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Small Business GuideA Guide to Starting and Running aSmall Business in Coventry & Warwickshire
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Small Business GuideA guide to starting and running a smallbusiness in Coventry & Warwickshire
Published on behalf of Business Link by Lansdowne PublishingPartnership Limited, 11-12 School House, 2nd Avenue, Trafford Park, Manchester M17 1DZ Telephone 0161 872 6667 Fax 0161 872 6665 ISDN 0161 873 8476E-mail: [email protected]
Whilst every effort has been made to ensure the accuracy of theinformation contained within this guide, neither Business Link northe Publisher can accept any responsibility for errors or omissions.You are strongly advised to seek professional help from a suitablyqualified business adviser. Publication of an advertisement in thisguide should not be taken as an endorsement by Business Link ofthe product(s) or service(s) offered.
CONTENTS
PAGE
1 INTRODUCTION 3-5
2 THE BUSINESS PLAN 6-7
3 MARKET RESEARCHUnderstanding your market 8-9
4 MARKETINGWinning sales 10-11
5 LEGAL ISSUESOperating within the Law 13-16
6 PROPERTYFinding the right business base 17
7 FINANCERaising money and accounting 19-23
8 OTHER BUSINESS SUPPORT ORGANISATIONS 24
9 THE DIRECTORYA to Z of business servicesand support agencies 25-28
www.businesslink.gov.uk
Running your own business can be the most rewarding
experience of your life. You will be faced with many
challenges along the way and to succeed you need
determination, dedication and self-belief.
Business Link is here to help you by making advice,
support and training as accessible as possible.
This guide is only a small part of the help that is available
to you. It aims to bring together all of the elements of a
comprehensive business plan and helps you to access the
range of support services that are available to help business
through the start-up stage to development and growth.
Business Link, along with our partners, are here to help
you to meet the challenges faced when starting and
running a business, by providing a range of advice,
information and expertise.
We wish you every success.
Paul Warwick
Enterprise Team Leader
For more information on how Business Link can
help your business, telephone 0845 600 9 006 or
e-mail [email protected]
www.businesslink.gov.uk
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1 Introduction
How This Guide Will Help You
The information and advice contained in this guide isproduced with the help of our independent team ofadvisers and specialists and is designed to help you get your business off the ground. If you are already inbusiness, the guide will help you develop for the future.
The guide covers all aspects of effective businesspractice from writing your business plan (an essentialbusiness tool), to marketing and selling your products.
It will help you focus on the key issues and actionsyou need to take to progress your business goals andmanage the changes to your home and working life,to give your business the best possible start.
Throughout, you will find useful information andguidance to help you make the right decisions.
Getting The Advice You Need
Many businesses fail within the first five years of operation.With help from Business Link, you can significantlyincrease the chances of your business surviving.
Business Link Services: Your SingleAccess To Business Success
Business Link provides a single point of access, tobusiness support, help and advice delivered at keylocations throughout Coventry & Warwickshire. Find outmore about our range of services by contacting us on0845 600 9 006 or e-mail [email protected] our website, www.businesslink.gov.uk
Starting a Business
Make the first step to starting a new business byaccessing the advice and training available to help yourbusiness succeed. Business Link can help improve yourchances of success by providing high quality businesssupport that meets your needs. Our workshops include:
■ Starting a business: Everything you need to consider ifyou want to start a business. This course starts at the
very beginning - from our motivations and skills, toour ambitions and plans. You will leave this workshopable to decide if starting a business is right for you.
■ Generating ideas for a business opportunity:This creative session focuses on how to generateideas that can make you money. You will leave thisworkshop able to direct your creative thinking, andmake plans to bring your ideas to life.
■ Investigating an opportunity: This sessioncovers everything involved in researching an idea.How do you find out if your idea could be a success?What techniques can you use? Essential planningfor everyone thinking of starting a business.
■ Planning for success: You will be guided throughall of the elements required to write a successfulbusiness plan. At the end of the workshop you willbe on the way to developing your own business plan.
■ Managing for success - legal issues: An insightinto the legal issues involved in running your ownbusiness. What is required of you by law and whatto consider at each stage? The focus is on bringingclarity to areas that people find difficult.
■ Managing for success - financial issues: A guide tothe financial issues that you need to consider whenrunning a business. What are the essential elementsto ensure the success of your business? You willleave this course with a clear understanding andoverview of the issues.
■ Managing through success - developing throughpeople: The essential guide to employing people,from advertising for staff, to selecting and managingthem. This workshop offers practical advice and isessential for everyone employing staff. It will leaveyou with a clear idea of your responsibilities bothlegally and as a manager, as well as understandinghow to get the best from your staff.
■ Marketing your business: Everything you need tostructure a good marketing plan and the besttechniques for implementing it. This coverseverything involved in preparing for your salescampaign… how to make people want to buy, how to
This section describes how this guide can help start-up or early stage businesses
meet the challenges and overcome the obstacles to running a successful business.
It also provides detailed information about how Business Link and other business
support enterprises can provide independent, bespoke advice, information and training.
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look after them and how to keep them coming backfor more. Full of techniques and ready to use ideas, toensure that your marketing works for your business.
■ Successful selling: Learn the secrets of a good salesplan and how to sell effectively. Covering everythingfrom telesales to the tendering process andpresentations to negotiations and closing the deal.You will leave this course confident that you have agood sales strategy and techniques to make it work.
■ The customer is king: Learn how to develop andmanage an excellent customer care programme.The aim of this course is to provide you withessential techniques and an understanding ofyour customer base which will lead to maximumcustomer retention and increased profits.
■ Business mentoring: One-to-one support, adviceand guidance.
These workshops are delivered across Coventry &Warwickshire. For more information, or to make abooking, call 0845 600 9 006.
Information Services
Whether you want in-depth advice, or the answer to a specific question, the information team is oftenthe first point of contact. They provide a fast, friendlyand accurate response or will direct you to therelevant business adviser or organisation to dealwith your enquiry.
