The magazine for SageCover members
How to keep your people protected at work
Weather the storm
Keeping cool when times are tough
Solutions autumn ’08
Meet our new franchising manager and get to know Sage 50 Accounts 2009.
Are you feeling the pinch?
New from Sage
Your business Practical, no-nonsense advice on how to prepare yourself for an economic climate change. First up, planning and forecasting…
Your people Advice and guidance on how to keep your people (and business) safe from criminal activity.
The award goes to… Meet one of the Sage businesses honoured at this year’s Queen’s Awards for Enterprise.
Your customers Personal recommendation is priceless for any SME. We talk to the businesses who’ve got their CRM sussed.
Needless to say, when the going gets tough for the UK economy, the effects are going to be felt keenly by the country’s SMEs. So what, if anything, can you do to weather the storm and keep your business in rude health? Turn to page 6 for our no‑nonsense advice. On a lighter note, we catch up with one of the winners of this year’s Queen’s Awards for Enterprise, discover what’s so good about CRM, and get an update on our latest software.
Most expensive business locations in the UK named If you were thinking of setting up shop in Milton Keynes, it might be time to reconsider, according to Alliance & Leicester’s Business Cost Monitor (BCM)
Lyndsey Hutchinson Editor, Solutions magazine firstname.lastname@example.org
Contributors Sarah Bridge Tackling a variety of business and travel stories for the Sunday Times, the Mail on Sunday and many more, Sarah Bridge looks into the importance of CRM (page 18).
Martin Allen-Smith A business and finance editor and journalist with 12 years’ experience, Martin Allen-Smith advises how you can stay prepared and even prosper in today’s economic climate (page 6).
Tech tips Got a technical problem you can’t fix? Our dedicated support team is on hand to deal with your most frequently asked questions.
Telephone: 0800 33 66 33 Email: email@example.com Sage (UK) Ltd, North Park, Newcastle Upon Tyne, NE13 9AA. Solutions is published for Sage by SPECIALIST. © Specialist Publications UK Ltd 2008. Any legal information contained in this magazine is for guidance only and does not constitute specific legal advice.
The report named the top 10 most expensive locations for businesses outside of Greater London, scoring each area according to the financial issues that impact on small businesses, from labour costs, business rates and rental values to housing costs and quality of life. Milton Keynes came top of the list thanks to average annual rental costs of £2,500 per square metre and heftier wage bills, with employees earning around £517 a week, compared to the national average of £457. More than 35 per cent of SMEs surveyed identified labour costs as their biggest financial concern, with over a quarter (27 per cent) citing business rates. Rental costs for premises or equipment concerned almost a fifth, while nine per cent of those asked cited transport costs as having the biggest impact. “The top 10 locations all have thriving, successful business communities, which means SMEs must expect to pay a premium,” says Steve Jennings, director of business banking at Alliance & Leicester Commercial Bank. “However, businesses that face high costs due to the area they’re in can save money in other ways. Reviewing outgoings is just one area where businesses can save considerable amounts of money. Look at regular costs such as utilities and bank charges and ensure you shop around for the most competitive deals. By researching the deals available and switching to a more competitive offer, businesses can save thousands of pounds each year.”
Milton Keynes (with its concrete cows, below) is the UK’s most expensive business location. Bristol (above) came in ninth
Outsourcing on the increase Top 10 Most expensive business locations
1 Milton Keynes 2 Cambridge 3 Oxford 4 Guildford 5 Edinburgh 6 Chelmsford 7 Reading 8 Stevenage 9 Bristol 10 Manchester
Industry specialist claims outsourcing is more popular than ever Project bidding website PeoplePerHour.com has claimed that increasing numbers of small businesses in the UK are using outsourcing to benefit their business. The website claims that outsourcing projects to freelancers is both cost‑effective and helps small businesses to avoid red tape. The site’s founder, Xenios Thrasyvoulou, believes that outsourcing will soon become the norm and not the exception for small businesses in the UK. “PeoplePerHour.com’s rapid growth is indicative of a wider trend,” he says. “In America, the benefits of outsourcing for small businesses have been recognised for several years… it seems inevitable that the UK will follow suit.”
autumn ’08 Solutions
Solutions autumn ’08
New from Sage
Entrepreneurs shun business accounts
Building franchise success
Over a million SMEs favour retail accounts over specialist options
Did you know that over 62 per cent of the British Franchise Association’s (BFA) members have Sage software? To help deal with issues that these franchises face, we have appointed Nigel Platt (pictured) as our new franchise manager. An employee with the company for nearly 24 years, Platt believes his background and experience as customer services manager and a key account manager will prove “invaluable” in his new role.
Research by financial comparison website moneysupermarket. com has revealed that over a million small-business owners are shunning specialist business accounts in favour of retail accounts. The latter, it says, typically offer better rates on balances and overdrafts and don’t charge transaction fees. Kevin Mountford, head of current accounts at moneysupermarket. com, says: “It’s no surprise that so many home-based small businesses are looking to the retail current account market for the best options, especially as they tend to have a better offering. The majority of sole-traders and business partners act and think like consumers and with the threat of fee-based banking coming into the retail sector, we could see a seismic change and the whole market merging into one.”
