Business Growth Beyond our Shores

Recent research carried out by The Small Business Research Centre and Barclays Business indicates that small businesses that export are growing faster than those who simply serve the UK markets. Their report follows a survey of 1000 owner managers across the UK, plus detailed qualitative analysis by the academics.

The results showed that the highest proportion of those who did business overseas were London based, an unsurprising trend given the city’s global reputation. Around 66% of all those who exported operated as manufacturers or retailers, many with online trading facilitating their ventures.

Surprise Findings

One aspect that surprises bookkeepers and business people is that some 68% of the survey reported that they had been exporting since day one. This contradicts the perception that most companies start local before moving on to overseas markets.

Another thing that might surprise you is that many exporters did not make strategic plans to move in that direction. They simply followed opportunities and “fell into it”. 59% were initially approached by contacts for overseas trade and 25% acquired the business by referrals. The report points out that they were being “reactive”, rather than “proactive” and were therefore likely to be missing other opportunities.

Barriers and Challenges

Of course, an online presence means that you can be known around the world, and more likely to be approached from overseas. But it appears that the challenges of exporting put many businesses off actually pursuing trade across boundaries. The complexities of regulation cause fear of falling foul of them in other countries. The way the markets operate can be different to what you are accustomed to, and then there are the language and cultural issues to deal with. Finding agents and organising the logistics can also be daunting for potential exporters.

Your outsourced bookkeepers will be in agreement with the report which recommends that small businesses “need to know where to look for immediate assistance and which

sources of advice can be exploited to maximise opportunities quickly. From a policy perspective, agencies responsible for export promotion, public and private, need to market their services clearly to SMEs and be able to provide appropriate SME advice on a responsive basis. This would include information on, for example, country-specific rules and regulations; together with information on currency exchange management from financial service providers; as well as presenting cases on how it has been done by similar SMEs.”

Nevertheless, the report’s initial finding that exporting is proven to be assist growth makes it well worth considering whether there are any overseas opportunities for you.

Choosing Safer Business Risks

If you want to grow and develop your business, you must inevitably take some risks. All the great entrepreneurs will tell you that they have taken major risks throughout their careers, but they have survived mostly by being canny and calculating about which risks to take. So how can you avoid being foolhardy and only proceed along the paths that are the safest? What will make it easier to calculate the risks and choose the ones most likely to be worthwhile?

Know Your Business in Detail

Perhaps the most important thing is to have an intimate knowledge of your financial starting point at the time you need to make your decisions. Unless you are completely familiar with what cash you have available, the liabilities that will deplete it and the expected revenues, your business decisions could do more harm than good. Outsourced bookkeepers can help, and it’s a wise entrepreneur who discusses plans with them before making commitments.

Do you know the number and value of your average sales transactions per week or month? What have you and your staff done to make this happen? Could there be a way to bump up the numbers without it costing you too dear?

What marketing strategies have you been using? What tactics have worked well in the past? What does your market respond to? What has been the response rate and the conversion rate? What might you change to improve things?

Work out your Needs and Their Cost

You also need to be sure about what it will cost to take a particular route, and be able to predict the long term benefits. Do you need to recruit new skills, and how much will that cost you in both acquiring and retaining these personnel? If you don’t know the answers to all these sort of questions, how can you be certain it will be worth it?

If you don’t already have all this information at your fingertips, now is not the time to move ahead with development plans that could end with you falling flat on your face. Postpone your activity and talk to your bookkeepers about how much historical information could be made available, and make sure that they collect and report on all the data you will need from now on.

With the right information, you will be able to develop reachable goals and plan what risks are the safest to take as you strive to achieve them. As you tick them off, you will have the enviable satisfaction of seeing your business thrive and grow.

The Role of Local Enterprise Partnerships

How much help do you get from your Local Enterprise Partnership (LEP)? Are you confident that you can get the advice and the services you need from it? Do you and other small businesses in your area have a voice in local business strategy of your LEP?

What The Federation of Small Businesses (FSB) Thinks

Your bookkeepers are aware of one of one of its recent reports, which says up front that LEPs must engage more with small businesses. Consulting more effectively with them would help them encourage and make the most of local growth opportunities. The recommendations of the report include LEPs having a small business sub-group and a stakeholder relationship manager to make sure that the needs and ideas of local small organisations are brought to the attention of the LEP. A board member with the relevant background and experience should also be appointed to hold specific responsibility for small business issues.

