case studies start up uk

8/14/2019 Case Studies Start Up UK

1/46

Case studies from businesslink.gov.uk

Heres how

my businessI started up


2/46

Business Link thanks the businessesfeatured in this book for their expertise,time and cooperation, as well as: theChartered Institute of Marketing,Companies House, Craneld Schoolof Management, the Department ofTrade and Industry, the EnvironmentAgency, the Health and SafetyExecutive, HM Revenue & Customs,the Information Commissioner, theNational Computing Centre, the PatentOfce and UK Trade and Investment.

Every reasonable effort has beenmade to ensure that the informationin this book is accurate, but noresponsibility can be accepted for anyerrors or omissions, or changes inthe circumstances of the businessesdescribed.

Because of its general nature theinformation in this book cannot betaken as comprehensive and shouldnever be used as a substitute for legalor professional advice. We cannotguarantee that the information appliesto the individual circumstances ofyour business. You should considerseeking the advice of independentadvisers, and should always checkyour decisions against your normalbusiness methods and best practice in

your eld of business. August 2005.

Department of Trade and Industrywww.dti.gov.uk

Crown Copyright.DTI/PUB URN /05/1542

Starting up4 Heres how I decided I was

ready to start up my businessPaul KruzyckiAles By Mail

6 Heres how having an up-to-date business plan helped my businessDarren JonesAKC Home Support services

8 Heres how I chose the namefor my businessNick Jenkins

Moonpig

10 Heres how I set up a businesswhen I was 23Marc DaySwapGame.com Limited

12 Heres how I established aneffective record-keepingsystem

Michelle De BruyneAmHealthy

12 Heres how I control my stockAndrea JonesSystems (Telecoms) Limited

Finance and grants16 Heres how I found a business

angel to invest in my businessRichard Palmerd3o

18 Heres how I applied for a grantMichael SekullaPinocchio Toys

Taxes, returnsand pay roll20 Heres how I chose the

right legal structure for my businessJohn KerrKerr Print and Stationery

22 Heres how I set up a payrollsystem for my business

Rebecca AlfandaryActive Designs

Are you starting up a business, or thinking about doing so? If youve ever wished you could tapinto what others learned about starting up, this book is for you. It brings together 21 of thebest case studies on the Business Link website. Each one features a real business owner ormanager, speaking in their own words, about how they made a success of the starting-up process.

SETTING UP A MANUALPAYROLL SYSTEM WASSOMETHING ID WORRIEDABOUT AND PUT OFFRebecca Alfandry

NO ONE QUESTIONEDMY AGE BECAUSE ICAME ACROSS IN APROFESSIONAL MANNERMarc Day

10 22


3/46

Heres how I startedmy business

24 Heres how the tax authoritieshelped me start my businessRachel JonesGreat Circle CommunicationsLimited

Employing people26 Heres how I recruited

directors with different andcomplementary skillsDenis HodgeStrata Systems Ltd

28 Heres how I complied with theData Protection Act 1998

Susan MooreSTC Consortium Limited

Health, safety, premises30 Heres how we decided renting

premises was best for ourbusinessStewart WhiteWhites Cleaning Services

Exploit your ideas32 Heres how I registered and

used my patentHeather KitchingThe Reuzip Partnership

IT and e-commerce34 Heres how my rst IT system

helped me set up my businessBill OBrienVetatech

36 Heres how I chose andmanaged my IT supplier

Rebecca Cadman-JonesKC Jones Conference & Events

Sales and marketing38 Heres how I identied and

reached the right sales targetsGareth EdwardsGEM Merchandising

40 Heres how I got my great newproduct in front of customersSam TateSprue Aegis plc

International trade42 Heres how I made the decision

to exportKeith TridgellSFM Technology Ltd

Buy or sell a business44 Heres how I selected and

bought my franchise

Stephen HalpinBoots Opticians

ARMED WITH A LISTOF CONTACTS, WE SPENTMONTHS PUTTING TOGETHERAN EXPORT PLANKeith Tridgell

OUR FIRST PRODUCTDEVELOPMENT DIRECTORWAS SOMEONE ID WORKEDWITH PREVIOUSLYDenis Hodge

I TALKED TO A BUSINESSLINK ADVISER WHO HELPEDUS SELECT THE HARDWARETHAT WE NEEDEDRebecca Cadman-Jones

4226 36


4/46

PAULS TOP TIPS

Really understand what you are giving up by leaving a job such as paidholiday, company car and so on.

Find information wherever you can, especially on the Internet. Be organised and methodical in your paperwork.

Heres how I decided I wasready to start up my businessPaul Kruzycki discovered an entrepreneurial streak while running a not-for-protcharity convention and he decided to set up his own venture. When he did, a cautious

approach to the launch of his real-ale mail-order company, Ales By Mail , provedimportant in giving the business a sound start.

Take the opportunity to work part-time to provide anancial buffer

My research showed that Ales by Mail couldnt payme a salary at rst so I decided I needed to save atleast six months living expenses. Then an opportunityto work as a property consultant came up.

I now do that two days a week and spend two dayson Ales by Mail. On the fth and sixth days I work onwhatever needs doing most urgently.

Im building the business on a tight budget and amgoing for slow growth. My consultancy work allows me

to take this approach.

Consider domestic circumstancesI spent 18 months preparing to start the business.There were things that needed to be resolved before

I gave up my job. Forexample, I needed to waituntil my house had beenrefurbished so that I couldwork from home.

Ive had a lot of supportfrom my wife. Knowing I cango to my family after a bad

What I didResearch the business proposition fully

I continued working full time as a building surveyorwhile I developed my business plan, built contactsand got my idea to a stage where I felt I could get it offthe ground. I wanted to prove fully to myself that thebusiness could work.

I also knew that if I wanted to get nance to helpme start up I would need to answer some toughquestions such as who are your customers, wherewill you advertise and so on.

I spent a lot of time talking to people in the industryand nding information on websites - seeing howother people were doing things, at what level and howdifferently.

Starting up


5/46

I SPENT 18 MONTHS PREPARING TOSTART. THERE WERE THINGS THATNEEDED TO BE RESOLVED BEFOREI GAVE UP MY JOB. FOR EXAMPLE, INEEDED TO WAIT UNTIL MY HOUSEHAD BEEN REFURBISHED SO THATI COULD WORK FROM HOMEday and receive that support helps me rememberthat the decision I made was the right one.

What Id do differently Think about the impact of routine paperworkBefore starting up Id nd out more about the

organisational aspects of running a business. Iunderestimated the amount of time needed to dealwith tax matters, chase up clients and do all the otherbits of paperwork.

Find out more:Are you ready to start up?businesslink.gov.uk/readytostart

5


6/46

Heres how having an

up-to-date business planhelped my businessDarren Jones launched his care business, AKC Home Support Services , in 1991with his wife Sharron. Although writing their business plan was one of the rst things

the couple did, Darren admits he originally saw it as a bit of a chore. Now, he takes a

different view, believing it has helped the business stay on track and true to its goals.

What I didWrite the planWhen we started the rm I knew we needed abusiness plan but saw it more as a document foreveryone else than something to help us. If I startedanother business tomorrow I would write one muchmore willingly as it brings a number of benets - from

helping you secure nance to keeping you focused onyour goals.

We got help from our local enterprise centre,looked at examples from other businesses and atemplate from the bank. We mixed and matched bitsfrom these sources because not everything applied tous. For example, because we were going into a newmarket we couldnt write about our competitors butneeded a lot of information about the market for care

services.

Consult the planWe used our business plan to set out the nancialand strategic goals we wanted to achieve in the short

and long-term. We review it annually now unlesstheres a signicant shift in our market and then weuse it to immediately re-evaluate our goals.

Our business plan has also helped us to avoidexpanding too quickly. Early on, we were offered workin another county. This seemed great but when welooked at our business plan and particularly our

cashow forecasts - we realised it was importantto establish a rm base in one county before takingon work in another otherwise we would overstretchourselves.

