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Do your personal shopping habits affect your business

17-Aug-10

Shopping is an everyday activity which most people have experienced at some point in their lives. It is not uncommon for business people to shop for the business in the same way that they would shop for themselves. There are people who will only buy brand name items, there are others who will spend hours on end researching costs before they buy and then there are the people who spend impulsively or at the spur of the moment.

Business owners frequently have to shop for a variety of different items. It can be anything from stationery, raw materials, suppliers, new staff, business partners or investors. Whatever it is that they are looking for it will ultimately require a choice to be made. Ultimately these choices will be based on your personal preferences. The big question is – does your personal preference help or hinder your business?

The named brand only business.

You only buy designer or brand name items for your business. Your pencils and photocopying paper must have a name on them. All of your employees must be university graduates. In addition you only want to be seen as doing business with the right companies. The advantage is that your business may well have a number of high quality items and people. The disadvantage may well be the high price that you pay.

The bargain hunter business.

The bargain hunter only shops in the sales or in bargain shops. The ultimate goal is to pay as little as possible for whatever it is that they are intending to purchase. Frequently they pay their staff as little as is possible and have premises that are the cheapest option possible. The advantages may be a short term gain in cash. However, the products they buy may be of low quality and ultimately may need replacing quickly. Equally the staff that are hired may not be appropriately qualified or have the relevant experience that your business needs.

The money is no object business.

Generally these businesses are not thinking about designer objects or the price. They simply have an idea about what they are looking for or the type of people that they wish to employ. Their premises may not suit the needs of the business – but it is what they like. Money is no object and they are willing to pay whatever it takes to fulfil their desire.

There is no right way or wrong way to shop for your business. The starting point should always be your budget and what is affordable or a priority for the business. An element of balance and planning is always required for business shopping. There should always be enough money left in the account to ensure that the business remains viable and operational at all times. It is equally important to be mindful that items purchased for the business are the assets of the business and not personal assets. As such the needs preferences of the business should take priority.

 

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Pitching for investment

13-Aug-10

The Dragon’s Den television programme is based on business people pitching to the five would be investors for capital for their business. The added bonus is the network connections and the business know how that these investors bring to the table. Pitching for an investment should be a fairly straight forward process. Yet time and time again a number of businesses leave empty handed.

Below are some of the things that you should be considering if you are thinking about pitching for investment:

  • When you're approaching a lender for financial investment, they will need to feel confident that your business will succeed. Investors need feel that they will not lose money. It is great if they like you.......however their ultimate aim is to make money.
  • You should be able to demonstrate that your sales have been increasing on a month-on-month and year-on-year basis. You will need to demonstrate that there is a growing demand for your product or service. Remember that an initial increase in revenue does not mean that there will be an ongoing demand. In reality you will need to show that your revenue growth will increase over at least a five year period. You should be mindful that no investor is going to want to wait for more than five years before they see a return for their investment.
  • As you plot your company's future, it's important to understand your current market in terms of your customer base and your competitors. Once done this you will be able to develop a plan that will enable your business to grow and enjoy sustainable growth. If your market is limited, you will definitely need to have a plan as to how you will overcome this barrier.
  • A good strategy is to be able to demonstrate the endless potential of your product or service. That is if possible you should show how spin-off products or services can be developed from the initial product. As such a new market can be opened up. Many investors will be keen to understand any additional opportunities that exist.
  • It is also important to show that you have thought about the risks associated with your business. Where possible you should find a way of mitigating each risk. For example the risk of competition may be mitigated by having a patent for your products. Protecting you intellectual property can help to protect future revenues.
  • Last but not least .......know your figures. You will need to know how much it has cost to date to develop your product or service, marketing cost and what your gross profit will be. If you are unable to work it all out for yourself – why not ask Holden Associate for a helping hand? It is easy to underestimate the finances that you will need to develop your business. At Holden Associates we are not just accountants, we are also a business planning and support service. We can help you to develop your pitch showing that you clearly understand the financial side of your business.
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8 COMMONSENSE TIPS TO HELP WOULD BE ENTREPRENEURS START THEIR OWN BUSINESS

02-Aug-10

Before the recession it was not uncommon to hear individuals talking about their desire to run their own business. Or alternatively about an idea which they believed would earn them lots of money and make them rich. Having a good 9 to 5 job no longer seemed like the ideal aspiration. It really looked as though everyone had ambitions of running their own business. Since the recession it appears that the trend is in decline. Now it looks as though only the dedicated few that are still striving to be the master of their own destiny.

