Your plan

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Get key business strategies right

Running a business can be difficult, with dozens of different tasks competing for your time. You need to identify the important issues and make sure that you spend most of your time on activities that will make a real difference to long-term success. Key areas include winning sales, controlling costs and managing cashflow. At the same time, you must not overlook important tasks, such as arranging adequate insurance and ensuring that you comply with your legal obligations. Leading and motivating employees is essential if you are to get the most out of them. And you need to invest in ways of improving your business from buying a new IT system to training employees or launching a new product. Getting the balance right takes time and effort - but pays dividends.

1 Focus on your priorities

1.1 Concentrate on winning and keeping customers. Continually research your customers and competitors. Work out which customers you want to target and how you will market to them. Actively promote your business and your products or services: for example, use advertising, direct mail, PR and exhibitions. Make sure you are spending enough time selling. Price your products (or services) competitively, but compete on value and service rather than on price alone. 1.2 Monitor your cashflow closely. Keep track of the balance between money coming into the business (usually mostly from sales) and money going out. Try to anticipate cashflow peaks and troughs so that you have time to deal with them.

Set up effective credit control systems. For example, many businesses need to put more effort into getting sales invoices paid on time. Explore your funding options. A loan (or investment by an external shareholder) might be a better way of covering a medium-term borrowing need than an overdraft. Other options include using factoring or invoice discounting to borrow against unpaid invoices, and leasing equipment rather than buying it outright. 1.3 Make sure your employees are performing effectively. Start by recruiting the right people. Use job descriptions to work out exactly what skills you want your employees to have. Lead and motivate your employees. Agree clear goals, encourage employees to take responsibility for achieving them, and praise and reward good performance. Monitor your team's performance by holding regular reviews. Discuss and resolve any problems and frustrations. 1.4 Develop your selling skills. Make sure that you, and all employees who interact with customers, have the right training, attitude and approach. 1.5 Control your costs carefully. Cost control is often the easiest way to improve short-term profitability. For example, you might be able to negotiate better deals with your suppliers.

2 Minimise your risks

2.1 Take out any insurances you need. You are legally required to have employers' liability insurance (if you have employees) and third party insurance for any motor vehicles. You are likely to want to insure your premises and their contents. Other insurances you may want include public and product liability (to help protect you against legal claims if your business or product causes harm) and business interruption insurance (to cover losses if a disaster stops you trading). A good insurance broker can advise you on a suitable policy.

2.2 Build customer loyalty to reduce the risk of losing a key account. Provide a high standard of customer care and keep in regular contact. Diversify your customer base to avoid excessive reliance on one account. 2.3 Control your cashflow. Anticipating potential cashflow problems is essential (see section 1). If disaster threatens, you might need to negotiate with your creditors or consult an insolvency professional. 2.4 Treat your employees fairly to minimise the risk of resignations or legal action. Offer competitive remuneration and a pleasant and rewarding working environment. Draw up sensible and fair employment contracts. Prepare and implement an equal opportunities policy. Invest in training and development. Share knowledge and skills to avoid relying too heavily on one key employee. 2.5 Make sure your computer systems and the data stored on them are secure. Take regular back-ups so that you can restore data if your system crashes. Keep the back-ups somewhere safe, away from your premises. Use virus-checking and firewall software, and protect access to data with passwords. Set up manual systems that will allow you to carry on working when PCs are out of action. 2.6 Make sure that you comply with the Data Protection Act. If you process information about individuals for business purposes you are likely to be covered by the Act. The Act covers all personal information held on computers and most manual systems. You must comply with the Data Protection principles - for example, limiting the amount of personal information you hold and making sure that it is secure and might be required to register. To learn more, visit www.ico.gov.uk

2.7 Protect your premises. Secure and insure your premises. Plan ahead if your rent is going to be reviewed, your lease is due to expire or before any rates revaluation. 2.8 Protect your intellectual property. Consider patenting inventions and registering designs and trademarks. Only invest in intellectual property protection if it is commercially worthwhile and if you are prepared to enforce your rights. Visit the Intellectual Property Office website 2.9 Negotiate solutions to disputes if you can. Going to court is risky, expensive and disruptive. If you are threatened with legal action, take advice. Realistically assess your chances of winning - and being paid - before you sue anyone. 2.10 Get advice and help if you plan to trade internationally. UK Trade and Investment, and the British Chambers of Commerce, offer help and advice. Visit www.ukti.gov.uk Visit www.britishchambers.org.uk

3 Improve your efficiency

3.1 Purchase appropriate information technology. Work out what your business aims are, and use these to define what your IT system needs to do for you. Computerise routine, repetitive tasks like book-keeping. 3.2 Use email and the internet. Email is a very cost-effective way of communicating. The internet can be a useful source of business information, for example, when finding out about customers, competitors and potential suppliers. You can use your website to attract new customers or to sell directly.