Use the planWe purchased a residential unit four years ago andour business plan denitely helped us demonstratewhy the bank should lend us the money. Without it

being put down on paper I dont think it would havesounded like a very viable suggestion.

The home added a different dimension to thebusiness in which we had no trading record sothe bank lent us the money according to our past

performance. We could alsoshow that we would offset someof the cost by using part of thenew building as ofce space.

Our plan also helped us to getsupport from Shell LiveWire -the organisation that assists 16-30 year olds to start and develop

DARRENS TOP TIPS

Make sure your business plan reects your personal vision dont justput things in because you think its what someone else wants to read.

Be objective. It is important to weigh up the pros and cons. Get assistance whenever you can.

Starting up


7/46

businesses - as you must have a business plan toenter its competitions. We were awarded prizes twice- not only bringing in extra money but publicity too.

What Id do differently Work on the plans presentationI would have tried to get more assistance andperhaps made the document look a bit moreprofessional. Its your way of gaining support for your

business and is the one thing that your bank managerwill remember apart from how you were dressed.

Get as much help and advice as possibleShow the plan to an independent third party - such asfriends or family who have run their own businesses- who will be able to point out if anything is missing. Itsmuch better to make mistakes on a practice run thanwhen it really matters.

WE PURCHASED A RESIDENTIALUNIT FOUR YEARS AGO AND OURBUSINESS PLAN DEFINITELYHELPED US DEMONSTRATEWHY THE BANK SHOULD LENDUS THE MONEY

Find out more:Prepare a business planbusinesslink.gov.uk/businessplan

7


8/46

Heres how I chose thename for my businessManaging director Nick Jenkins founded Moonpig , a London-based companyselling personalised greeting cards over the Internet, in 1999. It has grown at the rate

of 50 per cent a year and the business now turns over 1.2 million.

What I didConsider how a name could work as a memorablebrandI wanted business to spread by word-of-mouthso it was important my companys name was bothcatchy and memorable. I decided it had to be onlytwo syllables so that people wouldnt forget it, and

phonetic so that they wouldnt misspell it. Moonpig isfun and cheeky. Most of our cards are humour basedand Moonpig encapsulates that.

The name also had to be easily represented ingraphical format. Once youve seen our logo younever forget it. I commissioned a cartoonist to designthe moonpig. The whole branding exercise cost200 and three days work, but it has been far moreeffective than we could ever have expected.

Ensure the name is available on the InternetControl of a domain name was very important for us. Tocheck what was available, I sat on Nominet for four daysplugging in variations of names. I originally came up withlots of different names red-dog, green-carrot, thatsort of thing but they were all already taken.

Moonpig was actually my nickname at school. It

was available as both a .com and a .co.uk whichwas also an important consideration.

Moonpig is a completely unique word. The onlyreferences to it on Google are links to our website.

Trademark the nameHaving the .com and .co.uk gave the nameMoonpig some protection against copiers but wethought people might also try other permutations

of Moonpig to capitalise on oursuccess. It wasnt that expensive togo for trademarking and it gave thename an extra layer of protection.

I employed a trademarkattorney and Moonpig is now atrade mark in the UK and the US.

Its such a small insurancepremium. In a customer-facingbrand I think its critical as thebrand name is the thing thatcustomers really recognise.

NICKS TOP TIPS

Keep your name short and simple if youre a consumer-facingcompany.

Dont box yourself in. The real thought should go into your tradingname. Your corporate name should be bland and give you room formanoeuvre into other activities.

Make sure you secure the domain name for your trading name.Even if youre not selling over the net, people will be reassured tosee a professional-looking website if they are checking out thesolidity of the business.

Starting up


9/46

What Id do differently Start out with a general, bland registered-companynameAlthough we continue to trade under the nameMoonpig, we changed our name at CompaniesHouse to Altergraphics Limited in 2002, when wereceived venture-capital investment. The newinvestors seemed reluctant to write out a cheque withthe word Moonpig in it.

It might have been easier if wed started out withAltergraphics as our company name anyway.

Moonpig pigeonholes us as funky and humorouswhich is great as a trading name for our currentwebsite, but having Altergraphics as a corporatename gives us the exibility to develop other brandsunder different trading names in the future.

IT WAS IMPORTANT THAT MYCOMPANYS NAME WAS BOTHCATCHY AND MEMORABLE.I DECIDED IT HAD TO BE ONLY TWOSYLLABLES SO THAT PEOPLEWOULDNT FORGET IT

Find out more:Choose the right name for your businessbusinesslink.gov.uk/choosename

9


10/46

Starting up

Heres how I set up a businesswhen I was 23Marc Day founded SwapGame.com Limited , an Internet-based, games-rentalsubscription service, two years after graduating. A professional attitude and

thorough research has helped him nance and build his business, which is set to

achieve a turnover of 500,000 in its third year.

What I didTake time for thorough researchAfter I left university I took on admin-type jobs justto get by. During this time I did lots of research intomy business idea. I also carried out eld research,questioning people coming out of video games shops.I got as many facts and gures together as I could and

found out all the costs involved before I approachedanybody for money.

It took about 16 months. I wanted to go into themarket as quickly as possible, but I knew I needed tocover every angle before I did. I knew people werentgoing to throw money at me and that theyd want toknow all the details. Besides, it was important I knewthat the business was going to be viable too.

Explore all funding possibilitiesWhen I was rst looking for start-up capital Iapproached private investors and venture capitalcompanies, but they all wanted to see moreexperienced management in the company. It was a

difcult situation because I didnt have the money tobring that experience on board. The feedback wasalways that I had a great idea, but theyd like to see mestart the company and how it went rst. It was veryfrustrating.

But I plugged away and eventually I got themoney through loans personal and family ones.

Importantly, I also secured a 30,000 bank loan. Thebank was apprehensive, but I was able to use myparents property as security and I made my fatherchairman of the company, which gave the bank morecondence. My father was experienced in businessand I used him as a sounding board anyway.

Two years later I wanted to raise working capitalfor expansion, so I used the DTIs Small Firms LoanGuarantee scheme. Age wasnt a factor at all. It was

my track record that counted, the partnerships Idmade and my growth strategy. We got 100,000 andcan go back for another 150,000 if we reach certaintargets.

Show condenceA lot of my contact withpeople when I started wasover the telephone and nobodyquestioned my age becauseI came over in a professionalmanner, knew what I wastalking about and wasnt

MARCS TOP TIPS

Get as many facts and gures together as early as possible to backup your ideas.

Find a mentor you can ask for advice and run new ideas past. Keep plugging away even when you come up against obstacles.

0


11/46

frightened of negotiating with people. I think thatmakes a big difference.

What Id do differently Scrutinise my business plan regularlyI nalised my business plan when I got my nanceand though I kept gures in my mind that I had toachieve I didnt look at the plan again properly until Ientered the Shell Livewire competition. It was then, a

year after starting up, that I discovered how high mypackaging costs were and how that was impacting

the business on a daily basis.I managed to trim those costs down by about 40

per cent and it really affected protability. If Id lookedat my business plan after, say, six months, I couldhave made the business leaner much sooner.

NO ONE QUESTIONED MY AGEBECAUSE ICAME ACROSS IN APROFESSIONAL MANNER, KNEWWHAT I WAS TALKING ABOUT ANDWASNT FRIGHTENED OFNEGOTIATING WITH PEOPLE

Find out more:Starting a business when you are youngbusinesslink.gov.uk/businessyoung

11


12/46

Heres how I establishedan effective record-keepingsystemMichelle De Bruyne used an accountant to set up her limited company, AmHealthy ,which markets a herbal nutrition programme. However, she decided to do her own

bookkeeping. Good organisation, she says, has helped her track the progress of her

business as well as look after her customers.

