When setting up a business it pays to limit your start-up costs. It’s reassuring to know there are affordable options for start-ups. Here are five ways you might be able to minimise your start-up costs, while still hitting the ground running…
If your business is new, it’s unlikely you’ll be able to splash out on premium office space. Setting up a business from home has been made easier thanks to smart technology, super-fast broadband and the flexibility to work when you want. But when your four-year-old picks up the phone to your new client, it can end up costing you.
Entrepreneurs are now combining the flexibility of home working with the use of a local, managed workspace. This way they can benefit from a fully equipped office and meeting space as and when they need it.
When you first start out, you’re keen to follow any lead, and research we carried out suggests entrepreneurs would meet almost anywhere to secure a deal. When asked where the strangest places they’ve ever held a business meeting some of the weird and wonderful answers included the back of an ambulance, a navy warship and a cave! Coffee shops are a tempting meeting place, but negotiating while surrounded by talkative shoppers could prove tricky. Our research suggests 64% of business people would choose business centres over coffee shops when they need to be professional and productive.
When a prospective client contacts you, you must seize the opportunity. But important calls can come through to you when you’re queuing at the bank or boarding a plane. A ‘virtual’ receptionist is an independent contractor and more affordable than a member of staff. The receptionist, who’s often multilingual, will answer with your business name and can extend hours of availability so you never miss a business call again.
“Social media is to marketing as eye contact is to a handshake,” says social media guru Meg Fowler Tripp. Around 1.1bn people use Facebook every day and 200m go on Twitter, according to BuzzFeed. No new business owner would turn their nose up at free marketing, that’s why so many businesses now use social media channels to promote their products or services. But don’t ignore channels such Pinterest, Instagram and YouTube, particularly if your business has a visual aspect.
Even some of today’s most successful entrepreneurs, such James Caan (formerly of Dragons’ Den), didn’t start out in their own office space. He, like many other new business owners, opted for a virtual office, complete with a virtual address.
This affordable solution is increasingly popular among start-ups, home-based businesses and companies expanding into new regions. It eliminates the expense of renting while offering a business presence. Providing you with a local business address and phone number, it’s a convenient stepping-stone to a physical office.
By Anna Smith of serviced office provider Regus
“Global flexible workplace provider” Regus asked 26,000 people from 90 countries about their attitudes to meetings places. Some gave some pretty bizarre answers when asked for the strangest places they’d ever met a client…
New tax rules introduced in April 2013 allow sole traders (ie self-employed, unincorporated businesses) to use simpler rules for recording their business expenses. So what are they and how do they make life easier?
The first new rule is that sole traders can record their costs on what is called the ‘cash basis’, which means when they are paid. For almost all sole traders, this will not be very different from what they already do, even though previous rules stated that transactions should be recorded when they are incurred rather than paid (known as ‘accruals basis’). The subtle difference is when items are bought or sold on credit or paid for at a different time.
Under the new rules, instead of recording the actual costs and expenses incurred, a flat rate amount can be claimed for certain costs. You can claim these flat rate amounts regardless of whether you decide to cash account or not.
45p a mile for the first 10,000 miles and 25p a mile thereafter. If you use a motorcycle for business, you can claim 24p a mile.
If you elect to use this method you cannot claim any other motor costs.
Instead of claiming a portion of actual expenses you can claim the following amounts:
To use the cash accounting rules your yearly turnover in a year must not exceed the vat registration threshold. You must leave this scheme when your turnover exceeds twice the VAT registration threshold.
If you opt to use cash accounting there are a couple of pitfalls to be aware of:
You can find out more about the ‘cash basis’ and ‘simplified expenses’ schemes by visiting the Tax Donut.
The value of experience can be hard to judge. You only know for sure when you find yourself in a situation that demands it, and you perform – or not. The same goes for your staff. Will their lack of experience let them down? Or will their experience enable them to deliver in a tough situation?
When a challenge arises, staff with less experience tend to get bogged down in unimportant items and spread themselves too thinly, they don’t have the prior experience to just know what needs to be done and how.
Other symptoms of lack of experience include people coming into a situation with a belief that “the answer is X”, where X might be process mapping, improved accounting software or product line profitability, etc. It might well be that they are part of the solution, but a fixation with preconceived ideas is dangerous.
In many situations, you can work your way through. Experience is less important as you have time to consider your next move. It’s only in crisis situations, where there can be little margin for error, that experience is worth so much more than even its weight in gold.
Back in my auto industry days, I recall the words of the grizzled manager running the body assembly area, Derek Godsell. Talking about man-management skills, he said: “You need a good selection of tools in your box; you need to know how to use each of them; and you must know which one is for which job.”
I think it applies to many areas, though of course one can’t be expert in all of them. Bringing people into your team who have the relevant experience will strengthen your performance.