Our information team provide a wide range of servicesthat include:
■ First line diagnostic reviews.
■ Access to local, national and international databases.
■ Help with complying with British Standards yourequire.
■ Information and advice on the grants and fundingthat may be available to your business.
■ A fast and efficient credit reference service.
Business Advice
Every year, Business Link assists thousands ofbusinesses providing a range of services designed tohelp you prosper. Our experienced team of BusinessAdvisers who will help you to identify and solvebusiness problems.
We can help you with independent advice and practicalsupport covering:
■ Starting a business and young business support.
■ Raising and managing finance.
■ Advice on IT and e-commerce.
■ Developing your workforce.
■ Growing your business for the future.
■ Assisting companies to trade internationally.
Workforce Development
People are your most important resource. Keeping yourworkforce motivated, ensuring that they have all thetraining they need to develop the skills you require andeffective communication are all key concerns for asuccessful business. Significant commercial benefitscan be gained by having the right development andtraining strategy. The right strategy is a powerful toolfor motivating your workforce and helping your companyto meet business goals, improve competitiveness anddevelop and increase its productivity. Companies thatencourage development and training are also more ableto manage industrial and technological change.
The workforce development support available is tailoredto the needs of your business and includes:
■ Assistance in developing your Development andTraining plan.
■ Identifying the range of qualifications mostrelevant for you and your employees, e.g. NationalVocational Qualifications, Apprenticeships andManagement Development.
■ Supporting the identification of Work Skills orEssential Skills needs.
Contact Us
Our website, www.businesslink.gov.uk, contains further indepth information with links to other sites that you mightfind useful. In addition, call 0845 600 9 006, for adviceand information or e-mail [email protected] also refer to the final section of this guide whichlists other local and national organisations that provideadvice and guidance to businesses.
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2 The Business Plan
Introduction
Briefly outline details of your business; its name,address, telephone/fax/e-mail details; the name of theowners/ partners and a brief outline of the product orservice of the business.
Objectives
Provide a brief outline of what you hope your business willachieve in the short term (next 12 months); the mediumterm (next 2 years); and the long term (3 years and more).
Management
Include CVs of the business partner(s) highlightingwork experience and education. Place particularemphasis on the skills and personal qualities you have,that are relevant to running your business for example,if you have bookkeeping experience mention that.Also identify any training needs you may have.
Market Research
You must be able to show that there is a demand foryour product or service and that customers will want to buy from you. This is done by carrying out marketresearch (See Section 3 for more information). You willalso need to show how you will promote your product or service and the associated costs.
Product or Service
Describe in detail your business’s product or service, sothat someone who has little knowledge of your type ofbusiness will be able to understand what you are doing,but avoid using jargon or highly technical terms.Also include details of the other products or servicesinvolved in making or producing your product or service, ie. raw materials.
Pricing
Demonstrate how you have arrived at your chosenprices for your products or services. Show how yourprices compare with those of your competitors.
Selling and Distribution
Explain how you will sell your product/service and howit will reach your customers eg. retail shop. State whatyour terms of trade will be this might include cash salesor 30 days credit.
Legal Issues
Indicate which trading style (eg. sole trader) yourbusiness adopts, and show that you know whatlegislation is relevant to your business and that youare adhering to it. (See Section 5).
Premises
Where will your business be based? You may base yourbusiness at home or choose to take on businesspremises. Justify the decision you make, outlining costsand length of leases etc. (See Section 6).
Financial Information
This is the most important section of the Business Plan.Help is on hand from Business Link to assist you inputting together the figures and all other aspects ofbusiness planning. You will need to include the following:
Financial Requirements
Explain what you need to raise money for, how much youwill need and where you will get it from. (See Section 7for assistance on theses areas) Include capital costs,such as equipment and cars, initial stock purchase,
Your business plan is an essential business tool. It is a document that sets out how
your business will operate. It will help you focus your ideas and should be produced
whether you need to raise finance for your business or not. By preparing financial
forecasts, you will be able to test the viability of your business idea before you
commit any money to it. If you are already in business the forecasts you make can
be used as a yardstick against which actual costs and sales can be measured.
Your business plan should follow the following format:
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initial running costs and ongoing operating costs
(anything you have to pay out, before you receive sales
payments for example, wages). Also include your
survival budget.
Cash-Flow Assumptions
Show how you have arrived at the figures in the
cash-flow forecast for example, you may make the
assumption that your customers will take 60 days to
pay. If you are providing equipment you already own for
use in the business, make this clear. Include how you
have calculated the sales forecast.
Cash-Flow Forecast
This shows when you will be paid for the sales you
make, and when you have to pay for the stock purchases
you make and expenses you incur.
Profit Forecast
This shows when sales and purchases are actuallymade (rather than the payment and receipts in thecash-flow) and will allow you to calculate the profit you expect to make.
Break-Even Point
The level of sales needed to neither make nor lose money.
Accounts
If you are already in business include up to threeyears’ accounts.
Additional Information
Include relevant supporting material such as leasedocuments, letters of intent, photographs of yourproducts etc.
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3 Market ResearchUnderstanding your market
It is crucial to separate pure market research from test
marketing. Market research involves understanding how
your industry works and where it fits into the market
place. Test marketing involves gauging the likely
response of the market to your offer.
There are two types of market research:
Desk Research
Secondary data or second hand information. There are
many sources of available information including libraries;
specialist directories (such as Kompass and Kelly’s) and
market survey reports (such as Economic Intelligence
Unit, Mintel or Keynote reports); local authorities and
government departments; trade associations; trade
press, and trade exhibitions.
Field Research
Primary data or first hand information. This is the only
way to gather certain information. There is no substitute
for speaking to people directly by telephone or face to
face. It can be done formally with questionnaires or via
relatively informal conversation. When conducting this
form of research be aware of a few basic principles:
■ Prepare your approach or opening conversation.
Do not present a threat.
■ Keep your questions short and simple.
■ Keep the number of questions to a minimum.
■ Plan your time, place and method of research
carefully.