What I didDevise a ling systemIts very easy in this business to know what payments

are coming in because customers often purchase acomplete one-month nutrition programme. Its thesmall costs, like local advertising and postage that areharder to keep track of. There are lots of small receipts.

I put all my receipts into appropriately labelledplastic sleeves in a lever arch folder thats alsodivided on a month-by-month basis. If somethingis paid for by cash the receipt goes into the cashsleeve, if by bank account into the bank-account

sleeve and if by credit card, into that sleeve. Everytime I get a receipt I make a decision about whichfolder it goes into. Also, if the receipt doesnt statewhat was purchased, I immediately write on it whatit was for.

In fact, all paperwork to do with the business

is kept in an ordered ling system. Its especiallyimportant as the business is a limited company and Iknow the obligations that brings.

Separate business from domestic expensesBecause I run my business from home there areoften mixed expenses. For example I might havebought one item for the business alongside all myfood for the week. All those expenses add up too, so Itag the business items on the receipt with a tick andthat then goes into the relevant sleeve too.

Use a computer and back up data regularlyOur bank gave us an accounting package whenwe opened our business account and that hasproved very helpful. It allows for categories such asmarketing, administration, telecoms and stationery,so I can enter the relevant gures from the led

receipts directly into the relevant category.It really helps me keep track of how muchIm spending, on postage for example.I keep customer-order records on thesystem too. Its such a prompt for meto know whos buying what and when.Its important marketing information.

MICHELLES TOP TIPS

Track everything. Even small amounts of spending add up. Develop a system you can work with. Keep a routine for doing your records and dont let it slip.

Starting up

2


13/46

I back up the computer records at least once amonth.

What Id do differently Think about a system before I started upI was very disordered when I rst started. NowI le receipts as I get them and when I receive

statements I use that as a prompt to enter data onto our accounting system and to reconcile things.Developing a routine has been very helpful. An earlyinvestment in les and computer software does paydividends later.

OUR BANK GAVE US AN ACCOUNTINGPACKAGE WHEN WE OPENED OURBUSINESS ACCOUNT AND THAT HASPROVED VERY HELPFUL. I CAN ENTERTHE RELEVANT FIGURES FROM THEFILED RECEIPTS DIRECTLY

Find out more:Set up a basic record-keeping systembusinesslink.gov.uk/recordkeeping

13


14/46

Heres how I controlmy stockAndrea Jones is managing director of Liversedge-based Systems (Telecoms)Limited , a business specialising in the next-day delivery of refurbishedtelecommunications equipment.

What I didInvest in a computerised systemWe bought our computer system with its accounting

software, Sage Line 100, when we were turning over500,000 a year. It cost a lot of money but I got it on ave-year lease and I only paid 50 a week. I couldnthave got anybody to do the stock work for 50 a week.

I chose this system because I wanted somethingthat integrated all my accounting functions - my stockcontrol, my buying basically, to have everythingunder one roof, as it were. And, importantly, I wantedbarcoding. I did a lot of phoning around software

companies before making my choice.As an item comes in it gets barcoded and then its

logged on to the system under a purchase order withthe serial number, stock code and product details. Theproduct then goes to our test room for refurbishing.

ANDREAS TOP TIPS

Keep plenty of stock so you dont disappoint customers. Know exactly where different stock items are located. Use barcoding as a way to track items through processes.

The system can tell you whether any item hasbeen tested or not and exactly where its located in thewarehouse.

Hold enough equipment to full customer ordersFor the refurbished products side of my business

theres no such thing as having too much stock. Wecant ask people to wait a week if they want somethingso I buy anything that comes up for sale if its cheapenough and I know it will move. I wouldnt buy stuff ifthere was no demand for it but that doesnt happen. Iknow my market very well.

We sell new installation products too and we re-stockthat on a demand-led basis. We set minimum andmaximum stock levels on the Sage system and when thestock hits the minimum level the screen lights up tellingme to reorder. But I prefer to print a report on stock levels

every Friday. That tells me what were low onand I always top up to the maximum level.

Reorder consumables only whennecessaryWe use lots of paper, lever arch les, pensand ink cartridges. Everything is kept onbookshelves and I can see instantly whats

Starting up

4


15/46

in and what were running low on. I do a stationeryorder every couple of weeks or so - though I try to timeit with when there are special offers in the stationerycatalogue I use.

What Id do differently Install a computer connection from work to myhome earlier than I didWhen I get home I can click on two buttons and Imbasically sitting in my ofce. This means I can keep aneye on my stock at all times and I do a lot of bidding forproducts from home, for example on eBay. I can alsocomplete purchase orders from home.

Find out more:Stock control and inventorybusinesslink.gov.uk/stockcontrol

AS AN ITEM COMES IN IT GETSBARCODED AND THEN ITSLOGGED ON TO THE SYSTEMUNDER A PURCHASE ORDERWITH THE SERIAL NUMBER,STOCK CODE AND PRODUCTDETAILS. THE PRODUCT THENGOES TO OUR TEST ROOM FORREFURBISHING

15


16/46

Finance and grants

Heres how I found a businessangel to invest in my businessLondon-based design consultancy Designblue patented d3o, an innovative shock-absorption material, and wanted to start manufacturing and selling the product. But

founder Richard Palmer needed nance so he could fully exploit the opportunity.Heres how he did it.

What I didExamine the business needsWe developed our product, d3o, to a stage where ithad great potential as a highly lucrative technology.However, we needed to get additional nance intothe business to manufacture, sell and promote the

product. In identifying our preferred funding routewe thought carefully about our priorities, such asthe amount of funding we required, any security wemay need to provide and the amount of day-to-dayinvolvement investors would require. Business angelstend not to require security, and having decided thatwe needed a substantial investment without havingto cede too much day-to-day control, we decided thatbusiness-angel funding was ideal for our business.

Rene our business plans presentationWe had already prepared a business plan, but werefined it by including sections detailing how thebusiness-angel finance would develop the business and

what involvement potential investors might have. Wealso spent time on the plans presentation - ensuringit was focused and professional - to demonstrate ourcommitment. This stage was vital; a tailored businessplan clarifies what the benefits of the investment are forboth parties and specifically what the funds will be used

for - and what they will achieve.

Secure the fundsArmed with our business plan we contacted theBritish Business Angels Association who introducedus to several business angels. As a small but growingbusiness our choice of angel was based largely onthe sort of practical assistance they were offering.We then pitched our proposal to a shortlist of

investors and tried to show them the benets of theirinvolvement - both for them and for us.

One investor - David Richards - decided to investafter our rst meeting with him. To secure thefunds we negotiated issues such as our respective

responsibilities and growthtargets. Finally, our legaladviser helped to negotiate theinvestment terms, such as ournancial forecasts, which helpedour investor complete hisdue-diligence checks and agreethe deal.

RICHARDS TOP TIPS

Be prepared to demonstrate how the investment will boostyour business.

Be realistic - youll have to justify any claims in your business plan. Think long-term - it will save you time later.

6


17/46

What Id do differently View investment as an ongoing processWhen I was initially pitching for investment, I wastrying too hard to make the business cash-positivein one single stage. Had I appreciated that thebusiness would develop and grow in value so quickly,

I would have outlined my longer-term investmentrequirements more strategically.

Allocate more time to the projectIt takes a long time to secure any form of nance andits no different in the case of business angel nance.If we had known at the start just how much time andeffort it takes, I would have spent more time preparingan investment strategy at the outset.

