RESOURCE CENTRE

Your EnterQuest Bulletin - 3 November 2004

In this week's issue:

• how to start up a business that's guaranteed to fail
• the secret to guaranteeing repeat sales
• dealing with late payers
• a free IT security guide for home-based businesses
  

Weekly stir

How to start up a business that's guaranteed to fail

There's no disputing the fact that the majority of new business start ups will fail within three years, with half of those failures inside the first six months. And these statistics are pretty consistent year after year.

So we thought we'd encourage a few more business failures by writing a checklist to help you start up a new enterprise that will end up on the scrap heap sooner rather than later.

1) Pursue the first idea that comes into your head.

Imperative. Once you've thought up a business idea or concept, don't waste a second and get it started without further ado. Why not start up a business you know absolutely nothing about, or even better look for those 'here today - gone tomorrow' business fads and ensure your new venture is gone tomorrow as well.

2) Avoid market research at all costs.

Essential to guarantee failure. Listen, nobody knows the market better than you, and what's a market anyway? You've spotted the opportunity and you'll only get rich quick if you get on with it and sell it to everybody you can. You'll just end up getting bored looking for a market niche with genuine needs and demands that you could offer a service to.

3) Beat your competitors by selling at rock bottom prices.

Running a competitive business is just too easy. It doesn't matter how many competitors you've got, just make sure your prices are much lower than everyone else's. And don't worry about all that costing your product rubbish. If you sell enough at ridiculously low prices you will be the customer champion in no time at all, which is the fast track to profit making. Isn't it?

4) Run a business that doesn't need any marketing.

This is what it's all about. Your own brilliant ideas and keeping your friends impressed. Marketing's just a textbook term anyway, isn't it? Why start broadcasting the reasons why your service is so good or offers such an affordable solution to a particular group of people, when all that will happen is that you end up giving your competitors a chance to copy all your ideas? Why would anyone want to do that? Start up a business that will promote itself, and where none of your competitors will have a clue what you're up to.

5) Don't worry about the cash.

This is the best one. Everyone keeps telling you never to take your eye off your cashflow, but why bother with that when you've got the services of a good accountant and a sympathetic bank manager? They'll keep your finances straight, and let you know when there's no cash left. You just need to concentrate on being the overnight success you've always deserved to be

6) Get advice from people who know nothing about running a business.

There are plenty of "experts" out there who'll gladly give you the benefit of advice that they've probably read about somewhere. Or even better, there are those serial business failures who'll give you even more tips like the ones we've given you here to make your new venture a thoroughly spectacular failure.

It's a sad fact that some of you reading this bulletin will already be practising these tried and tested methods to guarantee failure of your business.

Does that set any alarm bells ringing?

There's no such thing as customer loyalty. People go where they can get the best value for their money, and just because your customer bought from you once, don't be fooled into thinking they will buy from you a second time. Even though they may have had a good experience with your business, the next time they buy it is likely to be from someone who provides a product that is as good as yours, but which costs a little less or is delivered a little faster.

So how do you keep your customers coming back time and again? You could start by trying the following three practical strategies:

1. Nurture your relationship with previous customers.

When a customer has formed a positive relationship with your business, perhaps as a result of a great experience, they develop an emotional bond which needs to be nurtured to prevent it fading away. You can do this by keeping in regular touch with your previous customers - through a personalised mailshot on the anniversary of their first purchase, a birthday or Christmas card, or a follow-up call to check how they felt about the last product or service they bought from you.

2. Give customers an incentive to continue the business relationship.

Businesses that reward their customers with details of special offers, discount coupons, loyalty points and bonuses create an incentive-based relationship. The more personalised and unique your offer is, the less likely it is that your customers will be able to find it elsewhere. A good starting point for devising some incentives is simply to brainstorm ideas for add-on products or services you could realistically offer to customers. But make sure your offers are regular, as the desire to return to your business can crumble once the incentive is taken away.

3. Integrate your product or service into your customers' lives

By tying your operations closely into your customers' lives, routines or businesses, you make it too difficult or costly for them to switch to another product or service provider, as doing so would cause damage emotionally, financially, operationally or socially. For example, if you run a consultancy business, by providing your clients with so much support, advice and attention that they can't do without you, you minimise the chances of them going elsewhere because they feel emotionally dependent on your business.

For even more techniques and ideas for thrilling your customers, check out the UK Small Business Marketing Bible, which contains hundreds of tips and tactics for boosting your sales using proven marketing strategies that work no matter what product or service you sell.

Legal tip

Dealing with late payers

Chasing up late payments is a fact of life for most sole traders and small business owners. Sometimes it can be difficult to tell if a customer is struggling to keep up with an overwhelming workload, or aren't coughing up because they're struggling to stay in business.

Having to take a business customer to court for non-payment is one of the most unpleasant things you can do - it can be expensive, it's a drawn-out process and it's time-consuming. So it's worth knowing how to keep an eye on your customers' accounts and being able to recognise when things might be going wrong.

• To prevent accounts falling into arrears in the first place, you should make sure your payment terms clearly state when you expect the account to be settled by. Payment terms should be included in your invoice, along with your business name and contact details, a description of the quantity and type of goods or services supplied, the price charged and the VAT amount (if you charge VAT).
  
  
• If you do need to chase up an overdue account, it's good practice to send a formal letter or e-mail telling the customer that the payment is overdue. You should keep a record of every letter and e-mail you send, as these can be used in court if necessary.
  
