It is crucial to have a realistic, working business plan when you’re setting up a business. It has many functions, from securing external funding to measuring growth within your business.

Many people see the business plan as a document used to secure external funding. This is essential because potential investors, including banks, may invest in your idea, work with you or lend you money as a result of the strength of your plan. There are many other benefits to creating and managing a realistic business plan - even if you just use it in-house. It can:

• help you spot possible pitfalls before they happen
• form the financial side of your business efficiently
• focus any of your development efforts
• work as a measure of your growth

The following people or institutions may request to see your business plan at some stage:

• external investors - whether this is a friend, a venture capitalist firm or a business angel
• banks
• grant providers
• anyone interested in buying your business
• potential partners

You should also keep in mind that a business plan is a living document that will need updating and changing as your business develops. Regardless of whether you intend to use your plan internally, or as a document for external people, it should still be capable of taking an objective and honest look at your business. Failing to do this could suggest that you and others have unrealistic expectations of what can be achieved and when.

Your business plan is a statement of intent. It should offer you details of how you are going to develop your business, when and who’s going to play a part and how you will manage the money. Clarity on these issues is on the whole important if you’re looking for finance or investment. The process of building your plan will also focus your mind on how your new business will need to operate to give it the best chance of growth.

Your plan should include:

• An executive summary - this is a general idea of the business you want to set up. It’s crucial. Many lenders and investors make judgments about your enterprise based on this section of the plan alone.
• A short description of the business opportunity - who you are and what you plan to sell or offer, why and to whom.
• Your marketing and sales strategy - why you believe people will buy what you want to sell and how you plan to sell it to them.
• Your management team and personnel - your credentials and the people you plan to recruit who will work with or for you.
• Your operations - your premises, production facilities, your management information systems and IT.
• Financial forecasts - this section translates everything you have said in the previous sections into numbers.

The executive summary:

The executive summary is often the most key part of your business plan. Positioned at the front of the document, it is the first part to be read. Nevertheless, as a summary it makes sense to write it last. It may be the only part that will be read. Faced with a large pile of funding requests, venture capitalists and banks have been known to separate business plans into “worth considering” and “discard” piles based on this section alone.

The executive summary is a synopsis of the key points of your full plan. It should include highlights from each section of the rest of the document - from the key features of the business opportunity through to the elements of the financial forecasts. Its idea is to explain the basics of your business in a way that both informs and interests the reader. If, after reading the executive summary, an investor or manager understands what the business is about and is keen to know more, it has done its job.

It should be brief - no longer than two pages at most - and interesting. It’s advisable to write this section of your plan after you’ve completed the rest:

• A brief description of the business and its supplies. It’s a synopsis of the entire plan.
• An extended table of contents. This makes for very dull reading. You should ensure it shows the highlights of the plan, rather than restating the details the plan contains.
• Hype. While the executive summary should excite the reader enough to read the entire plan, an experienced businessperson will distinguish hype and this will undermine the plan’s credibility.

A short description of the business opportunity:

This part of the plan sets out your vision for your new business and includes who you are, what you do, what you have to offer and the market you want to address.

Start with a summary of your business:

• when you started or intend to start trading and the progress you have made to date
• the type of business and the sector it is in
• any related history - for example, if you acquired the business, who owned it originally and what they achieved with it
• the current legal structure
• your vision for the future

Then describe your commodities or services as simply as possible, defining:

• what makes it different
• what benefits it offers
• why customers would buy it
• how you plan to develop your products or services
• whether you hold any patents, trademarks or design rights
• the key features of your industry or sector

Bear in mind that the person reading the plan may not fully understand your business and its products, services or processes as well as you do, so try to avoid jargon. It’s a better idea to get someone who isn’t involved in the business - a friend or family member perhaps - to read this section of your plan and make sure they can fully understand it.

Your marketing and sales strategy:

In this section you should identify your market, your position in it and highlight who your competitors are. In order to do this you should refer to any market research you have previously carried out. You need to show that you’re fully aware of the marketplace you’re planning to operate in and that you know any important trends and drivers.