Eye on health
For more financial advice, turn to our feature on page 6
Workers reluctant to ask for free eye test
Leap in identity fraud Latest research reveals rapid rise in identity fraud cases A report by information services firm Experian has revealed a rapid rise in the growth of identity fraud. More than 6,000 people sought help from the company’s victims of fraud team during 2007, compared to 3,500 the previous year, with directors of businesses identified as those most at risk. Experian found that the typical identity fraud victim is aged between 26 and 45, a homeowner and a highincome earner. Jim Hodgkins, managing director of CreditExpert.co.uk from Experian, says: “There is no room for complacency. We all need to take active steps to protect ourselves against identity theft.” Stay protected by shredding receipts, bank statements, bills and official forms before recycling; check your credit file on a regular basis; go through your statements carefully to make sure you recognise all the
A study has revealed that over a third of UK workers are not aware of their legal eye-health rights. The research, carried out by the College of Optometrists, claims that 38 per cent of workers did not know that they can ask their employer to pay for a sight test if they use a computer screen or electronic till at work. And even those who do know about the laws are reluctant to ask. Over two-thirds of workers in the UK have never asked for an employer to pay for or provide an eye exam. A fifth said it would make them feel uncomfortable, 15 per cent said it would make them feel greedy or inappropriate, and five per cent claimed they were too afraid to ask. The study was carried out as part of the College of Optometrist’s research into eye health care.
News in brief transactions; and keep personal documents like your passport and driving licence safely stored. For further information, visit the Home Office’s Identity Theft website at www.identity-theft.org.uk
An extra four-and-a-half million parents in Britain will gain the right to request flexible working, the Department for Business, Enterprise and Regulatory Reform (BERR) has announced. This follows the publication of an independent review last May. The extensions mean that parents of children up to the age of 16 can request the right to work flexibly.
“Although some companies are aware of the benefits that Sage Accounts and Payroll software can offer, many aren’t aware of our extensive portfolio of CRM, vertical and integrated business software,” he says. “We also boast business support services, like Excel support, and can also help with things like HR advice, health and safety advice, and more. We have so much to offer the franchise community,” he continues. “We’re a member of the BFA, which further demonstrates our commitment to supporting this important and influential community.” If you are a franchise business and want to discuss your requirements, contact Nigel Platt at firstname.lastname@example.org
Sage 50 Accounts 2009 Certainty in uncertain times How’s your cash flow? Do you know who owes you money and what you owe? How long would it take you to find out? In these uncertain times, it pays dividends to get to know your business better. Sage 50 Accounts 2009 comes with a wealth of tools designed to help you stay in control and ensure you’re prepared if conditions change. Our improved dashboard let’s you see the credit position of your business in an instant – you can identify where your money is, how old your customer or supplier debt is, what’s due and what’s overdue… all in one place. The in-built diary will be like having your own personal PA, reminding you to make those follow-up calls or pay suppliers, prioritising your workload and generally being an all-round office angel. It can even integrate with Microsoft Outlook to automate diary events. Make late-payments a thing of the past – the software will let you know who’s promised payments on what day, and even send you a reminder if the money isn’t
Need more? Sage 200 is ideal if you’re outgrowing your Sage 50 software. Call 0800 33 66 33 for more information
received – and manage customer relationships using the contact database, which stores and records the names, numbers, addresses and preferred contact times and methods of each of your customers. Our new batch reporting feature will let you run off any number of reports all in one go (password protection on PDF files will help keep sensitive information under lock and key) and we’ve made bank reconciliation even easier – ‘smart totals’ allows you to see the values of highlighted transactions and our new retrospective bank reconciliation report feature will instantly give you the reconciled balance of your account. And because we understand that you haven’t got time to muddle your way through, our improved assistance and video guides will help you learn all these new features quickly. For more information, call 0800 33 66 33 or visit www.sage.co.uk/sage50accounts
Solutions AUTUMN ’08
ust as credit card companies and mortgage lenders are making it harder for consumers to borrow as freely as they could just a year or so ago, the same risk-averse approach is being taken by lenders when it comes to their business customers. For SMEs in particular, this can mean a restricted supply on forms of finance that would normally be the lifeblood of any fledgling or small-scale business. Research by the Institute of Chartered Accountants in England and Wales (ICAEW) suggests that over 25 per cent of businesses have difficulties raising finance. For highgrowth businesses the figure rises nearer to 50 per cent, and these figures are predicted to grow as lenders become increasingly choosy. It’s perhaps fair to say that SMEs always have it tough in business, but their current problems are of wider concern. They represent the backbone of the local and national business community in the UK today, generating almost 60 per cent of the UK’s economy.
Climate control When times are tough, few businesses are as exposed as SMEs. Martin Allen-Smith finds out what steps you should be taking to keep yourselves in rude health against the odds
Plan and forecast So what can small businesses do to ensure they have sufficient finance in place to survive and prosper in these challenging economic conditions? Well, first and foremost, lenders will always look more favourably upon customers who they see as comparatively low-risk. For the SME, this means careful financial planning and accurate forecasting
to demonstrate to the lender that it’s wellrun and well-prepared to face any challenges that lie ahead. Evidence that your business regularly conducts its own health check to ensure that overheads, revenues, forecasts and contingency planning are being managed effectively will also make your business a far more attractive lending proposition. Specific points that need ongoing monitoring are: maintaining cash flow levels; keeping a firm grip on credit control processes to keep debtors within manageable levels; avoiding over-reliance on small numbers of key staff; and ensuring that the business is prepared for the future with carefully considered, realistic sales projections for the year ahead. You also need to be confident that your business is aware of (and addressing) any warning signs such as: overhead costs that are increasing faster than gross profit; cash flow ‘crashes’, which mean suppliers are sometimes kept waiting to have their bills settled; or changing market conditions that might leave the business depending on a small number of customers or otherwise require the business to evolve or diversify. The health of a business will remain in the best possible condition as long as these problems are addressed at the earliest opportunity rather than ‘buried’ for another day.
