Price Bailey

One thing that you cannot deny throughout the COVID-19 pandemic is the Government’s sustained efforts to try and support businesses and scaffold the economy in a time of significant uncertainty. As the country moves toward a normality that resembles life pre-pandemic, many businesses are asking what support is available for those still feeling the impact and for those who are wishing to maximise on opportunities available to them.  

In March, the Government announced the closure of the Bounce Back and Coronavirus Business Interruption Loan schemes; and introduced the Recovery Loan Scheme to provide continued financial support to businesses across the UK as they trade out of the pandemic. 

The scheme is open to any business that has been affected by COVID-19, and the use of funding is unlimited, provided it is for a legitimate business purpose. Businesses can borrow up to £10m per business (or up to £30m for groups). Businesses will also be happy to hear that you can still access this scheme, even if you have accessed other Government support schemes such as the Bounce Back scheme, CBILS or CLBILS. However, the amount available to borrow under the RLS will be reduced by any borrowing from previous schemes. 

The scheme provides guarantees to lenders via several different facility types:

• Term loan
• Overdraft
• Invoice finance
• Asset finance

It is important to note that not all lenders are accredited to offer all types of facility. 

Businesses seeking to apply for the scheme should ensure they have sufficient debt capacity to take on any additional funding of this kind. In addition, we strongly advise that you (with support from your advisors, if required) take the time to appropriately plan and produce a robust cash flow forecast to ensure that:

1. there is a legitimate requirement for the funding
2. you know to what level funding support is required
3. that the business is in a position to service the debt

This is relevant for any business considering the scheme, but particularly to those businesses that have already accessed other Government support schemes (or other commercial debt facilities) and are yet to understand the true amount of their repayment commitment fully; and/or whose turnover/working capital continues to be impacted by the pandemic and is variable upon the success of the easing of social distancing restrictions. This is also particularly relevant as, as with other external finance applications, you will need to be able to provide a solid business case for the funding, proving you will be able to meet the repayment obligations.

So how does RLS work? 

The RLS will be available through named lenders accredited by the British Business Bank. Further accredited lenders may be added as the scheme continues, and you can view the current list on the BBB’s website. However, lenders are advising that you speak with your existing finance provider first before approaching these lenders, as they may be able to offer you a commercial loan on better terms. 

Key features of the scheme:

• The scheme will remain open until at least 31 December 2021, subject to review.
• There is also no maximum cap set for the amount available to lend to businesses through the scheme – so there is no need to rush to apply if you do not feel you require financial support in the immediate term.
• There is no minimum or maximum turnover restriction for businesses seeking to access the scheme.
• The upper limit of the facility provided to each business is £10m (and up to £30m across a group), with minimum facilities starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts. (Please note – individual lenders will set their own minimum and maximum limits within these ranges).
• The scheme gives the lender a government-backed guarantee against the outstanding balance of the facility.  
• The annual rate of interest, upfront fee and other fees cannot exceed 14.99%, and businesses are required to meet all costs, interest payments and fees associated with the facility. 

Term lengths:

• Term loans and asset finance = 3 months – 6 years
• Overdrafts and invoice finance = 3 months – 3 years
• If you borrow £250,000 or less, personal guarantees will not be taken by the lender. For borrowings over £250,000, personal guarantees are at the lender’s discretion. Still, the maximum that can be covered is 20% of the outstanding balance of the RLS facilities after the proceeds of business assets have been applied.
• Lenders can offer an RLS facility to those businesses that would either not gain the funding on standard terms or would do but at a higher rate without the benefit of the government-backed guarantee.  
• In contrast to other Government support schemes, the RLS will not include 12-month Business Interruption Payments (BIP) to cover interest payments. 

Our advice to those looking to access the scheme:

While this next stage of Government support for businesses is being welcomed, business owners should remember that it is still a loan that needs to be repaid. Its purpose is to support with working capital requirements or to support growth. Lenders will be looking for you to be confident in and provide suitable evidence to support that the funding will be used to help the business grow, further benefiting the economy with jobs and supply chain benefits.

It is also worth remembering that there is no cap on the funding available to all businesses. The scheme remains open to applications until 31 December 2021; therefore, there is no immediate need or panic to apply for funding. Instead, it is better to take this time to develop your business’ recovery plan properly, revisit your strategy, and put together a robust set of financials to identify what, if any, funding requirements you have. This may start with improving working capital efficiencies, cutting further none essential spending and equity or other debt funding options (aside from RLS). This will mean that not only will you potentially avoid taking on further debt unnecessarily, but also, if applying for RLS is the right thing for your business’ recovery, you will be adequately prepared for lenders’ due diligence. 

