So you want to know how to grow your business in the UK? Small businesses are of course the backbone of the UK economy, contributing significantly to growth and innovation. We at Vyabul want to provide you some slick tips and tricks to get on the path to growth. This article provides actionable strategies to fuel your business growth and make a mark in your industry.

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The Impacts of AI: Will AI take my job?

ChatGPT, Bard and Meta AI it is clear to see that the AI arms race is heating up amongst the big boys, but what are the impacts of AI? Will AI cause job losses? Will it lead to job creation? Higher productivity? Does it have the potential to revolutionise business? Maybe even the world?

We at Vyabul are looking to answer these questions and understand what the true impact of AI could be.

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We are breaking down the best side hustles to start in the UK in 2023, but how do we define best? For us a side hustle needs to be profitable fast and require minimal capital investment to get off the ground. It also needs to be something you can fit around the general 9-5 and something you can potentially grow into a full-time gig in the future! So, with that in mind our list is focusing on the following key elements:

1. A growing market with few barriers to entry
2. Minimal requirements for capital investment and financing
3. Flexibility regarding hours

So, lets dive in shall we and break down the best side hustles to start in the UK.

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When looking at starting a business in the UK, you first need to answer a few questions. For instance, what type of business is it? What structure do you plan on adopting? Where are you going to work from? And are you planning on hiring employees?

Once you have answered these questions the picture becomes a lot clearer. The below article intends to give you an overview of these considerations. Give it a read and get yourself on the right path to starting a business in the UK.

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Financial forecasting and price modeling

The fun part of any business operation….The devil is definitely in the detail when it comes to financial forecasting and price modeling and there is specific software out there to help you on your way. However at the inception of a business idea you probably don’t want to invest in software and consequently you will have to turn to more manual and rudimentary means of creating financial forecasts. I feel the best alternative to dedicated financial management software is Microsoft Excel (you could also use Google sheets if you are more familiar with it). Microsoft Excel is a pretty powerful tool when used correctly and can help you to create and maintain an up to date financial forecast relatively easily using its myriad of built in functions.

Financial forecasting – The 3 Key Statements

There are 3 key statements you will be looking to model when it comes to financial forecasting and this can either be very easy, or very complicated dependent on the nature and scale of your idea. These 3 key statements are:

The Income Statement (The Statement of Comprehensive Income)

The income statement is typically the headline statement of any company’s annual report and illustrates the position of the organisation from a revenue and profit perspective. When attempting to put together your income statement forecast, you are looking to recreate something similar to the below:

The above seems relatively straightforward and clear in terms of a format, however a careful level of thought needs to applied in the derivation of the numbers. For instance you will need to be aware of the following:

• Staff costs – If you are building staff costs into your financial forecasting model then you need to account for and accrue what is known as the “on-costs”. These are those costs over and above the simple salary cost that you will need to pay as an employer. For example depending on where your business is located you may need to pay into a pension plan, employee insurance plans and employee benefits. With all this accrued for you can then create a fully loaded cost for that particular employee and build such cost into your model.
• Capital expenditure and setup costs – Setup costs are concerned with the upfront costs of getting your idea off the ground, these could come in the form of consultancy costs, administration costs, travel etc. Such costs are incurred then and there and have no real tangible asset that can be recognised from it. Such setup costs will differ a little from capital expenditure which tends to focus on tangible assets such as machinery, hardware, equipment etc which can be incurred, but written up as an asset and then depreciated over the useful life of the asset under an accounting method such as straight line depreciation. This allows an organisation to incur a heavy expense upfront, but accrue for this expense under the income statement over a period of time that enables it to be spread against the revenue it is generating.
• Operating costs – Operating costs can be items that are incurred year over year. It relates to items such as rent, business insurance and facilities management which are incurred each year usually at a fixed/semi-fixed rate. Items such as direct materials, utilities and software licensing also fall under the operating cost umbrella, but can fluctuate in line with usage. With items such as software licensing there may also be a capital expenditure element (upfront cost) and an ongoing operating cost which will need to be accounted for separately.

The Balance Sheet

The balance sheet is used to provide a snapshot at a point in time of the organisations assets, liabilities and shareholder investment. It is called the balance sheet as your total assets should always balance with the total shareholders’ investment plus the total liabilities.

In a basic sense let’s say you take out a £10,000 long term loan plus retrieve £5000 in investment from shareholders, you use this to purchase £8000 machinery and spend a further £2000 on Inventory. This means your total assets are £8000 of machinery plus £2000 of Inventory plus £5,000 cash which would equal the total investment you garnered from your shareholder investment and long term loan (£10,000 plus £5000).

The below provides an illustration of what a company’s balance sheet could look like:

As you can see the balance sheet above has the Total Liabilities and Shareholders’ Equity balancing with the Total Assets of the company and there are a few things you need to be aware of:

• Current assets – Current assets are your company’s most liquid assets i.e. those assets that can easily become cash. This covers the obvious being how much free cash do you have in the company, but also things such as:
  • Accounts Receivable – Money that is owed to you by customers e.g. you may extend credit terms and thus a customer will owe you x amount at a future point in time
  • Inventory – Generally inventory can be (or at least should be) turned reasonably easily into cash
• Non-Current Assets – These are assets that have a longer term value to the organisation, that are not as liquid including things such as property and equipment and any long term investments held.
• Current liabilities – These are short term financial obligations for your business which are typically due within a year and can include things like:
  • Accounts payable – Typically suppliers will extend credit terms to your business and the accounts payable line in the balance sheet is used to illustrate how much your business owes to these suppliers that has not yet been paid.
  • Accrued expenses – These expenses are recognised under an accounting method known as accruals which basically translated to matching the expense to when it is incurred as oppose to when it is paid. For example this could be items such as a purchase from a supplier which is yet to be invoiced or interest payments on loans that are not yet payable, but payable in the near term.
  • Short term debt – Typically any debt that is owed within the year
• Non-current Liabilities – These liabilities are financial obligations that are not due within the year and are therefore due in the longer term. Such liabilities could be things like deferred tax liabilities of portions of loans or other debt that does not fall due in the current year.
• Shareholders’ Equity – This represents the shareholders’ interest within the company and is usually made up of the capital (the amount that has been invested by the shareholders) and any retained earnings (profits that have been generated in the year, but have been reinvested in the business instead of being distributed to the shareholders.)