Below are 8 down to earth tips to assist would be entrepreneurs

  1. Choose a name carefully. What may seem like a catchy name now may well come back to haunt you. Remember that there are already an abundance of businesses already in existence. Hence you may have to choose two or three names before you find a name that is available.
  2. Find a co-pilot. The journey towards becoming established or securing business can be a lonely one. Sharing that journey with someone else brings with it numerous advantages that can help to start the business off on the right footing. ­­
  3. Location, location, location. May well be the mantra. However it is possible to start most businesses from a spare room or from a garage. Whenever possible you should always choose the cheapest place possible to start your business. Keep your outgoings low until you win business and your cash flow increases.
  4. Hire in expert help. There is no need to struggle alone. There is a wealth of experience available to assist in the starting of a business. There really is no need to struggle alone whatever help and assistance you require is available. Investing in your business is a step towards building your business.
  5. Prepare your one-line pitch: You need to be able to describe your business in one sentence. When talking to a potential investor your first line is the difference between them walking away or wanting to know more.
  6. Your customers are more than family and friends: When you start out it’s natural for family and friends to want to support you. Be warned however, that their custom will not be enough to sustain your business. Sooner or later you will need a different range of customers.
  7. Start measuring the things that matter: Focusing on the things which bring in revenue or add to the core value of your company are the things you need to pay attention to. Concentrating on the frills and niceties can come at a later stage of your business.
  8. Mentor or Coach? These are two very different roles, a mentor can be someone who has experience in your chosen field, someone to offer advice and to help you avoid pitfalls, whereas the coach will not have relevant industry experience but will be a trained individual who will coach you and bring out the best in you, many successful business people use coaches even though you may already consider them a success.

We all like the stories where entrepreneurs seem to make it over night. In reality the story is often one of long hours of hard work, endless multitasking and very little personal time. Be prepared for a long marathon rather than a quick sprint.

 

 

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Customer Retention

30-Jul-10

At times it may well seem like running a business is a 24-7 occupation. In that there are always numerous tasks to be done. However, one area of your business that may need additional attention is the customer retention side. Simply hoping that your customers will remain loyal to you........is not a strategy.

Having a customer retention strategy is just as important as having a business plan. Recent economic events have led to customers being more astute when choosing where to shop and what to buy. It is not that customers are trying to be difficult, or to play one competitor off against another. It is simply that in tough times every penny needs to count.

Customer Relationship Management

If customer loyalty is your objective then you will need a strategy to ensure that your customers either remain loyal or are willing to refer your products or services to other potential clients. It is likely that given the wealth of information available through the internet that most businesses will have a database comprising of a mixture of past, present and potential customers. Retaining this data is only one side of the coin. In one way or another data will need to be applied to the business in order to facilitate the process of customer retention. How this data is used will be pivotal in helping to build a customer centric business. It is important to be mindful that simply holding this data will not result in strong or ongoing relationships with customers.

Five tips to building a strong customer base

  1. Ingrain your customer retention strategy into the overall business plan. Whatever your business goal is the underlying question should be about how does any particular action you intend to take affect customer retention?
  2. Use online resources to identify the potential clients that visit your website on a frequent basis. Providing opportunities to engage with the business through a loyalty scheme will work to ensure you are in the forefront of customers’ minds.
  3. Dedicate some of your time to monitoring what is being posted about your business online. This will ensure that you do not miss the opportunity to react anything negative or to capitalise on positive posting.
  4. Identify which best practices of customer retention which can be applied to your business environment to enable your business base can be increased.
  5. Learn more about your customer base and use that knowledge to brand loyalty and increase revenue. That is take the time to understand why customers buy and when. Relying on a few clients as your main source of income is a recipe for failure!

As a business owner, you should always be marketing your services to build your client base. A sluggish economy is NO reason to slow down your efforts to promote your business.  Even if you are at your capacity, always be willing to take on small projects to keep your name out there.

 

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The benefits of being a small business

20-Jul-10

The popular media and the internet have both played a role in ensuring that many people are aware of or have some knowledge of many of the multinational corporations that operate on a global basis. Hence it may seem that there are advantages of having the lion’s share of business. As such it may well appear that there are numerous advantages of being a larger business. Consequently smaller companies may look as though they are significantly disadvantaged by virtue of their size. However, there may well be a hidden aspect of a small business that gives them distinct advantages and benefits over large multinational companies.

Good business planning and financial management can help a small business make the most of their strengths. The current climate of mergers, downsizing, and outsourcing has left many workers with uncertainty about their working future. Hence working for larger companies is not currently as attractive as it used to be. The loss of appeal has led to many prospective employees seeking employment elsewhere. As such the choice of employees for smaller businesses has improved.

So what are some of the advantages of a small business?

