Optimism, Hard Work and Success in Business: Are the all related?

Optimism, Hard Work and Success in Business: Are the all related?

A great interview with a successful Entrepreneur, aims to inspire any one thinking about starting their own business. be sure to check it out.

Introduction


So you have decided to start your own business, you have this great idea, you have started your business plan and now you need to know what to legally define your company as, well here is a simple guide which will tell you about the possibilities and some of the pros and cons of each.

Choosing the right one is an important step so take your time over this and access your goals and ambitions and chose the one which will best suit your business.

Sole Trader


This is by far the easiest way to set up a business and it is the most popular for those starting out, below are some of the key features:

1. only one person runs and is legally responsible for the business
2. All you need to do is register with HMRC as self employed other than that no other registration is required
3. you trade in your own name for example, Sarah James or with a trading name such as Sarah James trading as My Business
4. you are taxed via the Self Assessment and you normally pay tax twice per annum.

Pros

1. You are only need to maintain a Profit and Loss and Balance Sheet so accounts are kept to the minimum and so are fairly straight forward.
2. very easy and quick to get up and running
3. All profit after tax is yours to keep.

Cons

1. you are personally liable for all the debts incurred
2. your personal assets are at risk, if your business fails your creditors can seize your property in settlement.

Partnership


This is the second most popular way of running a small business.

Features

• a minimum of 2 and a maximum of 20 partners
• Can operate under partnerships name or the partners name followed by trading as. But all correspondences must use name of all partners.
• Each partner must register with HMRC as self employed.Partnership agreement should be signed, to minimise problems in the future.

Pros

1. Very easy and quick to start.
2. Accounts can be simple if you maintain organised books.
3. responsibility for business debts is shared amongst partners.

Cons

1. you are personally liable for up to 100% of the partnership debts and creditors can chase you for this
2. your personal assets are at risk and can be seized by creditors to settle debts
3. When you sign a partnership or verbally agree a partnership, you must split the profits in the agreed proportions

Limited Company


This is one of the less popular methods for start up companies, mainly because the costs to set them up are much higher, however recent legislative changes mean that ltd companies with profits less that £10k have tax breaks mean that they are rising in popularity. They are usually done by established businesses and start-ups with high start up capital.

Features

• a separate legal entity in its own right and can sue and be sued
• owned by the shareholders
• set up via registration at Companies House - see link
• annual accounts have to be submitted without fail

Pros

1. Liability is limited by shareholders stake in the business
2. The company is an entity in itself and hence will not dissolve when the directors or shareholders die or leave.
3. Ltd companies are viewed in a more trustworthy light that sole traders and partnerships.

Cons

1. Large amount of paper to register company.
2. It has much higher costs associated with set up.
3. you can be fined for missing the annual returns

Do I need to write a business plan if I am not planning for bank loan or investment?

This is a questions that I am asked by many starting up a business and the simple and emphatic answer is YES. The fact that a bank or investing individual or institution is a secondary consideration.

Primary focus if the business plan.

The primary and most important role of writing the business plan is to guide and direct the business owner or manger in the operation of the business. Preparing and writing the plan focuses the writer consider all the possibilities and aspects associated with their business. It forces the writer to confront and come up with solutions to any problems which the plan may highlight. It helps you to think about yourself and where you have a deficit in a certain skill and allows you to focus on these and allows you to search for training opportunities or advisers to fill this gap.

A good video on what type of business plan would suit you, by Tim Berry:

Financial advantages of doing a business plan

A monthly comparison of all known costs over time, will indicate to you the necessary sales you need to accomplish in order to match these and a make a profit. It allows you to look at this figure and assess whether it is a reasonable number, if it's not then it can cast a doubt on the validity of the adventure itself. So it is not just a tool for getting an investment or working capital but it's a tool to give your business direction and assess the validity of your hypothesises.

The business plan is an important and working management tool, which allows the manager to anticipate and compensate for situations before they arise and prevent business emergencies.