Credit management Of course, tough times or not, one of the most important issues is getting paid on time for what you’re due. Late payments are still seen by some of the business world’s dinosaurs as a legitimate way of squeezing
every last drop out of their own cash flow while seemingly remaining untroubled by the problems it causes others. So what measures should you take to keep debtors under control? John Dunsmure, managing director of the British Chambers of Commerce (BCC), says: “SMEs have to be totally honest with their customers from the outset and clearly state that, as an SME, late payment or non payment could be the death knell for the business. No customer wants to put a supplier out of business and payment terms should be mutually agreed at the outset. SMEs have to concentrate on the key essentials: selling and marketing; customer service; getting paid; and not running out of money! If they do that they will have a far better chance of surviving the toughest of times.” Credit management is just one part of a comprehensive mix, however, and a holistic, closely monitored view of it all is vital. Clive Lewis, head of SME issues at the ICAEW, says: “Businesses must keep a close eye on current and future financing while credit is tight. It’s no good putting your head in the sand. There are lots of steps SME managers can take to stay in control, but the most important is to keep cash flow and financing on the agenda for every management meeting. It’s a critical area of the business and you must not let it out of your sight.”
Borrowing For SMEs who have found some of the traditional forms of borrowing suddenly closed to them, all is not lost. There is a multitude of ways in which liquidity can
“Businesses must keep a close eye on current and future financing while credit is tight. It’s no good putting your head in the sand”
AUTUMN ’08 Solutions
Solutions AUTUMN ’08
Sage 50 Accounts 2009
Case study Name: Pat Armstrong Company: Turfcare Specialists Role: Admin manager
Accurate forecasting can help you identify potential problems, prepare for worst-case scenarios and attract funding. To find out about Sage 50 Forecasting 2007, call 0800 33 66 33 or visit www.sage.co.uk
There’s never been a better time to get know your business a little bit better. Sage 50 Accounts 2009 does just that, coming packed with an array of new and improved features to help give you peace of mind in these uncertain times. Make the most of our improved dashboard, which lets you see where your money is in an instant, or use the in-built diary to help you get your working week in order. Improved bank reconciliation has got our customers talking (see case studies) and our automatic diary reminders will let you know if promised payments are not received.
For further information
To find out more, call 0800 33 66 33 or visit www.sage.co.uk/sage50accounts
How long have you been using Sage Accounts software? “In this company, since 1996.” What are your first impressions of Sage 50 Accounts 2009? “I love it! It really does the job.” What particularly do you like? “The inclusion of the diary is a brilliant idea. It allows me to show the information I want people to see [general tasks and to-do lists, using Outlook] but it gives me a degree of confidentiality. The conversations I don’t want people to see, I store in my Sage diary and block anyone else from accessing it.” What about the other improvements? “Bank reconciliation is a dream to use. And the dashboard has improved immensely. It didn’t have a lot of functionality before, so nobody was really using it. But I suspect that my MD will use it now to get snapshots of information when he needs it. He can see if payments are overdue, but he can also drill down to get more detail – he can see who’s overdue and why.” Anything else you’d like to add? “The most important thing about accounts is attention to detail. And the best thing about the new features is that these details are so easily presented.”
be maintained even if all the goodpractice measures outlined have failed to ease the day-to-day problems. For example, invoice factoring can help small businesses bridge the gap between having to pay staff/bills and receiving money from customers for goods or services provided. The factoring company will forward the funds for invoices raised (less an agreed percentage) so you don’t have to wait and wait for the money to come in. And yet bank funding – even in this difficult lending climate – should still not be overlooked, says the Association of Chartered Certified Accountants’ (ACCA) senior policy advisor Rosana Mirkovic. “Banks are by far the most common source of small business finance, and while they are tightening their lending criteria, this is the time for small businesses to pay extra attention to the way information requested by bank managers is presented.” She adds that it also pays to ensure that your own individual finances are kept in good order: “It’s also important to remember that banks will consider how personal accounts of business owners are managed, including any overdrafts and bank cards. Demonstrating good management in all financial affairs will be paramount. Accountants can help improve the credibility of any loan applications so consider consulting one as early as possible.”
Loans and grants Another option to consider is the Small Firms Loan Guarantee (SFLG), a particular form of loan available from most banks whereby businesses run by people without a business track record or security can be given a loan of up to £250,000, partially backed by a government guarantee. The bank has discretion to suggest whether the business proposition is appropriate for a SFLG loan. Government grants for businesses are also available but being able to gain access is likely to depend on your geographic location. Despite this, it is an option worth exploring and one where access may even increase in the future if the economic downturn continues. Of course, larger businesses may have the financial clout to withstand tougher times, but in other ways their size and scale can be a potential hindrance. Smaller enterprises can in fact be more adaptable as the winds of economic change blow through the business landscape. “The resilience and flexibility of small firms is one of the key factors that can help them react quickly to economic changes and which may present opportunities usually not enjoyed by larger firms,” says the ACCA’s Mirkovic. “Carefully assess any changes in the demand for your products and services and examine whether
you can change your business activities accordingly. This may mean concentrating on the more popular offerings, introducing special offers and incentives or offering extended payment terms. Make sure that you’re making the most of any market trends, such as online sales – these are still booming, so make sure that you’re not missing out.” The BCC’s Dunsmure agrees that tougher times can bring out the best in smaller
businesses: “This is the sort of climate where many SMEs respond very well. SMEs are more customer focused (they have to be), can be highly innovative and creative, responsive and flexible, and are frequently more risk-averse than larger companies.” So while it’s easy to be downbeat about what many economists are starting to recognise as a recession, a well-run, versatile and tenacious business can still prosper – no matter what your size.
