A flexible office service has been launched in the UK, enabling professionals to use fully serviced workspace on a pay-as-you-go basis.

Dayoffice Card, the brainchild of former Regus sales director Matthew Stubbs, enables start-ups, SMEs, sole-traders and companies with a mobile workforce to occupy office space at more than 150 business centres across the country on a pay-as-you-go basis – keeping overheads low and productivity high.

The business enables people to buy individual days as and when they’re required, or for customers to opt for a pre-paid membership plan for a fixed number of days per month, be it two or 22.

Stubbs, managing director of Dayoffice Card, said that the business had launched at an optimum time, as financial forecasters suggest that the economy is entering credit crunch for the second time in five years.

“The past five years has seen an enormous number of start-ups launch and businesses of all sizes are examining expenditure as they undertake cost-cutting measures in order to survive the next wave. Underutilised office space represents a gulf when it comes to wasted expenditure.

“The last economic crisis led to an increase in mobile and home-based workforces as spending-savvy companies became more dependent on smartphone technology and other mobile devices

“We recognised a niche in the marketplace and Dayoffice Card was established with the aim of connecting professionals who won’t or can’t justify a full time office. Dayoffice Card is very much a cost effective solution for start-ups and SMEs that are home-based or operate a mobile workforce.  It’s especially useful for those needing a more professional environment for client meetings or to complete a project free from distraction,” he said.

Dayoffice Card already operates in London and 100 other major cities and towns including Edinburgh, Birmingham, Manchester, Leeds, Cardiff, Liverpool and Sheffield, offering prestigious addresses in the heart of each city as well as office solutions in surrounding towns and business parks.

This month’s questions were answered by experts who are part of the Aspen Waite Business Network, which is headed by Paul Waite.

 

 

 

 

 

Question:

We are a relatively new business, having traded for about 18 months. Our cashflow is good, and our income is rising. We want to look at expanding the business at the beginning of 2012, but we’re concerned about getting finance – we’ve always paid our bills on time and have a good relationship with our bank, but we’ve been warned that our credit rating isn’t good enough because we’re not established enough. Is there anything we can do to improve our standing?

Answer:

Most importantly, we can’t create a good business history where there hasn’t been a history at all. All that can be done is to minimise the impact of any other adverse factors. However, you do have some ways to improve your situation:

• Keep your bank manager in the picture, and let him have a properly prepared business plan showing performance with and without the proposed expansion, so that he is prepared for any formal request for finance, and can let you know his thoughts along the way. Avoid him getting any unpleasant surprises. Adopt a realistic approach to finance i.e make the bank managers job as easy as possible to support you.

• Build up funds so that you can put up a chunk of any expansion costs yourselves.

• Keep your credit record as clean as possible by paying on time, resolving disagreements before any possibility of Court action. Deal with any perceived risks from the business plan.

• Consider alternative sources of funding – HP or leasing of assets (even existing assets), invoice factoring, equity in own home. Be prepared to consider equity involvement from family and friends, joint ventures with customers or suppliers, business angels, etc.

• If it is clear that your bank will be unable to help when the time comes, keep your accountant in the picture and ask him for an introduction to someone that he thinks may be able to help. Be well prepared, well organized and well advised in advance of making any formal application.

• If at all possible when setting up the company create a decent amount of fixed share capital even £10k would help. If loaning money to the company consider subordinating the debt.

• Prepare full accounts with good disclosures and file the accounts quickly.

Question:

Following an extremely expensive problem with a difficult employee, who has now left the company, we’re concerned that our business can’t afford another HR nightmare. We’re a business of five people, we don’t have a personnel manager or anyone with any expertise in employment law. Can you give us some pointers on how to avoid staff issues in the future?

Answer:

The first thing is to have in place a written employment contract and a few basic
policies (disciplinary and grievance, family friendly policies) to go into a staff handbook. Employees have a legal right to written particulars but these agreements can also help protect your business. For example, it can be useful to have a contractual clause that allows you to put an employee on garden leave in the event of a dispute. It can also be beneficial for you to be able to make a payment in lieu of notice. Likewise, a written contract can include restrictions on what departing employees do next. This can be particularly important for a small business if the departing employee has a sales role or is close to your clients. Having in place post termination restrictions, in the employment contract, can deter and prevent a departing employee from not only leaving your business but taking your clients with them!