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide, and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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Lloyds Bank Academy

Your market is the area or industry your organisation is operating in. It’s your field, your customers, your competitors. You can see then, how understanding your market is essential if you’re going to build a successful organisation. Finding out what your audience really wants will help you improve your products and services to meet their needs. By discovering how your competitors work, you can find ways to improve on your products and services to give your organisation an advantage.

Carrying out research on your market will allow you to create effective advertising and find new ideas for your products and services. It will also help you to understand the competition you face and help you to price competitively.

In this lesson, we will review the different types of market research and why it’s important for you and your organisation.

KEY LEARNINGS

• What market awareness is
• The different types of research you can carry out
• Survey creation and research methods

Download the Guide here

Chapter 1

Levels of market research

Market Awareness

Gaining market awareness can be done in a number of ways. From online research, reading newspapers and other publications, speaking to friends and employees, talking with your customers, analysing your competitors’ business approach, analysing sales, to taking a note of trends happening in your business.

Informal research

This kind of research typically describes the gathering of information and opinions through conversation, surveys or more basic research techniques. For example, surveying of customers and potential customers to gain their feedback on a regular basis or reading a book on your organisation’s market. We’ll go into more detail in section 3.

Carl used informal research to set up ‘The Badger, a successful wine bar and craft ale house. He used Facebook to gain customer feedback and identified a real gap in the market, allowing him to build his business to fill it.

Formal research

In contrast with informal research, this research would be carefully planned and carried out, probably by a professional, to support a key organisational project or decision. The researcher should have a clear brief, budget and timescale.

View Chapter 2 here Improving your market awareness

Lessons for life, for businesses and for charities

Whether you want to improve your career or give your business or charity a boost, the Academy has lessons and skills training for you.

Watch the introduction video to find out how Lloyds bank Academy is helping people learn digital skills

Browse Lessons for Life Browse Lessons for Business Browse Lessons for Charity

Kathy Ennis, LittlePiggy

Does the idea of planning and setting measurable business objectives for your freelance or side hustle business scare you?

Planning can seem frightening, because when you’ve got a plan, you’ve got more than just a vague idea. You’ve got something real and measurable to work towards. Something that tells you whether or not your business is a success.

In my experience as a business coach and mentor, this is exactly why so many people are scared of planning! 

Business Objectives vs Self Belief

They worry that they might not achieve everything they’ve set out to do. They also don’t truly believe they will achieve it!

And then what?

As a business mentor who specialises in supporting freelance, solopreneur and side hustle businesses, I can tell you that running a business by yourself can heap on the pressure you feel to get everything right.

After all, working for yourself isn’t like working for a faceless corporation, where everything gets swallowed up in the machine. When you’re the only one in charge, there’s nowhere to hide from bad business ideas!

But I’ll let you into a secret: failure is a good thing. Every top entrepreneur knows that we need failure to succeed, because it’s how we learn and become better next time.

Success is not final, failure is not fatal: it is the courage to continue that counts

Winston Churchill

Why Your Own Self-Worth Means More than You Think when Setting Business Objectives

Do you really believe you’ve got what it takes to be successful? I mean, do you REALLY believe it?

From my experience working with freelance and side hustle business owners (not to mention years of running a solopreneur business myself!) I understand the importance of mindset. Specifically the mindset around your own self-worth. This can have a major impact when it comes to setting the right objectives – or any objectives – for your business..

If you don’t believe that you’ve got something other people will want to buy (and buy it from you), then it doesn’t actually matter whether you have or not! Your lack of self-belief will prevent you from setting objectives that will lead you to the right customers.

I once worked with a cake maker who priced her products purely on what she thought people might pay for a cake. Rather than pricing the ingredients and other costs so that she knew, exactly, how much each cake would cost her to make.

When we sat down and looked at her figures, we discovered that she was making a loss on every cake she made!

In this case, she was scared to properly price her cakes. Her thought process? If people refused to buy them for what they actually cost, it meant they were ‘rejecting’ her. Our work together as mentor/mentee did involve practical business advice and guidance; but there was also a lot of mindset and self-worth work in this case too.

Business isn’t complicated; more often then not it’s simple maths.

