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Doing business is getting easier?

As many entrepreneurs know, there seems to be endless reams of regulations and rules a business needs to follow. This makes doing business all the harder. In some countries the amount of regulations for small business are often off-putting. However, according to a recent World Bank report (see here), about 85% of the world economies have need doing business easier in the last five years. The annual “Doing Business” report by the World Bank (see www.doingbusiness.org) is one of those quite useful – but perhaps not well known ways – of comparing the relative ease of doing business in other countries.  The report measures key business “topics” to help business on the way: starting a business, construction permits, property registration, getting credit, investor protection, paying taxes, enforcing contracts and so on. Us Irish don’t do too bad in the ranking, as 8th easiest in the world.  Typically, doing business in the OECD countries is easiest, with sub-Saharan Africa at the bottom of the league.  While glancing through the full report, I thought it would be a fairly useful resource for any small business you might be considering extending export markets. The associated website is packed with information too!

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Self financing your business

Here’s an article from inc.com (7 Easy Steps to Bootstrapping Success) which give some good ideas on self-financing  a business venture. Some useful advice seen as banks are not too generous with start-up financing at present.

No Accounting for startups?

While having  a regular look on inc.com, I found this interesting blog post from Steve Blank’s blog. He writes that financial statements are not the best thing to use to monitor a start-up business. Sometimes banks or venture capitalists insist on things like regular income statements and balance sheets. While I don’t think it’s right to say “no accounting”, there is a point in the pieces in that a start-up might be much better served concentrating on more important performance indicators. Have a read and see for yourself.

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Choosing the right accountant for your business

I read a piece on inc.com recently about how to choose the right accountant for your business.  I’ll summarise it  here and add my own few thoughts. By the way, the picture on the left pops up in a google image search for “accountants”. Not the typical image we have of an accountant perhaps!

The piece on inc.com starts off with great question and answer.

Q: What’s the definition of an accountant?
A: Someone who solves a problem you didn’t know you had in a way you don’t understand.

This Q&A is of course a bit of a joke, but it is often the case that the problems with many smaller businesses is that the owners don’t have the knowledge or time to work with the numbers. Or buying some accounting software is just not top priority. hence the need to hire an accountant.  Assuming you need to hire an accountant, here are some things to think about:

1 .  What do you need the accountant to do?

If your business needs regular information of an accounting nature, then it might be worthwhile actually employing an accountant. This might be the case in larger businesses. The alternative is to engage the services of an accountant as needed e.g. at year end.

2. What qualifications and experience should the accountant have?

Unfortunately, in Ireland the word “accountant” can be used by anyone. Therefore, be sure you engage someone who is a member of one of the recognised professional bodies.  If  it’s a book-keeper you need, ask for references from other clients. If your business is a start-up or small one, you might be better off avoiding larger accounting firms as these tend to be able to give you less time.

3. There is no substitute for a personal recommendation. Ask someone else in business questions like “Are you happy with your accountant?”, ” Does your accountant help your business”?. If you are hiring an accountant as an employee, check their references and ensure they have a professional qualification.

4. Going back to the Q&A at the start, can you talk to your accountant? Or ask this another way, can your accountant talk to you? You need someone you can understand your business and problems if has, and be able to communicate to you in simple terms. Go and meet any prospective accountant and you’ll get a feel for what I call their social skills.

5. Can your business and your accountant grow together?  Most smaller businesses will start off with an accountant doing accounts and tax returns at year end. But as your business grows (hopefully) can your accountant offer more services. This might be something as simple as working with you on expansion plans, but it is worth asking any prospective accounting firm what skills are within the firm.

To conclude, when you get to the point of needing an accountant, take your time to choose the right one.  Remember, the accountant is a key person in your business, both now, and in the future.