Grants for small businesses are available and are an area of funding worth exploring. Grant Guide is a website containing pan-European grant information while Business Link also has a wealth of information on grants available in the UK and how you can apply for them. www.grant-guide.com www.businesslink.gov.uk If your brilliant business idea has come at the wrong time in terms of securing lending from the bank, then perhaps a ‘business angel’ could come to your rescue. The Angels Den website puts cash-hungry entrepreneurs in touch with prospective private investors looking for the next big thing. www.angelsden.co.uk
Case study Name: Zoe Minto Company: MKW Engineering Role: Accounts office manager How long have you been using Sage Accounts software? “Nine years.” What are your first impressions of Sage 50 Accounts 2009? “It looks really good, much simpler to use... we’re all looking forward to using it.” In what areas does the software excel? “The new dashboard. We didn’t really use it before but we’ll use it now – it’s much more user-friendly. And bank reconciliation is much better in terms of being able to see what hasn’t been reconciled – with the new software, you can see straight away which customers are late with payment.”
Sage 50 Intelligent Reporting 2008 Do you want to identify your most profitable customers at a glance? Would you like to see which ones give you the most business? Sage 50 Intelligent Reporting 2008 can help you do these things... and more. Over half of our customers said that using this software saved them up to five hours every month. To find out more, call 0800 33 66 33 or visit www.sage.co.uk
AUTUMN ’08 Solutions
Solutions AUTUMN ’08
And the winner is…
Safe and sound A structured approach to dealing with criminal activity not only keeps your people protected, but your business too
ith recent figures suggesting that some 30,000 small businesses have reported injury or trauma to their staff as a result of criminal activity over the past five years, experts are encouraging employers to take steps to ensure their people are safe at work. Crime prevention There are plenty of practical steps you can take to help protect your business from crime. Take a walk around your workplace and try to put yourself in the position of a criminal to see if you can identify any weak spots in your security. Ask your employees to do the same. Reduce the amount of cash you hold in the workplace or in tills by using safes – at night, leave tills empty and open. Avoid falling into predictable routines when it comes to cash delivery or collection times and routes. Ask motorcyclists to remove their helmets before entering and maintain a high level of lighting inside and outside your premises. You must also have a system in place should a major incident, like an armed robbery, happen – and make sure your people know what to do too. CCTV If you’re going to use CCTV, make sure that the system is correctly adjusted 10
The Queen’s Awards for Enterprise are the BAFTAs of business performance, garlanding the winners with global recognition of their excellence, not to mention an avalanche of favourable press coverage. Open to businesses across the UK, awards are given out for achievements in international trade, sustainable development and innovation. Andrew Stone talks to one Sage winner about being honoured with an International Trade 2008 award
and properly maintained. Check that the time and date displays are correct, that the picture is clear and that it’s covering the right area. Use highquality tapes, change them daily and use them no more than 12 times. Keep tapes for at least a month. Business watch You might also wish to link up with other businesses in the area by joining or forming a business watch scheme – this way you can share information and keep an eye out for each other. Action Against Business Crime aims to support and develop business crime partnerships in local areas. And of course, you can also liaise with local police and work with community wardens. Health & Safety Advice SageCover Extra customers can take advantage of our Health & Safety Advice service (standard). The online service gives you access to a comprehensive package of information, news, documents and guides to keep you 100 per cent updated with any changes in health and safety legislation that might affect your business.
D To find out more about SageCover Extra and inclusive Health & Safety Advice service, go to www.sage.co.uk or call us on 0800 33 66 33. For more on risk assessment, go to www.sagebusinessadvice.co.uk, choose Health & Safety Advice and log in.
Useful contacts For Action Against Business Crime, visit www.businesscrime.org.uk For general crime reduction advice, visit www.crimereduction.gov.uk For health and safety issues, visit www.hse.gov.uk
elfield earned its Queen’s Award for growing sales from £1.5m to £5.5m in just five years. They accomplished this by tirelessly seeking new business all over the world in markets including North America, Europe, Mexico and India. A small family business established in 1961, traditionally Delfield’s markets have been aerospace and defence. However, over the past 15 years, it’s developed the technology to compete in a niche global market supplying casings for X-ray scanners and nuclear imaging. The company has successfully targeted the major manufacturers outside Europe and ensures that it’s involved from concept stage through to prototype and production. It now exports practically all it produces. Peter Wakefield, the company’s managing director, believes that staying as close to its customers as possible is
the key to the company’s success. “We spent a lot of time developing new products with certain customers and distance is a challenge,” he says. “We’ve had to do a lot of travelling to stay in touch. If you don’t keep in close contact with your customers, it’s amazing what happens in your absence.” Although the company makes specialist products, it’s not immune to the march of competitors. “Global competition is pretty fierce so you do have to be competitive,” Wakefield explains. “That means being efficient in the way you work and in the way you use technology.” He’s learned a few things over the years about successful global trading too. “It helps to have a good relationship with your bank. When we started out we were paying 2.5 cents in the dollar over spot exchange rates, but by asking we got it down to 0.5 cents. That probably saves us £30-40,000 a year,” he explains. “We also started forward trading. It can help
Company: Delfield Precision Engineering MD: Peter Wakefield
Delfield’s top tips • Be as efficient as you can • Ask your bank for better terms on foreign exchange • Stay close to your customers to better meet their needs you avoid some of the day-to-day currency volatility.” Winning a Queen’s Award has had discernible benefits. “It was such a tremendous boost for the whole company,” he says. “It’s such a marvellous mark of recognition for the workforce. Everyone in the UK, all our suppliers, recognise it. The fact that it’s associated with the Queen also counts for a lot overseas. Receiving the award and meeting the Queen is such an honour. I cut my holiday a week short this year to be there, that’s how seriously I take it.” 11
AUTUMN ’08 Solutions
Solutions AUTUMN ’08
The five key bits of software you need
