Crowdfunding – could it work for your business?

Jan 18, ’12 7:21 PM
Author Lorraine Allman Categories Business Funding, Business Startup, Finance, Finance, Micro Business, Small Business / SOHO, find funding

Crowdfunding is becoming an increasingly popular method for small businesses and social ventures to raise much needed funds.  The map below gives you some idea of the scale of growth in Crowdfunding over recent years.  Interestingly, the same source indicates that 46% of all UK Crowdfunding platforms were launched in 2011 alone, so with the growth in such sites I wanted to write about the ups and downs of Crowdfunding from a small business perspective.
Worldwide map of Crowdfunding platforms

What exactly is Crowdfunding?
The idea behind crowdfunding is a relatively simple one. You have a business idea or want to grow your business but need money to make this happen. Visit your chosen crowdfunding platform, create your pitch, set your financial target, and promote your project to anyone online or offline who you think might want to invest in it, for example family, friends, clients, suppliers, twitter followers, linkedin (you get the idea). You offer rewards (traditional Crowdfunding) or a share of equity/revenue (commercial Crowdfunding) in return for the investment. When you reach your target, you get your money and get delivering on all those promises.

Sounds simple enough! So once your project has been listed you sit back and let the money roll in?
Alas, nothing could be further from the truth. In fact if you haven’t already been building your profile and marketing to your target audience before you post you’re going to have to work flat out to raise the funds you need. The onus is very much on YOU to promote your project and get the investors in.  At the time of writing this blog 31 projects, that’s 67% of those listed currently on the commercial Crowdfunding site Crowdcube® have 10% funding or less (many at 0%). Looking at some of the successes on the site it’s not difficult to spot the more established companies securing their investment fairly quickly (Kammerling’s £180k; The Rushmore Group Ltd £1m).  I’m not saying they didn’t have to work to secure their investment but a more established brand is likely to have a head-start.

How much does it cost to post a project?
At the current time the majority of sites don’t charge to list your project, but do  take a fee when projects reach their investment target. The average seems to be around 5% of the target achieved.

What do I have to offer in return?
Different sites have different rules so be clear about this before deciding whether to part with equity or offer rewards. Rewards (or ‘perks’ as they are called on some sites) could be anything relevant to your project such as free tickets to a show to an acknowledgement on a website or free/discounted products depending on how much is pledged.  Crowdcube® require you to release equity in return for pledges so you’ll need to make sure you have the right company structure for this and think carefully about how much equity you’re prepared to offer.  Most sites have an area where you can interact with investors and let them know how plans are progressing.

The art of pitching
Creating a memorable pitch (usually in video format) is a crucial part of the Crowdfunding process and it’s probably true to say many small businesses don’t have spare video footage hanging around that can be used. Even if you did, you need to know how to make your video appealing to potential investors and get your message across in a very short space of time.

You have to remember that whilst the Crowdfunding websites are providing a platform for you, that is all they are doing. It is YOU who has to put the work in to promote it, market it and reach your intended audience. You’ll be competing against plenty of other businesses so creating a compelling pitch, sometimes in less than a minute, can be a real challenge.  It’s worthwhile looking at the different sites and watching the videos of those projects who have secured 100% funding to get some ideas for your pitch. It may even be worth having a chat with one or two of them to find out just how much work they put in ‘behind the scenes’ to reach their target.

Dribble Delights – an example of a small business Crowdfunding
I caught up recently with Cheryl Ryder owner of Dribble Delights who currently has her project posted on Bloom VC a site which allows you to ‘make a promise’ to investors in return for their money. I asked her about her Crowdfunding experience so far.

Cheryl’s idea for a range of dairy-free foods for babies and toddlers stemmed from her own experiences as a Mum of a now 3 children, all of whom are dairy-intolerant. She became exasperated at the lack of choice on the shelves when it came to party food and treats in particular.  She entered the company into The Pitch 2011 competition with just an idea and became one of five finalists in the Scottish heat. This spurred her on to take the idea forward but as is often the case, funds were needed to turn it into a reality. Enter Crowdfunding.

