WinWeb

Selecting a Distribution Channel

August 9, 2010

When it comes to launching your product, selecting the right distribution channel is a critical decision that requires a lot of research. You must decide on the best way to deliver your product to consumers. If you get this crucial decision wrong, it could result in the failure of your business.

Different types of product require different methods of distribution and more than one type of selling. Push selling is the term given to selling your product through an outlet (e.g. a shop), whereas pull selling refers to the effort that you make to try and sell it, usually through marketing activities. The amount of push and pull needed will vary depending on the distribution channel you choose.

There are various factors that come into play when selecting a distribution channel. You must decide whether your product is suitable to be sold via post and consider the packaging materials that would be required if you decide to sell this way. Generally the more stages involved in your distribution process, the more sturdy (and expensive) your packaging will have to be.

You should also remember that by using some distribution channels, there will be no guarantee that you will receive quick payment. Retailers will often take 90 days or more to settle bills with suppliers, so this delay must be factored into your cashflow forecasts.

If that does not appeal to you, small stores will often stock products for no fee and then give you a share of the profit. Wholesale is also still an important channel for many products that can be bought and sold in large quantities.

For a more hands-on approach to sales, there are the traditional door-to-door and telephone selling methods. This is a hit-and-miss approach, plus it requires very strong personal sales skills. Another option is the ‘party plan selling’ method used by companies like Avon and Tupperware.

The Internet is probably the best distribution channel for many small businesses. A good website is all that is needed to build a successful company. You could also make use of Internet auction websites and sell products directly this way with a link back to your online shop.

WinWeb Pitch of the Week – Waste Notes

August 7, 2010

This week’s winner of the Pitch of the Week competition is Gordon Shaw, the founder of Waste Notes. Gordon is an entrepreneur of many talents, having previously won the Pitch of the Week with his company ‘Environmentally Friendly Solutions’.

His new venture is a way of ensuring that companies transferring waste are not breaking the law when doing so. We spoke to Gordon about his business and this is what he told us:

“We recently conducted a survey on our website that showed many SMEs in the West Midlands were unaware of their legal obligation as producers, carriers, importers, exporters, dealers, processors or brokers of controlled waste.

Controlled waste is defined as “industrial, commercial or household waste.” Waste must be managed carefully by storing it properly and transferring it only to the appropriate people.

It is important to ensure that when waste is transferred, it is accompanied with a Waste Transfer Note that sufficiently describes the nature of the waste. It must also include the relevant code from the List of Wastes (previously known as the European Waste Catalogue) in order to enable its safe recovery or disposal without harming the environment.”

Gordon provides waste transfer notepads to a large number of industries. His product allows other small businesses to stay on the right side of the law and fulfil their duty of care to others whilst also protecting the environment from further harm.

If you want your small business to be featured on our Business Blog, get a press release written for you and gain valuable Twitter publicity for your business, head to our Facebook page for all the details of our Pitch of the Week competition.

Top 5 Budgeting Tips!

August 5, 2010

It is not very difficult for a small business owner to create a budget. The difficult part is always trying to stay within that budget. Here are some tips that will help you to improve your budgeting.

Trim Expenses: You should look at ways to save money on expenses wherever possible. Only allow overtime if it is essential and if your employees have a company credit card, seriously consider getting rid of it. By cutting expenses you should be able to build a bigger money reserve in case things start to go wrong.

Create a ’slush fund’: It is vital to leave a certain portion of your budget unallocated – this is often referred to as a ’slush fund’. This money is for use in emergencies only and is often the saviour of many small businesses facing financial hardship. If you don’t spend the money, you can just add it to next year’s budget.

Monitor your budget: Don’t just create a budget at the start of the financial year and then forget about it. You will probably need to amend the budget every month based on your recent financial performance, as predicted figures are unlikely to be the same as the actual ones.

Monitor your income: If you manage to make more money than you expected in a particular month, try to be pro-active and adjust the budget appropriately instead of just sticking it in the bank. You may want to add extra funds to the slush fund or provide a boost to certain strained parts of the budget.

Don’t panic: If you realise that you have made a mistake and end up spending far more than you had planned in a certain month, try not worry too much about it. Budgeting is only an educated guess and mistakes are to be expected. Look closely at the upcoming months and try to find ways of making that money back.

Tax Consultation Begins In The UK

The UK Government launched a far-reaching consultation on tax issues last week. The Treasury is actively seeking input on tax policy from businesses, tax professionals and other interested parties. It is expected that the tax system will undergo a complete overhaul. This task will be overseen by a new Government body, The Office of Tax Simplification.