Read all about IT
Office productivity software – including word processing and email
According to the Institute of Directors (IoD), a small business with five employees should expect to pay between £8,000 and £10,000 for a basic IT system. This package should include a server (to provide a central storage area for all data and email), PCs, a security firewall, a laser printer, licensed software, and a service to put everything together. A complete IT solution can be bought under a leasing arrangement, which means you avoid large set-up costs and, instead, commit to a relatively small monthly payment spread over a couple of years. You’ll also need a maintenance contract. Even with a basic IT system, it’s important that the business has proper IT support for security and business continuity reasons. When considering maintenance, payas-you-go services are available, which means you don’t have to pay anything unless your system actually needs it, significantly cutting costs. Finally, to find a decent IT supplier, try asking other small businesses for a reference. And check that your supplier works to the ISO9001 quality assurance mark from the British Standards Institute. 12
Value for money
To get the best value for money, you need to consider the lifetime costs of the system, including maintenance, support, upgrades and training. When sourcing suppliers, make sure quotes include initial and ongoing costs – for instance, check to see if there are additional costs for installation and configuration. Your chosen supplier should also be able to provide details of how your future costs are likely to stack up. Get these details in writing as part of your contract. Training is not an optional extra when it comes to new systems. If your people are trained properly, your business will be more productive and the systems will run smoothly. You need to consider the training costs of the investment at an early stage and recognise the costs of taking people out of your business to put them on training courses. IT security should also be built into the project from the start. All company data should be protected and backed up. In addition, don’t neglect the physical security of your IT equipment and make sure it’s insured.
Database/spreadsheet software for payroll, accounting, sales and CRM
“According to recent research, 97 per cent of firms were confident that all software on their systems was legal, but the current UK software piracy rate is around 27 per cent”
Want a crash course in IT, from setting up to staying on the right side of the law? Antony Savvas is your guide
1 2 3 4 5
Once you’ve established the type of IT system you need, you have to decide how you’ll connect your business to the Internet, whether you need to connect a single computer or a network, and also how many email addresses you require. Most areas of the UK are now served by broadband Internet services from various providers, so serving a whole small office network from a single shared connection is possible. However, it’s worth noting that there will be some times of the day when everyone is on the network at the same time, which could slow Internet speeds, so it’s advisable to choose the highest bandwidth speed on offer for the price you’re willing to pay. Your choice of ISP (Internet service provider) will also depend on whether you want it to host your website – if you have one. If so, you have to estimate how large the site will be and how much traffic you think it will generate. Set-up and domain-name (website address) registration fees, annual fees, web space and usage charges, and support costs will also have to be considered, as will the need for a web designer/consultant to help design and maintain your site.
When you buy software you also purchase a licence to use it. Typically, this entitles you to use one copy of the software on one computer, although software providers also sell bulk licences if you’re using the package on more than one machine. Businesses should conduct a software audit to assess their compliance. You should make a list of the software you have on your computers and check to see if it’s all licensed. If you can’t find a licence, you should contact your supplier and ask them for a licensing history. You should also set up a software register to keep tabs on the software you’re using, which should also help you monitor purchases and upgrades, preempting potential licence problems.
IT advice on the web www.bnet.co.uk www.enterprisezone.org.uk www.evalu8it.com www.fsb.org.uk www.sage.co.uk www.smallbiz.uk.com
Security software to deliver anti-virus and network protection and anti-spam filtering Server software to distribute and support shared applications on the network
Storage software to keep data in a safe place, allow it to be retrieved and backed-up
Keeping track of software licences is essential to stay on the right side of the law. If your firm is using illegal unlicensed software, you face fines. Aside from the legal and financial consequences of copyright violation, other risks include lack of protection against security threats and damage to your reputation. According to recent research from the Business Software Alliance, 97 per cent of firms were confident that all software on their systems was legal, but the current UK software piracy rate is around 27 per cent. This disparity suggests a severe lack of awareness regarding the level of illegal software in the workplace. The financial risks can be serious. On average, small firms face fines of around £10,000 when caught using unlicensed software, but it can be significantly more – one business was recently fined over £90,000. If caught, you’re likely to have an injunction imposed on you to prevent further use of the unlicensed software, so you also risk losing valuable company information in that software.
As well as software compliance, you also have to make sure you comply with the Data Protection Act, which protects individuals’ private data, including customers’ details. If these details are lost or leaked to unauthorised persons, your business will face the wrath of the scarily named Information Commissioner and substantial fines. The Information Commissioner’s Office (ICO) has published a guide about a firm’s responsibilities under the Data Protection Act (check it out at www.ico. gov.uk/what_we_cover/data_protection. aspx). The bottom line is that businesses should make sure their email systems and servers are secure, and that their laptops don’t go walkies. All desktops and laptops should be password protected, and, as a result of a number of recent high-profile laptop thefts, there is now a growing expectation that laptops used out of the office should be protected with encryption software too. To underline the point, the ICO recently fined the Nationwide Building Society £1m for losing a laptop containing customer data that was not encrypted. 13
tarting a business can be like getting married. You have a rosy vision of a profitable future ahead and don’t want to think about potential pitfalls. But more than half of businesses fail within three years, so it’s important to make sure yours is sustainable. As John Wood, corporate finance partner at top 100 law firm TLT Solicitors, points out: “If you’re about to put your life savings into your business, then it’s worth thinking about the things that could go wrong.”