“It seemed like a good idea” said Cheryl “we had nothing to lose and everything to gain by trying to raise funds this way”. Although Dribble Delights have not yet reached their target funding (they have 30 days left but have so far secured just 3% of their target £7300), Cheryl is keen to point out what a positive experience it has been for them and the value of using the Crowdfunding platform to get their message out there.

“If anyone enters Crowdfunding simply to get money then they’re fools” said Cheryl. “It’s a bonus if you get your money but the exposure and opportunity it presents is priceless. We’ve had amazing coverage and recognising  we’re operating in a very niche market, but being able to reach that, ask questions and effectively test out what we’re doing has been incredibly helpful”.

Cheryl isn’t put off even if they don’t raise their funds in the next month, but feels that the most successful projects are those who have been working on building their market well in advance of posting their project and already have a following.

Making your ideas public
I asked Cheryl whether she had any concerns about drawing attention to her business idea before it was off the ground in case somebody came along and copied it. As her company was already very much in the public domain having been a finalist in The Pitch 2011 it wasn’t really an issue, but for others it could be so you have to balance whether the exposure with potential financial return balances out or outweighs the possible risk of someone with deeper pockets taking your idea and turning it into reality before you have chance to.

Here’s my summary of the ups and downs of Crowdfunding for small business:

Some good reasons to choose Crowdfunding:

  • More straightforward (and less expensive) to raise finance than through Business Angels/VC
  • An alternative to bank finance which is difficult for small business to secure
  • Free PR for your business – gets your message out there
  • Positive endorsement from potential clients
  • Builds future buyers database

Some things to think about:

  • Waiting time to know if you’ve raised sufficient funds to go ahead
  • Lack of good contacts, networks and mentoring that normally comes with external investment
  • Risk of failure to gain investment
  • Multiple investors to communicate with
  • Risk of idea being copied

It’s up to you to decide whether its right for your business but it should certainly be given serious consideration.

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Top 5 Tips for Small Business Logo Design

Jan 18, ’12 5:45 PM
Author Stefan Töpfer (Editor) Categories Business Checklists, Business Checklists

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The top 5 tips weekly post is always full of hints and tips for small, home & micro business owners.

1. The most memorable business logos are often just icons.

2. Text on a logo is not always necessary if you can come up with a strong enough visual concept.

3. Many logos use only a single colour. This helps to keep the design focussed and the message clear.

4. A rectangle design is a popular choice for many business logos.

5. If you must have text as part of your logo, make sure that you use a sensible and clear font. You may also wish to consider using only letters rather than a full business name.

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3 real ways to help you stand out and build better relations with your customers

Jan 14, ’12 1:33 PM
Author Adrian Swinscoe Categories Business Ideas, Business Marketing, Customer Service, Marketing/PR, manage your time

Readers of this blog and my own across at www.adrianswinscoe.com know that I write about building better and more valuable relations with your customers and your people as a way of growing your business.

Over the festive break I spent quite a lot of time ‘unplugged’ from the digital world thinking about how we can help ourselves stand out in front of our customers and, at the same time, help ourselves build better relations with past and present customers.

Here’s a few ideas that I would encourage you to think about doing more of:

  1. Automation, particularly marketing automation, is becoming really popular and there is a lot of talk about how we can automate this and that, specifically, when referring to online transactions, communication, customer service etc. Whilst I understand the rationale and efficiency of these type of efforts, I often stop and think about what this would mean to me if I were the customer on the receiving end of automation and how would it make me feel. Obviously, it will depend on the type of business you are in and the volume and size of transactions you have but do take the opportunity to stop and ask yourself what is the cost to your customer relations of trying to automate as much as you can. Try to resist the temptation to dehumanise everything. Put the time and effort in and do it yourself. In doing so, you will automatically personalise it and it will make you stand out.
  2. If you want to make people feel good about your business, make it less about the business and more about them. Here’s a simple idea: Pick up the phone/meet more customers even just to say ‘Hi’. You never know what will happen.
  3. We live in a digital age but don’t you get the feeling that you get a little overloaded from time to time with all the emails and web-based stuff that you see? How about winding back the clock a few years and try to do less by email and more by letter or postcard. We all love getting postcards and letters, right? Excited, I came across a great web-based service and set of applications for Android, iPhones and iPads called Touchnote that can help with that. What they do is allow you to upload pictures and images, write a personal message and they will post a postcard to a single or number of participants. Obviously, you have to pay for this service but what a great way to stay in touch with some of your customers and make you stand out at the same time.

What do you think? What would you add that has helped you stand out and build better relations with your customers?

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Benefits of Storage for Small Business

Jan 13, ’12 3:08 PM
Author Stefan Töpfer (Editor) Categories Disaster Plan, Guest Blog, Home Business

Not long ago it was significantly more costly to set up a small business. Advances in resources for working from home, such as high speed broadband among others have played a huge part in the changes. Factors such as lower priced technology and the increasingly cheap and more flexible options offered by storage companies also plays its part in the rise of small entrepreneurs.

Business no longer needs a physical shop space and so can advertise to the world from its home and so in the last decade we have seen a huge change in the way many businesses begin and are handled.

Home Business

Running a business from home used to come with the negative, of either having to section off an area of the home for stock, or having to purchase or rent a retail space. The advent of self-storage allows a flexible answer to this. Users can use their own stock control methods to ensure they have the goods needed on hand, while they can store others for periods in stores.

Flexibility

Storage options are significantly less costly than retail space, and many have the additional benefit of allowing entrepreneurs to use more or less space as their stock levels require it, mirroring this in costs, which are usually charged per square foot. Second to this, a storage solution for delicate goods is also provided for, with humidity controls in place for goods susceptible to damp environments.

Obviously, security plays an important factor when storing goods. Many entrepreneurs don’t feel comfortable with thousands of pounds of stock sitting around the house. Storage companies providing 24 hour CCTV, with individually alarmed rooms and sturdy perimeter fencing, provide safety homes never could.

Receiving Stock

For entrepreneurs who receive large stock, or deliveries via articulated truck, storage solution companies provide space and parking answers, which conventional streets, or roads just can’t. They also present options for unloading, such as pallets, trolleys and in some cases designated forklift drivers that require investment. Such lifting equipment obviously takes the cost, time and pain out of unloading stock.

Clearly, access is imperative and many of these storage points provide this seven days a week, with some even making provision for packaging needs via an onsite shop. This allows entrepreneurs to prepare items when onsite and save time, while being as productive as possible when on task.

Financial Aspect

Financial, storage solutions are also a positive, with costs low and storage flexible. People with storage needs often find the room required fluctuates, fortunately with such storage solutions it is possible to increase or decrease storage room depending on levels of stock. This means taking up less footage of an area when it’s required and so means paying less. Contract lengths are also quite short, with contract termination periods as low as seven days and storage allowed on the day signed up.

Storage solutions flexibility, economic costs, access and safety make them undoubtedly an ideal solution for the ways of much commerce in the 21st century.

GUEST BLOG: This helpful business advice was provided by Drew Davies on behalf of Big Yellow Self Storage

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8 Top Tips for Start-Ups

Jan 11, ’12 8:09 PM
Author Lorraine Allman Categories Business Startup, Micro Business, Small Business / SOHO, Start-Up, Start-Up, start-up in business, start-up in business

January is perhaps unsurprisingly one of the busiest months of the year to start up a business, yet the statistics on survival rates continue to make shocking news. For example in 2010 297,000 UK businesses went bust, equivalent to more than 1,170 every working day. Further research shows that less than 50% of companies established in 2005 were still trading at the close of 2009. (source)

So what measures can you put in place to avoid being a negative statistic, giving your business a better chance of doing more than just surviving?