You should also be able to explain that your business will be able to attract customers in a growing market despite the competition. Key areas to cover include:

• your market - its size, historical data about its development and key current issues
• your target customer base - who they are and how you know they will be interested in your products or services
• your competitors - who they are, how they work and the share of the market they hold
• the future - anticipated changes in the market and how you expect your business and your competitors to react to them

You also require knowing how your competitors’ advantages and disadvantages relate to your own. Portray any competitive analysis you have carried out and include some what-if scenarios that show how your business would deal with customers’ changing needs or any other market changes. 

Marketing and sales:

This section should illustrate the specific activities you intend to use to promote and sell your products and services. It’s often the weak link in business plans so it’s worth spending time on it to make sure it’s both realistic and achievable.

A strong sales and marketing section means you have a clear idea of how you will get your products and services to market.

Your plan will need to provide answers to these questions:

• How do you plan to position your product or service in the market place?
• Who are your customers? Include details of customers who have shown an interest in your product or service and explain how you plan to go about attracting new customers.
• What is your pricing policy? How much will you charge for different customer segments, quantities, etc?
• How will you promote your product or service? Identify your sales methods, eg direct marketing, advertising, PR, email, e-sales.
• How will you reach your customers? What channels will you use? Which partners will be needed in your distribution channels?
• How will you do your selling? Do you have a sales plan? For example, will you sell by phone, via a website, face-to-face or through retail outlets?

Your management team and personnel:

Your business plan required to set out the structure and key know-how of both your management team and your staff. It should categorize the strengths in your team and your plans to deal with any obvious weaknesses.

The management team: If you’re looking for external funding, your management team can be a decisive factor. Give details of who is involved, their role and how it fits into the organisation. Include a paragraph on each of the individuals, outlining their background, relevant experience and qualifications. Include any advisors you might have such as accountants or lawyers. If you’re aiming to satisfy your bank manager or other investors, you need to show that your management team has the right balance of know-how, drive and experience to enable your business to succeed. Key know-how include sales, marketing and financial management as well as production, operational and market experience. Your investors will also want to be convinced that you and your team are fully committed. For that reason it’s a good idea to set out how much time and money each person will contribute to the business and the salaries and benefits you plan to draw.

Your people: Give details of your workforce in terms of total numbers and by department. Spell out what work you plan to do internally and if you plan to outsource any work. Other helpful figures might be sales or profit per employee, average salaries, employee retention rates and productivity. Your plan should also outline any recruitment or training plans, including timescales and costs. It’s vital to be realistic about the commitment and motivation of your people and spell out any plans to improve or maintain staff morale.

Your operations:

Your business plan also required you to outline your operational capabilities and any planned improvements. There are certain areas you should focus on.

Location:

• Do you have any business property?
• What are your long-term commitments to the property?
• Do you own or rent it?
• What are the advantages and disadvantages of your existing location?

Production facilities:

• Do you need your own production facilities or would it be cheaper to outsource any manufacturing processes?
• If you do have your own facilities, how modern are they?
• What is the capacity compared with existing and forecasted demand?
• Will any investment be needed?

Management-information systems:

• Have you got established procedures for stock control, management accounts and quality control?
• Can they cope with any proposed expansion?

Information technology (IT):

• IT is a key factor in most businesses, so include your strengths and weaknesses in this area.
• Outline the reliability and the planned development of your systems.

Financial forecasts:

As part of your plan you will need to provide a set of financial projections which translate what you’ve said about your business into numbers. You will need to look carefully at:

• how much capital you need if you are seeking external funding
• the security you can provide lenders
• how you plan to repay any borrowings
• sources of revenue and income

You may also want to take account of your personal finances as part of the plan at this stage.

Your forecasts should run for the next three (or even five) years and their level of sophistication should reflect the sophistication of your business. Nonetheless, the first 12 months’ forecasts should have the most detail associated with them.

Your forecasts should include:

• Cashflow statements - your cash balance and monthly cashflow patterns for at least the first 12 to 18 months. The aim is to explain that your business will have enough working capital to survive so make sure you have considered the key factors such as the timing of sales and salaries.
• Profit and loss forecast - a statement of the trading position of the business: the level of profit you expect to make, given your projected sales and the costs of providing goods and services and your overheads. 
• Sales forecast - the amount of money you expect to raise from sales.

Presenting your business plan:

To make sure your business plan has maximum impact, there are a number of points to examine.