The Cash Flow Statement

The Cash Flow statement is a financial statement that summarises the flow of cash and cash equivalents through the business.

Putting together a forecast cash flow statement and understanding cash flow in business is absolutely paramount with many examples of profitable businesses with the ability to generate consistent revenue failing due to the inability to keep control over their cash.

The cash flow statement differs from the figures shown in the balance sheet and income statement as it takes into account cash items only, thus accounts receivable, accounts payable and non cash financial items (such as depreciation) need to be adjusted. The main components of the cash flow statement are:

Cash from operating activities

The cash from operating activities reflects any sources and uses of cash from business activities. For example this could include items such as cash receipts from the sales of goods and services and expenses such as rent payments or salary payments.

Some of the key things you need to account for are:

• Accounts receivable and Accounts payable – If you are looking to extend credit terms to your customers then you are going to need to keep track of the likely expected cash in at particular intervals and ensure it matches with your accounts payable. For example if I am extending 30 day terms to my customer, then I know a sale today would not translate into immediate cash, instead I would likely have to wait 30 days from now in order to receive payment. If my supplier wishes to be paid within 10 days then I have a cash flow issue as I now have a 20 day gap between when I have to pay my supplier versus when I receive the cash for the sale.

Cash from investing activities

Cash from investing activities covers a business’s investments for example a purchase or sale of an asset or a merger or acquisition or other miscellaneous cash investment. Generally investing activities result in cash out of the business, however in the example of an asset sale, it would result in a cash inflow.

Cash from financing activities

Financing activities include things such as investment from banks or shareholders, payment of earnings to shareholders (dividends) and any repayments of debt.

Financial Forecasting Overall

Financial forecasting is an imperative aspect in business and you should have at least a reasonable understanding of the 3 key statements and what they show. At the inception of a business these 3 statements will provide a snapshot of how your organisation is doing and therefore insight into areas you may need to change or successful areas that could be replicated. Keeping clear, accessible and regularly updated financial forecasts will ensure you remain on track and give you the ability to pivot quickly in the event something isn’t working as well as it should.

Putting together a Tender Exercise

Assuming you have a large and complex enough opportunity to put to market which would be attractive for potential suppliers to bid for then to secure Value for Money, you may be best off looking to run a tender exercise. Tender exercises are one of the key functions of good business procurement, as it evokes competition in the market and ensures organisations bidding for the work “sharpen their pencils” knowing that to win, they will need to have a more attractive proposal than their fellow bidders.

When would a tender exercise be appropriate?

Tender exercises are considered the heavy artillery in the procurement war chest and the big guns are only really needed for the big battles. Running a tender exercise for a small, non-core spend would be overkill and it is unlikely to get any prospective suppliers excited to invest time into putting together a response.

There is no hard and fast rule to know which contracts you should run a full tender exercise on, but there are some key criteria that can point you in the right direction:

1. Value – The monetary value of the contract is always an indicator as to whether a tender exercise is appropriate. High value contracts need due care and attention and assurances that the supplier is offering exactly what you are requiring. Organisations tend to set a threshold spend in line with their operational activity, typically £25k+. From a value perspective, you also have to consider the bidders view. Bidding against tender documentation takes significant time and resource not to mention the opportunity cost (bidding for your opportunity means they are committing resource that could be used elsewhere). You may feel a £5k contract is a lot to you and your business, but running a complex tender exercise is unlikely to attract many bidders as it simply isn’t worthwhile them committing the resource to it.
2. Complexity – If what you are purchasing has a significant level of complexity that needs to be specified, then it may be a necessity to run a full tender to ensure your bidders offers are matching exactly what you require. With a tender you can go into granular detail of exactly what service/functionality/product you require and introducing a very detailed specification, service levels and evaluation criteria will allow you to quickly map which suppliers can deliver to your needs. This documentation will also allow unsuitable suppliers to quickly disqualify themselves and not waste their time bidding for something they would be unable to deliver
3. Importance – This is more of a catch all. If the contract is of great importance to your organisation, it is likely to fit with one or both of the above criteria already. However, there may be some relatively low value and not particularly complex contracts that are absolutely imperative to your function. In this case you will want to explore what the market has to offer and ensure the supplier you go with has the level of credibility and experience necessary to continuously deliver to an exceptional standard.

How to put together a tender exercise

Once you have identified a purchase that requires a full tender exercise you will need to plan your go to market strategy. For instance, you will need to know where/how you are going to advertise your tender, who will need to be involved from an internal standpoint (key stakeholders and subject matter experts) and what your key evaluation criteria is going to be.

Finding bidders for your tender exercise

One of the easiest methods of advertising out your tender exercise is by conducting some of your own research. Research will give you an insight in to what suppliers currently occupy the market and their respective websites and content will allow you to gauge how suitable their likely proposals will be. Participants in the market will always be glad to hear about a new opportunity and simply dropping them a quick call/email introduction to enable them to register their interest is a very quick and typically very successful first step.

An alternative method is to sign up to and advertise on a bid portal. Countries tend to have their own rules and portals for bid advertising so it pays to do a little bit of research to find which portal is best for you given the jurisdiction in which you will be carrying out your procurement exercise. This method is likely to reach a much wider pool of potential participants, however you will have to take due care shortlisting such an extensive amount of potential offers. You certainly don’t want to be diving into detailed analysis of hundreds of responses and therefore you will need some criteria (size, location, experience etc) to disqualify participants in a quick shortlisting phase.

Internal Stakeholders

Internal stakeholders are a key aspect in a successful procurement exercise and it is vital that they are aware of and engaged with the prospective tender exercise. Within your organisation there will be a number of departments that will be affected by the outcome of a supplier selection, for example if you are tendering for a new financial software, the IT department and the Finance department will be key stakeholders with a vested interest in the outcome. IT will need to be consulted to ensure that prospective supplier offers meet key cybersecurity requirements and that prospective solutions could seamlessly integrate within the current IT infrastructure. Finance would also be the key end users and therefore would need to be actively consulted and aware of the user interfaces, functionality and prospective training that will be offered. Such internal stakeholders can help you identify what is important which will enable you to put together appropriate evaluation criteria when analysing supplier responses.

Putting together the key documentation

Once you have an understanding of where you are going to advertise your tender and have consulted with your internal stakeholders to gain more insight into exactly what is required and what is important, you will be able to move on to drafting your documentation.