Secondly, make use of available free sources of advice. The ACAS website is a goldmine of information. It is designed for people like yourself who may not have knowledge in employment law. On their website are comprehensive guides on how to, for example, manage a situation if one of your staff is pregnant. Download and print their guides out. They are written in plain English and should be straightforward to follow. Of course, there may still be occasions when you need legal advice, but if you have a basic understanding first, then you will be asking specific questions which will save you time and money.

Finally, remember that your staff are your biggest asset. Work to engender an open, supportive culture where people feel they can voice any concerns they may have in an informal setting. Don’t be so busy running your business that you’re not available for those you rely on! Consult with your staff regularly and involve them as much as you can in decision making. For example, develop with them a mission statement for your business. This could help give them a sense that they have a say in what happens and will engender loyalty. As far as you can, confer on your staff autonomy over their work. This has been rated as more important to job satisfaction than pay. A lot of employment law is about treating people fairly. So if you treat people fairly, in an honest and consistent manner, you are likely to stay on the right side of employment law.

Question:

We’re currently trading only with UK clients, but we’ve identified a couple of markets in Eastern Europe (particularly Ukraine and Moldova, to start with). We don’t have any experience in international business – we’re concerned about not getting paid, about product liability – we manufacture materials used in the construction industry and we’re worried that something we know nothing about will come back to haunt us. Is there any advice you can give us, or are there any organisations that can help us?

Answer:

Trading overseas is an obvious and often necessary way to expand sales for any business, but many companies fail to understand that it can be very different from trading at home and that each market has its own rules and culture. As with anything, many of the potential problems are very obvious to somebody that knows the market but all too easy to fall into if you do not know they are there.

As a starting point, the British Embassy commercial section and the chambers of commerce in the target country can be good sources of information. Often there are Chambers of Commerce linking the UK to other markets as well as the local chambers in the UK and your country of interest. But do not forget to ask either your own bank or another international bank with representation in country.

The Embassy and the Chambers of Commerce should be able to help answer basic questions regarding trading terms, insurance and other such questions and can also point you in the right direction of other, more specialist help, but in reality the quality of advice can vary greatly from one place to another. Some can be very good indeed.

If the individual sales are larger in value, then using L/Cs and other forms of trade finance can greatly reduce risk but it is often advisable (although not always commercially possible) to ask for payment with order at least for the first few sales to any particular client until a track record has been established. Again, ask your bank for details of this. And do not forget the potential of currency risk – what currency will you sell in and how exposed will you be to exchange rate fluctuations? It is probable that for Ukraine and Moldova you will settle on pricing in Euros but of course this is negotiable on a client by client basis. With countries like Ukraine and Moldova (and the whole of the CIS region) the business culture is very different and it is crucial that you have a very clear understanding of what terms have been agreed. Double check that both sides mean the same thing. Communication can also be more difficult as it is the culture often to only reply when it is possible to say ‘yes’ rather than responding quickly or by a given date as is the norm in the UK. It can often be the best way forward to work with a local partner that can act as your sales agent in the new country.

In addiction to knowing the local market and other potential buyers of your products this can help with any language problems as well as helping to smooth out the communication and other cultural differences. The right agent would also be able to advise you about product liability and other issues although these emerging markets are not as litigious as the UK. It is of course crucial to work with the right agent. Construction is set to boom in all of the markets in the region as they continue to emerge and play catch-up with the west so if you get it right in these markets it can be very good. Just do not think that it will be the same as trading with the UK or indeed other more developed markets.

In lean times, businesses need to be on top of their game, but when testing the financial fitness of 155 entrepreneurs, Intuit, the makers of QuickBooks accounting software, found many in dire need of a workout.