■ Do not influence your subject’s answers.
■ Make the results of your research easy to analyse.
The four main subjects to research are:
Market Forces
There are many forces that influence your market place.
You need to be able to anticipate how they will shape
your market. They are known as PEST factors:
P olitics - legislation, rules, regulations etc.
E conomics - recession, interest rates, disposable
income etc.
S ociety - changes in population, culture, fashion etc.
T echnology - new advances in equipment, techniques
and method.
Customers
Consider your target markets. It may be the case that
almost anyone can buy your products or services, but
you do not have the resources to communicate with
every customer at once. To examine your options and
help you make decisions, several key questions need
to be answered, such as:
■ Which type of customers are most likely to want to
buy your product or service first?
■ Where are they located?
■ Are there sufficient numbers?
■ How can you communicate with them?
■ What are the most important reasons for buying?
■ Who makes the decisions?
■ How often and when do they buy?
■ How much do they normally spend?
■ How and when do they pay?
■ Where do they buy from at the moment and why?
■ What are their likes and dislikes?
Market research forms the foundation of your whole business plan.
Many businesses are hindered by a lack of information at the planning stage.
Basing all of your strategic decisions and financial forecasts on assumptions could
be disastrous. Market research is an ongoing activity. Information needs to be
gathered and regularly updated in order to stay one step ahead of the market.
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Competition
Consider your competition. If there really is no oneoffering an equivalent product or service then what arethe alternatives from the customers’ points of view?It is only by understanding your customers that you areable to identify the competition in the first instance.Having done so, you must now list their strengths andweaknesses. Crucially, remember to evaluate thesefrom your customers’ perspective. It is very temptingand dangerous to be subjective about your competition.You can now clarify your Unique Selling Points (USP)and confidently answer the basic customer question:What makes you better and different?
Suppliers
Finally, consider your suppliers. It is essential once youbegin your promotional activity that you are able to meetthe demand from your customers:
■ How stable is your source of supply?
■ What are the minimum order requirements?
■ Can you get credit?
■ Are there any potential problems with the availabilityand regularity of supply and delivery?
■ How dependent are you on your suppliers?Is there an alternative?
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4 MarketingWinning sales
Research and Analysis
Market research is covered in detail in Section 3.
Strategic Decisions
Use market research information to make decisions
about five key areas:
Target Market(s)
It is unlikely that you will have the resources to service
every possible type of customer. You must identify which
types of people are most likely to require your products
or services in the foreseeable future.
Product
This means whatever your business has to offer,
whether it be time, creativity, products or services.
You have to decide what your chosen market will accept
in terms of your corporate image, ‘product’ range,
packaging and presentation, and sales messages.
Price
You should look at pricing from two angles, bearing in
mind that the lowest price is not necessarily the best.
Firstly, what is the least you can afford to charge?
(Cost-plus pricing), and secondly, what is the most your
customers will pay? (Market pricing). Between these
‘floor’ and ‘ceiling’ prices you have a wide range of
choices and the following should be taken into account
to help you decide:
■ Image ■ Profit margins
■ Production capacity ■ Flexibility to alter price
■ Current and future levels of competition,
demand and supply
Place
You must make decisions to ensure that whereverpossible you make it easy and convenient for yourcustomer to access your product. Look at:
■ Location ■ Communications
■ Premises ■ Mobility
■ Distribution
Promotion
The key to successful promotion is to ensure that youprovide your customers with the best opportunity to seeor hear your message. For this to happen you mustknow as much as possible about your market such aswhere they live and work, how they travel, and whichmedia they read, watch or listen to.
Don’t automatically follow the traditional routes ofpromotion in your industry.
■ Advertising: TV, radio, newspapers, magazines,posters and trade press.
■ Direct Marketing: faxing, phoning, mailing,leafleting, coupon response ads.
■ Merchandising: window and in-store displayor layout.
■ Exhibitions: reputable and relevant events.
■ Public and Press Relations: media coverage,events, sponsorship.
■ Face to Face Selling: appointments, cold-calling,party plans.
Forecasting and Targets
Once you have made your five key decisions anddetermined your strategy, you are now ready toforecast the results. Only by basing this on yourknowledge of likely customer buying patterns can
Marketing is essential to help retain a regular flow of sales and work. Often small
businesses will put a great deal of effort into marketing when they set up in business,
only to subsequently lose the marketing momentum they have established.
Marketing is an ongoing process. There are 5 stages:
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you begin to calculate a realistic forecast of sales toinclude in the cash-flow forecast of your business plan.Consider the following:
■ How many customers or sales can you expecteach month?
■ What is the average spend on each type of sale?
■ What seasonal variations exist?
■ How and when will you be paid?
■ What is the maximum level of sales possible in a year?
■ What level of sales do you require to break-even?
■ What lead times and conversion rates can you expectfrom your promotion?
The Action Plan
This is produced after having set targets andmade forecasts.
■ Who is going to do what and when?
■ How long must each activity be sustained?
■ How often should it happen?
■ How much will it all cost?
Finally calculate how much money needs to be allocatedto each month’s activity. This is your marketing budgetwhich can be transferred to your business plan.
Monitoring and Control
Once you have finalised your action plan the next stageis to implement it. The results of your activities must becarefully monitored, as money can be easily wasted.Changes may be needed and your plan altered orupdated. Consider the following:
■ Method of promotion ■ Cost of sales
■ Availability of resources ■ Market response
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5 Legal IssuesOperating within the law
Choosing a Legal Structure- The Pros and ConsFor most new businesses operating as a sole trader isthe least complicated and most common businessstructure. If you are going into business with otherpeople you may decide to operate as a partnership or aco-operative. Forming a Limited Liability company isanother option that limits your risk to the amount ofmoney you put into the business. However there aremore regulations to deal with and banks still want youpersonally to guarantee any borrowings.
