If you are a fan of design, I’m sure you’ll be looking forward to London Design Week, which is taking place across the city later in September. Our capital now seems to be crammed with creative companies and has developed an international reputation as an innovative hub in technology, food and fashion. However, not every business is graced with an in-house team of highly-charged creatives. When that’s the case, is there something we can take from seasoned design professionals that could invest some of that creative juice and energy into even the most basic product or service? With this in mind, let me introduce you to the concept of Design Thinking. This is a process that I’ve learnt from the Design and Technology industries that I believe can benefit every commercial enterprise regardless of its size or sector. So what do I mean by Design Thinking? In a nutshell, Design Thinking takes processes that designers and artists typically use to develop and … [Read more...]
How to build innovation into your business
A great way to building innovation into your business is to be looking for problems to solve and opportunities for improvement in your industry. That’s not to say that inventions haven’t succeeded by accidentally creating an invention and then looking to see what can be solved by that invention (case in point – post-it notes). However, that is not the topic of this article – today’s topic is about actively seeking to build innovation into your business. Create a culture for innovation to flourish First and foremost, if you want to embed innovation into your organisation, create a culture for innovation to flourish. If you forced me to come up with a formula, I would say: Make sure you hire people that are not only smart, they think creatively and are not afraid of change Relinquish control to your managers within a framework Encourage multi-disciplinary teams and internal networking between your sales, marketing and R&D team Make sure your employees understand … [Read more...]
To Register for VAT or Not, that is the question
What is Value Added Tax? Value Added Tax was introduced to the UK in 1972 to replace Purchase tax and to conform to the European Common Market. The Definition of VAT is a tax on the amount by which the value of an article has been increased at each stage of its production or distribution. For most businesses in the UK, VAT is added at 20%. However some things are exempt from VAT , eg most food goods, children’s clothes, postage stamps, financial and property transactions, printed books, magazines and newspapers. Some items are also charged at a reduced VAT rate of 5% e.g. energy and children’s car seats. When you are starting a new business when should you register for VAT? Reasons you should register immediately for VAT? Your new business is selling to other businesses. They will also be registered and will claim the VAT back as Input tax which reduces the amount they pay to HMRC. Your business is investing in capital items, … [Read more...]
Five ways to improve your business productivity
You will probably be familiar with the adage: Productivity = Potential – Interference. Many of us are battling daily with interference of one sort or another, both external and internal. Potential is not always something that is easy to quantify, or to realise. Growing a business, finding a market, and bringing in orders takes time and effort, and often a bit of luck. It’s also likely to take some time, so those frustrating interferences are the key focus if you want fast results. Productivity is critical Superficial measures do not always show the bigger picture – if two businesses are paying different wages, you cannot assume that the lower payer makes cheaper goods, without knowing their productivity. Obviously, if the higher-paying business is more productive than the lower payer, their output might still be cheaper. Higher productivity gives you the opportunity to take better control of your prices and margins, allowing you to undercut competitors without undue pain, or to … [Read more...]
Are you making the most of the upsurge in Leasing?
Leasing is powering ahead in the funding marketplace. In 2013 43% of SMEs used leasing as a method of funding new plant and machinery, office equipment and cars, this increased to 51% in 2014. The survey of 3,000 SMEs from Germany, France, UK, Italy, Spain, Netherlands, Poland, and Sweden found that SMEs financed 19% of their total investment via leasing in 2013, more than any individual form of bank lending. This figure showed the popularity of leasing among SMEs, as the leasing penetration rate for businesses of all sizes stood at 12% in 2013. SMEs focused on exporting and growth were found to rely on leasing to a greater extent than other firms. Exporting firms financed 20% of their investment via leasing, as opposed to 18% for non-exporters. Similar results were recorded for growth firms, with almost a quarter (24%) of their investment financed through leasing, significantly more than the 18% of non-growth SMEs. For further details contact: Peter.kelly@lgbusinessadvisors.co.uk … [Read more...]
