Is today a good time to start a business?

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This presentation was delivered by Clive Lewis, Head of Enterprise at ICAEW.

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  • Is today a good time to start a business?

    1. 1. #Finance4SUB Wifi Code – R3port1ngBUSINESS WITH CONFIDENCE icaew.com
    2. 2. Is today a good time to start a business? A presentation by Clive Lewis, Head of EnterpriseBUSINESS WITH CONFIDENCE icaew.com
    3. 3. #Finance4SUB Is today a good time to start a business? Presentation will cover: • Why people start a new business • Ten Tips for Start-ups • Alternative types of finance for Start-ups • Business plans for bank and outside financeBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    4. 4. #Finance4SUB Is today a good time to start a business? Why start a new business? • Have a skill, trade, profession or vocation and want to exploit opportunities • Have a new innovative product/ service/ idea • Have a hobby or interest which might generate an income • Need an incomeBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    5. 5. #Finance4SUB Is today a good time to start a business? Start-up survival rates • 90% last one year • Two-thirds last three years • 20% still going after ten years Based on VAT statisticsBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    6. 6. #Finance4SUB Is today a good time to start a business? Reasons for businesses ceasing include: • Move back to employment • Sell business • Merge with other business • Retirement • Business failure resulting in insolvency or bankruptcy • Becomes a part-time businessBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    7. 7. #Finance4SUB Is today a good time to start a business? Soft Issues – Positives • Being your own boss • Building something from scratch • A place in the community • An entrepreneur role-model • Tax advantages • Can sometimes be highly financially rewarding BUT: No Merc without workBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    8. 8. #Finance4SUB Is today a good time to start a business? The Soft Issues – Negatives • It can be lonely being the boss • You have to be a Jack-of-all trades • Getting out there / getting known • Paperwork & regulation burden • Long hours • Fear of Failure • Difficulty in “selling” your business ideaBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    9. 9. #Finance4SUB Is today a good time to start a business? Being in business is not for everyone • If you need a regular income • If you are risk averse • Personal circumstances/ financial situation may mean timing is wrong Consider the alternatives • A part-time business • Gaining experience in chosen sectorBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    10. 10. Is today a good time to start a business? Two quotes from Barclays Bank „Running a business‟ survey ‘ It’s the most satisfying and liberating experience I can imagine and a fundamental part of my life that I could not surrender’ ‘The practicalities are sleepless nights, worrying about my staff and how I can pay them every month and where we can find new business’BUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    11. 11. #Finance4SUB Is today a good time to start a business? Ten tips: 1 - Do research • Customer satisfaction - Who/ where / what / how much? • Test product / service/ idea /price/quality • Use feedback to refine product / service / ideaBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    12. 12. #Finance4SUB Is today a good time to start a business? Ten Tips: 2 - Write business plan • Use research to write plan • Description of product or service, market • Details of key people, experience, roles, etc • Financials: Year 1 in detail; Year 2 quarterly • Use plan to identify finance requirements, if any • Update plan regularly & compare actual performance to date with the plan. • In light of comparison review forecastsBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    13. 13. #Finance4SUB Is today a good time to start a business? Ten Tips: 3 - Secure finance Being underfinanced is often a factor in early poor performance • How much & when • Different types of finance • Cost • Obligations • Credit history • Friends & family financeBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    14. 14. #Finance4SUB Is today a good time to start a business? Ten Tips: 4 - Build in Contingencies • Setting up always takes longer • Think about regulations e.g. Health & Safety, Planning regs, etc • Delays usually increase costs & add to finance requirementsBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    15. 15. #Finance4SUB Is today a good time to start a business? Ten Tips : 5 - Hire the best people you can afford • If you intend to grow having people capable of taking on more responsibility is a decided advantage. • People will often work for below market rates if convinced of potential for growth in role/ business. • Being able to trust employees is vitalBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    16. 16. #Finance4SUB Is today a good time to start a business? Ten Tips: 6 - Find a mentor • Combat the loneliness • Someone to bounce ideas off • Your chartered accountant often fills this role • Use customers and suppliers as sources of adviceBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    17. 