Foresight and planning are a vital part of starting your own business, don't underestimate them. You can find more information on writing business plans for small business.

Happy New Year - Starting a new business: Business Ideas

Just thought I'd wish you all a very happy and hopefully a profitable New Year. If your New Years resolution is to start your new business then now is the time to act. I know that it can be a mine field of information and this information overload can lead to people giving up on their goals, but please don't. Starting a small business doesn't have to be complicated or stressful and doesn't have to take all that long. But you have to act or it will just stagnate and you will go off the idea.

So get up, and start working come up with that business idea, use brain storming, mind mapping or just jot think about:

• Online - You could start an online business, in e-bay selling, affiliate marketing, content writing etc. The only thing i will say is watch out for the scams there are many and don't sign upto every site you first find. One useful one i still use is Keyword Academy which is well worth looking at. Here is a useful video: 

•  Hobbies - you'd be amazed at how you can monetise your favourite things to do, if you are an incredible baker start up a cupcake company, if you're great at cross-stitch start a personalized cross stitch company, photography start doing head shots for actors.
• Writing - If you are passionate about writing, as I am, then you could start writing articles for content farms, you could use Elance, freelance etc. to get work from people, you could start writing a book.
• Skills - If you are very good at something i.e. leadership, communication, marketing then why not think about starting a consulting business, consulting medium companies and or groups or provide specialised training in these areas.
• Subjects - If you are an expert in a subject, maths, instrument, singing, science, languages then why not start a tutoring company
• Market Experience - If you have worked in retail or product development for many years, why not turn your hand and expertise to making money for yourself in the market you know best by setting up shop, plus you have the advantage of knowing the competitors well having worked for them.
• niche business ideas - This is where you start a business which could be a spin off from a main business idea, for example a child friendly restaurant which caters for kids needs over parents needs.

A good business idea will set you free.

So there are some ideas, use this new year, or if your not reading it then, now to get your business ideas on paper and start this new year with a bang. Once you have done this you are in a good position to make a good go of it. Wondering what to do next, there is a good business startup checklist at The Business Startup Hub which is really worth checking out.

Business Plan – You and Your Team

Introduction

Now you may be a one man band or you may already have 10 partners with different experience and expertise or you may already have a work force in place. The point is this is the section where you need to sell yourself and show what you bring to the business and how you are going to fill gaps in the experience. This section is important when it gets to getting funding, because people are not only investing in your business and the idea, but also in you as a person. So they need to be sure that you have the right skills and background to get this done.

Your Teams Skills

It needs to clearly lay out the skills you have in your management team and your staff, concentrate on the strengths in your team and show how you are going to deal with obvious weaknesses. Please note the word obvious, if you have no one with marketing experience and this is clear then yes discuss how you are sending the GM on a marketing course to fill this knowledge gap. But you don't want to discuss the GM's love of holidays and so he takes time off every 5 weeks. Only talk about what is glaring and what needs answering.

The Management Team

This can sell your business and get you that much needed investment so how do you do it! Explain who is involved, how they fit into your organisation. Include a C.V. For each key individual in the appendix and a paragraph on each person in this section. Concentrate on RELEVENT experience, skills and qualifications. Also include the greater support network, financial advisers, accountants, lawyers and specialist advisers.

In order to secure funding this section must prove to potential investors that you have the right mix of skills, determination, drive to make the business a success, with a keen focus on the business related aspects including operation and market experience, sales and marketing, financial and possibly man management these are just as important in market specific skills.

This section is where you show your commitment to this venture so give it your all, let your excitement, commitment and personality come through this will help you emotionally connect with investors.

The last thing you should discuss in this section is how much money will each individual draw from the business, this is very important for an investor as they use this to determine how much of a stake will be left. It is important to leave a substantial percentage for business development, especially in the first 3-5 years, this shows a long term commitment to this venture.

Your people

Give information regarding the size and demographics of your workforce, break them down by department if that is appropriate assign responsibilis and talk about any branch of the business which will be outsourced. If you are already established important stats include retention rates, productivity, average salaries and sales per employee if appropriate.