Sole Traders
These are individuals who set up in business.You will need to inform HM Revenue & Customs ofyour self-employed status when you start to trade.If you are not trading under a business name you mustdisclose your own name and address on your stationery.HM Revenue & Customs require you to keep recordsand complete an annual return under self assessment.Personal income tax at normal rates is payable ontrading profits, under schedule D.
Class 2 National Insurance Contributions are paid weeklyat a flat rate, while Class 4 contributions are based on theprofits you make and are paid at the same time as yourincome tax payments. It is advisable to open a businessbank account to keep business money separated frompersonal money. If a sole trader’s business fails theowner is personally liable for all the business’s debts.
Partnerships
These are formed when between two and twenty peoplechoose to trade together as a single business.Each partner is responsible for the other partners’ debts.
Partnerships have been compared to marriages:ideal when the partners are in harmony but fraught withproblems when they are not. Prospective partners arestrongly advised to consider a formal partnershipagreement which indicates the rights and responsibilitiesof each partner. A solicitor is able to draw up a Deed ofPartnership, for your business, this will indicate howprofits will be distributed, losses apportioned and howgoodwill is to be valued on the death or retirement of oneof the partners.
Tax and National Insurance are treated in much thesame way for partners as they are for sole traders.
Limited Companies
These are legal entities in their own right that can sueand be sued. The main advantage of a limited companyis that the company’s owners (shareholders) are onlyliable for any amount remaining unpaid on the sharesfor which they have subscribed. However the capacity ofa company to borrow is restricted unless the directorsare prepared to personally guarantee any loans theyobtain from banks and other financial institutions.To form a limited company you can either buy an‘off-the-shelf’ company from a company registrationagent (see Yellow Pages) or ask a solicitor or accountantto form a company for you. Limited companies aresubject to legal requirements affecting disclosure ofinformation: names and addresses of directors must befiled at Companies House as must annual accounts anddetails of shareholders. Accounts are subject to anannual inspection or audit depending on turnover.
A limited company’s taxation is treated differently tothat of a sole trader or partnership. The profits of thecompany are subject to corporation tax (at prevailingrate). Losses can be carried forward to the next year’strading accounts. The directors of a company payincome tax through PAYE. Depending upon your
You should be aware of the laws relating to running a business before you start
trading. Firstly, you must decide on the legal structure of your business then,
find out about the laws which relate to running businesses in general and to your
business in particular. This section gives an overview of the main legal issues which
apply to running a business explaining where to go for help. It is by no means
exhaustive, and should you be in any doubt seek advice from a solicitor.
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financial status, the formation of a limited company mayor may not have beneficial tax implications.
Limited Liability Partnerships
Since April 2001 a new legal format has been availablefor businesses owned by two people or more called aLimited Liability Partnership. It has the flexibility of aPartnership and will be taxed like a Partnership but itwill be registered at Companies House and will have toadhere to the slightly modified provisions of theInsolvency Act 1986. Should the LLP become insolvent,it will be treated similarly to a Limited Company.
Co-operatives
These are a simple way for two or more people to gointo business together as equals. A co-operative is not aseparate legal structure. It is usually based around alimited company structure, but with special rules whichgive everyone who works for the business a share ofownership and a say in the business. This givesmembers the advantage of limited liability while alsogiving them the rights of employees on PAYE.
Coventry and Warwickshire Co-operative DevelopmentAgency (CDA) offers free help if you are consideringsetting up a co-operative. The CDA provides help withbusiness planning, finding finance, legal registrationand business skill training. Co-operatives can also beformed from existing businesses, for example throughan employee buy-out. For an appointment with one ofthe CDA’ s business counsellors call 024 7663 3911.
Business Names
If you form a limited company your company name hasto be registered with Companies House (0870 333 3636)and you will not be allowed to trade under a companyname already in use. Sole traders and partnerships donot need to register a company name by law, howeveryou should check as thoroughly as possible that thename or title you intend to use is not already in use byany business or company. Failure to do so could resultin legal action. Use the Companies House database forlimited companies, undertake your own research or usea specialist company to check that your name or title isnot in use. Limited companies that trade under a nameother than that of their limited company should alsocheck that the title or name is not already in use by anybusiness or company.
HM Revenue & Customs
You must contact your local HM Revenue & CustomsEnquiry Centre to let them know you have startedtrading, and the legal structure you have chosen.Contact 0845 366 7842 to be directed to the appropriateoffice.
Self assessment tax returns need to be completedevery year by anyone who is self-employed or acompany director. Call the self assessment Helplineon 0845 900 0444 for more information.
Limited companies are required to operate a PAYE(Pay As You Earn) system. If you are a new employer callthe ‘New Employers Helpline’ on 0845 607 0143 foradvice on PAYE and other areas or visit www.hmrc.gov.uk
National Insurance
As a newly self-employed person it is essential thatyou register with HM Revenue & Customs NationalInsurance Contributions Office, which provides a starterpack explaining all about Class 2 and Class 4 NationalInsurance contributions. Call the Self EmploymentService Call Centre 0845 915 4655 for more information.
If you operate as a limited company Class 1 NationalInsurance contributions will be payable at the sametime as your income tax through PAYE (see above).
A helpline is available for employers on 0845 714 3143.
VAT
If you expect your turnover to exceed the registrationthreshold of £61,000 a year, then you must by law beregistered for VAT and you may be liable to financialpenalties if you are not. If your business’s turnover isbelow the registration threshold you can registervoluntarily so VAT can be reclaimed on purchases ofequipment, goods and services etc. However VAT mustbe charged on taxable sales.
Contact the HM Revenue & Customs National AdviceCentre on 0845 010 9000 for a range of help andinformation or visit www.hmrc.gov.uk
Working from Home
Many small businesses are started from home.Check with your local authority to ascertain whatplanning permission is required. Also check yourtenancy agreement or the deeds of your property toensure that you are not prohibited from running abusiness from home. Your household insurance policyis unlikely to cover business equipment so contact yourcurrent insurer to get cover extended.
If you sell your home any part used exclusively forbusiness purposes will be subject to Capital Gains Tax.It may be subject to the Annual Uniform Business Rate.
