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Your EnterQuest Bulletin - 4 May 2005

In this week's issue:

• small businesses fail when they don't have enough...of what?
• charitable marketing for small businesses
• what the small claims court can do for a small business
• the long road to Longhorn
• the ACAS website reviewed
  

Small business answers

If you have any questions about your business idea, are lacking some basic data about your target market, or simply need help tracking down a grant, subsidy or other source of business support in your local area, then send an e-mail with your query to the EnterQuest information team and we'll do our best to help.

Send your question to enterquest@cobwebinfo.com.

Weekly stir

Small businesses fail when they don't have enough...of what?

It's a grim fact that 80% of new ventures will fail within a few short years, with many of those failures happening inside the first 12 months.

According to research from banks and other business support agencies, these failures can consistently be pinned down to four major causes.

1) lack of strategy and planning
2) lack of financial acumen
3) lack of management know-how
4) lack of marketing

In your own particular situation, whether you've started up yet or not, how many of these factors can you honestly say do not apply to you?

If you find that you are lacking, or can admit that you are poor in at least one of these areas, then there's probably still time to do something quickly to rectify the situation. However if, as is the case with too many new business owners, you suffer from more than one of these failure factors, then your chances of surviving for long are going to be very slim indeed.

Let's look a bit more closely at each of the problem areas that get so many business owners into big trouble.

1) Lack of strategy and planning

By this we aren't saying that small businesses don't usually have a business plan, because most of them do when they start up. But unfortunately they don't always have a plan that is based on any sort of clear and serious strategy. This is generally due to business plans only being written for the purpose of raising finance.

A plan based on a strategy is a plan that will be used. Do you have a strategy which encompasses how your unique selling proposition (USP) will fill a gap in a particular market? If you've got this then you can also prepare a plan that you can use to drive your business towards achieving that strategy.

2) Lack of financial acumen

Ultimately a business will fail because it runs out of cash. This tends to happen for two reasons. First of all, poor cash flow management. The second reason is because the business didn't start up with enough money in it in the first place.

To get this side of your business right you need to do a lot of preparation and research. And if you don't have the know-how or financial experience then you certainly need to get some help from an external professional adviser who will give you an impartial view as to whether your figures stack up.

The chances are that your figures may not be realistic, so it always pays to get the right professional advice before you start up, and keep on getting it once you're up and running.

3) Lack of management know-how

We referred to this in last week's bulletin. People with little or no business management experience, who don't do anything about learning how or getting shown how, will almost certainly fail.

A switched on business owner will identify the areas where they are lacking in management know-how and seek help, by teaching themselves or learning from someone else. If you recognise this you will increase your chances of survival. It's all that 'strengths and weaknesses' stuff you hear about - but for real.

4) Lack of marketing

This problem relates to a small business ignoring or failing to prioritise the promotion of its products and services to its chosen target audience, and failing to find ways to make the business stand out in its market place. This factor alone will result in the eventual demise of an enterprise even if the other three reasons for failure have been addressed.

The problem is that some business owners believe that if their product is good enough then customers will find it themselves. And their competitors absolutely love them for it. Others simply carry out "spraying and praying" promotional methods, failing to identify exactly who their customers are and craft messages that will specifically address their needs.

So there's your lesson for this week. Check these four failure factors against your own situation.

• Have you got a clear business strategy and a plan to implement it?
• Have you got enough cash now and will you have enough in the coming months?
• Can you find someone to help you in the areas where you have little or no experience?
• Can you identify at least three new ways to promote your product, service or business?
  

Marketing tip

Charitable marketing for small businesses

Joining forces with a charity can be an excellent way to promote your business and find new customers. Not only is it a primary means for developing a powerful network but it also helps others in the process. People like to associate themselves with businesses that support disadvantaged people in a meaningful way.

Choosing a charity is sometimes confusing. Each has its own demands on your time and a variety of different ways in which you can contribute. The following are three criteria you should consider when seeking out a charitable organisation with which to partner.

