Summary of the Workshops

The series of workshops has undeniably left me plenty to think about and consider, but has also encouraged me with the future direction of my business. In a way I would argue that our main tutor, Steve Baker, has been the Jamie Oliver of business for our class, providing us with ‘food for thought.’

I believe my 15 second pitch has become a lot smoother, and I feel much more confident having practiced it through networking events and in the workshops. By bouncing ideas off others I have felt challenged and encouraged and have benefited from such a set up.

I’ve realised the importance of understanding my customers and their habits in order to optimise marketing activities and sales. As Steve put it, “if people aren’t buying, it’s because the marketing message isn’t right!” I need to think in the mind of the customer and not just as a retailer.

In regards to legalities and accounting, I see how important finance is to a business, especially a new one, so keeping track of it is essential! Discussing mistakes that have happened with book keeping I see the need to double check things as people make mistakes. I will also make sure to stay on the right side of the law!

I am now aware of a scheme in place with ‘Business Start-Up’ for new businesses to apply for up to a £1000 concept fund. I have just had a meeting with one of the business advisers who was really helpful and took me, step by step, through the application process. I was also informed of an annual competition in the Yorkshire area for further funding of £2000, which would be so useful as start-up funds! It’s reassuring to know that there is help available both financially and for future advice.

I will be regularly assessing my business plan and ideas for my clothing brand but feel much more confident than I did, knowing much more than I did. There is always room for growth, and I look forward to the challenges the future brings.

Faith

The Art of Business Marketing: Part 2

In the first marketing workshop, Steve Baker talked us through the first two stages of the marketing process as seen below. In the second workshop we completed stage 3, 4 and 5, which is what I’m going to write about in this blog entry. Continuing with the marketing process we discussed market strategies in relation to our business start-ups, branding, the 7Ps, promotion and implementation. I hope this gives you a few things to think about to if you’re in the early stages of starting up a business too.

STAGE 3- DESIGNING MARKETING STRATEGIES.

Steve explained that there are 3 types of market strategy that relate to market share:

• Overall Cost Leadership e.g. Dell who promote their prices and sustainability.




• Focus (Niche) strategy that promotes premium prices and has an irresistible appeal to the target audience.




• Differentiation that allows a company to market different products for different markets e.g. gold, platinum and silver cards can be very similar but appeal to different people.
  
  

I wasn’t sure initially what type of marketing strategy would most suit my business but after bouncing ideas off with people at the workshop I decided that I was mostly addressing a niche market. This is because from the research I’ve done my clothes would appeal to a very focused target market as there seems to be only 3 competitors who sell clothes specifically for curvy women, unlike everyone else on the high street who either sell extra large sizes or general sizes 6-16. Steve suggested that if appealing to a niche market then it’s important to charge a premium price, as charging too little for a niche product can actually restrict it’s sell-ability.

The Niche market tends to have less than 5% of the market, but offers a high value and can therefore charge a premium price, meaning I could price a suit at £300 instead of £100. Niche markets tend to have a strong corporate culture as everything reflects their image and brand e.g. Harley Davidson’s and Apple have this down to a T! I’m not sure how I would develop this branding because of lack of funds, but by developing packaging, clothes labels, receipts and my website with a logo etc people would become familiar with my brand.

Differentiation
Although I feel I can appeal to a niche market, I also see the benefits of differentiation. I realise that I can actually differentiate my brand for women from different social or cultural brackets as different styles of marketing will appeal to their different needs, even though the garments are the same! Differentiation can be in relation to product, service and positioning.

The example above is a bit confusing, I had to hear it several times before I understood it, but I think it explains differentiation really well! The table shows that if there are 3 markets and 3 types of product, only one market (M1) is being targeted to buy the product (P2), but by using differentiation all 3 markets can be targeted with different marketing techniques, maximising sales and marketing efficiency, as seen below.

For my e-commerce clothing site I could advertise the clothes in different ways to appeal to the needs of the different markets. I could even have different web addresses that market differently according to price as while some people want to know they are getting quality clothing with a classy look, others want to know they are saving money because no alterations are required, but is quality at a low price. It’s all the same clothing but marketed accordingly!

Another factor I could market is customer service. Three different approaches for three different markets could be:

1. 24 day returns policy if the clothes do not fit as hoped, so people can be encouraged to buy without trying on.


2. Free returns policy for people who are hesitant with paying extra delivery costs.


3. Styling advice available online so the customer knows what styles will suit them.

STAGE 4- PLANNING MARKETING PROGRAMMES:

I knew what the 4Ps were, but being presented with the 7Ps made some things clearer, such as the importance of people in a business and how they promote it (in my case-me) and the need for tangible evidence to encourage people to ‘spend spend spend’ on my product e.g. packaging and clothing labels.

Taking an example from the 7Ps I looked closer at pricing for my business…
Steve explained that when pricing our products we needed to select our pricing objective, determine the demand, estimate the costs involved, analyse our competitor's prices, select the pricing method and lastly, select the actual price-but he stressed never to charge too little to begin with as it is much harder to raise your prices than lower them!

Before this workshop, I had always thought that stressing the customer was getting a great ‘price deal’ for the clothing was the best means of promotion, but Steve explained that unless you break the pricing structure down then you can’t assess why it is actually appealing to the customer.

This is explained in the 3C’s of Pricing: Your costs, Competitor's prices and Customer assessment. For each section we had to fill in 3 products or services, which was really tough to think of on the spot! Looking at what directly benefits the customer when marketing is the best method in pricing, e.g. for my brand, customer assessment could be that:

1) They pay a high price as they receive excellent quality and durable garments.

2) The extra sizing available in the garments will also save them time and money as they won’t need to have them altered or have customised clothing made to fit which is much more expensive. Therefore my clothing benefits them and they are happy to pay!

Branding

Steve argued that ‘brand’ was too expensive a concept for small/medium enterprises to have as creating a serious brand can take millions of pounds; cash which is not available to new start-ups! Instead why not develop image, which is different form just having a brand as instead you can promote values etc? This gave me something to think about as I hadn’t realised how expensive branding was and I know I’ll not have the available resources, so instead I’ve started to brainstorm how to promote my image and values through e.g. testimonials and referrals.

