Top ten tips for entrepreneurs

Top ten tips for entrepreneurs

Top ten tips for entrepreneurs by Susanne Hasselmann, Director, Scirum Ltd. 

Starting a new business is not an easy task, but a challenge that can be extremely rewarding, frustrating, stressful and fun! Above all, be prepared to adapt as your new business evolves - things often work out differently to the way you expected!

Over the years I have been involved in a number of start-ups, I have helped to re-shape businesses and have had to adjust by downsizing or closing operations. During this time I have myself learned from my mistakes, re-shaped my expectations and celebrated the successes.

Above all, I have tried to learn from others through observation, research and by talking to people who have been through similar situations. The following TOP TIPS are my summary of what I have learned. I hope these are helpful to you entrepreneurs out there!

1. Optimism rules!
2. Know where you are going – have a vision!
3. Know why your business is different - your unique selling point
4. Be flexible
5. Keep focused on your plan
6. Enjoy what you do – and thus do it well!
7. Sell yourself in the right way!
8. Know what you don’t know
9. Know when to stop!
10. Control your cash flow and start small

1. Optimism rules!

What makes a good entrepreneur? Optimism, determination and resilience! When you are let down by a partner or customer or when things don’t turn out the way you expected, you have to get up, brush yourself off, adapt and try again. I guarantee you that this will happen often. I always think that being an entrepreneur is like being a bulldog - hang on in there until you have exhausted all the options. Stay positive!

Don’t hang on until the bitter end though... – but we will come to that later.

2. Know where you are going – have a vision!

Always have a vision when you start. You need to know where you are going – visualise where you want to be in three/ five/ ten years’ time, set realistic financial goals, then think about how you will get there. Why are you different to other companies? What resources do you need? How will you design and manufacture your products/ service? How will you distribute? Who are your customers (describe them)? How will you let them know you and your product/ service exist? How will you service your customers? What are the barriers you can foresee that could stop you from realising your plan and how would you overcome these?

3. Know why your business is different - your unique selling point

What makes you different from others? What is your unique selling point (USP)? This could be the skill you have, the unique features of your product or the positive impact you have on other people’s lives. You need to make sure you know your USP, you test it in the market to ensure it is unique and you can describe it in one or two sentences – a strap line is useful in that respect.

4. Be flexible

You set out believing in an idea. You have a plan. However, when you start taking it to market you suddenly realise that the format or design is not quite right. In this case, be flexible and learn. Adapt to market needs. Be flexible enough to change your plan in order to achieve your ultimate goal and vision.

5. Keep focused

Whatever you do, ensure you keep true to your vision and where you want to be in three to five years’ time. You may have to adapt your plans but only because you are staying true to your final goals. Keep focused on your customers and your finances! Make sure every decision you take gets you one step closer to your ultimate goal.

6. Enjoy what you do – and thus do it well

Being an entrepreneur is not a 9 to 5 job. It is a lifestyle. You will spend evenings and weekends working on your ideas, making sure the finances are stacking up and the product is perfect. Therefore, in order to do this you really need to love it. You will only succeed if you enjoy what you do!

7. Sell yourself in the right way

Start-ups are based on an idea that you have generated. You will need to sell it. You need to be credible, realistic and not over the top. If you don’t have a large company behind you with a brand people recognise, selling becomes more difficult. As a result, you are in the first instance selling yourself – remember that. Networking is the most important activity for you now. Use all the contacts you already have to let them know about your venture, make new contacts through social media, join local business groups and attend business networking meetings or speak at conferences (that way you usually don’t have to pay).

8. Know what you don’t know

To be able to enjoy what you do and to channel your energies into the areas of business where you can have the most impact you need to think about the areas of business where you do not have the relevant expertise. Make a list and think about how you can enlist appropriate help. You might like to ask a number of people to mentor you or you might think about outsourcing some of your functions to a company such as Scirum Ltd www.scirum.biz who can help. Plan how to fill the knowledge gaps you have.

9. Control your costs and start small

Finding investors is always difficult. You can go to your bank but unless you have a well thought out idea you are not going to get very far. The same is true with grants that are available for start-ups and other funding sources. I always think that you need to prove your concept first which means you need to get out there and test the market. My rule is never to spend more than £5,000 on an initial proof of concept and never to lose more than £20,000 in a business idea. Suffice to say, I have never lost any money so far – and this is where we get to tip number 10.

10. Know when to stop!

The most important thing to know is when to stop. Make sure that when you draw up your plans you include a list of things that will tell you ‘you need to stop now.’ Think about how you would define success and failure and develop some lines you will not cross, i.e. need to have first order by month X and will not spend more than Y on this idea. What happens if market conditions change dramatically - a recession or changes in exchange rates?You will be tempted to overstep these lines because the next contract is just round the corner, but DON’T. Get out before it gets you! Most successful entrepreneurs have to fail before they win big.

Scirum Ltd offers help to start-ups and small businesses. Please see our start-up web page or page for small business. .

