Pitchforit Brings Dragons’ Den Opportunities to All

You may be among the millions who have watched the TV programme Dragons’ Den and cringed for the would-be entrepreneurs who are ill prepared to beard the dragons in their den. You might also have admired their courage in putting themselves into such a stressful situation. And you may have envied those who were successful and walked away with thousands of pounds of investment in their businesses by the dragons, as well as gaining the benefit of their experience and expertise.

The TV series, of course, can only work for a few businesses and with a few investors, while most small business entrepreneurs are having a really hard time getting any funding for start-ups or growth. Peter Hart and his wife did succeed on Dragons’ Den, winning £100,000 in investment from Duncan Bannatyne. They know just how nerve wracking that was, and they decided to set up a facility for anyone to pitch to potential investors without having to go through that stressful experience.

Pitching for Everyone

Their brainchild is the website www.pitchforit.co.uk, where it is free to upload a video pitch to investors. It has a panel of high profile investors who see it as both a way to find worthwhile investments, and to help and advise would-be entrepreneurs. Currently you can go onto the site, watch the pitch videos and read the comments and advice they have given. They include Mark Pearson, of MyVoucherCodes, Sara Murray of Confused.com, Brad Burton of 4Networking and original Dragon Rachel Elnaugh.

The way the website owners make money is that, If you’d like to upload a pitch but don’t feel confident about making a video, they will organise a professional one for you, at a price that won’t break the bank. They’ll even create an animation for it, if you’d rather not be just a talking head.

Proof That it Works

Even before it was successfully launched, pitchforit won £10,000 in digital media and mentoring for Laura Thomas to develop her website business Happy Sugar Habits. The investment came from someone who was not on the panel of business gurus, so it seems that other investors can be reached as well.

If both you and your outsourcedbookkeepers agree that your business development is being held back by lack of funds, you might want to give this a try. If you are worried that someone else might see your video and copy your idea, the site owners have this covered. They intend to add a facility to make pitches private and viewable only by investors, so you just have to wait for that to happen.

Managing your Credit Rating

Did you know that moving premises could affect your credit score? How? If you don’t report it swiftly to Companies House, announce it on social media sites or register it with relevant address directories, people will start wondering whether you’ve gone bust and asking questions about your company. And if someone else takes over your previous location, your credit score could get mixed up with theirs, which may not be good.

Everyone knows that a poor credit rating affects your chances of securing funding, but it’s not just for the banks that you need a good credit score. If you want credit from suppliers or to get the most advantageous deals on your telephones or your utilities, you need a good credit rating. So how can you get and keep one?

What you Can Do

Communicate with the credit agencies. Check the information they have on you and your business to make sure it is accurate. If not, get it fixed. Ask them for tips on how to raise your score if needed.

Make all business payments on time. If this is not possible, talk to the suppliers involved and try to negotiate new terms that you can stick to. Ask suppliers for their perception of your payment history, and share aspects that make you feel proud on a blog or on social media sites.

The Historical Aspect

Do you have a good entrepreneurial history? Credit agencies look at directors and business owners and what they have already been involved with. If you are new to the business world, you may be wise to get someone else on board who can provide a solid business history.

New Customers and Suppliers

Don’t get burnt by late paying customers. Before you issue credit, you should check the credit rating of any new ones. If they don’t pay you on time, it may affect your ability to pay your debts, so you get caught in the credit score downward spiral too.

If you go to new suppliers who want you to pay upfront, make sure they are creditworthy before you part with your money. If they go under before you got what you paid for, you could be left without the supplies you are expecting. You’ll have to fork out again if they are crucial to your business and you’ll still have to wait for them, possibly putting you in your customers’ bad books for not being able to deliver on time, and other suppliers’ if you don’t have the wherewithal to pay them on time.

Your outsourced bookkeepers have lots of contacts in the business world. Ask them to let you know what they’ve heard about you, and where you should take care before committing time and money.

What to Do About Late Payments

Many small enterprises in the business to business sector suffer cash flow problems because their customers do not honour their payment commitments at the time agreed. But Business Minister, Michael Fallon, believes that the majority don’t want new legislation regarding late payment because it could interfere with their business relationships. Instead he seeks ways of changing the late payment culture to make prompt payment the norm.

He is urging all FTSE 350 companies to sign up to the Institute of Credit Management's Prompt Payment Code.  The minister has announced that he will be publishing a list of those who don’t to name and shame them.