  • One key advantage of smaller businesses over large companies is their ability to commit to long-term innovation. Frequently many large multinational companies are driven by shareholders who have a narrow perspective on the long term future of the business. That is many shareholders want to maximise profits rather than invest for the future.
  • Small businesses are predominantly free from the constraints of operating on the stock market or having to consult numerous shareholders. Consequently small businesses are free of the constraints that go hand in hand with being a multinational company. Hence small businesses are largely able to react quicker to changing circumstances.
  • Conventional wisdom indicates that the key to success is to increase your share of the market. Which in turn implies that businesses require large numbers of customers? Catering for a larger number of customers could lead to overstocking and wasted resources. A smaller business has the advantages of being able to read changes in the marketplace sooner and more accurately. As such they are able to keep their stock at more cost efficient levels.
  • Generally, the larger the share of the market a company commands, the more remote it becomes from its customers. By contrast, in smaller firms the managers tend to remain closer to customers and more able to provide a tailored or individualised service. Owing to their size multinationals are unlikely to be able to offer a similar level of specialist service. Smaller businesses are better able to operate in a niche market that it would be impractical for bigger companies to compete in.

In spite of the challenges, the opportunities for small business have never been better. There is no need to spend time wishing for a bigger business. You simply need to evaluate the strengths of your business and play to them. The grass is not always on the other side.

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Limited Company Formations on the up

16-Jul-10

New businesses registered with Companies House numbered 362,300 in the year to March 2010, up 10 per cent on the year before, however, the previous two years showed a fall.

With hundreds of thousands of people losing their jobs since the banking crisis started it would now appear that we are seeing these people dusting themselves down and starting up their own businesses.

This is great news, starting your own business is a very brave step for anyone to take, never more so than now with such a tight squeeze by the banks on lending to small business and reports about that the ‘taxman’ is looking to increase the ‘tax take’.

The web is full of good and not so good advice to those starting up in business, but a few tips I would offer:

  • Think big, be small
  • Be aggressive, move fast, make your decisions count
  • Don’t let the naysayers get to you
  • Borrow from family and friends, forget the banks
  • Keep overheads to a minimum, if your spare bedroom will do use it forget about paying for office space
  • Use the internet to further your reach, where else can you operate 24 hours a day every day of the year
  • Engage the services of a mentor, someone who has done it before, someone with experience
  • Engage the services of a good commercially minded accountant, you may not like us but you will need one
  • Use the online solutions offered like Google apps or if you want more then look at winweb.com, this is apps on steroids
  • Join an online business community, although the advice is free it may not always be correct, but still worth joining as being on your own can be lonely

And most importantly, work ever hour there is, do not give up, remember you are doing this for you and no one else, but remember if you have a family they also need some of your time.

Good luck.

 

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When will you retire?

12-Jul-10

It is possible that some people may have to work for longer than they can imagine. The simple reason being that they do not have a pension or a means of supporting themselves once they retire. As such, what should be a pleasant journey into old age, may in fact be one that is fraught with financial difficulty.

The recent economic downturn may have led to pension contributions being put on a back burner. Needing to work for a few years longer than you had originally anticipated will be a strong likelihood if you do not have sufficient capital to support yourself once you have retired. Needless to say it is important to have a pension provision, as it is also likely that you will be living longer.

Lessons in saving for retirement pitfalls.

  • Lesson one in saving for retirement: Saving for retirement: this is probably the most important lesson - it is never too early to begin contributing to a personal pension the earlier that you begin making contributions, the more your money will have in the long-run. There are quite a few people who think that it is reasonable to start pension plans later, although they may be financially able to do so, it is not a truly efficient way of managing money. Pensions have compound interest and any interest that is added to a fund can itself earn interest, so the earlier contributions are started, the greater will be the compound interest, plus the contributions will not be so high because the person will be able to spread out their payments over a longer period of time.
  • Lesson two in saving for retirement: The highest priority should be given to pension contributions and other forms of retirement investment. Whenever you are constructing a financial budget, retirement must be factored into your outgoings to the same extent as other expenses such as mortgages and utility bills - a pension is a necessity not a luxury. It is easy to overlook retirement as a day-to-day expense, especially when it appears to be so far away in the distance. Failure to factor retirement into the everyday cost of living will cost dearly in the long run.
  • Lesson three in saving for retirement: considering the alternative options to retirement. Life can be unpredictable, and sometimes it does not travel along a straight line. If financial constraints have prevented you from saving for your retirement, then there are other options that can be considered. Such as taking a late retirement - continuing to make pension contributions is a sure way of improving your situation. Another alternative is to downsizing your property if you have one. 
  • Lesson four in saving for retirement: start working with your accountant and independent financial adviser to find a pension plan that is suitable for your circumstances and financial means. Your accountant will be able to help you work out the tax relief you will be entitled to thereby giving you a true cost of contributing towards a pension.
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Accountants – Holden Associates new telephone number

08-Jul-10

Please note our new telephone number is 0845 652 2350. We should be grateful if you would amend your records to this number as the old number will cease to work in the next few months.