Keep the plan short - it’s more likely to be read if it’s a manageable length. Think about the presentation and keep it professional - even if you only aim to use the plan in-house. Remember, a well presented plan will reinforce the positive impression you want to create of your business. Make sure your plan is realistic. Once you’ve prepared your plan, use it. If you update it regularly, it will help you keep track of your business’ development.

• Include a cover or binding and a contents page with page and section numbering.
• Start with the executive summary.
• Ensure it’s legible - make sure the type is ten point or above.
• You may want to email it, so ensure you use email-friendly formatting.
• Even if it’s for internal use only, write the plan as if it’s intended for an external audience.
• Edit the plan carefully - get at least two people to read it and check that it makes sense.
• Show the plan to expert advisers - such as your accountant - and ask for feedback. Redraft sections they say are difficult to understand.
• Avoid jargon and put detailed information - such as market research data or balance sheets - in an appendix at the back.

Tags: business plan

 Every new business needs money when starting up. For the majority of businesses, equipment will need to be bought, the workplace established and marketing costs met - all before the first sale is made. Then once you’re trading, you’ll need cash to pay the bills and keep the business going.

There is a range of financing options. Choosing the right ones for your needs is essential. You can use your own money, borrow from banks, family and friends or attract outside investors. Grants and government support may also be available.

Most businesses use a combination of these, tailored to their specific needs and circumstances.

When starting your business, you need to put together a business plan. This plan sets out how you intend to operate your business and includes essential financial forecasts. These forecasts will help you determine how much funding the business is likely to need, what you need it for and when you will need the money. Good planning will also make it easier to raise the money you need. Use your business plan to explain your business to your bank and other potential sources of finance. A good plan helps convince them that you know what you are doing, and that it is worth risking their money backing you.

It’s essential to have an accurate idea of your financial needs. Once you’ve calculated the amount you’ll need to cover your initial start-up costs, you’ll also need to factor in your running expenses. Customers may not pay you immediately - but you will still need to pay all your bills to keep trading. It’s sensible to have sufficient capital to cover projected expenses for at least six months. At the same time, you need to make sure that you have taken into account how much money you need to live on. In the early stages, a new business is unlikely to produce spare cash that you can spend on yourself.

The type of finance you choose will depend on what kind of business you are starting, how much money you need and what you will use it for.

• Many people use their own savings or personal borrowings to fund the business. This may be the only choice if you can’t convince anyone else to lend you money or invest in the business.
• Family or friends might back you. However you should carefully consider the risk that they could lose their money if your business fails.
• If you have a credible business plan, you may be able to borrow from a bank. Many businesses use overdrafts for day-to-day borrowing and loans to finance large purchases such as equipment. If your business is likely to have peaks and troughs in its cashflow, it’s essential to be able to clearly illustrate these to your bank so you can plan an overdraft.
• A larger business with good prospects might attract outside investors. For example, “business angels” typically invest £10,000 or more in exchange for a share in the business.
• You might qualify for a grant - for example, if you are setting up a business in a deprived area.
• If your business is setting up in a deprived area, or in a sector that is not normally catered for by mainstream lenders, you might be able to attract finance from a community development finance institution. Alternatively you might be able to attract support from other businesses in your peer group.

Most businesses use a mixture of finance sources. For example, you might invest your own money in market research, bring in outside investors to share the risk and borrow from the bank to purchase equipment and machinery.

Set up your business on your own money

If you’re starting a new business, it’s likely that you’ll have to put up some of the money yourself. In fact, it’s usually difficult to borrow from a bank or attract other investors unless you’re investing some of your own money. The easiest way to provide your own financing is if you have savings you can use. If not, you’ll have to think about other possibilities, such as:

• getting a mortgage, or second mortgage
• borrowing privately
• getting an unsecured loan, or borrowing on credit cards
• selling possessions or assets

You should think carefully before borrowing to finance your business and should match the financing to your needs. For example, using credit cards for long-term expenditure can be cripplingly expensive while some loans can be inflexible - you could end up paying interest over many years. Don’t over-extend yourself. If you borrow too much, you may not have enough money left to cover your living costs while the business gets going. You should also try to leave a contingency fund, in case you need extra money to see you through a difficult period.

Advantages: Self-financing your business gives you far more control than other finance options. Outside investors or lenders could decide to withdraw their support at any time and most will expect a good return on their investment in the form of interest, shares or dividends.