Here are some ideas for marketing techniques you could use once you've chosen a suitable charity to partner with.

• Include your charitable involvement in your marketing materials such as newsletters, brochures, signs, displays and press advertisements.
  
  
• If you have given significant support to a specific charity's initiative, ask that it be named after you or the name of your business.
  
  
• Give away information about your chosen charity as a part of your business transactions, such as placing pamphlets in your retail outlets, having employees wear clothing or pins and buttons publicising your chosen charity, or placing charity information with your product when it is delivered.
  
  
• Lastly, be sure to ask your chosen charity to recognise your support in its own publicity efforts.

Remember, it's not just charities that can make good partners. You could consider contacting schools, sports clubs, and other community ventures in your local area.

Read more about charitable marketing in Chapter 25, 'Charitable marketing: growing your business through charitable giving', of the UK Small Business Marketing Bible, where you can also find hundreds of ideas, tips and techniques for increasing sales.

Legal tip

What the small claims court can do for a small business

Small businesses are often faced with the problem of late payment, and in some cases this can become a serious problem. It can affect your cash flow and make it difficult to pay your suppliers, and chasing up invoices adds to the general stress of running a business.

But it's now much easier than it once was to make a legal claim if one of your customers hasn't paid their bill. The courts have evolved a system which gives businesses a fighting chance of making a successful claim. Here's a brief summary of what that system involves.

• The small claims procedure (often called the small claims court) is designed to simplify and speed up claims for amounts up to £5,000, and at the same time keep costs to a minimum.
  
  
• The Court will expect you to have exhausted all the other options before bringing a case, including writing to your debtor and telephoning them.
  
  
• Claims can be made through any County Court (or Sheriff's Court in Scotland), although you may find it most convenient to approach your local court. You can find your nearest court using the HM Courts Service website.
  
  
• You can also claim online, via the Courts Service's dedicated Money Claim Online (MCOL) website.
  
  
• When you fill out a claim form, you'll be asked for the particulars of the claim, and this is an opportunity to give as much useful detail as possible to show that your claim is reasonable.
  
  
• Your debtor will either admit your claim or dispute it. In the latter case, a court hearing will be arranged and will most likely be started and decided on the same day. You don't necessarily have to attend (as long as you tell the court in good time you'll be absent), and it's also possible to arrange a conference call hearing involving your debtor, the court and yourself.
  
  
• Bear in mind that the court's decision may go against you. You should also remember that the court will charge a fee depending on the amount you're claiming (currently between £30 and £120). The Courts Service offers a guide to fees.

The Courts Service also offers some useful general advice for businesses considering making a claim.

And the UK Red Tape BUSTER offers hundreds of factsheets, scenarios, and FAQs covering every small business legal situation.

IT tip

The long road to Longhorn

Details about Microsoft's latest operating system - currently named Longhorn - are still sketchy, but since April the company has been talking about release dates and describing some of the features it will have. According to the IT press, the system will be available in the autumn, but ordinary users may not see it arriving until 2006.

Unless your business uses a lot of computers or you're a software reseller, you probably won't need to worry too much about the technical aspects of Longhorn at this stage. But if you're thinking of buying a new computer or upgrading the machine you have, it could be a good idea to hang on for a little while until it becomes clearer what the next operating system will offer.

Microsoft has suggested Longhorn will emphasise security much more than before, making web surfing safer against hackers, and providing improved tools to detect and eliminate spyware and malware. If things go wrong when you're working offline, for example if a program crashes, it should also be easier to go back several stages and pick up where you left off.

Longhorn should also be faster. Microsoft has said you'll be able to start up your computer more quickly, and it will also open files in less time and make full use of computer chips which are already in some PCs but are ahead of their time.

The downside is that the new operating system will be larger and more complicated - some of its features may not work on older computers, and it will take up quite a bit of disk space. But Microsoft says Longhorn will be user-friendly and it's true they've managed to simplify the basics in the past.

At the moment, Longhorn is still being tested. Over the coming months we'll keep you updated on the most significant developments as they occur, but Microsoft also has updated information online.

