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Business and enterprise minister, Mark Prisk, carried out his first day of “work experience” at small firms this week. This is possibly just a PR stunt, as he has already run his own business and surely knows the score, but his knowledge may be rusty and there are some vital lessons he should learn.
Here are five things he should remind himself of during his time with small firms:
1 Time is precious. Small firms are often run by one or two people, who, alongside keeping the business afloat, clearly don’t have time to battle their way through reams of admin and study the small print of new legislation. Hopefully Mr Prisk will be reminded to keep red tape to a minimum during this Parliament, and make sure any new requirements are accessible and clear.
2 Every business is different. There is no ‘typical’ small business and so the new coalition Government should avoid a one-size-fits-all approach to policy. An MOT garage may have very different needs to a social enterprise caring for disadvantaged children, but both are important to society and neither should be ignored when decisions are made at the top.
3 Small businesses create jobs. If given the environment in which to flourish, for example access to finance and low taxes, many viable start-ups will soon grow and play their part in stamping out unemployment. At a time when we are witnessing record unemployment levels, it makes sense to help small businesses become growing businesses, by ensuring the support is there if they need it.
4 Innovation flourishes in smaller firms. As they aren’t as tied down by bureaucracy and hierarchy, most small firms tend to be more innovative than their larger counterparts. While creative people must be self-motivated, the coalition Government should do all it can to encourage investment in, and the development of, new ideas.
5 There’s no rest for the small business owner. Running a small business is like working on a never-ending election campaign. Particularly in the early stages, small business owners think about their work 24/7, and once they have pleased all the customers, negotiated with suppliers, and got all their books up to date, an early night is a rarity. Mark Prisk and his team should recognise the role played by these dedicated people, small business owners and employees alike, in keeping the UK economy going.
What essential lessons do you think Mark Prisk could learn while he’s making the tea?
Kate Horstead, business writer and member of the Start Up Donut team
I’ve got to be honest, I’m feeling pretty pleased with myself. You see the Horsley Network that three friends (Jonathan, Liz and Claire) and I set up was launched earlier this year and we had more than 30 guests on our first night.
Having been to plenty of more established groups that have struggled to break 15 guests, I think we can pat ourselves on the back for having marketed the event effectively.
So how did we do it?
We focused. I’m a huge believer in “niching” your offering, and this networking group was no different. We’ve set up the Horsley Business Network for business owners who live in Horsley, as well as people who run businesses in nearby villages in Surrey. By having that focus, there’s a stronger pull for people who actually engage with the group’s aims.
We created a plan. We thought carefully about the structure of the evenings and how much it would be fair to charge. And we were realistic about how much we needed to invest in marketing – which clearly paid off. Too many people try to start businesses up on pennies because they want to be earning money before they put anything in. Prudent perhaps, but I seriously believe we would not have received the response we did had I sent round some photocopied “Word Art” flyers.
We took design seriously. We got some great businesses at our first event. Why? Because our flyers and website didn’t look cobbled together, they looked like we meant business, like it was worth bothering to leave a warm house and set out on a cold night to share a beer or two with some interesting people. In fact, we took the design so seriously that a couple of people thought that this was a franchised operation (it’s not – it’s strictly not-for-profit).
We created some compelling copy that focused on the reader. We thought about what their aspirations might be and what objections we’d need to overcome. And we used testimonials to add conviction.
We promoted – hard! We arranged to distribute 5,000 flyers in the local area – a combination of asking local schools and shops and some serious pavement pounding. We also left flyers on notice boards and in village halls. And I set up an email distribution list that included some of my own contacts as well as asking others to forward it on so that it “went viral”.
We used online as well as offline media. We have a professional looking website and we Tweeted about it. Next time, we’ll probably use LinkedIn to also spread the word.
We thought about tipping points. It’s all about enticing the reader to get out of their armchair and into the pub. There’s one benefit right there. For others it was the beer, perhaps the promise of support from like-minded business owners or the fabulous speaker in the form of Karen Skidmore.
I had also set up an online survey in December to find out what people really wanted, which made it much easier to deliver what they wanted.
I can’t help thinking that if many small business owners marketed their own businesses as comprehensively as this, they would also find the outcome exceeded their expectations. But all too often it’s tempting to skimp on careful market research, professional design and effective copywriting in favour of saving money and channelling everything through social networking. What do you think?
Fiona Humberstone, Flourish design & marketing
Expenses are an unavoidable part of running a business. If you’re new to company ownership, you may be unsure what does and doesn’t constitute a business expense, and the best way to handle them. Hopefully, this brief guide will help you.
From a tax point of view, anything which benefits your business in terms of profit is an expense. This includes things like travelling to a client’s home from the office, or printing costs if you need to advertise in the local paper. This type of expense is tax-deductible, so you can disregard it from your total profits when declaring them to the tax man. Other costs, such as staff lunches or certain equipment, may not be tax-deductible but will still need to be monitored if your cashflow is to remain healthy.
Travel to and from work is not a tax deductible expense, unless the employee has to travel to a place of work they don’t usually go to. Travelling to and from places on company business is deductible, and you can claim 40p per mile if using your own car.
If you or your staff need to stay overnight in a hotel for business purposes, then you could claim this as a tax deductible expense – provided the costs are reasonable. Food, drink and accommodation are reasonable, claiming for a pub crawl around the local town is not. If it’s a place your company will use often, set up an account with the accommodation and have them send the bill directly to you.
