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Launching A New Business

7th February 2018

I am regularly asked to give people advice ahead of them commencing with the launch of a new business. It is something that I, myself, have done successfully on a number of occasions, and as such I have learnt, along the way, many important things to consider. This blog summarises the main considerations, and should help as a useful reference point to those who seek my thoughts in the future.

The first things to think about very seriously are as follows. (i) Are you ready to give this new venture everything you’ve got?, and (ii) Do you have a good product or service that people will want to purchase at a level that makes the whole idea worth it? You need to be totally committed and prepared, at least initially, to be living, breathing, thinking and sleeping this idea. But before all that, will it actually give you, in terms of income, job satisfaction or whatever other measure that defines success, the results you are looking for?

What’s in a name? Well absolutely everything. You really need to work hard at coming up with a good business name (and the associated brand identity) that will stand the test of time. Your name and accompanying tag line needs to reflect the kind of business you see yourself being, not just today, but years down the line. Do you want to put your own name within the title of the business? This may, or may not, be a good idea. If we take the name ‘A Smith Ltd’, what is that actually saying to customers? Should the name not reflect what we do? I would always go with a big YES on that front. So, ‘A Smith Plumbers Ltd’ would be far stronger in my opinion. What about reflecting the marketplace in which you trade, either geographically or by sector? So, we could end up with ‘A Smith Household Plumbers Scotland Ltd’. OK now things are getting a bit bonkers and we have possibly gone too far. That is where the importance of a tag line comes in (something that should be included in all marketing material, from the signature on your emails through to the words on the side of the van). Now, we may end up with ‘Plumbers Scotland Ltd’ as the name, supported by the tag line, ‘Delivering Quality Service To Householders’. Other things to consider in your name choice are as follows. Is anyone else using the same name, and is there web domain names available for that name? For the former, you can check Companies House for Ltd company names in the UK, as well as resources such as National Business Register. And don’t forget the easiest of checks, using internet search engines. And here is the point. If anyone trading in your sector and/or your trading area geographically has a name similar to yours, you would be well advised to steer well clear and come up with something different. To not do this would be an open invitation to being forced to, later down the line, having to totally re-brand your business (sounds expensive and risky). And to finally close off this paragraph, the web domain name? For goodness sake do not go all the way down the line of getting the business name checked and registered, to then find you can’t have a web domain that reflects your business name. So check this out early on. 

Should I go for Limited (Ltd) Company Status, or should I be self-employed (or a partnership)? First of all, becoming Ltd isn’t that complicated. In fact it can be done in a matter of days, as opposed to setting up a business bank account which can take, relatively speaking, far longer. Being Ltd has certain requirements, but comes with it the protection from risking your personal assets. Also a Ltd company has its own separate legal identity to its owner(s). This means that when you work for your own Ltd company, you are actually an employee of the business you own as a shareholder. Being self-employed also has benefits and risks attached in that respect. Get good advice on these options, but in my opinion do not do one or the other purely based on a perceived cost, as in reality it’s not really a decision that needs to be driven by price.

Do I need an accountant? If you are Ltd company, then definitely yes. If you are a sole trader, you may be able to muddle through tax returns etc., yourself. But for the sake of a few hundred pounds per year (which can be written off as a business expense), if you can at least keep up-to-date with the books, is it worth your time doing all this yourself, and potentially making errors along the way? Now if you are not that busy (which may mean that every pound is a prisoner!), and you are up to date with your books, then it could be worth the effort saving on accountants fees. But, if you are busy, I would argue that you should focus on what you are there to do; deliver quality service for your customers. I have had direct experience of a small business not being able to deliver in a particular week because the boss was pulling together, at the last minute, the books and the tax return. What a shambles! I took my business elsewhere.

Do I need to be VAT registered? Well if your turnover is going to exceed the threshold set, then yes, you have no choice in this matter. On the other hand, there is nothing preventing you becoming VAT registered if you are below the threshold. There could be advantages to being VAT registered (e.g. allows you to reclaim the VAT on purchases), but, if many of your customers aren’t VAT registered (e.g. private individuals who can’t reclaim VAT themselves), then not being registered could give you a pricing edge over a competitor who is. So think about it in these terms, if you have the choice (i.e. below the threshold). Don’t, however, let anyone give you the impression that being VAT registered is complex or involves lots of extra work. The reality is, that this is not the case.