Promotion and Marketing Communications

There are so many ways to promote my business through using the marketing mix. Some of the main ways are listed below:

I think the best way for my business is ‘personal selling’ at trade fairs and networking or emails and phone calls to contact women who have left feedback on my website or who have shown an interest. This has much lower costs unlike e.g. Public Relations which isn’t that good for Small/Medium businesses but better for ‘brand’ images, similar to advertising which again is very costly. I could use direct marketing such as using links to problem pages for women struggling to find fitted clothing. Sales promotion could be money off vouchers on first purchases or if women complete a survey they get e.g. 15% off. There are so many ways to market without the associated prices, which I think appeals to any new start-up!

STAGE 5- IMPLEMENTION AND REVIEW:
“Market implementation is the process of turning marketing plans into action assignments and ensuring they are executed in a manner that accomplishes the plan’s stated objectives.” (Steve Baker)

There are several components I have to think about if I want to implement my marketing plan such as:

Developing an action plan. I must follow an objective and stick to it if I want to save money and not get side tracked. I need to assess my desired outcome and figure out how to get there using a timescale and activity description that must have impact. Steve stressed ‘impact’ several times, I guess if my business doesn’t stand out or lacks ‘appeal’ then I’ll never get off the starting block and get the sales figures I need!

Generating interesting, believable and exclusive messages is important if I want to reach my target customers. I have to appeal to them and make them feel valued.
Using appropriate media selection to promote my business through assessing the habits of my target audience e.g. what papers/magazines do they read. As my business is visual, Steve highlighted the importance of using pictures to advertise, not just words! Considering the cost though is important; I need to first asses how much money I have to spend marketing in this way.

Measuring the response form different techniques is essential. There’s obviously no point in continuing to pay e.g. Yellow pages if that’s not how most of the client base heard about the business. Feedback is so important and if I have a page on my website dedicated to this I could learn so much about the target clients to use in the future and make my marketing more efficient.

Conclusion
I felt challenged when I had to think about certain aspects of my business and why each factor was appealing and beneficial to my customer; it’s hard sometimes to think in the mind of the consumer and not the designer or entrepreneur! But when it comes to marketing I realise that understanding the customer is essential. In regards to how I would implement the marketing I have lots to consider and need to remember to be specific in my marketing in order to spend money reaching the target audience and not everyone that breaths!

The most important rule to follow though is that if the marketing message is right then the product will sell. If not, then go back to the drawing board and figure out what your customer needs to hear in order to make them buy!

Thanks for reading, I’d appreciate any feedback!

Faith

Sales Workshop: Part 2

The first workshop we had on sales discussed the initial sales process, and this was continued in the workshop earlier this week. Steve Baker took us through potential objections, assessing features and benefits of a business and the importance of confidence when selling. Confidence is key!

www.marvo.gr/sales.html

Analysis and Qualification
One of the things I needed to know more about was ‘qualification.’ Assessing what my business can offer the client and how I will make a difference to them is something I wanted to develop. Targeting the right people and not wasting time selling to people who are not in the target market is pointless. So collecting as much information as possible is essential in order to, as harsh as it sounds, filter out ‘potentials’ from ‘time wasters.’

If I ask myself what questions I need to know about my customers I will work out how to engage with them better and what selling techniques will work the best for them e.g. finding out my customers buying habits, how internet friendly they are and how often they would go online.

Steve also suggested comparing 20 e-commerce sites and assess what works and what doesn’t so I can invest this in my website, e.g. when clothes shopping online I can guarantee that the store has tried to sell you something to complement what you were buying. This is something I could do on my site e.g. suggest a bag or shoes to go with what the customer has chosen, or suggest a whole outfit, styling tips etc. This has proven to lead to more sales.

Features and Benefits
Steve was really challenging when explaining that when selling my product I have to keep asking myself “so what?” until I highlight the benefits for the customer, not just the features of the clothes and business. Before this I just wasn’t looking at sales from the consumer’s side, but from the retailer's view. For example if the feature is extra sizing for curves what does that actually mean to the customer? The benefit to the customer is that it fits them better and flatters their figure. Another example is that I could advertise the quality of the clothing, but the reason the customer will buy it is because it will last and wash well etc. That’s why they want to buy it, so I have to push myself to keep asking “so what?” until I have the message the customer wants to hear.

Overcoming Objections
Every business is faced with objections and learning how to handle these is key to developing and maintaining a good reputation. As I will be an e-commerce retailer, some questions I think I will be asked regard the fit, colour and condition of the clothing when it reaches the customer. Steve got us to do an exercise to see how we would handle objections. An example for my business may be that the colour doesn’t look the same as online but I could overcome the objection by highlighting the free returns policy.

Conclusion
From the sales workshops I’ve seen the need for me to improve my confidence when selling my business idea and improve my ability to explain my different USP’s. Steve highlighted again and again that “confidence is key” to successful selling and being prepared to answer objections and questions will increase this confidence. If you don’t sell yourself then who will?

Thanks for reading and feel free to leave feedback,

Faith

NLP sales (Neuro-Linguistic Programming)

How much of sales should be considered ‘people reading’? Well, yesterday we were given a talk on how NLP or Neuro-Linguistic Programming is not only an interesting way of developing relationships in day to day life and in the office but more importantly, is a very useful component of selling and is being employed by an increasing number of businesses to advance their customer base! In short, NLP teaches you to “utilise everything that’s presented to you!” (Caroline Edwards) It can ultimately lead to an increase in sales and profits through better understanding of your customers.


So what exactly is NLP?

“Neuro-linguistic Programming is defined as the study of the structure of subjective experience.”

However, if like me you didn’t understand a word of that, then here it is broken down some more:

1. Neuro: Programs are arranged in such a way as to become Neural structures.

2. Linguistic: By using specific speech we can interact in a much more efficient way. This is obviously important because language is a central way of communicating with people.

3. Programming: According to science and the experts, we have ‘personal programs’ in our brains which can be altered or changed.

