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Free Minibook!

s s e n i Bus s l a i t n Esse

Contains free sample chapters from: • Starting a Home Business For Dummies • Small Business Marketing For Dummies • Bookkeeping For Dummies • Persuasion & Influence For Dummies • Pop Up Business For Dummies


sier! ™ a E g in th ry e v E g Makin UK Edition

Free Sample Chapter

a g n i t r Sta s s e n i s u B e m o H

Learn to:

• Get your home business up and running • Use effective marketing and promotion on a budget • Make technology and the internet work for you

Rachel Bridge Paul Edwards Sarah Edwards Peter Economy


▶ Making the move to working for yourself ▶ Starting a home-based business that lasts ▶ Discovering six financial entry plans ▶ Identifying 18 sources of start-up funds

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In This Chapter

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The ABC of Starting Your Own Business

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Chapter 3

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▶ Developing an effective business plan

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ne of the biggest obstacles facing many prospective home-based business owners is simply how to answer this important question: what are you going to live on while you get your new business off the ground? In order to ensure the long-term success of your business, you have to start with sufficient income – from whatever source – to pay your bills.

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Three out of every ten people in the UK dream of starting a business of their own. Yet most of them don’t. Why not? In many cases, it’s because they’re afraid they don’t have enough money to do it. The fact is, although certain home businesses require a significant investment in equipment and products, many home-based businesses require little or no money to start. But aside from start-up costs, you have to put in a lot of work and careful planning to build a business that can pay the bills over the long run, which is why understanding the right ways (and the wrong ways) to make the move from working for someone else to running your own business is so important.

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In this chapter, we review the steps you need to take to set up a home-based business – specifically, what you need to do before you leave your day job behind. We cover how to secure financing and where to find the money you need. We also show you how to develop an effective business plan.

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Making the Move to Running Your Home-Based Business

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Starting your own business is exciting. For those people who have spent all their working lives employed by someone else, it’s often the culmination of a dream that’s lasted for years, perhaps decades. Imagine the power and personal satisfaction you’ll feel when you realise you’re the boss and you call the shots – from setting your own work schedule, to deciding how to approach your work, to choosing your computer and office furniture. Believe us, it’s a feeling you won’t forget in a hurry.

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But there’s a right way and a wrong way to make the move. Your goal is to make sure you maintain a sufficient supply of cash to pay the start-up costs of your business while paying for the rest of your life – the mortgage or rent, the gas and electricity bills, school fees, your daughter’s karate lessons . . . the list goes on and on.

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The fact is, within the first six months of operation, few businesses – home-based or otherwise – bring in all the money necessary to get them off the ground and keep them going for a prolonged period of time. In other words, you may need a lot of cash – from your current job, your partner’s job, your savings, or loans from friends, family or a bank – to keep both your business and your personal life going until the business generates enough revenue to take over.

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Although you have to decide for yourself exactly what schedule to follow while making the move to running a home-based business, unless you’re unemployed or retired, we generally recommend that you start your business on a part-time basis while you continue to hold down your regular full-time job. Why? For a number of reasons, including the following:

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✓ You can develop and test your new business with virtually no risk – you still have your regular job to fall back on if your new business doesn’t work out (and remember, no matter how great your business idea is, there’s a chance it won’t work).

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✓ You aren’t under the intense pressure to perform and produce enough money very quickly that you’d be under if your new business were your only source of income. ✓ You can keep your established holiday pay, pension contributions and other benefits. ✓ You have a steady source of income that you can use to pay your bills while you establish your new business.

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✓ You may be able to take advantage of tax benefits, like the ability to write off business expenses against income (see Chapter 9 for more on taxes and deductions).

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✓ You have a stronger basis for obtaining bank loans and other financing for your new business.

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Indeed, so many people are choosing to start up their home-based business this way that they even have a name: the five-to-niners, describing people who do their regular nine-to-five day job and then come home to run their home-based business in their spare time at evenings and weekends.

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However, bear in mind the downsides to starting a business while continuing to hold down a full-time day job:

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✓ Doing both won’t leave much time for doing anything else – your social life will definitely suffer and your family life may too as you find that all your spare time is taken up working.

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✓ Your health may suffer if you’re constantly working at 100 per cent capacity and have no time to yourself. ✓ Once your home-based business starts making money you may need to pay for an accountant to ensure that you’re paying the right amount of tax.

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✓ Your employer may not look too kindly on the idea of you starting up a business in your spare time. Indeed, many companies have a specific policy banning employees from taking up any other trade or occupation which interferes with the performance of their duties.

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Of course, the decision is ultimately up to you. When starting a home-based business, make sure the transition fits into your schedule and your life.

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In the following sections, we take a close look at six steps you need to take before you leave your regular job to devote all your time and energy to being your own boss. We also walk through the different steps involved in the process of establishing your home-based business.

Knowing what to do before leaving your day job After you’re consistently earning enough income from your part-time homebased business to cover your bare-minimum living and business expenses,

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you’re ready to make the jump to a full-time commitment of your time and attention. Before you hand in your resignation, however, take the following six steps:

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1. If you’re a member of the company pension scheme, find out how it operates, in particular whether it’s a final salary or defined benefits scheme. Make sure you know what will happen to the pension pot you’ve accumulated after you resign. If you’re near retirement age it may make sense to time your resignation so that you maximise the benefits available to you. For example, if you’re close to retirement it might be worth waiting, especially if you’re on a final salary scheme. Ditto company share schemes – if you’re a member of one, find out if you’re able to sell your shares.

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2. Find out when you can expect to receive any bonus money or profit sharing. You may, for example, be in line to receive an annual performance bonus or profit sharing a month after the end of the company fiscal year. This information can help with the financial planning for your home-based business because it lets you know when you’ll have the money available to help you get your business off the ground.

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3. If you have medical insurance provided by your employer, have all the check-ups and routine procedures done while you’re still covered. If you want to continue having a medical insurance policy after you leave, check to see whether you can convert your group coverage to an individual policy at a favourable rate.

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4. If you own a house and you need some extra cash to help you through the transition from salaried job to running your own home-based business, consider extending the mortgage on your home or taking out a personal loan before leaving your current job. Having a pot of cash to draw upon can be invaluable during the first two years of your new business, and your chances of getting a loan approved are much greater while you’re employed in a regular job. Sadly, after you leave your job, you probably won’t qualify for a mortgage extension or personal loan until your business has been successful for at least three years. 5. Pay off as much as you can on your credit cards while you still have a steady job. You help your credit rating (a measure of how safe you are for banks to lend to you; always a good thing) and provide yourself with another source of potential funds to help finance various start-up costs (and depending on the nature of your business, you may have plenty of those). Borrowing and always paying it down to the agreed schedule helps your credit rating more than having no credit card borrowings. Check out this website for ways to boost your credit score: www.moneysaving expert.com/loans/credit-rating-credit-score#improve. 6. Take advantage of training and educational opportunities, conferences and meetings that can help your preparations or provide you with contacts who can help you in your own business. You can then hit the ground running when you decide it’s time to start your own business.

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✓ Sound management practices: Including an ability to manage projects, handle finances and communicate effectively with customers.

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✓ Planning ability: Including setting appropriate business goals and targets, and then creating plans and strategies for achieving them. If you, or the combination of you and a partner, possess all four traits, the probability of your business succeeding is much higher than if you’re missing one or more of these traits. If you’re missing any of these attributes, find people who can help you fill in the gaps.

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✓ Industry experience: Including the number of years you’ve worked in the same kind

✓ Technical support: Including your ability to seek and find help in the technical aspects of your business.

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The four key indicators of business success are:

of business you intend to start and your familiarity with suppliers and potential customers.

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All kinds of alarming statistics abound about the likely success rates of home-based businesses and start-up businesses in general – it’s estimated that 80 per cent of all new businesses in the UK fail within the first five years, for example. Scary stuff perhaps, but the good news is you have several ways of making sure that you and your business don’t end up being one of the casualties.

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Time for a flutter: The odds of success

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Don’t make your announcement or submit your resignation until you’re really ready to go. Some companies are (sometimes justifiably) paranoid about soonto-be former employees stealing ideas, proprietary data or clients and may try to speed up your exit!

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After completing these steps, you’re ready to take what may well be one of the most significant steps forward you’ll ever take in your life: starting your own home-based business.

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Understanding what you have to do to start your own home-based business In the sections that follow, we go through exactly what you need to do to start up your own home-based business. We cover these topics in much greater detail in Chapters 4, 6, 10 and 11.

Develop a business plan Despite what you may read on many small-business websites or blogs, many home-based business owners can get by without drafting a business plan. Indeed, just the thought of having to draft a 50-page tabbed and annotated business plan is enough to scare many potential home-based business owners away from their dreams. The truth is that most business owners

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today use their business plans to obtain financing from third parties, such as banks or investors, and many successful businesses – home-based or otherwise – have been started without one.

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That said, the process of drafting a business plan can be very beneficial – both to you as a business owner and to your business. Taking the time to draft a plan helps you do the right things at the right time to get your business off the ground; plus, it forces you to think through potential challenges and what you can do about them before they overwhelm you. In essence, a good business plan:

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✓ Clearly establishes your goals for the business.

✓ Analyses the feasibility of a new business and its likelihood of being profitable over the long haul.

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✓ Explores the expansion of an existing business.

✓ Defines your customers and competitors (very important people to know!) and points out your strengths and weaknesses.

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✓ Details your plans for the future.

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Even if you think your business is too small to have a business plan, the process of developing the plan for your business produces a clarity of thought that you can’t find any other way and is more than worth your time. See the ‘Putting Together a Business Plan’ section later in this chapter for more details.

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Consult outside professionals

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As a new home-based businessperson, you need to consider establishing relationships with a number of outside professionals – trained and experienced people who can help you with the aspects of your business in which you may have little or no experience. If you run into questions that you can’t easily answer yourself, don’t hesitate to call on outside professionals for help as you go through the business start-up process (and be sure to check out Chapter 10 for detailed information on this topic).

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Any professional advice you get at the beginning of your business may well save you heartache and potentially expensive extra work down the road. Here are just some of the outside professionals you may choose to consult as you start your home-based business: ✓ Solicitor. A solicitor’s services are an asset not only in the planning stages of your business, but also throughout its life. A solicitor can help you choose your legal structure, draw up incorporation or partnership

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paperwork, draft and review agreements and contracts, and provide information on your legal rights and obligations. Look for a solicitor who specialises in working with small businesses and start-ups.

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✓ Accountant. Consult an accountant to set up a good bookkeeping system for your business. Inadequate record keeping is a principal contributor to the failure of small businesses. Regardless of how boring or intimidating it may seem, make sure you understand basic accounting and the bookkeeping system or software you’re using, and don’t forget to closely review all the regularly produced financial reports that the accountant compiles for your business using your software – such as tax returns and VAT returns (and make sure you actually receive them!).

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✓ Banker. The capital requirements of a small business make establishing a good working relationship with a bank absolutely essential. They can provide you with a business account, loans and overdrafts; and a good business-focused bank can also help with more complex needs such as credit-checking services and invoice factoring. Choose a bank with a strong track record in supporting start-up businesses – bank websites give you a good idea of where their priorities lie.

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We recommend establishing a relationship with your banker before applying for a loan, not after you decide to initiate the loan process. This relationship may make the difference between getting approval for the loan you need and being turned down.

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Establishing a good relationship with your banker isn’t difficult – arrange a meeting before you apply for a loan to talk through the prospects for your business, or even invite your banker to visit and see your business in action. Make sure you’re fully prepared with any financial facts and figures to hand, and always act in a professional manner.

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✓ Business consultant. Every person has talents in many areas, but no one can be a master of everything. Consultants are available to assist in the areas where you need expert help. You can use business, management and marketing consultants; promotion experts; financial planners; and a host of other specialists to help make your business more successful. Don’t hesitate to draw on their expertise when you need it.

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✓ Insurance agent/broker: Many kinds of insurance options are available for business owners, and some are more necessary than others. An insurance agent or broker can advise you about the type and amount of coverage that’s best for you and your business. The agent may also be able to tailor a package that meets your specific needs at reasonable rates.

The relationships you establish with outside professionals during the start-up phase of your business can last for years and can be of tremendous benefit to your firm. Be sure to choose your relationships wisely. In the case of outside professionals, you often get what you pay for, so be penny-wise but don’t suffer a poor-quality outside professional simply to save a pound or two.

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Using the ‘five Cs’ to build a better banking relationship

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✓ Capital. Bankers scrutinise your net worth, the amount by which your assets exceed your debts. ✓ Conditions. Bankers are influenced by the current economic climate as well as the amount you’re asking to borrow.

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✓ Capacity. This is a prediction of your ability to repay the loan. For a new business, bankers look at the business plan. For an

✓ Collateral. Bankers generally want you to pledge an asset you can sell to pay off the loan if you lack funds.

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✓ Character. Bankers lend money to borrowers who appear honest and who have a good credit history. Before you apply for a loan, obtain a copy of your credit report and clean up any problems.

existing business, bankers consider financial statements and industry trends.

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Bankers consider the ‘five Cs’ of credit analysis, factors they look at when they evaluate a loan request. When applying to a bank for a loan, be prepared to address the following points:

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Choose the best legal structure for your business

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Most home-based businesses begin as sole traders or partnerships because they’re the easiest business structures to run and the least expensive. But as these businesses grow, many explore the transition to another kind of legal entity. Before you decide what kind of business you want yours to be, consider the pros and cons of the following legal structures:

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✓ Sole trader. A sole trader is the simplest and least regulated form of organisation. It also has minimal legal start-up costs, making it the most popular choice for new home-based businesses. As a sole trader, one person owns and operates the business and is responsible for seeking and obtaining financing. The sole proprietor (you) has total control and receives all profits, which are taxed as personal income. The major disadvantages include unlimited personal liability for the owner (if the business is sued for some reason, the owner is personally liable to pay) and the fact that it may be harder to sell a sole trader business than one set up as a limited liability company because buyers can be worried about possible undisclosed liabilities and future possible liabilities that the sole trader themselves may not be aware of at the time of selling.

