It isn’t just personal current account customers who can take advantage of the free Current Account Switch Service to swap between banks, because small businesses up and down the country can make the most of the service, too.
Launched by the banking industry in September 2014, the service ensures that existing payments such as direct debits or standing orders will be moved to the new account automatically, and any transactions that do go through to the old account will be redirected to the new one for 13 months, so payments won’t go missing.
The company making or taking the payment using the old account details will also get a message instructing them to update their records with the new account information. On top of that, the service is backed by a guarantee that means that if something should go wrong during a switch, any charges or interest will be refunded.
Until the service was brought in, changing from one account to another could be a lengthy process, typically taking between 18 and 30 days after the new account had been opened. That was a huge hurdle for cashflow-reliant small businesses, with worries about invoice payments ending up in the right account or suppliers not being paid according to terms, with the possibility of late payment charges being incurred.
But that time’s been reduced to seven working days from the day the switching process starts to when the switch takes place.
One of the drivers behind the Current Account Switch Service has been to increase competition between banks and make it much easier for small businesses to vote with their feet when it comes to picking the account that works best for them.
So, is it time for you to look at whether you’re getting a good deal with your business banking? Here are the things you should consider…
If your business is a limited company you must have a business account. If you are a sole trader or partnership, you could use your personal current account, but that can make your finances messy. Keeping personal and business accounts separate is the better option.
Some banks charge a fee for business banking services, some don’t. Other costs are transaction-based, such as fees for cash withdrawals, cheques, Bacs transfers and overseas payments. Think about what you need to use and check the charges for each service. Some providers offer free banking, either for a set time or with limits on the number of transactions per month. Look at the penalties for exceeding those limits, and any charges that kick in when the free banking period ends.
Costs can be quite high but will vary between banks. Check interest rates, set-up fees and the amount you can borrow this way.
Many business accounts come with these facilities, but ask to see if you’re eligible for a debit card – and a cheque book, if you need one – before changing to an account where you might not qualify.
With the new Current Account Switch Service you can change your provider again, quickly and easily.
Not as long as you repay any outstanding overdraft with your old bank or building society. If there are any problems with payments as part of the switching process, your new bank or building society will put them right and make sure your credit rating is not affected.
Before you can cut your costs you need to understand your finances. Up until now, you may have been just bundling your paperwork into an envelope and sending it off to your accountant, crossing your fingers that you're in profit. But, obviously, that’s not a great idea.
Use online bookkeeping software to enter and track your finances electronically in real-time. Once you're doing your bookkeeping online, you can then use a certified accountant to process your accounts quicker, directly from your online records. This way they don’t have to wade through a messy stack of paperwork, meaning their fees will be lower.
Every year I hunt around to see if there is a better car insurance deal available. There's no reason not to apply the same principle to everything your business spends its money on.
First, contact your suppliers’ competitors to see if they can offer you a better deal for the same goods or services. Then speak to your existing suppliers and try to negotiate a better deal from them using your conversations with their competitors as leverage. If no one budges on price, you've not lost anything by trying. On the other hand, the upside is that you could instantly increase your profit margin.
Hold off paying for office space for as long as you can. If your business doesn't need physical premises, you can operate in a virtual office from home instead, using mail and call forwarding services.
For meetings, join the 'cappuccino commerce' generation and use Wi-Fi connected coffee shops, or hire a room/desk space on a pay-as-you-go basis using drop-in business centres such as Regus. Or carry out an online search for a “virtual office" in your town to see what’s available.
If working from home isn't an option, look for local start-up hubs offering free communal workspaces. Once you have a few staff working remotely, the team can stay organised using Trello, a free online collaboration tool to help track tasks and plan project activities.
If you’re working from home, you can claim expenses that contribute to your utility bill costs and mortgage or rent. Paying yourself expenses for “use of home as an office” can reduce your tax bill. This article provides guidance on how to approach calculating your entitlement.
Avoid buying expensive things outright, because it ties up your working capital. Consider renting or leasing expensive items, such as a company vehicle, machinery, high-end camera and audio or video equipment.
With German Christmas markets a festive draw in city centres throughout Europe, ‘tis the season to eat bratwurst and browse for gifts. For the sixteenth year, the much-loved German Christmas markets have returned to Manchester, boasting an array of wonderful stalls run by small businesses from the North West city and beyond.
With more than 300 stalls in such proximity, competition is rife. The pressure is on to win over consumers and market traders have learned many valuable business lessons over the years. We spoke to three traders to find out what they believed were the most important business lessons they’ve learned from trading in such a competitive environment.
Phil Fowler owns a small local business called Popsters, which transforms old records into clocks and coasters. A labour of love for Phil, Popsters only trades face to face at the Manchester Markets, selling online throughout the rest of the year.
Phil believes that to catch the eye of potential customers you must bring unique products to the market. But while Popsters’ vinyl gifts are one-of-a-kind, he knows that having a one-off product on its own is not necessarily enough to seal the deal. “It’s tempting to think that because I’ve got a unique product, that’s all I need,” he says. “You can’t get my product anywhere else, but actually I’m still competing with everybody else who’s got a gift item to sell in the same price bracket.”