In order to do this you will need to outline the specifics concerning your tender exercise. The documentation needs to highlight areas from requirements and priorities to timelines and evaluation criteria. The below framework should provide a useful foundation to get you started.

1. Specification – What is the product/service you are looking to procure? What are the specifics? Necessities? Desirables?
2. Term – What is the term of any contract you wish to sign, would this be a tender for a short term 1-3 year contract for a product and/or service or a longer term?
3. Key contacts – Who are the key contacts in your business concerning the tender exercise in case of any enquiries or requests for clarification.
4. Timetable – What is the timeframe within which you wish to complete the tender exercise? You should be careful to outline areas such as when the tender was issued, a deadline for the receipt of clarifications should the supplier have questions, a deadline for receipt of completed tenders, a deadline for evaluation and a target commencement  date.
5. Method of delivery – How do you wish to receive the completed tender documentation from each supplier? Will this be electronically? You should spell out exactly how a supplier should go about submitting their completed documentation.
6. Tender evaluation model – How are you going to evaluate the tender? Will it primarily be on price or will it be on quality/suitability to specification? You should outline exactly what you are looking for in the tender and attempt to apportion your weighting between cost and suitability (quality,, service levels, innovation and continuous improvement etc)
7. Legal disclaimers – It is good practice to include some legal disclaimers within your tender documentation. For example prospective suppliers through the tender process may gain access to sensitive corporate data and/or Intellectual Property and therefore including some basic legal disclaimers to guard against misuse of this information is good practice.
8. Disclaimer of cost – It’s good practice to include a legal disclaimer to state that your company is not in any circumstances liable for any tender costs, expenditure, work or effort incurred by the tenderer including if the process is terminated or amended by you.
9. Draft terms and conditions – It is likely you won’t just have a standard supplier contract to pull up for the particular product/service you are looking to procure, but it would be important to have in mind and spell out some contract terms you wish to see included (e.g. no volume guarantees, required liability levels etc)
10. Your rights – For example if you wish to make changes to the timetable, disqualify a tenderer due to a particular circumstance (e.g. misrepresentation) or withdraw or amend the details of the tender then you need to stipulate this under a company rights section. If you do not do this, you leave the door open for potential legal recourse in the event you decide to make changes.

Tender clarification questions

It is always important to put an initial phase in your tender exercise that allows prospective suppliers to ask questions about the documentation that has been provided and seek clarifications on any area that may seem initially unclear.

Ensure that your documentation spells out exactly who these clarification questions should be directed and which communication channel they should follow (email, phone call etc). Typically clarification questions should be directed to the procurement manager and sent via email. This leaves a clear auditable trail and enables the procurement manager to seek any additional information from relevant stakeholders that may be required to answer the question.

Once the phase is over, all clarification questions along with respective answers should be posted to each participant. This levels the playing field and ensures all parties are participating in the exercise with no asymmetry of information and therefore no discernible advantage to one party over another.

Evaluating tenders

Tenders should be analysed and evaluated in line with the criteria you specified. It pays to get your relevant internal stakeholders engaged at this stage too. Such stakeholders are subject matter experts and/or end users and will want to ensure that the prospective supplier offer meets their requirements.

In the evaluation phase it is also key to give yourself enough time to ask questions about the prospective suppliers response and seek any necessary clarifications concerning their offer.

It often pays to condense evaluations in to a presentation which highlights the key areas of each suppliers’ offer. This will enable you and your stakeholders to quickly discuss the offers and highlight which one meets all requirements and offers the greatest value for money.

Identifying a preferred bidder

Once you have evaluated the tender responses, you should be able to shortlist down to two participants. One of these participants will be your preferred bidder, meaning should contract negotiations go well, they will be your future supplier. However it is also very important to have another supplier as a reserve should negotiations break-down in the contracting phase. Doing it this way also puts some pressure on your preferred bidder to make some concessions during the contracting phase in order to secure the work as they’ll know you have another capable supplier waiting in the wings.

Contract negotiations with your preferred bidder often requires a lot of legal back and forth with both parties making acceptable concessions concerning key legal battlegrounds such as liability, termination and Intellectual Property. The phase should be given a reasonable amount of time to complete (at least 3 weeks) to ensure you retrieve the best possible outcome. It often pays to get some legal consultancy in this stage dependent on the nature of the contract, unless of course you have some in-house legal counsel.

Contract Award

Following the contract negotiation phase, you should hopefully have reached an agreement with your preferred bidder and now it is time to formalise and sign. When signatures are obtained you will now have completed your tender exercise and secured your supplier. It is good practice to file your contract in a contracts register for future reference if needed and ensure that your new supplier is entered into a suitable supplier management process to keep on top of their performance and engage with them over future opportunity!

Sourcing, Logistics and Supplier Relationships

Sourcing is paramount in business and no matter what business you are looking to run, you will typically need to procure and manage a certain number of supplier contracts and relationships. e.g. software contracts, premises contracts etc. When it comes to these contracts, businesses in their infancy typically make the mistake of simply going with the first supplier they find or using a supplier they are familiar with. However for large contracts or key suppliers especially, it is worth assessing the marketplace in an attempt to receive the greatest Value for Money (VFM).

Getting Value for Money (VFM)

The first step you want to take in when sourcing is to map out your purchasing needs. For certain service related organizations e.g. consultancies you will only need a small number of suppliers, typically software contracts, telephony contracts and premises contracts, however if your company is going to be product-based your purchasing will be more volumetric and often integrated with a wider supply chain and logistics process. In any case, once you have established what you will need to purchase, it is important to source the market and find reliable suppliers that can provide to your requirement at the right price.

In terms of finding the right supplier in the desired market with the desired characteristics to suit your business requirements you will need to invest some time in market research such as:

1. Internet research – The internet is always a powerful tool when initiating research and is definitely a useful means of identifying the key market players and potential suppliers that could be approached
2. Referrals – If you have contacts in the market or are networked with suppliers that have experience in that market then you can often get referrals to suppliers which you would otherwise not hear about
3. Industry publications – Pretty much every industry has in depth articles published by organisations specialising in market research and these are an extremely useful and reliable tool in determining who the key and emerging suppliers are in a particular market
4. Trade shows – If you have time to invest in attending trade shows you can often chat face-to-face with some of the key suppliers in a certain market and thus build an initial relationship which can help in future negotiations.