The vital part of managing your expenses is to record everything. Receipts and invoices should all be kept, and ideally your costs should be tallied at the end of each working day so you know at a glance what you have spent. If you allow your employees to claim expenses, use claim forms which can then be filed alongside invoices. Business credit cards can make it somewhat easier than using expense claim forms, as the figures are all there on the statement, but you should only allow trusted staff to use these.
Keeping comprehensive records of all expenses (and any benefits your employees are given) is crucial as you will need them at the end of the tax year when filling in your P11D or P9D forms.
You may have your own ideas about the best way to record your daily expenses, but if not, you can’t go wrong with an Excel spreadsheet. You could either use a blank worksheet and build up from there, or search on the internet for a template – the Microsoft Office website holds many user-created templates for you to download and start using straight away. Excel allows you to set up calculation formulae which will keep a running total for you, making it much easier to see how your cashflow is doing on a daily, weekly or monthly basis.
It’s imperative that you have a separate bank account for any company money. Look for a bank which doesn’t charge high fees for business banking, and it’s a good idea to get an account with an optional overdraft in case of dire emergency. If you anticipate your expenses to be of a sizeable amount, you may wish to get a separate account for these, as a ‘petty cash’ account. It’s also a good idea to have an account with online facilities, which will make monitoring your expenses much easier.
Louise Tillotson is a financial author with Moneysupermarket, and has written a number of guides on finance in all areas from business to travel
I am sure we have all driven in fog. Near me, there is a notorious black spot. It’s often foggy, and when it is, it’s like pea soup. As I carefully pick my way along, I’m usually passed by a few nutters doing more than 70mph. There’ve got no chance if they come across anything solid. It’s a way of playing probabilities that doesn’t appeal to me.
I know quite a lot of entrepreneurs that have started their own businesses. The successful ones always seem to have a deep knowledge of the key numbers for their business. As soon as you are talking business, they start telling you their figures. But this isn’t boring, geeky stuff. The numbers at their finger tips are the ones that show if the business is starting to work. They’re usually about the cost of getting new customers and how many were recruited last week. Then they explain how profitable it is, and whether more money should be poured in, or plans changed.
Starting a business is hard. You have to be both driven and confident to succeed. But confidence must be tempered with the reality that we all make mistakes. We need to measure things all the time. That way we can correct those mistakes and make adjustments as soon as possible.
Entrepreneurs that do everything by gut instinct are missing a trick. Like the maniac drivers in the fog, they feel invincible. But unlike most of the drivers, the majority of them won’t survive, at least in business terms.
I have found that as an entrepreneur, it’s essential to recognise what I’m good at, my weaknesses and some gaps in my current business. I have really enjoyed reading Rachel Elnaugh’s comments to all three fishbowl businesses, because it really strikes a chord.
For example, her advice to Matt at Fishbowl 1 is about the cycles of a business, the ups and downs. She says “...feeling real joy for running your business - no matter what is happening – is the best way to keep your energy high and to stay positive”. I have no problem with this myself, not yet anyway, I do love Monday mornings- in fact, there are no Monday mornings for me, because I can’t remember the last Sunday I didn’t work, at least a few hours. It’s that endless motivation and passion and belief in what you are doing that will keep on going when the going is tough.
Rachel’s advice to me is about branding and brand execution, which I totally agree with. However, not a visual person myself at all, I need to work closely with people who are, and who have experience in branding. This is where the team player bit comes...
I have met two other people who have much more experience than me in running a business but we have very strong common goals. It’s, as one of them put it, when 1+1+1 can add up to 10. One of them is very strong on the supply chain, the other is a celebrity chef very much into Mexican food and understands the cuisine as well as I do. It sounds great, but trying to meet and make important decisions with two other people is so complicated and it can take such a long time. We are working on the branding at the moment, but the process is complex and I’m finding this stressful... Maybe I shouldn’t worry so much about keeping everyone happy, but it’s important that everyone is on board.
A recent report reveals the UK is less than half as neighbourly as it was three decades ago with 49% of Brits saying people know more about their favourite celebrity than they do about their neighbour. But neighbours can make for good business; Emma Jones suggests we get to know them and offers five business ideas that are plain perfect for the folks next door.
In releasing the report ‘Co-operative Streets’ Ed Mayo, Secretary General of Co-operatives UK, the organisation behind the research, said: 'We see our neighbours much less but we like them more!' If you faintly know, and like, your neighbours why not start a business that serves your local market. Here are five suggestions.
Community supported baking – form a baker’s dozen with neighbours to form a bread company that is owned by the community to service local needs. This model of community bread making is being championed by The Real Bread campaign which offers helpful information on how to get started.
Parcel collection – in the report mentioned above, one figure stood out. Over 30 million of us collect parcels on behalf of our neighbours. That’s a lot of parcels! With online retailers such as Asos.com wanting to be sure their customers receive deliveries (that are currently being missed on account of people being away at work during the day) why not create a local collection point and ask neighbours to pay a small holding fee.
Dog-walking – make canine friends by starting a business walking neighbours’ dogs when they’re away from home. That way, you earn money and stay fit and healthy.
Raring to Go! magazine franchise – if you’d rather buy in to someone else’s idea, there are a host of franchise opportunities based on selling to family, friends and neighbours. One of them is Raring to Go! a magazine that acts as a guide on where to go and what to do for families and parents in your area.
Telecoms – this one may seem a little extreme but it’s just what the residents of Rutland did when they couldn’t get the broadband speeds they wanted so decided to take matters in to their own hands, find the funds, start a company, and deploy their own broadband. Rutland Telecom was the result and the village of Lyddington can now boast having the fastest fibre-optic broadband in the UK for a rural village. Proof of what neighbours can do when they get together!