In Good Company In Good Company The essential business start-up guide for women Rebecca Jordan and Kirsty Weir First published in Great Britain 2006 A & C Black Publishers Ltd 38 Soho Square, London W1D 3HB © Clear Content Ltd, 2006 All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying or otherwise, without the prior written permission of the Publisher No responsibility for loss caused to any individual or organisation acting or refraining from action as a result of the material in this publication can be accepted by A & C Black Publishers Ltd or the authors British Library Cataloguing in Publication Data A CIP record for this book is available from the British Library ISBN-10: 0–7136–7626–4 ISBN-13: 978–0–7136–7626–6 eISBN-13: 978-1-4081-0186-5 A & C Black uses paper produced with elemental chlorine-free pulp, harvested from managed sustainable forests Design by Fiona Pike, Pike Design, Winchester Typeset by RefineCatch Limited, Bungay, Suffolk Printed in the United Kingdom by Bookmarque, Croydon Contents Thanks x INTRODUCTION ★ About us ★ The ‘entrepreneur’ thing ★ The ‘small business’ thing ★ The ‘woman’ thing ★ How the book works 1 THE IDEA ★ The right idea ★ The right attitude ★ Identifying the best idea How much money could the idea make? How would the implementation of the idea affect your life? How much value potential does the idea have? Would the pursuit of the idea make the most of your skills? 9 11 13 14 14 14 15 v CONTENTS ★ The right time ★ How the idea for Kirsty’s previous business came about ★ Do you have to love your idea? ★ Finding your inspiration ★ Top tips for finding inspiration ★ Get the basics: you don’t always need your own idea ★ Finding out about your competition ★ Get the basics: protecting your intellectual property ★ Protecting your idea ★ Having a Plan B ★ Ten of the best business ideas – ever! ★ And ten of the worst ★ Your elevator pitch ★ The power of the written word ★ Our goal-writing guidelines ★ Get an ideas process vi MONEY ★ Sources of funding ★ Advertising and sponsorship ★ Get the basics: choosing your trading status ★ Should you sell equity in your business? ★ Get the basics: selling company shares to raise equity finance ★ Get the basics: funding your business ★ Get the basics: costing your business ★ Managing your money ★ A crash course in electronic book-keeping 15 18 21 21 22 23 26 27 30 33 34 37 38 40 41 43 46 49 49 50 55 55 63 72 77 78 CONTENTS ★ ★ ★ ★ ★ To sum up Writing a business plan Get the basics: why write a business plan? What your business plan should contain FAQs 83 83 84 86 89 PEOPLE ★ Human resource planning ★ The recruitment process ★ Write a job description and a job specification ★ Where to find staff ★ Conducting interviews ★ The job offer ★ Personnel files ★ Contracts of employment ★ Managing staff ★ Understanding yourself and your role as a leader ★ Retaining your staff ★ Get the basics: maternity and paternity leave ★ Managing the performance of staff ★ If you need to get rid of someone ★ To sum up 91 93 95 95 98 106 109 113 114 116 FINDING PREMISES ★ Get the basics: premises – your three main options ★ Office hunting ★ How to find business premises ★ To sum up 131 120 122 123 125 127 130 133 139 147 149 vii CONTENTS GROWING YOUR BUSINESS: MARKETING ★ Identify your market ★ Find a channel to your market ★ Get the basics: writing marketing copy ★ Get the basics: search engine optimisation ★ Get the basics: writing a press release ★ Branding ★ Writing your marketing plan ★ To sum up 150 151 153 163 171 183 185 186 187 GROWING YOUR BUSINESS: SALES ★ The sales process ★ How to win prospects and influence people ★ Decision-makers ★ Networking FAQs ★ To sum up 189 191 194 197 199 204 YOUR BUSINESS AND YOU ★ Balancing business and kids ★ Balancing work time and personal time ★ Balancing your business and your health ★ Manage your time ★ Your personal wellbeing account ★ Dealing with stress ★ Looking the part ★ To sum up 205 206 211 215 218 221 223 224 228 EXIT ★ How long you want to run the business for? ★ To what extent you want out? ★ Typical exit options ★ Selling your business 229 230 231 232 233 viii CONTENTS ★ ★ ★ ★ ★ Valuing your business for sale Keeping it in the family MBOs and MBIs Floating your company on the stock market To sum up THE END? Useful links and numbers Index 233 234 234 235 235 236 238 243 ix IN GOOD COMPANY you to stick around for a year or so to ensure a smooth handover of ownership This would normally be a requirement in the buyer’s terms and conditions, as long as you are bringing value to the business If you don’t want to sell outright, but want someone else to run it while you retain some shares, then there are various ways of doing this TYPICAL EXIT OPTIONS There are a number of pathways which most owner/managers of businesses will consider as exit strategies Below are the main routes to exit which you need to think about: ★ selling to another business or individual ★ handing it on to your family ★ management