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Co-Operatives – What Are They, Why Start One And Who Benefits?
Co-operatives are seeing resurgence in interest and offer an alternative to other business models.
Essentially a co-operative is owned by all the members. Members are both the employees and employers. Each member has a share in the business. Co-operatives will often work because each member has a greater commitment to making it work than traditional business models such as limited companies and partnerships.
Typically a co-operative would be started by members each putting in an investment to the business. Members are paid a dividend of earned income. Each member has a vote on how the business is run and in decision making.
Co-operatives are not suitable for all businesses and owners. It won’t for example work for owners seeking personal financial gain. However on the flip side co-operatives do tend to be more stable long term businesses. There is also the added bonus that it removes many of the stresses and isolation frequently felt by business owners because the responsibility is spread across the members.
Author – Paul Stanford
Small Business Start-Up Sole Trader Or Limited Company?
Setting up a new business is straightforward as a sole trader. You need to inform HMRC and complete form CWF1 to register as self employed. You also need to register for Class 2 National Insurance contributions by completing form CA5601. You must register within three months of becoming self-employed otherwise you could be fined. You also need to file an annual self-assessment form so need to keep records of all spending and income from day one. You are taxed as a sole trader which could be as high as 50% for those earning £150k or over. Interestingly you do not need to have a business bank account but it is preferable.
Starting up as a limited liability company can bring both financial and legal benefits. It gives the founders’ the protection of limited liability, some customers expect it and incorporation tax for small businesses is set to fall to 20%. To set up as a limited liability company you need to chose a name and register it at Companies House. Most founders chose to do this by buying a firm off the shelf from their accountant or formation agent for around £200. It is possible to register a company yourself for £20 by completing form IN01 and filing a memorandum and articles of association but this is more complex for the novice. Next Companies House will inform HMRC that your business has incorporated and you will be sent form CT41G to register for Corporation Tax. Company directors are responsible for keeping records and calculating their tax liability, which must be paid no later than nine months and one day after the company’s year end. Limited companies must have a business bank account
Author – Paul Stanford
Recession Spawns 1000 New Businesses Every Day
Over the past 12 months over 395,000 new businesses have been registered at Companies House: only 2006/07 saw more company births. But that was at the height of a boom, not the depths of a recession, and there are big question marks over the level of support that these new ventures will receive as the new government threatens to abolish the Business Link network.
Commentators suspect that the boom in business creation is fuelled by redundancy payments and the growth of the internet and faster broadband speeds allowing entrepreneurs to take advantage of e-commerce opportunities that require much smaller up-front investment.
But setting up a company is relatively easy; keeping it going beyond the critical three year period is less so. As the new government continues to feed speculation about the deconstruction of publicly funded business support, doubts increase about the level of support that fledgling businesses can expect from the State increase.
What scant information exists suggests that local delivery of pre-start support will be provided by the new Local Enterprise Partnerships [LEPs], but LEPs are probably between one and two years away from being established and most new companies hit problems in the first six months.
Source – http://brightonbusiness.co.uk
A Lesson on Domain Names From the Apprentice
The British TV show The Apprentice is a wonderful series, full of valuable lessons for business people. Many of these lessons are delivered by Sir Alan Sugar in his blunt and irascible style. But in May 2006 Sir Alan got a lesson about domain names that I’m sure he’ll never forget, and it was a salutary reminder for the rest of us too.
To business people in the online world, your web domain name is the most important asset. Get that right and everything follows. It’s literally the foundation that you build the business on. First, do we like his name for our new company? Is this domain name available as a .com and a .co.uk? Second, is this company name available at Companies House? If we’re in agreement then let’s register the .com, the .co.uk and the company name immediately.
And these discussions about domain names and company names should only be held privately with people you trust and not publicised until everything has been set up.
So, going back to 2006 and The Apprentice. The British public and the news media have been following the trials and tribulations of the contestants for weeks. Around six or seven million people were watching the final which was won by the pretty blonde Michelle Dewberry. A smiling Sir Alan announced that she was to be the managing director of a brand new company which rejoiced in the rather splendid name of Xenon Green. This new venture was a division of Amstrad’s existing Viglen PC business, and it would be doing some good environmental work too, recycling old computer equipment. Sir Alan proudly announced that this had never been done before.
An IT services technician who was watching did a quick check online and found to his astonishment that the domain name XenonGreen.com hadn’t been bought. Neither had the domain name XenonGreen.co.uk to his further surprise. Domain names are relatively inexpensive to buy, so he bought them, just for fun.
Pretty soon the world knew about this, as viewers started to look for the website of this interesting new company and it wasn’t there. Tech-savvy people like the fast-moving web designer were able to check whether the domain had been bought and found it belonged to an IT services firm which had no connection to Sir Alan’s businesses.
It then transpired that in addition to the domain name fiasco, Sir Alan’s people hadn’t registered the Limited Company name or a trademark either. And Sir Alan’s claim that recycling old computer equipment had never been done was met with a torrent of comments from firms who’d been doing this for years.