Another key lesson we learned from the Manchester traders is the importance of getting to know your customers. Standing in a customer-facing environment, seven days a week for five weeks solid means that traders get plenty of face-time with their customers. All three interviewees were unanimous about the importance of building good customer relationships and listening to their feedback.
Ken Jackson, from handmade gift specialists Timber Treasures, comments: “I think having a good relationship with customers is vital. Having a nice chat with them, keeping them happy – even if they’re not buying – you still need to try to maintain a good rapport with them.”
Similarly, Graham Kirkham, from Garstang-based cheesemakers Mrs Kirkham’s, advises: “Listen to what your customers are telling you, time and time again. Even if it’s criticism – don’t take it in a bad way.”
Listening to the customer is only half the battle. Acting on their feedback is imperative to success. Graham adds: “As a result of feedback, we’ve introduced more blue cheeses and more soft cheeses. Refresh your stall, refresh what you’re doing, keep it interesting and keep your customers interested.”
These traders spend a great deal of time vying for public attention in a crowded marketplace and the lessons they can teach us are pertinent no matter how big or established your business. Keep these three basic business principles in mind if you want to maintain a competitive edge and thrive in 2015.
Copyright © 2014 Aldermore Bank. Visit the Aldermore Bank blog to watch a video of festive interviews with the Christmas market traders in Manchester.
1 “It’s natural to see your competitors as the enemy. In reality, they’re not (ignorance and blindness-to-change are what you should really be watching out for). We’ve found that building relationships with our competitors has been invaluable in terms of support and knowledge sharing, while being fun, too.”
From The benefits of making friends with your competitors by Cartridgesave.co.uk
2 “If you believe that your target market is struggling and has no money to spend, you’ll easily be able to prove that to be correct. If you were to say to yourself that your target market is making more focused buying decisions, you’ll take a different approach to your next sales conversation. Whatever is true doesn’t matter. It’s the attitude and energy you take to it that will make the difference.”
From Are your beliefs holding your business back? by Sarah Lane.
3 “Look at companies such as Comet, Blockbusters and Jessops. I'm sure their business plans didn't include going into administration! Had they had a Success Plan, perhaps their futures may have been different.”
From Are start-up business plans a total waste of time? by Mark Williams.
4 “To run a successful team, a leader needs to be creative, logical, passionate and able to be compelling and articulate. However, you also need to recognise that you can’t do everything on your own, so you must get the right people around you.”
5 “I like to think that I am an ethical consumer. I shop locally (on foot or by public transport), I purchase Fairtrade goods and my mortgage and savings are with an ethical bank. I am not alone. Research has shown that demand for ethical goods and services grew 12% during the recent economic crisis, against mainstream growth of just 0.2%.”
From New research on SME and microbusiness ethical behaviour by Fiona Prior
6 “Remember: the ‘bitterness of low quality lasts longer than the sweetness of low price’. If you put up your prices, you will always lose some customers, but only those who have bought solely on price.”
From Should your business increase its prices? by Robert Moore.
7 “Entrepreneurs see things differently. They’re happy to stick to their guns when everyone else tells them they’re wrong. They’re prepared to go it alone. Often they can spot a gap in the market that others don’t see. They’re also prepared to put in a lot of extremely hard work and cope with failure, however hard that might be.”
From Are entrepreneurs born or made? by Marc Duke.
8 “Most businesses hit a ceiling because the way they began means further improvement and growth is too complex for them to handle and pursue. The business becomes trapped in the ‘Hindu Rate of Growth’ – around 3% each year – just enough to keep pace with inflation. To break through this ceiling, new systems need to be employed. What allowed many entrepreneurs to run a successful small business simply cannot support larger, more complex teams and issues.”
From Three reasons why you don't have a million pound business by Shweta Jhajharia.
9 “With just a £20,000 loan to start his first business, Sir Philip Green went on to take over the Arcadia Group and is now worth a staggering £3.88bn. Similarly, Mike Ashley used a £10,000 loan to start Sports Direct and is now worth £3.75bn, while Sir Richard Branson’s startup capital was a mere £300, which he used to start building an empire now worth £3.6bn.”
10 “A new report commissioned by the Information Economy Council argues that resources should be focused on helping ‘scale-ups’, because this could ‘contribute a million new jobs and an additional £1 trillion to UK economic growth by 2034.’”
From Should the focus be on ‘scale-ups’ rather than start-ups? by Mark Williams.
1 “Devise a simple ‘unexpected circumstances’ plan. Detail who does what, when and where, should things go awry. Prepare a temporary office in advance if there’s a risk you can’t get to your usual one. Make sure employees can work from home if necessary. Send your people home early if conditions worsen and be flexible if travelling is dangerous.”
From What to do if your business is affected by bad weather by Hannah Tonge.
2 “Sell something people want; make sure the difference between what you buy it for and what you sell it for is big enough; find a way to get people to buy from you. And, of course, make sure you collect all the money you are owed.”
From How to keep your business's head above water by Robert Craven.