Disadvantages: You must be aware of the risks. If your business fails you could lose your home and other personal possessions. And just knowing how much you have borrowed can put a lot of pressure on you and your family.

Friends and family may help to start your business

If you can’t raise enough money yourself to start your new business, your friends and family may be willing to help. They might lend money to you or to your new business or they might invest in your business, eg by buying shares.

You should provide potential investors with an up-to-date business plan. It will help demonstrate how their money will be used and explains the long-term plans for the business. You should also make sure that you have a written agreement in place that sets out terms and conditions, including any interest and repayment terms. This should help avoid misunderstandings.

There may also be tax implications for you and your family, especially on interest-bearing loans.

Advantages:

• Friends or family may be more willing to lend you money than a bank, particularly if you cannot provide security for a loan.
• Friends and family may offer easy terms - eg an interest-free loan.
• If you can raise some finance from your own resources or friends and family, it should make it easier to get additional finance from the bank.

Disadvantages: You need to be careful. You may feel under personal pressure, particularly if your business starts to struggle and there’s a risk that friends or family will lose their money. Remember that they too may worry about their money and this may put a significant strain on your relationship. As a rule of thumb, you should never ask them to lend you more than they can afford to lose. You should also seriously reconsider whether your business is a viable prospect if traditional lenders such as banks are unwilling to lend you money to start up.

Borrow from a bank

Overdrafts and bank loans are the most common sources of additional finance. Before lending, a bank will want to know that you are a good risk. Typically, the bank will want you to:

• present a credible business plan
• provide evidence that you have a successful track record in business
• offer security for any money it lends you - either business assets or a personal guarantee
• invest some money in the business yourself

If you don’t meet all the bank’s normal requirements, you may qualify for a loan under the government’s Small Firms Loan Guarantee (SFLG) scheme.

Whatever type of borrowing you use, you may have to pay arrangement fees as well as interest. Many small businesses use an overdraft to cover their borrowing needs. If you need longer term financing, it’s a good idea to consider taking out a loan.

Always take advice from your accountant or business adviser before signing any agreement to ensure the loan meets your requirements and you understand the terms.

Outside investors

You might want to bring in outside investors. If the business does well, they share in the profits - but if the business fails, they lose their money.

Typically, your company issues ordinary shares (standard shares with no special rights or restrictions) to investors in return for their investment. Outside investment can suit promising businesses that do not expect to produce a lot of spare cash in the short term but offer the potential of greater returns over the longer term.

Advantages:

• Attractive for businesses looking to bring in additional expertise as well as funding.
• Unlike loans and overdrafts, you do not normally have to make payments to investors until the business can afford them.
• Increasing the capital invested in the business makes it easier to borrow from the bank.

Disadvantages:

• Your share of the business, and of its profits, will be lower.
• Investors may want control over how you manage the business.
• Investors may want the business structured in a way that makes it easier to sell their shares in the future.

Sources of investment:

There are several different sources of investment:

• individuals, such as friends and business contacts
• business angels
• investment funds and venture capitalists for larger investments

Business angels are wealthy individuals who typically invest £10,000 upwards and may also offer business expertise. Venture capitalists usually invest more than £2 million in businesses they believe will provide a high earning potential and a defined exit time.

Before approaching potential investors you need a good business plan, including evidence of your management ability. Your plan should include detailed financial forecasts and demonstrate what you will do with funds invested in the business. You will also need to prepare a pitch, which will sell your business to potential investors.

Grants and government support

Your business may qualify for a grant or government support to help you get started.

The main advantage of grants is cheap financing. For example, you might get a subsidised or zero-interest loan, or even an outright cash grant. In addition, support schemes can provide expert advice, information or subsidised consultancy.

However there are drawbacks:

• there is strong competition for grant schemes
• you must meet the scheme’s criteria - such as business location and size, and how you plan to use the money
• the application procedure can be complex and drawn out
• you normally have to use the grant for a specific project, rather than general business costs
• grants usually only cover a percentage of the costs - you also have to provide matching funds

The Small Firms Loan Guarantee scheme helps businesses that would not normally qualify to get a loan.

Other sources of finance

Many start-up businesses do not require a great deal of money to get up and running. These small amounts of finance - known as micro finance or micro credit - are often not available through traditional lending sources. If your business is setting up in a disadvantaged area or a sector that is typically underserved by mainstream lenders, you may be able to source finance or support from one of the alternative sources of micro finance. These include community development finance institutions (CDFIs) or through other companies in your peer group.