If I am a Ltd company, how much share capital do I need to invest? In short, as little as possible. Bear in mind that the shares you purchase in the business need to be paid for at the start. If you value the shares for 100% ownership at £10k, that’s what you need to put into the business bank account on day one. You aint getting that money back until you either wind up or sell the business (or some of your shares) in the future. If the business fails, again you are probably not getting your invested income back (or at least not all of it). The next question may therefore be, but the business needs £10k for start-up costs etc.? The answer to that would usually be along the lines of the following. Set the business up with minimal share capital (e.g. £100.00), and then give your business a personal directors loan of £9,900.00. You will be able to start taking this loan money back (not an option if it’s tied up as share capital) once the business can afford to pay it to you, either as a lump sum or over a number of smaller payments. I have seen some terrible errors on this front whereby people just haven’t realised the consequences of decisions such as this early enough in the process.

How much can I pay myself? Well in short, if it’s your own business (i.e. no other shareholders or partners), as much as the business can afford to pay you, but with always one eye firmly fixed on your cash flow projections. There are, however, a number of things to consider, even more so if the business is Ltd status. If you are a shareholder in a Ltd company you are also allowed to receive dividends (assuming profit has been made and the business can afford to pay), as well as taking a salary. It is wise to look at the best mix of these two methods of paying yourself from a tax and national insurance perspective. Tax rules etc. change every year. The best advice is to ask your accountant the most tax efficient combination of the two, for your personal circumstances. BUT you also need to allow for the fact that you will almost certainly want to ensure you are paying enough to cover national insurance contributions etc. which govern matters such as, are you contributing enough over the whole of any given tax year to ensure your state pension entitlement is being fully funded. If you are the only shareholder in the business then decisions in matters such as these are relatively easy, whereas with more than one shareholder you may need to allow for other persons circumstances, which leads me on nicely to the final point.

Should I own the business myself, or ask someone to be a co-owner? If there is no good reason to have a co-owner, other than ‘it would be nice’, then I would suggest, if at all possible, you go it alone. If you own it all outright, then you can make all of the decisions without anyone else getting in the way, or arguments occurring. Now that doesn’t mean, off course, that you can’t go to other people for advice or to bounce ideas around with. It just means once you have decided to do something, on a daily basis, you can move quickly and get on with it. On the other hand, when there has to be more than one owner (especially when it’s a 50/50 arrangement) you need to agree upfront, ahead of any potential disputes, how you are going to resolve differences in opinion. The time to agree all of this, is at the outset, not during your first heated debate! Many businesses can only succeed with the effort and true commitment of more than one person. If you are in this situation you need to prepare well, so that if there are disagreements the business doesn’t suffer and you remain together working effectively as a strong unit.

Health Warning: All of the above thoughts are of a generalised nature. Each business set-up has its own particular circumstances, and as such, in making any decisions relating to the above points you must seek specific professional guidance reflecting your own situation.

Who’s Driving Your Bus?

7th November 2017

In short, if it isn’t you, yourself, then it flippen well should be. Let me explain…

Too many people feel that life conspires against them. Circumstances have merged in order to stagnate their self-development, or halt their career, or ‘put on ice’ some personal ambition. For some, for sure, at times, yes life can be very much like this. I don’t dispute that. We all have moments, days, weeks… when things beyond our control (‘uncontrollables’) occur, & we have to deal with it the best we can. But for many of us, the bulk of the time, we are who we are, or where we are, because of the decisions we’ve made in the past. The things we have chosen to do, or chosen not to do.

Whether you are a leader, a manager or just (hmm – don’t like that word – no-one is ever just ‘just’) part of a team, what you do with your time, & how you present yourself & your ideas, can have a big impact on those around you, the journey you are on, & your final destination.

What I am saying is that there is so much around & in front of you that falls into a category that I would call, ‘controllables’. These are things that you can, through choice, have a direct, positive impact upon. As opposed to an arm’s length, negative, lukewarm, mediocre at best, excuse for not trying your hardest or being the best version of yourself there is. If you want to achieve anything meaningful you should be seeking ways that take you closer to the point of success. People who are successful often will find the right route through hard work, whilst those who fail to achieve greater things usually, early on in the process, only find an excuse. I can hear these ‘reasons to fail before we even start’, right now as I type: “It’s too difficult”; “My boss won’t agree to change the way we do things”; “The system is against me”; “I’m not any good at this”; “I’m scared that it all goes wrong & I look stupid”.