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✓ Partnership. A partnership is relatively easy to form and can provide additional financial resources. Profits are taxed as personal income, and the partners are still personally liable for debts and taxes, meaning that their personal assets may be at risk if the partnership can’t satisfy creditors’ claims. A special arrangement called a limited partnership allows partners to avoid unlimited personal liability. Limited partnerships must be registered and must also pay a tax to the appropriate authorities in their

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jurisdiction. On the plus side, partnerships allow people to combine their unique talents and assets to create a whole greater than the sum of its parts. On the other hand, though, a partnership can become a nightmare when partners fail to see eye to eye or when relationships turn sour. When entering into any partnership, consult a solicitor and insist on a written agreement that clearly describes a process for dissolving the partnership as cleanly and fairly as possible if the time comes.

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✓ Limited liability company. A limited liability company can be a good choice for new start-up businesses because it’s a separate legal entity to its directors, which means although you’re responsible for the business, you won’t be liable for its debts or other liabilities if it runs into trouble. Setting up a limited company is costlier and requires more administration than registering as a sole trader, but it can be more tax-efficient because the profits belong to the company, rather than you, so you’re paid as an employee. You may also opt to become a shareholder and take dividends from the company as well.

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As you set up your new home-based business, take time to think through the ramifications of your business’s legal structure carefully. Each option has many potential advantages and disadvantages for your firm, and each can make a big difference in how you run your business. If you have any questions about which kind of legal structure is right for your business, talk to an accountant or seek advice from a solicitor who specialises in small businesses. Chapters 9 and 10 can also help you sort through the options.

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Decide on a name

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Naming your business may well be one of the most enjoyable steps in the process of starting up your own home-based business. Everyone can get in on the action: your friends, your family; even your clients-to-be.

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Consider your business name carefully – you have to live with it for a long time. The name should give people some idea of the nature of your business, project the image you want to have and be easy to visualise. Names can be simple, sophisticated or even silly. Try to pick one that can grow with your business and not limit you in the future. Think of Ocado, Opodo and Qjump and see what they conjure up in your mind. Along with a name, many businesses develop a logo, which provides a graphic symbol for the business. As with your name, your logo needs to project the image you want, so develop it carefully. Spend a few extra pounds to have a professional graphic artist design your logo for you. After you come up with a name, check the Companies House website (www. companieshouse.gov.uk) to make sure it isn’t already in use and register the name with them (see Chapter 10 for more details). Check that you can get the domain of the same name for your website, ideally with both the .com and .co.uk endings (you need both to stop anyone buying the other one).

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Part I: Getting Started with Your Home Business Take care of the red tape (and it will take care of you)

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Too many budding home-based entrepreneurs put off or ignore taking care of all the legal requirements of starting up a business. Unfortunately, ignoring the many legal requirements of going into business may put you and your business at risk.

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Getting through the maze of government regulations can certainly be one of the most confusing aspects of starting up and running a business. But even though this process can be intimidating, you have to do it – and do it correctly – because non-compliance can result in costly penalties and perhaps even the loss of your business. This step fortifies the professionalism of your business and at the same time helps you rest easy at night, knowing that you’re following the rules.

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Even very small or part-time businesses must meet certain legal requirements. For example, if you’re going to be preparing food, you may need to get a licence from your local council and arrange for their health and safety officers to inspect your kitchen to ensure that it complies with their food preparation standards.

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Adhering to regulations that apply to your business is your responsibility. Fortunately, finding out what you need to do, and when, is straightforward. The government website (www.gov.uk) covers all the legal requirements you need to adhere to, and the HM Revenue and Customs website (www.hmrc. gov.uk) spells out all the taxation requirements. Other business organisations such as the British Chambers of Commerce (www.britishchambers.org. uk) can also advise you on what you need to do. For your sake – and the sake of your business – don’t hesitate to ask for help when you need it.

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Get the insurance you need

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In today’s expensive, litigious world of business, insurance isn’t really an option – it’s essential.

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So what kinds of insurance do you need for your business? We recommend that you talk to an insurance agent to discuss your business and its needs. Some of the most common kinds of business insurance – some compulsory, some optional – include the following: ✓ Public liability insurance: Provides cover against claims arising if a customer or member of the public is injured or even killed or if their property is damaged because of your business. ✓ Employers’ liability insurance: Provides cover for claims made by an employee who’s injured at work or who becomes ill as a result of working for you. ✓ Product liability coverage: Covers liability for products manufactured or sold. ✓ Professional liability insurance: Also known as professional indemnity insurance. Protects your business against claims for damages incurred by customers as a result of your professional advice or recommendations.

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✓ Building insurance: Protects the building from damage caused by disasters such as fire or flood.

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✓ Contents insurance: Protects the contents of your business from damage, destruction, loss or theft.

✓ Vehicle insurance: Covers collision, liability and property damage for vehicles used for business.

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✓ Business interruption insurance: Covers payment of business earnings if the business is closed for an insurable cause, such as fire, flood or other natural disaster.

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A homeowner’s building and contents insurance policy isn’t usually enough for a home-based business for a couple of reasons. First, your typical homeowner’s policy provides only limited coverage for business equipment and doesn’t insure you against risks of liability or lost income. Second, your homeowner’s policy may not cover your business activities at all. If you’re going to be working from home, talk to your current home and contents insurance provider to ensure you’re adequately covered.

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Insurance is the kind of thing you don’t think about until you need it. And in the case of insurance, when you need it, chances are you really need it! Take time to set up proper coverage now.

Decide on an accounting system

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Accounting is one of those topics that makes people nervous (with visions of HMRC tax investigations dancing in their heads), but keeping the books doesn’t have to be complicated. In fact, simplicity is the key to a good system for home-based businesses. Keep in mind that your records need to be complete and up to date so that you have the information you need for business decisions and taxes.

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When you establish an accounting system, we recommend you use one of the excellent computer software programs dedicated to this purpose. You can choose to buy a software program for a one-off fee to install or download on to your computer, or you can choose to access an accounting system via a website on the Internet for which you pay an ongoing monthly fee. Increasingly, big accounting software suppliers such as QuickBooks and Sage offer both options. The benefit of an Internet-based option is that it automatically updates to reflect changes in VAT, for example, but ultimately the best option is the one you instinctively feel most comfortable using.

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The two basic bookkeeping methods are single entry and double entry. Single entry is simpler, with only one entry required per transaction. We prefer this method for most home-based businesses as the vast majority can operate very well with the single-entry system. Double entry requires two entries per transaction, and provides cross-checks and decreases errors. Consider going with a double-entry system if someone else manages your books, if you use your accounting system for inventory management or if you want more

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sophisticated reporting for analysing your business. The accounting methods you use depend on your business. You may want to talk to an accountant for help in setting up your system. Even with the support of a professional, however, you need to understand your own system thoroughly.

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Many home-based businesses can get by without detailed financial reporting or analysis – after all, if you can keep up with your bills and perhaps have a little bit of money to put away in your savings account, you must be making money, right? If you really want to understand your business’s financial situation, however, you need some basic financial reports.

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The following financial statements are the minimum necessary to understand where your business stands financially. With them in hand, you can review your business’s financial strengths and weaknesses and make accurate plans for the future.

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✓ Balance sheets show the worth of your business – the difference between its assets and its liabilities. Your balance sheet can tell you whether you’d have any cash left over if you shut down your business today, paid off all your bills and loans and liquidated your assets. ✓ Profit-and-loss (P&L) statements show you the difference between how much money your business is bringing in (revenue) and how much money it’s spending (expenses). If you’re bringing in more money than you spend, you have a profit. If you’re spending more money than you bring in, you have a loss.

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✓ Cash-flow projections tell you where your money is going and whether you’re likely to have sufficient money each month to pay your bills and operate the business. For many start-ups – especially those with employees, rent and other significant recurring expenses – a cash-flow projection is the most important financial statement of all.

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Years after starting his home-based business, author Peter still keeps a detailed cash-flow projection that shows expected revenues – by client – on a monthly basis for an entire year. By doing so, Peter can see any shortfalls that may be dangerous to his business’s financial health far in advance and he can address them before they become major problems. For many more details about these and other financial matters, including the use of financial ratios to gauge the financial health of your business and a much more in-depth look at accounting software packages, check out Chapter 6 and take a look at Bookkeeping For Dummies, 3rd Edition, by Jane Kelly, Paul Barrow and Lita Epstein, and Sage One For Dummies by Jane Kelly (both Wiley).

Develop a marketing plan If you want to be successful, you need to let potential customers know about your new business, get them in to have a look and encourage them to buy your product or service. Marketing is all of this and more. Your specific

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approach to marketing depends on your business, your finances, your potential client or customer base and your goals.

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Marketing sells your products and services, which brings in the cash you need to run your business. Marketing is so important to the survival (and success) of your business that it deserves a plan of its own. A marketing plan helps evaluate where your business currently is, where you want it to go and how you can get there. Your marketing plan should also spell out the specific strategies and costs involved in reaching your goals. You can integrate it into your business plan (if you have one) as one comprehensive section, refer to it regularly and update it as necessary.

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Seek assistance when you need it

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Successful marketing for a small or home-based business is a terrific opportunity to use your creativity and hone your business sense. For more information on marketing your home-based business check out Chapter 4.

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An almost unlimited number of organisations and agencies – private, public and not-for-profit – are ready, willing and able to help you work through the process of starting up your home-based business. Check out the websites of each of the following organisations for an incredible amount of free information and help, and remember that this list is only the beginning: ✓ UK government advice and information: www.gov.uk

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✓ British Chambers of Commerce: www.britishchambers.org.uk ✓ HM Revenue and Customs: www.hmrc.gov.uk

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✓ Enterprise Nation: www.enterprisenation.com ✓ Intellectual Property Office: www.ipo.gov.uk

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✓ Companies House: www.companieshouse.gov.uk

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Six Ways to Get the Cash Flowing Every new business starts at the beginning. No matter how much experience you have in your current job or how many other businesses you may have started in the past, when you create a new home-based business, you’re starting from scratch. In the beginning, every sale counts, and your primary goal quickly becomes building financial momentum. The faster you get the cash flowing into your new business, the sooner you can leave your nine-to-five job behind and dedicate yourself fully to your home-based business. Consider these six approaches to getting the cash flowing as you start your business: ✓ Begin part time with your new business. When you start your own business, you usually have a choice to make: keep your day job or quit. As we mention earlier in this chapter, we recommend that you keep your

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regular job for as long as you can while building your own business part time. That way you still have your regular job to fall back on if your own business fails for whatever reason in its early stages. At some point – after your own business has built up a sufficient clientele – you can leave your regular job and devote yourself fully to your home-based business.

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✓ Work part time at your old job. If you have enough work in your homebased business to keep you fairly busy, but not enough to make it your full-time vocation, consider working part time in your regular job. Depending on your particular situation, your current employer may be willing to be flexible with your schedule. For many employers, keeping a good employee part time is better than losing them altogether.

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✓ Turn your employer into your first client. If you’re really good at what you do, what better way to get your business off the ground than to do work for your current employer on a contract basis? Not only do you give your employer the benefit of your expertise while contracting with a known entity, but you also develop your business while working with people you already know, using systems and procedures you’re already familiar with.

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Take care, however, to clearly separate yourself from your former employer as an independent contractor rather than continuing to work in the role of an employee. If you don’t make this distinction clear, HMRC may decide that you’re effectively still an employee and that income tax must be deducted at source by the employer under the PAYE scheme. See Chapter 9 for a discussion on how to ensure you’re on the right side of this fine line.

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✓ Take business with you (ethically, of course!). Although stealing clients away from a previous employer is unethical (and may very well land you in court), you may be able to get your employer’s blessing if you let them know exactly what you want to do. When a company restructures they may need to divest themselves of customers or product ranges that don’t fit with their new business methods, which is where you can take over. The advantage of taking clients with you to your new business is that you maintain the strong working relationship you already have in place – which greatly benefits both your new business and your new clients.

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✓ Finance your business with start-up funds. You need money to start a business – any business. By lining up sources of start-up funds, you can ease the financial entry into owning your own home-based business. Although the list of potential sources of start-up funds is practically endless, we let you in on the best ones in the ‘Working Out Where to Get Your Start-up Funds’ section later in this chapter. ✓ Look to your spouse or significant other for support. If you have a significant other, he or she may be able to support you financially while you start your own home-based business. Although your overall income will be reduced until you’re able to crank up your sales, you have the shelter of one secure job and benefits. Such a shelter can save you a lot of sleepless nights, allowing you to focus your attention where it’s most needed – on building your business.

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Bringing a partner into your business

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✓ Fairness

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✓ Professional attitude and etiquette ✓ Personal integrity

✓ Positive attitudes about family/work priorities ✓ Good understanding of money and financial issues ✓ Timeliness and punctuality ✓ Strong work ethic ✓ Good manners and treatment of others ✓ Positive attitudes about your profession or business

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✓ Don’t go directly from stranger to business partner. That’s like getting married on the first date. Instead of telling people you’re looking for a business partner, put the word out that you’re looking for an associate to run a joint venture with. This initial joint venture should be a short-term or separate project that gives you a chance to get to know a prospective partner and see whether you have the chemistry to work well together.

