Small Business Advice | Banks join forces to lend to businesses

The British Banking Association (BBA) has announced plans to form a new taskforce in a bid to stimulate lending to UK businesses. The group, lead by Stephen Green, head of the BBA, has sent a letter to George Osbourne outlining plans to form a group to discuss how the banks can improve businesses’ access to funds. The group will also investigate what changes can be made to create a stronger financial market for business. To read the full story, visit the Growing Business website.

Small Business News | Surviving Public Sector Cuts

Real Business has recently published an article outlining how small and medium enterprises (SMEs) who supply to the public sector are able to protect themselves against the ever increasing public sector cuts.

Across the public sector, the government spends around £140bn on goods and £80bn on services annually. Although active discussions on price cuts are only being held with its 20 largest suppliers, it seems likely that this is to spread to the majority of suppliers including enterprising businesses and SMEs. Francis Maude, the Cabinet Office minister, has already been reported as saying that he expects public sector suppliers to cut their prices in order to help lower the public deficit.

However warnings are being made to smaller suppliers about ‘knee-jerk’ price cuts as there are concerns that it could be rather harmful to their overall profits. Suggestions have been made on how to come to a compromise over this situation. One such being to develop total cost of ownership tools to help evaluate the lifetime cost of the contract to the government, offering longer term contracts in exchange for lower annual costs.

To see all the survival tips and full article please visit the Real Business website.

Small Business Advice | Start-Up Tips for Young Entrepreneurs

Small Business Advice | Start-Up Tips for Young Entrepreneurs

With the UK’s Scouts Association announcing the launch of an ‘entrepreneurs’ badge, it seemed like an appropriate time to talk about the trials and tribulations involved in starting up a new business under the age of 21. The most notable recent young entrepreneur is Mark Zuckerburg, co-founder of Facebook. Zuckerberg set up his multimillion dollar business while at Havard University, and it would seem that the UK has the potential to launch similar talent into the business world; the recent BBC television series, Junior Apprentice was a serious showcase of the amazing, young entrepreneurs that reside on these shores.

It’s clear that there are numerous teenagers and young adults in the UK that have the potential to be successful business owners. Within this post I wanted to discuss the approach and obstacles that the next Alan Sugar is likely to come across when starting up a business. Firstly, the process of starting up a business is roughly the same for everyone, regardless of age. Below are four main areas that require consideration in the early stages of starting a business.

  • Idea: Every good business starts off with a good idea. This doesn’t need to be original as some of the best companies come from recycling an existing idea but doing it better
  • Research: Sound research provides the foundation for any successful business. This can range from market research to testing your idea against an existing company that is following a similar path
  • Name: Naming your business requires creativity and forethought. Not only does it help build your brand but it helps provide potential clients and customers with a first impression of what your company is about. However one areas of difficulty is avoiding issues of copyright infringement – using the same name as someone else – and also using words that require prior official permission otherwise known as sensitive words
  • Plan: Once you are confident that there is a gap in the market for your business, the next step is to make a structured plan.  A business plan is effectively a written document that describes your business, its objectives, its strategies, the market it is in and its financial forecasts. This is not just for personal use as it can help secure funding from a bank or private investor. In the future it can also help with measuring success within your business

Alongside the issues considered above, young entrepreneurs may face additional challenges because of their age, such as the legal and financial complications below:

  • Legal: From a legal point of view, anyone under 18 is classified as a ‘young person’ but this should not deter young people from starting their own businesses. However it may affect your ability to conduct some areas of business because as a minor one is legally unable to sign or be held to a contact. Therefore getting someone over the age of 18 to help you may solve this situation
  • Financial: Getting funding for your business may be the biggest hurdle to overcome. As a young adult you will tend to have little or no track record of borrowing money, and it is more than likely that you will have no assets i.e. house to use as security for a loan. Moreover, if you are under 18 even with the aforementioned, you will be ineligible for any form of loan. However, there are a number of funding and finance schemes available from private sources that can help you raise much needed funds. As a starting block, check out The Prince’s Trust, Community Development Finance Institutions and Shell LiveWIRE

 If you’re a budding entrepreneur looking to set up a business, I hope this post has been useful. While none of the above is a blue print for creating a business for young adults, I hope it provides you with some good resources and contacts for support in your adventure and highlights some potential pitfalls. The UK is a hotbed for small businesses, so don’t be afraid to take that initial step, you might just regret it if you don’t.

So if you’ve read this post and are considering starting a business, leave a comment below, I’d really love to hear from you.

All the best,

Gordon

Small Business News | Government to protect SME workers

The coalition government has launched a pilot scheme to try and crack down on the bosses of small and medium-sized enterprises (SME’s) who treat their staff poorly.

Alistair Darling, trade and industry secretary, has recently outlined government plans to protect vulnerable workers and reveal employers who fail to meet the minimum health and safety standards. In London and Manchester, two pilot schemes have been set up which will bring together industry gurus from unions, businesses, enforcement and advice bodies. The panels shall be working with an eye to strengthening enforcement procedures, secure fairer working conditions, give employees the chance to develop skills and ensure that bosses can understand and comply with UK employment law.

To read the article in full, please visit Business High Street.

Small Business News | SME’s plan own spending cuts

An article recently published by SME Web suggests that VAT increases and National Insurance measures could force a spending decrease and inhibit expansion for the UK’s small and medium enterprises.

The coalition government has been relying on a boom in the private sector in order to support the UK economy, particularly as large public sector cuts are implemented. However a study conducted by YouGov and Safestore reveals that with the increase in VAT from 17.5% to 20%, a third of UK small and medium enterprises believe that this rise will be detrimental to their business. A further 19% of SME’s say they plan to either freeze or lower salaries in order to survive new measures. When questioned about the NI measure, 31% did not believe that the raise would encourage expansion of their business. With over 12 million people employed by SME’s in the UK, this could strike quite a blow on both a personal and wider economical level. Moreover any negative effects from the VAT increase may affect small firms who will have to pass the increase on to their customers, unlike big businesses who can absorb the cost.

To read the full article, please visit SME Web

Small Business News | EC to help small businesses in Europe

An article in The Register has just announced that the European Commission has pledged €6.4bn for research investments across Europe for both academics and small businesses.

Following a ‘call for proposals’ later on today, an approximate 3,000 small businesses will end up benefitting out of a total 16,000 organisations. In order to qualify for the funds, organisations must meet the criteria working with economic and societal challenges: climate change, energy and food security, health and an ageing population. The hope is that provided funds will help kick start new businesses and create much needed jobs. €1.2bn will be allocated to technology and communications projects to support the Digital Agenda for Europe. Environmental research gets €205m and money for small and medium businesses must equal 35% of total spending – or €800m.

To read the full article, follow this link. Alternatively to read the official European Commission statement, go to the Europa website.

Small Business News | Are banks misleading small firms?

The Telegraph recently reported that ahead of a government led launch to improve the flow of finance to, Vince Cable has accused banks of misleading small firms.

Despite  Royal Bank of Scotland (RBS) and Lloyds Banking Group both stating that loan application approvals stand at more than 80%, Cable is convinced that the reality is something quite different. Latest statistics from the BBA show that banks lent £500m in May to small businesses but this was less than they collected in repaid debts and withdrawn overdrafts. Therefore aalternatives to bank debt are being examined alongside tax benefits which may encourage private investors to back fledgling companies. A mere 1-2% of UK small and medium enterprises use equity finance as an alternative to high street banks so the option of recreating 3i – a private equity group that provided equity and debt for small, growing businesses – looks like a promising solution.

To read in full please visit the Telegraph website