buy out (MBO) or management buy in (MBI) ★ floating the business on the stock market The first option is one of the most obvious ways of parting with your business Handing the business on to someone in your family is only going to be relevant for certain businesses and situations, and the same goes for company flotations Management buy outs are when the management team purchases the shares in the company from the existing shareholders, and management buy ins are when a team of external people, usually funded by venture capitalists, buys the company shares You may feel that none of these options is what you eventually want to with your business, in which case there are other alternatives, such as merging with another business or winding the company up You just need to think about what will suit your objectives best 232 EXIT SELLING YOUR BUSINESS Selling the business means getting everything shipshape in terms of your accounts, legals, intellectual property and admin Any buyer will carry out due diligence on all these things, and not having them well organised could jeopardise a sale The best way of sorting this out is by keeping on top of all your admin and legal requirements as time goes on Keep everything filed and easily locatable You will also need to have a good team of staff to add real interest for a buyer Sometimes in a trade sale a competitor will buy a business simply because the latter is occupying market space which it wants In this case the buyer may cut loose any employees of the bought company and merge the business’s other assets into its own But usually a buyer will want to know you have a strong team in place, with a common vision of how the company can progress VALUING YOUR BUSINESS FOR SALE Everyone has a different view of what a business is worth An owner/manager often tends to have an inflated idea of their company’s value, but it is a truism that a business is only worth what someone is prepared to pay for it Different industries and sectors have different ways of valuing businesses, but expect that a potential buyer will be looking at your profits rather than your turnover They will also want to see real evidence of growth and a future for the company You need to believe that your valuation of the company’s worth is based on market reality rather than your subjective opinion You need to be able to prove that the business has lots of strengths apart from you, and that your customers will stick with it A potential buyer will be reluctant to get involved with anything which is too reliant on the owner/manager for success 233 IN GOOD COMPANY Think of the tax implications Selling shares in your business will be seen by the Inland Revenue as a capital gain, and you will be taxed accordingly Always consult an accountant or tax specialist when you are making decisions about selling your business or selling shares The last thing you want is to lose a large chunk of your hardearned cash to the tax man at this stage KEEPING IT IN THE FAMILY These days it is increasingly difficult to set up a business which you then pass on to your children to run Young people nowadays have so many options when it comes to their careers that they are often reluctant to follow in their parents’ footsteps Of course, there are other family members who could take over the helm, but this can be fraught with difficulties and conflict If this is an option that you want to consider, talk to your family as early on in the process as possible and sound out exactly what their views are Don’t assume that anyone else is going to jump at the chance to run your business MBOs AND MBIs An MBO can be a good way of handing over your business into the hands of people who already know and are committed to it If this is the exit route you wish to take, be clear about it as an objective and train your team to work together in such a way that you can step away and they can carry on seamlessly without you They will need to raise cash to buy your shares, so you will need to give them notice of what your intention is and a chance to ask any questions Be aware that during the honeymoon period, when employees first start working with a business, they are much more likely to be enthusiastic about owning a stake of it As time goes on, they 234 EXIT may well change their minds An MBO isn’t necessarily an allor-nothing situation The management team could buy chunks of the company as time goes on, depending on company performance and objectives being met An MBO can be a positive way of selling your business, in that you know that you are handing it over to people who you have trained and who know the business On the other hand, you need to build the team to make it happen and, as Chapter has shown, this is no easy task MBIs are less common than MBOs, and there are many more risks involved which make them less likely to be successful For some types of businesses, however (usually larger ones), they are an option FLOATING YOUR COMPANY ON