Do your research Yes, I know it sounds boring but researching at least the basics about your market (e.g. trends, scale), target groups (where they spend their money and time), and competitors is essential to inform the rest of your business plan.

How are you helping the market? For most businesses to succeed you need to have a pretty clear idea about what problem your business is providing a solution for and/or what need you are meeting. If you’re thinking of entering an already busy market, consider how you’re going to differentiate your business from competitors. What are you going to do that’s better?

Keep listening and talking to customers This sounds obvious but it’s surprising particularly during the early years how we can be so focused on getting the business off the ground, learning the ropes and managing day-to-day that we forget the most basic of requirements for a successful business to listen to and talk with your customers. Create an authentic and meaningful relationship with them to engender loyalty and make sure you’re meeting their often changing needs.

Don’t take everything on yourself Easy to do in the early days when money is often scarce, but take a long, hard, and honest look at your skillset and time available. Consider outsourcing anything you’re not so good at. Doing your accounts is an obvious one (particularly if you’re Limited company) but help with administration or sales could be equally valuable. Ensure your network of colleagues complements your own skills and knowledge and don’t forget to keep an eye out for collaborative opportunities with complementary businesses – so much more can be achieved with a collaborative effort

Avoid starting with debt Being under-capitalised is one of the key reasons why businesses can fail. If your cash flow is poor to start with you could face an uphill struggle making the figures stack up. If you’ve done the figures and are short of money to start up take a look at some of the alternative funding sources such as crowdfunding (I’ll be writing a blog about this very soon) or even for small amounts your local credit union.

Find a mentor Many new initiatives that have started in the last year encouraging start-ups and existing businesses to find and benefit from a mentor. Some of these are volunteers and others charge a fee. Recent evidence suggests 70% of mentored small businesses survive longer than 5 years (double the number of non-mentored enterprises) so finding a mentor or coach isn’t really an option anymore, it’s essential.

Consider finding a Non-Executive Director This option isn’t for everyone however if you have genuine aspirations to grow your company quickly but need investment and skills to do that, you may want to consider finding an Investing Non-Exec. Once the domain of large corporations, an increasing number of start-ups are now choosing this route to add credibility to their management team as well as much needed funds and contacts. You can read more about this with some case studies here.

Test-trade or work 5-9 Thousands of people right now are holding down full-time jobs whilst starting a business of their own. They do this by working what is commonly referred to as the ‘5-9’ shift although in reality of course the hours are much longer! Test trading in a small way and/or working 5-9 can be an excellent way to find out a) whether you’re suited to being self-employed (it really isn’t for everyone despite what you may hear others say!) and b) help you determine basic information such as whether there really is a market for your business and if so how much people will be prepared to pay for your product/service.

Whatever your situation and whatever you decide to do, I wish you every success in 2012 and beyond.

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Top 5 Tips for Making Your Small Business More ‘Green’

Jan 9, ’12 3:24 PM
Author Stefan Töpfer (Editor) Categories Business Checklists, Business Checklists, be eco-friendly

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The top 5 tips weekly post is always full of hints and tips for small, home & micro business owners.

1. Use energy efficient lighbulbs in your workplace and take advantage of natural light wherever possible.

2. Recycle any waste that is generated by your business. Try to also reduce your waste output wherever it is possible by cutting down on needless waste like paper cups.

3. Encourage teleworking within your business if it is possible to do so. There is little benefit to meeting face-to-face with your staff that cannot be achieved through video conferencing and phone calls.

4. Try switching to more environmentally marketing techniques. Ditch those pointless paper flyers for email marketing and social media campaigns.

5. Make a concerted effort to make your workplace more energy efficient. Ensure workstations are at the very least placed into power-saving sleep mode at the end of the day and try to unplug other office items like printers, copiers and appliances.