Once you have a reasonable understanding of the potential suppliers in the market you should start exploring which one is going to offer you the greatest VFM. There are a number of ways a business can go about doing this:

1. Shortlisting – Following your market research shortlist 3 or 4 suppliers and retrieve quotes along with their standard terms of business. Using this approach puts you in more of a driving seat when conducting negotiation as you will have an idea of what suppliers are offering and can thus negotiate your position based on a foundation of offers from the market
2. Running a full tender exercise – This is generally for the more established organisation and for contracts of significant value. The exercise is designed to deliver the greatest value for money with vendors submitting in depth tender documentation designed to illustrate themselves as your best option. Tender exercises are often lengthy and require an extensive workload to complete with various stages and evaluations, however they are an excellent tool in realising the greatest value for money in the market and will ensure you have been through a thorough process before reaching a conclusion. It is however best practice to save such tenders for the larger value and more important contracts to your business (not many vendors will be interested in applying the resource to something that isn’t particularly large or worthwhile). For some tips and tricks on how to put a tender exercise together see our tips and tricks section
3. Network – if you visit trade shows, business events etc you can often network with some key suppliers and key individuals to develop a rapport. In many markets relationships are paramount and you can often retrieve better value, more favors and/or better terms should you have developed close relationships.

Selected a Supplier…What now?

When you have selected the supplier offering the greatest VFM, you now need to be actively managing the supplier to ensure they are delivering on what they promised.

In many cases in order to track and monitor supplier performance an organisation looks to employ a “scorecard” which highlights the key aspects to be monitored regarding a specific supplier. Such metrics could include financial health, pricing, lead time, quality/defects and responsiveness and would, depending on the value and importance of the supplier to the organisation be updated on a regular basis.

A scorecard for a particular supplier could look something like the below:

As you can see this scorecard provides a visual representation of the supplier performance and uses a Red, Amber Green method of identifying strengths and weaknesses. The template also includes a comments section which can document actions that need to be taken in order to solve any problem areas. Such a scorecard can be taken to and discussed with the supplier at the next scheduled supplier meeting and can act as an excellent talking point to structure conversation around performance and improvement areas.

Which Suppliers require the most attention?

As mentioned above, there are certain suppliers that will be core to your business that will require significant attention and the derivation of a scorecard similar to the above along with regularly scheduled supplier management meetings. However there are also other suppliers that I like to call the “tail spend” that still need to be monitored, but not with the same level of diligence as a high value, high importance supplier. For instance you will need to monitor your business insurance provider and your utilities provider, but it is very unlikely that you will need to be meeting with them on any sort of regular basis, however a core provider of a raw material used in the manufacturing of one of your products needs to be managed very closely and frequent (at the very least monthly) meetings need to occur in order to discuss performance, market conditions and challenges.

Understanding which suppliers need to enter an active supplier management program and suppliers that could be dealt with in a more passive fashion is an exercise that is very specific to each business, as one thing considered vital for one organisation could be seen as passive for another. However there are a number of rules of thumb that you could use to derive which suppliers require the most attention:

1. Value of the contract – It goes without saying that you will have some contracts with suppliers for spend that is very small (e.g. a website hosting provider) and others that could run up to relatively significant values (enterprise management software). As a business it is always worth understanding the contracts you have and the level of spend you are putting though these suppliers. From here you could use Pareto’s 80/20 to surmise which suppliers based on value need to be managed actively which essentially means analyse where 80% of your spend goes and manage all of those suppliers that fall within the 80% category.
2. Importance of the product/service – When it comes to your business, assess how important the supplier contract is when it comes to your day-to-day operations. For instance if there was a material change or problem with the supplier how significant would the impact be to your operation? If supplier issues are going to have significant impact on your ability to perform as a business, then it is certainly a supplier worth managing closely.
3. Past performance – In any business supply landscape, there is typically always a bit of a problem child. If you find a supplier is consistently underperforming then it pays to invest some time into understanding why and work with them in order to put together an action plan with some measurable targets and milestones that need to be hit. If the supplier continues to underperform against the action plan, then you begin re-procurement and will know exactly what any future supplier will need to deliver in order to be a successful partner.

Business Logistics

Business logistics is all about getting the right product to the right place at the right time and therefore it ties in nicely with both sourcing and supplier relationships.

So what exactly is Logistics management?

The primary element of logistics management is to ensure that product is delivered to its intended location within a timeframe that works for all of the parties involved.

That being said there are a number of functions under the logistics umbrella that come together to make this possible:

1. Warehousing – Optimising your warehouse space and ensuring it is suitably organised to receive and distribute inventory as it arrives is a vital ingredient in a healthy logistics recipe. The design of your warehouse needs to focus on efficient flow of resources to maximise the efficiency of staff receiving, finding and sending orders
2. Inventory management – Bin locations and clear labelling needs to be enforced to ensure each item of inventory has its specific space in warehouses and/or showrooms. A policy for a full inventory count twice a year with regular cycle counting is also a necessity to ensure you are aware of any system deviations well in advance of it becoming a potential problem
3. Order fulfilment – Fulfilment of an order should be efficient, thus appropriate organization and labelling of inventory items is required. In addition to this, the transportation policy should be clearly defined e.g. Will you be using a third party provider? Your own transportation network (trucking etc) or a combination of the two?
4. Scheduling – Scheduling encompasses both receiving and fulfilment. A logistics schedule should define the planned weekly incomings and outgoings enabling the parties involved to trace and track their delivery through to the end point.
5. Coordinating with other organisations – Naturally other organisations are typically involved in the logistics process, from the manufacturer to the customer and any third party logistics organisations in between. Communication has to be tight ensuring all parties are on the same page and aware of prospective lead times so that planning for any shortages can occur quickly to minimise any operational impact.

Marketing

There is a common misconception that marketing and advertising is one and the same thing, but marketing actually runs much deeper than a cleverly crafted advertisement and spans a much wider subset of considerations including the method of delivery, what to sell and where to sell it and how to price and promote. At the most basic level a clear marketing strategy helps to get your business’ product/services into the eyes of the customers you are targeting at the right price and through the right channel.

