Thursday, December 17, 2009

Fantasy Wardrobe - A 2009 Start-Up Story

I’m beginning a new series telling stories of commercial ventures founded in the face of the recession.

Businesses are set up by people with vision and drive, but they’re not extraordinary or superhuman and they have to contend with the same financial and domestic pressures as the rest of us. I hope these stories will inspire those who are struggling with their business or who are considering setting one up.

I’m starting with online clothing and fashion business Fantasy Wardrobe, set up by Gemma Dawson of West Yorkshire (pictured above). With experience in car sales and at a solicitors and some A levels in business management, Gemma began trading in April 2009.

She’s also the mother of a toddler and is expecting a second child in early 2010. As any parent knows, children demand bucketfuls of time and energy.

Gemma chose fashion because that is what she loves. She says passion for the product is important: “It keeps you interested, focused, and makes you want to work to make the business work.”

Starting a business requires a considerable investment of time and often money. To date Gemma’s put in £1,000 of her own and poured in a huge amount of time sourcing and researching. Where possible she's made use of free material from the internet or information from books.

As with any business, getting customers is a challenge. But Gemma's now got a steady stream of business and has more than covered her start-up costs. She started with fancy dress products but has since expanded the range.

Every new venture faces challenges. Gemma's was getting the website up and running and learning the needs of her customers. Because many of her products are inexpensive she found potential buyers were being put off by the delivery charge, so that's now been dropped.

Gemma is upbeat about the prospects for Fantasy Wardrobe in 2010. This is the first time she's run a business and she's learned a huge amount in the first few months. With strong foundations in place she's confident that the business will grow and is hoping to move into larger premises within the next 12 months.

Update November 2010: Read how Gemma's online business has changed since this original post was written.

If you've set up a business in 2008 or 2009 and have a story to share drop me a line via email or make contact via Twitter.

Andrew Knowles is a freelance writer.

Friday, December 11, 2009

Do Businesses Encourage Dangerous Practices?

Do you condone your employees breaking the law? 

And are you prepared to deal with the consequences if they're caught and convicted?

Every day thousands of employees use their mobile phones while driving. Many of them don't bother with hands-free kits and many of them are probably making work-related calls. The number of drivers using hand-held phones at the wheel is now greater than it was before it was made illegal in 2006, according to new research by the Traffic Research Laboratory.

A driver is four times more likely to be involved in an accident if they're using a mobile. This isn't just a statistic - it's a grim reality for everyone involved. Even a minor accident causes inconvenience, extra costs and potential health problems. A major incident, particularly one where someone is killed, can bring a jail sentence.

How would your business cope if a key member of staff was put out of action for a few days following a minor accident? Or if they lost their driving licence? Or in the worst case, sentenced to imprisonment. That's leaving aside all the issues raised by the Corporate Manslaughter and Corporate Homicide Act which could also see company directors implicated and convicted.

A good start is for your business to have a policy of discouraging mobile phone usage when driving. But a policy needs to be demonstrated by action. A wise employer will consistently remind staff of their obligation and will actively discourage telephone use at the wheel. They will never put their employee in a position of needing to make or take a call while driving.

It is likely that the penalties for driving and using a mobile will be increased in the future. But don't take risks now; demonstrate responsibility and take active steps to curb dangerous behaviour behind the wheel.

Wednesday, December 9, 2009

Pre-Budget Report 2009 - Initial Feedback

Now that Alistair Darling's speech is over, the response has begun.

Here's my summary of what I'm hearing from various sources:

  • It was a political speech with lots of small positives; the negatives were not spelled out in much detail, and most of the pain kicks in after the election.
  • Not a lot of real benefit for small businesses.
  • A 1% tax rise in 2011 (through National Insurance) is not good news. It's a clever ploy because it hits the employee AND the employer.
  • Concerns that public sector workers will see a decline in their future income, which will hit the economy.
  • The bankers will already be trying to find ways around the one-off levy on bonuses.
  • The Federation of Small Businesses likes some of the measures but thinks there should have been more to help business, and is unhappy with the impact of the 1% NI increase on employment.
  • The green announcements were insignificant.
  • Apparently the Chancellor's tie was a 'fair trade' garment.
The small print and fine details are available from the HM Treasury website.

Pre-Budget Report 2009 - Quick Summary

A year ago Alistair Darling, Chancellor of the Exchequer, galloped into the financial crisis on his white horse of rescue.

He slashed a corner off VAT for 13 months and unleashed a battalion of support measures for businesses and the general public.

Twelve months later it's time to start counting the cost. The white horse has been replaced by a set of scales as he begins balancing the books.

Here's a summary of today's announcements for business and employees:

  • 1% increase in National Insurance from April 2011 for everyone earning over £20k (a 0.5% increase was already scheduled).
  • VAT will return to 17.5% on 1 January 2010.
  • The Time to Pay scheme will continue as long as necessary, helping business spread tax payments.
  • Empty commercial properties will be exempt from business rates in 2010-2011.
  • Corporation tax increase of 1% small businesses is deferred, for at least one more year.
  • Measures will continue to support home-owners struggling to pay their mortgages.
  • £30m committed to help business in Teeside.
  • Every 18-24 year old is guaranteed work or training after 6 months out of work.
  • Over 50's will receive specialist support to find work.
  • It will be made easier for people to work part-time after retirement age.
  • Inflation predicted to rise to 3% in early 2010 due to the VAT increase but to fall to 1.5% by the end of the year.
  • Small business credit guarantee scheme extended for 12 months, worth £500m.
  • 100% first year capital allowances for electric vans.
  • Electric cars exempt from company tax for 5 years.
  • 50p per month levy on telephone landlines to pay for rollout of broadband.
  • New, lower 10p corporation tax rate on profits derived from patents.

