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Facing hard facts on the route to success

December 10, 2010 by Chris Barling

When you start a business, you need to be a raging optimist. That’s because, frankly, it’s hard and many people don’t succeed. So to stand a chance, you really need to have a sunny view of the future.

However, you also need to be a realist. A friend of mine was working in a new start up. He asked me if I was interested in investing, so I took home a sample of his product. In the meantime, he had managed to place it with a couple of major high street chains. I tried it with my wife and daughter who were in the target market. Neither of them liked it, so I declined to invest.

The business in the meantime continued. A while later they were back to the drawing board, because the product hadn’t sold through the retail channel at all and had been dropped by the retailers. Fortunately they have now completely changed the offering and are doing okay, albeit on a much smaller scale. My friend is no longer involved.

Another business planned to sell a website monitoring service to small companies. After a few months of selling, it was clear there wasn’t much of a market. The management team changed direction and started selling to big corporate sites instead. This was a raging success and several years later they still have a razor focus on the same market. I was happy and this time invested in the company when they changed direction.

What are the lessons from these stories? It’s about realism and facing the facts. The lesson isn’t to chop and change, as the second company had to stay their new course for several years. However, the quicker you face difficult facts the better, particularly when it comes to customers.

The most important thing any start-up can do is to get some happy, paying customers. If the prospects won’t buy or don’t like the product after they do, don’t try to tell them how they’re wrong. Instead, change direction and provide something that they want. Then press on. A dose of realism is worth a ton of investment. In fact, having the money to continue backing a losing strategy can be the biggest disaster.

Chris Barling is Chairman of ecommerce software supplier SellerDeck

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Is HMRC failing to follow its own rules?

December 07, 2010 by Julian Shaw

After winning a case on behalf of a client in which HM Revenue & Customs (HMRC) was forced to back down and write-off more than £2,000 of previously demanded tax, Elaine Clark of CheapAccounting.co.uk has accused the tax office of not applying its own rules correctly.

“This is a terrible case. [The taxpayer] receives incapacity benefit as well as an NHS pension,” Elaine said. “HMRC was informed of the two sources of income by the Benefits Agency and the NHS, but did not act on the information provided.”

Elaine claimed under the provisions of Extra Statutory Concession A19. The full version of the concession is quite lengthy, but basically it says the tax office must waive tax owed in certain circumstances if it makes a mistake. You could claim if:

  • HMRC failed to act on information it had
  • that failure lead to a tax underpayment
  • it did not say how much was owed by the end of the tax year after the mistake was made 
  • it was reasonable for you to think everything was in order.

(If the tax office made more than one error, the time limit may not apply.)

If you have been sent a bill and you feel this applies to you, then you may wish to seek further advice. Alternatively, there are a number of draft letters available online. (Search for “Sample letter ESC A19”.)

HMRC correctly said it could not comment on individual cases and that the concession would in all likelihood apply only to a small number of cases.

The problem arises because our tax laws place the onus squarely with the individual. Basically, if your tax is wrong, it’s your fault – even if you were not aware of the situation or if the tax office made mistakes. This is clearly ludicrous, especially given the complexities of our tax laws.

Which is why we have ESC A19. It is an incredibly powerful clause – without it HMRC would be almost unaccountable. Six million people could be affected by recent mistakes by the tax office, through no fault of their own, so the usual rules should not apply. Television programmes such as Panorama and cases such as this have highlighted the problem.

Elaine is right – HMRC is failing to instigate the concession when it could do. It is an Extra Statutory Concession that is being debated, so surely it is not beyond HMRC’s remit to introduce a temporary measure – something as simple as sending out a slip inviting a claim, with space for the relevant details perhaps.

Ethically, this would be the right thing to do, but it would of course cost HMRC and by default the government. 

Julian Shaw, Founder of The Practice Hub

The Apprentice: Stella’s halo slips

December 07, 2010 by Rachel Miller

Missed the ninth episode? Catch up here.

The task

Another pre-dawn start and this time they are meeting in Tower 42 in the city of London. As the sun comes up over the London skyline, Lord Sugar rises up to meet them in a great glass elevator. So what has he got in store for them this week? It’s a treasure hunt — the treasure being an eclectic list of hard-to-find items — including Indian gold, chickens’ feet, white truffles, a four-foot length of kitchen worktop (rarer than you might think), a special length of tartan, an antique sewing machine and the Bluebook (a set of four handbooks teaching London cabbies “the knowledge”).

There are ten items in all. But the critical thing is not just to source the items but to buy them at the lowest price possible. Failure to buy incurs a fine of £50 plus the list price. This task has got Lord Sugar’s name all over it — it’s all about wheeling and dealing. He chops and changes the teams once more and this time, all the girls are in team Apollo while the three remaining boys are in Synergy. This week’s team leaders are Liz and Jamie.

The best bits

Once again, it’s fascinating to compare the different approaches. The girls are well-organised, taking a full two hours to phone around and source the items before they hit the road. The planning pays off and they get all the items on the list. The boys, meanwhile, are strong negotiators and get some of the items at incredibly low prices. It’s all thanks to Jamie’s inspired approach — to come up with stories to support their bargaining. A taxi driving brother, a Scottish wedding — there are no limits to the tales they can spin in a bid to get a bargain. The tall stories work — not because they are believed (they are not) but because the sellers have to offer a rock-bottom price to get shot of these strange people.

