands for and how your website fits into your marketing strategy, otherwise, you’ll waste precious money.

What’s your brand?

So what’s your brand? Think of it as your business’s personality – how it speaks, looks and behaves. It’s something far greater than a logo, typeface or a few colours.

The essence of a brand is voice, look and behaviour. Often, these are defined by brand values, so take time to work out what these are. Before you ask a web designer to start work on your behalf, be clear in your mind about your brand values. Draw up a list of five or six brand values, if necessary, seek advice from those with knowledge of your professional or commercial values.

Now think about your marketing strategy – how you will sell your products or services. Your website will be part of this, even if you don’t intend to sell online. Your website must seamlessly complement your other sales efforts, whether that’s cold calling, distributing leaflets, direct mail, newspaper adverts, using online social media such as Twitter or quite possibly a mixture of these.

Be clear about the contribution your website needs to make. Do you need it to sell, generate sales leads/enquiries, capture information or simply tell people more about your business and its wares?

Choosing a web designer

Your choice of web designer will depend on several factors – and budget will be a key. Big agencies don’t work for small fees, while a self-employed web designer could create just as good a website for your business anyway.

Decide on your budget and stick to it. You could search online for web developers, but I’d recommend seeking recommendations from other businesses you trust. Give them a call and ask about how happy they are with the service and value for money they received. Ask whether they encountered any problems.

Shortlist at least three potential designers/agencies; check out their work and ask what solution they recommend for your business. One of the important questions, of course, is price. That’s not to say go with the cheapest – it’s more a question of value for money. Negotiate a set price before any work commences and get all work set out in black and white. There should be no unexpected additional charges. Most web designers often offer ready-made packages, so make sure your website will meet your individual needs.

Briefing your designer

Once you’ve decided on a supplier, you’ll need to brief them properly. A good brief is the cornerstone of any successful design project. They don’t have to be wordy, multi-page documents; aim for concise and clear guidance on the form, look and content of the site you want, totally in step with your brand and marketing strategy.

When it comes to key decisions (eg site structure, fonts, colours, images, etc), the designer should explain your options, which will enable you to make well-informed decisions. If you’ve picked the right one, you should have confidence in your designer’s ability and opinions, but that doesn’t meaning settling for something you don’t like. You should also be prepared to have your choices criticised where necessary, as long as this is accompanied by suggestions for better alternatives.

The process might involve having to make a few changes (hopefully minor) along the way, but soon enough, come launch you should end up with an important tool that enables you to start and grow your new business.

Brian Copeland, creative director of the multi award-winning agency, Graphic Clinic

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2020 Vision – Have you got it?

July 23, 2010 by Emma Wimhurst

Got an idea for a business? Great! What are you going to achieve with it? Let’s fast forward to 2020. Now tell me what you see....

  • Have you built a trusted brand?
  • Do you have a national, or perhaps, a global business?
  • ARE YOU A SUCCESS?

The vision of where you will be is all part of strategic planning. It’s something you must seriously consider before you take your business idea any further let alone launch it into the marketplace. BUT, what if you’re having trouble gazing into the future and planning your way? Where do you start?

Look at what you’ve done already. You should have carried out a little research, found a niche and run your idea by friends or family. Their enthusiastic reaction, combined with you ambition, will have turned it over and over in your mind, giving it an identity and inspiring you to create it.             

So let’s now look at something that will give your wonderful idea a tangible form.

  • Get a pen and notepaper and find somewhere to sit, relax and think. If you’re planning to set up in a partnership you must do this together, to make sure you share the same dream and want the same outcome. 
  • Scribble words, phrases, or short sentences that you feel sum up where you want your business to be and what success means to you.

STOP! I forgot to mention, be economical, it’s not a novel you’re writing but your vision statement and it must be wrapped up in no more than 50 words. It may only be one paragraph but it is so important and you must get it right. Within it you must encompass the essence of your business success, what you want to achieve and where you want to be in, let’s say, the year 2020. It should be exciting enough to motivate you and fire up others you want to involve in the venture.

I maintain that this single exercise – whether looking ahead for a year, five years or a decade – begins the planning you need to achieve success. This is something I believed when I set up Diva Cosmetics (as a new mother) back in 2000. I had a wealth of experience and expertise in the industry, I was focused on what I wanted, and knew exactly how I was going to get it. It was, in essence, written down in 45 words!