To contact us please go to www.scirum.biz, call Tel: +44 (0)1264 860060.or e-mail us.

Join us on Twitter for more updates.

Do as I say, not as I do – the pit of doom for regular blogging

What is my New Year’s resolution? To follow my own advice. When I sit with a client  and develop their social media and marketing plans I always say: “Whatever you do, when you start a Twitter account, Facebook page or blog, make sure you update it regularly.  Include thoughts that are personal to you, maybe talk about an interesting article you’ve read recently or some new research that’s relevant to you and your blog readers. It’s all about making your page interesting and informative.”

 

What has happened to me in the past? I failed miserably. Client work took precedence, staff changed and all my time was taken up with the day-to-day operations of running my business. Consequently, I ran out of time and I stopped writing blog articles. Shame on me! I’m not the first or last person to have fallen into this trap. But not anymore!

 

So, what will I do in future to ensure this doesn’t happen again? My New Year’s resolution is to set aside just a couple of hours every month to update my blog. It won’t be long. It won’t always have to be full of statistics, quotes and research. The idea of a blog is to impart thoughts, based on interests and experience. With this in mind, I’m sure we all have something useful to say – and even I can probably stick to that. So, watch this space!

Susanne Hasselmann
Director, Scirum Ltd

www.scirum.biz
@scirum

Financial Management for SME's

Congratulations! You have turned your idea into a business. You have a plan for the business today and how it will develop in future. You may even have had a few years of business experience behind you, but, whether you are a start-up or an established business there are still a number of considerations anyone managing business finances should know about.  

We at Scirum have therefore put together a series of financial blog posts that will give you some of these basic tips and tricks of the trade. Of course, if you need any more detailed information and help, just give us a call on 01264 860060.

       1.       Financial & Management Accounting – what is the difference? Why do I need it? (Click here)

       2.       Record-keeping - Record your income and expenditure (Click here)

       3.       Cash control – Develop good cash management practices (to be published)

       4.       Planning – Make a budget (to be published)

       5.       Processes – Determine how you are going to organise your office (to be published)

       6.       Controlling – Controls for when you have other people working for you (to be published)

The best advice we can give you is not to ignore your finances.  You may have some of the skills necessary to keep track of your income and outgoings and you may even decide to do your own tax computation at the end of the financial year when HMRC deadlines approach but you should always consider the following:

1.       How much time do you spend doing your finances? Could you spend it more wisely by networking and selling your products?

2.       Do you know what value an external view and some experienced hands can bring to your business? Have you tried it?

At Scirum, we have a dedicated team who take care of our clients' social media planning and digital presence. If you are thinking about increasing your social media activity, why not give us a call (01264 860060) or email us?

Mary Proctor, Commercial Financial Controller, Scirum Ltd.

For more useful tips and answers to common questions from SMEs, visit www.scirum.biz or follow us on Twitter and Google+, like us on Facebook or join our LinkedIn group.

  

Financial & Management Accounting – what is the difference? Why do I need it?

            Let us first of all consider the two types of accountants.  Not everyone knows that there are Financial and Management Accountants and they offer very differing skills.

            Financial Accountants are chiefly involved in a business’s legal entity set up (eg. Limited company, partnership, sole trader or self-employed, etc) as well as their tax computations.  They can audit the business’s accounts to ensure compliance with accounting laws and to test that financial controls are rigorous enough to avoid fraud, for example. They also advise and assist business owners with the submission of forms required by HMRC and by Companies House (if registered).  They can provide advice on which expenses are allowable for Tax, thereby decreasing the annual tax bill.  These are some of the skills for you to consider when deciding whether you need a Financial Accountant. 

            Financial Accountants are usually external to the small company and have offices on the high street. They will provide you with a quoted cost. To ensure you keep your costs to a minimum you should regularly test the market by asking other local firms to quote. If you change your Financial Accountant make sure you do this at your year-end, so transferring the accounts becomes a relatively simple task. You should also consider the type of work that is done - the more you can employ someone to carry out routine transactions (from a trained admin assistant, to a bookkeeper) the more you are in a position to reduce your bills.

            The alternative is to do it yourself and take advice from HMRC websites and run the gauntlet with them as to whether you are actually compliant with tax and accounting laws. With a small number of transactions to process and little complexity in the business, there are lots of small businesses doing this! However, you need to weigh up the time you need to spend learning the tax rules and keeping up with latest legislation against the time required to grow your business.

            Management Accountants, in contrast, are generally internal to a company.  They process the weekly and monthly results; provide analysis of cashflow and profit; forecast financial outcomes and provide analytical insight on a product, a service or on a customer level.  The Management Accountant effectively provides ‘a second set of books’ that you use internally to drive your business.  The overall figures stay the same, but the Management Accountant uses models to extract parts of the financial data. For example, you might wish to understand the strategic implications of making certain capital investments or expanding a product line. The Management Accountant would be able to draw out the relevant costs and model different scenarios for you, analysing product profitability or business unit profitability as well as cash flow, thus giving you a better understanding of your business and helping you to make the best strategic decisions.