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Top 5 Tips for Starting a New Business in 2012

Jan 3, ’12 7:00 AM
Author Stefan Töpfer (Editor) Categories Business Checklists, Business Checklists

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The top 5 tips weekly post is always full of hints and tips for small, home & micro business owners.

1. Don’t be afraid to seek out a mentor to help and guide you. Starting a business is a daunting prospect for many of us.

2. You will need to conduct extensive research – but try not to spend forever doing it. Every day you spend researching is another day in which you do not own a business or earn any money.

3. Make sure you know exactly what you are looking to achieve from business ownership. It is all very well having a business dream, but there is a lot of groundwork that has be laid in order to make it a reality.

4. Try to keep track of your progress by setting goals and marking important milestones (e.g. 1 month of trading, 100th sale). This helps to remind you of how far you have come.

5. Don’t delay in turning your ideas into reality. You shouldn’t just assume something will work, get it implemented right away and start receiving feedback from customers.

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Top 5 Small Business Tips for the New Year

Dec 31, ’11 7:00 AM
Author Stefan Töpfer (Editor) Categories Business Checklists, Business Checklists, Small Business / SOHO

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The top 5 tips weekly post is always full of hints and tips for small, home & micro business owners.

1. Look at your competitors and see how their product offering has changed over the course of the year and examine what they’ve done right and wrong.

2. Try to get the year off to the best possible start by innovating. Look at your existing product offering and consider how you could make it more popular or reach a new audience.

3. Remember to focus on finding solutions rather than stressing over problems. You should be aware of what went wrong in 2011, now think of ways to do things better with a fresh start.

4. This one is important: don’t repeat your mistakes from this year all over again! Running a business should be a learning experience and failing in the same way each time shows that you are not learning at all.

5. Finally, look back at 2011 and evaluate what has worked and your business did right. Do more of it in 2012!

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2012:The Year Enterprise Rocks

Dec 30, ’11 6:21 PM
Author Tony Robinson OBE Categories Announcements, Employment, Freelancer, Getting Things Done, Home Business, Micro Business, MumEntrepreneur, Self-employed, Small Business / SOHO, Small Business Support, Sole-Trader, Start-Up

Making it Better and Fairer

It will be a rocking good start to 2012. The UK Enterprise Rockers movement is inviting journalists to kick off 2012 by covering the launch of our #MicroBizMatters campaign. The Enterprise Rockers, all micro business owners, have chosen Scarborough to host the media launch event at noon on January 9th.

Scarborough is a former winner of both the most enterprising place in Britain and the most enterprising town in Europe. Oh and the two founders of the Enterprise Rockers, the wonderful Tina Boden and me, live there.

The aim of the Enterprise Rockers movement is to make life better and fairer for all Micro Business Owners. The #MicroBizMatters campaign will improve awareness of the importance of the UK’s 4.5 million micro businesses, including start-ups, to jobs, the economy and communities.

Although the UK is the first to launch the Rockers there is already interest being shown in many countries to take up our movement, including the US.

Positive Messages Will Tackle Discrimination

The campaign also seeks to make people more aware of the discrimination by Government, Banks and Big Businesses against micro business owners and what the benefits to Britain would be if they gave them a fairer chance to survive and thrive. The campaign also positively recognises large organisations that the Rockers agree are micro enterprise friendly such as Apple, the Co-op, British Library and ACAS.

Founder Tina Boden, who owns a fine food company, explained, ‘We’re not a political, lobbying or a fee paying membership organisation. Micro business owners freely get involved in the Rockers to do as much or as little as they like. We agree everything by majority decision.

We believe that by thousands of us supporting each other, trading with each other and carrying the same messages in villages, towns and online all over the UK that we can harness the power of plenty to make life better and fairer for micro business owners.

Our #MicroBizMatters campaign will make people aware why it is important that Britain is more micro enterprise friendly. This in turn will improve the future prospects for micro-business owners including start-ups.’

Why this way works?