Running a business is challenging, decisions have to be taken and if you’re not absolutely certain where you’re heading it’s possible to stumble, lose your way and ultimately miss out on the success that should have been yours. I often referred back to Diva Cosmetics’ Vision Statement when confronted by difficult decision making. If opportunities led me away from my original strategy, I refused to be sidetracked. Establishing my goals was a priority at Diva Cosmetics. I knew from day one where I wanted the business to be and achieving £1m in the first 12 months was, of course, all part of the plan.

I made use of a planning system I call my Seven Business Disciplines to ensure I don’t deviate from the path towards success. Having sold the company, I now use this proven system to guide start-ups. Of course, there are many facets to my first discipline, strategic planning, but having a clear and considered vision statement is a very positive start.

Once finished, put it aside for a week or two. When you go back to it, review it, edit it and leave it again. Repeat this process until those 50 words mean what they say. Now you have your vision for success. Success doesn’t just happen it takes enormous effort and hard work. It also takes thorough planning, specifically strategic planning as a foundation to build everything else on, so now you see just how vital it is.

A lack of research and planning is often blames for business failure, so do make sure your business planning is watertight. If you’re daunted by that then consider getting advice from someone who’s already got what it is you want. Planning is crucial to your success, so take advice.

At this early stage in your business planning, make sure you set out your vision statement and be true to it. Focus on where you want to be with the clearest of 20:20 vision and then set off but never lose sight of it. Who knows where you’ll be in 2020? You do...because you’ll have planned it!

Emma Wimhurst is a motivational business speaker, mentor and author

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What your bank will want to see when you apply for a loan

July 22, 2010 by Rob Warlow

To help banks assess whether you’re a good risk when you apply for a loan, they will give you a shopping list of required information. Failure to oblige with the right information can lead to months of delay in getting an answer. So what will your bank want to see?

1 Business plan

In the relatively short space of time you have with the representative of you bank, it’s impossible to effectively convey every aspect and nuance of your business. A business plan can do that. It’s is a ‘convincer’ for the bank and a control and check for you. A plan can highlight flaws in your business idea and potentially save you from making an expensive mistake.

2 Financial statements

Bankers love numbers. Your annual financial statements may not mean much to you, but to the bank they offer a wealth of important information. Don’t apply for finance if your financial statements are out of date. Going to the bank any time greater than three months after your financial year-end without your accounts will simply result in the bank telling you to get them done.

3 Management figures

You may have your financial statements produced within three months of your year-end, but it’s still three months of trading since you closed your books and a lot can happen in that time. The bank will want to see management figures.

The format doesn’t have to be complex; it can be as simple as an Excel spread sheet to accountant-prepared figures. You can also get accounting software that easily prepares monthly figures for you, so there’s no excuse for not having up-to-date figures on business performance.

4 Profit and loss and cashflow projections

Your projections are your view of where you think your business is going to be financially in one, two and three years’ time.

The bank will want to see to prove your business can afford to pay back the loan or overdraft facility. They can also be used as a tool to monitor future performance against your estimates. And by preparing forecasts, you will be forced to think through your numbers first.

Preparing financial forecasts can be daunting, especially if you have never done them before, so seek help, perhaps from an accountant, if necessary.

5 Personal financial statements

Increasingly, banks are taking a greater interest in business owners’ personal financial position. Banks have realised that many business owners have raided savings and ‘maxed out’ on personal overdrafts and credit cards to keep their businesses going.

Banks will ask you to complete a personal monthly income and expenditure report and an assets and liabilities statement, which will give them an immediate overview of your financial position.

6 The list could go on

Each lending request will be treated differently and may lead to your bank requesting more information than I’ve outlined above, but this provides a good introduction.

Rob Warlow helps business owner’s deal with their banks to obtain funding or assist in re-building damaged client-banker relationships. He has written a book called ‘Loan Sharp: Get the Business Finance You Deserve’ which is available via Amazon or on his website.