Example: If your average customer spend per month is £200, then to make £2,000 every month you will need to find ten customers.

As I said, a very simple calculation. However, if you don’t believe that you will be able to get ten customers, you might be tempted to aim lower or not aim at all.

Or it could be that you have a fantastic idea about running an all-inclusive retreat, yet you feel nervous about asking people to pay what it would cost.

(But what if some people were ready and willing to pay?)

How to Start Setting Realistic Business Objectives and Goals

First, a few definitions:

• Objective: this is the top-level description of what you want to achieve, for example, more customers
• Goal: goals break down the objective into time-specific, measurable outcomes, for example, those ‘more customers’ becomes ten more customers
• Action: once you have a set of measurable goals, you need to work out how you are gong to achieve them. Then you need to create a list of actions you will take. So, what will you have to do to get those ten more customers?
• Attend 5 networking meetings in the next 2 months
• Host a webinar in 6 weeks time
• Create a special offer and promote it over the next 8 weeks
• Post regularly on Facebook for the next 4 weeks
• etc. etc.

A good place to begin with objective and goal setting is by looking at your financial targets. If you know how much your business – and your life! – costs, then you will need to set objectives that mean you can afford them!

Here’s a simple example:

Your business costs you £750 a month to run and you pay yourself £1,250 a month. You currently turnover £2,000, but you want to invest in a new website and pay for some business mentoring support. So, you will need an extra £500 per month. You have 10 customers and your current, monthly customer value (i.e. the average you take monthly from each customer) is £200.

Let’s see how this turns into an objective, goals and actions:

Objective: Increase monthly turnover

Goal: Increase monthly turnover by £500 to £2,500

Now there are a few ways you can go with the Actions; you can approach them separately, or in combination. For example, you could introduce a number of actions that would bring you more customers. In this example you would need 3 more customers spending an average of £200 each to bring you the £500+ you need.

Another option (or maybe, an additional option as there’s nothing stopping you doing both!) would be to increase the value of each customer sale. You could do this by encouraging current customers to buy more, or you could increase your prices.

In this example, if you did a combination (which i would always recommend), it could look something like this:

Increase your prices by 10% – this would make the average income from each customer £220, so your 10 customers would bring you a total of £2,200 per month. Annually, the difference would be an increase in turnover from £24,000 to £26,400.

Now you only need to make another £300 to reach your £500 a month target

Create a new product or service – something your current customers have been asking for; something low-cost, maybe £15 a month. Even if only seven of your current clients buy it, you’ve made another £105 per month. If we look at the annual turnover to include this increase you would move from £24,000 to £28,200.

Now you only need to make another £195 to reach your £500 a month target

Get one new client – we always think this should be our first step, but getting new clients is seven times harder than it is to get clients who but from us already to buy from us again.

I usually recommend my clients to make this a final option.

In this scenario, one new client would bring in £220 per month (remember, you’ve put your prices up and maybe they’re not ready to go for your £15 a month add on).

Now your monthly turnover would be £2,525 and your annual turnover would move from £24,000 to £30,300

Three things have happened here.

• One simple objective has been set
• A measurable goal has been identified
• Specific actions have been created

This example shows that small increases, low-cost items and one extra client can add £6,300 per annum to this business.

If you need to know how to do this in your business, book a Breakthrough Session today

The Importance of Understanding Your Market

Once you’ve looked at your financial targets, it’s time to take a closer view of your market.

In other words, you’ll need to make sure your business objectives and goals are the right ones to attract your ideal customers.

You can use the four Ps to help you on your way: Product, Price, People and Promotion.

All four of these Ps need to be in alignment when you set your business objectives. 

For example, if you’ve got the right Product and it’s the right Price but you’re Promoting it to the wrong People, you will find it virtually impossible to achieve your goals.

A common mistake freelance and side hustle business owners make, particularly in the beginning, is blindly marketing their products or services to the people they usually mix with. Targeting people they know from regular networking events, or friends of friends.

A more successful strategy would involve finding and targeting the people who would most benefit from your product or service. This may mean casting your net wider, such as contacting new people on LinkedIn, or running a targeted marketing campaign.

Do You Know Where You Will Be Five Years from Today?

I’ll be taking a more in-depth look at micro and side hustle business objective and goal setting in my next post. Meanwhile, my Five Year Timeline will help you set out your intentions, and ensure you can come up with a clear business plan that fits in with your life.

Download it now!