Licences
Certain businesses require a licence to operate:
■ For cinemas, theatres, child minding, private hire,public entertainment, nightclubs, pet shops, boardingkennels, scrap metal dealing, residential care,
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nursing homes and agencies, street traders andindoor sports venues - apply to your local authoritylicensing department.
■ For sale of alcohol in shops, public houses, clubs,nightclubs, restaurants and hotels - apply to yourlocal authority licensing department.
■ For hotels, restaurants, abattoirs, hairdressers,mobile food sales, massage, skin piercing andtattooing, work involving asbestos - apply to yourlocal authority environmental health department.
■ For Heavy Goods Vehicles or Public ServiceOperators (buses and coaches) - apply to the VehicleOperator and Services Agency on 0870 606 0440 orat www.vosa.gov.uk
■ For licences for betting shops and other gamingestablishments, apply to your local magistrates’court (see phone book).
■ For money lending, offering and arranging credit,debt collecting, issuing credit cards, operating acredit reference agency, hiring, leasing or renting outgoods, you may need a credit licence. For clarificationand a licence application form, contact ConsumerCredit Licensing at the Office of Fair Trading on020 7211 8000 or at www.oft.gov.uk
Fire Safety
Contact the Fire Prevention Officer at your nearest FireStation (see phone book).
Health and Safety
All people at work whether employees, employersor self-employed are affected by Health and Safetylegislation. The legislation also affects the health andsafety of the general public who may be affected by yourwork activities either on or off your premises. If youemploy five or more people there must be a writtenstatement of health and safety policy. Health and safetylegislation is enforced either by your local authority orthe Health and Safety Executive. Contact the Health andSafety information line for advice on 0845 345 0055.
Trading Regulations
Your local authority Trading Standards or EnvironmentalHealth Officers will be able to advise you on laws relevantto your business and how to comply. Some businessessectors require licences such as food, entertainment,health and care, consumer credit and fireworks.Contact your local Trading Standards Service forguidance on regulations such as trade descriptions,labelling, pricing, product safety and age restricted sales.Contact your local Environmental Health Service forguidance on regulations such as food safety and hygiene,health and safety and pollution control.
Employment
If you employ people you have certain duties such asthe provision of a contract of employment andadherence to fair disciplinary procedures, employers’liability insurance etc. For advice on employment,contact the Advisory Conciliation and Arbitration Service(ACAS) on 0845 747 4747.
Insurance
There are certain minimum requirements which yourbusiness must have by law. If you employ people youmust have:
■ Employers’ Liability Insurance - to insure youremployees against risks caused by the nature oftheir employment.
If you own cars you must have:
■ Third party motor insurance - your insurancebroker will be able to advise you about the othertypes of insurance for you or your business.
You should also consider the following:
■ Public Liability Insurance - protects your businessif it is sued as a result of injury or damage to thirdparties or their property caused by you or youremployee’s negligence.
■ Product Liability Insurance - should be consideredif your products may cause injury or damage to thirdparties.
■ Fire Insurance - where there are business assetssuch as property, machinery or stock this policywould be advisable as would cover for explosions,floods etc.
■ Consequential Loss - covers your business forloss of profits if you cannot trade for a period oftime because of fire or flood.
■ Goods in Transit Insurance, Theft Insurance andMoney Insurance - protects cash or goods in transitor when on business premises.
■ Fidelity Guarantee Insurance - protects againstlosses caused by dishonest employees.
■ Engineering Insurance - the Factories Actrequires certain plant to be insured and checkedby a ‘competent’ engineer. Certain plant may bevulnerable to breakdown or damage as well asbeing dangerous to third parties. These risks canbe insured.
■ Personal Health and Sickness Insurance, andPermanent Health Insurance - (which pays yourwage if you are unable to work) are also available.
■ Professional Indemnity - liability for provision ofadvice and/or professional services.
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Data Protection Act
If you keep details of ‘living, identifiable individuals’on computer, even just names and addresses, withonly a few exceptions you will need to register yourbusiness with Information Commissioner (Formerly theData Protection Registrar). Call 01625 545 700 for aninformation pack.
Intellectual Property
When you start a new business, you should think aboutprotecting the valuable assets you have in the name,brand or logo associated with your business or in theinnovative product you may have developed. Intellectualproperty rights protect these assets: patents forinventions, registered trade marks for names, logos,slogans and brands and registered design right for theexternal appearance of a product. Patent and trademark attorneys can advise you on the best way toprevent others copying what you have created.
For more information contact the Patent Office, thegovernment department responsible for granting theserights, on 0845 950 0505 or visit www.patent.gov.uk
Disability Discrimination Act
Employers with less than 15 staff are now covered bythe employment duties of the Disability DiscriminationAct for the first time. This means that like largercompanies you will need to make sure you don’tdiscriminate against disabled employees, job applicantsor members of the public because of their disability.It may mean that you have to make ‘reasonable’changes to your workplace or employment policies orthat you provided a reasonable alternative way ofmaking your services available to disabled people.
Legal Advice
A solicitor can guide you through the laws which relate torunning a business. Under the Lawyers For Your BusinessScheme operated by the Law Society, designatedsolicitors will offer a free initial legal consultation of atleast half an hour. With the message that ‘prevention isbetter than cure’ a solicitor will attempt to forecast theproblems which may affect your business and help youavoid costly problems later. The solicitor will tell you whatfurther help you need and how much it will cost. You areunder no obligation to take matters further. A list ofsolicitors in the Lawyers For Your Business Scheme isavailable by e-mailing [email protected] visit www.lfyb.lawsociety.org.uk
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6 PropertyFinding the right business base
Assessing Your PremisesRequirements
■ Decide upon the type of premises you require.Retail space includes market stalls, retailaccommodation with short term licences and typicalhigh street shops. Industrial space includes factoryspace and small workshops in managed workspacessuch as those run by Warwickshire CountyCouncil and Coventry City Council. You may requireoffice space of the type available in a number ofmanaged business centres and serviced officeschemes. Both privately operated andcouncil run office accommodation is available inCoventry & Warwickshire.
