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Your EnterQuest Bulletin - Issue 223

Thought for the week: "Always bear in mind that your own resolution to succeed is more important than any one thing." Abraham Lincoln

• Northumberland chilli farm's hot business idea
• Understanding costing and pricing terminology
• Tobacco age change website
• Risk assessments launched for different sectors
• Help for flood-affected businesses
• Free market self-assessment tool

Northumberland chilli farm's hot business idea

A taste for travel and photography led Dan May to a "hot" idea for a new business.

The 38-year-old, from the Northumberland village of Coanwood, operates what is believed to be the world's most northerly chilli farm.

His business, Trees Can't Dance, grows almost 70 different varieties of chilli and produces six sauces and five spice blends, which are bottled on-site and sold at farmers' markets and other outlets around the UK.

A staff of three produce and bottle more than 2,000 jars of chilli sauce a week and demand is continuing to rise. Dan has ambitions to sell his products in Germany, Switzerland, France, the Middle-East, the US and Mexico, within 18 months.

While the last two destinations sound a little like selling ice to the Eskimos, Dan claims: "The biggest market for your product is always going to be where they use it most frequently. I'm currently in negotiations with a number of supermarkets and other retailers in Mexico to sell my products there."

Before establishing Trees Can't Dance in 2005, Dan was a successful landscape photographer for more than 15 years. His clients included Sainsbury's, Pfizer (Europe), Spiller's Pet Foods, El Al Airlines and the Irish government.

It was on his travels as a photographer that Dan picked up a taste for chillies and many of the recipes he uses today.

More importantly, it was his success as a photographer that provided him with the funds to establish Trees Can't Dance.

The Sheffield University graduate said: "This took me all over the world working for numerous corporate clients.

"As a result I was able to provide a great deal of the £50,000 start up funding for Trees Can't Dance from my own resources. However, I also obtained valuable help and support from the Business Angels network, Entrust and Business Link."

Despite this ability to self-finance Trees Can't Dance, he claims this was perhaps his biggest mistake.

"The only problem with self-financing the business was that I basically worked for two years without getting paid. If I was starting again, I would talk to more people and business advisers beforehand, and raise more money from other sources."

For hundreds more practical tips and techniques to help you find new customers and increase sales on a shoestring budget, check out The UK Small Business Marketing Bible.

Understanding costing and pricing terminology

Working out the right price for a new product or service can be one of the biggest problems faced by small business owners. The price needs to cover costs and make a profit, but must also take account of what competitors are charging and what customers are prepared to pay.

Many new business owners aren't really clear about costing and pricing terminology and what the definitions mean, so this uncertainty can make it difficult to work out a price and can affect the preparation of accurate cashflow forecasts and meaningful business plans.

Here's a quick guide to some of the more commonly used costing and pricing terms and what they mean:

• Direct costs - The direct cost of a product or service is the specific cost incurred in producing and supplying the product or service. These costs are also known as variable costs, because they vary in direct proportion with the number of units produced. Raw materials and subcontract labour are examples.

• Fixed costs - All businesses incur fixed costs regardless of whether any products are sold. These fixed costs are also known as overhead costs and include items such as employee costs, rent, rates, insurance, and depreciation in the value of fixed assets such as machinery and equipment.

• Cost plus pricing - A traditional method of calculating the price to charge. It is often used in pricing products rather than services. It is based on applying a percentage mark-up on top of the cost of producing a product to make the desired profit.

• Value-based pricing - This is based on what the market will bear. The impact of factors such as fashion, convenience and monopoly affect what price level can be achieved.

• Gross profit - This is the selling price less the direct costs involved in making a product or delivering a service.

• Operating profit - The gross profit minus the fixed costs.

• Gross profit contribution - As long as a business sells a product for a higher unit price than its direct cost, the product will make a contribution to the fixed costs of the business and hopefully to the generation of an operating profit.

• Breakeven point - The stage at which income from sales exactly equals all the costs incurred by a business. More sales than this level will result in a profit; fewer sales will result in a loss.

For more information see our guide to costing a product or service.

Each week we provide you with summaries of some popular or emerging business ideas in the UK and elsewhere around the world.

• Garden furniture designers - OK, so far the summer hasn't offered us the glorious sunshine it did last year, but with consumers continuing to extend their living areas into gardens and backyards, quality garden furniture is still in demand.

• Chewing gum recycling - Gummy Bins are special bins that passers-by can use to safely and cleanly dispose of their gum. The bins have cartridges that can hold either 250 or 500 pieces of gum. Once full, the cartridges are pulled out and the gum is recycled into useful products such as underlay for running tracks.

Regularly improving your vocabulary is not just about learning a new word and its meaning. It will improve your general knowledge and make you feel and act smarter in all sorts of personal and business situations.

Do you know the meaning of the word 'frangible'?

a) rigid or unbending
b) easily broken
c) strong, tough
d) a financial term

Answer at the end of the Bulletin.

The following topical business issues have been recently reported in the media. Did your radar pick them up?

1) What is the value of franked small business mail being held up each time there is a strike by postal workers, according to the British Chambers of Commerce (BCC)?

a) more than £2.5 million
b) more than £5.5 million
c) more than £8 million
d) more than £15 million

2) A study by search engine marketer ClickThrough says one business sector in particular is failing to harness the power of the Internet to attract new customers. Which sector is it?

a) construction
b) food
c) stationery
d) publishing

3) The Government has announced that businesses caught up in the catastrophic floods are being given some leeway when it comes to paying what?

a) marketing costs
b) tax
c) invoices
d) power bills

Answers at the end of the Bulletin.

Tobacco age change website

This website highlights forthcoming changes to legislation on selling tobacco and provides information to help retailers keep on the right side of the law. From 1 October, it will be illegal to sell tobacco or tobacco-related products to anyone under 18 in England and Wales (it is expected to change in Scotland on the same date). The site, put together by the Department of Health (DH), also has downloadable signs, factsheets, FAQs and a list of useful links.

Risk assessments launched for different sectors

These risk assessment factsheets, which can be accessed online, have been put together to help you avoid accidents at work. The Health and Safety Executive (HSE) practical guides cover a number of different businesses, including an office, an estate agency and contract bricklayers. Model risk assessments for different types of enterprise will be added as time goes on.

Help for flood-affected businesses

The Forum of Private Business (FPB) is opening its helpline to businesses that have been affected by the recent floods. The FPB helpline is normally only available to its members, but it is making the service available to owners and managers of flood-affected businesses in a bid to help them cope with problems such as health and safety and employment issues.

Free market self-assessment tool

This self-assessment tool from Sean Welham evaluates eight core strategic competencies, including brand and product management, strategy and planning and customer insight. The tool assesses the impact a characteristic would have on your business and how your business rates against a specific characteristic. Read more about the tool here.

This book aims to educate the reader in a range of selling techniques that work as opposed to using the old-fashioned hard sell. It helps the reader to understand buyers' personalities as well as their own, and builds upon the concept that today's customers want to buy and not be sold to. Check out:

Smarter Selling: Next Generation Sales Strategies to Meet Your Buyer's Needs - Every Time, by David Lambert and Keith Dugdale

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Good luck

The EnterQuest Team

This information is meant as a starting point only. Whilst all reasonable efforts have been made, the publisher makes no warranties that the information is accurate and up-to-date and will not be responsible for any errors or omissions in the information nor any consequences of any errors or omissions. Professional advice should be sought where appropriate.