Find out more:Equity nancebusinesslink.gov.uk/equitynance

ARMED WITH OUR BUSINESS PLANWE CONTACTED THE BRITISHBUSINESS ANGELS ASSOCIATIONWHO INTRODUCED US TO SEVERALBUSINESS ANGELS. AS A SMALLBUSINESS OUR CHOICE OF ANGELWAS BASED LARGELY ON THE SORTOF PRACTICAL ADVICE THEY WEREOFFERING

17


18/46

Heres how I appliedfor a grantMichael Sekulla s traditional toyshop, Pinocchio Toys , had been trading in Dunster,Somerset for less than a year when he began looking for ways to reach more

customers. A website was the obvious route, but with no computer and limited

funds the path seemed blocked. With help from his local Business Link, Michael

successfully applied for a grant to help buy the hardware he needed. The company

now runs a thriving website, www.pinocchio-toys.co.uk, alongside the original shop.

What I didSet clear objectivesWed always planned to sell online, but we couldntafford to invest a lot in computer equipment during the

early months. Around that time, we had a visit from ourlocal Business Link adviser who got us thinking aboutgrants. The first thing Business Link asked us to do wasto fill in a form setting out what we wanted and why. Wealso wrote our own plan outlining the business benefitswe expected to gain from a grant. Putting our objectiveson paper focussed our thoughts and helped with filling inapplications later on.

Explore the optionsWe were very specic about our requirements.Knowing exactly what you want makes it easier

to narrow down the grant options available. Welooked at local authority websites, approached ruraldevelopment agencies and, most helpful of all, usedBusiness Links Grants and Support Directory. We

were prepared to put in what money we could afford,which was important because we found that fewgrants cover the full cost of a project.

Target the applicationOnce wed narrowed down the possibilities, wewent through each grants eligibility criteria in detail.We only wanted to apply for something that we hada realistic chance of getting. We nally went for a

Rural Business Chest grant from Somerset DistrictCouncil. The application process was quite rigorous,but the groundwork wed done paid dividends.

Grant bodies want tosee that youre committedand that youve thoughteverything through froma business point of view.Getting the grant was abig boost. It enabled us tostart on the website six tonine months earlier thanwed planned and meant

MICHAELS TOP TIPS

Be clear about why you want the grant and put your objectives downin writing.

Use the Business Link Grants and Support Directory it saves onlegwork and will point you in the right direction.

Dont apply for lots of grants its very time consuming and your effortsare better spent doing a tailored application for the grant you want most.

Finance and grants

8


19/46

we had e-commerce capabilities in time for the keyChristmas selling period.

What Id do differently Dont write a novelThe plan we wrote was useful, but too wordy. Nexttime Id make it shorter. Id also produce a condensedversion on a single page of A4 to attach as supportingmaterial. Grant bodies get thousands of requests.Theyre more likely to read one page of bullet points

than plough through a 20-page epic, unless thatswhat theyve asked for.

Think biggerLooking back, we probably had a good chance of gettingsome money for software and website design as well.But at the time we didnt want to push our luck. Im notsuggesting the skys the limit, but we thought smallwhen we should have been thinking medium.

Find out more:Grants: the basicsbusinesslink.gov.uk/grantsbasics

THE APPLICATION PROCESSWAS QUITE RIGOROUS, BUT THEGROUNDWORK WED DONEPAID DIVIDENDS

19


20/46

Heres how I chose theright legal structure formy business

Taxes, returns and payroll

After ten years as the general manager of an ofce supplies company, in 2001 John Kerr decided that he wanted to run his own business. Initially, John went intopartnership with a former colleague. After a series of disagreements they agreed to

go their separate ways, and John has a new business partner.

What I didTalk to a solicitorOriginally Id planned to take on my colleagueas an employee. But he wanted to share in themanagement of the business, which seemed fairenough, so we talked to a solicitor about the choices.

Setting up a partnership was the simplest option,and would avoid the extra costs of setting up andadministering a company. The solicitor pointedout that we would both be personally liable for anybusiness debts, but as we werent planning to borrowthis wasnt a big issue for us.

Start the businessThe solicitor said that we needed a partnership

agreement, and helped us draw one up. Preparingthe agreement was a chance for us both to think

about how we wanted to run the business and whatour responsibilities would be.

Apart from that, the ofcial side of startingthe business was very straightforward. We eachregistered as self-employed and for VAT with HMRevenue & Customs and told them that we were

going into partnership. At the same time, we set upa computerised accounting system and lined upan accountant to handle our tax returns. With oursystems set up, we were ready to get on with buildingthe business.

Reorganise the businessUnfortunately, we soon realised that we didnt worktogether well. We each had our own ideas on what we

should be doing, and it wasnt helping the business atall. A few months after we started, my partner left the

business.As it happened, there

was someone else I wantedto bring into the businessanyway. Reorganisingthe partnership wasstraightforward, but I didcheck with the solicitor andtell the accountant. It seems tohave worked out well enough.Turnover of our business has

JOHNS TOP TIPS

Take professional advice on the best way to set up your business - dontassume that you need to form a company.

Think about how your business relationship will work in practicebefore you go into partnership.

Consider if your structure is still the right one when circumstanceschange -you dont have to stick with the structure you chose when youstarted up.

0


21/46


22/46

Heres how I set up a payrollsystem for my businessRebecca Alfandary set up her business Active Designs to supply educationalequipment to primary and nursery schools in 1995. When the company took on its

rst employee Rebecca decided to save money by setting up a manual, in-house

payroll system. Now that the business employs ve, it uses a payroll software

package instead. Here, Rebecca explains how she set up her rst payroll system and

why she decided to get it computerised.

What I didContact the HM Revenue & CustomsSetting up a manual payroll system was somethingId worried about and put off for as long as I could.

I thought it would be complicated with a lot of formlling, but once you know what youre doing, it is quitestraightforward.

I contacted HM Revenue & Customs for a NewEmployers Starter Pack, which contains all theinformation you need to set up a payroll system. Ialso spoke to a couple of HM Revenue & Customsadvisers on the New Employers Helpline who werevery helpful.

Complete the right paperworkMany of my rst employees were second jobbers,which meant they didnt have a P45 from theirprevious employer. I had to get them to ll out a P46

and send it to the HM Revenue & Customs. Ourpayroll just involves making the standard PAYE andNational Insurance contribution deductions. If therehad been other considerations, such as student loan

repayments, I might have considered outsourcing ourpayroll to an agency.

When you do a payroll manually you have to usetables from the HM Revenue & Customs to work outhow much to deduct. Theyre daunting at first, but onceyou know what pages to use, its easy. You basically takethe employees gross earnings and cross-referencethem against the correct tax band. Their personal taxallowance is taken into account automatically.

Invest in a computerised systemWhen we started to employ more people I asked myaccountant about alternatives to our manual systemand he recommended a well-known payroll software

supplier. It cost a couple ofhundred pounds plus about100 a year for the supportpackage. Its pretty essentialto have that as they sendyou updates when any ratesof thresholds change, toensure youre doing your

REBECCAS TOP TIPS

Make use of the HM Revenue & Customs website if you get stuck. Get a computerised system as soon as you can. It is easier to set up while

you only have a few employees. Ask your accountant what payroll software they recommend.


2


23/46

calculations correctly.Manually, the monthly payroll took a couple of

hours and I would send the deductions off to the HMRevenue & Customs by cheque. Now, it takes me 30minutes, and with the advent of online banking, I can

transfer the deductions and my employees wages

directly.

What Id do differently I wish Id invested in the payroll software sooner. Ithought it would be complicated to use, but its verysimple and a great timesaver.

WHEN WE STARTED TO EMPLOYMORE PEOPLE I ASKED MYACCOUNTANT ABOUT ALTERNATIVESTO OUR MANUAL SYSTEM AND HERECOMMENDED A WELL-KNOWNPAYROLL SOFTWARE SUPPLIER.IT COSTS A COUPLE OF HUNDREDPOUNDS A YEAR PLUS 100 FORTHE SUPPORT PACKAGE

Find out more:Operate a year-round PAYE systembusinesslink.gov.uk/PAYEsystem

23


24/46

Heres how the tax authoritieshelped me start my businessRachel Jones co-founded Great Circle Communications Limited , an Edinburgh-based reputations management consultancy, in 1998. Rachel explains how it quickly

became clear that understanding tax issues was a top priority.

