Government austerity measures are likely to have a severe impact on John Wilkes’ business, but he’s already planning for survival.
The biggest issue John Wilkes and his firm ANDS faces is the current cutbacks in the public sector. And while business is good at the moment, he’s well aware that now’s the time to prepare for a downturn.
ANDS offers training and recruitment services to local authorities and their providers. “We tend to work in the areas such as land maintenance, waste management, low level IT and – which is our biggest areas – parking enforcement,” explains John. “When I tell people we recruit and train traffic wardens, we’re suddenly their least popular contact. But it is a vital part of how the country works.”
John’s business model is to sign long term contracts with local councils with an agreement to recruit and train a certain number of people per year, either in one specific area or across a range of different roles. While never the staff’s employer, ANDS is also responsible for performance measurement and ensuring the staffing levels remain at the required rate. “So we may have a contract to bring eight people on board a year, but if two of those leave within that year, it’s our role to replace them.”
The actual recruitment of people is not that difficult, says John, despite the reputation of many of the roles he recruits for. “Our main purpose is more on the administration side – most of the positions require criminal record checks, and we need to be very careful that those we do hire have the right to remain and work in the country. It’s also in our best interest to ensure they are genuinely keen to do the job, because the cost of replacing people also falls to us.”
Starting up
John started ANDS with two colleagues six years ago, when the local authority he was then working for decided to outsource the operations for his business. The trio would have either been made redundant or been transferred to a new employer, so they thought that with their knowledge of how the system worked, they should form a business and bid for it themselves. “The council was initially a bit unsure about using us – we’d done a good job for it but we were a new company. And while the first contract was small, it didn’t want anything to go wrong. It took us a long time to even convince them that we should be taken seriously. Even then, we didn’t get any preferential treatment, our bid was decided on its own merits and we were up against two other providers, each of whom had far more experience.” Fortunately, John’s business won the contract, and from that moment on, events moved at a rapid pace.
“All three of us had only worked in local government for our whole lives and we didn’t have any experience of running our own business, so it was a steep learning curve!”
Each partner put in an initial £20,000 to get the business started and agreed to defer salaries for three months. “Our start up costs weren’t that high,” explains John. “We already had the first contract so we would be working on that to start with, so we needed office space, IT and some funds to pay for recruitment and training costs.”
Even though its first client was a central London council, the new company felt that there was no need to pay the high commercial rents of central London and instead took a suite in a serviced office out in the suburbs.
“Taking an office in the centre of the city would have cost us at least a thousand pounds a week,” he says. “We now don’t even pay that a month.”
Once the first contract was up and running, the main priority for the company was to bring in additional business. “This first job was a good one, but it wasn’t enough to sustain the three of us in the long term,” explains John. “But we wanted to show that we were able to do a good job so we didn’t bid for anything else for the first six months so we could build up our reputation. Our timing proved to be good, as a number of tenders came up about five months after we started. We bid for all the ones we thought we could do, which numbered about 11 different contracts, and we managed to secure two of them. We were actually quite disappointed that this was all we got, but in the event it turned out for the best – we couldn’t have coped if we had any more.”
Since then, the business has grown steadily. With each contract lasting for an average of two years, the company has picked up a net average of three a year,
and now works for eight different local authorities on 15 different projects. The three founders are still part of the business, which has hired a further six full time staff as well as a number on short term or part time contracts for busy periods or when additional specialist skills are required.
“We’re not exactly millionaires,” says John, “but we’ve done pretty well and I’m happy with the way the business has developed. We’ve built ourselves a good reputation to the extent where we are now invited to tender for projects rather than having to push ourselves in. We’ve got good relationships with most of our
clients, and also with our suppliers, such as recruitment agencies and specialist training organisations.”
Finances
ANDS launched with a basic bank account from HSBC, and has never seen a need to switch. “We don’t see a lot of different payments go through, we are not a cash business and I can do almost everything with internet banking, so the actual bank charges are fairly irrelevant to us,” explains John.
One of the issues the company does face is late payment. “We only have a few clients, so if more than one wants to wait until the new financial year before paying us, it can really knock us out – this happens more than you think, there have been a couple of years when no-one has paid us until April!” The firm has an overdraft facility with HSBC for such an eventuality, though it has also built up reserves which, says John, can fund the business outright for three months. “Wherever possible we try not to use the overdraft because it can get expensive, but it’s a good safety net for if we ever need it.