The Four Ps

If you have read about or heard about marketing techniques in business you most likely already have some knowledge of the “4 Ps”.  These “4 Ps” Product, Place, Price and Promotion (aka the marketing mix) provide a useful framework to reference when thinking about and developing a marketing strategy:

• Product – Product should get you thinking about the product/service that you are offering in the market. Are you breaking new ground with this and thus creating an entirely new market? Or are you simply looking to expand an existing one?  What are your key differentiators that you wish to demonstrate to your customers? How are you looking to package it? Is it a budget alternative? Or a luxury offering? Such considerations will feed into how you wish to promote and price your product as well as helping you envision a desired brand and customer experience.
• Place – Place covers two distinct aspects when putting together your marketing strategy including:
  • Where are you looking to sell your product/service? Different countries will have different cultures and legal guidelines whilst different areas within a country will have differing customer preferences (e.g. Buying power, age, lifestyle etc). You should have an idea of who you are looking to sell to from your market research in the business planning phase and as such should be able to focus in on the target locations of your intended primary customer base
  • How are you going to get your product/service to your customers? This is an area known as logistics/distribution and you will need to understand what channel(s) you wish to explore as a means of getting your product/service to your customer. There are, as always, a plethora of different channels ranging from indirect methods (e.g. wholesalers and retailers) to direct methods (Physical stores, e-commerce) and you can select a concentrated or mixed strategy dependent on your requirement.
• Price – This ties in nicely with your product and place overview as you need to ensure your pricing is not just competitive, but also correlates with the nature of your product and the customer you are targeting. If your product is a budget offering your pricing needs to ideally undercut the market and offer your prospective customers value for money whereas a more luxurious product should come with a price tag that doesn’t undervalue its image.
• Promotion – It is a deliberate move to list promotion as the final bullet point in the overview of the marketing mix. It pays to have a thorough understanding of your product, your customer, distribution channels and the pricing you can offer before putting together a promotional campaign that would fit with the product/service and create the kind of customer experience you are looking for. At the promotion stage it is also important to understand where your probable purchases are going to start looking for information, if you can place yourself at the forefront of their first initial touch point with seeking a product/service such as yours, you will be in an excellent position to convert the lead.

Overall a successful marketing strategy should look to inform, attract and engage your target audience, articulating why they should choose you over someone else by spelling out how your product/service serves the needs they have. Good marketing and a good product/service offering should then provide a foundation to build your reputation, sell more and ultimately grow your business.

How could you promote your product/service?

Social media – Social media has risen rapidly as one of the key and least expensive methods of advertising (depending on how you use it) and it is therefore paramount that your business have some form of social media presence especially on the big 3 – Facebook, Twitter and Instagram. Having an active account/page on each of these mediums can present significant opportunity, not only can your prospective customers find you easily, but it also allows you to run campaigns such as contests and influencer promotions (see below) whilst also engaging with other trending topics to boost visbility.

Hosting contests – Contests can be potentially linked to social media, but can also be run through other mediums and are an excellent and cost effective method of reaching a wide ranging audience. Contests often work via enabling customers to share your content in return for an entry into a prize draw – the sharer gets the potential to win something and you get inexpensive advertising. The drawback however is that this isn’t especially targeted and often content might be shared with individuals who are completely disinterested in your offering.

Gamification – Gamification seems to be a consistent hot topic in the world of business and involves incorporating gaming elements into a non-gaming context to improve engagement and encourage action. Many companies employ gamification principles in their marketing especially with things like loyalty schemes (e.g. Mcdonalds monopoly), but you can also find more innovative examples that tap into customers’ and/or employees’ competitive spirit and desire for reward.

Internet – Using your business website to generate leads should be incorporated into any promotional marketing you do. Often organisations do this through a combinations of Search Engine Marketing (paid advertising e.g. pay per click) and Search Engine Optimisation (optimising your website to ensure it gets a higher rank on search engines e.g. Google).

Post-purchase – Looking after your customers post-purchase is a necessity as ensuring they are happy with the product/service provided will ensure they are more likely to refer you to others and you can grow organically as a result. A happy customer is more likely to do business again with you in future and will often leave favorable reviews/testimonials which you can use in future promotions to enhance your business’ reputation.

Influencer promotions – Promoting your product/service through use of an influential person in the market can also be a quick way of advertising to your target audience. For example if I was launching a new fitness product, I could look at the most popular fitness influencers on the likes of Youtube and Instagram and strike a deal with them for some sponsored content.

Paid media – Paid media is a more traditional method of promotion including television, radio, billboards etc. This often involves paying a provider to air an advertisement for you for a specific period of time. Costs can rack up pretty fast doing this, but it gives you the opportunity to advertise to a significant base of prospective customers very quickly. In that regard, if your idea is relatively innovative in a relatively new market with only a few other small players, a paid media promotion might just give you an edge and push you into a customer perception as a market leader in the space.

Referrals and affiliates – Referrals allow some of your existing customers to bring aboard new customers in return for a future discount or other incentive. To incorporate such a program quickly you might want to use a referral program software or if you are familiar with coding you can put this together yourself. Affiliate marketing is slightly different in the sense that recommendations may come from individuals or organisations that are not necessarily your customers, but who will promote your brand and provide prospective customer leads in return for a commission should that lead turn into a successful sale.

Expectation bounce – Exceeding your customer expectations can be an excellent way to bounce your reputation as it enhances your image as a quality business that not only delivers what it says, but goes the extra mile to exceed an expectation. A good example of this is Amazon – Many times they quote a delivery date 2-3 or sometimes more days further out and then end up delivering it early. In this regard they set an expectation; which they then exceeded; which in turn made you happy and gave you the impression they went the extra mile. If any issues occurred in Amazon’s delivery schedule then you likely still would have received your package in the expected timeframe and therefore still would have been happy.

Free framing – Samples, data, knowledge etc can all be given for free to attract an audience. With this technique you will essentially be giving away something that is desirable to a target customer for free as a vehicle to sell something else at a premium. For instance you might look to provide a website which looks to educate an individual on a subject e.g. the stock market. The free level of this information will be basic level, however you can up sell more premium content e.g. detailed business analysis for target stocks.

Measuring ROI when Marketing

There are a number of organisations that may treat marketing as a necessity, but monitor and control the cost centre with little or no diligence (I’m not sure how often company branded mugs result in greater sales – but I see them quite a lot).  Marketing campaigns should be clear, targeted and designed with traceable metrics to measure success.