In the end, Xenon Green bought a hyphenated domain name, Xenon-Green.co.uk which is generally regarded as the poor cousin of the unhyphenated domain name.
So, as this story illustrates, when forming a new company, you should research the market, and when thinking of likely names you should definitely register the domain name once you’ve decided, and form a Limited Company before you publicise it. Otherwise other people may do so and cause you all kinds of problems.
Source – http://articley.com
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Dragons’ Den boost to entrepreneurship wears off
A dramatic fall in the number of would be entrepreneurs has thrown in doubt the private sector’s capacity to drive the recovery in the economy.
Only 3.8pc of the population expects to start a business in the next three years, compared with 5.9pc in 2004, a survey of 30,000 people in the UK, called the Global Entrepreneurship Monitor, has found.
For the first time since the survey began in 2003, fewer than half the adults surveyed thought that starting a business was a good career option and that they saw successful businesses covered in the media, suggesting that the so-called ‘Dragons’ Den‘ effect may be wearing off.
Only 3.7pc of women were involved in what the researchers from Strathclyde and Aston Universities defined as entrepreneurial activity, compared with 7.8pc of men.
However, the gap between male and female entrepreneurial activity narrowed in early stage companies, the researchers found, raising the prospect that a higher proportion of female owned businesses fail to become established.
The number of people having to set up in business to earn income rose sharply between 2007 and 2008 but eased off last year in every region of the country apart from London, where the number of people forced into self employment tripled.
The Government said it was “well aware of the challenge it faces to raise enterprise awareness and start-up activity in the UK”.
Mark Prisk, small business minister, said: “We will meet that challenge by making this decade the most entrepreneurial and dynamic in our history.”
He said the Government would develop “a coherent and comprehensive strategy for enterprise”.
This would include:
– “Challenging aspirations and capability – embedding enterprise awareness and business management skills into mainstream education: schools, further education colleges and higher education institutions.
– “Modernising business support – ensuring the support, information and advice provided to businesses is fit for the 21st century.
– “Supporting cash flow and access to finance – ensuring individuals and businesses have the skills, tools and networks they need to understand the options and to access finance, and that Government identifies and addresses market failures.
– “Reducing burdens – making it easier to start and grow a business by delivering long-term certainty and stability in the tax system, and pushing ahead with the promise to reduce regulation.
– “Transforming opportunities for individuals and their communities – a radical change in the support offered to workless people through Work for Yourself and providing access to mentors and small loans for the most disadvantaged”
Source – The Daily Telegraph, 15th July 2010
Top Tips From Entrepreneur Ed Reeves
Ed Reeves is the founder of Moneypenny – an answering service with a difference! Based in Wrexham, North Wales, it turns over £7m per annum and has 250 staff.
Says Ed “whatever business you do, make sure it is scalable. That is where everyone goes wrong. And stick to your convictions”.
He also recommends recruiting staff based on their attitude rather than their experience.
I am totally with Ed on his tips. As a business adviser I see so many businesses that start a business but it’s not readily scalable. Typically the business is totally reliant on them, the product doesn’t lend itself to growth/spin-offs or the premises are not able to cope with expansion. Could this be your business?
Recruiting staff is always an emotive issue. Michael Gerber, author and small business guru, will talk about recruiting staff with the right attitude and will even go so far as to say he doesn’t want staff with experience. I am not so sure I go quite as far as Michael on this one but I will always put a prospective employee’s attitude and willingness above experience or qualifications.
Author – Paul Stanford
Got A Sweet Tooth?
It was reported today that Hotel Chocolat, the upmarket chocolate retailer, has raised £3.7m from an innovative “chocolate bond” to help fund future business growth.
This is how it works – customers invest in a 3 year bond in the business and in return they get paid in deliveries of chocolate over the bond term. Bondholders can redeem their chocolate bonds in full after 3 years and they will receive their first delivery of a chocolate tasting box next month.
Could you do something similar to fund growth for your business? I think this is a great example of thinking outside the box (a chocolate one in this case!) and goes to show that such ideas can and do work in practise.
Author – Paul Stanford
Warren Buffett on the economy
Warren Buffet has recommended an out-of-print book written by a little known government adviser on the collapse of Germany into hyperinflation in the 1920s.
The book is called When Money Dies. Written by Adam Fergusson in 1975 but now being released by Old Street Publishing. When Money Dies describes the economic collapse in Germany after the First World War that helped pave the way for Adolf Hitler to take power. It is being seen as a warning of the dangers being posed by Europe’s current financial crisis.
The book has become a cult among top-level investors because it describes in detail the devastation hyperinflation has on ordinary people. Also, It shows that the idea that hyperinflation comes slowly is wrong. Within a single year, in 1923, the value of money was utterly destroyed and, as Adam Fergusson rightly says, “if you destroy the value of money, you destroy a cornerstone of society”
We have been warned…
Author – Paul Stanford
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