✓ Honesty

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A: The best business partner is someone with whom you have a long track record of working well – someone with whom you share common goals and compatible work styles. The more experience you’ve had working together, the better. But don’t despair if you can’t find anyone from your existing pool of contacts to team up with. You can find partners by networking through professional and trade organisations, or by getting referrals from others whose judgement you value and respect. Here’s what we suggest:

✓ Strengths that complement yours

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Q: I’m looking for a business partner for my company. Do you have any suggestions on how to find one?

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✓ Ask for referrals from those in a position to know people who will meet your criteria: the officers of a trade association, the president of the chamber of commerce, the editor of the trade journal, or a valued supplier or client. You can network with such individuals online as well as in person. These days, you need not limit yourself to teaming up only with colleagues in your local area. Many people successfully use email, collaboration software, landlines and Skype to team up with associates anywhere in the country or even internationally.

As you talk with people about the possibility of collaborating on an initial venture, look for compatibility in the following areas:

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Take note of any red flags. If anything like the following comes up in initial conversations, watch out! ✓ A history of financial problems ✓ A history of combative relationships or lawsuits ✓ Soap opera tales of woe about previous partners or joint ventures ✓ Unprofessional behaviour, such as being late to meetings or frequently putting down others ✓ Unwillingness to put plans and agreements in writing When you find someone you click with, do several short-term projects or joint ventures together before committing to a formal, legal partnership. Make sure that your initial assessment is accurate and that you can, in fact, trust your partner and work well together. Head to Chapter 13 for more about finding a business partner.

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Working Out Where to Get Your Start-up Funds

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The number-one concern for most people who plan to start their own homebased businesses isn’t what kind of business to start, where to start it or how to market their products and services. It’s not who their customers will be, who their competition is or whether they should involve a partner in the business. Their number-one concern is money. More specifically, it’s where to get the money they need to start up their home-based businesses.

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Although many home-based businesses don’t need much money to get started, with cash, you can buy the things your business needs to operate, and stock up on the inventory of products you plan to sell to your customers and clients.

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But where does this initial money come from, and what are the best ways to pull together the cash you need to start up your home-based business? Here are 18 of our best suggestions:

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✓ Bartering. Although not strictly a source of cash, bartering with others – trading your products or services for theirs – can be a great way of getting the things you need to get your business off the ground. Need a computer? Well, if you’re starting a massage business in your home, you may be able to find someone who’d love to trade some massages for a second-hand computer. Craigslist (craigslist.co.uk) or Gumtree (gumtree.com) are good places to give bartering a try.

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✓ Business idea competitions. Some organisations run business idea competitions, with the prize for the winner being start-up funding to get their business off the ground. Shell Livewire (shell-livewire.org), for example, offers start-up awards of £1,000 in cash each month and £10,000 annually to young entrepreneurs aged 16–30 in the UK.

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✓ Charitable organisations. The Prince’s Trust (www.princes-trust. org.uk) offers small start-up grants and loans to unemployed young people between the ages of 18–30 as part of its Enterprise Programme. ✓ Credit cards. Home-based business owners often turn to credit cards as a source of cash for business start-ups. A word of caution: beware of high interest rates and extra fees for cash advances. If you do decide to use a credit card for your business, try to dedicate one solely to your business expenses. Doing so makes working out your taxes for the year a much easier task. ✓ Credit union loan. Because credit unions are owned by their members, they often offer better interest rates than regular banks or other financial institutions. If you belong to a credit union, try there for a loan first. Keep in mind, however, that credit unions are generally even more

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averse to risk than regular banks, so your credit has to be very strong for you to have a chance of getting the money you need.

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✓ Crowdfunding. The Internet has made it possible to raise start-up funds by equity crowdfunding: asking lots of individuals to each invest a small amount of cash – as little as £10 – in return for an equity share in your fledgling business. They (hopefully) reap the rewards when you eventually sell your business for many millions. Social media such as Facebook and Twitter has made it easy to let people know what you’re up to and how they can get involved.

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Alex Kammerling managed to raise £180,000 from 85 investors, in return for a combined 23 per cent equity stake, to fund his start-up spirits business Kamm & Sons via Crowdcube (www.crowdcube.com). Other popular crowdfunding options include Seedrs (www.seedrs.com) and Kickstarter (www.kickerstarter.com).

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Individuals who own a tiny slice of equity may feel a sense of ownership towards the business and the entitlement to ask you questions about the way it is run.

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See Crowdsourcing For Dummies by David Alan Grier (Wiley) for heaps more on crowdfunding.

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✓ Disability payment. If you’ve been granted a disability payment or insurance payout because of an on-the-job injury that prevents you from pursuing your former vocation, the cash you receive may be useful as you begin a new career – running a business from home.

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✓ Funds from investors. Many new companies rely on cash from investors to fund their start-up and initial operations. Be aware, however, that when you accept money from investors, you probably have to give them something in exchange. That something is usually equity in the company. And with equity comes the power to have a say in how the business is run. If you don’t want anyone telling you how to run your business, you may not want to use investor funds to help you start your business.

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✓ Grants. The days of government grants for start-ups are sadly long gone, but you may still find the occasional grant being offered by regional enterprise agencies and local development organisations. Check out the Business Finance and Support finder function on the government website www.gov.uk for details of any available financial assistance in your area.

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✓ Home equity line of credit. If you have a home and have built up equity in it (the value of the home being over and above what you owe for it), you may be eligible for an equity line of credit. This is similar to an extension of your mortgage, except that you only pay interest on the additional amount borrowed when you actually draw on it (you may have to pay some sort of loan origination fee to set up the line of credit). Home equity loan terms are often much longer than standard loans – up to 15 years or more.

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On the downside, you have to put your home up as security – which means that if you default on your loan, you may lose your house. You also need to secure the funding before you quit your job because the amount you can borrow is determined by your salary – and of course the assumption that you’ll be using that salary to repay the loan, so you need to be absolutely confident that you can make the monthly repayment from your home-based business after you quit your job.

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✓ Inheritance. Although an inheritance may be subject to taxation, depending on exactly how much you inherit and in what way (check with a tax adviser for all the details, and see www.hmrc.gov.uk/ rates/iht-thresholds.htm), you may still be left with a substantial amount of funds that you can use to start your new business.

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✓ Incubator programmes. Some businesses and organisations encourage start-ups within their industry by providing office space and funding for a limited period of time – typically six months to a year – in return for a stake in the fledgling business. This model is particularly likely in the new technology or bioscience sectors where the business sponsoring the entrepreneur might benefit from the innovations being developed. Telecoms firm O2 Telefonica, for example, runs the Wayra programme, in which tech start-ups are provided with free workspace, training and support at Wayra’s headquarters in London for six months in return for O2 Telefonica taking a small stake in the business. Head to www.wayra. org/en for more details.

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✓ Life insurance policies. No, we’re not suggesting bumping off your spouse! Depending on the kind of life insurance policy you have (term, cash value and so on), you may be able to cash it in or take out a loan against it. Read the fine print of your policy or consult your insurance provider to see whether you have this option.

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✓ Loans from friends and family. When aspiring home-based entrepreneurs don’t personally have the resources to finance their new business, friends and family are often the first potential sources of funding they turn to. As long as your request for a loan doesn’t cause your relationships to sour, loans from friends and family can be a great way to put together the financing you need. Be sure to treat relatives and friends as professionally as you would any business partner, using signed, written loan documents with clear terms and conditions.

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✓ Local seed-money funds. Some regional enterprise agencies offer a small amount of initial funding (seed money) to help finance new businesses in their communities. Contact your local enterprise agency – details on the National Enterprise Network website www.nationalenterprise network.org – to find out what’s available in your area.

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✓ Microloan programmes. The government provides loans to start-up businesses through its Start Up Loans programme (www.startuploans. co.uk). You must be between 18 and 30 and living in England or Northern Ireland to be eligible for a loan, which will typically be for around £2,500 depending on your business plan. The unsecured loan must be repaid within a five-year period at a fixed rate of interest, currently 6 per cent.

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✓ Personal assets. You may be able to find some of the start-up funds you need by selling some of your superfluous personal assets such as furniture, games consoles, unwanted gifts, household items and so on. Think car-boot sales, eBay, Gumtree, or the classified ads in your local paper.

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✓ Personal savings. Savings accounts are probably the first place most soon-to-be home-based business owners turn to when looking for cash to start up their new businesses. And why not? You get instant loan approval – no matter how good or bad your credit report may be – and you can’t beat the interest rate of zero per cent!

How to patent your ideas a patent attorney to do it on your behalf. Failure to use sufficiently precise wording can render a patent useless.

A: A patent provides protection for a new invention or process for up to 20 years by giving the owner the right to take legal action to stop anyone else from making or selling it without their permission. Having a patent also enables an inventor to sell or license their invention to someone else.

It can take two to three years for a patent to be granted but after your application has been filed you’re free to discuss your invention with third parties, although you must ensure you stick to only what you have filed. You’re also entitled to put the words ‘patent pending’ on your product while your application is granted, to deter would-be copycats.

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Q: I’ve invented a product and I want to take out a patent to protect it before I show it to anyone. How do I go about doing this?

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Patents are awarded by the Intellectual Property Office (www.ipo.gov.uk). Your first step should be to check that nobody has thought of your idea already, by checking their database of awarded patents. If you still think your idea is unique you can apply to the IPO for a patent by submitting a full description of your invention, including any drawings. You can do this yourself but if your idea is in any way complicated, hire

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The Intellectual Property Office produces two free booklets to help first timers called Patents: Basic Facts and Patents: Essential Reading, which you can download from its website. And check out Patents, Registered Designs, Trade Marks & Copyright For Dummies by John Grant, Charlie Ashworth and Henri Charmasson (Wiley).

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Putting Together a Business Plan

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Whether you write it on the back of a napkin or fill hundreds of pages with full-colour charts and photos of happy customers, your business plan can help you prioritise the actions you take to start up and run your business. Although today’s businesses usually put together business plans for the benefit of bank managers and potential investors, even if you’re lucky enough not to need external capital, the process of putting together a business plan for your home-based business is an education in itself – one you can’t get anywhere else.

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Even though you have some flexibility in determining the exact format of your business plan (especially when it’s an informal one for your own use), if your intent is to use the plan for securing financing from a bank or investors, they expect to see certain information presented in specific ways. These expectations allow banks and investors to make informed judgements on the viability of your business and its potential for growth and profitability.

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A formal business plan needs to contain, at the very least, the following elements:

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✓ Mission statement. Your company’s mission statement sets the tone for the business, relating it to its values and goals. Mission statements are inspiring and serve to galvanise you and any employees to work hard to attain the company’s goals. For example, authors Paul and Sarah’s mission statement is: ‘We’re authors, broadcasters and facilitators. Our mission is to explore new and better ways of living and working through the interface of nature and technology.’

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✓ Description of the company’s products and services. Here you provide a complete description of all the products and services your company presently offers and plans to offer in the future. If your home-based business specialises in producing the best wedding cakes in the UK, using the latest in confectionery technology, you’d explain that here. Be complete – leave nothing to the imagination.

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✓ Market analysis. If you’ve already put together a marketing plan for your business (see the ‘Develop a marketing plan’ section earlier in this chapter for a description of a marketing plan), you already have the material you need to fill out this part of your business plan. The market analysis takes a close look at the markets in which you intend to sell your products and services, and details the number of potential customers, the potential growth rate of the market, information about your competition and the particulars of your marketing strategies.

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✓ Financial projections. Do you plan to go from £100 a month in revenues to £100,000 a month? This part is where you present your financial projections, including revenues, expenses and profit or loss. Include the three basic financial statements – a balance sheet, a profit-and-loss (P&L) statement and a cash-flow projection – and be ready to back up your guesses and forecasts with hard data. (See the ‘Decide on an accounting system’ section earlier for more details about these financial statements.)

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✓ Management strategies for achieving company goals. You have your products and services, your marketing strategies and your financial projections. Now, exactly how do you intend to achieve your goals? This section presents the details of the strategies for accomplishing your company’s goals and lays out when and how you plan to achieve them. For example, what directors you plan to hire to help you grow the business and what their specific roles and responsibilities will be.

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Check out Business Plans For Dummies, 2nd Edition, by Paul Tiffany, Steven Peterson and Colin Barrow (Wiley), for details on writing a successful business plan.

Outsourcing your business plan

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Q: I want to start a business, but the bank needs a business plan before I can get a loan. I don’t know how to write a business plan and am not good at writing. Can I hire someone to write a business plan for me?

Our advice is to use a business plan template, perhaps provided by the bank itself, and ask a friend to help you get the wording and spelling right.

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A: You can certainly employ a professional business plan writer and you can find many advertising their services online. If you decide to go down this route, look for someone who has a general business background in the areas of accounting, bookkeeping and marketing, and familiarity with financial statements, business jargon and your local business community.

However, a business plan isn’t just to impress a bank manager; it should also reflect you and your passion for what you do. Most importantly, you need to be able to explain and discuss your business plan in detail and bring it to life. This is far harder to do if you’re reciting someone else’s words and perceptions. Also, an overly polished glossy document can give the impression that your business is all style and no substance.

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Develop the right marketing strategy for your business Attract new customers and keep them coming back Harness social media as a marketing tool Make use of a wide range of simple, effective marketing tools that suit your budget

Paul Lancaster

Free Sample Chapter


Chapter 11

In This Chapter ▶ Starting up your social media efforts ▶ Looking at the biggest social media sites

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▶ Monitoring your social media program

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▶ Becoming an active participant on social media

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Getting Interactive with Social Media

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y the end of 2012, Facebook had more than 1 billion active users. People on Twitter posted over half a billion tweets daily. Meanwhile YouTube reported that 72 hours of video were uploaded every minute. Wowza!

