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So the coalition government set out its stall this week by outlining measures it believes will aid the UK’s five million or so small and medium-size enterprises (SMEs).
Hosting the launch event – loftily entitled the Summit for Small Business – Business Minister Mark Prisk said: “I entered government with the goal of making this the most entrepreneurial decade in our history and I'm confident today's announcements will make that a reality.” Big ambition. Bold claim.
All the major parties agree on the pivotal role SMEs are likely to play in reviving the UK economy. SMEs provide 60 per cent of the nation’s jobs and half of its GDP. And with so many public sector workers likely to lose their jobs, many will hope to find gainful employment in the private sector.
The government’s three main aims, as revealed at the Summit, are to: improve access to finance; make it easier for SMEs to win public sector contracts; and allow social tenants (ie someone who rents a property from a local council or housing association) to start their own home-based businesses (currently this isn’t allowed).
Despite the taxpayer bailouts and criticism from business groups, still too many small firms are met with refusal when seeking a bank loan or overdraft extension. Business Secretary Vince Cable has certainly been a vociferous critic of the banks in this regard.
The government says it is committed to ensuring a wide range of finance options for small businesses. The Enterprise Finance Guarantee (EFG) scheme will remain live for another four years. According to the government it will make “£2bn available to viable small companies [that lack] credit history or collateral. This will provide support to 6,000 SMEs a year.”
A further £200m will be committed to Enterprise Capital Funds, which will “support equity investments in the highest-growth potential businesses over four years.” The first of the new funds is expected to begin investing in early 2011.
The government will also work with banks in their response to the Business Finance Taskforce green paper, including the £1.5bn Business Growth Fund, mentoring and drawing up of a new lending code. Vince Cable said: “The government is doing its bit. The banks [must] play their part [by increasing] normal commercial lending to get the economy growing.”
Chancellor of the Exchequer George Osborne noted: “The private sector is also taking steps to provide a diverse range of finance options for businesses – a development which is welcomed by government.”
The government also wants to make sure SMEs are awarded at least one-quarter of public sector contracts, which will be welcome news for those eager to get a slice of a multi-billion pound pie. To speed up the process a standardised ‘Pre-Qualification Questionnaire’ (developed in co-operation with the Federation of Small Businesses) will be introduced in December. Designed to ease cashflow pressures, the government has committed to pay 80% of its prime contractors within five working days and these must pay their suppliers within 30 days (more good news for many small suppliers).
Cable, Osbourne, Prisk et al are not the first politicians to make speeches underlining the huge contribution SMEs make, as they quietly go about generating wealth and providing employment. Praise is one thing. Time will tell whether these latest measures are enough to have any a quantifiable positive effect on SMEs’ fortunes in the difficult few years yet to come.
Mark Williams, Start Up Donut editor
Growing a business isn’t easy, but experience has taught me that one of the keys to success is to set yourself apart from the rest. Thankfully, it doesn’t have to be expensive.
You want the product or service you sell to become a real hit among your target market, but do you really know who buys it? There are many factors to consider and these could change with emerging trends. It’s important you gain an understanding of who is buying and what the biggest driving forces are that make that someone choose you, your expertise, your brand, your product or service.
The internet is a low-cost billboard for you to showcase your business and perhaps sell your products and services, but the prospect of hiring a web designer can be daunting. Why not take a DIY approach? The good news is that a modern range of software is demystifying web design. There are simple, drag-and-drop visual web design programmes not a million miles away from an office word processor. Some packages boast even more potential, producing feature-rich websites without using any HTML coding. A professional-looking site can be produced and online in a matter of hours, even if you have no prior experience – and without a hefty bill for design and build.
Consider placing an advert in a targeted publication so you can be seen by the right people. Consider your budget – is radio or TV a possibility? How about adverts in mobile phone applications? If you need to keep your costs low, creating your own advert can still work wonders. Distil what you want to say and make it an attractive proposition. Decide what your brand values are and keep messages within brand guidelines. Focus on an easy-to-remember call to action.
Cut out the middle men by producing designs yourself and sending them straight to a professional printer. Some flexible design and publishing programs are ultra user-friendly. Templates offer a quick way to make polished materials and your designs can be shared in a professional, compatible format (eg PDF) for accurate printing in any pro print shop.
First, thoroughly check text for spelling and grammar mistakes. Use software to help, but remember to check for errors with the naked eye, too. There are proofing tools built into popular desktop publishing packages, design products and word processors, but they might not always pick up correctly-spelled words used in the wrong context.
