Top tips for starting or growing a business

The IAB carried out interviews with four small business owners to hear their advice for setting up and growing a business.  To coincide with Small Business Advice week, we are sharing these tips with you.

Do what you love and love what you do:

These tips are focused around being passionate about what you do to help spread the word about your business.

1. Do something that hasn’t been done before, or do it differently, or in a place that doesn’t have it already.

A budding rock star, Quentin needed money to fulfil his dream. He rode his motorbike from Cambridge to London where he spotted motorcyclists delivering things. “I decided to start a similar business in Cambridge where no one else was doing it.”

2. Do market research and vary your research methods.

The response to a leaflet drop may be disappointing. You have to send out 1,000 leaflets to get one back.

A magazine or newspaper advert may be expensive and not get the response you hope for. Use other methods such as word-of-mouth, or see how competitors do it – and then do it better. The Internet provides lots of opportunities but don’t pay someone to do it. Do it yourself.

3. Find your audience to be their best possible servant and create the solution that solves their top problem. Be a specialist.

Quentin identified his audience as medium and large corporates, spotting that their biggest problem was getting tenders delivered on time. “I got on my bike, complete with long hair and leather jacket, and parked in front of their premises. I walked in, met the receptionist and to my astonishment they all said ‘Yes, we need that service.’ He had solved their delivery headache. “I was their knight in shining armour.” The business went “ballistic” and he had no time to be a rock star. His latest business A4Accountants focuses on hairdressers and beauticians.

4. Do business with people – or employ people – you like and trust.

Never feel you have to cross the road to avoid someone because of a bad business experience.

5. Win and keep customers by asking the right questions in the right way.

Show passion for your customers. The secret of success is not about business plans but asking customers and prospective customers what they need. Successful start-ups are very close to their customers because they’re passionate about them.

6. Get to know your clients and work with them as a team.

You work WITH clients, not FOR them.

It helps you to better understand their business. Be confident in yourself. Most clients don’t like paperwork and if you’re a bookkeeper, they look to you for reassurance that you can take away some of the worry, make their life easier and that you’re going to do a good job. A good working relationship gets the best out of each other, and you will grow with them.

7. Word-of-mouth recommendation is the best form of advertising.

You used to put an ad in a local magazine or newspaper but now you have to be more on social media. You’ve got to move with the times. Don’t get left behind.

8. Don’t be worried about marketing yourself.

9. Failure is no stigma.

Sometimes it’s not been a failure of your idea but the way you may have been treated or ripped off.

Bring your best ‘you’

These tips are focused around being the best you can be to help your business excel.

1. Do something you’re passionate about. 

Charlie Mullins of Pimlico Plumbers built a £38m business by knowing he could provide a better customer service than any other plumber. A business owner is often driven by their love of the reaction they get from satisfied customers. You will only keep going if it’s something you really love doing so it’s not like a job. Someone with a music career is a micro business owner.  A busker is a perfect example.

2. Look presentable. 

Quentin had his hair trimmed “because when you’re successful, you need to meet important people in suits.”

3. Don’t say ‘Yes’ to everything.

When you start, you tend to do everything for everybody. The sooner you realise the need to specialise, the better. It’s very hard to say No. Two of my biggest mistakes were not saying No and venturing into areas where I wasn’t competent.

4. Learn new skills. 

Quentin was a talented musician but knew little about computers and programming. He learned how to design an accounting program to solve his own problem – issuing invoices, collecting money and pulling the financial side together.  That led to the thought: “Why don’t I build an accounting program to help businesses like mine?”

5. Don’t waste time thinking about what you shouldn’t do.

“The only thing we have of any value is time. You have to decide what you’re going to do with your time. If you pick the thing you love the best, time becomes irrelevant. If you’re doing something you don’t enjoy, you’re going to have an unhappy life.”

6. Don’t under-value yourself, especially if you are female.

There’s a tendency for small and medium enterprises (SMEs), especially those run by women, to cut their prices. They are frightened of charging a good price for the job. A personal coach encouraged [my wife] Patricia to increase her charges. She doubled her fees and won more work.

If you’re experienced and offer a good service, don’t ever cut the price to get the business. If you over-price and lose the deal, you’ve lost nothing, If you over-price and get the deal, you’ve got more money.

7. Do be flexible. 

If at first you don’t succeed, never be afraid to adapt or change your business model.

8. Meet deadlines.

Businesses panic. They need to know that, if you’re their bookkeeper, even if you go there only once a month, it’s under control. Once you’ve hit the deadline, they relax. You’ve got to deliver. If you do, that’s a turning point, especially if it’s your first time with a client. I’ve had some clients for more than 20 years.

Have a good system in place. I go back to basics and use T cards showing, for example, names of clients, Vat due date, when their year end falls. That ensures you don’t miss anybody and your card gets moved when, say, you’ve filed the Vat return. If you’re away, someone else can pick it up. You need a tidy mind.

9. Don’t say you can do something when you can’t. 

Never take on work you’re unsure about. Don’t over-promise and under-deliver. You don’t want to disappoint a client but if you can’t do something, it’s better to be honest. Develop a good relationship with their accountant and say: “That’s a question for your accountant.”

Don’t be afraid to say No. Have the confidence to turn down a client. If you get an uneasy feeling, perhaps that something sounds a bit dodgy, have the courage to say No. I felt that some clients would be a nightmare.

10. Be principled and professional. 

If you’re a bookkeeper, never forget that bookkeeping is a profession and demands professional standards at all times.