NLP was created in 1949 and developed further in the 1970s by R. Brandler and J. Grindler who studied psychotherapy professionals who had achieved loads by using communication as well as studying those who had excelled in their fields such as sportspeople, managers and scientists. They basically wanted to see what made them tick and gave them the drive to succeed. Their conclusion was that these people used motivational and self-motivational behavioural strategies that could be reproduced, and so from this concept NLP training was born! (www.nlp-london.co.uk)

I’ve always been extremely fascinated by how people interact and their psychology so when Caroline Edwards of Satsuma NLP presented a very persuasive argument for the benefits of NLP I have to admit I was really impressed. NLP is about assessing every one as an individual, regardless of how their behaviour has been learned, the importance is in the 'here and now' and how we interact, so you don’t need to know someone’s history in order to understand them! (This is one way which NLP differs from psychology)

Any potential customer/ client will fall into one of the following categories, but depending on time and place can change categories:

Visual: Those people who are visual tend to be dressed well and tend to breathe from high in the chest and stand up straight as this allows for quicker breaths as they often talk fast. Furthermore, this tends to be about what they 'saw' as they often remember through what they saw. If working with this group then I should use imagery to help sell my idea. I think that when people shop they will be engaging with their visual side, so if I can address this, e.g. have an amazing looking website, then there is the potential to increase sales.

I myself fall into this category; with an artistic and creative personality I find that I have a million different pictures running through my head as ideas, and when people describe an image, that’s when they really capture my attention! So I feel confident with what I need to do here!

Auditory: These people tend to use words like ‘tone’ and ‘sound’ etc. They often change tempo and the sound of their voice. (I personally find this much better than monotone!) If I want to sell to this group then I have to tell them about it, for example a phone call will get me far further than any email! Also, if I am speaking to an auditory client then I could try to match their pace, slow down if I speak faster than them, change my tone when they change theirs etc.

Kinaesthetic (feelings): Such individuals tend to be ‘slow sense.’ Indications can be slower speech, they wear more comfortable clothes, often sit or stand slouched and their physiology drops a bit. This can be very beneficial because if people feel comfortable in a situation, then they tend to be happier to talk. Often you will find that visual and auditory people become more kinaesthetic as a conversation progresses and they relax. I know I do!

Olfactory (sense of smell) and Gustatory (taste): Tend to be linked. It is however very rare to find someone who connects primarily or fully with these senses.

Building on this, a sales person can also create ‘rapport’ (an unconscious connection with someone). The ability to mimic this connection in sales can be of great advantage. There is both mirrored physiology and matching. However, the prior is more unconscious and therefore softer and less obvious than matching. An example of mirroring could be two people standing at a bar facing each other. If one person is resting on their right arm, the second person would be doing the same but with their left arm.

The importance of rapport should not be undermined as NLP teaches that the majority of communication is not actually based on words but rather reading someone’s body language and how they interact as well as their tone. (This obviously doesn’t work over the phone!) I would like to try this out when networking just to see if I could use it to my advantage!

Another aspect of NLP is Synaesthesia which is when inside feelings can be revealed on the outside and where two feelings overlap, for example a sigh, or even when a person sighs while recollecting a funny event. This would suggest that the person has more clouded emotions about the event than thought, or is currently not that relaxed. Using this I could potentially pick up if my approach is wrong when selling and marketing my idea. I think though that this is situational and would take more teaching and time to understand, and could be dangerous to assume (Although I do find it fascinating)!

An important thing to remember is that although body language gives a lot away, sometimes what we see and think to be happening isn’t always the case. For example I may fold my arms which is something in the past I have been told is a ‘closed off’ and uncomfortable reaction but the truth is I often fold my arms when I am the most comfortable! Everyone’s reactions cannot always be generalised, but instead depends on the person. That’s why, for example, if I am giving a presentation and people are slouching and looking bored as can be, I shouldn't take it personally but instead assume they are just tired. This positive approach will make me feel much more confident in my abilities. NLP teaches that if I chose to assume I was the cause for those peoples slouching then my negative belief would cause me to give a less enthusiastic presentation. This aspect of NLP is definitely something I need to remember when presenting ideas and I feel it will help me grow in confidence.

Understanding someone’s eye movements can also suggest what kind of person they are. For example if I were to ask a question such as where the client lived or how old they were I would see what direction they looked to access their memory; up would suggest a visual person, to the side suggests an auditory person and kinaesthetic if they look down. Of course to be completely accurate or understand eye movements completely training and practice would be necessary.

I think NLP is something that has great potential to help any business. NLP claim that using their methods means less stress and more effective communication, more creativity, more energy and bigger sales, fewer costly errors and can lead to customer retention and referrals from happy customers. (http://www.renewal.ca/communication.htm

I feel I have learned a lot already but am aware I still only know the basics and will probably never fully understand, however what I have picked up from the workshop and extra reading will give me a head start in business. Although much of my business will be conducted online, I still see the benefits of NLP as I will have to present my business ideas, meet with suppliers and manufacturers, network and understand my customers. I would recommend any one- in business or not- to check NLP out because it’s fascinating! I can’t help but think I am going to be analysing people a lot more!

For further reading check out http://www.nlp-london.co.uk/ as there is stacks of really interesting information and tips on the website. There are also seminars etc for those of you think this is something you would like to take further. Also check out http://www.renewal.ca/ .

Thanks for reading and I would also greatly appreciate any feedback.

Faith

Considering the Legal Aspects of a New Business

One of the hardest things I find to get my head around, other than finance, is the legalities involved in starting and running a small business. However, it is also one of the most important! In a workshop by Philip Parkinson, a specialist solicitor in this area, we discussed topics such as business basics, control in your business, intellectual property rights and other legal considerations. I have found the website www.ipo.gov.uk (Intellectual property office: IPO) extremely valuable when researching legal issues for my business and would recommend you check it out for more details.

Business Basics

The first step I think is establishing what type of business you are going to run; e.g. Sole Trader, Limited (Ltd) or a Partnership. Although I had already decided that I was going to be a sole trader, I had not fully assessed the reasons why this was currently the best option. There are several advantages, including:

1. This is much easier to set-up; I just have to inform Inland Revenue and Customs (within the UK).

2. I current have no assets and therefore do not need limited liability that is offered as an Ltd. However banks almost always (especially with the current economic climate) demand personal guarantees on loans to the company, which is one less advantage, in regards protection, of being a Ltd.