Now there isn’t a one-size fits all approach to measuring ROI concerned with Marketing as it simply depends what objective you have in pushing the campaign. Typically, you want your marketing to drive customer awareness in order to subsequently drive more revenue; however it is important to spend some time to define exactly what it is you want from the campaign and the time horizon to measure its success.

For example I might wish to roll out a contest in order to retrieve new customers and drive some further revenue in the short term – Consequently my measures could be:

1. Revenue increase of 5% within 3 months of the campaign
2. Drive 2000 new unique page visits over the next 3 months

If I achieve these measures then my campaign was successful in line with the objectives I set for it, if not it could be back to the drawing board in order to test a different approach.

When setting your objectives/metrics for each marketing campaign you should look to ensure they follow the SMART principles – Specific, Measurable, Achievable, Realisitic and Time controlled. Ensuring your metrics cater to these elements will ensure you can trace and measure the success of your capital outlay.

Identifying and Assessing Business Opportunities

Identifying and assessing business opportunities is a key skill should you wish to set up a company. When you first identify a potential business opportunity and believe in its potential, it is important that you begin assessing its credibility through a logical approach rather than being blindsided by confirmation bias. Often there are lots of potentially great ideas out there, but you need to think about the resources you have available, the nature of the market and potential route to sustainability. Reading through this section should begin steering you in the right direction, ensuring that you don’t spend too much time or resource on an idea that in practical terms won’t work.

Identifying Business Opportunities –

The Quick Checklist

A checklist is a very simple, but very powerful tool to employ in any area of life, from picking up the right items at the supermarket to managing a project through logical sequential steps to even completing pre flight checks. I therefore like to employ a very simple checklist at the inception of an idea to avoid wasting too much time and effort on developing something that is likely just not going to work. This checklist is as follows:

You would simply go through the checklist and assign a score from 1-10 for each item 1 being not attractive at all and 10 being extremely attractive. I normally then dismiss any idea with a score less than 40.

For example I might think of starting a gym and my score could look something as follows:

Assessing Business Opportunities –

Break Even and Price Competitiveness

To test an ideas initial feasibility it is always worth assessing its viability through the lens of cost and potential profitability (assuming this is designed to be a for profit business, however this analysis is also useful for non-profits sustainability). Often I do this through a quick break even calculation.

For example if I was going to start my own gym I would gather initial thoughts on the costs involved e.g. premises, marketing, equipment, employees etc. Let’s say:

1. My premises costs, utilities and other overheads came to £10,000 a month
2. My initial investment for equipment and marketing was £8,000.
3. I know therefore my first year cost is going to be £128,000.

Researching other organisations in the same market reveals an average price of £45 a month membership. I decide my business is designed to be a budget offering so I want to undercut and charge £40.

With that in mind, just to break-even on a monthly basis I would need at least 250 paying monthly customers (£120,000/12/40). At that rate I would be able to cover my monthly outgoings, but could never recoup my initial £8000 investment, consequently I would need to attract more than 250 customers to my gym in order to start seeing a return.

At this stage, if I believe it simply isn’t feasible to get at the very least 250 customers, then the idea is simply not viable.

Assessing Business Opportunities –

Customer Acquisition Cost

The customer acquisition cost (also known as the allowable acquisition cost) is closely aligned with marketing. Basically it is a method of attempting to compute the amount you can invest in trying to attract a customer to your product/service whilst still maintaining adequate profitability.

If your allowable acquisition cost comes in at £200 per customer, but you are estimating that you’ll need £300 per customer to get the message out there, then the idea may not have the ability to deliver a return worth the investment from a time, capital and resource perspective.

You can calculate the allowable acquisition cost as follows:

For example let’s say:

1. My expected average value from a customer is £1000 over a 2 year period;
2. To deliver that to them it will cost me £200;
3. My total expected overhead per annum is £100,000;
4. I forecast attracting 200 customers in the period and I am looking to achieve a 50% profit.

My calculation therefore is as follows:

Average lifetime value per customer (£1000 ) minus the cost to deliver that value (£200) = £800

Overhead per customer is equal to £100,000/200 = £500

I therefore have £300 (£800-£500) in revenue per customer before marketing.

As I want a 50% margin, I can only afford to spend 50% of that £300 on attracting a new customer giving me a maximum allowable acquisition cost of £150.

From a budgeting perspective, over the 2 year period I can’t afford to spend more than £30k on marketing (£150*200). If my forecast spend is much higher than this then the idea is likely going to be too costly to attract market share in the time horizon set for it to be profitable.

Assessing Business Opportunities –

The Shadow Test

If you feel you have landed on a pretty solid idea, that passes the above tests you may be able to employ the concept of a shadow test which is a relatively risk free way to understand whether there is really a market for it.

A Shadow Test works especially well in industries where significant capital is required upfront e.g. technology. For example, Fitbit, at its inception created a website for its fitness tracking product and marketed it out taking preorders without actually having a workable product to sell. This significantly reduced their cost and their risk as they hadn’t invested capital in the creation of a product that potentially wouldn’t sell. The interest garnered through this shadow test process provided evidence of a market which enabled them to secure investment and begin mass production.

Next Section: Creating a Business Plan

Introduction

As boring as it may seem, legislation governs quite a lot to do with business and you need to be careful to comply with relevant legislation in the jurisdiction within which you operate.

As a basic introduction, Commercial law, also known as business law is a body of law that regulates the conduct of persons, merchants and businesses who are engaged in trade, sales and commerce. Even at the inception of your business there are laws of compliance with regard to incorporation (which vary depending on what legal structure you choose), business registration and tax registration and this then leads into some of the main strands of commercial law, namely: consumer protection, employment law, contract law and intellectual property laws. Whilst you don’t need to be an expert in these areas, it pays to understand some of the basic concepts and to understand that dependent on the country and jurisdiction in which you are looking to set up in, the obligations can range from almost non-existent to very restrictive and onerous.

Business registration, tax and incorporation

One of the first steps on your journey into business would be to register the company within the jurisdiction you choose. Dependent on where this is, there may be rules around the name which you can choose and you will often need to submit a request with the related governmental body for approval. This is designed to ensure that your business name is:

1. Not directly copying the name of another business
2. Not overly similar to an existing business, or designed to confuse or mislead
3. Not offensive

Once registered, this business name can then be linked to the ownership of the company and will ensure the governmental body of the jurisdiction in which your business exists is aware of your operations.