This consultation follows on from the tax changes that were announced in the Emergency Budget last month, when the Government committed to making the making the process far easier for anyone who has to pay tax. The nine announced papers want opinions on proposals regarding pension tax relief, inheritance tax and PAYE system reform, amongst other topics.

The reform of the PAYE system could potentially have the greatest impact on small businesses. It will be changed to reduce the burden on employers, who are currently responsible for deducting income tax and National Insurance Contributions. Under the proposals, tax and NIC would be deducted directly from the gross pay of employees as it enters their bank account. This could save time for many small businesses and make paying their staff less complicated.

Pension contributions will also be looked at closely. It is likely that the previous Government’s plan to lower pension tax relief for high earners will be scrapped. Instead, the pension allowance which allows pension funds to grow tax free will be reduced from a threshold of £250,000 a year to between £30-40,000.

The Government also wants far greater scrutiny into the methods that the rich are currently using to sidestep the inheritance tax laws. In particular, the practice of transferring property into trusts will be looked at more closely.

The small business community has reacted with initial cautious optimism about the proposed changes. Any changes that would simplify the PAYE system would be welcomed, but all the proposals will obviously be subject to a lengthy public consultation process before becoming law.

Financing Your Small Business

August 2, 2010

Raising enough capital to start a business venture is probably one of the hardest things you will ever have to do. Depending on the type and scale of the business you are hoping to run, there are numerous methods of generating capital that may or may not be appropriate.

A common source of finance for many businesses in the past has been to approach a bank and ask for a loan. Unfortunately, ever since the financial crisis, securing a loan for a business venture in the UK has been like trying to extract blood from a stone. If you are determined to try anyway, you will require an extremely attractive business plan to even stand a chance.

Fortunately, there are many other ways to secure business finance without saddling your new venture with large amounts of fast accumulating debt. The best way of getting the money you require is to go into business as a partnership. This will often require giving up partial control of the overall business, unless you can find a ’silent’ partner that only wishes to invest money.

Don’t overlook friends and family as a potential source of capital. Although many people are obviously concerned about damaging close relationships if the business fails, as long as the investor is fully aware of the terms and risks before parting with their money they are likely to be understanding even if things go wrong for you. However, make absolutely sure that that they are not risking money they cannot afford to lose. Once your business is a success you can pay them back and reward them handsomely for believing in you in the first place.

Venture capitalists and so-called ‘Business Angels’ may also be interested in providing capital if they see potential to make money on their investment. Try to pitch your business to as many of these as possible. If your business is an exciting prospect, you may get a number of deals on the table to choose from.

Ultimately, whatever source of finance you manage to acquire, bootstrapping your business to keep costs to absolute minimum will be the key to whether you succeed or fail. You should be looking to cut costs whenever possible and making use of the hundreds of great bootstrapping techniques that you can find online.

WinWeb Pitch of the Week – Domoticware

July 31, 2010

This week’s winner of the Pitch of the Week competition is Manoj Phatak, the founder of Domoticware S.L.U., offering innovative products to the smart building, smart applicance, smart furniture and intelligent transport sectors since 2008. He also works as a Business Analyst Instructor for many Fortune-500 companies and provides training sessions all across Europe on a subcontract basis.

Manoj’s small business is located at the European Centre for Innovative Companies in Elche, Spain. He hopes this area will come to be known as the European equivalent of California and a place where lifestyle and technology are able to co-exist profitably. We spoke to Manoj about his business inspiration and this is what he told us:

“I wanted to design products that would be innovative for customers, rather than just from an engineering perspective. How many times have you upgraded MS Office to find some ‘innovative’ feature which simply wastes more of your time?

I am an electronics / software engineer with a marketing mindset and I wanted to foster a development approach to new products that offers better traceability from requirements to design, to production and to maintenance, ensuring that quality and innovation are always terms defined by the customer.

The Spanish business climate is quite different from the northern European mindset and who you know counts for a lot more than what you know in Spain, unfortunately. Still, I consider this a business opportunity if I can capitalise on the weaknesses of my competition and launch innovative and profitable products whilst providing excellent customer service.”

Manoj Phatak, founder of Domoticware, was able to take the skills he has developed over his career and build a small business. Do you think that you might be able to do the same?

If you would like the chance to be featured on our Business Blog, have us write a press release for you and gain valuable publicity via Twitter, you can find out all the details on our Facebook Page!

John Needs Your Help!

July 30, 2010

Business blogger John Crickett writing a new book: The Big Book of Business Ideas, and needs small business input.

John needs business owners to use as case studies and to give direct advice on starting a business.

What do you have to do?