Business basics You’ve taken the leap and started your own business. Now comes the hard bit, says Chloe Rigby
Who are you?
The first thing you need to decide is what kind of legal entity your company will be – a sole trader or partnership, or a limited liability company. “A limited company can always go into insolvency,” says Wood. “If you’re a sole trader or a partnership you are personally liable.” If more than one person is involved in the company, a shareholder or partnership agreement could avert disaster. “What if someone dies or is incapacitated and can’t come into work?” asks Wood. “You can talk through the possible solutions and plan for those from the outset.”
A thorough business plan is essential for those looking for outside funding, but equally importantly, it also allows entrepreneurs to clarify in their own mind in what direction they’re heading. James Benson, managing director of FDUK, which supplies parttime finance directors to small and medium-sized companies, says the plan needs to cover three main areas: • The vision – what product or service
“A business plan is essential for those looking for outside funding, but it also allows entrepreneurs to clarify in their own mind what direction they’re heading in”
are you going to deliver? Who is going to buy it, and why? • How is that going to be done? Are you going to manufacture it, source it, distribute it, or all of those things? • How will this make you money? A financial forecast is at the heart of the business plan. “Think cash the whole time,” he says. “Stay flexible. Don’t buy anything that you can rent; borrow as much as you possibly can – but get good equipment so you don’t incur too many liabilities.” If you’re not sure, it’s good to ask – Benson says all companies should have a financial advisor they can call on from time to time.
Thorough market research is vital, says Business Link advisor Dave Green. While it’s important to make sure there is demand for your product or service before the business starts up, Green says you also need to “think not only about what it is the customer is going to see in terms of the product or service, but also what they see when they look at the business – from the stationery to the website and branding”.
One area that would-be entrepreneurs often don’t consider is how much they’re going
Solutions AUTUMN ’08
to charge. “If you’ve been earning £10 an hour in a job, you might think you can just go out and charge that amount in your business,” says Green. “But when you run a business, you have overheads and dead time when you’re not earning because you’re doing your admin. You have to plan to compensate yourself for that time. Chargeable time is the key, and it’s not the same as working time.” Plan to get paid as well. Set out your own standard terms and conditions where you can, and make sure any work contracts are clear on what you need to deliver before you get paid. FDUK’s Benson advises: “Make payment terms a central part of your negotiations. Make sure they’re extremely clear. And when you do make your first sale, make sure you follow up quickly and get paid.”
Contracts are essential if you plan to take on staff. TLT’s Wood says all employees must have a contract within two months of starting a job, setting out terms and conditions, job titles and pay conditions. Fail to do so and you could be in breach of employment legislation. Once again, it’s important to think of what can go wrong – that means providing a simple disciplinary policy. And from the moment you advertise for staff you must be careful not to discriminate on issues including disability, age, race or gender. Make sure you’re well briefed on any regulations that affect your industry – and get advice from the relevant professional body on how to comply. Planning might sound difficult, but at the early stage of a start-up you can uncover potential problems and find creative ways of solving them, putting your business on a solid footing for the future. And that’s got to give it a better chance of survival for the long term. 15
SPRING ‘08 Solutions
Solutions AUTUMN ’08
“Most unhappy customers don’t complain directly, but instead tell everyone they know and then take their business elsewhere. If there’s a problem, take steps to resolve it”
ow well do you treat your customers? Are you keeping up with their changing needs and interests? How can you continue to deliver value and grow at the same time? Customer satisfaction can bring your business more than just money – it can bring true ‘customer value’ and help you grow. Customer value is not about the quality or cost of your product, but lies in the heart of customer relations. Creating and maintaining good relationships is as important as your service delivery or price. It needs a continued focus and can be difficult to keep up, which is why it’s often the first thing to slip as businesses grow. Here are some ways you can fine-tune your customer value proposition.
Value added As businesses grow, customer service can be the first to suffer. Lyndsey Hutchinson looks at the importance of customer value 16
It’s good to talk Invite (and act on) customer feedback. Use it to find out what customers value about your business, product or service and identify areas where you could improve your offering. Most unhappy customers don’t complain directly, but instead tell everyone they know and then take their business elsewhere. Think about making follow-up calls or sending out satisfaction surveys. If there’s a problem, take steps to resolve it. Prompt and effective follow up means those customers are more likely to bring repeat business. Out with the old Chances are you’re doing things the same
way now as when the company was smaller. Review your processes, particularly if you feel the business isn’t giving the same level of service as it did. Not having enough people to support customers can easily lead to an overloaded staff and unhappy customers. As businesses grow, certain levels of personal service become harder to maintain so working to ensure this doesn’t happen is key to sustaining customer relationships and essential for future growth. See the bigger picture Explore new systems. Technology can play an important part in giving the level of support your customers need as you grow. Knowing more about your customers can notably distinguish you from competitors. Efficient customer management should be based on valid and up-to-date information. Anyone in direct contact with customers should not only know who they’re talking to, but have access to order details, overdue balances, previous contact, etc. Having this information to hand means you can deal with customers better, and can also assist your marketing efforts too. Turn to page 18 for more about CRM. It goes without saying that taking steps to add value to your customer relationships can bring long-term benefits. Satisfied customers typically stay with you longer, deepen their relationship with your business, and above all, are more likely to recommend your products or services to others. All of which will help you to grow your business.
