My accountant is trying to drum up business for their “Tax Investigation Insurance Scheme” which is fine. What isn’t fine is that they’re mixing it up with the proposed Business Records Checks which are another thing entirely. It’s nothing short of scaremongering to link the two together but that’s a matter between me and my accountant. For now, let’s look at BRCs and what they might mean for us.

I’m not, at this point, going to get deeply into the government justification for BRCs (indeed, they claim it’ll help us make more money, a-ha-ha-ha) because it can be summed up as this: money. They claim that they’re missing out on billions of pounds of tax revenue because poor record keeping amongst small businesses almost always results in lower tax bills. Or at least, so they say. It seems to me that if the problem is simply poor record keeping, it would be just as likely that this would result in paying too much as too little but reading between the lines they believe small businesses are deliberately keeping poor records to reduce their tax bills.

The plan is for HMRC officers (don’t you just love ‘em?) to investigate “up to” 50,000 small businesses annually. Given that there are 5 million SMEs in the UK, that means one in 100 can expect to be investigated although that will be biased towards certain industries (especially those that deal with cash, I imagine).

I’ve dug around the consultation document and other supporting information to summarise things here:

• The stated point is to improve business records
• It’s due to roll out in the second half of 2011
• It’s claimed intention is to look at record keeping as it is happening, not to look back at past years. It is not a tax investigation. In other words, HMRC might ask you how you keep your records and what records you keep. They will then decide whether you’re complying with the law and use their “professional judgement” as to whether you’re committing a breach serious enough to be fined. Given that this is an exercise in increasing revenue for HMRC I rather suspect their “professional judgement” might err on the side of fining you. Nothing new there then.
• The level of fines hasn’t been determined but it’s likely to be pretty punitive – a ceiling of £3,000 is proposed
• Each investigation is supposed to take up to 1 day but that must depend on the business. So you will lose time and you’ll probably have to pay your accountant too
• You face two fines: one for poor record keeping and one for inaccurate returns
• Separate fines for VAT and Corporation Tax
• Cases are to be selected based on a Risk Assessment of the industry the company works in, along with a few random ones for good measure.
• You should get 7 days notice of any visit.

Here’s the critical section:

It is not intended to begin a programme of Business Records Checks with penalties for significant record keeping failures without first providing for a period of adjustment; that is, allowing a reasonable period for all to bring their record keeping up to standard,with penalties being imposed only for significant record keeping failures occurring after the end of that period.

In other words, small businesses will be given time to get their house in order before the regime begins. At least that’s the plan.

What records do I need to keep?

That depends on your business. There’s the “Keeping records for business –what you need to know” factsheet produced the HMRC but perhaps more useful is BusinessLink’s interactive tool: Find out what records you should be keeping.

I recommend that you get a good quality book-keeping system such as FreeAgent and have as many transactions sent and received electronically as you possibly can.

My Thoughts

My gut reaction is that this is yet another imposition on micro businesses. The government talks a good game when it comes to supporting small businesses but the facts are somewhat different. The smaller your business, the bigger, proportionately, the burden of red tape and HMRC has become noticeably more intrusive in the past 18 months.

If this is just about encouraging better record keeping then perhaps there’s a place for it but there are ways of achieving this that don’t involve jack-booted HMRC clones knocking on your door.

What’s worse is that this is clearly a money-grabbing exercise and is likely to descend into fining as many firms as possible for inconsequential errors in their record keeping when what the government apparently wants us to do is actually run our bloody businesses so we can reinvigorate the economy. Talk about wanting your cake and, simultaneously, eating it.

My message to government is to get off our backs and show some genuine support. They should be cutting down the administrative burdens of doing business not increasing them.

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First impressions count. Boring, clichéd but true.  An amateurish or incomplete website, for example, destroys the credibility of any small business. The same applies to your paper-based communications. We may live in a digital world, but paper’s been around for 4,000 years and it’s likely to remain important for the foreseeable future.