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Social media is where the action is. By December 2012, the Pew Internet Project (www.pewinternet.org) reported that 67 per cent of online adults use social networking sites, yet marketers – especially small business marketers – still question whether social media is the right place for their messages. The answer is a resounding ‘Yes, but’.

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✓ Yes: Social media networks are where marketers need to be, because these networks are where the majority of all consumers are. Social medis is where your customers are – or, on the slim chance your customers aren’t there, you can bet those who influence their decisions are. ✓ But: Social media can consume hours without a return on the investment if you don’t have a good marketing objective and plan. And even then, marketing participation can backfire. You absolutely have to enter social media networks with an intent to build relationships and interact with consumers, not to hawk yourself or your wares through promotional messages that intrude, annoy and harm more than they help your business and brand.

This chapter helps you manage the balancing act.

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Benefiting from Social Media Activity

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Marketers used to have debates about whether to get involved with social media. Those days are gone.

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Research by Social Media Examiner (www.socialmediaexaminer.com), the world’s largest social media online magazine, shows that nine out of ten marketers now consider social media important for generating business exposure, and that more than two out of three marketers want to know more – particularly about Facebook and blogging. Here are a few other facts about social media to get you going: ✓ It doesn’t cost much. Doing it well takes an effort, but most small businesses invest next to no money and handle social media interactions without additional staff or services.

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✓ It’s not an all-or-nothing proposition. You don’t have to start everywhere. Figure out which networks the people you want to build relationships with use and start there. You can always expand to other networks down the road.

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✓ It addresses a longstanding marketing need. For as long as people have sold goods and built reputations, they’ve sought ways to talk with those who can affect their success. This communication is what made rotary clubs, chambers of commerce, business lunch places and industry gatherings so popular. Those same motivations drive escalating interest in social media networks, which let you reach your customers where they are and when they want to receive messages.

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Getting Started in Four Necessary Steps

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To engage your business in social media, take the following four steps – if you haven’t already done so – and then dive in. After that you need to commit to a managable set of ongoing activities. The result: Greater business exposure that leads to more website traffic, more qualified leads, and improved search engine rankings. Did you just hear the door slamming on your lingering doubts?

1. Define your objectives In descending order, most small businesses say that their social media objectives are to connect with customers, enhance visibility and awareness, promote business offerings, share news quickly and stay on top of market and industry news and trends. What are your aims?

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✓ Do you want your business to become known as a trusted thought leader in your field?

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✓ Do you want to attract the attention of new customers or influencers by getting useful information in front of them? ✓ Do you want to broaden your network of contacts with others in your field?

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✓ Do you want to spark more conversation with and receive more input from customers and prospective customers?

✓ Do you want to tap into consumer conversations to find out what people are saying about your business or business sector?

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✓ Do you want to build relationships that lead to sales?

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Out-and-out selling is repellent in almost any social situation, and doubly repellent on social media. No matter how you define a successful sale – whether you’re aiming for cash register transactions, speaking engagements, press coverage, mailing list opt-ins or simply favorable impressions – don’t push. Instead, take a social and roundabout route by delivering entertaining or educational messages of value with links that people want to follow to your website and point of purchase. Inspire their interest; don’t require it. In social media, sales come as a result of achieving all your other objectives.

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2. Choose the name that you want to use across all social media networks

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If you’ve already reserved your business name as your website domain name, the logical next step is to simply use your domain name as your social media user name.

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For example, For Dummies has the domain name fordummies.com, which it presents as @fordummies on Twitter and For Dummies on Facebook and LinkedIn. Sometimes, though, using your domain name as your social media user name isn’t possible because the name is too long (Twitter restricts names to 15 characters max) or because the name is already reserved by someone else on major social media networks. If that’s the case, turn to Chapter 10 for advice on coming up with an alternate name for use on social media.

Sites such as http://checkusernames.com, http://knowem.com and http://namechk.com provide free, almost instantaneous services for checking to see whether user names are available across social media networks.

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3. Develop your social media Bio

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Everything you’ve heard about ‘social media noise’ is true. A whole lot of posting never gets through the online static. People tune out all messages except those that seem relevant to their wants and needs and those that come from sources they know and trust.

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To work your way into your users’ inner circle, introduce yourself in a way that causes people to take note and think, ‘This sounds interesting’ or, ‘This is what I’m looking for’. Follow these tips:

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✓ Create a Twitter Bio that conveys at a glance what your business does and for whom, along with what makes it trustworthy, distinct and likable (this is, after all, social media).

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✓ Twitter limits Bios to 160 characters, and that’s a good limit for descriptions on other networks as well. ✓ Include keywords – the words or terms that people use when searching for businesses like yours – so you show up in search results.

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✓ With your Bio, deliver a sense of the kind of information people can count on you to deliver, as well as the tone – whether humorous, serious, controversial, authoritative, whatever – your messages will convey. Steer clear of self-aggrandising terms like expert. Convey why you’re an expert instead, preferably in a way that makes people smile and want to find out more.

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✓ If you’re the primary player in your business, help people locate you by your personal or business name by incorporating both into your Bio. As proof it can be done, here are Twitter Bios for a couple of the marketing experts featured in sidebars throughout this book:

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@ronjdub: I do things like Knodes & Snapgoods. Doer|Thinker|Speaker. I use technology to create new possibilities and I’m a funraiser. Yes, fun.

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@JeanneBliss: Customer Crusader. President, CustomerBliss. Author, Chief Customer Officer and I Love You More Than My Dog.

Be sure that your social media Bio is an exact reflection of how you introduce your business and what customers encounter off-line as well. Consistency builds brands, and brands power success, whether with people entering your business through your front door or via your online pages. (If the term brand raises a question mark in your mind, Chapter 7 is for you.)

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4. Set up an online home base

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Social media isn’t an end unto itself. Before getting involved in social media, establish the online home base to which you’ll direct the interest your social media activity generates.

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✓ If your business doesn’t already have a website, flip to Chapter 10 for advice on building one.

✓ Turn to Chapter 17 for information about the online media centre your site should include, especially if your objective is to enhance credibility by becoming recognised as an authority in your arena.

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✓ See Chapter 12 for information on creating a blog, which most social media powerhouses consider essential to social media success. A blog can double as your website or be a page of your website. Whichever you choose, it offers a source of continuously updated content and a place for all-important customer interaction.

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Include the address for your website or blog in your social media descriptions and in content that you develop and offer through social media posts. By sharing your address, you help people reach your business online while also building relevant inbound links to your website, which help improve search engine results for your business name.

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Diving into Social Media

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If you’ve already taken the important step of reserving your user name across social media networks, then you know from looking at the hundreds of opportunities that being everywhere is impossible. (If you haven’t reserved your user name, look back at Step 2 in the preceding section for tips.)

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Narrow your options by taking one easy step: Talk with your customers and ask which networks they use. Where they are is where you need to be.

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Beyond talking with customers, go to your competitors’ websites and see which social media networks they use. Then visit their social media pages. See what kind of followings they’ve acquired and the nature of the information they share. Then consider your own target audience and marketing objectives. If you’re working to reach consumers, Facebook and Pinterest are strong choices. For business-to-business marketers, LinkedIn reigns. For general awareness development, Twitter and Pinterest are top contenders, while Facebook is great for building loyalty and customer service, and LinkedIn and Twitter help generate leads.

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Part III: Marketing in a Screen-Connected World The most prominent social media networks fall into these categories:

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✓ The big dominant social media networks: For networking, target audience interaction and Search Engine Optimisation (SEO), the three big players are Facebook, LinkedIn and Twitter. Google+ currently gets less user time and attention, but because it’s indexed by Google and interwoven into other Google products like Gmail and YouTube, it should be included in your social media activities. For retailers and restaurants, Pinterest became a mega-player in 2012, and no doubt others will emerge as well, which is why following news from sites such as www. socialmediaexaminer.com is so important. It keeps you up to date in a constantly changing online world.

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✓ Location-based check-in sites: If you find that your customers use mobile phone apps to check in and redeem purchase incentives at participating businesses, don’t miss the chance to get in on the action. Use sites like foursquare to create valuable – and free – social media visibility for your business, prompting customer visits with your own check-in incentives and reward.

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✓ Review and rating sites: TripAdvisor and industry-specific sites affect all businesses.

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The following sections describe the lay of the social media land by summarising the major categories and sites. But what you see on these pages is just the tip of the social media iceberg. For video, you have YouTube. For photography, you have Flickr and Instagram. For books, you have Goodreads. For an updated list of social media networks, go to http://traffikd.com/ social-media-websites.

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Facebook

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First a distinction: A Facebook page is different from a Facebook profile. Profiles are for people and pages are for businesses. A page gives your business presence on Facebook. It provides a place Facebook users can go to access information, news and offers from your business. Plus, when users ‘like’ your page, your updates appear in their Facebook news feeds, where they can click to interact with your business.

Seeing why businesses use Facebook Summarising from Facebook’s own site, here are seven reasons ‘why your small business needs a Facebook page’. ✓ More than half of users log in at least once a day, allowing you to maintain an interactive presence with them. ✓ By clicking ‘like’, customers can connect with your business and share their association with their Facebook friends.

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✓ Facebook pages are public (unlike personal profiles). Businesses that update their pages with new content and posts are ranked highly by search engines and enjoy improved search results.

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✓ When you post news, events, photos, or other content, your update shows in your fans’ news feeds. If they comment or click to ‘like’ your post, their update shows in their friends’ feeds. Then, if their friends also comment or click ‘like’, that’s how viral sharing gets started.

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✓ You can survey your page followers for free by using the easy Question or Poll tab.

Creating and using a Facebook page

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✓ You can promote events for free. Click the Events tab on your page to announce events, invite customers, receive RSVPs and monitor anticipated attendance.

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To create a Facebook page, log into your personal Facebook account or the Facebook account of the person who will serve as your Facebook-required ‘page administrator’. At the bottom of the home screen, click Create a Page to get started, taking two precautions: ✓ Take care with the first page-creation step, which is to choose the classification and category for your business. This step is the one part of your page that you can’t change later.

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✓ When Facebook prompts you to share the fact that you’ve created a page, hold off. Wait until your page is complete before you announce it.

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After your page has been created, you need to choose a Vanity URL. By default, your page address is a long string of impossible-to-remember characters. Go to www.facebook.com/username to register a name that features your company’s social media user name. For example, the For Dummies page is www.facebook.com/ForDummies, as you can see in Figure 11-1.

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After you’re all set up, start using your page. If you don’t do it yourself, assign someone to keep your page updated with interesting, relevant information that can engage your audience and prompt participation. And above all else, use Facebook to interact with your following. Send thank you messages to those who like your page, respond to messages and posts, survey followers and share the results and always follow up – promptly – on customer suggestions.

Twitter Twitter is a messaging tool. In short posts of 140 characters or fewer, people tell what they’re doing, what they’re reading, who they’re listening to and what they find interesting and important enough to share with others.

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Figure 11-1: Features of a Facebook business page.

Weighing the pros and cons of Twitter

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The biggest criticism of Twitter is that ‘no one cares what you had for lunch’, but Twitter posts feature a whole lot more than trivial updates. Businesses use Twitter to share news, tips and useful information. They also use it to stay on top of news and opinions in their market areas. In the process, they acquire connections and stay in touch with local or far-flung audiences.

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Just don’t try to get opportunistic on Twitter (or any other social media network, for that matter). Start spewing sales pitches and people drop your feed faster than they can finish the cup of coffee you didn’t want to read about. Instead, use your tweets to draw attention by sharing information and links to content that your followers will want to share and that – and this objective is your ultimate one – makes them think more highly of you as a valuable business resource.

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For everything you could possibly want to know about why and how to use Twitter, read the Twitter Guide Book by Mashable.com, available at http:// mashable.com/guidebook/twitter/. Mashable is the largest independent news source dedicated to covering digital culture, social media and technology. After your Twitter account is live, consider following @Mashable to stay on top of the latest news.

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Creating and using a Twitter account

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Just go to http://twitter.com/signup, register your user name, fill in the required information and you’re ready to start posting messages, or tweeting. That’s it. Then, anyone who wants to can follow and read your tweets – with no requests or acceptances required – and you can follow others just as easily.

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To find Twitter users to follow, use the search function on your Twitter home page to locate friends, business associates, local and industry media outlets, customers, suppliers, businesses you use or admire, people of influence in your world and anyone who sounds interesting. When you find accounts full of interesting tweets, click Follow to add their posts to your Twitter feed.

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Beyond following interesting people on Twitter, click on their accounts to see which accounts they follow. When you see an interesting account, click to follow it as well. After that, you need to get involved. Start reading what’s called your tweets timeline, where posts from everyone you follow show up. Pay attention to how people word their messages. Click the links in their tweets to view the content they’re tweeting. Check on the keyword or topic hashtags (words preceded by a #) they use to see conversations in areas that interest you.

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As you start posting your own tweets, go to the ‘Twitter Help Center’ at http://support.twitter.com and click Twitter Basics for all kinds of useful information. Among the tips:

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✓ Make sure that you appear in Twitter Search by completing your description, including your user name, full name and bio, using keywords that you want associated with your account.

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✓ Tweet, retweet, reply and mention others to keep active in search results.

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• To tweet, just type a message into the ‘Compose new Tweet’ box and hit return.