Through this registration process you will also be given a tax identification number which enables your business to be taxed appropriately. Each jurisdiction has different approaches to corporate tax and the treatment will also depend on which business structure you select. It is therefore worth reading into in order to be aware of the basic tax rules in the jurisdiction in which you operate in order to ensure you are in compliance.

If you go down the route of incorporating your company, there will be additional legal requirements to consider and you will need to prepare and submit your articles of incorporation. The articles of incorporation essentially stipulate the set of rules that govern the company as well as providing an overview of the capital and share structure that underpins it. It is strongly recommended that you get the advice of a professional during this stage as a qualified Lawyer will be able to amend generic articles to suit the intricacies of your business and a tax accountant would be able to advise on the optimal structure for tax purposes. Further to this, should your organisation trade shares on a public stock exchange, you should also be aware of the laws governing insider trading.

Commercial Law and Consumer Protection

When operating a business, there will always be some consumer protection legislation that you will need to be aware of that will govern how your company must act in order to be fair and equitable to the customer for your product or service. Such legislation is usually devised by the governmental body overseeing the jurisdiction and can therefore vary a little, but in general the legislation usually governs the following:

• Data Protection and Privacy – Data protection and privacy is a very hot topic in today’s commercial law market with a significant amount of our lives moving online and big data becoming big business. As a result legislation has needed to catch up to regulate the usage of consumer data that is constantly being mined through consumer interaction with online services. It is now law in most countries for organisations to have a privacy policy that clearly discloses how any consumer information that is collected is used. Penalties for not complying with commercial law in the area of privacy and data protection can be significant, so depending on the nature and types of data on customers that you are looking to collect, it may be worth getting legal advice to ensure your privacy policy is sufficient to protect you.
• Consumer product safety – Should you be selling products to customers, then product safety is paramount. Commercial law here can govern areas such as electrical hazards, mechanical hazards and material usage and it really depends on the nature of the product you are producing as to which standards you will need to comply with.
• Food safety – Should you be selling or producing food or beverages for customers, then you will be governed by the specific government’s legislation around food safety. This typically encompasses areas such as quality and safety along with food handling and storage. Typically the governments health authorities tasked with monitoring food safety will have the authority to conduct investigations at your place of business to ensure you are in compliance with applicable law and big penalties and even prosecution can ensue. It also pays to know that in most jurisdictions you will need to acquire a permit in order to be involved in a business which concerns the production and resale of food and beverages and such permits typically require annual renewal.
• Product packaging and labeling – The packaging and labeling for your products needs to be clear and precise and not be misleading to the customer or difficult to find. Packaging will also need to be safe and in the modern era compliant with any environmental legislation.
• Anti-competitive practices such as price fixing and misleading advertisements – A pretty obvious one, but price fixing and uncompetitive practices to exploit a dominant market position can be quite common in certain industries and thus needs to be legislated against in order to support effective competition to drive value for the customer. Misleading or offensive advertisements are also a no go.
• Terms and conditions – I don’t know about you, but as a consumer I am typically quite negligent when I see an organisations terms and conditions. As a busy customer I simply don’t have time to read through pages of complex legal terms governing the business transaction and simply assume they are reasonable so that I can make my purchase and move happily along with my day safe in the knowledge that I haven’t just signed my entire portfolio of assets away by purchasing a Game of Thrones box-set. Fortunately the government knows we as customers don’t have the time, nor the knowledge or even the capacity (I can’t imagine negotiating my individual terms of sale with Amazon) to deal with these terms and they have therefore introduced legislation that governs areas such as returns and unfair contract terms that seek to protect customers.

Tip – When it comes to consumer protection, this protects individual consumers. Business to Business transactions have far less protection as a business is considered to have competency and resource to be able to negotiate their position from a contractual perspective.  

Commercial Law and Employment Law

Employment law governs how you hire, manage and dismiss any employees in your organisation. Again such legislation can vary dependent on the jurisdiction within which you do business, so it is important to read up on the basics using articles from the relevant governmental body in order to ensure you set up employment contracts in a compliant manner.

Employment law and standards is not only different across different jurisdictions, but it is also a body of law that is ever-changing and one body with which your HR department should be well versed in. It is highly recommended that you seek the advice of a professional lawyer before drafting up employment contracts and hiring employees as this will ensure you have the appropriate contractual terms and conditions template in place to govern the behavior of your staff. Without a good contractual template, the terms may be too vague and thus interpreted in a court of law differently to how you had originally envisaged which could spell potential disaster.

Employment law covers a pretty vast area of different regulations, but some of the main topics covered are as follows:

• Maternity and parental leave – This area covers the law regarding the length of maternity and paternity leave along with the rates of pay and rules around the protection of the roles availability to the employee once the period of leave is over
• Vacations with pay – A pretty self explanatory area which covers the amount of paid vacation days that need to be offered to the employee.
• Harassment – Harassment law is becoming more and more significant in the workplace with regulations and policies adapting to eliminate harassment that has become commonplace in certain industries or organisations
• Termination – Termination governs the law around how you must act when looking to terminate an employment contract. You must be careful to be in compliance with the law in this regard in order to avoid any wrongful dismissal cases in future
• Minimum wage and overtime – This governs the pay conditions of your employees and the right to additional pay for any overtime worked. You should have a clear policy around overtime and ensure that the wage/salary offered to the employee in question is clearly documented and agreed between both parties whilst also meeting the minimum value required by law.
• Hours of work – Different jurisdictions will have different rules around the amount of hours an employee can work each week, along with rules around breaks and working on consecutive days.
• Privacy – Employees like customers will need a policy governing their personal and private information which is held by the organisation and be fully aware and accepting of how this information is processed, stored and used.
• Sickness and leaves of absence – There will always be rules around paid sick days and leaves of absence and generally by law a number of paid days will need to be offered
• Non-competition – This is an important clause to protect your business in the event that one of your employees with insider knowledge seeks to leave the organisation for a competitor
• Occupational health and safety – Health and safety has rapidly become a significant area in business and ensuring you offer a safe work environment to your employees is paramount in any circumstances.

Contract Law

Contract Law is probably one of the most synonymous areas with commercial law and is often found at the heart of most legal cases concerning business. This is because contractual documentation governs a lot of the fundamental operations and underpins many of the relationships that a business holds. For example, contracts for sale will cover your business to customer relationship, contracts for supply will govern your supplier relationships and contracts for employment will govern your organisations’ relationship with staff.