What I didSign up for HM Revenue & Customs coursesIf we were trying to build up other peoplesreputations, it was important we could look after our

own, so getting the business tax affairs right from theword go was essential.

Our local HM Revenue & Customs ofce runshalf-day courses and I took advantage of severalof these in Great Circles early days. I went on onescovering how to pay yourself, how to pay employees,maternity leave and sick leave.

Theyve proved very helpful. I dont remembereverything but it means when my accountant talks

about tax matters I at least have an idea about thebasics.

The courses were free too - Id have been crazynot to go on them.

RACHELS TOP TIPS

Dont take the ostrich approach dont put your head in thesand over tax matters.

Helplines can be a great source of useful information. Take a course to kick start your tax awareness.

Invite the VAT inspector into the businessAlthough we started the business from home with just one computer on the kitchen table, we knew wewanted to be VAT registered from the start. People

expect to pay VAT in consultancy and having a VATregistration number positions you as a serious player.But VAT was double Dutch to us.

We came across an HM Revenue & Customsstand at an exhibition where we chatted to theVAT inspector who agreed to come and visit us. Iremember he sat in our living room - also our meetingroom at that point - and gave us a presentation.

He was very approachable and answered all of

our questions about what exactly attracted VAT andwhether it was more advantageous to lease or buy acompany car.Though we were VAT registered from the start,we reached the VAT threshold anyway within eight

months. We were VAT inspected after threeyears and it was no big drama.

Use the tax helplinesIn the early days we used the various taxhelplines quite a lot. Wed ring up the VATofce, for example, and ask why postagedidnt attract VAT but you had to pass it on as


4


25/46

a cost to clients. Im still not afraid of ringing up andasking questions. Theyre there to make sure you getthings right.

What Id do differently Speak to the National Insurance peopleWhen we started out we assumed our bookkeeper

was keeping an eye on National Insurance but itwasnt something they knew about and the result wasa National Insurance shortfall and a big bill. Its quitedifcult to keep an eye on everything, but you mustand for that you need to know the basics. We got theVAT right, but not the National Insurance.

OUR LOCAL HM REVENUE ANDCUSTOMS OFFICE RUNS HALF-DAYCOURSES AND I TOOK ADVANTAGEOF SEVERAL OF THESE IN GREATCIRCLES EARLY DAYS. THEYVEPROVED VERY HELPFUL

Find out more:Tax advantages for those starting up inbusinessbusinesslink.gov.uk/taxadvantages

25


26/46

Employing people

Heres how I recruiteddirectors with differentand complementary skillsStrata Systems Ltd is a business intelligence company providing analyticalsoftware for human resources management. Established in 1986, the company

has 19 employees. Here managing director Denis Hodge describes the factorsinvolved in recruiting his four board directors.

What I didIdentify skills required

Although Ive always worked in IT, when I started thecompany I knew Id need to recruit other directors.My skills include identifying new markets, raisingnance, and maximising return on investment, sonance was covered.

One of the key reasons IT start-ups fail is that theyhave a great idea and technical know-how, but lackselling skills. So my first priority was to recruit a salesdirector.

Although we had a great product, I also knewthat business growth depended on developing newproducts. Next on the list was a product developmentdirector. Decisions on other directors were made asthe business grew.

Recruit on merit

I recruited our sales director through a recruitmentagency. He had an impeccable track recordand references and demonstrated tremendouscommitment and tenacity.

Our rst product development director wassomeone Id worked with at a previous company.He brought to the business intellect, vision and amethodical management approach.

We soon needed a second product development

director. The person we recruited was working fora competitor at the time. We were impressed by hismarket experience and ability to identify future trends.

The last director we recruited was an industrycontact. His particular strengths were technical

knowledge, project managementexperience and a very commercialapproach. He was brought onto the board asprofessional services director to manage ourteam of consultants and installers.

Appreciate the differencesDifferent skills and perspectives bring

DENISS TOP TIPS

Be clear on the skills youre looking for and be preparedto pay above the going rate for the right person.

Use all channels to nd the right people to recruit. Hire the person, not just the CV.

6


27/46

business benefits. For example, Im always looking atways to keep costs down, while my product developmentdirectors always want more resources to develop the bestproducts they can. Its a good balance - Im there to applythe brakes, while they encourage me to invest.

At other times, I rely on another directorsattention to detail because Im more impulsive andinclined to get impatient with the small print.

Overall, having directors with different skills andapproaches means we look at things from differentangles. This improves decision-making.

What Id do differently Empower people to do the job

In the early days, we were fairly hierarchical and Iwish Id changed that sooner. We now have a formalpolicy that if directors can see a way to improveperformance, they go ahead and do it. After all, ifyouve recruited good directors they need to have thefreedom to make decisions.

Find out more:Recruiting directorsbusinesslink.gov.uk/recruitingdirectors

I RECRUITED OUR SALES DIRECTORTHROUGH AN AGENCY. HE HAD ANIMPECCABLE TRACK RECORD ANDTREMENDOUS TENACITY

27


28/46

Heres how I complied with theData Protection Act 1998When former teacher Susan Moore set up her own supply-teaching agency, STCConsortium Limited , she was alerted to the need to comply with the Data ProtectionAct 1998 by a potential customer. Two years on, Susans business now provides cover

for absent teachers over 6,000 square miles from the Tweed to the Tees and the

business stores personal data about more than 800 teachers. Susan explains how

she complied with the Act - and the efciency gains that compliance has provided.

What I didGather informationI didnt really know much about the Data ProtectionAct 1998 before I started trading. However, when

I was discussing the service my business couldprovide to the Local Education Authorities (LEAs), theytold me I should be registered with the InformationCommissioner (IC). This is because my IT databasewas going to store the names, addresses, workexperience and Criminal Records Bureau (CRB)details of the teachers that would work throughthe agency. I would also need to store hard-copyapplication forms in my archive. A lot of information

about people, in other words.I found more information on the ICs website. You

can also register as a data controller on there.

Appoint a dedicated data controllerI made a member of staff responsible for ndingout about what we needed to do to comply with the

Act. She went on the ICs website and sent off forinformation packs and videos available on the site.She also attended an information day to learn aboutthe Data Protection Act 1998.

Train all staffThe data controller then trained the rest of the staffto process data condentially and accurately, and toensure it was seen by nobody outside the business.

We used a video from the InformationCommissioner as the foundation of these trainingsessions. You can order the video on data protection

through the InformationCommissioner website.We compiled a handbook

so every member of staffcould have a copy to whichthey could refer at any time.This meant they knew howto handle and protect data atall times.

SUSANS TOP TIPS

Use a dry, secure and alarmed archive so you dont run the risk of losingdata to oods, re or theft.

Make someone responsible for keeping data safe by having adesignated keyholder.

Keep visitors away from your inner ofce so data cannot accidentallybe seen such as an IT engineer working on your PCs.

Employing people

8


29/46

What Id do differently Set up data-protection policies before starting thebusinessThe LEAs suggested that I should be registered withthe IC. I should have done this from the start to complywith the Act.

Get permission to use data to apply for referencesas part of the initial paperworkWe now have a data-protection policy on the back

of our application form. This means people canll the permission details out as part of their initial

application, making the application process morestreamlined. We only have to process one set offorms, rather than sending out a separate form,which would cost us more money in postage andadministration time.

I MADE A MEMBER OF STAFFRESPONSIBLE FOR FINDING OUTABOUT WHAT WE NEEDED TO DOTO COMPLY WITH THE ACT

Find out more:Comply with data protection legislationbusinesslink.gov.uk/dataprotectionlegislation

29


30/46

Health, safety, premises

Heres how we decidedrenting premises wasbest for our businessStewart White started out window cleaning as a sole trader in June 2003. Nowa partner in Whites Cleaning Services , a contract cleaning and car-valetingcompany, he says operating from rental premises has enabled him to adopt a

exible approach to business development and growth.