 

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Downsizing for stability

05-Jul-10

There have been many recent reports in the media about different employers that are considering the option of downsizing their business in order to secure the long term viability of the business.

The process of downsizing a business normally focuses on the legal, economical and financial aspects of the business. It is bad enough to receive the news that a company is planning to downsize. Hence the business will have to go through a process of restructuring and change. It is a totally different ball game if you are the person that has to make most or all of the important decisions. Naturally the tough decisions about what to reduce, what to eliminate altogether and who to lay off are far from easy. Even so they are decisions that must be made.

The Process

The legal implications of downsizing are often difficult to work out, who should get what redundancy package and who or who does not have employment rights can be a minefield. The economic aspects of downsizing mean that some of the work that will be undertaken during the process falls within the remit of being management related tasks. Keeping your eye on the financial side of the business is an accounting task. Ultimately the bottom line resonates around what the business can or cannot afford financially. Needless to say it pays dividends to have a good set of financial records that can be referred to for guidance.

Who can help?

No doubt if you are the owner of the business then you may well find the whole process traumatising to say the least. It is difficult sometimes to separate the tasks in hand from the emotional side of the business. At times like this it pays enormously to have a good accountant to help and guide you through the process. Impartial advice, professional knowledge and moral support can go a long way towards - reducing some of the emotional and logistical barriers that may be encountered whilst going through the process. Additional support from a business planning adviser may help to prevent serious errors being made that may damage the sustainability of the business.

What are the alternatives?

One alternative to laying off staff may be to implement furloughs. Furloughs are mandatory time off work periods with no salary. Some employees may well prefer a period of time away from work with no salary – in the short term. Opposed to the long term effects of losing their jobs completely. This process is generally implemented by employers as a cost saving measure before thinking about the harder options of laying staff off. As with any other process there are advantages and disadvantages of using of furloughs. Other options may revolve around asking workers to either reduce their working hours or offer their labour on a voluntary basis for a fixed period of time.

Whatever you decide to do you will most certainly need a good strategy. You will need to find a strategy that will encompass good practice and give your business a new lease of life after downsizing.

Good luck.

 

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What does the Emergency Budget mean for a small or medium sized business?

24-Jun-10

The long awaited budget was finally announced on Tuesday by the new Chancellor. Most business people are not sure what the implications will be for the long term. The budget was certainly a mixture of taking the ‘bitter with the sweet’ in an effort to reduce the national deficit.

Tuesday’s budget announced a mixture of tax rises and impending cuts which will almost certainly have a knock on effect impact on how businesses are run and managed. Businesses which are dependent on public sector contracts will certainly not receive the news of impending public sector cuts with a smile.

The recent recession has seen many a business struggle to survive. As such more cuts may well mean a prolonged period of recession for some businesses. Both the FTSE and sterling fell on Tuesday...let us hope that this is not a sign of times to come.

So what are the implications for businesses?

VAT

VAT will be increased from 4 January 2011 to 20%. It is possible that the rise in VAT will lead to a rethinking of spending habits. There are no changes to items that were previously exempted from VAT.

Manufacturing allowances and reliefs

April 2012 will see a change in the Annual Investment Allowance which will be reduced to £25,000 a year. Capital allowances for plant and machinery will fall from 20 to 18%. Any assets held for longer periods will only receive an 8% allowance.

National Insurance

The planned rise in employers’ National Insurance Contributions (NICs) has now been scrapped. Alternatively the threshold for employers’ NICs will rise by £21 per week above inflation. Outside London, the South East and the East new businesses will receive a £5,000 exemption from NIC payments for their first 10 employees.

Capital Gains Tax

Capital Gains Tax will rise from 18 per cent to 28 per cent with immediate effect. However this will only affect people who pay tax at the higher rate. Entrepreneurs’ relief at 10 per cent will be extended from the first £2 million to the first £5 million of gains.

Corporation tax

Small businesses will benefit from a reduction in the Small Profits Rate of corporation tax from 21 per cent to 20 per cent. This applies to firms with profit not exceeding £300,000. The standard rate of corporation tax will be reduced to 27 per cent next year, with further 1 per cent reductions in each of the following three years.

On the face of it the budget has not been too detrimental for small and medium sized enterprises. There are definitely benefits which will be beneficial for businesses.

Much of the anxiety and worry is linked to the reduction in public services. In reality this could mean anything from reduced services, reduction in procurement or job losses. All of these will inevitably have a knock-on effect on how much the spending power of the individual.

As such many businesses may continue to see their clients spending less rather than more.

For our full Emergency Budget Report click here.

 

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