The other key area for the company is insurance. “We’re an employer, so we have to have employers’ liability insurance, and we also protect our equipment with a contents policy. But because we operate recruitment and training schemes, there is the possibility of huge legal claims – we haven’t had anything of that nature, thankfully, but we make sure we have the right insurance policies in place if ever there was a claim.
The future
Government cuts could have a major impact on ANDS, but any impact is yet to be felt. “We know that local authorities are cutting services and freezing recruitment,” says John, “so we have to prepare for that.” Because the length of the average contract is so long, the company still has plenty of business but they are keeping control of expenses and looking for new avenues. “A year or so ago, we started looking at what we could offer the private sector – perhaps recruiting and training security guards or other, similar, levels of staffing. We also don’t do a lot of training for people who are already in employment and that’s an area we should explore.
“But really it’s about keeping the contracts we have and keeping the costs down. One of our staff is due to leave just before Christmas as she is moving away from the area, and we’ve taken the decision not to replace her straight away. We’re going to batten down the hatches and ride out the storm – it’s better to survive than try too hard and lose the business.”
A new nationally operated Manufacturing Advisory Service has launched, focusing on helping small and medium sized manufacturers to grow.
The new service will be delivered by the Manufacturing Advisory Consortium (MAC) and will help create an estimated £1.5 billion in economic growth, 23,000 jobs and safeguard 50,000 jobs.
The Manufacturing Advisory Service will continue to deliver a national service to all manufacturing businesses in England but the new consortium now means that there will be a specific focus on:
- driving business growth through strategic and technical support for SMEs developing advanced manufacturing capabilities and creating high value jobs
- enabling business improvement with manufacturers operating in global supply chains; and
- linking SMEs with the apprenticeship programme delivering a minimum of 1,250 engineering and manufacturing apprenticeships annually.
Business Minister Mark Prisk said: “Manufacturing contributes half of Britain’s exports and has much higher productivity than the rest of the economy so it is essential to our plans for growth. That is why we are taking steps to ensure our industrial base is thriving as part of a strong and balanced UK economy.”
Karl Eddy, partner at Grant Thornton, said; “MAS is designed to support all manufacturers to retain employment, improve productivity and deliver significant growth to the UK economy. At its core is a passion and drive to help dynamic, innovative businesses to grow – even in a challenging economic environment. These principles are very much at the heart of the MAC consortium’s own business strategy and values. Our proven expertise in delivering advice to growing businesses combined with specialist regional, market and technical knowledge allows us to bring scale, commitment and innovation for entrepreneurship to the future of this programme. ”As the service moves to a national delivery model the consortium will continue to recognise and cater for regional needs. The service will continue to be delivered from locations across England.”
Vince Cable
Following the first round of applications to the £50m Growth and Innovation Fund, innovative proposals to deliver world class training in seven leading industries have been selected for further development.
Business planning will now get under way for a new National Skills Academy for Health, which will be led by the Skills for Health Sector Skills Council.
Plans are being developed for existing National Skills Academies to be expanded, with the National Skills Academy for Nuclear embracing nuclear manufacturing and the National Skills Academy for Creative and Cultural Skills expanding into the jewellery, design and heritage industries.
Specific projects with joint employer and public funding are being initiated to boost specialist skills in the fitness and playwork industries.
The above projects will draw on joint funding from employers and the Government, via the Skills Funding Agency.
Secretary of State for Business, Innovation and Skills, Vince Cable said:
“This Government wants business to lead the creation of a world class skills system. I’m pleased that employers have responded by coming forward with innovative ideas for the Growth and Innovation Fund. The fund will target public money, investing alongside business, to deliver workforce skills in new and creative ways.”
Meanwhile, the UK Commission for Employment and Skills is working on the detail of potential public investment in further innovative projects with sectors ranging from agriculture to energy and from hospitality to science-based industries. Further details of Growth and Innovation Fund investment in these projects will be confirmed after the summer.
Minister for Further Education, Skills and Lifelong Learning, John Hayes said:
“I first announced the Growth and Innovation fund as part of our Skills Strategy in November 2010. Since then the Government has worked with industry to build the biggest and best apprenticeships programme our country has ever seen, with a new emphasis on advanced skills and high quality training.
“I’m delighted that applicants to the Growth and Innovation Fund have submitted excellent proposals to boost their investment in apprenticeships, and to increase the use of professional standards to improve their industries’ growth prospects.”
The GIF board is led by UK Commission for Employment and Skills Chair, Charlie Mayfield.