For most small businesses, the day to day production of paperwork is handled in-house and this presents two problems. Firstly, you need to have some understanding of design to come up with a professional look and for this I strongly recommend the Non-Designers Design Book by Robin Williams.

The second problem is translating your design into reality. Most small businesses use Microsoft Word but Word is not up to the job of creating sophisticated layouts. Word’s purpose is to make the job of generating documents quick and efficient. This is fine for reports and letters but if design is a key component of the document then a more sophisticated tool is needed and this is where desktop publishing comes in.

I’ve been involved in DTP since the days of Ventura running on the first PC GUI: GEM (a straight rip-off of the early Mac OS). Ventura cost a fortune, as did its successors. QuarkXpress, for example, will set you back around £900 plus several weeks of learning time. Adobe InDesign is more reasonably priced but will still cost you around £300 and, again, the learning curve is steep.

A desktop publishing application aimed at small business needs to satisfy four criteria:

1. It must include all the features they’re likely to need
2. It must be easy to learn and use
3. It must be capable of professional results
4. It must be cheap!

In my view, UK software publisher Serif’s PagePlus X5 is the only tool that meets all four criteria.

Features

PagePlus makes it possible to create everything from business cards through compliment slips, brochures and letterheads to newsletters, menus and postcards. PagePlus has a range of good quality built-in templates for you to base your documents on, each of which can be altered once you’ve created the document.

The latest version introduces “multiple master pages” which allows you to have, for example, one design for odd pages and a different design for even pages. Think of these like PowerPoint’s master slides – the more you can put into the master page, the less you have to repeat on each page.

PagePlus includes built-in drawing and photo manipulation tools – including an easy to use and fairly effective image cut-out tool which allows you to isolate the main image from the background. These tools are ideal for basic editing but can’t match Photoshop.

One of the most exciting features is PagePlus’s ability to import (as well as export) PDF documents. In practice what this means is that once the document is imported, it’s converted to PagePlus objects and you can then edit it or, most usefully, base your own document on the PDF’s layout. If you’re like me, you download PDFs on a regular basis and this is a fantastic way of learning design by basing your documents on an existing layout with the minimum effort.

In short, there’s NOTHING missing for business document development.

Easy to learn and use

If you can use Word and PowerPoint, you can use PagePlus X5. Most of the text formatting processes will be very similar to using Word whereas the drag and drop positioning of text and graphics is very similar to working in PowerPoint. Indeed, you can import text from the latest versions of Word and preserve most of the formatting so you can use the two alongside each other.

Of course, there’s a bit of learning to do. I also find the grid snapping clunky and inconvenient but it’s a small criticism. I would defy any reasonably proficient Office user to struggle with PagePlus.

Professional results

Just as having a copy of Word doesn’t make you a novelist, having a DTP package doesn’t make you a designer (see note above about how to fix that). However, PagePlus’s design templates at least give you a fighting chance.

Furthermore, PagePlus X5 makes it easy to provide a professional printing firm with the PDF format they need. This includes crop marks and very specific compression and resolution settings to suit the document size. Any self-respecting printing firm should be able to take your files and output your leaflets or brochures without fuss.

Cheap

PagePlus X5 costs £79 – a tenth the price of Quark Xpress (you can get it for less from Amazon). I’ve used it for creating a 60 page ebook, promotional postcards, stickers, instructions and letter headed paper. But what about Microsoft Publisher? Publisher was, for a long time, the only choice at the lower-price end of the market. However, quite apart from the fact that it costs 50% more than PagePlus, Publisher simply cannot compete feature-for-feature. And it’s refreshing to be able to buy a product created in the UK and set up out of the box for English English.

Overall, PagePlus X5 is the only realistic choice for small business desktop publishing. Its short learning curve, low price, high quality end-results and feature list would be enough on their own but the low price makes PagePlus X5 an essential part of the small business toolkit.

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I’d been meaning to do it for months but finally we’ve got a franking machine for our candle kit business MakingYourOwnCandles. Wax, in particular, is expensive to ship and it seemed, on the face of it, that we’d save a lot of money – particularly in the run up to Christmas.