When you decide to produce your own poster, advert or other marketing materials, remember that a clear message will have more impact. Don’t use graphical effects for the sake of it or use too many different fonts, sizes and weights, otherwise the design will look unprofessional. If you have a coloured area or image as a background, you might want it to go right up to the edge of your page, but headlines, text, logos and other important information should be places well inside the edge of your design. What is it you or your customers like about other advertising you consider to be effective? Bear these points in mind when you work on your own materials, whether editing a design template or creating a design from scratch.
Dale Cook, Serif
Finding a truly niche market is hard these days. With remarkably few barriers to entry, especially when considering internet retailing, there has been an exponential rise in competition.
Whether you’re selling ink cartridges (as I do) or cuddly toys, there will be companies out there offering the same products at a similar price. As such, a company’s attempts at differentiation now commonly focus on customer service and “going that extra mile”. And new printer technology can play a big role here, by creating good first impressions with your marketing literature.
As you all know, in addition to internal document printing, your business printer can be used for customer documents, ranging from invoices to promotional brochures. This is a crucial part of your service and poor quality documents with low-resolution prints or dull colours can really affect attitudes towards your business.
Historically, the options were to outsource such printing requirements to a professional printer, or to foot the bill for a (previously) very expensive colour laser.
However, many manufacturers are now following Oki and moving into LED printing technology for their colour laser machines, and start-ups with high volume printing requirements can cheer at this.
The benefits are many:
And best of all, their initial price (from £180) is accessible for any start-up. Plus, very little can go wrong with the machines, the quality is brilliant and the costs (both in consumables and maintenance) are affordable.
The only real weakness behind the technology is the limited horizontal resolution, as there are only so many LEDs you can physically fit in a row. For the vast majority of small businesses, however, this is not an issue, because it only becomes a problem where you’re doing a lot of image printing. And in that case it would be better to purchase a dedicated image printer anyway.
Perfecting the customer-facing side of your company is just one of the many factors a start-up has to get right to survive. LED printers are a great way to achieve affordable and professional quality printing, and thus immediately put your business level with the competition. And avoiding the need to outsource printing means costs can be kept to a minimum and forecast easily – a real bonus in the start-up world, where every penny counts.
Case studies are stories describing how a customer’s business has benefitted from using a product (or service). They can be in written, podcast (audio file) or video format.
Aside from actually talking to potential customers, case studies are a great way of showing off what you do well and getting your business noticed. They can be used on your website, newsletter or brochures, but I want to focus on using written case studies for public or press relations (PR) because getting coverage in places like websites, magazines and newspapers is a fantastic way to generate leads and build brand awareness.
Marketing case studies are often too ‘hard sell’ for putting in the media. Editors like a subtle approach with only one or two direct references to the product and the story tightly focused on the customer’s experience.
A good case study needs three basic elements: a business challenge faced; the solution found; and, most important, the benefits gained.
But you must also engage your readers and tell a story with a strong angle. Find something topical, like Polished Bliss who has flourished in the recession, or Stinkyink.com who overcame online fraud problems. Maybe combine a business interest with a human element, such as fulfilling a lifetime dream, or how a company overcame a major obstacle as The Cake Store did when it beat off competition from local supermarkets.
Having decided on your ideal customer and storyline, ask if the company is happy to co-operate – explain the mutual benefits, such as free publicity.
You can always hire a freelance copywriter, a PR specialist or journalist who knows your field. They may cost a few hundred pounds, but it’ll be money well spent. To find one, ask for recommendations at networking events or on social media sites – you’ll be inundated. Always ask for samples of a writer’s work, to check their style. Ensure that one rewrite is included in the fee. Not even an expert will get it right first time.
Once you’ve chosen a writer, give them a clear brief. Tell them the length/word count (typically 500-750 words); the product(s) you want promoted; and the benefits you want highlighted. Fix a deadline for the first draft and then introduce the writer to your customer personally. After that you can leave it to them to arrange the interview.
Of course, if you want to write it yourself, if you have the ability, it’s a great way to get to know your customers. Once written, get someone you trust to check it over, because we become blind to our own mistakes. Try not to be upset by any criticism; ask if the piece ‘reads well’ and makes your point.
Your target is the publication most relevant to your real audience: your customers and prospects.
Write a summary of your key points and email it to the editor. Only approach one publication at a time, to avoid being accepted in two places. You can try the story in more than one place, but only if you target titles in different sectors using different angles. Editors want “exclusive” stories.
Once accepted, you may be asked to shorten the piece to suit the space available.
Don’t forget to put your case study on your own website and refer to it in your customer communications. If you’re on Facebook or Twitter, post a link.
Now go out and find a satisfied customer – one who’s happy to talk about the benefits your product has given. Let me know how you get on.
Jane Lee from Dexterity is an independent PR consultant specialising in IT companies and small businesses.
Missed the third episode of The Apprentice? Catch up here.