The Current Legal Options

You should not forget, though, that you already have legal options through the Late Payment of Commercial Debts (Interest) Act 1998. Under this, there is an understanding that, if no written or verbal agreement about payment terms has been made, the default period for a date that the debt is due will be 30 days from the date an invoice is received or a service is provided. After that period or whenever the debt was due according to a reasonable agreement, statutory interest may be charged on the debt, and the supplier is entitled to additional compensation.

For a variety of reasons, few small businesses choose to enforce this, even if they have to wait up to a scandalous six months for payments for supplies, services and expenses. Often this is because they fear that they will lose the late payer as a client, plus if word got around, it might jeopardise other business as well.

Reminding Customers of your Rights

It is still wise, however, to include a warning that you reserve the right to charge statutory interest on late payments when sending out documents such as quotations, order confirmations, invoices and statements. The statutory rate to quote is the Bank of England base rate at the time the debt falls due, plus 8%. This could be a deterrent for companies that tend to let payment dates slip.

It’s really important to stay on top of your credit control. Your outsourced bookkeepers will provide you with regular reports on this. If a customer hasn’t paid up on time, you would probably follow up with a letter or phone call, depending on the type of relationship you have with them.  It’s always a good idea to find out if there are any special circumstances around the missed payment if you can. Then you can choose to negotiate a new date or stepped payments if that seems appropriate, or you can remind them about your right to interest on what is due.

Taking Late Payers to Court

You may decide to stop doing business with persistent late payers and feel you have nothing to lose by making a claim against them. In that case you have the weight of the law on your side. You can claim for unpaid debts plus interest, and you can claim for the statutory interest on late payments during the six previous years.

Did you Fall into the Swap Trap?

In 2007, few people foresaw the drastic reduction of interest rates to come, including financial advisers. They were enthusiastic about swaps, the hedging products designed to protect business loans from interest rises. Some business funding from banks was conditional on having a swap attached.

This has turned into a bonanza for the banks, because when interest rates drop the swap customer has to pay the difference to the lender. These Interest Rate Swap Agreements (IRSAs) are also very costly to get out of, and that was often not explained to the customers before they signed them.

Losses can be Significant

One entrepreneur, who was persuaded to buy six IRSAs in 2007, says his total losses so far amount to £1.5 million and he is only still in business because the losses are spread among several enterprises and he still has one that is profitable. He maintains that break costs or other options were never mentioned before he purchased the swaps.

Swap Mis-selling Also Significant

This constitutes serious mis-selling because banks and their representatives, as well as independent financial advisers have a responsibility to point out all risks involved in any transaction, and to ensure that products are suitable for a customer before decisions are made. The FSA recently estimated that, of SMEs that purchased swaps, around 90% were mis-sold. Many have had to down-size their staff and their growth, or have even ceased to trade altogether.

Claiming Compensation

So the FSA has set up a scheme and ordered the major banks to sort out their small business swap customers and compensate them for their losses. If you have been a victim, have a total of up to 50 staff, with a turnover of not more than £6.5 million or a balance sheet of up to £3.26 million, and your lender is involved in this scheme, you can expect compensation. You should not have to involve a financial adviser, but you should not delay talking to the lender and asking what they will do about it and how soon. The Financial Service Ombudsman can also intervene in cases where compensation will not reach more than £150,000. To claim from lenders outside this scheme, you will most likely need to get legal support, so your claims will also need to cover your legal costs.

The first step is probably to work out the difference between what repayments you would have made if your loan had been free of the swap and what you actually paid. Your outsourced bookkeepers will be the best people to help you do this.

Do you Sell Online?

Only a small proportion of UK SMEs do. The others could be missing out on the many e-commerce advantages. It’s clearly the way of the future and, unless they make the jump, they will be left behind.

Benefits of Online Selling

If you sell products, by adding online selling to your physical store activities, you will suddenly open the door to a much wider customer base, and you can keep on selling through every 24 hours. An online shop never closes.

This can also apply if you provide services. It can be a new way to take enquiries and there may be items, such as advice and guidance papers that can be ordered and provided online. It could take your business into new and lucrative directions.

Compared to having a physical store or office, an e-commerce website puts no strain on your finances. There’s no rent to pay, and utility costs are minuscule. Your only investment will be in webhosting and maintenance.

When you get recommendations via social media, most people would not be able to physically get to you. If you sell online, this is never a problem. Offer an excellent product with brilliant service to wow your customers, and social media can bring you masses of online business.

Order processing and data capture will happen automatically on a website. It’s also easy to track online sales and monitor buying trends so that you can respond accordingly and match what you offer to what the consumers want.

