RESOURCE CENTRE

Your EnterQuest Bulletin - 7 December 2005

In this week's issue:

• A guide to starting up a business that will fail
• Tips for identifying competitors
• Changes in the pipeline for registered companies
• Measuring visitor numbers on your website
• The Chartered Institute of Purchasing and Supply (CIPS) website reviewed

Small business answers

If you have any questions about your business idea or target market, or need help tracking down a grant, subsidy or 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.

To access over 800 factsheets, guides and small business reports, go to www.scavenger.net.

Weekly stir

A guide to starting up a business that will fail

If you listen to the raft of Government-sponsored departments and enterprise 'promotion' initiatives in the UK at the moment, we should all be getting off our lazy backsides and starting a business, without further ado.

Tally ho, chaps! That's the spirit, we haven't won every war since 1066 without forgetting that the reason Britain is Great is because we've always been a nation of shopkeepers (and café owners and gardeners). And apparently the only way to beat our overseas competitors and the hordes of foreign dervishes wanting to flood our precious market with cheap imports and bootleg Robbie Williams CDs is to start as many new enterprises as possible.

And Carol Thatcher should be the next Prime Minister, with the Dragons' Den panel making up the cabinet!

What is going on in this country? Why are all these Sir Humphreys and the do-good gasbags that support them telling us all that anyone can and should start a business?

There are plenty of people starting a business already, and on top of those there are plenty of others who would like to and probably will. The fact that really needs to be addressed is that most of them go on to fail - 80% inside three years, with half of those inside the first 12 months depending on which statistics you read.

Surely it's not encouraging more people to start a business that's needed, it's about encouraging the right people to do it, and helping them find the professional support, information and advice they need to start up properly and stay in business.

So if we suddenly all start listening to the gasbags, we're only going to exacerbate the problem and encourage more people to start something that will fail, with their life savings, mortgages and other people's cash sliding down the dinky, never to return.

The problem that we've particularly noticed over the last 12 months is the increasing emphasis that's now placed on starting a business being all about finding the right idea. This was highlighted to us to a startling degree at the Business Start Up Show in London a fortnight ago, with more than half of the visitors who came to our stand not having a business idea but believing they could find one at a start up event!

The real point about all of this is that simply finding an idea for a business is not enough to ensure that your start up will survive. In fact, too many people start up with an idea, often a very good idea, but with little else in place to make it happen and flourish into a successful small business.

So here's our guide to the quickest way to start up a business that will fail.

• Having a reasonable idea or concept for a start up, but without the foggiest idea as to who will buy from you. A great idea with no market is guaranteed to result in rapid failure.
• Having a business plan without a clue about what is required to run the business. Business plans that are based on bullshit and waffle, with no substance to them, invariably mean that the individuals behind them don't have the experience or know-how required to run the business.
• Being bereft of any ability to sell. Too many people can't even bring in the initial sale, never mind having the marketing savvy to persuade customers to buy from them over and over again.
• Not having enough working capital at start up, or even worse not knowing how much capital you need to start up. Early business failures simply run out of cash before they've given their sales a chance to start coming in.
• Not getting the right sort of professional advice and support before you start up and then crying for help when it's too late to do anything.

So, in a nutshell, be extremely wary of the enterprise ballyhoo from the misguided public servants and quangos, and don't start a business if you haven't found a market for your idea, haven't got the experience to run a business day-to-day, or if you don't understand the importance of sales and marketing, and can't identify how much start up and working capital you need.

Above all, don't start up without thoroughly researching your idea AND your market, and make sure you get professional advice from an accountant and your local enterprise agency before you get anywhere near launching your new venture.

To assess whether you really do have what it takes to run a small business effectively, why not check out our practical assessment factsheet, Could You Run Your Own Business?

Marketing tip

Tips for identifying competitors

We've frequently emphasised the importance of knowing as much as possible about your competitors before starting up your business. It's also wise to revisit this information frequently once you start trading.

In general, you should be finding out:

• How your competitors' products or services compare to yours, and how you can differentiate.
• How their prices compare with yours, and whether they have guarantees or discounts.
• How many customers they have, and who they are.
• How they promote their products, and where this is done.
• What share of the market they have.

The following resources provide guidance on how to identify and understand potential competitors.

• This comprehensive document from the Chartered Institute of Marketing (CIM) provides tips on investigating competitors and the type of information you need to know about them.
• A basic explanation of competition and the ways in which businesses compete with each other is provided at the Times 100 tips and training tool.
• Trade associations often publish magazines and journals highlighting what businesses in the industry are up to. Search for the trade associations related to your industry at the Trade Association Forum.
• Online directories provide a useful way of searching for similar businesses operating in your area. This resource from Cranfield University provides links to a number of useful directories.
• The Companies House website features a number of tools to help you find information on registered companies, and you can also find details of those operating in your sector.

Finally, you can access our practical factsheet on finding information about your competitors at our Scavenger research resource. And for hundreds more tips, ideas, techniques and tactics for increasing sales and finding new customers, check out the UK Small Business Marketing Bible.

Legal tip

Changes in the pipeline for registered companies

If you run a limited company, or if you're thinking about starting one, next year will see some important changes to the law which may affect your business. Although the details haven't been confirmed yet, the changes have been proposed as part of a company law reform bill, and it will be worth keeping an eye on developments.