What I didOpt for short-term leasesWhen I started out I rented because I didnt know

how long the business was going to last. You neverknow whats around the corner and with short-termleases if you incur problems nancially you can getout. Ive never signed a lease lasting more than 12months.

Move to more appropriate premises as thebusiness developedMy rst place was a unit where cars could drive in for

valeting. But I decided to sell the valeting side of thebusiness because contract cleaning was where themoney was. Also, the unit was away from the mainroad and I had to spend a lot on advertising.

As the units lease was on a monthly basis I just

STEWARTS TOP TIPS

Look around at whats available. Dont jump at the rst premises offered. Take time to read contracts carefully. Look at the length leases offered and consider where you expect your

business to be in that time.

gave one months notice and I took a 12-month leaseon a small ofce. The business then only neededsomewhere to le work and receive phone calls. I

stored equipment at the premises we cleaned.Then the opportunity came up to rent a car

valeting centre. It was in a prominent position on themain road and a good way to get back into valeting soI took it up. Initially I kept the ofce premises as well,as I didnt know how things would go, but nine monthslater I moved the ofce here to save on money andtravelling. Although there was still time to run on itslease the landlord let us out.

Benet from maintenance and security built intocontractsA new landlord took over our old ofce while wewere there and the building was given a complete

makeover. The outsidewas painted, the premisesthoroughly cleaned, and anew alarm, front door andintercom tted. It didnt costus anything.

The place were in nowhas also recently had a full

0


31/46

paint job on the outside and security cameras put up.Our rent hasnt gone up because of this.

What Id do differently Negotiate better terms"When I went for our rst premises I paid the rent

that was asked for. It was only when I talked to otherson our industrial estate that I realised some werepaying less. I was a bit nave. I didnt realise we couldnegotiate and maybe get the rent a bit cheaper. Now Ialways negotiate when I meet landlords - and I alwaysmanage to get them down.

Find out more:Renting business premisesbusinesslink.gov.uk/rentingpremises

YOU NEVER KNOW WHATSAROUND THE CORNER AND WITHSHORT-TERM LEASES IF YOUINCUR PROBLEMS FINANCIALLYYOU CAN GET OUT. IVE NEVERSIGNED A LEASE LASTING MORETHAN 12 MONTHS

31


32/46

Exploit your ideas

Heres how I registeredand used my patentAfter developing an innovative polyethylene zip with teeth, entrepreneur HeatherKitching set about exploiting her idea. But rst she had to protect her design - andso began the process of securing a patent. Heathers hard work paid off - her idea

is now used in a range of well-known packaging products and has scooped several

high-prole awards

What I didUnderstand your intended marketIn 1996 I invented the concept of the worlds rstpolyethylene weldable zip fastener with teeth,which doesnt break under repeated use like some

tramline-type zips. At rst the idea seemed sosimple I nearly discounted it but it soon becameclear that it had potentially successful commercialpossibilities - and Id need patent protection to makethe most of these possibilities.

While I wanted to protect the idea as soon as possibleI held off lodging my application while I researched themarket. Having discovered several market opportunitiesI was able to improve my patent outline. Armed with a

clear, detailed idea I contacted the Chartered Instituteof Patent Agents who put me in touch with a localsolicitor who is registered with the professional body as a

HEATHERS TOP TIPS

Get up to speed with basic business skills - no matter how good theidea, you need basic sales and cash ow skills to be successful.

Speak to the Chartered Institute of Patent Agents - they can give lots offree advice on who to use and how to get a patent.

Get the legal aspects spot-on rst time. If a licensee abuses youragreement all your hard work could end up being in vain.

patent agent. Doing so ensured I would be working withsomeone with credibility and confidentiality. Ultimately Italked to four agents before choosing one.

Prepare the application

The rst step was to draw up a specication for theidea from which I could nalise my patent application.I spent a lot of time and money getting this rightand used a professional draughtsman to get myconceptual drawings spot-on.

I was then ready to submit the first part of my patentapplication, known as the abstract. Essentially thisoutlines how my idea solves a problem. The secondpart of the application was to prepare my claims.

These form the skeleton of your idea and they explainin simple terms what your idea actually is. It isimportant to include as many of these as you can, so

that your idea is as specic aspossible and isnt vulnerableto being copied. While all ofthis was being done my patentagent carried out searchesat the Patent Ofce to checkthat my idea hadnt been donebefore. Once this was doneI submitted my completepatent application.

2


33/46

Capitalise on the patentPatent applications take a few years to be approved soduring this time I turned my attention to developing theidea and finding companies that could turn the idea intocommercial products. But in order to do this I had to

brush up on my sales and marketing skills. Eventually,after a couple of years the patent was approved and,armed with prototypes, I licensed the technology to amajor packaging company. Unfortunately this venturewas unsuccessful after the licensee was found in breachof the agreement. Having secured the patent, it waseasier for me to get the licensee to stop using the ideawhen we brought the agreement to a close.

Since then Ive followed a different approachby setting up my own company - Reuzip - with myhusband, to handle the distribution and productionof the merchandise. We now supply majorsupermarkets such as Sainsburys with our unique

products and in 2000 I scooped the Tomorrows WorldEntrepreneur of the Year Award and the Best BritishInvention - the rst woman to win this award.

What Id do differently Spread the riskI would avoid the temptation of putting all my eggs inone basket by signing up with just one licensee. Ourone licensee took a long time to utilise the product- and ultimately abused the agreement - which endedup losing me valuable time and money.

Find out more:Get patent protection for your businessbusinesslink.gov.uk/patentprotection

33


34/46

IT and e-commerce

Heres how my first IT systemhelped me set up my businessBill OBrien set up Vetatech , a West Yorkshire-based security and surveillanceequipment company, in 2001. A simple collection of basic PCs met the business

needs in the early stages, but as the company grew, Bill needed to build on the basics

cost effectively to get his technology to achieve more. Heres how he did it.

What I didAssess the business needsWe knew that there were three key functions weneeded from day one - the ability to send and receiveemail to and from potential clients and some sort ofsimple bookkeeping and word-processing functions. Wewanted to start with a basic system and be able to add to

it easily and cost effectively as the business grew.We bought three basic PCs with standard

Microsoft Ofce software on each, such as Wordand Excel. This allowed us to build templates forprofessional-looking customer quotations andsimple spreadsheets for accounting. And we used abasic dial-up connection to get access to the Internetand email, using the modems built into the PCs.

Get specialist adviceWe had made good progress with the business andneeded to build on our IT system. We got to the stage

BILLS TOP TIPS

First assess your business needs and check theproposed solution will exactly meet those needs.

If in doubt, seek professional help and dont beafraid to ask questions.

Leave room for expansion it will save youmoney in the long term.

where we had ve PCs - one for each member ofthe team - but we felt we could make the technologywork more effectively for us.

We got a lot of advice from the company thatsupplied the PCs. After outlining what we wanted toachieve - better communication and information-sharing internally, faster and cost-effective Internet

access and data security - we came to a joint decisionon the best way forward. The advice we got wasinvaluable - we couldnt have done without it. And itproved useful for the supplier too, as weve stuck withthem since on the strength of the advice they gave us.

From the initial setup of three stand alone PCs, wedmoved to five networked PCs and a central server. Thismeant that sharing customer details and documentsacross the business was much easier. We also started

backing up data centrally from the server, so we had acopy of everything in case of disaster. And we switched toan ADSL (Asymmetric Digital Subscriber Line) Internet

connection which was much faster than the dial-up option and saved us time as the connection isalways on.