Remember you can go to prison. If you know your client is doing something untoward, you’re just as liable as they are. Anti money laundering rules apply to bookkeepers.

No one wants to pay tax and if a client says: “Can’t you make it any less” your answer is No.

11. Don’t be afraid to ask for help and advice.

You’ll get the kind of help you need. It’s scary being a self-employed person on your own. I’ve never been in favour of ex-bank managers becoming mentors. It’s about business owners helping each other. All advice should be in the context of the person, and the business they are running.

Keep your finances in check

These tips are focused around ensuring your finances are in order, which is vital for the success of any business.

1. Stay employed until the business has grown.

“We over-estimate what we can do in a year and under-estimate what we can do in 10 years. To be good at anything will take you a long time. If you’re an employee and thinking of starting a business, stay employed until the business has grown to a point where you are happy.”

2. Don’t borrow at the start.

An investor is a risk to your controlling your own destiny because they’re gambling. I’ve met hardly anybody who’s used a pitch for start up funding or government start up loans that has been a long- term success.

3. Find an angel investor.

Quentin started a new software company with a product that ran on every computer. Seeking investment, he attended the First Tuesday Club and found an angel with £100,000 to grow Accountz.com. It created software that was sold by major retailers and nominated for 3 MacWorld Awards. Quentin featured in The Sunday Times with a photo of himself strumming his beloved Fender Stratocaster guitar.

4. Manage cash flow and take on a bookkeeper so that you can spend more time looking for opportunities. 

Bookkeepers can do fantastic things for a start-up, especially managing cash flow. The bookkeeper is an important and trusted guide. Bookkeepers help equip the start-up and micro business owner with the skills they need. I love self-employed bookkeepers, what they achieve and what they do for micro businesses. As a fan of the IAB, I know bookkeepers are a micro-businesses’ best friend. Clients should guarantee to pay within 30 days.

5. Don’t take on professional help – except a bookkeeper.

If you go to a start-up seminar, professional vultures will circle, saying you need to use an accountant or solicitor. You don’t. You won’t need an accountant until nine months after year-end. When starting a business, you can choose the accounting start date. It could be two years before you need to present accounts. Nowadays, you may not even need an accountant to do that, especially if you’re not making a profit.

6. Don’t hire anybody until you’ve got regular income.

It may be hard to find potential staff who work to your standards. Don’t take on anyone until you have regular income because you increase your overheads and cut the amount of time doing what you’re good at.

7. Do get your pricing right and keep an eye on cash flow.

Few understand the difference between gross and net margin. Gross margin is the difference between what you sell something for and what it costs to sell. For example, if you sell something costing £50 for £100, your gross margin is £50. But from that you have to pay business expenses like rent and rates, after which you end up with net profit.

Each month, you should know your breakeven sales and how much you need to sell to make enough net profit to pay your fixed overheads. If these are, say, £5,000 a year, you must sell £10,000 (if your gross margin is 50%) just to break even. After that, all sales generate profit. You should work that out before you start. When pricing a service, work out how many days you want to work. If you’re offering a premium or niche service, you can charge more.

8. Do maintain a good set of up-to-date books – use a bookkeeper if you can’t.

You need a decent set of books. Unless you are well trained, don’t do it yourself. That’s a recipe for disaster. You just need a bookkeeper and there are quite a few who will file accounts at Companies House.

If you’re a Limited Company or Limited Liability Partnership, your bookkeeper should be able to prepare the accounts with a modified balance sheet showing assets and liabilities but no turnover or profit margin.

 

Useful links:

To find out more about IAB qualifications click here: https://www.iab.org.uk/qualifications/.

If you’re interested in joining the IAB as a professional member click here: https://www.iab.org.uk/join-the-iab/.

To find a bookkeeper for your business visit: https://www.iab.org.uk/find-bookkeeper/.

 

Thank you to the following successful small business owners who have provided these tips:

Janet Jack FIAB MIAAP: Janet is IAB Chief Executive and former Bookkeeper of the Year. She was a professional bookkeeper for many years, running a business with a partner and then as a sole trader JJBA Ltd. 


Quentin Pain FIAB AIAAP: IAB professional member, Quentin was named Small Business Mentor of the Year 2013. He left school at 15 with two ‘O’ levels and started his first business – a motorcycle courier – at 23. He has written 4 books including ‘Accounting for Everyone: A 12-week Bookkeeping Course.” He runs several businesses, including A4 Accountants, based in Wisbech.

Richard Romain: Marketing and digital consultant Richard Romain has worked closely with the IAB for many years. The former mechanical engineer and general manager set up his own marketing business in 1982. He went on to run a yacht charter business and mentored start-ups at Maidstone Enterprise Agency. He and his wife Patricia, a former nurse, NHS consultant and NVQ assessor, recently retired and work hard together on their expansive eco-friendly property in France.  

Tony Robinson OBE: Tony is known as the Micro Business Champion. He runs the annual, global #MicroBizMattersDay with co-founder Tina Boden. They also co-founded Enterprise Rockers CIC to make life better for micro business owners everywhere. There are 5.2 million in the UK, employing between 0 and 9 people. He founded SFEDI in 1996 and the SFEDI Group includes the Institute of Enterprise and Entrepreneurs (IOEE), the UK’s only dedicated awarding organisation for enterprise and entrepreneurship. Tony worked in the corporate world before leaving in 1986 to start his own business. He has written a 5* rated fictional satire Freedom from Bosses Forever. Tony is based in Scarborough and works with Yorkshire Enterprise Agency.

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