17. #Finance4SUB Is today a good time to start a business? Ten Tips : 7 - Information is Vital • Financial information is not just to satisfy the taxman – use it to inform yourself on trading performance • Set up your records from the start • Talk to your accountant • Use software if you are comfortable with it • A good book-keeper is a possible first optionBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    18. 18. #Finance4SUB Is today a good time to start a business? Ten Tips: 7 - Information is Vital – Key Performance Indicators – daily, weekly, monthly, annual data • Turnover • Gross margins • Overheads • Finance costs • Net profit • Cashflow/ Bank balances • Working capital – stocks, debtors and creditorsBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    19. 19. #Finance4SUB Is today a good time to start a business? Top Tips: 8 - Be alive to the possibilities • Don‟t exclude taking the business in a different direction with the product or service • Keep a watch for competitors in difficulties • Listen to customers, suppliers & staff • Maximize the potential of the Internet- your website should be professional looking and well designed • Develop a marketing plan & think about advertising- leaflets, leaflet inserts &drops, Ads in yellow pages, etc • Work at getting personal recommendations from customersBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    20. 20. #Finance4SUB Is today a good time to start a business? Top Tip: 9 - Starting is a Learning experience • As an entrepreneur you will learn a great deal & obtain new skills. • Learn from your mistakes – ask why did that (potential sale) not achieve the outcome I wanted? • Mentors - someone who has faced the challenges of starting a business and succeeded – can help with the learning.BUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    21. 21. #Finance4SUB Is today a good time to start a business? Ten Tips: 10 - Minimise the likelihood/ effects of failure ‘Manage the downside’ • Shorten the learning curve – have previous experience of sector/ employ someone who has • Appoint a chartered accountant before starting – many have a wealth of experience with start-ups • Manage overheads/ working capital: - minimise investment in stocks - finance any assets by HP/ leasing - encourage prompt payment - keep some balance at bank/ unused facilities for contingenciesBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    22. 22. #Finance4SUB Is today a good time to start a business? Ten Tips:10 - Minimise the likelihood/ effects of failure • Be prepared to recognise it‟s not working out • Protect personal assets - if possible • Ask „If I didn‟t do this, what would I want to do/ be doing‟?BUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    23. 23. #Finance4SUB Is today a good time to start a business? Chartered Accountants (ACA or FCA) – the trusted adviser • Record-keeping • Help decide business format • Who do I need to notify? • Taxation compliance / planning • Help preparing business plans • Help raising finance Help - a phone call awayBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    24. 24. #Finance4SUB Sources of start-up finance • Your own personal savings • Friends and Family • Credit cards • Credit Unions • Grants (usually for specific groups of people or sectors) • Bank finance – overdraft or loans • Hire purchase , leasing or hiring • Small scale equity finance such as Business Angels • Private equity More information available on the Businesslink.gov.uk websiteBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    25. 25. #Finance4SUB Bank finance – information requirements • Business plan with convincing narrative • Cashflow forecasts show how much finance required and when it will be repaid. • Past financial reports • Detail of the key people with information on their credit histories and explanations for past difficulties. Before opening a business bank account, banks routinely credit check signatories to a bank account. They use their own records of a customer‟s transaction history. New customers would be checked with the credit reference agencies. They would also do checks required by the moneylaundering regulations.BUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    26. 26. #Finance4SUB A business plan A business plan should include: • The management team including previous employment • Description of business including trading history • The market, your proposition, competitors, research and marketing plans • Profit, Balance Sheet and Cashflow forecasts identifying any borrowing requirements • Details of shareholders, other sources of finance • Security and personal guarantees available A short Executive Summary is vitalBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    27. 27. ICAEW Business Advice Service (BAS)BUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    28. 28. BUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    29. 29. BUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    30. 30. Searching for BAS firmsBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    31. 31. Advantages for SMEs and start-ups • Provides SMEs/start-ups with professional advice • Easy to find on website and book consultation • No long term „lock-in‟ • Initial meeting is free of chargeBUSINESS WITH CONFIDENCE icaew.comCopyright © ICAEW 2012. All rights reserved.
    32. 32. A world leader of the accountancy and finance professionBUSINESS WITH CONFIDENCE icaew.com

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