Intuit tested entrepreneurs thinking about starting or already running a business and found many are:

• Without a plan. The golden rule of business is have a plan and yet 16 per cent of aspiring entrepreneurs and 20 per cent of existing business owners do not have a plan or expect to have one by the time they start their business. A plan helps a business stay focused; it is also necessary when applying for external funding.
• Baffled by accounting speak. Entrepreneurs aren’t always financial experts and many find even basic accounting terms confusing. Almost half (47 per cent) do not know the correct definition of gross profit and 31 per cent do not know what turnover means. 19 per cent of respondents do not know what margin means and 16 per cent do not know the correct definition of cash flow.
• Confused by compliance. Only 61 per cent are aware that the VAT threshold is £73,000 and more than one in five (23 per cent) do not know the correct definition of VAT taxable turnover. Tracking, recording and reporting VAT is one of the biggest headaches for small businesses and getting it wrong can have a negative impact on cash flow and leave a business vulnerable to a penalty from the HMRC.

“We want to help Britain’s small businesses get fighting fit,” said Pernille Bruun-Jensen, managing director at Intuit UK. “Too many businesses run out of cash, manage it badly or just don’t have the time or the skills to help themselves out of financial difficulty. In addition to accounting software which can help business owners better manage their finances, entrepreneurs need practical advice and support to feel more confident and equipped to tackle the financial challenges of starting and running a business. Over the next year Intuit will be training more than 1,000 small businesses across the UK as part of a workshop initiative backed by the Department for Business, Innovation and Skills.”

Proposals to simplify the financial and corporate reporting requirements for the smallest businesses are the subject of a discussion paper from the Department for Business, Innovation and Skills (BIS) and the Financial Reporting Council (FRC).

“Simpler Reporting for Smaller Businesses’ sets out ideas to reduce the amount of reporting micro-entities would be required to undertake. This could benefit around 5 million businesses and result in considerable cost savings in relation to the preparation of their accounts.

The paper proposes easing corporate reporting procedures so that micro-entities are only required to file a simplified Trading Statement (in place of the current Profit and Loss account), a simplified Statement of Position and a simplified Annual Return.

The paper also proposes developing an integrated software package to help small businesses prepare financial information. This could allow managers to gain a better understanding of the trends in their businesses’ performance and help them plan for the future.

The minister responsible for corporate governance, Edward Davey said: “Reducing unnecessary regulatory burdens on the smallest businesses can give them the freedom to innovate and grow – which ultimately benefits the entire economy and is absolutely central to the Coalition’s vision for Britain. A new deregulation from EU rules targeted at micro businesses means we now have a chance to deliver these benefits.

“The financial reporting regime must also serve the users of the information published by companies – whether they are customers, banks or government agencies. So we look forward to receiving responses to our proposals from a broad range of interested parties in the coming months”.

The number of new companies being set up is on the rise for a second consecutive year, up by 9.4 per cent to 396,000 over the year to March 2011, says accountants Wilkins Kennedy.

According to Wilkins Kennedy, the number of new companies setting up each year is now at its highest since before the credit crunch.

There were record falls in the number of incorporations during the recession, with the number of new companies established per year falling by 17 per cent from 450,000 in 2006/07 to 372,000 in 2007/8, followed by a drop of 11 per cent to 330,000 in 2008/9.

 

Wilkins Kennedy says that the continued improvement in business creation is partly a sign that entrepreneurs are willing to take the plunge, defying fears of a double-dip recession – although a considerable number of new companies could have been set up to achieve better tax efficiency for the business owners.

Kevin Walmsley, partner at Wilkins Kennedy, commented: “There are early encouraging signs for the UK economy, which are in line with the cautious, but more optimistic mood that we’re seeing in the business community.”

“Despite continued economic uncertainty, there seems to be a consensus now in the UK that it is time to get on with business and bring new commercial ideas to life. Every recession also presents its own opportunities.”

“Starting a new business is hugely challenging given how difficult it still is to obtain funding. The fact that there are small and medium sized businesses being established indicates that there are still entrepreneurs out there who are confident enough in their business model to launch their own company.”

“That kind of determination is impressive, and it shows that entrepreneurial spirit in the UK is alive and well. Imagine how many more start-ups the UK could have if entrepreneurs weren’t held back by the continuing lack of lending and red tape.”