However, I was nervous of getting a franking machine – partly because I didn’t fully understand how it worked and partly because it represented a contractual commitment, unlike SmartStamp.

1: The Basics

Franked mail is cheaper than standard mail – and that’s the main reason for switching to it. For example, a first class stamp for a letter would cost 41p, franked it’s 36p. a 2KG first class packet costs 96p less when it’s franked.

To frank your mail, you need a franking machine (which you lease on a 12 month contract) and a contract with Royal Mail (handled by whoever leases the franking machine).

2: Topping up

The franking machine needs to have credit on it in order to print the franking labels. You will be asked to estimate your monthly spend and that amount will be deducted from your account every month. This ties up cashflow, of course, but then so would buying stamps or using SmartStamp.

The essential difference is that it costs you money to fill it up. This is the equivalent of having to pay a shop and extra couple of quid when you buy a topup voucher for your mobile. The cost is usually added to your phone bill because, quaintly, the franking machine connects to the data centre via a built-in dial-up modem that plugs into your phone socket.

Tip 1: Make certain you know how much this is going to cost. Our current provider gives 12 free topups per year but charges a fee for any topups beyond that.

This has proved to be a nightmare for us as Christmas approaches. Our turnover triples at this time of the year so our average monthly postage is meaningless. This means that we’re forced to top up again and, to avoid too many extra charges, we end up putting huge amounts into our provider’s bank account so that we can draw it out. This could easily become a cashflow problem. I’m angry about this because it seems that we’re being charged for using a device we’re already paying to lease.

3: Parcels

We send a lot of our products by parcel post. Guess what Parcel post does not offer a franking discount! This immediately reduces the benefit to us in having a franking machine. Any item over 1KG cannot be sent second class and so the choice is either sending it first class or via parcel post: our customers don’t want to pay for the former and the latter offers no saving to us.

4: Same day

All franked mail needs to be at the post office or sorting office the same day: if you miss the deadline then unlike with stamps you lose the lot. One cockup could cost a fortune.

5: Don’t expect good service

Our experience has been poor. Most franking machine companies didn’t even bother to respond to our enquiries. The one that did (the one we went with) provided reasonable upfront service but despite knowing that we were novices and what our business was about, didn’t let us know about parcel post or the costs of topping up in advance (in, indeed, how to do it). The machine wasn’t set up for us, so I spent a morning doing this and the support since the sale has been poor to say the least. It’s the classic case of selling the item then moving on to the next sale.

Has it been worth it?

Probably, especially over the Christmas period. There’s also the intangible benefit of the more professional presentation you  get from franking your mail. However, the saving is not nearly so great as you might imagine if you add up the cost of renting the machine, the costs of topping up in between regular topups and the fact that there is no discount for standard parcels. When I get an actual figure for what we saved, I’ll post it here.

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Step 1: Planning

• Come up with product ideas
• Evaluate them
• Plan a business around the best
• Set up your company
• Prototype and test your product/service

Step 2: Build the business

• Build your product/service
• Build the website that supports it
• Get payment processing and support systems into place

Step 3: Market the business

• Optimise your site
• Build a list
• Create an autoresponder
• Begin an Adwords campaign
• Use Facebook and Twitter to promote your business

Find out more by downloading our FREE guide to starting a business on a shoestring

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Who’d be a school/college/university leaver today? Well, I would for one as the range of possibilities open to people these days is exponentially greater than when I left school. At that time (in the 1980s), on leaving college you had two choices: get a job or go onto University (at which point you had two choices: stay at Uni or get a job). Although there were, of course, self-employed businesspeople, most people didn’t know one personally and it seemed that there were many barriers in the way. For example, being self employed meant, at that time, selling a physical product or service and that meant either buying expensive equipment or renting a shop and that meant borrowing money from a reluctant bank (or family member).