Fortnum and Mason, Piccadilly. Lord Sugar, Karren Brady and Nick Hewer, stony-faced as ever, have called in the candidates to give them their next task — turning flour into serious dough. They have to make large amounts of bread and cakes, get orders from suppliers and also sell their wares on the streets of London. The team names are the same — Synergy and Apollo — but the players get shifted around so it’s no longer a competition between girls and boys.
It’s all about multi-tasking and while each team is good at some things, neither manages to get it all right. Getting it all right would be essential in the real world of course. There are three key components to the task — getting orders, making the baked goods and selling the remaining stock on the street. All this requires careful pricing and planning. So what happens? Synergy (headed by Melissa Cohen) secures limited orders but the team shines in the bakery where it manages to create an effective production line churning out bagels and croissants — arguably much easier when you have few orders. Apollo (lead by Shibby Robati) manages to pitch well — perhaps too well — and rashly promises to deliver 1900 units to a five star hotel.
So what goes wrong? Synergy is hopeless at pitching and has no idea what to charge. Given five minutes to think about their strategy by the hotel management, they take a full fifteen minutes and only secure a limited order when Alex steps in with prices at the last minute. Apollo, meanwhile, has given its baking team an impossible task. And sure enough, the next morning, they arrive at the hotel with only 16 — yes 16 — of the 1000 bread rolls ordered! The result? They have to pay the hotel compensation of £130.
Both teams end up selling just under £1000 of bread and cakes. But Apollo’s profits are hit by its compensation payment. So Shibby is in the firing line and he nominates Paloma and Sandeesh to take the flak too. But they can’t — or won’t — help him and this week it is Shibby who gets the chop. As ever, Lord Sugar also has words of warning for another candidate and it looks like Sandeesh is on borrowed time.
A couple of the candidates are clearly learning how to play the game. Joanna “gobshite” Riley and Stuart “everything I touch turns to sold” Baggshave radically toned down their attitudes and may last longer as a result.
“They sold cheap and it wasn’t a pretty sight really.” Nick Hewer watching Synergy giving away a box of muffins for a tenner.
Finding the right partner to help you start up your business more than doubles your chances of success.
First there’s resource. Your business will have more financial resources and a wider network of family and friends to help.
Then there are strengths and weaknesses. Very few of us have all of the talents needed to succeed in business. If you think this isn’t you, watch the X Factor for an object lesson in over-confidence in one’s own ability. With two people, you have a greater chance of covering all the things that matter.
Then, there’s morale. It’s hard to start a business, and with two there’s always one to cheer up and urge the other on.
Finally, growth is easier. The biggest first step in growth is usually recruiting your first employee. When there are two of you, the recruit only increases the wage bill by 50 per cent, which is much more manageable.
But there can be problems. Let me give you some real life examples. A friend of mine went into business with a partner and after several highly successful years, the relationship became strained to the point where both hated going to work.
My friend offered to buy out the partner, but with the relationship broken, the other party was uncooperative. Feeling desperate, my friend upped the price in an attempt to close the deal. Finally, all was agreed, but he had to put all of his assets on the line and take a loan from the other party. Unfortunately, the long period of wrangling had undermined the business. Unable to meet the loan repayments, my friend ended up losing everything – his job, his house and the business.
In another example, a different friend split from his business partner. The partner, again after much wrangling, took most of the existing business with an agreement to make payments on a percentage of sales. However, the business partner set up a subsidiary; made sales to the subsidiary at a highly discounted rate; then the subsidiary sold the products to the end customer. The result was the ex-partner effectively stole from my friend, although it was probably legal.
The problem with partners comes when you fall out. Of course, in the heat of enthusiastic start-up this seems a distant prospect, but it eventually happens in many cases. So I would offer two pieces of advice.
The first is to make sure your potential partner has integrity. If they don’t, were you to split, they will try to defraud you. I parted ways with my business partner. It wasn’t easy and it wasn’t a happy time. But because he had integrity, he didn’t try to “do me down”. In fact, despite the tensions, I still trust him.
A quick way to check if a potential partner has integrity is to ask them about the cleverest things they’ve done in business. If they boast about how they outsmarted (defrauded) other people, you can expect the same treatment if you ever seriously fall-out.
The second recommendation is to draft a “shotgun clause” between you. This allows, at any time, one partner to offer to buy out the other. The recipient of the offer can then choose to either sell or buy at that price, but they don’t have the right to refuse. This is a great way to get to a fair valuation of the business.
Despite the horror stories, partnership is still more than worth the risk. It’s better to have a problem sharing the pie, rather than have no pie, it just pays to take care. After all, you will probably spend more time with this person in the next few years then you will with your personal partner.