3. It means cheaper start up costs as I don’t have to pay the registration fee at Companies House and annual costs associated with a Limited company.

4. As a sole trader, accounts are not published on Companies House. This is something that many new small and medium enterprises (SME’s) find important as cashflows for the first few years tend to be less than desired.

It is likely, however, that after several years of trading my business will become a Ltd. This is because of the reputation that comes with this status as banks and many suppliers prefer Limited companies.

The all Important Company Name

The name of a company is obviously of great significance but before this workshop I really didn't know where to look to see if a trading name was available. There are many websites available to give anyone quick advice and show if the name has been taken, e.g. if you are setting up as a Ltd then Companies House will search all names, or similar names to your business.

http://www.companieshouse.gov.uk/

However, if like me you are a sole trader then it is slightly harder to figure out if a name is taken as you don’t have to register the trading name. A good indicator is to do a domain search and if the website address is unavailable then it is likely so is the trading name. Because e-commerce trading is such a big thing we were advised to choose a trading name that matches your website address, and even if you don’t want to use a website yet, buy it and keep it for when you do! It really doesn’t cost very much at all e.g. when I was researching it I found domains available for £5-£20 for 2 years, which is really cheap!

We were advised to try the below search engines to look for domain names and reminded that it is obviously best to avoid giving your company a name that is similar to one already in your trading sector:

www.123reg.co.uk
www.nominet.com

Other considerations when choosing a trading name include avoiding offensive words (which doesn’t really need explaining!) or names that are linked with the government or Royal family or suggest a connection with them.

More Basic Issues

Maintaining the reputation of your brand is obviously vital. The lecturer explained that once you have established your trading name, one way to do this is to ensure that letters, emails, website etc all include your company’s full name and address and trademark if you have one. If you are a limited company then the country of registration and registration number should be included as well as a VAT registration number if valid. For my business I realise that branding will be really important to help keep up the image of the company.

Terms of business

I doubt there’s anyone out there who has not had to read a terms and conditions document, and personally I know that I’ve skipped a good few sections on them before and often just skim the pages. Even worse than that, I know I’m guilty of clicking the ‘I agree’ box when I haven’t even looked! However I also know that I’m not the only one, but the workshop explained that the truth is, reading terms and conditions are SO important!

Within business, terms and conditions determine how much you get paid, when you get paid, what your obligations are as a supplier, distributer or retailer, what your customer’s obligations are as well as limiting your liability. Ultimately terms and conditions put you in control of the contract and keep your business almost bullet proof, something which I hadn't really thought about.

If shareholders or partners are part of your business then such documents allow for clear and decisive decisions to be made without arguments over who is responsible for what! Although this doesn't apply to my business right now, it could do so in the future.

Intellectual Property rights: Trademarks, Copyright, Patents and Passing off

Philip also explained intellectual property in relation to our businesses, stating that it is really important to ensure you clearly define your product and ensure it is protected. If talking to another company or pitching an idea it is advised to write it down and get the other party to sign a confidentiality agreement. Without this you have no control of the idea and they could easily use it without you! However there are many other ways to protect your ideas and designs, known as intellectual property rights:

Trademarks

“Trade marks are symbols (like logos and brand names) that distinguish goods and services in the marketplace.” (Intellectual property office)

If you want to protect an image that represents your brand then this is normally how it is done. It protects logos and words either on their own, or together. Trademarks do not have to be registered but to register a trademark within the UK can cost as much as £200 for a specific category and class, after which it is another £50 for every extra category. These must be renewed every 10 years. Check out:

www.patent.gov.uk (It brings you through to IPO). Because I intend to have an image as part of my brand name this is something I will investigate further.

Copyright

“the exclusive legal right, given to the originator or their assignee for a fixed number of years, to publish, perform, film, or record literary, artistic, or musical material, and to authorize others to do the same.” (Oxford dictionary)

This simply means that you are not allowed to reproduce such work in any medium or even copy and paste an image that is copyrighted, without first asking permission. It is recommended to put © followed by the trading name and start year on the bottom of all work including websites. This may add legal value in some countries and also put people off using your work without asking. One way to add protection is to post a letter via special delivery with the work inside so that the date can be traced if ever there is a dispute about offending your copyright. Also, providing your solicitor with a copy will do the same. I hadn't realised it was so complicated!

Within the UK, copyright is automatic with no registration, fees or forms, but does not protect names or titles. Ideas themselves are also not protected but the work as a result may be. Copyright does however apply to any medium e.g. it can be implemented on websites, pamphlets, pricing structures/ layout of documents, any new creations and on symbols.

There is no limit to how many copyrights you can use, and whilst something is copyrighted it can also have another intellectual property right connected to it, e.g. copyright can protect your logo, but you could also register the logo as a trade mark.

Patents

“a government licence giving an individual or body the sole right to make, use, or sell an invention for a set period.” (Oxford dictionary)

As stated above, patents can only be used for inventions and must prove original and industrially appropriate. Patents do however take a long time to process, not to mention the cost involved! For my fashion business patents will only be relevant if I develop a new structure to the clothing or develop a new template. I feel this is very difficult within the fashion industry as most new ideas are developed from older ones!

Passing off

Passing off is a legal concept that allows for the protection of a business’ trading reputation. It protects businesses if another company trades from their reputation, e.g. if a company sold bottled water and were called ‘Volvil’ this would allow Volvic to take legal action as the name and sector of trading is too similar. If Volvil were to sell dodgy water this would reflect badly on Volvic.

Passing off can also protect those businesses without a registered trade mark or company name e.g. a sole trader who has not registered their name.

Other Legal Considerations

For extra protection try this link for the property office. It has a whole list of topics and specific areas for protection:

http://www.ipo.gov.uk/types/otherprotect.htm

Websites

The Web is becoming more and more relevant in our society. As an e-commerce site I want to ensure that I use my company’s website to its full potential, but must ensure I do this legally. As mentioned earlier it is very easy to buy a domain name, but we were reminded that it is really important to double check that you do own it and control it before paying big bucks to customise it.