• To retweet, hover your mouse beneath a message and click Retweet. The post appears with the author’s name and user name and is followed by a retweet icon alongside your user name. As an alternative, you can hover over the message, click Reply and then paste in the message you’re retweeting. Consider adding RT at the beginning of the tweet to indicate a retweet. Also consider adding a few words of comment to add value to the message. • To mention others, use their user names preceded by the @ sign. Mentions of others can help your message gain visibility, prompt conversations, get shared and gain replies – sometimes even from celebrities.

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✓ Keep tweets under the 140-character limit. When you’re composing a message, Twitter shows the character count, but don’t take it to the limit. Keep posts under 120 characters because when people retweet, ‘RT @yourusername’ gets added to the tweet, eating up the characters you left unused.

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✓ Include links to useful content. To shorten long links so they don’t consume tweet characters, use an URL shortener such as bit.ly or let Twitter shorten the link for you. Just paste the link into your tweet and a message box pops up that reads, ‘Link will appear shortened’. Then, in your message, give a good reason to click on the link; for instance, ‘3 great Twitter tips’, or, ‘Our newest customer survey results’.

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✓ Get familiar with Twitter third-party apps like HootSuite. You can organise followers into groups, schedule messages and manage multiple Twitter profiles on the go from your mobile device without using a web interface.

LinkedIn

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✓ Explore Twitter’s advanced features. After you’re familiar with the basics, use the Twitter help area to explore how and why to tweet images and videos; connect Twitter to your blog, website or Facebook page; and develop your Twitter following and community.

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LinkedIn (www.linkedin.com) is the world’s largest professional network with over 200 million users. If you use business cards, Rolodex files and networking opportunities, you’vea basic understanding of how LinkedIn works. It helps you exchange knowledge, ideas and opportunities with your contacts and those they’re connected to.

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You can set up a LinkedIn profile for free. What’s more, LinkedIn profiles rise to the top of search results for your name, allowing you to control the information others see about you. To get started, go to http://learn. linkedin.com.

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Viveka von Rosen knows how to use LinkedIn. Named one of Forbes’s Top Ten Women in Social Media, she’s not associated with LinkedIn but is a top trainer and consultant to those who leverage LinkedIn for personal and business success. You can benefit from her expertise by following the advice and using the checklist that appears in Tips for Becoming Successful on LinkedIn, which you can find at www.dummies.com/extras/smallbusinessmarketing.

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Google+

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Probably the most compelling benefit of a Google+ business account stems from its Google heritage. If your business is on Google+ and you develop an active Google+ community, your business is more likely to appear high in Google search results, and we all know what that means: website traffic.

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Google makes joining Google+ super easy. Here’s what to know:

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✓ Connections: After you open a Google+ business page, you can put a +1 button anywhere you’d like, allowing your business to easily invite people to simply click to follow and recommend your business and products or services to friends and contacts across the web.

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✓ Target sharing: As people follow your business, you can choose which Google+ circles to add them to based on their interests and their relationship with your business. Then, when you post content, you can make your posts public for all to see or you can make them visible only to followers in one or several circles.

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✓ Collaboration: Through Google Hangouts, up to 10 people at a time can take part in a live video conference, which can be broadcast ‘On Air’ to anyone watching via your Google+ page or YouTube Channel.. On Air Hangouts are automatically posted onto your YouTube Channel where even more people can watch them and you can embed them in your website or blog or share on Facebook or Twitter.

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✓ Measurement: Google’s measurement tools show you what people are saying about your business, how many +1’s your business receives and how your online activity affects your site traffic.

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To create a page, go to http://google.com/+/business, follow the prompts and then customise your page with your logo, photos and other information that presents your image and offerings.

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You have to tie your Google+ page to a specific Gmail account, which is difficult to change later. Consider setting up a specific account that you use only for your business activity on Google.

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Pinterest Think of a corkboard where you pin pictures of your wish list and favourite memories and you’vea good idea of what Pinterest is about. Except Pinterest goes further, letting you browse and re-pin images and videos from others as part of a global share-fest that, as of early 2012, was driving more online referral traffic than YouTube, Google+ and LinkedIn combined.

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To get your business started on Pinterest, follow these steps:

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Businesses use Pinterest just like individuals do, creating boards on a range of topics that reflect the character of the brand and interests of customers, and then pinning business-generated content, re-pinning images from others and calling for and pinning content from followers. (For complete information, go to http://pinterest.com/about/help.)

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1. Request an invitation from a Pinterest user or from http:// pinterest.com.

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2. Register, authenticating your business account using a Twitter account rather than a personal Facebook profile. 3. Go into Settings to complete a keyword-rich profile, designate your email settings and determine how you want Pinterest to interact with your other social media pages.

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4. Start making boards – and here’s where you have to get inventive.

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Pinterest isn’t your business photo album. Pinterest is about portraying the culture of your business and the interests of your customers. If you’re a local retailer, what inspires your store offerings? Where do your customers dine, gather, exercise, holiday or otherwise spend their days and enjoy their interests? Feature those interests as you pin captivating photos, infographics, videos or other attention-stopping images on your boards.

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Create boards that cover a range of topic areas and use keywords as you give each a name. Use them to share bold graphics, videos and photos that people will want to re-pin. Post your content on your own website or blog first and then pin it on Pinterest. That way, the pinned image includes a link back to your site, driving traffic and search rankings.

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Location-based and check-in sites

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Over half of all mobile phone users carry smartphones in the UK, and more than half of those smartphones access location-based services such as maps, directions and location-based social networks like foursquare. If you’vea walk-in location that serves customers, people may well be checking in as they enter your front door, whether you know it or not. The following services and networks are worth your consideration.

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Google+ Local

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The easiest way to lead people to your business is with a free Google+ Local page and Google map. To get going, all you need is a physical mailing address, a free Google account and a location in a country where Google Places is available. Go to www.google.com/places, click Get Started, follow the prompts and take these steps:

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✓ If your business already appears on Google Maps but you didn’t submit it, take advantage of the offer to claim your business with a Place page.

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✓ Verify your listing and then enhance your Place listing by adding photos, videos, coupons and updates such as weekly specials. For help, see Chapter 7.

foursquare

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After you set up and manage your listing through Google Places, your customers can find your business through your Google+ Local page, where they also find information from other Google properties, including Search, Maps, Zagat scores and customer reviews and recommendations (see Chapter 6 for more).

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People using foursquare arrive at a business, check in and compete against others to become the ‘Mayor’ by racking up the most check-ins. What’s in it for the business? Every check-in is free advertising within the customer’s social media network. To get involved, take these steps:

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✓ Go to http://foursquare.com/business to see whether your business is already listed as a venue. If so, click where it asks, ‘Do you manage this venue?’ If not, click, ‘Add new venue to foursquare.’

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✓ Provide the requested information, including the address of your business website’s contact page or Google page.

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✓ Wait 7 to 10 days for foursquare verification.

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After that, start offering visitors rewards and incentives for foursquare checkins, at no cost beyond whatever promotional offer you’re extending.

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New location-based and check-in networks Social media is rapidly evolving, and probably no area of the field is undergoing more change than location-based networks.

To stay on top of the news and opportunities, read the world’s largest online social media magazine, Social Media Examiner (www.socialmedia examiner.com). From the magazine’s home page you can click to follow on Facebook, sign up for free email updates, add the site to your Google+ circles or follow @smexaminer on Twitter.

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Rating and review sites

Claiming your presence on review sites

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Probably the quickest way to grab the attention of small business owners is to mention the topic of bad online reviews. By taking some upfront and ongoing steps, you can improve the odds that good reviews outweigh and overshadow the occasional, usually inevitable one-star rating. Here’s what you need to know and do.

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If you aren’t sure which rating and review sites are important, just ask your customers which sites they check out. ✓ Almost any business-to-consumer company can benefit by claiming its presence on Google Places (www.google.com/places).

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✓ If you’re in the travel business, your customers likely use TripAdvisor (www.tripadvisor.com).

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✓ Restaurants get active on sites like TopTable (www.toptable.co.uk) and all kinds of local sites. ✓ Each business sector – legal, medical, consumer electronics and so on – has a set of review sites where customers weigh in and where smart businesses participate.

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Encouraging reviews

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The best way to get good reviews (and drown out the noise of bad reviews) is to offer amazing products and services. Around the corner from where I live is a foot spa, and here’s how one review starts: ‘I can’t believe this salon has any reviews less than five stars. I wish that I could give it MORE than five stars.’ If somewhere down the feed is a rant, the words from this totally satisfied customer more than silence the complaint.

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To encourage reviews:

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✓ Display review site logos in your business and on your website so people know where to go to post reviews.

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✓ Directly invite your best customers to share their opinions. To make it easy, give customers cards featuring your review site URLs, possibly including a next-visit discount or offer – valid whether or not they post a review. ✓ Take care not to bias customer comments. Google offers the following precaution about soliciting customer reviews, which serves as good advice across all review sites:

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✓ ‘Reviews are only valuable when they are honest and unbiased. Even if well-intentioned, a conflict of interest can undermine the trust in a review. For instance, do not offer or accept money or product to write positive reviews about a business, or to write negative reviews about a competitor. Please also do not post reviews on behalf of others or misrepresent your identity or affiliation with the place you are reviewing.’

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Keeping cool when a bad review shows up

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✓ Don’t blitz your review pages with a deluge of reviews posted over a short period – a signal to review sites that some incentivising may be going on. Instead, cultivate a steady stream of reviews for the best results.

Sooner or later, someone is likely to post a bad review of your business. When it happens, do the following:

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✓ Look for a shred of truth in the rant. If the review points out even a tiny deficiency, fix whatever’s wrong. Then use your blog, Facebook page, or direct contact with the reviewer (if you can reach the person, which isn’t always possible) to describe the changes you’ve made. Research shows that disgruntled customers aren’t just placated by businesses that resolve their issues – they actually become proponents, sharing the positive outcome of their experience with others.

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✓ Don’t hit back. The more attention you give a bad review, the more people notice it and the more you inspire the rage of an already disgruntled person. Instead, push the review out of sight by encouraging new, positive reviews. Remember that those who use online review sites take an occasional poor review with the grain of salt it deserves.

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Announcing Your Social Media Debut

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As soon as you create social media pages, launch your social media presence by getting the word out: ✓ Invite employees, suppliers, clients, friends and family to join and interact with your social media sites. ✓ Promote your profiles by including invitations to join you online in all your marketing communications. ✓ Cross-promote your profiles on each of your social media pages. For instance, add your Facebook and Twitter URLs to your LinkedIn profile, and add your Facebook URL to your Twitter Bio. ✓ Add ‘Join us on’ icons, to your website so people can simply click to join your social media networks. Just enter the word widget in the help search box.

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✓ Include your Facebook and Twitter URLs in your email signature and on your business card, but only if you’vea plan to stay active and engaged in the networks. Nothing looks worse than a link to a page that hasn’t been updated in months.

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Keeping Your Social Media Efforts Active and Engaging

Participate with your social media networks through a combination of three activities:

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✓ Sharing useful, relevant, interesting information, called content, created by your business.

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✓ Sharing – basically re-gifting – useful, relevant, interesting content created and shared by others. ✓ Sharing your thanks, praise, expertise and input by adding your comments to others’ posts.

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Sharing content

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Businesses that pull people to their pages online do so with useful, relevant, consistently presented information that takes time and discipline to create.

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If you’vea blog this part gets easier, because maintaining a blog forces you to create useful information that you can then repurpose to feed into your Facebook and LinkedIn pages, feature on Twitter, pin on Pinterest and compile into newsletters and mailings. Chapter 12 is all about blogging and definitely worth checking out.

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With or without a blog, however, take these steps:

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✓ Develop content that supports your social media objectives, described earlier in this chapter. • If you’re seeking awareness and credibility, share content that gains attention and establishes your business as a uniquely valuable resource. Examples include links to publicity, favourable reviews, research findings and white papers or blog posts with helpful and interesting content that people will want to read and share.

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• If you’re seeking interaction with your target audience, create and share surveys, host forums, or announce online or offline events that prompt input, comments and conversations. LinkedIn Answers is a good place for this activity, as are Facebook Questions or Polls and Twitter Chats, which you can stay on top of by following @ChatSchedule.

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• If you’re seeking customers, create and share content that draws people to your business, perhaps by offering free samples or material, such as white papers, e-books or other useful, relevant information. Just be sure that you link the offer to your website home page or, better, to a landing page on your website that’s customised to greet new visitors, fulfil their interest and invite them to join your mailing list or any customer-registration database.

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✓ Develop a reputation for content that supports your brand image. For example, become known as the business that puts out a monthly list of top five tips in your business arena or that releases a quarterly opinion poll or annual best-practices white papers. The For Dummies brand is known for reader-friendly reference information. Other brands are known for their unique (and highly shareable) graphical presentations of information, known as infographics. By deciding on a type of content to share on an ongoing basis, you not only make content development easier but also create higher awareness, recognition and credibility.

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✓ Establish and stick to a posting schedule. You can’t achieve visibility or credibility with once-in-awhile social media involvement. Commit to a schedule that keeps your business visible without inundating your audience. (The consensus seems to be that eight Twitter messages and four Facebook posts a day touches on the outer limit.)

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✓ Involve your employees by sharing your social media objectives and approaches and assigning responsibilities that allow you to share the burden – and the enthusiasm.

The Checklist of Content-Generating Approaches, which you can find at www. dummies.com/extras/smallbusinessmarketing, features ideas to consider as you develop content for social media sharing and interaction.