So, what are we doing to improve customer experience? Listening and learning We regularly carry out focus groups to find out what our customers think about us, our software and services. We also invite customers to submit ideas for new software features and many will ‘test drive’ them before a new release. That way we can be sure we’re introducing the right features to meet changing needs. Measuring satisfaction and success We’ve recently introduced new and innovative live data streaming which processes customer feedback. After contact with us, a random sample of people is sent a short survey to ask about their customer experience. The results are regularly fed through to our management, sales and support teams, giving a quicker insight into current customer satisfaction levels. Word of mouth recommendation We also measure our ability to grow through customer recommendation. Based on their experience with us, we ask customers: how likely are you to recommend us to a friend or colleague? This gives us an indication of how well we’re doing in successfully engaging with our customers.
Solutions AUTUMN ’08
Talk the talk
Case study Name: David McPherson Company: Aegis IT Role: Founder “ACT! has fundamentally changed the way we operate as a business,” says David McPherson, founder of leading technology infrastructure experts Aegis IT. “We can do things with client information that wouldn’t have been possible before we got the software.” Although they’d been “playing around with it for a while”, the business finally invested in ACT! last February. “We soon found that it had loads of capability that we hadn’t exploited,” he says. “As a small business, it’s allowed us to empower people from within the company. The software gives us visibility, allowing us to store important data in one place, so there’s no reason for people to check up on client information all the time. We can communicate using the technology.” Perfect for a team that spends vast amounts of time out of the office and away from the meeting room. “As founder, I also tend to be engrossed in one or two of our bigger accounts, but ACT! lets me see what’s going on in all areas of the business.” The software has also put paid to the team’s “preconceived idea of CRM”. “I didn’t realise it could help with things like forecasting,” he continues, “or that it was so sales-driven. It’s allowed us to focus much more on core business… and we just wouldn’t have been able to do that before.”
People power Personal recommendation can be vital for the future success of any small business, says Sarah Bridge
hen it comes to setting up your own business, generating a positive word of mouth can be crucial. Personal recommendations are far more likely to be trusted and acted upon – indeed, research shows that 70 per cent of people choose a product or service because friends and family have recommended it. It can also be easier on the budget at a time when you’re really trying to stretch your money as far as it will go, since building good customer relationships is far less expensive than costly advertising campaigns. Jim Pople runs his own design and construction business, Pople Design Construction, and relies entirely on customers’ recommendations. It seems 18
to be working – his company is booked up until the end of the year – and Jim says that the secret is putting the customer first. “People can be quite nervous about the construction industry so we make sure we give great customer service,” he says. “We really go out of our way to make sure that the customer is happy and that way, they’re glad to recommend us.” Simon Briault of the Federation of Small Businesses agrees. “The way to get a customer to recommend you is to provide a good service at a good price and to encourage people to tell their friends,” he says. “Once word gets around, it grows exponentially – one person tells two people, they each tell two people – and then you’ve got really high visibility as a company.” Tell your friends Five years ago, Claire Brynteson set up her company buy:time which provides PA-style
help to time-stressed executives. Not having money to spend on advertising, Claire built her business up entirely through word of mouth, telling friends, former work colleagues and everyone she knew about her company. “I relied entirely on personal recommendations, which really worked because by the time people got in touch, they already knew all about me and were more likely to use the service,” she says. Buy:time now has 500 clients and is approaching half a million pounds in annual turnover. Claire makes sure she keeps track of customers by logging every single purchase and query onto a database so she can follow up on how things went and what other services might be needed further down the line. Building customer relationships is one area where SMEs can do better than larger corporations. “Small and medium-sized enterprises are
at a real advantage when it comes to building personal relationships with their customers,” says Briault. “The owner is more likely to be in touch with the customers themselves due to the size of the business, and then they’re more able to keep track of them, ask them how previous purchases went, and build up a relationship with them.” But with the widening reach of the Internet, SME owners shouldn’t feel limited to building word of mouth just around their local neighbourhood. Positive reviews on websites and forums also count as glowing recommendations. Even if the reviews are from strangers, online endorsement can really help to build a positive buzz around your product or service. “I’ve always concentrated on getting referrals from within the local region I work in,” says Pople. “But now I realise that you can actually build up word of mouth from much further afield, thanks to the Internet.”
Other ways to build word of mouth
Create a buzz on the Internet. Join forums and networking groups where your customers might be and tell them about your company. Have a feedback form on your website where people can leave comments, and set up a mailing list so people can sign up for alerts about new products and special offers.
Get your name out there in the ‘real’ world by sponsoring local sports teams, getting a stall at the village fair, letting your local newspaper know about forthcoming events, etc.
Keep track of every customer purchase and query, and ask whether they might be interested in buying from you at a future date, such as if they’re moving house or getting married. Don’t harangue people – just use the information to build up a personal relationship so you can suggest useful products when they next get in touch.