The report follows a survey of LEPs, Local Authorities and small business representatives. Of the 39 LEPs currently operating, 36 responded, as well as 131 local authorities and business people. The FSB conclusions are that LEPs are hampered by a lack of government clarity about their role and mission, as well as by inadequate funding and staffing. Its report therefore also makes recommendations to government.

A fascinating graph covers types of LEP activities to support small business competitiveness that are currently available, and the considerable amount that that falls short of what a) local authorities and b) the FSB think they should be offering.

Why the Small Business Sector is Important

It points out that ‘small and medium sized businesses have been responsible for four in five (84%) jobs created in the private sector between 2010 and 2013, and represent almost half (48%) of private sector turnover. Yet the report finds that large businesses are perceived to have most influence within LEPs.

According to FSB National Chairman, John Allan, "LEPs are crucial to delivering local economic growth across England. While some have done a good job of reaching out to the small business community, others need to up their game. Small firms will ultimately be the ones creating most of the jobs and prosperity in the private sector, so it is absolutely essential that they are at the heart of all LEPs thinking and plans.”

So how much do you and your outsourced bookkeepers know about your local LEP? Is it time to find out more and become proactive in lobbying for the changes that are needed?

Starting the Working Day in Bed

Freelancers who work from home have long luxuriated in the fact that they can start work when they want, and can stay in their dressing gowns while getting on with the job and even while talking to clients on the phone. Video calls may have put paid to the latter, but by making good use of new technology, they don’t even have to get out of bed before checking their emails, posting social media updates, performing research, working on drafts of proposals and reports and so on. Similarly, those entrepreneurs, directors, managers and employees who roll into the work place after 10am, could easily have been hard at it from before dawn.

Recent Statistics

Digital market research company, Toluna, recently revealed that around 70% of UK participants in a survey check their smart phones as soon as they wake up in the morning. Are you one of them? If so, you are probably starting your working day in bed.

Price comparison website, Give as you Live – which raises money for charity from transactions through the site – has also been doing research. It found that nearly half of its UK shoppers were in bed when they made purchases.

What This Means for Businesses

Outsourced bookkeepers and their clients recognise that these trends have implications for business. The shop is never closed when it operates on the web. Whether they are using mobiles, tablets or laptops, users can access the internet in their homes, gardens and bedrooms, and out and about wherever WiFi is available.

Paul Twite is the Managing Director of Toluna in the UK. He advised that, “As consumers use multiple devices to access the internet, it is becoming more important to understand how habits are changing.”

“With UK consumers active on the internet at all times of the day, and in all locations, it is important for marketers to be able to provide engaging content outside of traditional time frames. It is also vital to react quickly to trending themes and stories in order to meet the high expectations of an audience that is always switched on.”

If your business sells goods or services on the internet, you may need help to ensure you are making the most of its opportunities. Your bookkeepers know your finances and where your risks lie. If you make sure they know what you are trying to achieve, they will be happy to discuss it with you and may be able to introduce you to people who can help you get there within your budget constraints.

Minimum Wage Rise October 2014

If you have employees, you need to be aware that the next increase in the minimum wage comes into force on October 1^st. For anyone over 21, the hourly rate rises by 19p to £6.50. For 18 to 20 year old employees the rise is 10p to reach £5.13 an hour. For those in work at the age of 16 or 17, it is 7p, making their minimum wage per hour £3.79, although youngsters only become eligible for this on the last Friday in June of the year in which they become 16.

Now that some form of education is compulsory until the age of 18, 16 and 17 year olds can only be employed if they are also undergoing some part time education or training as well. You might have one or more young people on apprenticeships with you, in which case their minimum hourly wage rises by 5p to £2.73. As your outsourced bookkeepers will know, after apprentices’ first year, the rate remains at this level for those under 19, while those over 19 must receive the same rate as other employees in their age group.

Non-compliance can be Expensive

Failure to comply with these regulations can evoke some hefty penalties, and these become even more severe on October 1^st. Where currently the maximum fine that could be imposed is £5,000 per employee, it is set to go up to £20,000, which will add up to a significant total if several workers are involved.

HMRC have powers to investigate employers at any time if they have received a complaint or have reasons to suspect non-compliance. They can request pay records for up to the previous three years.