What I realised was that building any IT systemis a compromise between what youd like to haveand what makes a worthwhile investment. Wespent most of our time isolating with the supplierexactly what we wanted to achieve. Once weddone that, the advice we got meant specifying thekit to do the job was quick and easy.

4


35/46

Make the system scalableWhen we upgraded the system, we agreed with oursupplier that it was important that we could quickly

and cheaply extend the system as the needs of thebusiness grew.

For example although we had ve users at thetime, we bought an eight-port hub for the centralserver. It cost a minimal amount more than a smallerhub and it allows us to have up to 20 simultaneousconnections to the server if we want - meaning wedont have to spend masses of money upgrading theinfrastructure when more staff join us.

What Id do differently Have more condence with IT specialistsSpecialist IT suppliers often speak a completely

different language to the rest of us. At rst it was a bitintimidating. But I learned after a while that if yourecondent and keep asking simple questions if you

dont understand, you stand a much better chanceof getting the functions that you want at a good price.Theres no magic to building the right IT system - its aquestion of persistently asking whats the best way toachieve your objectives.

Find out more:Getting the most from IT in your businessbusinesslink.gov.uk/getmostfromIT

35


36/46

Heres how I chose andmanaged my IT supplierRebecca Cadman-Jones is managing director of the Derbyshire-based businessKC Jones Conference & Events . The company was established in April 2004 and hasve employees. Here Rebecca explains how the business beneted from managing

its relationship with an IT supplier.

What I didSeek as much advice as possibleAs a business we are heavily reliant on IT. Last yearwe had 10,000 delegates sign up to our conferences- many of whom came via our bespoke onlineregistration service. Our website is fundamental to

reaching new customers.When we first started we had a limited budget with

which to buy the IT equipment we needed, so selectingthe right suppliers was crucial. We had to get value formoney - service was a secondary factor at that stage.

Before choosing our IT suppliers I spoke tofriends and colleagues about the type of system weneeded. I also talked to a Business Link adviser whohelped us select the hardware we needed, as well as

recommending a software supplier.

REBECCAS TOP TIPS

Look at several suppliers to get a picture of whats available. But itsworth having an idea of what you want beforehand, as it will save youspending too much time on your search.

Consider how much IT support you actually need - this will dependon how much IT expertise you have in-house and how much you canafford to pay for a support contract.

Use a single supplier where possible and build a good workingrelationship with them.

Select a supplierI found most hardware suppliers offer similarpackages at similar costs. We looked at severalsuppliers and the main difference in price was inthe after-sales support. In the end, we chose a localcompany that was recommended to us as being cost

effective but reliable.We decided to go elsewhere for our software,

as we needed a bespoke package tailored to ourindividual needs. The software supplier SimpleSolutions was recommended to us by our BusinessLink adviser. They visited us and we briefed them onour strategic IT objectives.

They were prepared to adapt to our needs andoffered us a list of options with associated costs. This

enabled us to start with the basic essentials and thenbolt on extras as we could affordthem.

Build the relationshipBuilding a good workingrelationship with our suppliershas been key to our IT systemssuccess. But I still review thedeals weve got to see whetherthere are better alternatives.

Its worth having a signedcontract which you both agree

IT and e-commerce

6


37/46

to. Then you both know your obligations and whatshould happen in the event of a disagreement ordispute.

What Id do differently Plan for growthIt would have been helpful to plan our longer-termhardware requirements at the outset.

For example, we didnt buy a server for our

computers straight away and in hindsight we shouldhave done. We told our supplier we couldnt afford

one, but as our business grew, we expanded beyondtwo people and needed a server to meet our ITrequirements. We didnt plan for this growth.

If wed had one from the beginning, it would havesaved time and expense later on when we had totransfer a lot of information to the server.

Find out more:Choose and manage your IT supplierbusinesslink.gov.uk/chooseITsupplier

I SPOKE TO FRIENDS ANDCOLLEAGUES ABOUT THE TYPEOF SYSTEM WE NEEDED. I ALSOTALKED TO A BUSINESS LINKADVISER WHO HELPED US SELECTTHE HARDWARE WE NEEDED

37


38/46

Sales and marketing

Heres how I identified andreached the right sales targetsWhen Gareth Edwards set up his value-added in-store merchandising business,GEM Merchandising , in Maidstone, Kent in 2003, sales generation was animmediate priority. Combining the use of technology with a methodical approach,

Gareth was able to reach the decision-makers that mattered. GEMs national team of

85 merchandisers now make 30,000 service calls per year to customers that include

Woolworths, Homebase and B&Q.

What I didGather informationWe concentrated initially on the DIY retail market,because that was my background. Our rst step

towards identifying sales targets was to attendseveral trade shows for fact-nding and to makecontacts. We also purchased the data lists held by theshow organisers and transferred them onto our owndatabase, which we then added to and tailored.Company websites were another fruitful source ofinformation and we also quizzed our own personalcontacts gained from 20 years in the industry.When youre working out which individuals to target

for sales purposes, heading for the top is a goodrule of thumb, but it doesnt always apply. In largercompanies, we found we had more success withsales and marketing managers than we did withmanaging directors.

GARETHS TOP TIPS

Be persistent, but dont be a pest. Always focus on the benets your product or service can offer. Dont take a brush-off personally.

Make contactArmed with a database of target contacts, weadopted a three-pronged approach. First, we senteach contact a company brochure, followed by an

email alert, then a phone call. We found that callingpeople who had already seen our name on a brochureor email made them more likely to talk to us.

With all sales targets, the name of the gameis developing a relationship, so its important topersonalise communications. We discovered earlyon that sending a generic message addressed to themarketing manager didnt work well at all.

Crib-sheets can be very useful in phone

conversations. A brief list that includes the key benefitsof your service plus notes on the customers businesshelps you to sound knowledgeable and stay focussed.Remember that the ultimate goal is to get a face-to-facemeeting, so you have to provide succinct, convincingreasons to persuade someone that its worth their while.

Be persistent, be professionalSometimes we had to be quitepersistent in order to secure a meetingor even to get the person on the phone.However, we found that as long as youhave genuine business benets to

8


39/46

offer, most people dont mind being chased.Even when the answers no, weve never been told

we didnt get a piece of business because we were

too tenacious. Conversely, giving up without getting adecision means youve effectively wasted your resources.

We always made sure that we communicated oursales progress internally. For example, its good to letall customer-facing staff know the names of potentialtargets youve contacted, so that if prospects phone in,they get treated appropriately.

What Id do differently Focus on emailWe made good use of the internet in nding andcontacting potential targets, but we didnt focuson it enough in the early days. Our experience has

shown that we get three times the conversion ratefrom contacting people by email than we do fromconventional mail.

Use what worksTailoring the sales pitch to the target is important,but theres no point re-inventing the wheel everytime. It took us a while to start recording the details ofsuccessful pitches so that the same techniques couldbe used on subsequent occasions.

Find out more:Target the right people in an organisationbusinesslink.gov.uk/targetrightpeople

39


40/46

Heres how I got mygreat new product infront of customersSam Tate co-founded Sprue Aegis plc in 1998 when he and his business partnercame up with an innovative smoke detector. The FireAngel ts between a light

tting and the bulb, taking its energy from the mains. FireAngel charges up its

rechargeable battery when the light is on - and runs off the battery when the light is

off. The company hasnt looked back since convincing one high-street retailer to sell

the detector. Its now stocked in around 6,000 outlets.

What I didResearch the target consumerWe spent months digging out market researchreports, talking to the Fire Brigade and the Ofce

of the Deputy Prime Minister - the governmentdepartment responsible for re safety. Once weconrmed the FireAngel was a valuable idea, I wentout on to the street to see if there was a market for it.We basically just stopped people, showed them theprototype and asked a set list of questions. We alsolooked closely at our competitors products and whotheir market was.

We initially worked out a sales strategy involving

the Internet, direct marketing and advertising.However, we soon knew on a cost-per-sale basis thiswouldnt be feasible - we would have sold less and

had to charge twice as much. We then realised anideal way to reach consumers who wanted a quicksolution was through supermarkets.