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✓ Automate the process of posting across multiple networks by using free tools like HootSuite (http://hootsuite.com), or Buffer (www. bufferapp.com).

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Becoming a content conduit

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If you share content from others, you benefit in a number of ways: ✓ You become known as a connected person who relays valuable information.

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✓ You generate social media activity without having to generate content.

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✓ You attract the attention of those whose content you share, likely leading them into your network and possibly gaining their interest in sharing your content as well.

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To find interesting and shareable content, study your own social media feeds, read news sites that carry interesting information and scan industry blogs, sites and pages. Identify several sources worth watching carefully and use a RSS reader to receive alerts every time the sites are updated. When you see something that may interest your audience, don’t just share it – let your audience know why you’re sharing it and where it came from (for example, ‘Great industry stats: Tip of the hat to @greatcontact’). On social media, sharing is the sincerest form of flattery.

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Getting conversational

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Use the social media networks that you establish to interact with customers, associates and followers online.

✓ Watch for any mentions of your business, products or people. Whenever appropriate, immediately retweet, repost, share or reply with thanks. You amplify your own presence and deepen connections all in a few keystrokes. The next section, on monitoring your social media mentions, helps with this step.

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✓ Watch for comments posted to your content and respond, preferably within 24 hours. On Facebook, a simple ‘like’ may be enough. On Twitter, a retweet with a ‘thx’ may do. Best of all, a thoughtful response posted as a reply gives you a chance to say thanks and provide more information.

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Monitor your social media programme in two ways:

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Keeping an Eye on How You’re Doing ✓ Watch to see who’s talking about you and what they’re saying.

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✓ Observe how your comments and content are received and how your network is expanding as a result of your efforts.

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Monitoring your social media mentions

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Set up alerts so that you’re notified when your personal name, business name, product name, business category, competitors’ names and any other terms you want to monitor are mentioned online. ✓ Set the preferences on Facebook and Twitter so you’re alerted by email when someone interacts with your posts.

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✓ Use sites like http://search.twitter.com to search for posts about the names and terms that you’re following. ✓ If you use Constant Contact, set up NutshellMail (http://nutshell mail.com) to email a summary of activity on the schedule you request.

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✓ Set up online alerts through sites like Google Alerts (www.google. com/alerts), Bing Alerts (through your Windows Live ID account) and Social Mention (http://socialmention.com).

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To make your life easy, direct all responses to a single RSS aggregator so you can open that one resource and see alerts for all your mentions in one place.

Social media isn’t just a popularity contest, although the number of friends, follows and likes you accumulate matters, especially if they come from members of your target audience or, even better, those who influence members of your target audience.

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Measuring your social media effectiveness

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✓ From your Facebook page, click Insights to view a summary of your activity and see which posts drew the most views and interaction.

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✓ From your Twitter profile, click @Connect to monitor your interactions with and mentions by others, including which of your tweets was most shared. ✓ For location-based sites like foursquare, monitor redemption levels of exclusive promotional offers.

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✓ Use Google Analytics to monitor your website traffic. Go to your account and open Traffic Sources to see which networks are driving traffic to your site.

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✓ If your content and posts aim to generate leads, monitor which offers drive traffic and result in conversions.

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The purpose of monitoring is simple: to help you do more of what works best.

Social media dos and don’ts

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✓ Never ignore hard questions, whether on review sites, social networks or your own blog.

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✓ Never participate online simply to sell or to place your URL.

✓ Always sound like a person and not a faceless corporation. ✓ Always be consistent in the way you present your business – and your brand.

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✓ Always be open to advice and even criticism, which you should never delete.

✓ Always keep your communications helpful, useful and friendly.

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er!™ si a E g in th ry e v E Making

Free Edition rd 3Sample Chapter

g n i p e e k k o o B Learn to:

• Manage day-to-day records like sales and purchases • Produce Profit and Loss Statements and Balance Sheets • Prepare year-end accounts and VAT returns • Handle employee payroll and benefits

Jane Kelly, ACMA

Chartered Management Accountant


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 Keeping business records  Getting to know the lingo  Navigating the accounting cycle  Understanding accrual accounting

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In This Chapter

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Getting Down to Bookkeeping Basics

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Chapter 2

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 Making sense of double-entry bookkeeping  Clarifying debits and credits

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ll businesses need to keep track of their financial transactions, which is why bookkeeping and bookkeepers are so important. Without accurate records, how can you tell whether your business is making a profit or taking a loss?

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In this chapter, we cover the key aspects of bookkeeping: We introduce you to the language of bookkeeping, familiarise you with how bookkeepers manage the accounting cycle, and show you how to understand the more complex type of bookkeeping – double-entry bookkeeping.

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Bookkeeping: The Record Keeping of the Business World Bookkeeping, the methodical way in which businesses track their financial transactions, is rooted in accounting. Accounting is the total structure of records and procedures used to record, classify, and report information about a business’s financial transactions. Bookkeeping involves the recording of that financial information into the accounting system while maintaining adherence to solid accounting principles.


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Part I: Basic Bookkeeping: Why You Need It

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The bookkeeper’s job is to work day in and day out to ensure that transactions are accurately recorded. Bookkeepers need to be very detail-oriented and love working with numbers, because numbers and the accounts the numbers go into are what these people deal with all day long.

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Bookkeepers aren’t required to belong to any recognised professional body, such as the Institute of Chartered Accountants of England and Wales. You can recognise a chartered accountant by the letters ACA after the name, which indicates that he or she is an Associate of the Institute of Chartered Accountants. If they’ve been qualified much longer, they may use the letters FCA, which indicate that the accountant is a Fellow of the Institute of Chartered Accountants.

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Of course, both Scotland and Ireland have their own chartered accountant bodies with their own designations. Other accounting qualifications exist, offered by the Institute of Chartered Management Accountants (ACMA and FCMA), the Institute of Chartered Certified Accountants (ACCA and FCMA), and the Chartered Institute of Public Finance Accountants (CIPFA).

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The Association of Accounting Technicians offers a bookkeeping certificate (ABC) program, which provides a good grounding in this subject. In reality, most bookkeepers tend to be qualified by experience.

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If you’re after an accountant to help your business, use the appropriate chartered accountants or a chartered certified accountant as they have the most relevant experience.

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On starting up their businesses, many small businesspeople serve as their own bookkeepers until the business is large enough to hire a dedicated person to keep the books. Few small businesses have accountants on the payroll to check the books and prepare official financial reports; instead, they have bookkeepers (either on the payroll or hired on a self-employed basis) who serve as the outside accountants’ eyes and ears. Most businesses do seek out an accountant, usually a chartered accountant (either ACA or FCA), but this is usually to submit annual accounts to the Inland Revenue, which is now part of HM Revenue & Customs. In many small businesses today, a bookkeeper enters the business transactions on a daily basis while working inside the business. At the end of each month or quarter, the bookkeeper sends summary reports to the accountant who then checks the transactions for accuracy and prepares financial statements such as the profit and loss (see Chapter 17), and balance sheet (see Chapter 18) statements.


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In most cases, the accounting system is initially set up with the help of an accountant. The aim is to ensure that the system uses solid accounting principles and that the analysis it provides is in line with that required by the business, the accountant, and HM Revenue & Customs. That accountant periodically reviews the system’s use to make sure that transactions are being handled properly.

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Wading through Basic Bookkeeping Lingo

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Accurate financial reports are the only way to ensure that you know how your business is doing. These reports are developed using the information you, as the bookkeeper, enter into your accounting system. If that information isn’t accurate, your financial reports are meaningless: As the old adage goes, ‘Garbage in, garbage out’.

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Before you can take on bookkeeping and start keeping the books, you first need to get a handle on the key accounting terms. This section describes the main terms that all bookkeepers use on a daily basis.

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Note: This list isn’t exhaustive, and doesn’t contain all the unique terms you have to know as a bookkeeper. For full coverage of bookkeeping terminology, turn to the Glossary at the back of the book.

Accounts for the balance sheet

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Here are a few terms you need to know:

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 Balance sheet: The financial statement that presents a snapshot of the business’s financial position (assets, liabilities, and capital) as of a particular date in time. The balance sheet is so-called because the things owned by the business (assets) must equal the claims against those assets (liabilities and capital). On an ideal balance sheet, the total assets need to equal the total liabilities plus the total capital. If your numbers fit this formula, the business’s books are in balance. (We discuss the balance sheet in greater detail in Chapter 18.)  Assets: All the items a business owns in order to run successfully, such as cash, stock, buildings, land, tools, equipment, vehicles, and furniture.


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Part I: Basic Bookkeeping: Why You Need It  Liabilities: All the debts the business owes, such as mortgages, loans, and unpaid bills.

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 Capital: All the money the business owners invest in the business. When one person (sole trader) or a group of people (partnership) own a small business, the owner’s capital is shown in a Capital account. In an incorporated business (limited company), the owner’s capital is shown as shares.

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Another key Capital account is Retained Earnings, which shows all business profits that have been reinvested in the business rather than paid out to the owners by way of dividends. Unincorporated businesses show money paid out to the owners in a Drawings account (or individual drawings accounts in the case of a partnership), whereas incorporated businesses distribute money to the owners by paying dividends (a portion of the business’s profits paid out to the ordinary shareholders, typically for the year).

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Accounts for the profit and loss statement Following are a few terms related to the profit and loss statement that you need to know:

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 Profit and loss statement: The financial statement that presents a summary of the business’s financial activity over a certain period of time, such as a month, quarter, or year. The statement starts with Sales made, subtracts out the Costs of Goods Sold and the Expenses, and ends with the bottom line – Net Profit or Loss. (We show you how to develop a profit and loss statement in Chapter 17.)

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 Income: All sales made in the process of selling the business’s goods and services. Some businesses also generate income through other means, such as selling assets the business no longer needs or earning interest from investments. (We discuss how to track income in Chapter 9.)

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 Cost of Goods Sold: All costs incurred in purchasing or making the products or services a business plans to sell to its customers. (We talk about purchasing goods for sale to customers in Chapter 8.)  Expenses: All costs incurred to operate the business that aren’t directly related to the sale of individual goods or services. (We review common types of expenses in Chapter 3.)


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Other common terms

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Some other common terms include the following:

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 Accounting period: The time for which financial information is being prepared. Most businesses monitor their financial results on a monthly basis, so each accounting period equals one month. Some businesses choose to do financial reports on a quarterly basis, so the accounting period is three months. Other businesses only look at their results on a yearly basis, so their accounting period is 12 months. Businesses that track their financial activities monthly usually also create quarterly and annual reports (a year-end summary of the business’s activities and financial results) based on the information they gather.

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 Accounting year-end: In most cases a business accounting year is 12 months long and ends 12 months on from when the business started or at some traditional point in the trading cycle for that business. Many businesses have year-ends of 31 March (to tie in with the tax year) and 31 December (to tie in with the calendar year). You’re allowed to change your business year-end to suit your business.

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For example, if you started your business on 1 July, your year-end will be 30 June (12 months later). If, however, it is traditional for your industry to have 31 December as the year-end, it is quite in order to change to this date. For example, most retailers have 31 December as their yearend. You of course have to let HM Revenue & Customs know and get their formal acceptance.

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 Debtors (also known as Accounts Receivable): The account used to track all customer sales made on credit. Credit refers not to credit card sales but to sales in which the business gives a customer credit directly, and which the business needs to collect from the customer at a later date. (We discuss how to monitor Accounts Receivable in Chapter 9.)

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 Creditors (also known as Accounts Payable): The account used to track all outstanding bills from suppliers, contractors, consultants, and any other businesses or individuals from whom the business buys goods or services. (We talk about managing Accounts Payable in Chapter 8.)  Depreciation: An accounting method used to account for the aging and use of assets. For example, if you own a car, you know that the value of the car decreases each year (unless you own one of those classic cars that goes up in value). Every major asset a business owns ages and eventually needs replacement, including buildings, factories, equipment, and other key assets. (We discuss how you monitor depreciation in Chapter 11.)


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 Nominal (or General) Ledger: Where all the business’s accounts are summarised. The Nominal Ledger is the master summary of the bookkeeping system. (We discuss posting to the Nominal Ledger in Chapter 4.)

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 Interest: The money a business needs to pay when it borrows money from anybody. For example, when you buy a car using a car loan, you must pay not only the amount you borrowed (capital or principal) but also additional money, or interest, based on a percentage of the amount you borrowed. (We discuss how to deal with interest expenses in a business’s books in Chapter 12.)

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 Stock (or Inventory): The account that tracks all products sold to customers. (We review stock valuation and control in Chapter 8.)

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 Journals: Where bookkeepers keep records (in chronological order) of daily business transactions. Each of the most active accounts, including cash, Accounts Payable, and Accounts Receivable, has its own journal. (We discuss entering information into journals in Chapter 5.)

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 Payroll: The way a business pays its employees. Managing payroll is a key function of the bookkeeper and involves reporting many aspects of payroll to HM Revenue & Customs, including Pay As You Earn (PAYE) taxes to be paid on behalf of the employee and employer, and National Insurance Contributions (NICs). In addition, a range of other payments such as Statutory Sick Pay (SSP) and maternity/paternity pay may be part of the payroll function. (We discuss employee payroll in Chapter 10 and the government side of payroll reporting in Chapter 20.)

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 Trial balance: How you test to ensure that the books are in balance before pulling together information for the financial reports and closing the books for the accounting period. (We discuss how to do a trial balance in Chapter 15.)

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Pedalling through the Accounting Cycle As a bookkeeper, you complete your work by completing the tasks of the accounting cycle, so-called because the workflow is circular: Entering transactions, manipulating the transactions through the accounting cycle, closing the books at the end of the accounting period, and then starting the entire cycle again for the next accounting period. The accounting cycle has eight basic steps, shown in Figure 2-1.


