“Business’s come in many shapes and forms and their success is dependent on so many things. Their beginning’s vary even more”

By Chris Copland

In this article I would like to investigate some possibilities, probabilities and prefer-abilities. that would assist business growth starting from the standpoint of a one man business start up. to a fully researched financially backed data led growth by asset acquisition.

New businesses are launching at an unprecedented rate, with approximately 660,000 new start-ups registered in the UK every year according to The Telegraph.

An estimated 60% of them fail. The reason for failure are just as varied as the reasons they started in the first place. I think there are crucial fork’s in a business decision making process that are crucial to the success or failure of the business.

Below I highlight some of these and in further articles I will delve deeper into really helpful scenarios that highlight where the (Fork) in the road to success or failure changes the direction of a company.

The Possibilities

Anyone can start a business, and it is the nature of business to create a profit. But the form the profit takes is not always clear cut. I am not going to get tangled up in the complexities surrounding all of that as the point of this article is to share my views on what would help business’s and what is hindering them.

To shorten the length of this article I will focus on specific and likely start up scenarios which facilitate explaining my points clearly but not at the exclusion of other just as worthy scenarios .

Lets take the scenario of a person with a trade or profession who at first wants to be self employed. The options open to him are:

1. To simply start keeping records of his income and expenditure as required by HM Revenue and Customs. for a (Private Unlimited Company) or Sole Trader
2. To form a legally recognized business entity e.g.; a Limited Company by Guarantee or Shares or a PLC or a Partnership with one or the other of these

Regardless of the company structure the moment it is decided to form a company in any form is when the real business responsibilities start. Many of these responsibilities are completely sensible and beneficial for your business in many different ways, Using the blatant example of “Public and Limited Liability Insurance” This is right at the top of my list of necessary requirements for any business as it covers a business for accidental damage and injury to third parties and property caused by unforeseeable event’s. it is also great “Value for Money” as it is such a widespread insurance the costs are extremely reasonable with the risks taken by the insurance companies. It is not Mandatory for sole traders working on their own. But Employers Liability Insurance is Mandatory for anyone who has employee’s regardless of company status.

I mention the above only as an example of the first in a long line of expenses that are incurred in the day to day running of a business. Taking that on board I will take it that it makes sense to anyone reading this that a business will have a long list of cost’s that will add up and contribute to the expenses of running any business.

So what can be done to nurture and encourage the creation of businesses that carry out the services required to support the huge undertaking that is the necessary for a country to sustain a thriving economy that benefit’s the people of that country and helps to distribute the wealth of a country? To understand this lets look at a Scenario that shows Forks in the road to success for the business seeker.

Probabilities (Fork One)

Firstly a business can be started with no money at all. I myself opened my first business account with the Clydesdale Bank with an account balance of Zero. I funded my first job out of my pocket and my second job with the income from the first job. This is fine for lots of small job’s. This highlights one of the first obstacles a business faces. “Cash-flow” at some point a business may get asked to do a job that the materials required cost more than you have in your pocket at this (Fork) you have a choice of four things. 1. Refuse the job (Not very good for the customer or repeat business) 2. Explain to the customer that you will need to take a deposit from them because of the cost of the materials and see if they are willing to do so. (If the customer accepts this a written contract is extremely recommended and will protect you and them in case it all goes south. Completing such a job on time and within the original price builds great confidence in customers) 3. Open a credit account with suppliers. ( This can help with cash flow but credit checks will need to be done and could effect your credit rating if payment is not made as per the terms, also Interest amounts can be high on unpaid debt) 4. Borrow the Money, a: From friend or family. b: From the bank. c: On a credit card (Payback in full and within the time.) All of the above methods can work but if something goes wrong with the job and it causes delays these can all lead to failure of the business, Failure to satisfy customer’s. Breach of contract issues. and essentially business failure.