The Department of Trade and Industry (DTI) explains what it's trying to do with this reform in a number of different documents, which in this instance actually make some sense.

Chapter 5 of the white paper is worth scanning. Here are some of the changes the DTI wants to make:

• It wants to make it possible for only one person to start a company, instead of the minimum of two that are needed at the moment.
• It wants to see every company's rules consolidated into its 'Articles of Association', but also wants to give company founder(s) the right to impose more rigid business goals.
• It would also like to make it easier for companies to change their registered offices and move around the country.
• The white paper also suggests that directors should have more privacy. They should be allowed to provide a 'service address', rather than being obliged to give their home address.

There are many ways of staying in touch with changes, but the Companies House website is one of the best sources of information. And we'll be keeping our introductory factsheet on starting a limited company up to date as the changes are announced.

Don't forget the UK Red Tape Buster has news, factsheets, and the answers to frequently asked questions about company law and red tape of all kinds affecting business owners.

IT tip

Measuring visitor numbers on your website

If your business has a website, it's essential to know something about the web users who visit it. Using information about visitor numbers, you should be able to work out which parts of your site are most popular and which aren't working well, and adapt the design of your pages accordingly.

To make it easier, there are plenty of free counters to give you the information you need. See www.statcounter.com, www.sitemeter.com or www.bravenet.com as starting points.

Here are three of the most useful pieces of information these counters will give:

• Unique visitors. Not to be confused with 'hits', which simply show how many pieces of information the visitor has downloaded. A page with text and three pictures will count as four hits. Unique visitor numbers better reflect how many individuals are viewing your site
• Referrers. It's useful to know which sites are linking to your website, but also which search engines are providing you with the most traffic.
• Pages viewed. Are visitors making the most of your site, or missing out on pages you've spent hours building? Page views will tell you, and give you clues about, how to build a better site.

Free counters will give you a wealth of other information to help improve your site. The e-Commerce Guide lists many of these tools, and Web Marketing Today has links to over 400 articles on how to make the most of the information you obtain from your counter.

If you're looking to develop your own business website to sell to customers via the Internet, why not check out the Small Business Builder, a unique tool to enable a complete novice to set up a website or online store.

New business idea

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

Here is this week's idea:

• Face Painter

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 the word 'discursive' means?

a) getting off the point or covering a range of subjects
b) something which deviates from accepted standards or laws
c) talkative or friendly
d) disorderly or distracting

Answer at the end of the Bulletin.

Website review

The Chartered Institute of Purchasing and Supply (CIPS - www.cips.org)

CIPS provides a range of training, news, reports and information to supply-chain businesses and those involved in the purchasing process. But how user-friendly and accessible is its website?

• Navigation and presentation - a well-constructed homepage provides simple navigation through the content of the site, clearly signposting key sections and resources. The inclusion of topical issues keeps things looking fresh.



• Accessibility - the site is compliant with the W3C's accessibility guidelines, which means users can resize the text, and turn JavaScript off in order to use a text reader. There's guidance for users with different browsers, and an e-mail address to contact if you still can't access something on the site. No foreign language options, though.



• Content and usefulness - the tone of the site is unfortunately targeted at large companies - for example, the language talks about 'chief executives' a lot - but if you can wade through this there are some useful resources for small businesses. The glossary of IT and e-commerce jargon, and the Topic Reference Files on issues like costing and pricing, and meeting standards, are highlights.



• Relevance - news and press releases have to be downloaded, whereas publishing them in short snippets would make the site more interesting. And the news content is rather dry and turgid, focusing on CIPS corporate developments rather than genuinely engaging news. It's also thin on the ground, with the latest press release dated 10 November.

A moderate score of 11 for the CIPS - reworking the tone and style of the wealth of information on the site would help to engage small business owners.

Our rating - 11/20

Did you know?

The Small Firms Loan Guarantee scheme has changed

A series of major changes to the Government's Small Firms Loan Guarantee (SFLG) scheme came into effect on 1 December. The loan scheme has been revised to refocus on new and young businesses under five years old, and to expand the lending limit so that a standard limit of £250,000 applies to all eligible firms. The loan scheme is aimed at businesses that have problems accessing conventional sources of loans (like banks and building societies) because of a lack of security.

Worth a visit

Your festive responsibilities explained

Advisory and conciliation body Acas has released a series of frequently asked questions and guidance to clarify business owners' responsibilities towards their staff during the Christmas party season. The guidance covers where your business legally stands as regards issues like excessive drinking, time off for hangovers, drink driving and the payment of Christmas bonuses to staff.

Heroic resource about universities and colleges

Hero (the Higher Education and Research Opportunities site) is a little-known resource that explains how small, local businesses like yours can work with universities and colleges to benefit from their expertise, their facilities, research they have carried out and graduates they have produced. The site summarises the types of help and services academic institutes can provide, as well as providing a directory of short courses they run and help with recruiting graduates.

Worth a read

A fascinating - if disturbing - guide for business owners about how to ensure your venture survives and prospers in the face of impending economic turmoil, this book takes as its starting point the concept that the Western world is an economic timebomb. However, instead of scaremongering, it provides practical advice, tips and checklists for preserving the competitive advantage of your business, managing change, analysing your circumstances and taking steps to protect your enterprise. 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.