Today it’s different. It’s possible to get a business up and running for, say, £250. It’s easy to choose a business that you can run part time to supplement earned income. And then, at some point, to add another business or build that one until you have enough regular income to stop inhabiting the corporate rat maze.

And the sheer amount of choice, along with the questionable reputation of the internet and the multitudes of “gurus” all eager to sell you on the dream of easy money is what is leading to confusion and procrastination amongst the next generation of entrepreneurs. With so much choice, what do you do?

Well, you may have come across a book called Crush It!: Why Now is the Time to Cash in on Your Passion by Gary Vaynerchuk. If you haven’t then I strongly recommend it: I had read it within 24 hours and am now systematically applying its lessons to my businesses. Vaynerchuk’s style might be a little OTT for your taste (or mine) but there’s no denying his enthusiasm or his success.

He talks about three rules, in this order:

1. Love your family. As soon as I read this, I knew I was going to like the book.
2. Find your passion
3. Work your arse off

…and there’s a fourth, which is “patience”.

So, to find direction you need to think about this. If you didn’t need to earn money, what constructive activity would you devote your life to? What would get you out of bed early in the morning energised and carry you through the day enthused and excited? Whatever the answer to that question is, that’s your direction.

I get excited about the idea of building new businesses, either myself or helping others to do so. It’s like a puzzle to me, a very creative puzzle. I also love writing and programming. So I spend the majority of my day doing these things. I’m advising one young man to build a blog around his passion for horse racing, another to build a very specific t-shirt business and a young woman to build a business around her passion for history. Can you imagine spending all your time working on something that turns you on? Then do it! Vaynerchuk’s book is a good starting point but you’ll find this advice given by all of the industry’s most respected figures.

The key is not to be in it just for money: be in it because you love it. You might not make more, working for yourself, than you did as an employee. But you’ll have a great time doing it.

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If, like me you get hundreds of emails a day (in my case from 5 main accounts) then you need a way to effectively handle them. Having spent years struggling with keeping most messages in my inbox (which ended up with thousands of entries) I tried “managing” my inbox down to zero in Thunderbird by either responding to emails instantly, deleting them or moving them into another folder.

It lasted a few days. However, on moving our email onto Google Apps Professional (essentially the Gmail client) it has become not only possible but actually easy. I am not an organised person by nature so the fact that I can achieve it means ANYONE can.

You can see the original philosophy behind Inbox Zero by following the link. Gmail helps you achieve this by including sophisticated Filters which allow you to “Archive” dealt-with emails instantly and thus remove them from the inbox. The “star” system allows you to tag emails you can’t deal with immediately so all you’re left with is a clear inbox and a sense of satisfaction. Gmails excellent search features mean that you can very quickly find any email you’ve archived and, because it’s all online you don’t get the machine-slowdown so noticeable with Outlook or Thunderbird AND you can access it from any connected computer or mobile device.

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Be gentle with me guys: this is my first video blog entry: I will get better and there is some good stuff in this!

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…I wish I knew the answer to that. At the end of the day, the client is the one with the money and they therefore hold the ultimate whip hand. The bigger your reliance on an individual client or a small group, the greater their control over you and a few clients find themselves unable to resist exerting that control. It is only a few I hasten to add, but when it happens it can be devastating.

1: Many small clients > a few big clients

The first step is the business model you operate under. Given the choice I would always choose a business model that involves having lots of small clients over a few big clients. Let’s think about a modest microbusiness with a turnover of £50,000 per year. If that business has two major clients each of whom is therefore worth £25,000 to the bottom line: that’s a LOT of power. If the business has 1,000 clients each of whom brings in £50, then each client has much, much less power. That doesn’t mean that they should be treated with less respect but it does mean that if, for whatever reason, you decide to go your separate ways (or even refund them) it’s not going to bankrupt the company.

What if you’re in a business like the first example? If it were me, I’d move towards the second one bit by bit.

2: Be clear, be upfront, be honest

Agree everything upfront. Assume that your clients are going to treat you well and with integrity whilst protecting yourself in case the opposite happens.