■ Build the cost of premises into your business planand cash-flow forecast. It is important that you donot take occupation of premises in the faint hopethat the profits you will make will cover yourpremises’ costs - they very frequently do not!
■ Decide how important location is for your business.You could base the business in a town or city centre,edge of town, suburban, adjacent to your home, yoursuppliers or your customer base. It is also importantto consider whether road, rail and airport links willaffect your location.
■ Make a checklist of your physical requirementsincluding access hours; provision of central servicessuch as photocopying, typing, and fax; natural light;loading bays; furniture; water and drainage; threephase electricity; parking and other services that areimportant to the success of your business.
Finding the Right Premises
Premises information can be obtained from thefollowing sources:
■ Asking family, friends and other business people.
■ Commercial property agents (see Yellow Pages).
■ Local newspapers such as the Coventry EveningTelegraph, Nuneaton Echo, Rugby Observer,Leamington Spa Courier and Stratford Herald.
■ Warwickshire County Council offers a propertyadvisory service and comprehensive database of allcommercial and industrial property in the county.The council has a portfolio of workspaces and unitssuitable for most businesses. The service is freeand confidential, call 01926 412140 and or visitwww.warwickshire.gov.uk/wips
■ Special property information services, such asproperty bulletins of factories, warehouses anddevelopment sites published by local councils, orcontact Business Link.
Signing the ContractMost commercial workspace is let on a formal agreementthat can tie you down to burdensome and expensiveterms and conditions. To protect yourself from pitfalls, bearmed with the following questions to ask the landlord:
■ How much is the rent?
■ How often is it reviewed (increased) and on what basis?
■ How much are the rates and who is responsible forpaying them?
■ Is there a service charge?
■ How much is it, when is it reviewed and on what basis?
■ Is the rental paid by cash, cheque, standing order ordirect debit?
■ Is the rent due weekly, monthly or quarterly?
■ Is there a deposit? How much is it? Is it refundable?
■ What period of notice do you need in order to vacatethe premises?
■ What period of notice does the landlord have if hewishes to cancel the agreement?
■ Who is responsible for the repair and redecoration ofthe premises?
■ Do you have to bring the premises back to theiroriginal condition before you leave?
Most small businesses need cheap, flexible accommodationwith 24 hour access and central services. Before you signan agreement for commercial premises, consult a solicitor(use the Lawyers For Your Business Scheme - Section 5) orsee an experienced business adviser.
The decision to move into commercial property is fraught with pitfalls when not
properly thought out. If moving into commercial premises is the right decision for
you there are a number of important factors to be considered before you make the
move. After wages, premises costs are the second highest overhead for most small
businesses, so it is important that you make the right premises decision.
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7 FinanceRaising money and accounting
Raising Money
Correct financing of your business is crucial to itssuccess. Your business needs finance to:
■ purchase capital equipment and fund start-up costs.
■ provide working capital.
You will need to produce a business plan to show howyour business will operate and to forecast the profit itwill make. This is very important as it will assess theviability of your business idea without risking anymoney. If you are to raise money from outside sources,then your business plan will be essential to prove thatyour business idea works. Business Link can help toprepare a business plan. Alternatively all of the mainbanks provide very good business planning guides andaccountants or financial advisers will also help but you will have to pay for this service.
There are specialised schemes available, some of whichare detailed later in this section, but these have veryspecific criteria and tend to be ‘lenders of the lastresort’. These schemes can however be used as a mixand match with other funding packages and finance thatmay be available. All businesses will be required todemonstrate through their business plan that they areable to repay the total amount of funding sought.
There are several sources of finance available tosmall businesses:
Your Own Resources
Do you have savings or redundancy payments that youcan put into the business? Can your family help you out?If you can fund the business from your own resourcesthen the business stands a greater chance of success.You will not have the burden of loan repayments and thecost of interest. Having your own money at risk in thebusiness makes you even more determined to see thatthe business will succeed. It also gives confidence toother lending organisations that you believe in thebusiness sufficiently to put your money into it.
Banks
The major banks have well developed means of financialassistance, such as loans and overdrafts. Many have‘brand name’ types of small business loans eg;
Natwest Business Start-up Loan, and a local networkof Small Business Advisers or Business Bankers.These specialists will have undertaken a variety oftraining both within the Bank and occasionally by ashort term placement outside their own organisation.
Most offer free banking for a limited period this will be followed by bank charges being levied, although forbusinesses with smaller turnovers a set tariff will beapplied. Arrangement fees may be payable for fundingarranged but this should be known at the outset andmay be negotiable.
The banks are an important source of finance for manysmall businesses. When you start in business you willneed a business bank account to keep your personalfinances separate from your business finances.
Bank finance takes two main forms:
■ Overdrafts - a source of short term finance normallyused for working capital purposes.
■ Loans - longer term finance with regular repayments,normally used for the purchase of capital equipment.
Most banks have a long term commitment to businessgrowth and have a range of loans which can be tailoredfor various requirements. Overdrafts are generallyfor a shorter term, up to a year, and loans wouldgenerally be for longer term finance or asset purchase,1 to 25 year terms are available. The banks will assessthree major areas:
■ Business viability.
■ The borrowers credit rating or previous track record.
■ Security available for any loan, if required.
Interest rates and fees will be dependant on the amountof loan required, owner’s contributions and theperceived element of risk to the lender. The banks areresponsible lenders and will wish to ensure for theirown benefit and their clients’ that a business has theviability to repay any loan.
Alternative sources of finance are also available throughthe high street banks including:
■ Leasing and Hire Purchase.
■ Factoring or Invoice Discounting.
■ Commercial Mortgages.
■ Access to Government or Specialist Schemes.
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■ Pension Loanback Schemes.
■ Contract Hire.
■ Small Firms Training Loan Scheme.
■ Small Firm Loan Guarantee Scheme.
For all schemes contact clearing banks direct.