CDFIs are sustainable, independent organisations established to develop and create wealth in disadvantaged communities or markets. They provide capital and support to individuals, micro enterprises and small businesses. A loan from a CDFI can be used to purchase equipment or property, to finance working or start-up capital or to fund marketing campaigns. Loans can be for as little as £50 or up to £1 million depending on the project.

Some businesses find that they can access finance, support and advice from other businesses in their peer group - known as peer-group lenders. There are many organisations that have been set up to support specific groups of individuals and businesses. These include:

• Prowess - the UK association of businesses and individuals that specifically support women in business. Find out about the support available to women in business on the Prowess website.
• The Asian Business Development Network (ABDN) Ethnic Minority Enterprise Network - assists Asian and minority businesses by creating access to opportunities and sharing best practice. Read about the Ethnic Minority Enterprise Network on the ABDN website.
• The Black Business Initiative (BBI) - aims to support the black and minority business community. Find information on the services provided by the BBI on the BBI website.

Tags: finance

 Your business plan is crucial

A business plan is essential for your enterprise. Whether your business is starting up or established, the business plan is the roadmap for future development. It is a key document when you are looking for business funding - whether applying for a simple overdraft or looking for new investment or capital.

This guide explains how to present your business plan to a variety of people, including potential investors, shareholders and your bank.

The business plan helps a variety of people, including potential investors, shareholders and your bank to understand your vision and goals for the business, how you are going to spend the invested or borrowed money, and how this will benefit the business and potential funding providers. It is the first source of information that most providers of funding see about a start-up company and is crucial in getting their attention and interest. This guide sets out the key elements that they will be looking for.

The elements

Potential investors and lenders will examine your business plan closely to determine whether to risk their money.

There is no standard format but most plans include:

• An executive summary highlighting the main points - to catch people’s attention.
• Details of key personnel with an organisational chart showing individual responsibilities.
• Details of competitors and how your product or service fits into the market - eg who your potential customers are and why you think they will buy your product or service.
• Your marketing plan - how you are going to get your product or service in front of potential customers, together with any assumptions made when setting your targets.
• Financial information - eg key ratios. These can be used to compare your business’ performance against industry benchmarks. It’s also a good idea to give details of any major expenditure you’ve made on long-term assets and explain the reasons behind any changes in working capital items, such as stock, debtors and creditors. Remember to include balance sheet and profit and loss account details. Many lenders ask for three years’ financial information. If this is not available, supply details about trading to date.
• How you will manage credit, expenditure, stock planning and control, and debtors and creditors.

When seeking funding, include:

• A cashflow forecast indicating the amount of funding you need and why. For a start up include estimates of how much finance you will need for two to three years or until you start to make a profit. Indicate contingency funds that might be needed for rough patches. This is usually between 10 and 20 per cent of the total funding requirement.
• Financial forecasts for a three to five year period. Try to present this information in the same way as historical financial information, so that straightforward comparisons can be made.
• How a loan will be repaid, how investors can get their money back, and when.

Target audience

A business plan serves a number of purposes and you may have to modify information depending on your target audience.

Your bank will be interested in:

• how you intend to repay a loan or overdraft
• what you are going to do with the money
• how the loan will help the business to grow
• what other loan or debt commitments you have

Most lenders operate a credit-scoring system. Make sure you give up-to-date and relevant information. A good relationship with your bank manager will not influence the credit score - the manager may have discretion to negotiate terms but not to change the decision itself.

Tell potential investors about:

• what you are going to do with the money
• when and how you are going to pay it back
• the expected return
• your other sources of funding
• your management’s track record

Include a detailed forecast of your profits and cashflow.

Indicate to shareholders:

• the prospects for the share price
• how they may be able to sell their shares
• what dividend they can expect on their shares
• your management’s track record
• what say they might have in the business

Demonstrate how they can exit with positive returns within three to five years.

Many businesses with growth potential fail to raise funds because they lack investment readiness, ie they do not understand the expectations of investors, cannot turn proposals into attractive opportunities or are unaware of financing sources.