THE STOCK MARKET This is an ambitious target for any start-up It can also be one of the most rewarding in terms of money and sense of achievement However, this is not an appropriate goal for all businesses, and for many smaller businesses there would be no real advantage in being publicly listed Nevertheless, it is a goal for many start-ups with high growth potential TO SUM UP ★ Right from the start, think about how you want the business to end up ★ Keep on top of all your legal, HR, administrative and other stuff which a buyer will want to look into ★ Think about how long you want to run the business for ★ Research the options for exiting your business and decide which is best for you, then write your business plan to fit into this goal 235 The End? T , but we hope it is the beginning of your business Alternatively, if you are already running a business, we hope that this book has helped you to come to some informed conclusions about decisions that you need to make With any luck we will have flagged up some of the pitfalls that start-ups can stumble into and you can now try to avoid these Starting your own business is not an easy option when it comes to career choices But along with the stresses and the problems comes a huge opportunity to set yourself on the steepest learning curve you are ever likely to encounter during your life What we have found is that, while you can prepare an end game for your business in the form of a three or even a five-year plan, there is no limit to the amount you learn and experience when you are setting something up yourself Every challenge, every opportunity becomes the starting point for a new experience, which makes you more confident, more informed, a better thinker, communicator or empathiser The better you are at making decisions, assessing risks and understanding others, the better your business will perform As we have seen, simply by following the chapters in this book you 236 THE END? will have to tackle creative thinking, researching, pulling numbers together, writing business and marketing plans and dealing with other people (some of whom you would never normally encounter in your daily life) You will also have to get used to problem-solving, spotting talent, organising yourself, being honest and open with your loved ones and balancing your home and your work The best thing about setting up and running your own business is that you are doing it on your own terms You are doing it to improve the lifestyle of yourself and your family – financially, but in other ways too Women in the 21st century are at the forefront of a massive change in the way that people choose to work Most of us have to work, but we can choose the way in which we work When you run your own business, you are able to choose your hours, to shift your priorities, to concentrate your efforts in a way in which you never normally can when employed by someone else In this sense, it is a hugely liberating experience But with liberty comes responsibility, and you need to consider carefully the fact that being your own boss means exactly that – and you will need to manage yourself and your business to get the most from the experience When things go wrong, as they often will do, the responsibility will fall on your shoulders to sort it out If the business is a roaring success but you have no work-life balance, then you will need to make some difficult decisions We face these kinds of decisions and responsibilities every day with our businesses The amazing thing is that we have found we are capable of making those decisions We are actually pretty good at what we do! And we could never go back to the 9–5 or having a boss again Setting up our own business has changed our working lives for ever – it could the same for you 237 Useful Links and Numbers Advertising Standards Authority www.asa.org Tel: 020 7580 5555 Alliance of Independent Retailers www.indretailer.co.uk Tel: 01905 612 733 Aurora: Advancing Women www.auroravoice.com Tel: 0845 260 7777 The Bag Lady: Global Directory of Women in Business www.bagladyit.com Tel: 0845 838 1451 British Chambers of Commerce www.chamberonline.co.uk Tel: 020 7654 5800 British Franchise Association www.british-franchise.org Tel: 01491 578050 238 USEFUL LINKS AND NUMBERS Business Link www.businesslink.gov.uk Tel: 0845 600 9006 Business Network International www.bni-europe.com/uk Tel: 01923 891 999 Companies House www.companieshouse.gov.uk Tel: 0870 33 33 636 Copywriting and Writing Advice www.ibruce.co.uk Department of Trade and Industry www.dti.gov.uk Tel: 020 7215 5000 Direct Selling Association www.dsa.org.uk Tel: 020 7497 1234 Federation of Small Businesses www.fsb.org.uk Tel: 01253 336000 HM Revenue & Customs www.hmrc.gov.uk Tel: 0845 9154515 (for newly self-employed) HM Treasury www.hm-treasury.gov.uk Tel: 020 7270 4558 239 USEFUL LINKS AND NUMBERS Health & Safety Executive www.hse.gov.uk Tel: 0845 345 0055 Incorporated Society of British Advertisers www.isba.org.uk