3.3 Establish time-saving routines. Develop and implement straightforward policies so that you do not have to take the same decision repeatedly. Store information systematically so that it is easy to find (whether in paper files or on computer). 3.4 Manage your time efficiently and help employees to do so. Organise a schedule of daily tasks (eg checking appointments and correspondence), weekly tasks (eg checking bank balances and cashflow), monthly tasks (eg reviewing business performance) and so on. Aim to spend most of your time on important activities that will help you achieve your business goals. Look for opportunities to delegate (or even eliminate) less important activities. Use appropriate tools such as time management software.

4 Plan your strategy

4.1 Establish your long-term goals. Identify the key factors that will determine the long-term success of your business. Boosting sales, controlling costs and managing cashflow are the three key areas. Use a SWOT analysis to help you understand your strengths and weaknesses, and the opportunities and threats that face your business. Consider using other techniques, such as benchmarking, to help you assess and improve the overall health of your business. Try to establish a small number of key indicators to monitor and act on. 4.2 Prepare a forward-looking business plan. Use the plan to set out how you will achieve your objectives. Review and update the plan regularly. 4.3 Keep moving ahead. Aim to continually improve the way you do things. Encourage employees to make suggestions.

Continually improve products and services. Be ready with new or improved products before your existing products become tired and uncompetitive. 4.4 Continually monitor key external factors which affect your business. Keep up to date with changes to your market and what the competition is doing, so that you can refine your marketing plans and take advantage of new opportunities. 4.5 Plan for your personal long-term security. Make sure you have adequate pension arrangements. Plan how you will exit the business (eg by selling it to another company). 4.6 Stay focused on your core activities when you are buying or selling a business. Managing your business must still be a priority, even if you feel under pressure to work on a deal.

5 Comply with legislation

5.1 Find out about the laws that are likely to affect you. Ask your advisers (see section 6). 5.2 Comply with employment legislation. Key areas include offering equal opportunities, providing written terms and conditions of employment, and ensuring that you do not dismiss an employee unreasonably. 5.3 Provide a safe working environment. You are legally responsible for everyone affected by your business, including employees and members of the public. A health and safety risk assessment is the key to meeting your obligations. If you have five or more employees, you must have a written health and safety policy. For more information visit the Health & Safety Executive website 5.4 Fulfil your duties as a director.

You must act in the interests of the company. Specific responsibilities include ensuring that the company files its statutory returns on time. If the company gets into financial difficulties, you could become personally liable, for example, if you fail to act with reasonable skill and care, or if you allow the company to continue trading and borrowing when you know there is no reasonable prospect of repaying those debts. 5.5 Keep accurate financial records and prepare proper accounts. Make sure you have solid book-keeping systems from the start. Take advice from your accountant. 5.6 Make sure you meet your tax liabilities. You will be liable for tax on your business profits, either corporation tax (if you trade as a company) or income tax (if you are self-employed). If you have employees, you will have to operate PAYE to handle income tax deductions and National Insurance contributions. If your turnover exceeds the VAT threshold, you will have to register for VAT and make VAT returns. Find out more about VAT by visiting the HM Revenue & Customs website at www.hmrc.gov.uk 5.7 Stay on the right side of IT law. Only use licensed software. Take advice on how the law applies to your emails and your website.

6 Get help and advice

6.1 Contact your local business support organisation to find out what help they can offer.

6.2 Work with good professional advisers. Use an accountant who understands your kind of business. Ask a solicitor who works with small businesses for a legal health check. Members of the Lawyers For Your Business scheme offer a free initial consultation that will help you understand the basics.

6.3 Contact your trade association and local Chamber of Commerce. To find details of your trade association visit www.taforum.org To find your local Chamber of Commerce visit www.britishchambers.org.uk 6.4 Find external skills to cover any weaknesses you have. Consider employing skilled consultants in areas where you cannot afford to develop in-house skills. Consider appointing an experienced non-executive director (or business mentor) to provide a regular assessment of what you are doing.

SIGNPOST
To find a trade association relevant to your sector, search the Trade Association Forum's online database To find your local Chamber of Commerce, search the British Chambers of Commerce website You can email the Law Society for a list of Lawyers For Your Business solicitors in your area which offer advice to smaller businesses and a free initial consultation For help and advice on exporting, contact UK Trade & Investment (020 7215 8000) and visit the British Chambers of Commerce website at www.britishchambers.org.uk/zones/export For more information about the Data Protection Act, or to register, visit www.ico.gov.uk or call 0303 123 1113.