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The Accounting Cycle

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1. Transactions

6. Adjusting Journal Entries

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4. Trial Balance

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Figure 2-1: The accounting cycle.

3. Posting

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7. Financial Statements

2. Journal Entries

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8. Closing the Books

5. Worksheet

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1. Transactions: Financial transactions start the process. Transactions can include the sale or return of a product, the purchase of supplies for business activities, or any other financial activity that involves the exchange of the business’s assets, the establishment or payoff of a debt, or the deposit from or payout of money to the business’s owners. All sales and expenses are transactions that must be recorded. We cover transactions in greater detail throughout the book as we discuss how to record the basics of business activities – recording sales, purchases, asset acquisition, or asset disposal, taking on new debt, or paying off debt. 2. Journal entries: The transaction is listed in the appropriate journal, maintaining the journal’s chronological order of transactions. (The journal is also known as the ‘book of original entry’ and is the first place a transaction is listed.) We talk more about journal entries in Chapter 5. 3. Posting: The transactions are posted to the relevant account. These accounts are part of the Nominal Ledger, where you can find a summary of all the business’s accounts. We discuss posting in Chapters 4 and 5.


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Part I: Basic Bookkeeping: Why You Need It 4. Trial balance: At the end of the accounting period (which may be a month, quarter, or year depending on your business’s practices), you prepare a trial balance.

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5. Worksheet: Unfortunately, often your first trial balance shows that the books aren’t in balance. In this case, you look for errors and make corrections called adjustments, which are tracked on a worksheet. Adjustments are also made to account for the depreciation of assets, and to adjust for one-time payments (such as insurance) that need to be allocated on a monthly basis to match monthly expenses with monthly revenues more accurately. After you make and record adjustments, you take another trial balance to be sure that the accounts are in balance.

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6. Adjusting journal entries: You post any necessary corrections to the relevant accounts after your trial balance shows that the accounts balance (after the necessary adjustments are made to the accounts). You don’t need to make adjusting entries until the trial balance process is completed and all needed corrections and adjustments have been identified.

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7. Financial statements: You prepare the balance sheet and profit and loss statement using the corrected account balances. 8. Closing the books: You close the books for the Revenue and Expense accounts and begin the entire cycle again.

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At the end of the accounting year (year-end) all the accounting ledgers are closed off. This situation means that Revenue and Expense accounts must start with a zero balance at the beginning of each new accounting year. In contrast, you carry over Asset, Liability, and Capital account balances from year to year, because the business doesn’t start each cycle by getting rid of old assets and buying new assets, paying off and then taking on new debt, or paying out all claims to owners and then collecting the money again.

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Understanding Accounting Methods Many not-for-profit organisations, such as sports clubs, have very simple accounting needs. These organisations aren’t responsible to shareholders to account for their financial performance, though they are responsible to their members for the safe custody of their subscriptions and other funds. Consequently, the accounting focus isn’t on measuring profit but more on accounting for receipts and payments. For these cases, a simple cash-based accounting system may well suffice, which allows for only cash transactions – no provisions are made for giving or receiving credit. (We cover not-for-profit organisations in more detail in Chapter 19.)


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However, complications may arise when members don’t pay their subscriptions during the current accounting year and the organisation needs to reflect this situation in its accounts. In this case, the accrual accounting method is best.

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A few businesses operate on a cash basis, and their owners can put forward a good case for using this method. However most accountants and HM Customs & Revenue don’t accept this method as it doesn’t give a very accurate measure of profit (or loss) for accounting periods.

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In the next sections, we briefly explain how cash-based accounting works before dismissing it in favour of the more accepted and acceptable accrual method.

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Realising the limitations of cash-based accounting

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With cash-based accounting, you record all transactions in the books when cash actually changes hands, which means when the business receives cash payment from customers or pays out cash for purchases or other services. Cash receipt or payment can be in the form of cash, cheque, credit card, electronic transfer, or other means used to pay for an item.

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Cash-based accounting can’t be used when a business sells products on credit and collects the money from the customer at a later date. No provision exists in the cash-based accounting method to record and track money due from customers at some point in the future.

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This situation also applies for purchases. With the cash-based accounting method, the business only records the purchase of supplies or goods that are to be sold later when it actually pays cash. When the business buys goods on credit to be paid later, it doesn’t record the transaction until the cash is actually paid out. Depending on the size of your business, you may want to start out with cashbased accounting. Many small businesses run by a sole proprietor or a small group of partners use the easier cash-based accounting system. When your business model is simple – you carry no stock, start and finish each job within a single accounting period, and pay and get paid within this period – the cash accounting method can work for you. But as your business grows, you may find it necessary to switch to accrual accounting in order to track revenues and expenses more accurately, and to satisfy the requirements of the external accountant and HM Revenue & Customs. The same basic argument also applies to not-for-profit organisations.


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Cash-based accounting does a good job of tracking cash flow, but the system does a poor job of matching revenues earned with money laid out for expenses. This deficiency is a problem particularly when, as often happens, a business buys products in one month and sells those products in the next month. For example, you buy products in June paying £1,000 cash, with the intent to sell them that same month. You don’t sell the products until July, which is when you receive cash for the sales. When you close the books at the end of June, you have to show the £1,000 expense with no revenue to offset it, meaning you have a loss that month. When you sell the products for £1,500 in July, you have a £1,500 profit. So, your monthly report for June shows a £1,000 loss, and your monthly report for July shows a £1,500 profit, when in reality you had revenues of £500 over the two months. Using cashbased accounting you can never be sure that you have an accurate measure of profit or loss – but as cash-based accounting is for not-for-profit organisations, this is not surprising.

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Because accrual accounting is the only accounting method acceptable to accountants and HM Revenue & Customs, we concentrate on this method throughout the book. If you choose to use cash-based accounting because you have a cash only business and a simple trading model, don’t panic: Most of the bookkeeping information here is still useful, but you don’t need to maintain some of the accounts, such as Accounts Receivable and Accounts Payable, because you aren’t recording transactions until cash actually changes hands. When you’re using a cash-based accounting system and you start to sell things on credit, though, you better have a way to track what people owe you.

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Our advice is to use the accrual accounting method right from the beginning. When your business grows and your business model changes, you need the more sophisticated and legally required accrual accounting.

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Recording right away with accrual accounting With accrual accounting, you record all transactions in the books when they occur, even when no cash changes hands. For example, when you sell on credit, you record the transaction immediately and enter it into a Debtors account until you receive payment. When you buy goods on credit, you immediately enter the transaction into a Creditors account until you pay out cash.


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Like cash-based accounting, accrual accounting has drawbacks, doing a good job of matching revenues and expenses, but a poor job of tracking cash. Because you record income when the transaction occurs and not when you collect the cash, your profit and loss statement can look great even when you don’t have cash in the bank. For example, suppose you’re running a contracting business and completing jobs on a daily basis. You can record the revenue upon completion of the job even when you haven’t yet collected the cash. When your customers are slow to pay, you may end up with lots of income but little cash. Remember – never confuse profit and cash. In the short term cash flow is often more important than profit, but in the long term profit becomes more important. But don’t worry just yet; in Chapter 9, we tell you how to manage Accounts Receivable so that you don’t run out of cash because of slow-paying customers.

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Many businesses that use the accrual accounting method monitor cash flow on a weekly basis to be sure they have enough cash on hand to operate the business. If your business is seasonal, such as a landscaping business with little to do during the winter months, you can establish short-term lines of credit through your bank to maintain cash flow through the lean times.

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Seeing Double with Double-Entry Bookkeeping

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All businesses use double-entry bookkeeping to keep their books, whether they use the cash-based accounting method or the accrual accounting method. Double-entry bookkeeping – so-called because you enter all transactions twice – helps minimise errors and increase the chance that your books balance.

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When it comes to double-entry bookkeeping, the key formula for the balance sheet (Assets = Capital + Liabilities) plays a major role. In the bookkeeping world, you use a combination of debits and credits to adjust the balance of accounts. You may think of a debit as a subtraction, because debits usually mean a decrease in your bank balance. On the other hand, you probably like finding unexpected credits in your bank or credit card, because they mean more money has been added to the account in your favour. Now forget everything you know about debits or credits. In the world of bookkeeping, their meanings aren’t so simple.


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The only definite thing when it comes to debits and credits in the bookkeeping world is that a debit is on the left side of a transaction and a credit is on the right side of a transaction. Everything beyond that can get very muddled. We show you the basics of debits and credits in this chapter, but don’t worry if you find these concepts difficult to grasp. You get plenty of practice using these concepts throughout this book.

Debit

Furniture

£1,500

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Account

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Before we get into all the technical mumbo jumbo of double-entry bookkeeping, here’s an example of the practice in action. Suppose you purchase a new desk for your office that costs £1,500. This transaction actually has two parts: You spend an asset – cash – to buy another asset – furniture. So, you must adjust two accounts in your business’s books: the Cash account and the Furniture account. The transaction in a bookkeeping entry is as follows (we talk more about how to do initial bookkeeping entries in Chapter 4):

Cash

Credit

£1,500

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To purchase a new desk for the office.

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In this transaction, you record the accounts impacted by the transaction. The debit increases the value of the Furniture account, and the credit decreases the value of the Cash account. For this transaction, both accounts impacted are Asset accounts so, looking at how the balance sheet is affected, you can see that the only changes are to the asset side of the balance sheet equation:

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Assets = Capital + Liabilities Furniture increase = No change to this side of the equation

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Cash decrease

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In this case, the books stay in balance because the exact pounds sterling amount that increases the value of your Furniture account decreases the value of your Cash account. At the bottom of any journal entry, include a brief explanation that explains the purpose for the entry. In the first example, we indicate this entry was ‘To purchase a new desk for the office’. To show you how you record a transaction that impacts both sides of the balance sheet equation, here’s an example on recording the purchase of stock. Suppose that you purchase £5,000 worth of widgets on credit. (Have you always wondered what widgets were? Can’t help you. They’re just commonly used in accounting examples to represent something purchased where what is purchased is of no real significance.) These new widgets add value to your


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Account

Debit

Stock

£5,000

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Stock Asset account and also add value to your Accounts Payable account. (Remember, the Accounts Payable account is a Liability account where you track bills that need to be paid at some point in the future.) The bookkeeping transaction for your widget purchase looks as follows: Credit

£5,000

To purchase widgets for sale to customers.

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Accounts Payable

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This transaction affects the balance sheet equation as follows: Assets = Capital + Liabilities

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Stock increases = Accounts Payable increases + No change

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In this case, the books stay in balance because both sides of the equation increase by £5,000. You can see from the two example transactions how double-entry bookkeeping helps to keep your books in balance – as long as you make sure that each entry into the books is balanced. Balancing your entries may look simple here, but sometimes bookkeeping entries can get very complex when the transaction impacts more than two accounts.

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Don’t worry, you don’t have to understand double-entry bookkeeping totally now. We show you how to enter transactions throughout the book depending upon the type of transaction being recorded. We’re just giving you a quick overview to introduce the subject right now.

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Double-entry bookkeeping goes way back

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No one’s really sure who invented double-entry bookkeeping. The first person to put the practice on paper was Benedetto Cotrugli in 1458, but mathematician and Franciscan monk Luca Pacioli is most often credited with developing double-entry bookkeeping. Although Pacioli is called the Father of Accounting, accounting actually occupies only one of five sections of his

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book, Everything About Arithmetic, Geometry and Proportions, which was published in 1494. Pacioli didn’t actually invent double-entry bookkeeping; he just described the method used by merchants in Venice during the Italian Renaissance period. He’s most famous for his warning to bookkeepers: ‘A person should not go to sleep at night until the debits equal the credits!’


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Differentiating Debits and Credits

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Because bookkeeping’s debits and credits are different from the ones you’re used to encountering, you’re probably wondering how you’re supposed to know whether a debit or credit increases or decreases an account.

Table 2-1

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Believe it or not, identifying the difference becomes second nature as you start making regular entries in your bookkeeping system. But to make things easier for you, Table 2-1 is a chart that bookkeepers and accountants commonly use. Yep, everyone needs help sometimes.

How Credits and Debits Impact Your Accounts Debits

Assets

Increase

Decrease

Liabilities

Decrease

Increase

Income

Decrease

Increase

Increase

Decrease

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Account Type

Expenses

Credits

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Copy Table 2-1 and post it at your desk when you start keeping your own books (a bit like the chief accountant in the nearby ‘Sharing a secret’ sidebar). We guarantee that the table helps to keep your debits and credits straight.

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Don’t feel embarrassed if you forget which side the debits go on and which side the credits go on. One often-told story is of a young clerk in an accounts office plucking up courage to ask the chief accountant, who was retiring that day, why for 30 years he had at the start of each day opened up his drawer and read the contents of a piece of paper before starting work. The chief

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Sharing a secret accountant at first was reluctant to spill the beans, but ultimately decided he had to pass on his secret – and who better than an up-andcoming clerk. Swearing the young clerk to secrecy, he took out the piece of paper and showed it to him. The paper read: ‘Debit on the left and Credit on the right.’


er!™ si a E g in th ry e v E Making

Free Sample Chapter

n o i s a u Pers e c n e u l & Inf Learn to: • Become more influential in the workplace • Develop effective listening and rapportbuilding techniques • Adapt to your listener’s style • Use persuasive language to reach your goal

Elizabeth Kuhnke Executive Coach


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Ten Sure-Fire Ways to Influence Anyone

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Chapter 15

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In This Chapter ▶ Venturing beyond words ▶ Supporting your side

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▶ Making the most of others

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▶ Working together

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n Henrik Ibsen’s play The Master Builder, the lead character imagines that by wishing for something, it will come true. At the end of the play, he falls to his death. I’m not suggesting that you might die by wishing to become a great influencer! Rather, I’m suggesting that becoming a skilled persuader leads to a much happier outcome than simply wishing, hoping, thinking and praying ever can.