Tel: 0207 291 9020 Information Commissioner www.informationcommissioner.gov.uk Tel: 01625 545 745 Institute of Direct Marketing www.theidm.com Tel: 020 8977 5705 Market Research Society www.marketresearch.org.uk Tel: 020 7490 4911 National Federation of Enterprise Agencies www.nfea.com Tel: 01234 354055 National Readership Survey www.nrs.co.uk Tel: 020 7242 8111 The Prince’s Trust www.princes-trust.org.uk Tel: 0800 842 842 240 USEFUL LINKS AND NUMBERS Prowess: Promoting Women’s Enterprise Support www.prowess.org.uk Tel: 01603 762 355 Small Business Service www.sbs.gov.uk Tel: 0845 001 0031 UK Business Directory www.business-directory-uk.co.uk The UK Patent Office www.patent.gov.uk Tel: 0845 500 505 241 INDEX accounts, 77–83 advertising, 49–50, 100–1 see also marketing advice, sources of, 30–2 agents, 177–8 appearance, 224–8 attitudes, 11–13, 43 bank loans, 60–3, 64, 86 book-keeping, 77–83 branding, 185–6, 194 brokers, 177–8 business angels, 58–60, 66, 231 business plans, 83–90 cash flow, 77–9, 88 CD ROMs, 176 childcare, 206–11 clothes, 224–8 companies: selling equity, 55–60 Stock Market flotation, 57, 235 trading status, 52–5 winding up, 231 competition, researching, 26–7 confidentiality, 29 contracts, employment, 114–16 copyright, 29–30 copywriting, 163–5 CVs, 103–6 direct mail, 159–62 directors, 53–4 DVDs, 176 e-mails, 173–4 elevator pitch, 38–40 employees, 73, 91–130 contracts, 114–16 firing, 127–30 induction period, 111–12 interviewing, 106–9 243 INDEX job descriptions, 93, 95–8 job offers, 109–10 leadership, 120–2 managing, 116–18, 125–7 maternity leave, 123–5 personnel files, 113–14 recruiting, 91–110 retaining, 122–3 reviews, 125–7 stress, 215–16 equity, 55–60, 65–6 existing businesses, buying into, 25 exit plans, 229–35 family life, 206–15 finances, 46–90 accounts, 77–83 business plans, 83–90 sources of, 49–50, 55–69 start-up costs, 69–77 trading status, 50–5 franchises, 23–4 goals, writing down, 40–2 going concerns, 24–5 headhunters, 103 health care, 215–20, 223 holidays, 214, 223–4 home working, 134–5, 138–9 ideas, 9–45 and attitudes, 11–13, 43 244 goals, 40–2 ideas process, 43–5 identifying best, 13–15 inspiration, 21–3 intellectual property, 27–30 other people’s, 23–5 Plan B, 33–4 protecting, 30–1 researching, 26–7 selling, 38–40 timing, 15–19, 43–4 inspiration, 21–3 intellectual property, 27–30 Internet, 104, 165–75 interviews, 106–9 investors, 55–60, 65–6 job centres, 98–9 job descriptions, 93, 95–8 leadership, 120–2 liability, trading status, 50–5 limited companies, 52–5, 231 loans, 60–4, 86 magazines, 158–9, 182 mailshots, 159–62 management buy outs (MBOs), 232, 234–5 marketing, 74, 150–88 branding, 185–6, 194 CD ROMs and DVDs, 176 channels, 153–7 identifying market, 151–3 INDEX marketing plans, 186–7 mobile phones, 175–6 online marketing, 165–73 press releases, 182, 183–5 in print media, 157–62 public relations, 179–82 television and radio, 176–7 viral marketing, 173–4 wholesalers and agents, 177–8 writing copy, 163–5 maternity leave, 123–4, 206–7 mobile phones, 175–6 money see finances mortgages, 136–8 networking, 199–204 newspapers, 157–8, 180 non-disclosure agreements, 29 online marketing, 165–73 partnerships, 51 patents, 27–8, 30 paternity leave, 124–5 phones, mobile, 175–6 planning: business plans, 83–90 exit plans, 229–35 marketing plans, 186–7 Plan B, 33–4 premises, 131–49 buying, 136–8 finding, 139–41, 147–9 leasing, 73, 131, 135–6, 139–46 press releases, 182, 183–5 Prince’s Trust, 65 profit and loss statements, 80, 88 public limited companies (PLCs), 54 public relations, 72, 76, 179–82 radio advertising, 176–7 recruitment agencies, 102 relationships, work/life balance, 211–15 relaxation, 221–2 research, 26–7, 75, 151–5 resellers, 177–8 sales, 189–204 networking, 199–204 sales process, 191–4 talking to the right people, 197–9 winning prospects, 194–7 search engines, 171–3 selling business, 232–4 serviced offices, 148–9 shares, selling, 55–60, 65–6 sleeping partners, 25 Small Firms Loan Guarantee Scheme (SFLGS), 61–2, 64–5 sole traders, 51 spam e-mails, 174 245 INDEX sponsorship, 49–50 Stock Market flotations, 57, 235 stress, 215–20, 223–4 tax, 76–7, 79, 234 television, 176–7 time management, 218–21 trademarks, 28–9, 30 trading status, 50–5 246 travel, 75, 222–3 VAT, 80 venture capital, 49, 66, 231 viral marketing, 173–4 websites, 165–73, 175 wholesalers, 177–8 work/life balance, 206–15 ... redressing of the balance in terms of business writing Pick up any business supplement, any top-100 list on business topics, business magazine or website, and you could be forgiven for thinking... roughly in terms of the themes you will need to tackle when planning your business or when running it in the early days – first comes the idea, then the INTRODUCTION requirement for funding, then for. .. really helpful information on these for all businesses without going into masses of detail To find out more about these issues, go to the business support organisations in the ‘Useful Links’ section