Have you got any stories or comments to share about business planning? Feel free to post them below, and let’s start a conversation.

Price Bailey

Your business is growing, your order books are full, and everything is going well. But what’s the best way to draw money out, so you can feel the benefit of your success?

There are several options, but withdrawing money tax-efficiently takes a little planning.

Director’s Loan

When you started out, you might have provided a loan to the business before you began making sales, and your cash flow was low. Just like any other loan, it’s payable back to you, and the repayments you receive aren’t subject to personal tax.

Salary

As the boss, you can earn a salary from your business, just like any other employee. However, as you have other earning options from the company, you might want to keep the salary part of your income low, to reduce the tax you pay. For example, you can take a salary of around £9,000 without incurring national insurance or income tax – and your salary is also seen as a tax-deductible cost to your business.

Reimbursable expenses

As long as your expenses are only for work, you can claim them back from the business. HMRC also allows other options for using personal assets for business. For example, if you’re travelling in your own car on business, you can claim 45p per mile without incurring income tax. As an added bonus, there’s no personal tax to pay on this, and you get a reduction in corporation tax.

Pension

Both employers and employees can contribute towards a pension fund set up by the business. This is an allowable expense against personal tax, and your company can save 20 percent corporation tax on the amounts paid. (But if your business is growing and needs to maintain cash flow, you might not want to be paying out money you can’t access until you retire.)

Dividends

Once your company has paid 20 percent corporation tax on its profit, you can pay what’s left to shareholders as dividends. This way, you can keep salary costs low and pay your shareholders after earning actual profits. This is the most tax-efficient way for owners to earn from a business.

Each of these options has pros and cons, which you’ll need to consider before going ahead. We can help you navigate through them, to ensure your business continues to grow, and you continue to earn.

You can view this original Price Bailey article here

Price Bailey

Last year was a mixed year for the UK M&A and private equity markets. With the announcement of the first lockdown in the spring of 2020, the country and all its dealmakers held their breath, and acquirers stepped back to see how the market and opportunities would develop.

Consequently, deal volumes and values dropped as some decided to wait, while others accepted a lower price. Yet, adapt is what we did and come the second half of 2020, the M&A and private equity market made moves back toward recovery, as news of the vaccine and the temporary easing of lockdown measures bought with it some renewed confidence. Now, in the early stages of 2021 and living in reintroduced lockdown measures, we look at the lay of the transactional landscape and notice, among other trends, the increasing interest of overseas buyers on the UK horizon. In this article, we look at the growing trend in overseas investment in and out of the UK and provide our thoughts on what to do if you are the object of overseas interest.

According to a recent LexisNexis report on UK Public M&A in 2020, of the 42 firm offers announced, 62% involved overseas bidders, including 8 of the ten deals that were valued at over £1bn each. We have observed that this growing trend in the public markets is also being mirrored in the private mid-market with a growing number of overseas to UK deals vs UK to UK.

Interest from Euro and Dollar corporate buyers and funds is due to various reasons, including Brexit and the continued impact of the COVID pandemic. We look at some of these in further detail here:

• Playing to our strengths – it is unsurprising that both the impact of Brexit and COVID are dominating UK business news; however, it is also important to keep in mind the reasons the UK has been and continues to be an attractive place to do business.

• • A top European economy – despite the noise surrounding Brexit, the UK is still one of the biggest economies in Europe, second to Germany. The UK continues to provide a key gateway to Europe for US and Asian purchasers. For US purchasers, there can also sometimes be an easier language and cultural fit with businesses in the UK than in other parts of Europe, increasing the attractiveness of UK businesses.

• • Growth industries – whilst some markets are experiencing challenging and uncertain conditions; many sectors continue to experience growth that is likely to be sustainable. To take full advantage of this, companies need a physical presence in the UK, and overseas buyers need to acquire established local businesses to increase their footprint to benefit from that growth.

• • Intellectual property (IP) – the UK is one of the major global creators of IP. In a global market, being the cheapest supplier is not sustainable in the long term. We have seen overseas buyers, particularly those from low-cost markets, look to acquire UK businesses to gain control of IP to safeguard the longevity of their own business.