The challenge – with start-ups in particular – is often lack of resources. So fewer people (perhaps just you) have to cover many bases. Secondly, even if you want to recruit expertise, it can be hard to tell whether someone really has it. The truth is only revealed when that crunch moment arises and they’re put on the spot.
So what are the key benefits of experience? What I value most in experienced staff is:
For most people it’s inevitable that the older you get the more experience you have, so it really does pay to have older employees around you (preferably mixed in with younger ones).
Supplied by Hilary Briggs, a profitable growth expert with more than 15 years of industrial experience. For the past 10 years, she’s worked with SMEs to improve their profitability.
As an author of start-up books, I get very jaundiced when I start reading others. It’s professional jealousy and it’s childish. Most of these books (if not all) are better then mine, which reinforces my jealousy. I was prepared to be unimpressed by Entrepreneur Revolution – How to Develop Your Entrepreneurial Mindset and Start a Business That Works by Daniel Priestly, but after reading it I wasn’t.
The book is superb. Straight talking. Nothing complex about technology, social media or strategy, but some very simple home truths that are very difficult to argue against.
The book’s starting point is that the industrial revolution is over; the information technology revolution is about to be over; and we are entering the entrepreneur revolution. We are moving from hands and heads to hearts. The future is customer intimacy, delivered by entrepreneurs who deliver amazing value, love what they are doing and get paid for it.
New technology allows everyone to follow their passion, heart and dreams. And following your passion makes you able to compete against the “big boys”. It also allows you to be in charge of your own destiny without being controlled by “The Man”.
The key question here is whether you are a clinger (ie wasting your life, holding on to the industrial revolution-type of living, living in the past, etc) or a surfer (ie someone who follows the joy, opportunity and empowerment).
Daniel’s book introduces the term “Global Small Business”, because technology now enables you to go global overnight. And then he explains how:
Once you have that set up, you have to lean in, go for it with all your being and start building your reputation. And because you are enjoying yourself, the spark, the energy, the curiosity and passion will bring the rewards, one way or the other.
The icing on the cake is how Daniel gives you a business model that works. It’s called the Ascending Transaction Model and consists of a gift, a “quick-win product”, a core product and a logical next step. Each step has increasing revenue potential, with all steps having great emphasis on excellence, customer delight, client success and sales.
To quote directly from the book:
“Secretly, many small-business owners have a negative association to selling and they wish they could simply do extra marketing, extra servicing or extra networking rather than having to have the sales conversation.”
“Unfortunately, this is fantasy. Omega, Ferrari, Google, HSBC and Apple all invest in sales training so their staff know how to have structured sales conversations with prospective buyers.
“If the world’s biggest brands, with the world’s hottest products, need to have sales conversations, then so does every small business.”
Daniel leaves the best for last, by providing a few home truths:
This book gave me a jolt. It forced me to look at our business model, reinforced my belief in entrepreneurship and taught me a few new things – all the things you want from a good book.
In an age when it’s never been more important to differentiate a business from its competitors, it can be all too easy for entrepreneurs and new and growing businesses to become fixated on acquiring the sole lease to a flashy office in the heart of the trendiest part of town.
Instead of splashing out on a lavish frontage and focusing on the kudos of owning a highly sought-after commercial property, the most successful start-up owners are often the ones who find a happy medium between image and practicality.
For new businesses in London, for example, it can be a genuine challenge just to get a foothold on the ladder within their respective sectors, simply due to expensive lease rates within the capital and the general demand for commercial property in London.
So what are the main factors growing businesses should consider when selecting office space to move into?
Before you sign on the dotted line for a commercial property lease it’s wise to research the community around your premises’ location. Note the success rate of businesses nearby and pick the brains of fellow business owners to get their thoughts on the area.
Admittedly this is less important for digital/online firms, but retail and service-orientated businesses may wish to conduct some competitor analysis. If there’s a chance to secure attractive office space that provides a competitive edge, this can be the tipping point in an almost-saturated market.
Be aware that you may not be able to use all of the floor space on offer to you. Most floor plans include toilet and kitchen space in the total space available. For instance, if an agent informs you of an office with 6,000 sq ft of floor space, you are unlikely to have the full amount to play with – something to bear in mind if you have a growing workforce.
Also consider the actual shape of the floor plate. This is integral because it influences the number of desks you can fit into each room or floor. An odd-shaped floor plan will almost certainly increase the overall cost per employee per square foot.
If you’re searching for your first office space, you may be unaware that you’ll have to pay business rates. These are usually separate to rent and are payable directly to the local council as contributions to local authority services. The fee is usually between £3 and £10 per sq ft each year.
With firms keen to keep their overheads low, energy efficiency has become a buzzword in many entrepreneurial quarters. Following the 2011 Energy Act, landlords increasingly have to adapt premises with energy-saving lighting, insulation, double-glazing and much more. These features are a great opportunity to implement sustainable operations, save money and reduce energy usage simultaneously.
Written by Philip Hodgkinson, manager of Club Workspace, a fast-growing network of creative co-working business clubs in London.