So what is a contract?

Contracts can be both written or verbal (although written is always preferable for enforceability) and essentially act as a legally binding agreement between 2 or more parties who intend to exchange goods, services, money or property. For a contract to be legally derived, it must have 4 basic elements:

1. Offer – There must be a promise from one party to enter into a contract on certain terms. For example, offering a personal training service for £30 per hour would be an offer to contract.
2. Acceptance – Once an offer is on the table, it must be accepted by another party to create a contract. For example if somebody accepted the contract above to retrieve 1 hour of personal training, that would create a contract and the party will need to pay £30 and the personal trainer would need to deliver the service. If the party wishes to negotiate the terms, this is known as a counter-offer and is effectively a rejection of the original offer and would then need to be accepted by the other party before a contract could be made.
3. Consideration – This essentially means that a party cannot enforce a contract unless they have given or promised something in return. A court does not look behind the value of consideration even if it is inadequate as it is up to the parties contracting to ensure consideration meets expectation
4. Intention to create legal relations – The parties involved must be intending to create a legally binding agreement for a contract to be created. For example asking a supplier for a quote or putting together an offer that is “subject to contract” would not create a legally binding contractual relationship as it is clear to the courts that the parties had at that stage not entered legal relations.

Once a contract is created between two parties, it becomes legally binding and the relationship of the parties will be governed by the agreed terms. It definitely pays to have these terms in writing as should an issue occur a clear written contract can establish what a breach would be and what remedy the party seeking damages could expect.

In the event one party fails to deliver on their obligations under the contract or otherwise breaks the contract then the party that has been harmed will be able to bring a lawsuit against the party they believe to have broken (breached) the contract. The legal process litigation then determines whether the contract has in fact been breached or whether there are circumstances that mean this is not the case.

In the event of a breach there is often a number of remedies the party that has been harmed can seek to realise including:

• Monetary damages for losses
• Contract rescission
• Equitable remedies such as an injunction
• Business mediation or other alternative dispute resolution methods

Often remedies will be determined within the contractual wording and the degree of remedy will vary with the nature of the breach and the level of damaged caused. In the event that remedies are not determined within the contractual wording, the courts will have to decide on an equitable remedy given the nature of the breach and the extent of loss incurred by the party affected.

It typically pays to consult a legal professional when writing or negotiating a contract, but there are certain elements that should be included:

• Term – You should look to define the length of the contract and define what would happen to the contract following the expiry of the term e.g. would it continue on a rolling monthly basis?
• Termination – You should include clauses around termination including how a party would go about terminating the contract and whether there would be any penalties to do so.
• Scope of work and deliverables – Defining what services, products etc should be provided in the contract in exchange for respective payment is a necessity. This can get especially complex in supplier contracts in which there may be Key performance indicators and related service credits established in order to monitor and manage performance
• Payment and Payment terms – It is necessary to define how the party is expected to pay and whether there is any credit facility in place (e.g. net 30-day payment terms). This section should also define penalties should payments be late and/or discounts as a result of earl payments.
• Liability and Limitations of Liability – Liability is typically a big section in any contract and you would want to ensure you map out exactly what each party would be liable for in the event of an issue as well as the caps on that level of liability
• Change Control – Should you wish to make changes to the contract in future, there should be a fair and structured process for doing so requiring the signature of both parties.
• Confidentiality – In many business relationships there is often situations in which a party is privy to confidential information. Clauses for this need to be designed in order to provide protection against the other party using or selling your confidential information
• Intellectual property – Intellectual property clauses are intended to put safeguards in place to ensure the other party doesn’t use your IP in a manner that you don’t intend (e.g. using it for resale). Clauses concerning IP can also be used to safeguard potential future outputs e.g. if you hired a consultant to work with you in creating a new product, you would want to ensure it was clear as to which party held the rights to the output.
• Data protection – Data protection has been a hot topic for a while with General Data Protection Regulations coming into place in many countries. Essentially this section of a contract should spell out what personal data may be shared under the contract between the two parties, how this will be stored, managed and processed and what if any third parties would have access to it
• Force majeure – A force majeure clause intends to free the parties form liability in the event of an unforeseeable circumstance that would prevent a party from fulfilling its obligations (e.g. an earthquake).

Intellectual Property Law

Intellectual Property Law is designed to protect and enforce the rights of the creators and/or owners of inventions, writing, music, designs or other works. It essentially has 4 main areas:

• Copyright Law – Protects the rights of the creators of art, publishing, entertainment, software etc. The laws essentially protect the owner from their work being copied, presented, displayed or resold without permission
• Patent law – A patent grants protection for a new invention such as a product, design or process and ensures the specifics of how it works cannot be copied. The patent owner then had the right to license, sell, mortgage or assign these rights to use the invention.
• Trade secrets – As above, a business may wish to protect its trade secrets when creating a contractual relationship with another party in order to ensure such secrets cannot be resold or given away to others. For example, contracting with an organisation such as Coca Cola may provide insight into their formula and as such, information which provides such significant competitive advantage would need to be protected and kept confidential

Business insurance

In addition to law, it is also important to take a risk averse approach, not only knowing the legal guidelines, but also retaining the appropriate protections so that in the event there is a case against you, you can avoid bankrupting your company or yourself!

This is where business insurance comes in. Business insurance coverage is designed to protect businesses from losses that may occur during the normal course of business activity and can therefore include a multitude of areas ranging from property damage to employee related risks.  The following are the main types of business insurance:

• Professional liability insurance – This insurance protects against negligence by you or your employees during the course of delivery. This could include mistakes and/or a failure to perform and adequate insurance will vary dependent upon the nature of the business. It pays to look at this from a risk perspective and fully understand what could go wrong (e.g. food poisoning in the case of a restaurant) so that you can insure against that risk.
• Property insurance – Covering property, equipment and inventory in the event of fire, storm or theft.
• Home-based business insurance – Home owners’ insurance does not cover home-based business and a separate insurance policy will be needed to insure the commercial operation.
• Product liability insurance – If your business manufactures a product to sell then product liability insurance is very important to protect against lawsuits should the product cause damages
• Vehicle insurance – Any company vehicles need to be fully insured
• Business interruption insurance – This is a type of insurance that is especially applicable to businesses with a physical location such as retail stores or manufacturing plants. Such insurance compensates a business for lost income during events that cause disruption to the normal course of business.