Premises

As my business is an e-commerce one, for now I do not need to consider renting or purchasing shop space, however it is vital that this is thought out, e.g. if you rent a space how flexible is the contract encase you need to move premises to meet market demands etc? As I intend to run my business from a spare room in rented accommodation I will need to check that my tenancy agreement allows me to run a business from my house as many do not.

Employees

I will be starting my business on a small scale and with little capital so employees will not be something to be concerned with. I have been told of the stress and time it takes to be an employer and I am thankful I don’t have that problem for a while! When my clothing company does branch out in the future there will be plenty of legality involved e.g. health and safety including licences and certificates as well as environmental consents and licences. Tax, National Insurance etc also have to be considered and whether or not business will be subcontracted to other firms.

Conclusion

I was always aware that understanding legal issues within my business was important, but after the legal workshop I was given a more in-depth, clearer picture of what I really need to consider before trading and as my business grows and changes. I hope this has been a useful overview to you and reminded you of anything you might have forgotten to consider too! I would suggest talking to a solicitor about your business as well as looking at the IPO's website

because you never know what you might have missed!

Thanks for reading and I would appreciate any feedback,

Faith

An Intro to Book Keeping, VAT, Taxation and all that Jazz!

The workshop I attended was about finance, something which I am definitely not a wiz kid with, but I don’t think any new business owner can shy away from the importance of good bookkeeping in their business. Although only a brief overview of accounting; the main areas to consider were made very clear and have given me much more insight. Areas discussed included how to register a business, the importance of keeping records, what these records are and how to handle VAT. I hope this gives you something to think about for your business too.

1) Registering your Business
Although it seems obvious, one of the most important decisions is deciding what structure you want for your business. Choosing the structure depends on many factors, externally and internally such as: tax, annual costs, whether you want your accounts to be published, whether the company will need an audit report and regulatory requirements etc.

Although there are many structures I could choose for my business such as a Limited Company (Ltd), a Conventional Partnership, a Limited Liability Partnership or even a Joint Venture, whether incorporated or unincorporated, I feel that acting as a Sole Trader is most beneficial.

Because there are so many different structures, there are of course different people to contact in relation, e.g. as a sole trader/partnership, HMRC (tax and NI) need to be contacted within 3 months of trading, whereas for Ltd’s, Companies House, HMRC and VAT are compulsive. This is one reason why I need to have a well organised structure from the beginning, as late notification can result in penalties.

2) Why Keep Records?
For me a good reason to keep records is that I know I will forget several months down the line, and the best way to remember anything and be organised is to write stuff down, especially with something as important as finance! After all, a big part of running a business is to earn money and make profits.

Records need to be as accurate as possible in order to report profits to the HMRC because of tax liabilities. Although the HMRC only receive a summary of the business information they hold the right to access more at any point to ensure profits have been properly disclosed and only genuine expenses have been claimed against income.

Most expanding business will need to approach banks, venture capitalists etc for working capital. There is very little chance that this will be secured without demonstrating past performance and finance forecasting for the future. I know that a cash injection is something I will need for my business to get it up and running so in order to inspire confidence in my business I will definitely ensure I spend time doing my books!

HMRC now further assess up to 10% of returns of self assessed businesses. It is likely that messy records will prompt the HMRC to make assumptions where the source documentation isn’t available; assumptions which will not be to the businesses advantage! However, well kept records indicate a well run business, allowing HMRC to deal with enquiries faster and with less cost.

3) Basic Records- Where to Start?
Organising the finance in my business is something I dread to think about because knowing where to start is so confusing! But I found the way this information was broken down in the workshop much easier to understand than I expected. There are several areas to consider:

Cash Book (always enter from source documentation): This includes chequebook stubs and paying in books always being competed. Direct debits and standing orders from bank statements need to be recorded. However, I was told not to just copy entries from the statements as banks do get it wrong sometimes-but to always double check! It was also explained to only enter payments in the book when cheques have been sent out, or received. It is important to keep a separate file of unpaid purchase invoices which can be later removed to the paid file when paid. Always cross reference and keep all source documents on file. (Although this seems like a lot to take it, I realise that by doing this my business will run much more efficiently!)

Bank Reconciliations: This process is basically comparing and matching figures from your businesses

accounting records (cash book total) against those shown on the bank statements. Online banking also allows you to access your account information which will show any cheques that are still waiting to be cleared and which will affect your balance. Regular assessments of these will save money as accountants love to charge lots for this!

Petty Cash Book: It is important to always keep vouchers or receipts for any cash expenditure in the PCB and reconcile to cash in hand on a weekly basis.

Sales Day Book: It is pretty obvious to keep a record of all sales, but I didn’t know that I should consecutively number them or that if a number is missed then to note it down in the SDB. All sales invoices should be stored and filed numerically.

Sales Ledger and purchase ledger will be necessary as my business will be conducting a large number of credit sales transactions and should be updated regularly as well as being part of a double entry system. VAT Records are also necessary, but will be explained later.

As a sole trader there is no need for year end accounts but only tax returns.

4) Double Entry Book Keeping
The majority of businesses work on a double entry system as using single entry bookkeeping means there is no way of reconciliation. Double entry is basically when debit and credit information is entered for each transaction, allowing profit and loss to be calculated much easier.

Within this arises the question of whether to hire a bookkeeper to do this work. For a new business, managing the cash efficiently is essential and as a result most people think hiring a bookkeeper is a bad idea… but apparently not! The lecturer explained that new businesses tend to be so wrapped up in running the business, generating sales or in production that keeping the books in order is at the bottom of the list, and if left too late is expensive to correct! With a pile of unfiled invoices and statements, they don’t know where to start! This is definitely not what I want for my business, but there are lots of ways around ‘hiring’ a bookkeeper such as computer packages which I was relieved to hear about. These packages can produce reports and analysis of my business performance, I can begin with using simple spreadsheets to record information and all the records will we stored in once place and easy to find, making double entry bookkeeping much easier without the help of a professional. Of course these records should be backed up.