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If you’ve ever watched in awe as someone persuaded another to do something she originally disdained (or at least doubted), this chapter serves up ten secrets from successful persuaders that you can utilise in your own interactions.

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Establish Trust Try to get someone to follow your lead without first establishing trust, and watch your efforts collapse at the starting gate. If someone doesn’t trust you, why would she possibly want to follow you? Being perceived as trustworthy requires that you demonstrate your credibility. ‘Walking your talk’ is one way of building a reputation for being trustworthy and credible. Behaving in a way that reflects your beliefs and values shows you’re a person who’s true to your word. Walking your talk manifests itself

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in simple, everyday activities: show up on time, tell the truth and act in other people’s interests. Do these consistently, and people see you as someone whom they can trust to do what you say you’ll do. See Chapters 1 and 5 for more on trust and credibility.

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When my sister Wendy wanted our late grandmother to do something she wasn’t convinced was in her best interests, all Wendy had to do was look her in the eye, smile and say, ‘Trust me, Memaw!’ Sure enough, Memaw would do what Wendy wanted. Memaw and Wendy liked one another, and because Wendy always told Memaw the truth and acted in her best interests, Memaw trusted her. ‘Trust me, Memaw!’ has become the rallying cry in our family whenever we want our parents or siblings to do something they’re not so sure about doing.

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Set Out Crystal-Clear Goals

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The best persuaders and influencers are confident about what they want. They state their desired outcomes from the start in clear, concise and compelling terms that their listeners can understand and relate to.

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Revisit your goals regularly as you travel along your path to persuasion. Whether your goals are quantitative or qualitative, simple or multi-faceted, you’ll struggle to achieve them unless you know what they are. See Chapter 1 for more on clarity and Chapter 4 for advice on using compelling language.

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Step Into the Other Person’s Shoes

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Sun Tzu writes in his classic The Art of War that the person who knows both the enemy and himself need not fear the result of a hundred battles. The more you know about what matters to other people, the more ammunition you have for persuading them to accept your point of view. Gear your proposal to the other people’s needs and concerns, and watch them flock to your fold.

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You can find out how to identify what motivates your listener in Chapter 2, and in Chapter 3 you gain tips for figuring out people’s attitudes and beliefs. Ask questions and focus on the answers you receive. Listen not only for the words others say but the way they say them too. Someone’s non-verbal behaviour – including body language and vocal qualities (see Chapters 13 and 14 – often reveals feelings and attitudes that are as much a part of her perspective as the words she speaks.

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Find out as much as you can about what matters to your listeners and let them know that you respect them as individuals as well as respecting their points of view. The more you acknowledge their perspectives, the more willing they are to take on board your suggestions – or even join your proposed plans. Turn to Chapter 12 if you want to figure out who you’re talking to.

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Behave Congruently

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When the words you’re saying and the way you’re saying them match, you’re behaving congruently. Your message and delivery match, and your listener knows what you mean. If your words say one thing and the way you say them communicates something different, your listeners are likely to feel bewildered. Consider the pitch, pace and tone of your voice. People generally believe what they observe more than the words they hear, so also pay attention to your non-verbal behaviours such as your posture, movements and gestures.

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The way you talk and the way you move your body tell what’s going on inside (see Chapters 13 and 14). Make sure you’re certain about what you’re saying and say it as though you know what you’re talking about.

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If you’re uncertain and unconvincing in the way you present your case, you send out a message of doubt, uncertainty and indecision that your listeners will remember. Speak clearly, concisely and with conviction. Move like you mean it and eliminate ums, ers and ahs from your vocabulary.

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Ask for More than You Expect

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My son has a quote on his pinboard that says, ‘Shoot for the moon. Even if you miss you’ll land among the stars.’ Or to paraphrase former US Secretary of State Henry Kissinger, your effectiveness at the conference table depends on overstating your demands.

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Asking for more than you expect to get gives you some wiggle room, some space for negotiating. For example, when you’re selling, you can always come down from your initial offer, but never expect the buyer to suggest that you ask for more. Conversely, if you’re buying something, your offer can always go up, but you’d be hard pressed to go down from your original offer. See Chapter 12 for the ins and outs of establishing useful expectations.

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Respect Your Relationships

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What goes around comes around. How you treat people determines how they respond to you. Treat people with respect and watch them return the favour.

ER

Aim to identify with, understand and respond to other people’s feelings, emotions and experiences. Demonstrating empathy (see Chapter 3) goes a long way in building a positive relationship that in turn benefits you.

AT

Build Your Case

M

As Henry Ford said, ‘Before anything else, getting ready is the secret to success.’ Knowing what you want, knowing your audience and knowing how to present to your audience in a way that captures their attention and sustains their interest boosts your chances of walking away a winner.

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As I detail in Chapter 9, the most successful influencers present themselves as credible characters appealing to their listeners’ emotions as well as to their logical minds. ✓ Start with a strong opener that grabs your listeners’ attention and resonates with their values.

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✓ Express each point clearly in a single sentence and assert your claims as statements of fact.

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✓ Avoid overwhelming your listener with too much information. Try limiting yourself to three main messages, each of which needs to be compelling on its own.

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✓ Back up your claims with appropriate supporting material that your listener can believe and accept. Make sure your claims are correct. ✓ Deliver your message with feeling.

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✓ Conclude your case with a call to action that ties in with your opening. Make your case short, sharp and memorable.

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Whatever you say, make sure it’s relevant. Be creative. Include stories, analogies and vivid language to help your audience visualise and connect with what you’re saying.

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Chapter 15: Ten Sure-Fire Ways to Influence Anyone

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Offer Your Most Captivating Reasons

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People need reasons for knowing why you want them to do what you want them to do. Although ‘Because I said so’ may gain their compliance, it’s unlikely to gain their hearts and minds.

AT

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Let your audience know how your request benefits them. Appeal to their values and tie your reasons into their self-interests and then watch them jump over themselves to comply with your request. Use language that’s both accurate and exciting to get your audience visualising your recommendations. Provide your listeners with significant facts and figures if they’re into the detail. Tell them captivating stories, including metaphors and analogies if they like to look at the big picture. The more captivating the way you present your case, the more chance you stand of success.

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Limit the number of reasons you throw their way. Too much information is overwhelming and results in no decision at all.

Seek Common Ground

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When people like you, they’re more likely to comply with your requests. The more you have in common with the people you want to persuade, the more likely they’ll like you. Turn to Chapter 10 to find out about the power of liking someone.

PY

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Effective persuaders seek out similarities between themselves and the people they want to influence. The more you know about your target audience and the more you establish genuine shared aims and chances for camaraderie, the more likely your chances of persuading them. Chapter 2 is filled with tips for finding out about other people.

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Own Up to Your Weaknesses

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To gain buy-in – to get people to commit to you and your proposals – you’ve got to gain trust. One of the most effective ways to persuade others that you’re trustworthy, honest and credible is to admit your weaknesses.

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Part V: The Part of Tens

IA L

Before giving all the reasons why someone should agree to your request, present a minor, relatively obvious drawback immediately and then hit them with your most compelling reason for gaining their agreement. Admitting a small weakness builds credibility. And the more credible you are, the more willing others are to follow you.

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In Chapter 6 you find out how to admit to your weaknesses without damaging your credibility.

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g Easier! Making Everythin

Free Sample Chapter

p U p o P s s e n i s Bu

Learn to: • Plan and launch a successful pop-up business • Find the perfect space – and landlord! • Promote and market your pop-up • Manage day-to-day business tasks with ease

Dan Thompson

Founder, Empty Shops Network


Chapter 16

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Ten Reasons Why Your Pop Up Is Good for Business In This Chapter

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▶ Making a difference

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▶ Fostering fun

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op ups are an incredibly useful tool for doing business; they’re like a Swiss army penknife, which pops out in all sorts of useful ways. So what you do with your pop up is entirely up to you. The only limit is the edge of your imagination.

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This book doesn’t give you a template, but it can make starting a pop up easier and help you avoid mistakes.

PY

In this chapter, I list ten common pop up themes.

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Have a Message Pop ups aren’t just shops; they are, by their very nature, something special. They have a magical, ephemeral quality, like blossoms in spring, and they do something that other shops on the high street just don’t do. Whether your pop up is testing a new idea, giving something special to valued customers or has a social purpose, make sure that your message is clear. Use your decor, kit-out, marketing and social media to convey your message and tell the story behind your brand.

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Part VI: The Part of Tens

Be Local

L

Many people are living much more locally in the last few years. Social media has helped people form strong, local groups – global networks, for local action! And people are keen to ‘Shop Local’, too.

AT

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IA

The best pop ups are celebrating the local by discovering what’s distinctive about the place where they happen and exciting the neighbourhood. Make your pop up relevant to the place where it happens and the people who live nearby. Not only will you find your pop up more rewarding, it will be easier too, as local networks mobilise to support your work.

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Do Something Different

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Are you bored of the nine to five grind? Find yourself doing the same things, week in, week out?

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Pop ups exist so that you can break out of the routine, be creative and do things differently. They’re still part of your core business, especially if you get your aims right in the first place and stick to them throughout the time you’re planning and running your pop up (see Chapter 2 for more on aims).

So take a chance; use a pop up to do something different.

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PY

But pop ups are about innovation and give you the perfect chance to test and prototype new products and services. The risks aren’t as great as they would be if you took a long-term lease. You can be in and out in a matter of weeks, from the day you start planning to the day you get back to normal.

Change the Rules Pop ups, even the most corporate ones, have a mischievous, slightly anarchic spirit. They’re about finding new uses for old spaces, being temporary not permanent and trying new things. They’re not about doing things the way they’ve already been done.

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Chapter 16: Ten Reasons Why Your Pop Up Is Good for Business

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You don’t have to be dangerous; this book covers risk assessment (Chapter 2), finance (Chapter 4) and leases, licences and the legal stuff (Chapter 5). (I did say only slightly anarchic!) But pop ups do give you a chance to build new teams, push the boundaries and bend things to meet your aim.

L

It’s time to rewrite the rulebook.

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Be a Coffee Shop

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The prototype Next store in Shoreham by Sea sells clothes and furniture and has a Starbucks cafe. The Orange community shop in Monmouth is used as a community shop but still sells mobile phones. The Rough Trade record store in London’s Brick Lane is a cafe, bookshop and occasional venue.

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Some people predict that, in the future, everything will be a coffee shop that does something else as well.

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What they really mean is that the social element of shopping will become more important. Add a coffee machine, stock up on biscuits and make cups of tea for your customers; you create a more friendly pop up and keep customers engaged for longer. (For additional ways to make your pop up more inviting, see Chapter 10.)

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Don’t Hang Around In the past 50 years, people have assumed that permanent equals important, that being old gives you authority and that the established equals the powerful. But the world is accelerating.

Things that exist for a short time add interest and meaning to places. Think about the number of events you go to that pop up; farmers’ markets, craft fairs, street performers and music festivals all bring life and vibrancy to the places where they happen. And nobody thinks of their website as a permanent, set in stone, unchanging thing. Be proud to be a pop up and be agile (see Chapter 2 for more on this concept). Don’t try to be permanent!

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Part VI: The Part of Tens

Learn from Failure

L

In today’s culture, success is all that matters. Creative people know, though, that failure is more important; by making mistakes, you learn and do better next time. As playwright Samuel Becket said, ‘Try again. Fail again. Fail better.’

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IA

Entrepreneurs know that failure fosters success, too. Virgin Brides, Virgin Cosmetics, Virgin Megastores and Virgin Cola weren’t successes, but they all helped Sir Richard Branson become one of the richest people in Britain.

M

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Pop ups are a perfect place to test and prototype, but it means some ideas will fail. Don’t be scared to fail, but do reap the lessons when you do. Fail faster!

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Recycle Empty Shops

TE

Pop ups recycle old shops, old furniture and shop fittings, and many even sell recycled and remade goods, too.

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Creating new things from old is common to lots of pop ups. Think of your pop up as part of the cycle of life on the high street. Make sure that you reduce, reuse and recycle. Whatever’s left at the end of your pop up, pass on and share.

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Come Together Get people together to make your pop up work. Working with a group is more fun than working alone, so find people you can trust and let them do what they’re best at. Don’t micromanage. Pop ups are often shared spaces, with loose partnerships delivering mixed programmes of activity in their shops. Chapter 3 tells you how to build a team and form partnerships. Round up a posse, and you’ll find that, as singer Sufjan Stevens says. ‘We can do much more together – it’s not so impossible’.

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Chapter 16: Ten Reasons Why Your Pop Up Is Good for Business

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Have Fun

IA

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Whether your pop up flies or crashes into the ground, it’s an unusual chance to try things out. You work with a great, handpicked team of people to achieve a common aim. You get a chance to be creative. You meet interesting visitors, too; pop ups do attract the local characters!

ER

So make sure, amongst all the planning, the push to open on time and under the pressure of delivering, to have fun.

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That’s why people like me become pop up addicts; because it’s just about the most fun you can have on the high street.

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Business Essentials For Dummies Minibook  

Sample chapters from new and bestselling For Dummies business books.

Business Essentials For Dummies Minibook  

Sample chapters from new and bestselling For Dummies business books.

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