Seriously! If you really want something that bad, you will find a way, or at the very least put in the hours & give it a darn good try. “If you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse” (Jim Rohn, American Entrepreneur). If all you do find is an excuse, then you possibly just didn’t want it bad enough. In which case, don’t complain about it. It was your choice not to push yourself harder, or step outside your comfort zone. Accept responsibility for your own decision not to pursue it fully. But don’t kid yourself on & don’t blame it in someone else. Where you are at, is down to you, & you alone. Now that may be good enough for you, & there is most definitely no sin in being happy with your lot.

But what if you are feeling that you could be doing better. Well, take a long look in the mirror & give yourself a good kick up the behind & change your attitude & your approach. Once you change, you may very well find that things around you begin to change also. Positive things begin to happen. Big steps, small steps – but all heading further than what would be the case if you hadn’t accepted self-responsibility. So, get on board the bus, but don’t be a passenger. Take an active role, & get in the driving seat. Get that idea, or project, or new personal goal on the road. Find a way, not an excuse.

Communicate – It’s Really That Simple

12th November 2016

As managers and project team leaders we reside over complex tasks and scenarios that need a considerable amount of thought, planning and ultimately, effective delivery. Despite all of this effort however, sometimes; somewhere; somehow; something goes wrong. And when it does, you need to get it fixed. But that is just the beginning, as you also (arguably more importantly) need to explore how to avoid a recurrence. Or indeed, many recurrences – hence why arguably more important.

So following on from the ‘incident’, you then investigate more thoroughly what went wrong so that it doesn’t happen again. Surprisingly, a huge percentage of the time when mishaps do occur they are caused, quite simply, due to poor communication, misdirected communication, or worse still, no communication at all. If you think about any failures in task delivery you have been involved with, I bet that the majority of time communication has been at the heart of what went wrong. Either that, or, at the very least, better or faster communication could have prevented or reduced the impact on those affected.

As a leader you should encourage (not strong enough Neil – this stuff is important. OK change ‘encourage‘ to ‘insist‘) your team to communicate everything they come across that could impact, not only upon their own responsibilities, but those around them and the project goals overall. And when they do come across things you need to be receptive to them telling you about it, as opposed to you creating an environment whereby they are apprehensive about doing so. Getting the communication right, at every level, means that life becomes so much simpler, as many avoidable mishaps are dealt with before they actually become a ‘mishap’ in the first place.

I once had someone in my own business saying to me; “Neil, all of this communication is wasted energy. Nothing bad ever happens!” “And why the blazes do you think that is?” was my response.

What Do You Do With Your Time?

4th June 2016

I was very fortunate to be interviewed recently (May 2016) by NHBS regarding my new book, ‘The Effective Ecologist – Succeed In The Office Environment‘. One of the questions they asked me related to time management.  My response is shown below.

As managing director of two companies, as well as a bestselling author, time management must be a well worn tool in your kit bag. What’s your top time management tip?

Everything in this world is affordable or available at some level, apart from time itself. It doesn’t matter how rich you are, how many people you have in your team, whether or not you are the best at what you do. Once a moment has passed, you can never get it back. You can never go back to yesterday and undo the thing that prevents you from doing what you should be achieving today. My top tip – treat time as the most precious commodity you have available to yourself. Organise it well, be protective over it and use it well. Make sure you spend your time doing things that make a difference. If there is no benefit to spending time on something then stop doing it. No benefit, no point…  …We all are equally rich with the time we have immediately in front of us. The choice is, how do you choose to use it to best effect?  Click here to read the full interview.

The Ideal Recruitment Choice

14th March 2016

When it comes to building a successful team within your business it is essential that you recruit the right people into the roles that need to be filled. In a previous blog (Feb 2015) I discussed the importance of ensuring that the people you employ are a ‘good fit’ for your business, and I suggested that this is probably the most important aspect to carefully consider, albeit the toughest one to measure during the selection process.

What, however, is the overall blend that ideally you are seeking to acquire when selecting new team members? As the Venn diagram displays, you are ideally looking for the candidate that first and foremost is a good fit for your team, and in addition has the suitable experience and the correct level of technical knowledge. Only when you have a potential employee who exhibits all of these characteristics, are you then faced with the ideal choice for the role. Of course there will be occasions when no-one satisfies all three areas, and you may be forced to choose someone who is less than ideal, or alternatively start the whole recruitment process again with a different approach.

So when faced with your next recruitment dilemma why not take the list of candidates and add them to your own version of the Venn diagram. Anyone who falls inside the overlap of all three areas surely has to be a serious contender. But for those who don’t, you would be wise to ensure that the successful candidate has been considered from a ‘good fit’ perspective (see blog dated 09 Feb 2015: Successful Recruitment Matrix).

 

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