• Capitalising on uncertainty – we cannot ignore the turbulence caused by both the ongoing COVID restrictions, particularly in the UK, and the final severing of ties with the EU. From a UK business perspective, there have been significant winners and losers over the last 12 months. Across every sector, the focus has been on how business owners adapted their business models, cut discretionary spending and preserve profits. For acquirers, market conditions over the past couple of years have resulted in the weakened pound making UK assets more attractive to overseas buyers. COVID has led to expectations on values reducing in some situations. What this creates for strategic buyers looking to enter the UK market or expand their existing presence is an opportunity to do so at a lower cost.

• Continuation of UK trade – in other instances, the UK’s departure from the EU at the end of last year has caused some overseas corporates to acquire in the UK to continue trading here with fewer restrictions. Interestingly, we are observing the reverse being true with UK businesses acquiring businesses in Europe to enable the continuation of Eurozone trade post Brexit.

• Availability of cash and lower borrowing costs – the cost of debt globally is at an all-time low at present, and there is plenty of cash in financial institutions that need to be deployed. Access to cheap cash is helping to fuel acquisitions.

• New work practices removing barriers – as in other sectors, technology is making the transaction easier to manage remotely and, thus, cross-border deals easier. With travel restrictions across the world, it’s now common to buy a business without visiting the site or meeting the management team face to face. In the longer term, this raises challenges for physical and cultural integration.

Interest from overseas buyers and funds has been steadily increasing since 2016’s referendum result, and we believe we can expect to see continued interest for the next 12 months. Where acquisitions are strategic and not hostile, this may provide a much-needed boost to the UK economy. Nevertheless, every potential opportunity to sell (whether to an overseas and domestic bidder) should be assessed on its individual merits. Below, we provide some of our thoughts on what business owners should consider when considering selling to an overseas buyer.

What to consider if an overseas buyer approaches your business

Businesses can often be subject to unprovoked interest from acquirers. Whether a business is actively looking to sell or not, an approach, particularly one from an overseas buyer, can often incite more questions about the future of the business than it does answers. As Corporate Finance advisors, we advise businesses looking to acquire on or off-market opportunities and businesses looking to sell. We have provided below our top 5 tips for what business owners should consider if an overseas buyer approaches them:

1. Understand what you want from the deal – First and foremost, it is important to have a clear idea of what is important to you and the business’ shareholders both in the deal and for the continuation of the business. This is not necessarily just about the offer price; in fact, sometimes money is of lower importance relative to other things, such as exciting growth prospects, continued employment for loyal staff or maintenance of the family name. However, the point here is that having a clear idea of what is important to you and the business in a sale will help you to identify the right offer, aid in negotiations and avoid you being blind-sided by an attractive price when there are more important things at stake.
2. Tax planning – almost as a natural progression from knowing what you want from the sale, it is also important to ensure you are in the best possible position from a tax perspective before sale and that you also understand the tax implications of different deal structures (e.g., assets vs share deals). If you haven’t sought advice from a tax advisor, it is recommended that you do so as there may be an opportunity to improve the tax position. They can ensure that consideration has been given to the tax implications in the sale. Any required clearances with HMRC are factored into the sale process to avoid any unnecessary hold-ups.
3. Are you ready to go through the process? – This may seem like an obvious question. Still, particularly in situations where you are the party being approached to sell, it can often be tempting to get swept up in considering the offer and finding out more detail before considering whether the business and you as owners are ready to enter into the process. The sales process can be lengthy, and for a prolonged period of time, both you, your fellow stakeholders and the business are under the microscope. Therefore, it is important first to consider whether you are mentally prepared to undertake the process and, secondly, if the business is in the best position to sustain detailed examination. For example, are all your records, processes and procedures up to date? Do you have a relevant and up to date financial forecast? Are there any skeletons in the closet, e.g., outstanding disputes or litigation? The level of detail an acquirer will require to complete due diligence is more than owners typically use to manage their business. Ensure that you are on the front foot when the acquirer and their advisors scratch below the surface. This is particularly relevant if you are in talks with US acquirers as their due diligence procedures are notoriously detailed.
4. Think twice, strike once – Building further on the point above; it is vital to ensure that the information you share with prospective buyers shows the business in the best light, is correct, accurate and up to date. Once a buyer sees it, it’s difficult for them to un-see it. Sending information that is out of date, incorrect, or overly negative or optimistic could be detrimental to the continued interest of the purchaser or your negotiating position. It is also wise to be thorough and provide both numbers and words. When preparing information, always consider:
5. a. What message do you want to convey? Sharing information during due diligence is still part of the sales ‘pitch’; therefore, ensure that everything you share fits into the story, e.g., if you are sharing financial information and forecasts, it can be helpful to provide supporting commentary that explains any unusual items, or assumptions made so that they can follow the narrative told by the numbers.
6. b. Don’t assume the purchaser has pre-existing knowledge of your business or that what is publically available is suitable.
7. Are they right for you? – You will spend a lot of time providing information to the potential buyer. Before you engage too deeply, you need to confirm:
8. a. Does their offer meet our objectives for a deal?
9. b. Do they have the capability and resources to deliver it?
10. c. Does their business fit, strategically, with ours?
11. d. Is the person we are speaking to the key decision-makers, or have they got delegated responsibility to deliver the deal?