And don't forget that Microsoft's operating systems aren't the only ones out there - the Mac OS and Linux are two of the best-known alternatives.

New business idea

Here is this week's idea:

• Colour Consultant

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 'emoticons' are?

a) weblogs (blogs) that encourage users to chat about personal issues
b) a new generation of mobile phones that you can set to reflect your mood
c) 'smiles' and other facial expressions created by a certain series of computer keystrokes
d) graphics files used to attract search engine spiders

Answer at the end of the Bulletin.

Website review

The Advisory, Conciliation and Arbitration Service (ACAS) (www.acas.org.uk)

This website aims to provide businesses of all sizes with everything they need to know about employment relations, covering complying with employment law, managing staff effectively and dealing with problems.

• Navigation - although the homepage is rather cluttered, it includes clear signposting to ACAS' most important content in the form of its training toolkits and publications for business owners struggling with a particular aspect of employment law. The muted blue colour scheme doesn't do the site's appearance any favours, though.
  
  
  

• Accessibility - the site offers an excellent troubleshooting guide which explains the many accessibility options. These include options for visually impaired users and users of different browsers, and the practical tips on tackling printing problems and error messages are extremely useful.
  
  
  
  
• Content - there is a vast array of highly practical information available to view or download. Highlights include comprehensive advisory booklets on key aspects of employment law, plus checklists on basic issues such as recruitment, keeping records and dealing with problems. Much of the content is free or costs less than £5 to access.
  
  
  
  
• Relevance - the latest news on the site dates back to the beginning of April, and although all the content has been updated following the raft of changes to employment law that came into force on 6 April, not much has been added since then. However, there is a link to relevant DTI news on the Government's news network.
  
  

A solid 12 points for ACAS - a score that would be improved by making all the site's essential information free of charge for small business owners.

Our rating - 12/20

Did you know?

Online retail is now more popular than mail order

Fresh research from analysts Mintel has revealed that online stores have surpassed mail order catalogues as the most popular form of home shopping for the first time. Figures published for 2004 show that 32% of shoppers bought goods online, compared to 25% who bought from a catalogue, representing a fall from 53% for mail order shopping since 2000. The changes have been attributed to the greater convenience of shopping online, although we suspect the wider availability of broadband now has something to do with it.

Google has launched a new tool

Google.com is beta testing a new service to help users of the search engine find more relevant information. The 'My Search History' service is free to use (though it requires registration), and provides a detailed list of previous searches, together with the date of the search and how many times the page has been looked at.

Worth a visit

Find the perfect business adviser

The Institute of Business Advisers (IBA) has launched a new service, Adviser Locator, to help small businesses locate the right adviser to suit their needs by searching a comprehensive online database of IBA members. The tool can be searched according to your location, and once you've found an adviser you can contact them by e-mail or click straight through to their website. Users can be safe in the knowledge that the adviser they choose is formally accredited, licensed and insured.

Tips for avoiding business scams

The Financial Services Authority (FSA) has updated its information about the various scams currently targeting small businesses in the UK. The revised information contains explanations and tips on avoiding phishing swindles, identity theft, online fraud, fund transfer scams and share scams. The latter are currently plaguing small firms up and down the UK, so the FSA has also produced a list of unauthorised overseas firms thought to be operating share scams.

Practical WEEE information

Implementation of the European Directive on Waste Electrical and Electronic Equipment (WEEE), which was due to come into force on 13 August this year, has been delayed by the Government until January 2006. However, it's worth getting up to speed sooner rather than later, and small retailers and manufacturers of affected goods can find plentiful practical advice, news and chat to help them avoid falling foul of the complex new law at the WEEE Network.

Worth a read

This easy to read manual explains the complex subject of strategic thinking in simple, jargon free language. It's aimed at business directors and managers responsible for steering the direction of an enterprise, and looks at issues such as developing a marketing strategy, improving and streamlining business processes, providing practical examples that any business owner can understand. Check out:

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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.