Small Business News | Boom in small businesses but with a legal sting in the tail

According to the Federation of Small Businesses (FSB) a record number of people will become self-employed this year. However there are concerns that the taxman may wish to turn your status from self-employed to employed, therefore putting you into the PAYE bucket.

 With the UK facing high unemployment, the FSB is expecting a boom in people going it alone this year with a record 300,000 people looking to become their own boss. According to the article this will not only help grow the economy but could in turn create more jobs as these small businesses flourish. However, the FSB is concerned that those that do become self-employed are penalised by the taxman if they take on other part-time or temporary work for another company. If so, there is a chance that the taxman will want to put you into the PAYE bucket and turn your legal status from self-employed to that of an employee. Therefore the FSB is calling on the HMRC to respect the declaration of self-employment, accepting the individual as just that unless a material change takes place.

 To read more on this issue, please visit the Federation of Small Businesses.

Small Business Advice | Protecting the force

I run a specialist clothing company, Rig Equipment Ltd , for people working in dangerous environments, such as air ambulance crews, paramedics and specialist units in the police. It actually started out as a hobby business back in 1994 when I was still working for the police, but when I retired I’d put in so much work to the business, I decided to start running it full time.

Paramedics in Action

In my experience, turning a hobby business into a full time occupation has been proved to be a great decision. However, making the move from a career in a specialist unit within the police to MD of a small clothing manufacturing company has also brought with it its fair share of interesting challenges.  So, although I would always encourage other budding entrepreneurs to do the same, I wanted to share with you some of my own thoughts on things to consider before you make the move; so that your hobby business translates into a full time success:

Be clear on your business idea and the reasons why you are setting up a business. If, like me, you started the business as a hobby then you already know you enjoy all that it involves and making the jump to full time will be a natural progression.  I’d suggest starting with the basics. Research your business idea and see who is already offering your proposed product or service; research their strengths and weaknesses, is there a gap in the market? Consider how you plan to finance your start-up and which people do you need on board to help you get set up? I’m sure you won’t forget that you need a name for your business, but you’ll also need to register it too.

Be honest about your skills. Identify your strengths and weaknesses. If you are a fantastic sales person but lousy on finance then seek advice and get help. There were obvious gaps in my own CV. I lacked a background in sales and my previous experience of running a business was limited. On the other hand, having worked within the specialist circles, I really understood the product and the end-user which was a huge advantage. Other suppliers to the police, although good at manufacturing, didn’t really understand what the product was supposed to do, whereas my insight enabled me to provide the best product on the market.

Take advice. On everything. There’s so many blogs, websites, forums and organisations available that can offer practical advice on starting a business, there’s no need to go it alone.  Some of the things you might want to consider seeking advice on are how to structure your business – should it be a sole trader, partnership or limited company – to finance and auditing, HR policy and even finding a suitable premises. I personally found some of these resources to be invaluable.

If you require funding, make sure your business plan and financial projections are well thought out. There are a number of options you can look at to get funding, from banks or private investors to government agencies, so do your research. Personally, I found a lot of my help came from government agencies. For example, when we came to designing our product and getting it CE tested and the European Standard ISO, we had a strict budget in order to remain competitive. The Manufacturing Advisory Service were able to offer us half of the total cost in funding as well as offering what would probably have cost approximately two thousand euros of advice, for free. Likewise, Advantage West Midlands assigned me with my own mentor to help me through the early stages of the business which made a world of difference, especially when it came to helping me build up confidence around my weaker skills such as sales. Input like this was invaluable.

I hope some of my own experience can help you make the move too!

Good luck!

Ray

Small Business News | Empires built on free code aren’t cheap

The Register has recently claimed that whilst starting up a business is still fairly cheap, the price paid for success is far more expensive.

A reduction in hardware and software costs certainly do suggest that it’s a ‘great time to be an entrepreneur’ as declared by Joe Kraus five years ago. Nonetheless lower start-up costs seem to have had little or no effect on venture capitalists as recent data from the National Venture Capital Association reveals that average investments are similar to levels since 2007. Furthermore the cost of scaling a company may have actually gone up. Customising open-source software and creating data centres – an action recently taken by Facebook – is not cheap. Such facts suggest that things like capital intensity and scale only privilege the minority, leading to market concentration and in cloud computing. Of course the cheaper alternative is to outsource your data centre, but companies such as Facebook are hardly going to trust third parties with such a wealth of information. So whilst it may be cheap to start-up a business, beware, because it is still highly expensive to scale one.