Time to get back on the horse?
Over the last few weeks and months (and for some possibly years) we have been buffeted with bad economic news. If it is not the plight of the Euro, it is the unemployment figures or the deficit or many other pieces of informatioin that makes us all feel gloomy about our prospects. Well I say enough is enough! We cannot sit on our hands for ever waiting for market conditions to improve. Conditions will not improve till WE do something about them. I know many companies that have had good years throughout the recession (double dip or not) Why? They have gone out and got on with business. They have not cut their marketing budgets and some have increased them and fought even harder against their competitors. They have not listened to the doom sayers and they have made their own 'luck' Talking to a small company recently they were moaning about the state of the Euro zone. This intrigued me as they do not export and have no intention of exporting, they do not buy from outside the UK and … [Read more...]
Deficit reduction or growth – which is the chicken and which is the egg
Small business that get into trouble by over-borrowing, end up making no money, or even worse, making a loss because the cost of borrowing gets to be greater than their profit. Where do they go from there? Growth: you need money and resources for that and if there is none, you have to find it. Deficit reduction: cost reduction is an absolute must for businesses in this position to free up some cash. Restructuring: this is the White Knight option - someone, often a predatory acquirer, comes along who will take on the debt at a lower rate of interest - not many of those around today. Default: for some companies going into Administration is the only option, with a pre-pack to take out the best bits and leave most of the debt behind. Shame for the the creditors, especially the tax man and the small shareholder. So what about the National Debt? Default - think of Greece. Restructuring - think of the ECB and the IMF. Deficit reduction - think of the UK and other realistic national … [Read more...]
Should we do more to repatriate jobs to the UK
Are we missing a trick? Last week saw the US approving legislation to bring jobs back to America that had previously been outsourced to lower-cost economies. The measure is aimed at reducing America's 9% unemployment, and with the economic case for outsourcing no longer as compelling as it was 10 years ago this seems like a good idea. This begs the question - should we be doing more to repatriate jobs to the UK, to tackle our own unemployment? Bringing jobs back to America Congressman Frank Wolf reports that "legislation approved yesterday in both the House and Senate requires the Commerce Department to immediately set up a task force to examine what needs to be done to encourage U.S. companies to bring their manufacturing and research and development activities back to America’s shores. " "The department also must develop a list of “best practices” for states and communities to follow to help foster the repatriation of jobs that have moved abroad." Is this not happening already in … [Read more...]
Should we do more to repatriate jobs to the UK
Are we missing a trick? Last week saw the US approving legislation to bring jobs back to America that had previously been outsourced to lower-cost economies. The measure is aimed at reducing America's 9% unemployment, and with the economic case for outsourcing no longer as compelling as it was 10 years ago this seems like a good idea. This begs the question - should we be doing more to repatriate jobs to the UK, to tackle our own unemployment? Bringing jobs back to America Congressman Frank Wolf reports that "legislation approved yesterday in both the House and Senate requires the Commerce Department to immediately set up a task force to examine what needs to be done to encourage U.S. companies to bring their manufacturing and research and development activities back to America’s shores. " "The department also must develop a list of “best practices” for states and communities to follow to help foster the repatriation of jobs that have moved abroad." Is this not happening already in … [Read more...]
Should we do more to repatriate jobs to the UK
Are we missing a trick? Last week saw the US approving legislation to bring jobs back to America that had previously been outsourced to lower-cost economies. The measure is aimed at reducing America's 9% unemployment, and with the economic case for outsourcing no longer as compelling as it was 10 years ago this seems like a good idea. This begs the question - should we be doing more to repatriate jobs to the UK, to tackle our own unemployment? Bringing jobs back to America Congressman Frank Wolf reports that "legislation approved yesterday in both the House and Senate requires the Commerce Department to immediately set up a task force to examine what needs to be done to encourage U.S. companies to bring their manufacturing and research and development activities back to America’s shores. " "The department also must develop a list of “best practices” for states and communities to follow to help foster the repatriation of jobs that have moved abroad." Is this not happening already in … [Read more...]