New ACT! by Sage 2009 Generate more leads, make more sales, retain more customers “ACT! has revolutionised the way small businesses build and maintain relationships,” says ACT! marketing manager, Brian Macgregor. How could 2.8 million users be wrong? With ACT! by Sage 2009 we’re going back to basics to help you work more effectively, increase productivity and better serve your customers. Alongside a host of new features, we’ve made significant enhancements to those areas you use the most. It’s now quicker and easier than ever for you to input, find, share and analyse customer information. We’ve increased integration with everyday tools like MS Outlook, Excel and Word to help you stay on top of your admin. And we’ve upped performance, so you can find, open and synchronise data quicker than before. To find out more, call 0800 33 66 33 or visit www.sage.co.uk/act. Available from 26 August 2008. 19
AUTUMN ’08 Solutions
Solutions AUTUMN ’08
Tech tips We answer some of your queries to help you get the most out of your software. This month, we take a look at the Clear Audit Trail Wizard, setting up student loans and Report Designer
1 How to Clear your audit trail
If you receive one of the following, you must set up your payroll to make student loan deductions:
U sing the Clear Audit Trail Wizard removes transactions that meet the following criteria:
• Form SL1, Start Notice, from HM Revenue & Customs (HMRC)
• Dated on or before the date specified
• Form P45, with Y in the Continue Student Loan Deductions box
• VAT reconciled, if applicable • Bank reconciled, if applicable • Sage Accounts v11 and above – if the transaction is allocated, all linked transactions must also meet the criteria
2 In the Student Loan Details section Start box, enter the date the deductions are due to start > Save details > Close Existing Employees screen
3 To confirm you have printed the recommended reports, click Next 4 Enter the date up to which you want to clear your audit trail N ote: We recommend that you clear up to a date before the start of your previous financial year. 5 To proceed, click Next, then if prompted to confirm that you want to clear your audit trail, click Yes > click Process T he Finished window appears informing you how many transactions have been removed. 6 To complete the Wizard, click Finish
To set up a student loan
S age Accounts v10 and below – for further information about clearing the audit trail, please refer to Ask Sage Article 11577.
2 Clear Audit Trail Wizard > Next
James Smith Report Designer specialist
P roviding the employees’ earnings are above the thresholds specified by HMRC, the student loan deduction calculates automatically when processing the payroll.
1 Employee > Maintain existing employees > Deduction Details tab > click required employee
1 Tools > Period End > Clear Audit Trail
Brian Windsor Accounts specialist
• Form P46, with a tick in box D, Student Loans
N ote: Clearing the audit trail cannot be reversed and you should therefore take a backup before carrying out this routine. Additionally, you may also wish to print reports – for example, the Audit Trail.
To clear the audit trail:
Liz Oldfield Payroll specialist
How to Set up a student loan in Sage Instant Payroll v11
C learing your audit trail can help to maintain the efficiency of your Sage Accounts data and also reduce the size of your backups.
• Fully paid
Meet the experts
Y ou have now cleared your audit trail up to and including the specified date.
• Form SL1
3 How to Add a sort to a report or layout W hen producing reports within Report Designer you may want to change the order information appears on the report. To add a sort to a report or layout: • Sage Instant Accounts v14 1 From the Report Designer window, open the Data menu > choose Sorts 2 From the Sorts window, click Add 3 Choose the required Table and Variable that you want to sort by and choose the order you want to sort the data in > click OK • Sage Instant Accounts v12 and below 1 From the Report Designer window, open the Format menu > choose Sorts 2 From the Sorts window, choose Add 3 From the list of Report Variables, choose the variable that you want to sort by and select the order you want to sort the data in > click OK
N ote: The Priority and Protected boxes are not available unless the employee has an Attachment of Earnings Order.
If you are amending a report that has existing sorts you can move the sorts up or down using the arrows in the Sorts window. You can also remove sorts if they are not linked to a group.
• Forms P45 and P46
Adding filters to your reports
1 When setting up the record for a new employee, from the drop-down lists, choose the relevant option
Y ou can use filters to make your reports show only the information you want to appear. For example, if you want to set up a report to only show invoices, you can do this by adding a filter. To add a filter in:
2 Employee > Maintain existing employees > Deduction Details tab > click required employee 3 In the Student Loan Details section Start box, check and if necessary amend the date the deductions are due to start > Save details > Close Existing Employees screen
• Sage Instant Accounts v14 1 Edit the required report 2 Open the Data menu > choose Filters
To check the amount of the deduction
3 Create the required filter > click OK
• Pay Employees > Maintain employees’ pay > click required employee
• Sage Instant Accounts v12 and below
The Student Loan amount appears in the right-hand pane.
2 Open the Format menu, choose Filter > click Build
For a step-by-step guide to this, please refer to Ask Sage Article 18302.
3 Create the required filter, click OK > click OK
1 Edit the required report
AUTUMN ’08 Solutions
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Sage 50 Job Costing provides true business control, analysing project costs, helping you stay on budget, tracking every job. Sage 50 Intelligent Reporting is Microsoft Excel®-based data analysis and reporting software that summarises, simplifies and presents Sage 50 Accounts information in a graphical format. Sage Instant Payroll Pay up to 10 employees at the touch of a button, with all pay, tax, NI, pensions and Year End returns calculated automatically.
Sage 50 Payroll** manages payroll tasks for companies with any number of employees. Sage 50 Payroll Bureau** Perform payroll tasks across several businesses or divisions in a batch instead of one at a time. Sage 50 HR helps manage people by recording, storing and tracking HR information in one place. Sage 50 P11D provides a convenient way to manage all employees’ taxable benefits.
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ACT! by Sage helps you to organise contact information, manage daily responsibilities and communicate with prospects and customers more effectively. For one to 10 users. Available for Windows and mobile devices. ACT! by Sage Premium is a more scalable version of ACT! optimised for up to 50 users, with up to 100,000 records, and with added workgroup functionality. Available for Windows, Web and mobile devices. Both allow you to view financial information held in your Sage 50 Accounts software.
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