This list is by no means exhaustive, and the last question may seem strange, but we have seen several situations where division heads have not got the group’s authority to act.

We also suggest that you speak with your financial advisors, who will be able to assess the approach to appropriately support and advise on how to proceed.

A recent example

We recently advised Cambridgeshire-based Comtec on their sale to French-based Euro Techno Com Group (ETC Group).

Founded in 1978, Comtec Group is one of the UK’s largest value-added distributors of telecom and IP equipment to both the carrier and enterprise markets, and a specialist in supply chain management for telecoms operators and systems vendors. It serves most major telecom operators and installers in the UK and the Middle East, including BT, Virgin Media, Sky and Ooredoo. Since its inception, the company has experienced continuous growth and has scaled through targeted acquisitions and sustained international growth. Comtec has seven offices across the UK, Oman, Qatar, the UAE and Hong Kong.

Since completing a management buy-out, the business has continued to develop. Revenues have more than doubled over the past five years to over £70m.

The acquirer, ETC Group, has operations across six countries in Europe and North America. It is regarded as a global leader in product design, procurement, supply chain management and the distribution of passive and active telecom equipment and materials with best-in-class technical and logistics solutions for communications service providers’ network deployment and maintenance. Its 2,000+ customers include major American and European cable operators and telecoms service providers, as well as large and small independent installers and sub-contractors.

The transaction provides ETC Group, which Carlyle acquired last year, a strong foothold in the fast-growing UK market. All major telecom operators and alternative networks have started a long-term deployment phase of fibre across the country to support the ever-increasing demand for high-speed connectivity. The acquisition also allows ETC Group to serve the growing IP infrastructure market for enterprise customers and further expand its offerings and expertise in data centre supply and maintenance.

You can read more detail in our press release here.

This article was written by Phil Sharpe, Corporate Finance Partner at Price Bailey. If you have been approached and would like to speak to our specialist Corporate Finance team, please contact us on the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide, and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

  You can view this article in its original setting with Price Bailey Here

NatWest Business Builder: Cost structure

Starting a business is no small feat, and in the first year every penny matters. We look at practical economies SMEs can make to keep their budgets in check and survive that challenging first year.

It costs an average of £27,520 to set up a business in the UK, according to a recent survey of 850 new companies. Nearly half of these entrepreneurs used their own savings, and almost a quarter had help from friends and family. That’s quite a financial – and personal – investment.

But with careful planning and thinking outside the box, business leaders can slash those costs dramatically.

Here are a few ways you can save cash in that all-important first 12 months.

Choose your location carefully

Much of your spend on premises, staff and suppliers depends where in the UK you are. The average London business spends around £30,000 just on admin during its first year, but head to Wales and you could pay just a quarter of that. The cheapest place to launch a business in England is Yorkshire, where average first year costs for start-ups are £11,454.

Refurb’s the word

It might be tempting to kit all your team out with the latest tech but refurbished computers, tablets and phones can give you the same quality for a fraction of the price. “Technology moves so fast that it can be hugely expensive to invest in new kit that could be outdated in six months,” says Geoff Wightwick of accountant RSM UK. “But cheaper alternatives are out there. Look for those low-cost options in everything you do. It’s not just tech – keep a lookout for businesses moving premises, which will often be offering unwanted office furniture cheaply, or even free.”

“People tend to note down utilities as a fixed cost. But [you’d] be amazed at how much you could save by paying a little attention”

Jason Smith, founder, Business Electricity Prices

Conserve your energy

“People tend to note down utilities as a fixed cost,” says Jason Smith, founder of advice website Business Electricity Prices. “But [you’d] be amazed at how much you could save by paying a little attention.”