Sunday, December 6, 2009

Customer Service - What's That?

True stories of poor customer service abound.

Email to customer from supplier of IT services: "We would like you to consider paying a fixed support fee of £150 per month instead of buying our services on an ad hoc basis."

Customer's reply to IT services supplier, sent one hour later: "Our records show that on average we pay less than £150 per month for your services so please explain the benefit of going to a fixed support fee."

IT services supplier's swift response to customer, sent minutes later: "We consider your response to be unreasonable. We offered you a fantastic deal and you turned it down, so our offer is now for a fee of £300 each month."

Yes, this really happened, in the course of an afternoon last week. No, the IT supplier is not a large, faceless corporation that can afford to upset people now and again. Both the customer and the supplier are small, owner-managed businesses. Needless to say, the customer is now considering sourcing an alternative support provider.

It's amazing how, even in a recession, businesses fail to understand the value of their customers or how to use communication technology effectively. In the situation I related above it's clear that the supplier wrote and sent their final message in haste and in anger.

Let this be a reminder to all of us - always pause before pressing the send button and consider how the customer will react. Because if you upset them you'll probably lose them, and if you lose too many you won't have a business at all.

A good tip to remember: use every engagement with a customer as a marketing opportunity.

Wednesday, December 2, 2009

Communicate to Succeed

Great communicators are more likely to be successful. That applies to individuals and businesses alike.

This post is prompted by an incident the other day. I won’t bore you with the details; it’s enough to say that someone used the wrong method of communication and, unsurprisingly, the message didn’t get through and the customer was upset.

We live in the communication age and we’re surrounded by an array of communication systems. I’m writing this post on a laptop in my car and even here my communication options include email, Twitter, mobile phone, and text. Not to mention good old face-to-face contact.

Despite our wealth of communication tools, or perhaps because of it, people often choose the wrong tool for the job.

So here are some tips, based on my experience, for using your communication tool box effectively.
  1. Telephone – use this for urgent messages and when you need confirmation that it's been received and understood. It’s also one of the fastest ways to get your message across because it allows dialogue.
  2. Email – great for sending messages that are not particularly time-sensitive, and it allows for lots of content where required. Ideal when you need to communicate with a large group in multiple locations.
  3. Text - invaluable for short, clear messages that you can be reasonably confident of being picked up on quickly; either one-to-one or one-to-many.
  4. Twitter - very similar to text messaging but online. But also very different from text messaging because tweets can be read by anyone if they're not direct messages or protected.
  5. Face-to-face - use this when your need to deal with complex issues or negotiation. It allows for comprehensive communication including body language and opportunities for questions and answers.
This short guide doesn't cover all communication methods or situations, but if nothing else I hope it makes you think about the tools you use and how appropriate they are to different situations.

Timeliness and complexity are two fundamental issues when choosing how to communicate. It might seem obvious but experience tells me that it's not.

Next time you need to get a message to someone, particularly a customer, make sure you're doing it in the most effective way.

Tuesday, December 1, 2009

Employ a Graduate for Free

Would your business benefit from employing a graduate for 3 months, at no cost?

That's the offer available to members of the Federation of Small Businesses (FSB), starting in early 2010. The FSB and the UK government have come up with a plan that gives 10,000 graduates a minimum of 13 weeks valuable work experience and that helps small businesses to take on extra staff at no cost. It's called internship.

What is an intern? Putting it bluntly - an intern is someone who works for nothing, or almost nothing.

More accurately, an intern is a graduate looking for work experience and willing to employ their skills for virtually no reward. In return they expect a diverse and educational experience with opportunities to learn a lot in a short time.

They're an extra pair of hands - invaluable when resources are in short supply. But they're not free labour to be exploited. Treated right they could be a huge asset to a small business and who knows where the experience might lead? According to the FSB around 25% of internships lead to a full-time job for the graduate.

The FSB expects graduates to be given a specific project; they suggest that a graphic design graduate might be asked to re-brand a business. Alternatively they could be asked to review and re-engineer a specific business process, which means they will need to get hands-on experience of how it works before recommending improvements.

If you're interested in exploring the intern programme you need to be a member of the Federation of Small Businesses and make contact with one of their regional organisers - if you're a member you might already have been contacted about the scheme.

The internship programme won't cost you anything, except some time. But you should be able to recoup that, and more, when you have a graduate working in your business.

There is one issue it's important to be aware of. Your business will be given £100 per week during the internship with the expectation that you will be paying the intern the national minimum wage for 18-21 year olds, which is £4.83 per hour. £100 equates to just over 20 hours per week, so the intern will be funded to work part-time, not full-time.

Overall the internship scheme appears to offer a good deal, although a full-time funding solution would have been better. It'll be interesting to see how it works out in practice.

Photo courtesy of Argonne National Laboratory, under a Creative Commons licence.