This section should also contain information about your recruitment and training processes, it should show a commitment to your people and should indicate time-scales and costs involved.

Be realistic about motivation and loyalty of your staff, we all know cold calling sales has a high turnover, but what investors want to see is how are you going to improve staff morale and improve commitment.

We will next be talking about the operation section of the business plan.

Markets and Competitors

After working through the previous two posts you have a clear vision and a direction, you know what products and you have some basic information regarding your customers and how you are going to get the products to them.


Now in this post we are going to help you define your market, your companies position in it and who your main competitors are. In order to do this you need to do some market research, there is some useful information here regarding doing your market research.


Once you have gathered all the information you will need to collate it all. You should have information on:

• Total size of the market
• Your main competitors and their share of the market (think local and national)
• history of the markets and the products
• your customers and their buying habits
• Product pricing and availability 

The main point of this section is to tell your reader that you know this market, you understand the trends within it and what drives it. You need to show that it is a growing market and how you are going to attract customers despite the competition.


I hear you say how am i meant to do this, well if you have been operating and or working in this market for a long time then it will feel natural and you will know this information naturally. If not then these are what you need to focus on to ensure that the readers get the level of detail they require:

1. your target customers - Who are they, what is their demographic information, including disposable income and spending habits, how you know they are interested in products and services you will be supplying. Why this group of people.
2. your competitors - who are they, how do they operate within the market, what is their main customer base, market share, it's good to perform a SWOT analysis on each competitor as well as yourself.
3. the future - Expected changes to the market, focus on how you and your main competitors will react and use this section to show how you are innovative and understand the trends and what drives the market and how you can fill a gap in that market.

I will be writing further posts on market research and competitors at a later date so please take a look at those to help with this section. But for now check out this article on Market Research

An important note to finish on is that markets, competitors and customers are not static entities they change and are very fluid by showing contingencies and other scenarios you are showing the reader you understand this and it adds a layer of trust and believability to this section of your plan.

Next up we'll be looking at you and your team and how this can be a big part of making your business a good investment prospect. As usual any questions  please feel free to ask.

Your business, products and services

With this post we are going to focus on your business and what is going to make you unique and stand out from the sea of competitors offering similar products and services.

You have written your Vision Statement using the previous information. We will now use this and expand upon it to build a clear picture of what your business will be, your target customers and what you will be offering them. This is all information that others are going to want if they are to provide funds or investments.


Now for this section you want to start out by giving an overview of your business, focus on:

• The date you started trading or proposed start date.
• Any investment or projected investments to date.
• The type of business and the sector that it is in.
• History of the company, including if applicable, previous owners, franchise information, previous successes
• The legal status (e.g. sole trader, partnership, LLP, LTD) here is a good link for information about these
• Your vision for the future.

With all of this you will have given investors, banks, partners, angels the information they need to look further at your plan.

Following on from this you are going to discuss your products and or services. An important point to keep in mind is that the person reading your plan may not know anything about the industry, market or products you are offering, so it is vital to keep jargon and acronyms down to a minimum.

You need to consider and write about the following:

• Describe your products and services as simply and clearly as possible.
• What makes it different from similar products.
• What benefits does this have for both your customer and your business.
• Why will customers buy from you rather than competitors.
• the key features and success factors in the industry you will be operating within.
• How you plan to develop you products and services to ensure you are current
• Any patents or trademarks you currently have

In order to do this accurately you are going to have to have started looking at your competitors and there products, customer bases, look into the size of the current market and what market shares the main companies have. This will help you with this and the next section.

You know your products and customers and so you can read this and fully understand it, to ensure that a person with no industry knowledge can understand it, give it to a friend or family member to read over and ensure that they understand the information within.

Information within here will help give your business shape and ensure that you know who you are targeting and what you have to offer them that makes you stand out from the rest.

Next time we will look at the markets and competitors section of your plan.