Having both an online and a physical business can be a big help with marketing. People can do online research that will bring them through your doors when they go out to shop. You can make the links between the two sides of your business obvious with, for example, a competition flyer handed out at the checkout which has to be completed at the website. On the other hand, the website could communicate special offers in store or offer a discount voucher to be used there.

Making it Easy

If you are put off by the prospect of taking online payments and organising shipping, a little research will show you various readymade options that will do it all for you for a small monthly payment and transaction percentage fee. Some offer free advice on selling and marketing.

The one job you will have is to write compelling product descriptions, but if you can’t manage that you can outsource it to an expert copywriter. Why not ask your outsourced bookkeepers if their experience covers e-commerce clients? You could pick up some tips from them. 

Smarter Purchasing to Reduce Costs

Most entrepreneurs start a new year determined to make changes that will bring benefits. One of the areas of your business it could pay to take a good look at is purchasing. Sometimes we set up procedures, and get into habits, that are great at the time but may not continue to be the best way to do things as the business develops. Here are some questions that might help you recognise where this might be the case.

Having the Optimum Number of Suppliers

Are you buying just what you need, or are there some things you could do without that are eating into your profits? Can you prioritise what you need most and what could wait for a month or more? Could you reduce the number of suppliers you deal with so that you buy more from a few and could negotiate discounts for larger orders?

On the other hand, are you at the mercy of one major supplier, and have you thought what you could do if that one let you down for any reason? Having more than one supplier of the goods you need to buy gives you both back up and bargaining power.

Benefits of a Buying Consortium

Have you considered going into a consortium of buyers that place regular orders together? Companies that do this can share the burden of regular reviews and market testing for more economical ways of purchasing. They can also share due diligence reports on the supply chain to help with compliance with the new anti-bribery laws. When new suppliers are coming on board, a consortium has more negotiating power on price, terms and conditions than any individual SME.

Stock Management Procedures

Do you have procedures for checking goods on delivery before signing for them or noting that they haven’t been checked on the delivery note with the signature? Do you manage your stock so that you don’t have to hold more than you need at any one time?

If you have good relationships with your suppliers they may come up with ideas to help you. It’s in their interests to keep you happy and coming back for more. Some will even hold stock for you to be delivered as needed.

Benefits of Buying or Leasing

Sometimes it’s more economical to lease a major item than buy it. It can change your tax situation, so remember to discuss this with your outsourced bookkeepers. You only need to buy the advisory time of your accountant if they feel it necessary. 

Getting Ready for Your Annual Accounts

If you have a company with a March year end, you may be starting to think about the annual accounts about now. Your outsourced bookkeepers should have everything kept up to date, but did you know that the responsibility for accuracy lies not with them, or with your accountant, but with you jointly with any other directors of your company? You have 12 months from the year end to submit them, but most people do it three months before that, at the time that tax must be paid.

The Small Business Submission

If your turnover is less than £25.9 million, you only have to submit a Director’s Report and a Balance Sheet. If you are fortunate enough to have passed that turnover milestone, the requirements are a little more onerous; you also need a Profit and Loss Report – covering sales income, expenses and other costs, and your profit or loss for the year – and explanatory notes with extra details about items in the accounts. The format of the submission should comply with UK accounting standards and the headings specified in the Companies Act.

The Records you Must Keep

Regulations also stipulate that you must keep records to back up the accounts for a number of years. These include your bank statements, cheque and paying in books, confirmation of internet payments; invoices for purchases and copies of sales invoices; PAYE records for employees if any, and for directors; VAT records if you are registered, a list of fixed assets with date of acquisition and depreciation applied; any stock held at the year-end and/or the value of work in progress not yet invoiced at the year end.

It is therefore necessary to do a careful stocktake on your year-end date, and to work out its value at the lowest figure between the cost of buying it in or producing it, and the sales revenue you expect to receive from it. If you are a service company you should work out the percentage of work already completed on specific projects which will be billed on completion so that you can accrue a reasonably accurate percentage of that figure.

You need a list of outstanding debtors and creditors, noting any bad debts that you may not be able to recover. Also record any disputed invoices from suppliers.

Making the Most of all This Activity

Depending on your relationship with outsourced bookkeepers, they may prepare all this for you automatically. Still, it’s worth checking with them whether you would gain any tax or other benefits from doing anything else before your year end to bring things into the accounting period. This is also a really good opportunity to take a hard look at your business practices and make sure you are not wasting time or money, or missing opportunities to save them.