  
• Before getting caught up in the legal system, you may prefer to try alternative dispute resolution. This means hiring a mediator or arbitrator to pass judgement on the claim and hopefully get your customer to pay. Get more information on arbitration and other alternatives to going to court from the Chartered Institute of Arbitrators.
  
  
• The Late Payments Directive entitles you to levy interest payments on overdue accounts, as long as you've mentioned this option in your terms and conditions. Sometimes a polite hint that you will do this can result in immediate payment. There's more on how it works from the Better Payment Practice Group. They also provide advice on using e-invoicing to speed up the payment process, minimise risk and cancel out waste paper, plus techniques for tracing debtors who seem to have vanished off the face of the earth.
  
  
• You could engage a debt collection agency to gather any outstanding debts. Debt collection agencies work for a fee, but they may save you the time and hassle of attempting to collect the debt yourself. Find a reputable debt collector through the Credit Services Association.
  
  
• As a last resort, court action may be called for. You can use the Small Claims Court to chase debts under £5,000 - just click on the link for advice on how to do this. However, you may need to check that your customer is still in business. Contact the Insolvency Service for details on how to do this.

The Red Tape BUSTER has advice on trade credit and payment terms, as well as hundreds of business scenarios, FAQs and checklists for every small business situation.

Fending off the three-pronged attack

A recent AOL survey suggested that many computer users are unaware of how the most common security threats can affect them - one person who responded to the survey had no fewer than 213 viruses. 80% of computers in the survey had some sort of spyware or adware installed, and 20% had a fully fledged virus - but only 6% of their owners were aware of these intruders.

There are numerous ways your computer can be at risk. Here's a quick guide to three of the most common - viruses, Trojans and worms - and how they might affect you.

• Viruses are executable programs, designed to do anything from sending e-mails to everyone on your mailing list to wiping out parts of your computer's memory. You can catch them in several ways, but the most common way is by opening an infected e-mail attachment. To minimise the risk, set your anti-virus software to automatically scan all e-mails before you open attachments, and check with the sender if you receive an unexpected attachment.
  
  
• A Trojan is also a program, but it only does one thing: it allows other people to gain control of your computer when you're online and do anything they want - change files, look at your passwords and accounts - everything, in fact, that you can do. Trojans also frequently come attached to e-mails.
  
  
• A worm is less easy to spot. It does two things - it behaves like a virus, but it also replicates itself and goes on to infect other computer users online. It can be used to send information about your computer to a hacker, but it can also hijack your computer and use it to bombard a website with spam or adverts, rendering it unusable. Installing a firewall is the single most important thing you can do to keep out worms - it's not failsafe, but it's a very good start.

Want to find out more? CERT offers a well-written guide to computer security, or you could click on this practical explanation and review of the best firewalls. In the meantime, make sure your Windows and anti-virus software are updated with all the relevant patches, and keep an eye out for suspicious attachments to your e-mails.

If all that's got you worried, you can find comprehensive advice on computer security for the home-based office by checking out this IT security guide for home-based businesses. It's written for everyday users, rather than techies, and covers protecting your system against malware, data encryption and keeping Windows and Linux secure.

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

Here is this week's idea:

• Noodle Bar

Just one word

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 what 'contextual targeting' is?

a. targeting customers according to the psychographic niche they're in
b. using popular keywords on your website to improve its search engine ranking
c. using text messaging to tell customers about a new promotion
d. listing your pay-per-click ad on a website related to your sector

Did you know?

Distance selling law has changed

The DTI has announced a small but significant change to the Consumer Protection (Distance Selling) Regulations 2000, which will particularly affect your business if you sell products or services over the phone or via the Internet. After April 2005, you will no longer have to provide customers with a written version of certain information before they can enter into an agreement with you. The change in the law is designed to be helpful for transactions where it's hard to get paperwork to the customer in time, such as a last-minute holiday purchase.

You can download more information by clicking on 'Responses to consultation' at the DTI's site here:
http://www.dti.gov.uk/ccp/consultations.htm#distsell

The DTI attempts to explain the changes at http://www.gnn.gov.uk/Content/Detail.asp?ReleaseID=133138&NewsAreaID=2, and we'll look at Distance Selling law in more detail in our legal tip next week.

Environmental advice on the Green Card network

This resource provides advice on how the forthcoming Waste Electrical and Electronic Equipment (WEEE) European Directive will affect businesses. It also offers tips, case studies and ideas for recycling office equipment and environmentally sound business practice. Joining the network is free, and a tree will be planted for every new registration.

To register as a Green Card member, visit:
http://www.thegreencard.org.uk

A directory of search engines that let you advertise on a pay-per-click basis is available at this site. It reviews them, lists them in terms of popularity, and chronicles a number of speciality search engines by sector so that you can find the ones most relevant to the business you're in. And as if that isn't enough, there are also free tools for optimising your website for search engines, stats on which ones get most traffic, and discussion forums where you can read about other businesses' success and failure with search engine advertising.

It seems too good to be true, so point your cursor at:
http://www.payperclicksearchengines.com

Another clever Google tool

This Google cheat sheet helps you get the most out of the famous search engine by giving you a series of hints and tips on how to make your searches more specific. It explains how to find pages containing certain words and phrases, how to use Google's calculator facility, plus a range of other advanced features and tools that we bet you never knew about.

Get googling at:
http://www.google.com/help/cheatsheet.html