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How to use Kickstarter to launch a business

As a small business, getting finance is always a big problem- even more so nowadays with poorer economic times. And let’s not say too much about the banks! An alternative funding source to get you off the ground might be crowd funding. What you ask? Well, the basic idea is to get a “crowd” of people to all provide a small amount of money to help start your business venture. So if you needed €2,000 to kick start you venture, could you get 200 people to “donate” €10 each – I say donate as they may not get any return from it.  But where’s the crowd you ask? Well, social networking is the “in thing” nowadays it seems. You could use you business and social networking contacts as a start. If this is not sufficient, there are some websites out there you may help. Kickstarter.com is one such site  ( here’s a recent piece from inc.com “How to Use Kickstarter to Launch a Business“.  While such site are in their infancy and may still be more common in the US than Europe, don’t rule them out straight away. Crowd financing may be a viable answer to those smaller one-off ventures, but you know what, sometime these turn into a great and booming business.

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Can You Write a Business Plan With Fewer Than 140 Characters?

Here’s a really interesting piece from the New York Times (April 15, 2010) about using Twitter to make you business plan/pitch.

Can You Write a Business Plan With Fewer Than 140 Characters? – You’re the Boss Blog – NYTimes.com.

The key question asked really is can you sum up your business, and its viability in 140 characters or less?

Numbers “your granny could understand” – keep the business plan simple

The text of this article caught my eye in the Sunday Times of 22/11/2009. The piece “Write your own success story” by Sandra O’Connell refers to the need for a good business plan for any start-up business. According to O’Connell, a business plan needs to provide TEN – text, evidence and numbers. Text is the story of you business plan, evidence is your supporting facts and research and numbers are the supporting financial data which show that your story and evidence convert to sales and profits. So how can you provide numbers in a way even you old granny would understand. The answer is to keep it simple. This means three key numbers should be the main focus of your plan; 1) how much can you sell, 2) how much does it cost, and 3) how much money do you need to get this off the ground. I think even granny can understand these! But should my business plan not be detailed I hear you say? Yes of course, but you can summarise it down to a page or two that you place at the front as an executive summary. The details – sales prices and volumes; detailed costs; detailed cash requirements – can be provided in as much detail as necessary later in the plan. So, as you fight with projected costs, revenues and cash-flows, try to do a summary of each as you go. Then give it to granny to see if she can understand it.

Finally, here’s a link to a sample business plan you might find useful http://www.dceb.ie/search/business%20plan

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A good business plan needs to address the finances too.

 

A good business plan is something like a map in that it should help you to navigate to where you want to go. It is a necessity not just for you but also for potential investors or banks that may finance your business. A good business plan needs many things, one of which is financial projections for income, expenditure, capital and cash requirements of the business.

 These financial projections will take some time to prepare. It’s worth it though as you need them to complete a business plan and tout it to banks and potential investors. You should first try to plan how much you can sell and at what price. Then, work out how much it costs to buy or produce what you hope to sell and any other costs. These plans won’t be 100% accurate, but they should be based on reasonable assumptions. You should also try to plan your capital requirements i.e. how much you need to buy equipment and other assets for the business. Plans for capital are very useful when approaching banks if you need to borrow to buy the equipment.

 Finally, you should also include a cash projection in your business plan. This involves predicting when cash comes in to the business and when cash needs to be paid to suppliers, employees etc. This can help identify any cash shortages which might arise and plans can be made to rectify this.

Do I need to register for taxes?

Once you have set up your business, you will have to register for the collection and payment of various taxes. Here’s a very quick guide on what you need to watch out for.

 Income taxes

If your business operates as sole trader or partnership, you will have to register for income tax. This is typically in addition to income tax you pay as an employee under the PAYE system. If your business is a limited company, you will need to register for corporation tax, which is a tax on the profits of a company

 Value added tax (VAT)

VAT is a tax on goods and services. When the turnover of a business exceeds a certain amount (currently £70,000 in the UK), it is legally required to register. VAT is charged on sales and VAT on purchases can be deducted. Any surplus is paid to the tax authorities on a regular basis.

 Payroll taxes

If you have employees, you need to register as an employer and collect PAYE and National Insurance from employees and also pay an employer’s National Insurance contribution. You should register when you have your first employee.

 A good thing to do is look at the website of your tax authority. For example, HM Revenue & Customs provide simple guidelines for new businesses – see http://www.hmrc.gov.uk/businesses/iwtregister-a-new-business.shtml . Follow these guidelines and get your business registered sooner rather than later.

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