            If you are too small to be able to afford a full-time Finance Director post, Scirum provides part-time support to its clients in book keeping, management accounting and strategic financial planning. Please call us on 01264 860060 or send us a message. We are a friendly bunch and happy to help and talk through your requirements.

For more useful tips and answers to common questions from SMEs, visit www.scirum.biz or follow us on Twitter and Google+, like us on Facebook or join our LinkedIn group.

Record-keeping

Receipts and Invoices: 

When you start your business you will start spending money before you make any.  That is a fact for all but very few businesses.  For several reasons you will need to keep a record of those outgoings and keep track of all of your receipts.  You will need to keep them to support the tax computations you (or your accountant) will make at the end of the business year and you will need them to refer to should you have payment queries or you need to contact your suppliers.  You really must get organised from the start.  The old fashioned idea of collecting your invoices and receipts in a shoebox is a good analogy to start with!  If you are going to keep your own ‘books of account’, this is a good way to start... at least you can find them all in one place!  Alternatively, you could file these and divide them up either a) alphabetically: so you can find what you are paying by supplier name or b) by month: so you can input (and later trace) them to your accounts on a month by month basis.  You have now got a system for storing your paperwork.  As you grow, you can develop more sophisticated systems with the help of a bookkeeper. For example, you may use a numbering system that is stamped onto the incoming document and logged on your ledger.  In that way, you build your filing system and you trace those documents using the sequential numbers stamped onto them.

Ledger book, Spreadsheet or Accounts program: 

At first, for a small start-up, this is not a major consideration.  If you are computer literate and have a version of Excel, you can open a new file and set up three tabs (i) Income (or Sales) (ii) Expenditure (or Costs) (iii) Summary Income & Expenditure (Profit or Loss) Statement.  I have shown a screen shot example of each below.  The Summary uses links to the other two pages to calculate Income less Expenditure (Sales less Costs) giving you a figure for profit or loss.  You can list items in a long column or you can try to track the type of sale or type of cost by using headings across the top of the page, in columns, with the Supplier or Customer name down the left hand side, alongside the date and cheque/invoice number. For some micro businesses, an accounting ledger book is sufficient and they are more comfortable with this method. The layout is approximately the same as the spreadsheet layout shown below.

The first example is showing a suggested breakdown for Income (or Sales).

The second example below is showing a suggested breakdown for Expenditure (or Costs).

When you hand over your metaphorical shoebox of invoices to someone, this is an example of what they will do with them in order to produce a Summary for you for the period under review.  An example of the Summary Income & Expenditure Statement is below:

If your invoices remain in the shoebox you are missing out on summaries and analysis that will positively influence you in decision-making for the future of your business. “I know what my costs are, even if they are in a shoebox.  I know what I have spent”… this approach does not separate out the true costs of your product/service going forward.  The figures you have in your head could well include the costs of your business cards, the deposit on your office, the cost of your website set up and your hosting costs.  How you apply those costs to your product/service will greatly affect your pricing and your expectations of profit.  This is exactly where a few hours with a management accountant offering decision support would be beneficial as that insight and coaching would serve you well for the future of your business.

Inevitably as your business grows, the range of products/services you offer may become more extensive, or perhaps you may reach the VAT threshold (currently £81,000) and you feel that you need to have more in-depth financial analysis and greater financial control.  In this case you would consider accounting software packages.  There are a number of well-known brands out there:  Sage and Quickbooks, for example, have been very dominant in this market over many years and traditionally have been set up on a standalone computer. But with the growth in cloud accounting, others like Xero have risen to prominence.  Entry prices for cloud based packages start at £6 to £9 per month. Each package will have their advantages and disadvantages and some of the features will be useful to you and easier to use whilst some provide a Rolls Royce when a Mini will do (a common expression used by accountants!).  You may have specialist needs such as multi-currency or stock control so you have to choose wisely, as not all packages are equal. Of course, if you need help with choosing the right package, the Scirum team is here to help!

Our aim in this article is to demonstrate to you that you can get on with developing your business whilst spending very little effort setting up and running adequate financial ‘systems’.  Always remember that sophistication comes at a price, so make sure you cut your coat to fit the cloth but remember also that with good financial analysis and control you can recoup those costs through improved financial management and decision making.

The next article in this blog series on Financial Management will look at the challenges of controlling your cash.  Keep following the blog for further useful articles on the essential aspects of financial control or follow us on Twitter or LinkedIn. If you have any questions, just call us on 01264 860060 or send us a message. We are a friendly bunch and happy to help and talk through any challenges you may be facing.

Mary Proctor

Commercial Financial Controller

For more useful tips and answers to common questions from SMEs, visit www.scirum.biz or follow us on Twitter and Google+, like us on Facebook or join our LinkedIn group.