3 “A well-engaged workforce will deliver increased productivity and performance. Remember that even the smallest gesture can make a big impact, such as enabling staff to leave early once targets have been met or even treating them to lunch. It’s up to you to motivate your workforce and prevent a dip in staff morale.”
From Top tips for boosting staff morale this winter by Helen Pedder.
4 “The right time for growth is when your business is in the middle of a successful period, with a few strong months just gone and a couple more forecast to follow. Be aware that expansion will eventually require additional resources, including labour, equipment, finances and more micro-management.”
From Why it pays to fund your own new business by John Bee.
5 “Don’t be afraid of mistakes. They’re a fact of life and with a bit of thought they can be easily managed. Accept that making mistakes need not be a bad thing. After all, in the words of legendary US basketball player and coach John Wooden: ‘If you’re not making mistakes, you’re not doing anything.’”
From What's the best way to handle your employees' mistakes? by Heather Foley.
6 “New businesses are a prime target for predatory salespeople. If you’re in the online space you can expect companies that host business directories, sell email data, run pay-per-click ad campaigns, etc, to contact you. Most of them will press really hard and rattle off impressive-sounding numbers, but these direct sales services rarely convert to sales.”
From Five key insights gained by a six-month-old online start-up by Pete McAllister.
7 “Over-thinking something often means that the ideas you come up with are forced and unrealistic. Watching an unchallenging film or TV show can allow your mind to switch down a gear and come up with something much less forced.”
From How to reach your 'light-bulb' moment by Paul Lees.
8 “Effective marketing is about taking someone on a journey from hearing about you to buying from you, and from there, to buying more and telling the world about you. Taking the time to understand how your buyers do this will always be a good investment.”
From The fundamentals of marketing explained for start-ups by Bryony Thomas.
9 “One in eight UK employees works more than 48 hours per week, while 54% of Britain's workforce regularly works through their lunch break. People who work long and unsociable hours could be doing themselves serious harm. Studies have shown that working 11 hours a day compared to eight increases your chances of developing heart disease by 67%.”
From Has Britain become a nation of workaholics? by Helen Pedder.
10 “Factually, right now, about 60% of the people in your sector are only doing OK and 20% are struggling. This means that by stepping up and standing out, you could be in the 15% that are doing very well and if you really excel – you could be in the 5% that are exceptionally successful.”
From How to be an exceptionally successful business by Anne Mulliner.
Thank you to our site sponsors for their support in 2014. Many thanks also to the experts who shared their knowledge to ensure this blog remains a popular source of information, advice and inspiration. A massive ‘Thank You’ to all our readers, of course. Whether you were thinking of starting up and wanted inspiration or started your own business in 2014 and needed advice, we hope you found what you were looking for. Happy Christmas – here's to a fantastic 2015…
When was the last time you were up at 3am? Big birthday bash? New baby? Box set? There are many life-affirming reasons to have your eyeballs open at silly o’clock. But slaving over your accounts or squinting at your Google Analytics dashboard aren’t among them. There are four classic mistakes that start-ups and small businesses often make. Here’s how you can avoid them:
There’s an unavoidable period where start-up owners have to wear all the hats: sales, marketing, finance, IT, operations. While it is possible to find joy in all these tasks (the thrill of a sell, the hum of a server, the glint of a spreadsheet anyone?) there are some you will always despise. But if you’re not careful you’ll end up doing everything forever. So cherry-pick the bits that give you a buzz and for everything else, use freelancers to get it off your desk and get it done. If you can’t face your accounts, your blog or your SEO, ship them off to someone who can. You get some sleep – or finish that box set.
If you’re trudging through your tax return or fiddling for hours with Photoshop, you’re definitely not making best use of your time and you’re probably not making a great job of it either. Don’t run your business doing lots of stuff averagely; do less stuff, but outstandingly. Build a network of fellow specialists and you’ve created a multi-skilled team without employing a single person. Find freelancers with the right skill set and experience, check out examples of their work and read independent reviews from other business owners. When you hire, set a fixed rate, for an agreed period, with clear deliverables.
Unless you live in a cave, you’ll know the two Truths of Domestic Existence: 1) you will one day, possibly quite soon, have need of a good plumber and 2) there is nothing harder to find than a good plumber. However – and here’s the point – you still wouldn’t hire a permanent one would you? Similarly in your business, you might have a recurring but unpredictable need for say, a proofreader, a salesperson or a website designer. Using online hiring platforms such as Elance or ODesk to hire an expert resource on a project-by-project basis – exactly when you need it – keeps your options open and your cash available. Even if business is flying at the moment, future demand is hard to foresee. Focus on what you need now and stay flexible for as long as you can.
What happens when you go on holiday or get ill? Do all gears grind to a halt? If so, you’re not running a business, you are a business. Diverting streams of repeat activity such as admin support or website maintenance through reliable freelance channels makes your business less vulnerable to disease, pestilence and man-flu. It also gives you a greater sense of progress: in addition to the furrow you’re ploughing, you have another production line. Most importantly however, placing tasks with others automatically promotes you to an executive position. That means you are reviewing, checking, approving and deciding everything, which is a lot less time-consuming and more important for your business than doing absolutely everything.
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