5) VAT in Relation to my Business
Before this lecture I had a brief idea of what VAT was, but didn’t know how exactly it related to my business and what aspects of it applied to me as a sole trader rather than a limited trading company.

Once my business is over a certain level I will have to register for VAT, however I can voluntarily register below this point if I want. We were told this level was £61,000 turnover for the year. Although that feels like a long way off for me now, I realise the value of understanding VAT and tax (despite the fact I’m not a fan of figures!). If my business does make over £61,000 for a while, but the annual level falls to less than £59,000, I can deregister. This also applies if the business stops trading. However, it was stressed that seeking the advice of a professional before deregistering was essential.

VAT consists of 2 main areas- Input and Output tax. Outputs cover all supply of services and goods whereas input refers to the business’ purchases. Luckily completing a VAT return only happens on a quarterly basis, after which a return is issued and submitted to HMRC no later than 30days after the quarter (Some businesses using the Annual Accounting Scheme only have to do this once a year, however this is for businesses with a much higher turnover). Ensuring I do this in good time will mean I don’t receive penalties, something which any new start-up could do with avoiding! If this payment is late more than once, a penalty called a default charge is added, calculated as a percentage of between 2% to 15% of the VAT that is paid late. Being organised with this will definitely pay off!

I was confused at understanding exactly what a tax invoice was. I have seen plenty in the past because my dad runs a business, but I never thought to study one. The workshop explained exactly what was required in an invoice, so I made sure to take plenty of notes for the future (All tax invoice copies are to be kept for a minimum of 6 years, unless agreed with customs). Things to be included are:

• An identification number,
• The date of supply and the date of issue of the invoice,
• Name etc and registration number of the supplier,
• The type of supply by reference to categories e.g. hire, lease etc,
• Description of goods/services supplied,
• For each description, the quantity of the goods/ extent of the services is required as well as the rate of tax, and the amount payable excluding tax.
  

As I plan to purchase fabrics from suppliers and have my garments manufactured, keeping these invoices and making sure all these details are included will save a lot of time and potentially money for my business. However, I will not just be purchasing from suppliers but as an online retailer I will be selling directly to the public, for which I learned no invoice is required. Obviously a receipt is required for this, which should still show:

• The name, address and registration number of the retailer,
• Date of supply,
• Description of goods/services,
• Total amount payable including tax.

Summary
I have learned many things from this workshop such as the importance of double checking information, seeking professional help if unsure, but most importantly how organisation can have a huge impact on the efficiency of a business and its finance; a well run business can quickly build a good reputation, something that every start-up business aims for! There are so many websites and books that are specifically for new businesses and I would recommend having a look, because despite how much you may think you know, there is always more to learn!

I hope you enjoyed reading! I would love to hear your feedback,

Faith

The Art of Business Marketing: Part 1

Defining marketing is easy, defining marketing success is possibly impossible! Everyone has a different desire for their business. In the first part of the marketing workshop with Steve Baker we discussed our USP’s, what marketing is, the marketing process, market research, the marketing environment, consumer and business markets and competition. By reading this, maybe you too will pick up on ways to improve your research, which is after all the foundation of your business.

So what is marketing?

“Marketing is a process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives.” (Steve Baker)

Defining what you view as success will help you define your objectives for your company and ultimately keep you on track with your aim. I realised I hadn’t fully assessed what I believed success was for my business. I know I like designing and have always wanted my own business, but were is the success in that? Thinking harder I reached the conclusion that to me success is to ‘conquer’ the UK fashion industry sector that caters for curvy women, whilst helping women love their natural curves. I know that to do this I need a successful marketing campaign that will promote my brand and promote the need for extra sizing in clothing as well as making curvy women aware that there are clothes available for their shapes, which are my objectives that I can build on.

Marketing is a two way thing, you have to find out and understand what the customers want and then sell it to them. The model below shows how marketing links a business with potential customers (customer centric):

Using this model in relation to my business I feel I have identified a need for better fitting clothing for women and need to understand their shopping habits and requirements, define a specific age group and match my designing style to that, in order to produce an effective marketing campaign.

The Marketing Process
Marketing strategy is comprised of market analysis, strategic planning, approved business goals, marketing plans, marketing implementation and results. When analysing the market there are two approaches; product approach and marketing approach. The first is more of a ‘push’, where consumers buy good products and the company’s focus is on making good products. However the marketing approach is when the company determines the needs of a specific market which allows them to deliver satisfaction more efficiently. The approach can of course be both methods, however marketing tends to be more effective.

As my fashion business is a clothing label for curvy women I feel my business fits in with the marketing approach as I knew there was a gap in the market for this. However, because one of my USP’s is the high quality of the clothing, my business could also be considered as taking the product approach.

Overview of the Stages in Marketing (Only the first 2 boxes in red were covered in our workshop):

ANALYSIS STAGE1- MARKETING OPPORTUNITIES:
The process above suggests how businesses should analyse opportunities. This includes analysis of market research, the marketing environment, competitors and buying behaviour.

1) Analysis of Market Research (getting data)
Within the market research process it is important to firstly define the objectives of your business, then develop the research plan, collect this information, analyse this information and lastly present the findings. For example, one objective I have for my fashion business would be to assess if and how often my target customer would shop on line. Do they even have access? I need to then assess the best way to gather this data e.g. surveys or online statistics. I had never sat down and actually written a list of objectives for my business that would help with market research, so I found this guidance by Steve really useful.

The Data sources can be primary or secondary. Primary is basically asking questions such as surveys or focus groups. The prior I have attempted, although only on a small scale, but Steve pointed out that this was not accurate research as collecting primary data should normally be conducted with a minimum of 50 people and an optimum of 250 people. I know now that I need to hand out a lot more surveys to women, whether it’s on the high street or online, but it needs to be done before I properly move on!

Secondary research can be internal, government, periodicals and books or commercial data, e.g. the ‘Mintel report’ in libraries covers the last 12 months of data, e.g. in my case fashion. Again this is something I need to research as I didn’t know it existed before the workshop.