Special Schemes
There are a number of initiatives in Coventry and
Warwickshire which provide sources of finance for
businesses that have difficulty in raising money either
from their own resources or under the banks’ normal
lending conditions.
The Royal British Legion
The Legion’s Small Business Loan Scheme considers
applications from Service Leavers and unemployed
ex-Service people requiring financial help to start their
own business. If you are eligible for membership of the
Royal British Legion and are starting a business in
England, Wales or Northern Ireland you may receive up
to £5,000 to help. However, loans will not be given to
assist the expansion or to support an existing business.
For more information contact The Small Business
Advice Office, The Cottage, Ordnance Road, Tidworth,
Wiltshire SP9 7QD. Telephone 01980 847753.
Arts Council, England
The Arts Council, England, provides information on
grants for the arts, other funding opportunities, and
details of current projects that are happening across
the country. In the West Midlands, the main funding
programme is grants for the arts. You can find out more
about this and other programmes by visiting the website
www.artscouncil.org.uk or by contacting the West
Midlands office at 82 Granville Street, Birmingham
B1 2LH. Telephone 0845 300 6200, Fax 0121 643 7239.
Young People
The Prince’s Trust
The Prince’s Trust are a UK charity that helps young
people overcome barriers and get their lives working,
through practical support including training, mentoring
and financial assistance. For those wanting to run a
business, start-up support from the Prince’s Trust is
available for 18-30 year olds including a low interest
loan, test marketing grant and ongoing advice from
a volunteer business mentor. For more information
contact The Prince’s Trust, Suite 2, Unit 16, Coventry
Enterprise Centre, Bilton Industrial Estate, Humber
Avenue, Coventry CV3 1JL. Telephone: 024 7665 0679.
Employment Assistance
The following organisations all provide some form
of assistance to help both employers and prospective
employees.
Connexions
Offers careers advice and other support to young
people, including signposting for business support.
Telephone 024 7670 7400.
Development Finance
Selective Finance for Investment in England(Replaced Regional Selective Assistance andthe Enterprise Grant Scheme from the DTI)
Selective Finance for Investment (SFI) is designed
for businesses that are looking at the possibility
of capital expenditure in an Assisted Area, but need
financial help to go ahead. Business Link acts as an
initial point of contact, and as advisers to applicants,
in some cases.
SFI is discretionary and normally takes the form of a
grant or occasionally a loan. All projects must meet the
scheme criteria and in each case the amount and terms
of assistance will be negotiated as the minimum
necessary for the proposed project to go ahead. There is
a minimum threshold for grant applications of £10,000.
For further information contact Business Link on
0845 600 9 006.
Venture Capital
Aimed at companies requiring £50,000+. Involves
selling shares/equity in the company and normally
involves a director being appointed to the board.
Contact through Business Link service or via British
Venture Capital Association 3 Clements Inn, London,
WC2A 2AZ. Telephone 020 7025 2950 or visit their
website www.bvca.co.uk
Private Investors/Business Angels
These are similar to Venture Capital but terms of
investment vary widely from investor to investor.
Particularly recognised in technology/IT/innovation
businesses, usually retired business people with funds
available who believe they can recognise growth
and opportunity and who wish to invest for a share
of future profits. Contact through University of
Warwick Science Park Ltd, Barclays Venture Centre,
Sir William Lyons Road, Coventry CV4 7EZ.
Telephone 024 7632 3000.
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Keeping The Books
Keeping proper financial records is not a favourite taskfor most business people but it does allow you to keeptrack of the profit you are making. Bookkeeping isessential and it is a legal requirement for all businessesto keep suitable records. These need to be retained for 6 years for taxation purposes.
■ Every business registered for VAT has to keep its records according to guidelines laid down byHM Revenue & Customs.
■ HM Revenue & Customs requires every business tokeep proper records for the calculation of selfassessment tax liabilities and for PAYE. If you fail to do so you could end up paying much more taxthan necessary.
■ Records are required for year end accounts.
If you have borrowings from a bank they will require
these to see how your business is performing.
If you trade as a Limited Company your accounts
must be submitted to Companies House.
■ You need regular information to ensure that margins
are maintained and profits are on target. Accurate
record keeping is essential to provide information
for managing the business.
Bookkeeping is not complicated. Advisers at Business
Link or an accountant can help by recommending a
bookkeeping system that is suitable for your business.
Contact Business Link on 0845 600 9 006 or visit
www.businesslink.gov.uk
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8 Other BusinessSupport OrganisationsRuralnet UK
Works with other agencies to stimulate and supportlocal rural enterprise and assists organisations withInformation Technology development and systems.Telephone 024 7669 6986.
Warwickshire County CouncilEconomic Development Unit
For advice and signposting support to both start-up and existing business. They offer a range of specialisedand dedicated services. Contact The Business SupportTeam on 01926 412737.
Sir Frank Whittle Business Centre/Business Resource Centre, Rugby
A centre which offers managed workspace for smallstart-up businesses and provides a range oftraining services and support. Visit the centre at,Great Central Way, Butlers Leap, Rugby CV21 3XH,or call 01788 551500/537353.
Centenary Business Centre, Nuneaton
Provides managed workspace with over 52 units forsmall businesses. Contact the centre on 024 7664 1399.
Amazon Initiatives
Offers advice, support and start-up incubator facilitiesfor businesses that are being started by womenbased in the Foleshill Regeneration area of Coventry.Based at 280 Foleshill Road, Coventry CV6 5AH,Telephone 024 7668 5889.
Coventry & WarwickshireChamber of Commerce
Membership of Coventry & Warwickshire Chamberof Commerce, gives your business a competitive edge,giving you unrivalled access to support, advice andnetworking opportunities. Join the Chamber and getahead in business, call the membership team nowon 024 7665 4321.