Should we do more to repatriate jobs to the UK
Are we missing a trick? Last week saw the US approving legislation to bring jobs back to America that had previously been outsourced to lower-cost economies. The measure is aimed at reducing America's 9% unemployment, and with the economic case for outsourcing no longer as compelling as it was 10 years ago this seems like a good idea. This begs the question - should we be doing more to repatriate jobs to the UK, to tackle our own unemployment? Bringing jobs back to America Congressman Frank Wolf reports that "legislation approved yesterday in both the House and Senate requires the Commerce Department to immediately set up a task force to examine what needs to be done to encourage U.S. companies to bring their manufacturing and research and development activities back to America’s shores. " "The department also must develop a list of “best practices” for states and communities to follow to help foster the repatriation of jobs that have moved abroad." Is this not happening already in … [Read more...]
Bank or pawnbroker?
There was a time when as a small business owner you could go to your bank with a reasonable business plan and you would get a modest overdraft. But not now: what has happened to make the banks so dislike overdrafts? Are banks now behaving more like pawnbrokers than old fashioned banks? Banks don't like unused overdrafts I was at a talk last week by a senior manager from a national bank, and he explained that his bank requires that an overdraft has to be covered by a capital reserve. And this is the case even if the overdraft is secured by the borrower. And fundamentally, what the bank doesn't like is unused overdrafts - they have a capital reserve for funds that have not gone out of the bank! This is why, if you go in to talk about a long term facility, they move you towards a loan. Short term support However, the presenter did say that many clients make the mistake of asking for a long term overdraft facility when what they really need is short term help. Especially for … [Read more...]
Get a grip on your cash flow
Predict and plan: work out in detail when you can expect cash to come in and plan how you will spend it. It will help you to see where you can generate extra cash to fund new projects if you are growing, or even pay off old creditors if you are stressed. While this applies whatever the size of business, it is particularly critical if you are a micro businesses or a small businesses with significant order-to-ship lead times, buying materials and selling products on credit terms, when you will have a significant working capital - cash - requirement to fund the work in process. On this article we'll show you how to put together a cash flow management workbook that will help you to manage your cash, month by month. Start with your order book and prospect list Starting with cash coming in, you'll know your order book, but what about beyond that? This is the hard bit - study your prospect list and write down when you can expect to get new orders from those clients. For this you have to … [Read more...]
Selling into export markets
Occasionally you come a cross a business that reminds you of what it takes to be successful. Here was a export business that was selling process control instrumentation into a well defined global niche market. Selling was done by a UK-based sales engineer who had intimate knowledge of his market place, and with a market-leading technology, the company had been able to price its products to make a handsome profit. Support costs were low and the products were made entirely in the UK. What more could a government want - a tax-paying export-led business that created employment in the UK! Many different ways of selling into export markets However, for most businesses, growing an export business is not going to be quite that straightforward. A product that someone wants; selling it to them; shipping it; getting paid; low aftercare costs; and making a profit - in principle doing business overseas is the same as doing business at home, but it is certainly more complex, and it is the … [Read more...]
Why are small businesses not borrowing from banks?
A recent article in the Daily Mail suggested that small businesses are hoarding cash because they fear overdrafts could be slashed at any moment. However, isn't it more likely to be the issue of personal security - business owners are just not interested in offering personal security for what in many instances are relatively modest sums of money, required on an intermittent and short term basis. What are overdrafts and loans for? You get the impression that the banks are trying to re-establish the principle that overdrafts are essentially for managing cash flow and that loans are for working capital. This distinction was blurred until recently due to the banks' historic attitude to risk that has recently toughened, and the risks and time-scales are different in the two cases. You need a good business plan But, whether it is for an overdraft or a loan, a good business plan is required to present to the bank, but they are not the same plan - they have different objectives and … [Read more...]