Get the right price and sales channelMost smoke detectors retail at between 5 and 10.We knew we could charge a premium because ttingthe alarm is as simple as changing a bulb. It doesntneed a battery and it lasts for up to ten years. We setthe price at around 20 but the retailer obviously takesa margin. Remember - its a lot harder to put the priceup than drop it down, so dont go in too cheaply.

Nail the sales pitch earlyIts really important to be able to get your messageacross in 30 seconds at. If you get the chance to

speak to a buyer, you need to be ableto sock it to them - theyre extremelybusy people. Its denitely down totrial and error so I would recommendrehearsing your sales pitch in frontof anyone who will listen, and notdelivering it for the rst time to thetop buyer at a potentially major client.It took three years to get our

product to market. A lot of this time

SAMS TOP TIPS

Remember that getting your rst customer will give you a salesrecord, making it easier for others to follow.

Provide as much hard data as you can about your pricing and thebenets your product will bring to the buyer.

Eliminate all the unknowns: make sure you understand yourmarket, product, customers, users and brand.

Sales and marketing

0


41/46

was spent on design and safety testing, but it took18 months of talking to one well-known high-streetretailer before they agreed to stock the alarm. Onceyoure in there with one retail chain, it gets mucheasier to approach others. But you denitely have tobe persistent to succeed.

What Id do differently Dont take no for an answer - right from the startIts easy to say, but be prepared for knockbacks. We

got them - and would have started to get demoralisedby them without a total belief in our product. After a

short time we realised that persistence was the keyto making it all happen. Buyers are busy people andyouve got to make yourself stand out from the crowd.For example, we waited in the reception of one high-street retailers head ofce until the buyer agreed tosee us. Sometimes you have to go to that level.

WE REALISED AN IDEAL WAY TOREACH CONSUMERS WHO WANTEDA QUICK SOLUTION WAS THROUGHSUPERMARKETS

Find out more:Develop new products and servicesbusinesslink.gov.uk/developnewproducts

41


42/46

International trade

Heres how I madethe decision to exportEngineering solutions company SFM Technology Ltd had a shrewd idea that therewas an overseas market for its advanced soft fruit harvesting machinery. With the

help of the International Trade Team at his local Business Link, sales and marketing

director Keith Tridgell put the companys ideas into practice. The company hasalready shipped its rst machine to New Zealand and another is en-route.

What I didGet the right adviceWe couldnt have achieved what we have withoutthe help of the Business Link Somerset InternationalTrade Team. Previously wed been reactive ratherthan proactive when it came to exporting, but the

International Trade Team really got us focused.The rst thing they did was to assess our

readiness for exporting with an export health check.We were given the green light and accepted for theYour Passport to Export Success programme, whichis funded by UK Trade & Investment (UKTI), an agencyof the DTI. The programme provides mentoring,training and matched funding for novice exportersand includes help with all aspects of exporting. The

contacts provided by our local export mentor, as wellas his overall advice and input, were invaluable.

Research the marketArmed with a list of contacts, we spent monthsresearching the market and putting together anexport plan. We wanted to concentrate initially onNew Zealand, since they produce a lot of soft fruitand have similar growing conditions to the UK. We

also wanted to start in a market where there was nolanguage barrier.

The Your Passport to Export Success programmeput us in touch with the British Consulate in NewZealand and from there I planned my rst marketvisit, which the Passport scheme partially funded.I made three subsequent trips, which we paid forourselves. Local knowledge is everything and eachvisit turned up new information, information we would

not have gathered without face-to-face meetings.Among many other things, the visits enabled us

to research competitors, investigate a sales supportsystem and talk to potentialcustomers in depth. HavingUKTI support openeddoors and put us in directcommunication with all thekey people.

Appoint an agentIt soon became clear thatwe would need an agent to

KEITHS TOP TIPS

Understand your target market and make sure you research everythingfrom competitors, through pricing to logistics.

Commit resources and think about the investment you need to carry ononce you nish a Your Passport to Export Success programme.

Communicate regularly with your contacts in the country, since this willmake sure your network remains fresh and new opportunities are taken.

2


43/46

handle things for us in New Zealand. At that distanceits hard to do everything yourself, even in these days of

email and the Internet. The network of contacts built upduring my market visits enabled us to find exactly theright person. Our agent provides on-the-spot customercontact, handles front-line maintenance issues andhelps to streamline the paperwork. As well as severalmeetings in New Zealand, we arranged for our agentto visit our UK site. This underlined his confidence in theproduct and cemented the relationship.

What Id do differently Allow plenty of time for visitsOn my rst visit to New Zealand I thought Id allowedplenty of time, but it wasnt enough. That rst visit is

crucial and you can save yourself time and moneylater by making the most of it.

Invest moreWhen exporting is unknown territory its easy to be over-cautious. The resources we allocated were adequate butperhaps, with the value of hindsight, we should have hadthe confidence to make a bigger initial investment.

Find out more:Market entry, selling and promotionoverseasbusinesslink.gov.uk/sellingoverseas

43


44/46

Buy or sell a business

Heres how I selected andbought my franchiseEntrepreneur and trained optometrist Stephen Halpin always intended to runhis own business. In his chosen market, the high street optical services sector, a

franchise seemed like a good way to get a head start. After considering the options,

Stephen bought one of the rst Boots Opticians franchises in Northwich, Cheshire.

What I didSelect the franchiseThe retail optical services market is highlycompetitive and starting an outlet in your own nameis a risky affair. A franchise made sense, because itreduces some - not all - of the risks, offers a familiarbrand name to build on and provides support with

marketing and other aspects. There are severalfranchisors out there and I considered them all. Idecided to go for a Boots Opticians franchise.

Boots reputation with UK consumers is excellentand brand awareness is almost universal. Also,because I was applying for one of the rst BootsOpticians franchises, there was more scope to getinvolved in developing the operational systems. Thiswas important to me I found that longer-established

franchisors had a less exible attitude.

Work out the guresWith the help of an accountant, I put together a

detailed business plan. The store I wanted to takeon had been trading as a Boots Opticians for severalyears so it had nancial records to assess. Otherfactors I considered were the store location, localcompetitors and current operational practices.Without a clear idea of how much the business couldmake and how much cash I needed, it would have

been impossible to tell if the franchise agreement onoffer was worthwhile.

Check the agreementThe business plan also formed the basis of thepresentation I gave to Boots management. Thiswas a key part of the process of being accepted forthe franchise. The presentation and plan also gaveme the information I needed to negotiate a contract.

Following the presentation we had a number ofconversations about the principles of any agreement.

Once I had been accepted for the franchise,Boots drew up a franchise agreement setting out

terms, conditions and fees.I got advice from specialistfranchise solicitors beforesigning. One of my keyobjectives was to ensure thatthe agreement benetedboth parties, that I mademoney and so did Boots.

Starting from this position,

STEPHENS TOP TIPS

Dont assume a franchise is an easy, risk-free option - youll be runningyour own business with all the responsibility and hard work that entails.

Use professional advisers and make sure theyre franchise specialists. Negotiate your agreement and dont think you have to accept the rst set

of terms put in front of you.4


45/46


46/46

Are you starting up a business, or thinkingabout doing so? If youve ever wished youcould tap into what others learned aboutstarting up, this book is for you. It bringstogether 21 of the best case studies on theBusiness Link website. Each one features a

real business owner or manager, speakingin their own words, about how they made asuccess of the starting-up process.

There are 100 more case studies atbusinesslink.gov.uk/casestudies ,and the website contains a wealth of otherguidance: punchy, practical advice andtools to help you in every aspect ofstarting up your business, especially atbusinesslink.gov.uk/startingup .

Business Link is the National Business Advice

case studies start up uk

Documents