To read the full article please visit The Register website.

Small Business News | Number of business failures drops

Recent reports released by Equifax show an overall drop in the amount of business failures since 2009. There was a 19.1% year on year drop for Quarter 2 2010 compared to Quarter 2 2009 and a 7% drop for Quarter 2 compared to Quarter 1 2010. However rates are still not down to the pre-recession levels of 2008. 

The report highlights how businesses have been tightening their control on cash flows and costs but also the great regional disparity that seems to exist between those business managing to keep their heads above the water, and others that are not quite so lucky. Scotland was revealed to be the best performer with a 31.9% drop in failures whereas the East and South East of England only dropped by 2 to 3%. Another point highlighted in the article was the difference between industry sectors with Transport, Communication and Manufacturing industries fairing far better than the Services sector who actually experienced an increase of 1.3% of business failure.

The overall tone of the article was that despite the seemingly positive results, businesses should be careful not to take their eye off the ball. It seems we are not out of the woods quite yet.  To read the full article please visit Business Matters website.

Small Business Advice | Starting a Business – Checklist

Starting a business can be a very complex and time consuming process. Fellow small business website, Smarta, offers advice on how to set up a business step-by-step. The article goes on to answer some of the pressing questions soon-to-be business owners need to ask. For the full story, please visit Smarta.com

• How do I research my business idea?
• Writing a business plan
• How can I finance my business?
• Prepare: business training, skills and support
• Getting the right people on board
• Naming your business
• Registering your business
• Set up a website
• Getting suppliers and distributors on board
• Get the nitty-gritty right

Small Business Opinion | The power of positive thinking

It’s not just the weather that appears to be improving at the moment. If you believe the chatter, then the expectations for recovery are looking up and there are plenty of new opportunities for entrepreneurs willing to give things a go.

While it would be foolish to think we’re out of the choppy waters as far as economic recovery is concerned, the wise among us know that times such as these are ripe for new and innovative approaches and that more often than not; it is the SME market which can take a lead in this.

Free from the overheads and micro-management of some of the bigger corporations, SMEs and individual owners tend to be more bullish in their approach to market, something that can reap dividends for those who are prepared to gamble and go for it.

Indeed, figures from a recent Regus Business Tracker study back this up, pointing out that companies with fewer than 50 employees tend to think in this way.

Of course, being smaller means businesses are more nimble and able to adapt to changing market conditions and this is another reason why those of us running SMEs should be looking positively forward. Sure, you may not have the capital lying around that you’d like to play with, but that smaller headcount and lack of crippling rent to pay on office space can be the difference in your attitude to getting things done. Free from the confines that such pressures can place upon them, many great entrepreneurs I know just get on and do things without procrastinating.

That positive mindset makes a BIG difference as to how you sell yourself and your business to potential customers, whether it be in person, online or over the phone. You’d be surprised at how many people can instantly pick up on this and it can often be the difference between closing a deal and having something blow-out.

Stand up and walk tall, enthuse about your product and tell people about the difference you can make to them. Identify your unique selling points (USPs) and make sure you get them across. Oh and that bit about standing up wasn’t a joke either. Any good salesman will tell you that their ability to sell improves ten-fold when on their feet whilst pitching. Most will also tell you that the glass is always half full…

The key thing is to remain focused on what you want to achieve and avoid being sidetracked, especially when starting out. Outsource or get help with things that are not your business, like accounting or web development and concentrate on your core competencies. Oh and remember that your entire marketing strategy should flow from your USPs. Customers want to feel loved and need to know that you can make a difference.

Small Business News | OFT to review barriers to new banking entrants

The Office of Fair Trading is set to undertake a review of barriers to entry, expansion and exit in the retail banking sector according to Money Marketing magazine.

The review will look at obstacles that are holding back new entrants and preventing smaller banks from expanding. This includes:
• Regulatory requirements, including obtaining authorisation from the FSA and capital and liquidity requirements
• Access to payment systems and availability of credit risk information
• Barriers to achieving scale such as developing branch networks and customer inertia
• Barriers to exit and aspects of the operation of the Special Resolution Regime

For the full article, visit the Money Marketing website.