This is particularly true if you’re taking over a premises. “New tenants get put on ‘deemed rates’, which is the second highest tariff out there,” says Smith, “and many businesses don’t even notice. But you can change it immediately by calling the provider. Also, make sure you shop around at renewal time – some ‘automatic, take-no-action’ renewals put you on a 30% higher tariff than you were paying before.”

Share your space

Finding premises is costly – so why not join a co-working hub? Britain’s increasingly flexible working culture means new businesses that previously might have had to commit to a year’s rent for a space they could never hope to fill can now hire space one desk at a time, on an ad hoc basis. “It’s brilliant,” says Jane Porter, who set up her bespoke uniform fashion-design company Studio 104 at Shoreditch co-working hub The Brew. “We started with two of us, and a tiny space to match, and we now have 10 staff and just expanded on the site, and without the tie of a fixed-rent contract. This allows companies to grow and shrink, and pay only for the space they use, when they use it.”

And it’s not just office space that can be shared. Many universities now have business incubation centres/enterprise hubs, which let units, including industrial spaces, to start-ups at affordable rents – and often offer free mentoring and business advice.

Exchange

If you need to buy something, you don’t necessarily have to pay cash for it. If your product or service is of use to, say, the local printer, you could do a deal offering your product in return for producing your promotional materials.

And this can scale up, too. “This is a fantastic way to buy, especially if you’re struggling for cash flow,” says Chris Kirby, who with business partner Greg Harrand runs the British arm of Australian firm Bartercard. “We have 54,000 global ‘Barter cardholders’ who sell their services to fellow members for so-called ‘trade pounds’, which they can then spend on a product from another member. It’s a brilliant way of reducing expenditure.” The UK franchise only opened up in April, but already has 2,000 members and is aiming for 10 times that by 2020.

Moving to hire ground

Staff are a costly expense – essential in the longer term, but freelancers might suit you better to begin with. “It could be a flexible, cheaper option than staff when you’re starting out,” says Bobby Lane, start-up consultant at London-based accountants Blick Rothenberg. “You hire them when you need them and, as they’re self-employed, you don’t need to provide the employee benefits you would for those on permanent contracts. Freelancers are particularly good for short-term, specific projects, but even employing them for more general tasks you avoid long-term fixed costs.”

Head in the cloud

There’s no longer a need to buy expensive servers and office software – cloud-based software will save you money on hardware and installation, or upgrading in the future.

“It’s an obvious money-saver for start-ups and SMEs because it’s so much cheaper than setting up a network,” says Robert Davies, who runs technology consultancy business Kashiko. “Most providers will offer word processing, spreadsheets, calendars, while cloud-based accounting is secure and can give your accountant real-time access to your figures, which will save you money too. You don’t need an email server, you just buy as many addresses as you need, with your own domain name. And the biggest advantage is that if you suffered a fire or a theft, you don’t lose any of your files.”

But, Lane warns, however you save money, it should not be shorthand for cutting corners. “Every start-up has necessary expenses, and it’s foolhardy and short-sighted to cut these out for the sake of saving a few pounds. The key is to plan, evaluate where you need to spend the money and then work out the most cost-effective way to do it.”

Further Reading

• SME growth: when to spend
• SME Tools: eight ways to rein in business costs
• Managing cash flow: procurement

We have a thriving and diverse community of thousands of entrepreneurs from multiple sectors, backgrounds and skill sets helping you to connect with the right people at the right time. No matter whether you’re looking to upskill, get feedback, engage with new people or simply observe, there’s something for everyone.

‘Want to learn more? Register for NatWest Business Builder to view all of their business development tools. Click HERE‘

NatWest Business Builder: Self Awareness

If you really want to know what your team think of you and your business, these questions will help create a clear image.

1. What frustrates you about your role at the moment?

This question is a great one for SME owners to ask, says Peter English, a management development consultant and author of Tackling Difficult Conversations, because about 40% of people focus primarily on resolving problems in their lives. “These are people who are more aware of problems and get more annoyed by them,” he says. For the other 60%, it’s still a good question because it can unearth all kinds of issues.

English says many owners have a natural aversion to this line of questioning because they’ve been tutored in the ‘think positive’ school of thought. “They also fear that they won’t be able to address the issue that’s frustrating employees, or that the answer might be about their management style,” he says.

Why it’s worth asking: It should give owners a true snapshot of what their staff are thinking about their daily grind. “Owners won’t always be able to solve the problem, but they can often do something about it – maybe meeting staff halfway,” says English, who adds that bosses should try not to act defensively to employees’ suggestions.