2) Analysis of the Marketing Environment
In the workshop we then discussed the essential PEST model to help determine external factors that can help make or break any business. This is an area I had already covered in a previous module and was confident that I understood PEST in relation to my e-commerce fashion business, however, as with many topics in the workshops, I realised I had only half assessed this. Some brief points I have began to develop include:

Political being legislations, enforcements and imports/exports.

Economic referring to levels of income, spending patterns and of course the current recession. Unemployment levels of professionals means less disposable income to spend on luxuries such as shopping. On the high street the middle market seems to be hit the hardest as people are budgeting, with Primark booming due to it’s cheaper than cheap prices!

Social factors include demographic, which in my case is the internet and is potentially set to get a bigger market share than the high street. Trends are influential such as the average age of the population. In regards culture, western society is very demanding and constantly demands new fashion and collections.

Technological advances and the pace of such change are also relevant to my businesses. For e-commerce fashion this may be in regards the internet, e-commerce or the efficiency of machines in factories.

3) Analysis of Consumer and Business Markets
Things that can affect consumer behaviour and my fashion business include: cultural factors, social factors, personal factors and psychological factors. This does overlap with PEST, however it focuses on consumers, not just the environment in which we live. Below is a diagram that displays this information better:

(http://www.tutor2u.net/)

How a consumer acts can change depending on what they are purchasing e.g. from a psychological approach, women shop as a type of ‘retail therapy’ or to motivate themselves as a treat. If I establish a marketing campaign that addresses the relaxing feeling of shopping then my brand can relate to the women whose consumer behaviour is psychological.

Another way of explaining buyer behaviour is in this diagram below. It clearly shows that the 4P’s of marketing and PEST factors affect how a consumer chooses products or brands, depending on the market. This image is again from tutor2u.net which is definitely worth checking out for more in-depth understanding of marketing.

(http://www.tutor2u.net/)

Business behaviour is different again from general consumers. There tend to be fewer buyers than the latter but are larger in size and need. Buyers often have close relationships with suppliers and are geographically concentrated. The business environment tends not to be as price driven, however there are always several buying influences. By attending trade fairs and networking, my business could secure deals on a larger scale, so ensuring that I market my brand correctly to such clients is essential e.g. if they are not as price driven, I shouldn’t market the clothes as being value for money etc.

4) Analysis of Competition
As part of successful competition within marketing any business should assess the industry concepts for the sector it is entering into. The number of sellers, degree of differentiation (e.g. costs), entry and mobility barriers, exit and shrinkage barriers, cost structures and vertical integration are all important factors. The market concepts include assessing the needs, segmentation, strategy and positioning of competition. Previously I had only really assessed who the completion were, but not really their in-depth strategy, cost structures etc, but after talking to Steve about the potential competitors for my business, I have learned how to analyse their structure and how that will help me compete in the sector.

ANALYSIS STAGE 2- RESEARCHING AND SELECTING TARGET MARKETS:

Market Segmentation and Market Targeting
Steve clarified that effective segmentation within target markets needs to be measurable, sustainable, accessible and actionable but it can be broken down into two main areas; Consumer and Industrial:

To begin with I wasn’t sure what consumer psychographics were, so encase like me you don’t either, here it is defined: "Psychographics refers to the attempt to evaluate the purchasing intentions of consumers from a study of their emotional and psychological responses to qualitative surveys. The aim is to match standard demographic Data (such as age, income, marital status, socio-economic group) to more amorphous characteristics (such as values, interests, self-image)." http://www.quantum3.co.za/CI%20Glossary.htm#P

Understanding this helps me to see that many issues concerning these two areas are very different. If your business sells directly to the public like mine does, then the whereabouts of your business is important, for example if I had a shop in West Yorkshire then I would only be selling to women there. However, if I have an e-commerce fashion site then I can sell and market globally, but in doing this I must take into account the cultural differences etc.

However, if selling business to business I need to understand that it is a very different approach, so by segmenting the market I can market accordingly and much more effectively. Although I knew that there are many different markets that I could sell to, I never realised how important it was to be specific and segment markets, as they all have different appeals. I will definitely spend more time assessing the different markets and how to market to them.

Conclusion
I really enjoyed the workshop as I felt challenged to define the goals for my business, and by doing so have had to really think about what success is to me! By listening to the many different aims of people in the workshop I realise how every new start-up business is different but needs to keep hold of their aims so they don’t get side tracked but use marketing effectively.

I now feel that I understand what marketing is, the necessity of market research and the reasons for assessing external and internal aspects of my business. It helped me understand areas I need to research further before launching my business which I had previously not realised the importance of. I am looking forward to the second marketing workshop, but in the meantime I have lots to reassess and develop!

Thanks for reading and feel free to leave feedback,

Faith

Sales Workshop: Part 1

So this was the first of a series of workshops that were to inspire and develop our admittedly young minds into the successful entrepreneurs of the future, and I don’t think any of us knew exactly what to expect!

The aim of the workshop was to guide us through the sales process and give us some tips on capturing clients and generating prospects for our businesses. As mentioned in my first entry as a ‘blogette’, my aim is to establish an e-commerce fashion label for curvy women because in my opinion, and dozens of other women I’ve chatted to agree, the high street fails to cater for curves. So with this in mind I began the workshops, listening eagerly!

Our session leader was Steve Baker who I am likely to mention over several of the blogs as he is to be one of our main tutors for marketing and sales. Beginning with the interesting equation below we were told “selling is simple!”

If effectiveness is the business message and exposure the number of people I talk to, then the best way to make money is to represent myself and get out and network…hardcore! But is selling really that simple? Well I got the impression from Steve that it can be…if it’s well practiced! So where else to begin than with the ’15 second elevator pitch.’ Apparently remembering AIDA helps focus:

Attention-engage hearing and vision.
Interest- engage thinking and make it relevant.
Desire- engage the audiences appetite by helping them visualise the solution with relevance to their own life.
Action- get a decision to act.

I’m pretty sure however, that mine came out as a mix-up of words that I hope sounded vaguely English! Of course I’m exaggerating, but I know I missed out several things I wanted to say, and waffled on about things which should have been a short sentence. Steve has reassured us though that we will be working on this pitch over the next few weeks (I will be ready to impress)!