Get it written down. It doesn’t have to be in formal contract form since the fact of the matter is that you can’t afford to sue your client in any case. By having it written down, you greatly reduce the chances of being shafted – the client can’t take the easy route of pretending to misunderstand what you agreed (or, indeed, genuinely misunderstanding if you’re not communicating well).

3: Be paid in stages – get money upfront

Never, ever agree to work without an upfront payment of some sort: I usually insist on 50% upfront for project work. If you don’t do this, ALL the risk is on your shoulders – you could complete the entire job and not see a penny.

By agreeing to an upfront payment, the client risks that money and you risk your time and your business expenditure so the risk is shared.

I usually insist on being paid 25% on delivery and a final 25% on signoff. This means that the most I risk is 25% of the budget. To date, in the 11 years I’ve been running my businesses, this is the most I’ve ever lost. I lost 25% to a blue corporate when my client lost their job and their replacement simply jettisoned all their projects in the sure and certain knowledge that we couldn’t afford to sue them.

…and that’s the situation I’m in today. I signed a contract with my client which meant that they should have paid me by the end of December 2009 (it’s now March 2010). I met every last condition of the contract and yet the client has prevaricated at every turn because he now has the code and believes he can afford to waste my time now before paying the final bill – assuming he ever pays it.

At the end of the day, I cannot make him pay up because I can’t afford to (or be bothered to) sue him and, you know what, I’m not going to lost any sleep over it. It is a whole lot better to assume you’re going to be treated with integrity by your clients because then you automatically work with integrity yourself. This means that if it does all go tits up, at least you are left in the sure and certain knowledge that you have acted properly.

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One of the most often asked questions is “How do I come up with an idea for my small business?”. Bear in mind, from the start, that coming up with an idea is just the first step in a long process – once you have an idea, you need to research it before deciding to base your business on it. Far too many businesses are started up without this level of research and this is one of the main reasons for early business failure.

Here are some of my techniques for idea-generation:

What do you like doing?

A good business is based around your skills and knowledge. If you like doing something, you’ll naturally be better at it and more informed simply because your interest level is that much higher. This is why boys who are completely turned off by school can explain, in great depth, the off-side rule or list their favourite team’s players faultlessly.
Whilst it is possible to force yourself to learn about a subject you’re not naturally interested in, you’re pushing against the grain when you do that. Make a list of the things you like to talk about and do and see if there are any business ideas there.

What frustrates you?

Don’t expect to come up with business ideas in an instant. You need to turn on your radar and look out for opportunities. Most usefully, you should notice when you get frustrated by something. It might be spectacularly poor service, bureaucratic nonsense from a corporate or just a random thought: anything that seems harder that it should be probably is and if you get frustrated by it, so will a potential customer.
For example, MakingYourOwnCandles came out of a frustration that we couldn’t get a good quality candle making kit – the kits we found were just expensive toys.

Changing Media

Often products and services that are currently offered through one channel could also be offered, more effectively, through a different one. The idea for PassYourTheory came about when I was standing in a queue in WHSmith and the young woman in front of me had a Theory Test CDROM. PYT offers theory tests online rather than on CDROM. Of course, the opposite also applies. All ecommerce shops are, effectively, bricks and mortar shops transferred to a new channel. How could you apply “real world” products and services to the online world?

Current trends in society

For example, during a recession, customers are looking for cheaper, more effective products or services.
Green products are popular at present: could you take a product or service that has a negative impact on the environment and reduce or eliminate that impact?
People feel time poor – how about creating a product or service that frees up their time? Ironing and gardening services are good examples.
The population is ageing: can you adapt an existing service and make it more appealing to older people? Can you invent a new product for that target group? It is, after all, under-provided for at the moment.
People are getting fatter despite food quality and labelling improving: what products or services could help with this?
Some would say that, for many people, life has become more and more shallow as we become more prosperous. People who feel like this will be attracted to low-cost products/services that give them a pleasure kick without feeling guilty.

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