Employees (Fork Two)

But lets say you weather the start up and teething troubles of business start up and have been able to start getting multiple jobs and there is not enough of you to go round and you need some help. You have your next (Fork) you need to employ another person. up until now most sole traders will have called on the help of a family member, friend or casual worker. but now that you have grown a little you cannot afford to let the customer’s down. (Trust me when I say that is a killer for repeat business) So you now need to address the admin required to manage an employee with an employee you fall under the umbrella of a Data processor so you will need to have measures in place relevant to being an “Employer” Although this does add to your admin burden there are lots of companies that will do bookkeeping and manage employee duties for a small fee. however managing employees can bring additional stresses on you most of which can be managed fairly well by having enough income to pay for the help required.

Premises (Fork Three)

Congratulations on getting this far. You have started a business, your doing well, you have a couple of employee’s you can trust to leave on the job without your supervision. (Trust me when you find an employee that you can do that with and they do a great job. treat them well) its worth it, in all other situations hire slow and fire fast. by now you should have drafted a conditions of service employment contract outlining both your responsibilities and that expected of your employees. (Fork Three) Fork three eventually raises it’s ugly head because the van you have been using for your business is loaded to the gunnel’s with the leftovers and materials that accumulate because many of the jobs you do change midway or require additional materials or you simply over order materials just in case you need them. and you now need … Premises your garage at home just cannot cope with the growing array of materials you have laid out good money to buy and let’s face it there is now a small fortune lying on your garage floor, and garden shed, were not even going to the spare room. OK at first a lock-up will probably suffice but security is a bit of an issue and everyone can see what you are taking in and out each time your van parks up. Even if your business is office oriented eventually the constant stream of clients can test the patience of anybody’s family.

Delegation (Fork Four)

I am not talking about telling people what to do here. I am talking about delegating everything you have been doing so far to someone else. because it’s time for (Fork Four) It is very hard for someone starting a business to do this but if done successfully it can be the difference between success and failure. Choosing when you do that is tricky but it is easy to assist that person and nurture them into the way you like things to be done. Now that you are free to really look after your business from a birds eye view you should do a S.W.A.T analysis to find out you Strengths, Weaknesses, Opportunities, and Threats. Armed with the results you can steer your business towards new opportunities and away from bad habit’s that have developed.

I would recommend a complete audit of where your money is going and where your profit’s are really coming from. Remember, Money not needing to be spent by the business leaves more money for other things including profit’s. Depending on your turnover and type of work perhaps the time is right to open up another branch of the business, buy out a competitor or buy a ready made business that can benefit and expand your own.

Preferabilities ( Now the Problems )

All of the above situations are preferable and a provide a possible path for a business. but at each of the forks there are dangerous decisions that have to be made. and this is where small growing business’s come up against the establishment. I am talking about the establishment of Property owners. In particular owners of empty business properties. Some of them may be empty due to the natural ups and downs of business ebb and flow but it is while they are empty due to major economic downturns that a lot of these owners really are unforgivable.

The problem lies in being the owner of a property that is reflected in your assets as a figure on your portfolio of assets. Prior to the Credit Crunch of 2008/9 many high streets had just a few shops empty and high streets were under attack by the out of town shopping centre’s springing up all over our country. (Just to be clear I am in favour of covered out of town shopping areas that are warm, convenient and provide a variety of shopping experiences) What I am not in favour of is the owners of the high St shops being allowed to leave them empty and prey to wilful damage and deterioration just so they can maintain a value on their balance sheet as an asset.

A case in point was my own experience where I asked an owner (Through their agent) how much it would be to rent their empty shop in the high St. The figure duly came back and was a ridiculous figure considering the condition of the shop. Undaunted I made a request to rent the shop for a period of three months (I wanted to see if the passing trade in that location increased my turnover adequately to warrant a more lengthy rental term and was totally rejected as Non Negotiable.

The reason for this is because owners of empty properties in this country enjoy the privilege of not having to pay or pay only a small proportion of Council tax for Vacant Properties. This is true of retail and commercial properties alike. and multiple properties could be made available to growing business’s many of whom in their growth cannot afford the extortionate prices held out for by people who do no actual work at all but hold the deeds of a retail or commercial property that cost’s them nothing to do nothing with and does not contribute to the local economies when (If occupied) would create workplaces, jobs and growth so that small business’s can become big business’s and contribute to the economy of the country.

copyright © 2022 Chris Copland