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Sales breakthrough and a huge dilemma

July 21, 2010 by www.inafishbowl.com

It is a really exciting time for Rico Mexican Kitchen at the moment. You might think I keep on saying this and that’s because business opportunities take twists and turns and there’s never a time to be bored! Having a strategy is fundamental to keep the opportunities and challenges in perspective, but there must be a great amount of flexibility and a desire to go with the flow and take any opportunity too.

The aim of my business is to introduce a new range of fresh, vibrant, genuine Mexican foods and now I’m looking for opportunities which bring volume.

We have achieved a listing with a prestigious supermarket chain, which is great news! What normally happens though is that they will list you in a limited number of stores and monitor the performance of the product and then, if it does well, they will offer to place your product in more branches. The problem here is that for some products, the minimum production runs are quite large and if they have a limited shelf life, the waste whilst in storage would be considerable.

So, if the shops are not enough to cover the minimum production run, we could end up running the production at a loss. I have identified other retailers which will stock the new products, but we still may find ourselves overproducing.

The really big question in whether we should go ahead with this listing and hope for the best, and in the meantime, work like mad to get more listings to give us the volume we need. Or is it best to delay the launch by a few months, get those extra listings first and THEN start producing?

I know that option two sounds safer but the real danger is that while we are working to get more listings, the original listing offer may disappear. This is not unheard of. It may be that a competitor may get the listing instead, or the buyer changes and their successor won’t choose our product. Difficult decision, isn’t it?

You can find out more about Marcela on the new interactive business website www.inafishbowl.com

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5 tips for graduates going self-employed

July 15, 2010 by Emma Jones

A recent feature in The Guardian ran with the headline: ‘Graduates warned of record 70 applicants for every job’ The next line went: ‘Class of 2010 told to consider flipping burgers or shelf stacking to build skills’ Was I the only one thinking flipping burgers and shelf stacking is a flippin’ great way to earn part time income whilst building a business? For all graduates considering self-employment, here are five tips along with stories of those who’ve been there and done it.

1. Start now!

If you’re an undergraduate and looking at the job market with dread, start taking small steps now to earning an income. Is your degree in languages? Become a private tutor via sites like First Tutors or sell your skills to business through the likes of Lingo 24 and Language123.com. Are you good at making things? Make a few more and upload to sites such as Folksy.com and MyEhive.com so you can sell to a wider audience. Kane Towning started on the path to self-employment whilst at Leeds University and as soon as he graduated, became full time director of AIM Clubbing; an events company set up with two fellow students and friends.

2. Seek out help

There is plenty of help on offer whilst you’re studying – and still when you leave. Whilst studying, check to see if your College or Uni hosts an enterprise society; NACUE is a good source for this. Make the most of events, competitions and Awards hosted by National Council for Graduate Entrepreneurship and Shell LiveWIRE and why not take on work experience with entrepreneurial upstarts so you can learn on the job via sites including Enternships and Gumtree.

3. Club together

Does starting a business seem a bit too daunting when you haven’t even left learning? Then pool your talent, join with friends and start that way. This is what the three amigos Oliver Sidwell, Ali Lindsay and Chris Wickson did when they came up with the idea for RateMyPlacement whilst studying at Loughborough University. After graduating, they all secured jobs and worked collectively on the business at nights and weekends. That was three years ago and the company is now a startling success.

4. Go global

To be sure of a wide market for your products and services, go global from the start. Technology enables you to do this with sites such as Odesk and elance.com allowing you to be found by customers around the world if you’re selling time and knowledge and having your own website (with good search engine optimisation) increases your chances of picking up overseas trade. In business, the world truly is your oyster and think of all the places you’ll get to travel to meet clients, and taste local culture!   

5. Thanks be to folks

I hear from many students who are running a business and getting much-needed help from parents whether it be rent-free accommodation or having a bookkeeper/mentor/telephone receptionist on tap who won’t expect a salary in return! Arthur Guy started a star solutions when he was 17, after working at an electronics store. He’s now completing a PhD at Sussex University so his Mum takes care of the day to day running of the business. Thanks, Mum!

Even if you don’t turn your business into a full time venture, the experience of being your own boss and showing you have the attitude and skills to make a living will look good on your CV and set you apart from those other 69 applicants.

Emma Jones is founder of Enterprise Nation, a business expert, and author of ‘Spare Room Start Up’ and ‘Working 5 to 9’

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