2. What can I do better as the owner of the business?

This question – unthinkable to some bosses – turns the spotlight 180 degrees. Nelson Phillips, professor at Imperial College Business School in London says that feedback could be transformational if the owner is brave enough to listen.

“Owners often think that employees will feel free to speak up and tell them their ideas, observations, and suggestions, but this is very often not true,” he says. “Hierarchy always looks much more distant looking up than looking down.”

Why it’s worth asking: The team may well be holding back – especially true, says Phillips, if the founder is charismatic and full of self-belief. “Asking this question is, ironically, most useful for owners who are least likely to ask it,” says Phillips. “This is a version of the feedback paradox: the people who desperately need to receive feedback will do everything they can to avoid it.”

3. What do you think of the service we currently provide to our customers?

If the customer is king and your team’s on the frontline when it comes to dealing with them, getting staff to open up about their thoughts on the customer experience can be a valuable exercise. Caroline Dunk, owner of business consultancy the CDA Organisation, says this question often helps identify opportunities to improve customer service by making changes to key processes.

“I’m the only person in this business who can make blanket changes quite easily, so I tell the team that if something can be better, they should let me know”

Adam Greenwood, CEO, Greenwood Campbell

“We carried out some work for a mobile phone retailer to improve the service in their high-street stores; many of the changes that we made were based on ideas that came from their store staff when we asked them this question,” she says.

Why it’s worth asking: As well as unearthing new suggestions to improve the customer experience, Dunk says this question will help you to identify which members of the team really care. “Even if you don’t agree with every detail, a considered, passionate response will tell you that the individual is engaged with the goals of your organisation and wants to deliver an outstanding customer experience,” she says.

4. What can we as a company do better?

It seems such a blindingly obvious thing to ask the team, but Laura Jackman, assistant professor in entrepreneurship at Edinburgh Business School, says many owners simply never get round to it.

“The ‘we’ aspect of this is important because staff need to feel that it’s safe to be honest and not just say what they feel the boss wants to hear,” says Jackman, who cautions against asking this purely as a box-ticking exercise with nothing happening as a result. “When that happens it’s hugely de-motivating and staff quickly realise that their opinion isn’t valued,” she says.

Why it’s worth asking: “It’s open-ended, and in my experience frequently brings out both problems and opportunities,” says Jackman, who reiterates the importance of acting on at least some of the feedback. “I think you can ask staff as many questions as you like but if they really don’t feel ‘safe’ to answer honestly, it’s utterly pointless,” she says.

5. How can we improve working here?

Happy staff and a work culture in which they thrive are much-sought prizes for many owners, and Adam Greenwood, CEO and co-founder of digital agency Greenwood Campbell, says the best way to get there is to ask the team what they want.

“I’m the only person in this business who can make blanket changes quite easily,” he says, “so I tell the team that if something can be better, they should let me know.”

Why it’s worth asking: Staff are the lifeblood of any enterprise, and the happier they are, the more likely they are to propel a business forward. Don’t ask, and resentment and grievances may simmer. “Last year we took two members of the team away to a big digital conference in the US,” says Greenwood, “and some of those who didn’t get to go questioned why I only took those two. So this year I said: ‘OK, we’re going to take everyone.’”

6. Are you clear on the wider business objectives and your role in achieving them?

“A lot of business leaders make the assumption that employees know the business goals and the part they play – and that everyone is pulling in the same direction,” says business coach Rebecca Morley. Unfortunately, this isn’t always the case – as Morley discovered when she recently put this question to a senior leadership team. “In a number of cases there was some ambiguity around the goals and their role, and it can lead to inefficiency,” she says.

Why it is worth asking: “Sometimes the simplest questions can make the biggest difference,” says Morley. “Business is a machine, and everyone needs to be playing their individual role in making it move forward effectively. If someone is misaligned, it creates an issue not just for them but for the business and the people around them.”

Further Reading

• Leadership lessons: how to be a good boss
• Management strategies: why mentoring matters
• Five flaws that could be your biggest strength in business

We have a thriving and diverse community of thousands of entrepreneurs from multiple sectors, backgrounds and skill sets helping you to connect with the right people at the right time. No matter whether you’re looking to upskill, get feedback, engage with new people or simply observe, there’s something for everyone.

‘Want to learn more? Register for NatWest Business Builder to view all of their business development tools. Click HERE‘