Make Sure you Comply

You are advised to get your bookkeepers to check the payroll and ensure that all your employee records are up to date, especially those for young people whose rates could have changed on their birthdays. Rules for what can be excluded when calculating the minimum wage can be complicated and many employers have fallen foul of the regulations because they were not known or understood. Outsourced bookkeepers keep up to date on all these aspects, so make sure you discuss the changes with them before the end of the month.

If you discover that anyone has been underpaid, pay the arrears straight away to demonstrate that it was just a mistake and you have acted in good faith. That way, you may be able to avoid the heavy financial penalties that can be imposed where employers deliberately flout the rules.

Local Authorities and Small Businesses

The Centre for Entrepreneurs, and the Spend Network, have been analysing the breakdown of spending for the 158 local authorities across the country. Their survey covered over 44 million transactions between April 2011 and March 2014. It found that, at a time when central government claims to be trying to do more business with small firms, most local authorities don’t seem to be following that trend.

The Survey Analysis

We have looked at Spend Small, the report on the work. It states that, in total, during the three years the local authorities spent £89 billion with companies. Only £11.1 billion of this went to small firms, while £9.9 billion went to just 20 of their largest suppliers. While none of the 78,128 small businesses concerned received more than £50,000 in a 12 month period, the average receipts per year of the top 20 suppliers to local government was £165 million.

Some councils have even lowered the amount they have been spending with small local firms, while a few have been increasing it. If you are based in the London boroughs of Wandsworth, Greenwich, Croydon or Newham, you might have more chance of persuading them to do business with you, as these are among those that have increased their spending with local small businesses the most.

Why Local Authorities Spend as They do

The analysis considered various environmental factors, such as financial size, location and political control, and it made like with like comparisons. It found no apparent links between these factors and whether the institutions used small local firms. Their work indicated that what makes the difference is a commitment to spending more with them. To quote the report, “Where an authority’s leadership commits to boosting small firm spend, they are able to do so – indicating that the key factor is having a Spend Small Policy and implementing it.”

How Change Might be Achieved

If you and other local entrepreneurs believe you have much to offer your local authority, we believe this is what you need to be lobbying for. That supporting small local businesses makes real economic sense could be good ammunition for this. Research has shown that, as they develop, small businesses are a key source of job creation and economic growth in local areas.

If you don’t have a local pressure group to run a campaign, you could use your networking contacts to set one up. Your bookkeepers can probably help and might be able to introduce you to other like-minded small companies.

Too Busy for a Holiday? Take the Work with you!

It’s always hard for an entrepreneur to decide to take time off, and many small business owners forgo holidays altogether. That, however, is decidedly not good for you and not really good for the business either. When you don’t take breaks, you get tired and stale, and that affects your performance. Your business can no longer benefit from your vision and verve.

Getting Away Does Help

Take a tip from your bookkeepers and book yourself a holiday. If you really can’t afford to leave your work for a week or two, find ways to take it with you. A change is as good as a rest, the old saying goes, and this could work for you too.

When you are away from home and your work place, other responsibilities are left behind. You can make time in the day or evening for exploring the new environment or go for a refreshing swim in the sea or the hotel pool before or after you put in a few hours of work. You’ll wake in the mornings with things to look forward to once you close your laptop. You’ll be eager to get the work out of the way so you can join companions on the beach or the golf course.

A Little Planning Could Make it Work

If you have a favourite holiday destination, it could be worth buying a holiday home there and going away regularly. Whether it’s a place in the sun or a country retreat, you’ll be bound to come back with batteries charged and ready to move forward at top speed. If you like exploring different places, you need to spend a little extra time on planning to make sure you book somewhere you’ll have internet access. Everything else you can take with you.

To get the most from your break, you should set some rules where you can. These could be set times during the day to check and respond to emails and other messages. Your out-of-office email message could ask for text messages to your mobile for anything urgent.

The holiday destination could give you the respite you need to write an important proposal or bid for funding. But if you expect to be really busy on something like this, plan longer periods for working with set times to stop and do something else.

It’s true that having to work on a break is not ideal, but it’s certainly better than not taking one at all. With all the technology that’s available now to make it possible to access your files and stay in contact with staff and customers, there really is no excuse for putting off taking that well-deserved and much-needed holiday.

To be sure that everything will be properly looked after whilst you are away, have a chat with your outsourced bookkeepers about their general office services. You might be surprised at what can be taken off your shoulders for as long as you want.