Steve continued with explaining that the best layout is to simply begin with who you are and put into context the problems that your clients are experiencing. In my case finding good fitting clothes for the bust and hips is impossible! This should then lead into the USP’s (Unique Selling Points) and why you can do the job that no one else, even superman himself, can’t do quite like you! And to polish the pitch off, state what you plan to do to turn this ugly problem on it’s head! Then silently congratulate yourself on moving that one step closer to a ‘perfect’ sales pitch as I believe Steve when he said that practice makes perfect!

Start-ups and Networking
So if like me you are a new business, then where do we look to sell our ideas? Well, Steve suggested to get networking. In fact I think ‘networking’ has become a bit of a buzz word for me since I’ve been doing this business year. It’s not that I didn’t know what it meant before, it’s just that now I feel I understand the importance of it when growing a business as networking can easily lead to professional selling.

The Sales Funnel

http://www.sonic.net/mnitepub/pccafe/reviews/act2000/funnel.jpg

The idea of the sales funnel is to keep filling it up, as the more that goes in at the top, the more that comes out the bottom! This is how prospecting for business should work.

Prospecting
I may have an idea of what I want to achieve with my business but figuring out how to get there isn’t easy, it’s how to get people involved- prospecting- that I feel clueless about. But Steve gave an overview of the ‘sales funnel’, outlining the process of how engaging people and the results can tend to go; all sales begin with prospecting, then initial contact, qualification, presentation, addressing the concerns, closing the sale, ask for referrals/ testimonials, which then leads in full circle back to prospecting for the journey to continue again.

I now know that I need to get stuck into organising prospects and get as much information as possible, by looking through the phone book, trade listings, chambers of commerce, websites, papers, Google and purchase lists. I then need to qualify the list by sorting, e.g. make it my objective to find 25 prospects in a certain time limit, make initial contact and find another 25. It seems a long process but Steve reinforced the necessity of it!

Initial Contact
There are several ways of making initial contact; initial sales through people I know, networking as a result of referrals or professional selling through letters, emails and phone calls.

Steve gave tips on writing sales letters, hinting that they work best if they are addressed personally, are attention grabbing and I provide the client with useful information and consequently prove I am worth talking to. Then finish by asking them to take action steps. This seems bold to assume they will act but I guess a big part of business is confidence and knowing that you can sell yourself well, an area I hope to improve in as the workshops progress.

Cold Calling
I’ve worked in telesales in the past and admittedly half the time I found it such a daunting process because I knew I was trying to sell people something they didn’t need or want and to stay positive after several rejections was difficult. But for start-ups, cold calling can be one of the only ways to build a client base and because it will be my business that I’m selling and something I believe in, I need to be positive. Steve reinforced the ‘80% of the response is how you say it, not what you say’ theory which is why positivity works. So as well as networking I may need to allocate time to cold call and develop a script in relation to the responses I get, using open questions as a lead. As my business will be an e-commerce site I doubt there will be as much cold calling as emailing people who have shown an interest or searched my website, however if I wish to expand or put lines in shops I may need to call around business to do this.

Conclusion
I feel challenged to develop and practice a sales pitch that will knock everyone’s socks off, as I realise how important an opportunity just 15seconds can be. I also realise how motivated I will need to be to find prospects and stay enthusiastic even though I will be rejected as well as encouraged.

I found this picture, the '10 commandments of sales,’ on the internet and would encourage you to read it.

Thanks for reading and I look forward to any feedback!

Faith

Intro to me and my blog...

There’s no ‘sure thing’ when it comes to business, if anything it's a huge risk. I wonder if that is why people refer to things as being ‘a risky business’?

I once heard an entrepreneur state that any business can be set up in a day but it is the maintenance of it that proves the difficult part (If you have watched BBC3’s ‘the Last Millionaire’ this will ring true). To me this suggests the importance of research and preparation and ultimately a strong foundation if a business is to be successful long term.

Entrepreneurs tend to reinforce the ‘third time lucky’ theory in that most business people fail several times before getting anywhere. No business is flawless and the more experienced you become the more successful each of your new ventures tend to be. You learn from your mistakes, don’t you?

For me though, I want to get as close to the mark as possible, first time. I don’t have a mattress made of cash, or know a bank manager on a first name basis. I’m a soon to be graduate with big expectations and ideas but no collateral. So where do I go from here? How do I get a business up and running?

Well, taking a course in business is where my entrepreneurial journey has begun. It has helped me reassess my business plan in a more realistic manner than just day dreaming! Bouncing ideas off other ‘ideas’ people has been both encouraging, and at times disheartening! There have been times when I began to think it was an impossible venture! “How am I ever going to open a clothes shop in Leeds- the costs would be crazy, I have little experience and it’s a huge risk!”

It was at an enterprise event that I got chatting to a tutor and experienced entrepreneur who suggested quite confidently, “No business is impossible because of finance. If you don’t have the money, start smaller!” As a result I realised that although not ideal, the internet was the only real possibility for my clothing business. Since then however I have seen the benefits such as automatic global coverage and the chance to gain experience at a better pace.

Although I had hopes to start a company this summer, as a result of the recession and the uncertainty of the fashion high street, I have decided not to start trading until a later date by which point it is likely the industry will be showing signs of recovery. Below is a model of the Hills and Valleys theory of a business cycle. It is supposed that the optimum time for a new business to enter the market is when competition is neither peaking, nor when the industry is in recession, but when it begins to recover.

Business Cycle- Hills and Valleys

Although this is still a few seasons away, it is not set in stone and is completely determined on how fast fashion recovers. In the mean time though I have been thinking of what else I can do to exercise my business skills and develop my business knowledge.

My blog is to be a summary of the business workshops that I and my fellow Enterprise students will be attending over the next few months and how I can build on what I learn to further develop business ideas and structure.

There are feedback sections, so I would love to hear your comments, suggestions and ideas on ways to improve the blog, or even on your shopping experiences in the past- the good, the bad and the darn right ugly!

Enjoy reading, Faith