Just take a few minutes to complete his questionnaire. It will only take a few moments and will help people looking to start their own small business to learn from the successes (and failures!) of others.

What’s in it for you?

Everyone who responds (and wants to be mentioned) will be acknowledged on the book’s website, all the case studies will be published on the Business Opportunities and Ideas blog and the best ones will be written in the book – Giving you free publicity!

‘Double Dip’ Recession Fears Ease

July 29, 2010

Last week there was a lot of talk in the press voicing fears about the UK slipping into a ‘double-dip’ recession. This would involve the economy going back into recession, despite only recently having come out of it. These are commonly referred to as ‘W-shaped recessions’ because of the shape that they make when plotted on a graph.

The press mentioned numerous factors that might potentially cause the economy to slip back into recession. One of the most talked about factors was the on-going lending crisis that is denying small businesses access to finance. The Bank of England published statistics which showed that for yet another month they received more loan repayments than loan requests approved. Since the Banking Crisis in 2008, the figure has only been positive in three months.

Chancellor George Osborne and Business Secretary Vince Cable are due to publish a green paper this week looking at bank reform, in a bid to rectify this problem. However, the banks were also warning the Chancellor that if he tightens banking regulations it will result in up to £1 trillion being drained from the financial system. This is likely to knock a few percentage points off the economy and cause another recession.

The other evidence that the press were using to suggest another recession is imminent is that house prices in June fell for the first time in 15 months. The annual increase was trimmed by 0.1%, with a slump in demand and an over-saturated market being blamed. Houses prices in London suffered the biggest slump of 0.2%, with further drops predicted nationally over the second half of the year.

However, some of this fear regarding a ‘double-dip recession’ has already proved to be unfounded. Over the weekend, the Office of National Statistics revealed that UK economic output surged unexpectedly by 1.1% in the second quarter, almost twice as fast as expected. This increase in GDP has made the possibility of further recession less likely. Despite this, many experts still warn that the deep cuts planned for the public sector will prevent any further growth.

Top 5 Website Myths

Many small businesses still do not have a website or online presence of any sort. Here are some of the top excuses for not having one, along with an explanation of why the excuse is a false assumption:

Too Expensive: A common misconception is that it will cost thousands of pounds to start a business website. Unless you decide to hire a designer to work on a large customised project, you can get a website very cheaply. Templates are probably your best option if working on a low budget.

No Content: People often say that they can’t think of anything to put on their website., but this is utter nonsense. You could have pages about products and services, customer testimonial pages or perhaps gallery pages with pictures of your happy customers and employees.

Don’t Need It: Just because your competitors do not have a website, its not an excuse for you to do the same thing. If you genuinely believe that your industry has no need to incorporate modern technology, it is time for you to have a serious re-think.

SEO is Confusing: Search Engine Optimisation is not as hard as it might sound. You just need to make sure that any content you write for your website includes keywords relevant to your industry. This will ensure that when people use these terms in their content searches, your website will be included among the results.

No Time: Updating your website need not be a time-consuming process. Many people are worried that they won’t have time to update frequently. However, it is easy to start a blog and write something a few times per month. You can often schedule your posts to go out on certain days, so you can write a few and then forget about it.

Advice for Young Entrepreneurs

July 26, 2010

A growing number of businesses are being started by people under the age of twenty-five. Although it is always good to see young entrepreneurs, these people will often find it much tougher than older people who are more experienced. Luckily for them, there is a lot of help available if they require it.

One of the most prominent national programmes that aims to support struggling young entrepreneurs is run by Shell UK. The scheme, entitled Shell Livewire, provides help and assistance to entrepreneurs aged between 16 and 30. Not only does it offer a wealth of information and advice to anyone that needs it, they have given away over £3 million to aid SMEs since the scheme began in 1982. They have directly helped over 600,00 small businesses and give away £10,000 annually to the winner of their Young Business Start-Up awards.

The Prince’s Trust is a charitable organisation which provides opportunities to 14-30 year old young entrepreneurs. The trust is often the only option for those with troubled backgrounds to receive finance for their business venture. Amongst the services that the Prince’s Trust provides are low-interest loans and small grants, plus advice from mentors for the first three years of trading. Every year the trust helps around 13,000 young people to start a business and many of them have gone on to great success.

Another option for wannabe entrepreneurs is the Young Enterprise scheme. This helps young people to develop the skills that they will need to run their own business. They run summer schools all over the country that give over 1,000 14-16 year old young adults a chance to learn all about business. If you are a parent of a child in that age range you might want to consider sending them to one of these camps during the summer months – they might not thank you at the time, but they certainly will if it leads to them becoming a self-made small business millionaire!