Launching a new business is an exciting and rewarding experience, but nobody expects you to know everything about it right at the start. True, you’re expected to know your own products and services, and the market in which you’re operating. But there’s much more to it than that. If you don’t have lots of experience in running your accounts, arranging business insurance or marketing you services, for example, there are plenty of places where you can get help.
Your first start should be your local Business Link. This is a Government agency, organised regionally, that provides information and support for all small businesses – whether they are start-ups, established companies or firms looking to expand. It’s particularly strong on the administrative side of running a SME, with guidance on taxation, employment, finance and regulations. But it also has plenty of useful tips on marketing, international trade and grants, and runs local events that provide advice and networking opportunities.
The Federation of Small Businesses is a member organisation that campaigns on behalf of SMEs. It promotes the interests of small businesses in Parliament and in the media, but it also gives its members a range of benefits. Members are entitled to legal information, and can download templates of legal documents.
Members also get tax advice and there are a number of special deals you can access when it comes to banking, loans and credit cards. “Our purpose is supporting small businesses, and in addition to our lobbying work, we’re always looking for ways to give our members more help,” says a spokesman for the FSB.
It’s also worth visiting the websites of the major banks; they all offer accounts and services to small businesses, and many of them have plenty of advice to companies, which is available whether you are a customer or not. Lloyds and HSBC have two of the better websites, but most will have something of interest. Coverzones has plenty of useful and easy to understand information on specific insurance policies that small businesses need to consider, including laibility and indemnity cover.
As part of the Government’s long-term strategy to get more of its services online, there is now a wealth of useful sources of information for small businesses, many of them available through Direct.gov. The site is generally set up for individuals, so if you’re a sole trader then you can receive guidance on your rights and responsibilities, as well as information on tax and benefits. For larger companies, the taxman will be able to explain all about VAT, corporation tax, employers’ tax and the like. It’s particularly useful for companies undertaking new ventures, such as employing someone for the first time or selling products and services overseas – each of these come with potential liabilities so it’s a good place to start if you’re considering such a move.
The Department for Business, Innovation and Skills concentrates mainly on the regulatory side of running a small business. The site is currently being updated, so at the moment can be a little difficult to navigate, but if you can find it there’s plenty of help available.
You may think you know everything about a potential new business, but if you’re looking for finance, or support services, you may need to be able to prove it. Creating a business plan will help you show potential partners that you have a comprehensive and sustainable strategy for making your business work.
Building a plan can also work in your favour. Setting down your ideas and plans on paper – or, more likely nowadays, on a computer screen – can help you focus on the key issues you need to consider. It will highlight any potential weaknesses and show you areas you need to work on. This means the purpose of your plan should be twofold – firstly to show to any potential investor, lender or service provider, and reassure them that you are a serious, viable business; and secondly to provide a template for the direction of your business.
So what should a business plan contain? Experts’ views vary, but there are some core areas that must be included:
- Cashflow. Businesses run on income, so you need to set down what monies you expect to come in, and what expenditure you’re likely to incur;
- Profit and loss. If you’re a new business, you’ll need to estimate what profit you expect to make over the coming years – at least one, and usually at least three. Be realistic, it’s better to exceed expectations than underperform;
- Balance sheet. What will the business own – physical assets, such as machinery, or those less easy to quantify, such as data and goodwill, need to be valued and accounted for;
- Sales forecast. You can be as detailed or as vague as you like, but you need to be able to give people an idea of the income you expect to bring in
- Personnel. Who do you need to run the business? Even if you’re planning on being a sole trader, you may need assistance from time to time, and businesses that plan on employing staff must have a plan for their recruitment and management;
- Market report. Don’t expect everyone you come into contact with to be an expert in your sector. Put down in writing what the market is like and again be realistic – all areas are subject to challenges at some point, so it’s much better to point out potential obstacles in advance to help you plan better for the future.
Case study
Mark Milkins’ import/export company has benefitted greatly from the amount of time he spent on his business plan. “I left a shipping company to set up on my own and thought I knew everything I needed about this market,” he says, “but when I went to set up a bank account and get credit facilities, the bank basically said it wasn’t interested unless I had a business plan.”
But the hours Mark spent compiling his plan helped him identify gaps in his knowledge. “I realised I wasn’t an expert on tax, and I didn’t know enough about marketing,” he says. “So I made sure I got that knowledge before I started trading – if I hadn’t done so, I could have got myself into a lot of trouble.”
Loading ...