The worst bits

So both teams have strengths but who has the edge? Athough the girls look like a crack buying team and the boys are disorganised, the bottom line is price. While the girls enjoy the treasure hunt, the boys rightly see it as a bargain hunt and negotiate accordingly. The biggest disaster occurs when the girls go to a Knightsbridge restaurant to buy their truffles. Not only are they shopping in the worst possible place for a bargain, they get their maths all wrong and manage to pay twice the going rate.

The winners and losers

The girls lose. Everyone is shocked, especially the boys. Talk in the boardroom is all about Trufflegate. Laura and Stella were the ones who did the deal so they come in for a lot of flak. In fact Stella is really in the spotlight this week and not in a good way. All the girls accuse her of being a poor negotiator. Karren Brady says she’s too “corporate”. Perhaps what they really mean is that she is too full of herself. Suddenly, everyone is keen to bring her down and peg or two. But Lord Sugar acknowledges her past strengths and eventually tells Laura she is fired.

The ones to watch

Stella’s halo has well and truly slipped. Judging by the frosty atmosphere between her and Liz back at the house, the gloves are off between these two strong contenders. Joanna, though, is quietly looking like a possible winner. But the boys will have to lift their game if any of them want to stand a chance. Then again, as Stuart says, “even when we’re s**t, we win”!

Quote of the week

“We’ve negotiated well, we’ve got every single product, we’ve come back here feeling confident, everybody’s done a good job and I can’t wait to hear the results.” Laura Moore, shortly before she is fired.

Missed this episode? Watch it on BBC iPlayer.

The pros and cons of self-employment

December 06, 2010 by www.inafishbowl.com

This week has been very ‘up and down’ for me and my jewellery business, Mama Jewels, but it ended positively, which has made me better appreciate the flexibility self-employment offers.

At its low point this week, my young son was admitted to hospital with an infection in his foot after treading on a metal pin. Fortunately, my husband is on holiday so that made life a whole lot easier. Being self-employed also meant I was able drop everything and look after our baby and be at the hospital.

The upside of being self-employed is that you can just take that time off whenever you need to without anyone questioning what or how much time off you take. This is a huge plus for any parent with two small children.

The down side is nobody is paying you while you do this; nobody is standing in for the appointments missed and orders still need to be processed. I had quite a busy schedule set up for the past two days and I had to cancel or postpone most appointments, which only adds to my workload in the weeks to come.

This is something you need to be prepared for when you start your own business. It can be a world away from receiving a regular monthly income, paid holidays and sick pay, as well as having other people to step in and pick up your work in times of crisis.

Before I became self-employed I attended a six-week course run by Business Link. During the first session I realised the course was not going to tell me how to become self-employed or what I needed to do, instead it explored whether I was in the right situation or state of mind – was I really ready for such unpredictability. It was incredibly helpful and confirmed my readiness to start my business.

I was semi-prepared for the rollercoaster world of self-employment, because my parents ran their own business. As a child, I remember the early days when money was very tight, but later I also remember the fabulous foreign holidays and nice family cars.

I remember our financial advisor warning my husband and I, when I told him of my plans to start a business that we needed to be prepared to live on one salary, which is what we’re now doing. Don’t let this put you off, necessarily: I’m just sharing my thoughts, but it’s just worth thinking and planning for this when considering starting your own business.

Our online sales are up slightly on last week and I’ve secured another online stockist, who also has a retail shop, so it isn’t all bad news this week.

Amanda Waring, Mama Jewels

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

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Start-up lessons from the World Cup Bid failure

December 03, 2010 by Chris Barling

So England has lost the bid for the 2018 FIFA World Cup. As soon as the result was announced, someone on my company (SellerDeck) forum posted that they were really pleased. As a result of the failed bid, a new stadium and 2,500 houses wouldn’t be built a couple of miles from their front door.

It did get me to thinking about some of the lessons start-ups can learn from this whole tale of woe. Often what is a disaster for one person is a blessing for another, and things aren’t always what they seem.

Firstly, going for a big win is a dangerous strategy. Think of the bid team. There were years of work and further years of excitement. Then suddenly it’s all over and they are out of a job. It’s the same way if you focus on landing one big contract when you’re starting up. Generally, it’s best to aim lower first, then you can gather some momentum before finally going after the bigger fish.

While there will be howls for several months to come – and no doubt the FIFA voters can look forward to many years of entrapment and hassle from the British media – there’s probably a big lesson about messing in the political field. It’s certainly the case that some decisions in business are not made for rational reasons. It’s important that when you’re starting a business you ensure you understand the area you are targeting. If connections are critical and you haven’t got any – leave the field to others.

Sometimes the loser is the winner. Certainly for years, winning the Olympics was almost the kiss of death for a nation’s economy. In the same way, there will be contracts that we lose that turn out to be a blessing in disguise. It’s important that when we lose, we can pick ourselves up, quickly get over the disappointment and move on to better things. In fact, if you don’t have this kind of resilience, maybe you’re not cut out for starting a business. On the other hand, if you know that this is a feature of your character, then congratulations, you already have one of the critical success factors in place.

Chris Barling is Chairman of ecommerce software supplier SellerDeck

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