For me, it is really important that everything we do is really positive. As micro enterprise owners we are and have to be positive people and we’re used to just getting on with ‘doing the biz’ so we’re certainly not moaners and we’re not looking for hand outs.

We’ve made very little progress in the last twenty years consulting with Government Ministers and their officials to try and get a better deal on skills and support for start-ups and enterprise owners. So the Enterprise Rockers movement is a welcome change of direction.

As one in seven of the adult workforce in the UK are running their own micro businesses there can’t be many of the population that don’t know, and more importantly, would like to help a micro business owner to earn an honest living.

Politicians are only interested in what the public think around election time but by the next UK election we’re pretty sure that we’ll have enough public opinion on our side so that they, for the first time, will need to state what they are going to do for micro business owners (0-9 employees).

Fact: Micro-Business Matters

Influencing public opinion and in turn government is a small part of what we’ll achieve. After all, we’ll never be as important to Ministers as Big Business and the Banks but we can hopefully stop 95% of government funding and support going to bigger business so that the 95% of all UK businesses that are micros get a fairer deal and an even break.

We’re growing. We already provide most of the new jobs, innovation and best help to communities and we contribute a third of all private sector jobs and a fifth of UK turnover. The thousands of Enterprise Rockers actively involved on Twitter, Facebook, Linked In and ready to champion our #MicroBizMatters campaign will make life better and fairer for us all.

The #MicroBizMatters campaign already has 750 signatures on its ‘Tell Us What You’re Doing for Micro Enterprises Not for’ SMEs’ government e-petition. This already puts it at Number 14 out of over 600 e-petitions to the government’s Department of Business, Innovation and Skills.

Whilst the Rockers are not campaigning, through #MicroBizMatters for government funding they are requesting that government reduces its funding and support to Bigger Business. For example for every £50 million of government support 4.5 million micro businesses get 6000 big businesses get £1 billion.

Time to join our band?

The launch of #MicroBizMatters takes place in the Penthouse, the Sands, North Bay, Scarborough at 12 noon on Monday, 9th January. If you know a journalist then ask them to either register here http://enterpriserockersofficiallaunch.eventbrite.co.uk/?ref=enivtefor&utm_source=eb_email&utm_media=email&utm_compaign=invitefor&utm_term=readmore&invite=MTU1Nzk2OS90b255QGVudHJlcHJlbmV1cnN1ay5jb20vMA== or they can arrange to interview the founders of the Enterprise Rockers by e-mailing tony@entrepreneursuk.com with their requirements.

There’s also no better time for you to get involved with the Enterprise Rockers. It’s free and you can join our Enterprise Rockers discussion groups and MicroBizMatters discussion groups on Facebook and Linked In or follow us on Twitter @EnterpriseRocks or check out our website http://enterpriserockers.co.uk and sign our Government e-petition at http://t.co/QK36cLlU

Thanks lots – enjoy 2012 the year of the Enterprise Rockers.

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The rate of insolvency is not helped by lies, damn lies and statistics

Dec 22, ’11 6:36 PM
Author Adrian Swinscoe Categories Finance, Recession Survival, Small Business / SOHO, handle problems

I saw a couple of news stories today that were reporting on new figures that have come out of Experian on the number of business insolvencies in different parts of the UK.

The first (Huge rise in insolvencies, but London fares better than rest of the UK) was from Londonlovesbusiness.com and looks at the November statistics compared to the same time last year. The graphic below is from their site graphs the Experian data.
Experian stats on insolvencies UK
The second (North/South business insolvency divide begins to widen) was from Business Matters and looks at the month on month data over this year.

There were a few things that occurred to me when I saw these two articles:
1.    Both articles had the same data but came up with two very different stories
2.    Don’t always believe what you read in the press.
3.    Both are right and not right at the same time.
4.    Everyone has their own agenda.

My Christmas wish for all of us in business: Read press like this less, talk to friends and your trusted advisors more, be more open, ask for help early and even if you don’t need it and let’s work together to make sure these statistics (whichever ones are true) don’t get worse.

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