Coventry & Warwickshire Enterprise Club, a Chamber ofCommerce Service, provides access to business products,services and events to help unlock and develop yourpotential for starting and running your own business.Find out more about the benefits of Enterprise Clubmembership at www.enterpriseclub.co.uk
University of Warwick Science Park
Provide a wide range of services mainly aimed at SMEsbut can include start-up businesses. Including BusinessAngels, specialised marketing support, and officeaccommodation. Telephone 024 7632 3000.
Women’s Business Development Agency
Promotes, supports and develops women’s businessthroughout Coventry and Warwickshire. Free andconfidential business advice, counselling and training isavailable to business start-ups and existing women ownedbusinesses. For further information call 024 7623 6111.
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9 The DirectoryUseful telephone numbers and websites
BUSINESS ADVICE:Business Link Coventry & WarwickshireOak Tree Court, Binley Business Park, Harry Weston Road, Coventry CV3 2UN ......................0845 600 9 006www.businesslink.gov.uk
ACAS (Advisory, Conciliation and Arbitration Service) .................................................................0845 747 4747www.acas.org.uk
Amazon Initiatives ........................................................................................................................024 7668 5889www.amazon-initiatives.org.uk
Arts Council, England - West Midlands .......................................................................................0845 300 6200www.artscouncil.org.uk
British Chambers of Commerce...................................................................................................020 7654 5800www.britishchambers.org.uk
British Standards ..........................................................................................................................020 8996 9000www.bsi.org.uk
British Venture Capital Association .............................................................................................020 7025 2950www.bvca.co.uk
Business Link (National)...............................................................................................................0845 600 9006www.businesslink.gov.uk
Companies House .........................................................................................................................0870 333 3636www.companieshouse.gov.uk
Countryside Agency (West Midlands)...........................................................................................0121 233 9399www.countryside.gov.uk
Coventry City Council....................................................................................................................024 7683 3333www.coventry.gov.uk
Coventry Bangladeshi Centre ......................................................................................................024 7622 3518
Coventry University ......................................................................................................................024 7688 7688www.coventry.ac.uk
Coventry & Warwickshire Chamber of Commerce .....................................................................024 7665 4321www.cw-chamber.co.uk
Coventry & Warwickshire Co-operative Development Agency..................................................024 7663 3911www.cwcda.co.uk
Department of Trade & Industry..................................................................................................020 7215 5000www.dti.gov.uk
Factors & Discounters Association ..............................................................................................020 8332 9955www.thefda.org.uk
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Government Office West Midlands...............................................................................................0121 352 5050www.go-wm.gov.uk
Health & Safety Executive ............................................................................................................0845 345 0055www.hse.gov.uk
HM Revenue & Customs ...............................................................................................................0845 366 7842www.hmrc.gov.uk
HM Revenue & Customs (VAT) ......................................................................................................0845 010 9000www.hmrc.gov.uk
The Information Commissioner (Formerly The Data Protection Registrar)...............................01625 545 700www.informationcommissioner.gov.uk
Investors In People .......................................................................................................................020 7467 1900www.iipuk.co.uk
Lawyers For Your Business..........................................................................................................020 7242 1222www.lfyb.lawsociety.org.uk
Mintel ............................................................................................................................................020 7606 4533www.mintel.com
National Federation of Enterprise Agencies...............................................................................01234 831623www.nfea.com
North Warwickshire Borough Council .........................................................................................01827 715341www.northwarks.gov.uk
Nuneaton & Bedworth Borough Council .....................................................................................024 7637 6376www.nuneatonandbedworth.gov.uk
Office of Fair Trading ....................................................................................................................0845 722 4499www.oft.gov.uk
Prince’s Trust (West Midlands regional office).............................................................................01384 892100 www.princes-trust.org.uk
The Royal British Legion (for small business).............................................................................01980 847753www.britishlegion.org.uk
Regenesis Leamington Spa ..........................................................................................................01926 883377www.regenesis.ik.com
Rugby Borough Council ................................................................................................................01788 533533www.rugby.gov.uk
Ruralnet UK...................................................................................................................................024 7669 6986www.ruralnet.org.uk
Shell LiveWIRE..............................................................................................................................0845 757 3252www.shell-livewire.org
Stratford-on-Avon District Council ..............................................................................................01789 267575www.stratford.gov.uk
Thomson Directory onlinewww.thomweb.org.uk
University of Warwick...................................................................................................................024 7652 3523www.warwick.ac.uk
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© Copyright 2006 Lansdowne Publishing Limited. All rights reserved.
No part of this publication may be reproduced in any material form (including photocopying or storing it in any medium by electronic
means whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright
owner except in accordance with the provisions of the Copyright, Designs and Patents Act 1988.
Thanks to Paul Warwick, Jennie Evans and Christine Stobbs for their invaluable assistance with research for the Guide.
Publisher: Lansdowne Publishing Partnership Limited, 11-12 School House, 2nd Avenue, Trafford Park, Manchester M17 1DZ
Telephone 0161 872 6667 Fax 0161 872 6665 ISDN 0161 873 8476 E-mail: [email protected]
Designers: Lansdowne Publishing Partnership Limited.
UK Trade Fairs & Exhibitionswww.exhibitions.co.uk
UK Trade & Investment ................................................................................................................020 7215 8000www.uktradeinvest.gov.uk
Warwick District Council ..............................................................................................................01926 450000www.warwickdc.gov.uk
Warwickshire County Council ......................................................................................................01926 410410www.warwickshire.gov.uk
Warwickshire County Council Economic Development Unit ......................................................01926 412737
WATCH (Working Actively to Change Hillfields) .........................................................................024 7655 0564www.watch-hillfields.org
West Midlands Regional Technology Centre (WEMTECH)..........................................................01527 595066www.wemtech.co.uk
Women’s Business Development Agency....................................................................................024 7623 6111www.wbda.co.uk
Yellow Pages Directorywww.yell.co.uk
Young Enterprise (West Midlands office) .....................................................................................024 7688 7927www.young-enterprise.org.uk
BUSINESS LINK
ONE CALL COULD MAKE ALL THE DIFFERENCETELEPHONE 0845 600 9 006WEBSITE www.businesslink.gov.uk