What do you do when a customer makes a complaint?
What will you do if your product or service fails to meet your client's expectations and they make a complaint? You certainly don't put it in your desk drawer and hope it will go away - that's a sure way to trash your reputation. And don't hide behind your Terms and Conditions. We've all experienced being given the brush off when we thought we had a legitimate complaint - it makes you think twice about using the same company again. Actually, you get back to them promptly and talk to them about the issue: you promise to try to resolve it within a given time-frame, and try to keep that promise. Your client might still be unhappy with what you supplied, but they'll be happier with you and your company as they will know you have responded to their complaint and their issue is being addressed. Put in a Complaints Handling System And you should do this systematically for every complaint. Faced with this, recently, a client asked me what was meant by a Complaints Handling System that … [Read more...]
Business Improvement Strategy
Imagine a business that was trying to grow, but was making no profit, generating no cash, and not paying its owner-directors a proper salary or dividends. By going over their business, end-to-end, and they found 27 areas where their business could be improved, and by implementing their 27-point plan, within a year they had turned their business around to a PBIT (profit before interest and tax) of 17% of sales. They then tackled their interest payments: with help, they were able to find lower-cost working capital so that they could pursue their plans for growth, and still have enough to pay themselves a decent return. Business improvement should be part of your business strategy There is as lesson to be learned here about thorough and systematic business improvement: no matter whether your business is rocky like theirs, or doing reasonably well, there can be a huge benefit in having business improvement as part of your business strategy. It can help you to: Find new … [Read more...]
Continual Improvement
As a small business owner wanting to grow your business you will be looking at ways to improve your business to generate more profit and cash, to free-up working capital, and to make more effective use of your own time. While there may be one-shot improvements you can make, such as outsourcing an overhead function to make a net saving, there will always be those issues where the benefits are obvious but the means of achieving them are not so clear. Continual Improvement is not just for manufacturing quality Adopting a systematic, continual improvement approach to those issues could be the answer. It used to be thought that continual improvement was about manufacturing quality, but these days, quality is seen as something that should be embedded right across a business. And likewise the continual improvement methodology can be applied to issues, right across a business, in every function, for example: improving the enquiry rate from an existing marketing budget increasing the … [Read more...]
Four steps to make sure your clients pay on time
We all understand that not collecting payments on time has as a severe impact on your cash flow, but let's not forget also that you are effectively giving your clients, your debtors, interest-free credit, and this also has an impact on your cash flow and your profit. Whatever the size of your business - start-up, sole trader, micro business, small business or SME - the remedies are the same. Follow these four steps and you will reduce the amount of money owed to you: send out the invoice as soon as you ship the goods; call the client the day after you send out the invoice to check the invoice has been received and there are no issues with the goods or services supplied; call the client 5 days later to carry out the same checks, so that there no excuses on that front; and call the client 5 days before you expect to get paid to make sure your invoice has gone into that month's payment run. Pretty obvious really, but it is surprising how many companies are not doing that. DSO - … [Read more...]
Collecting cancellation fees
People don't like paying cancellation fees even if they are aware of them when they book their appointment, to the extent that charging a fee often results in the client going elsewhere. No easy remedies Apart from asking for a non-refundable deposit, there are no easy remedies. Charging a cancellation fee to their credit card leaves you open to the client disputing the charge and claiming a refund, the excuse being: they did not receive your service, they were not aware of your cancellation policy (even if you did tell them), and they did not authorize the charge. Avoid cancellations in the first place So, by far the best way of reducing lost revenue is to avoid the cancellations in the first place. Send the client a reminder 24 hours before the appointment either by SMS, email or phone and get a confirmation of the appointment; Ensure your staff are well trained to handle objections and secure the appointment; Survey the clients to find out why they cancel and address the … [Read more...]