Common reasons why business plans and loan applications fail include:

• a weak management team
• a flawed marketing plan
• unrealistic forecasts
• incomplete and poor presentations

Commitment to the business

If you want to attract outside funding, it is important to invest your own money in your business. If you are not prepared to risk your own capital a lender is unlikely to want to risk theirs. If you are looking for funds, the business plan needs to show the extent to which you are committing your own resources. It should list all the cash and assets that you have put into the business. You can demonstrate strong commitment to your business by:

• reinvesting profits from the business rather than taking dividends yourself
• putting in more cash of your own
• using personal borrowings (eg a mortgage) and guarantees to raise funds
• finding funds from family, friends and existing investors

It is always helpful to detail the backing you already have from banks and other investors - especially independent investors. Remember that money attracts money. The more backers you have, the easier it is to attract new ones.

Because your commitment and track record in meeting your obligations are so important, lenders and investors will want to know your personal credit history. Credit references will be taken up for sole traders and each partner in a partnership. A credit reference agency will discover if you, or any partner or co-director of the business, have a poor credit history or county court judgments. If you have poor credit rating, use the notes supporting the business plan to state the facts and give your own version of how the poor credit history arose. This is much better than having the new investor find out without any explanation. You should also state what you are doing to repair your credit history.

Key considerations

Your business plan is a tool you can use to attract new funds or use as a strategy document. Give yourself the best chance of success by following these suggestions.

Before presenting the plan ensure that you:

• check that the help you are applying for is still available - you may no longer qualify
• back up any assumptions in the plan with thorough research
• find out your own credit rating by applying to Experian or Equifax for your credit file - a small charge is payable
• get someone to read the plan to spot spelling and typing errors, and to ensure that it makes logical sense

Write your plan in a way that demonstrates your commitment to the business. Give it a professional feel by limiting the use of graphics, colours and font types. Above all, make sure that your plan is always honest and realistic.

Things to avoid:

• Being overly ambitious - make sure you can justify any assumptions or projections.
• Ignoring financial difficulties - warn your bank or lender if you anticipate that you may not be able to meet a repayment. There is every chance you will be able to come to some arrangement.
• Failing to devise and implement effective cashflow arrangements, eg. have clear procedures for chasing up any accounts receivable.

Once you have presented the plan, ensure you review and revise it as your business grows. If you are refused investment or a loan, take the criticism on board and consider how you might improve the plan.

Tags: business plan

Dear all

In December 2007 new Money Laundering Regulations were brought into force.

These new regulations meant that UK based businesses involved in Company Incorporations must have anti-money laundering controls in place and must register with the H.M. Revenue and Customs.

FID Trust International Limited must comply with these regulations and as a result there are various steps that we made in our applications for companies incorporated online:

1. The date of birth of Secretaries and Subscribers will be required to assist with validating the persons identity. Please Note: From 6th April 2008, to incorporate a company, a Secretary will not be required, except for PLC’s where a secretary will still be required.
2. If a Corporate entity is a Director, Secretary or Subscriber then the ultimate Directors and Beneficial owners of that Corporate entity must also supply their Due Diligence. We will require the ultimate owners names, addresses and Dates of Birth.
3. If a company officer is a non-UK resident then their Passport Number and the Passport Verification Number will also be required. The Passport Verification Number contains numbers and letters and is approximately 28 characters long.

In order for us to comply our customers will have to follow one of the options below:

1. If you will be carrying out your own due diligence please complete, sign and post the attached letter back to us. (Text - Due Diligence Requirements, in PDF - Due Diligence Requirements). We will then mark your account accordingly and we will not need to carry out our own checks. Therefore there will be no additional charge.
2. FID Trust International Limited  can make an electronic check for each individual involved in the company, which will slightly delay your incorporation.

Incorporations can be submitted at anytime, but we would hold the incorporation until we have made the checks.

The checks can only be made during our normal working hours.

The electronic checks will eliminate any delays waiting for paper copies of Due Diligence documents etc. and the need for you to keep and store the documents for a minimum of 5 years. FID Trust International Limited can recall details of all checks made for up to five years. There will be a charge of £2.50 (+VAT) per individual.

Important Notice:

Either Step 1 or Step 2 above work in our applications from 18th April 2008.

Unfortunately these requirements have been forced upon us all but we will try to minimise the impact as much as we can.

If you have any further questions or queries please do not hesitate to contact us.

Best Regards

Mr. Sergios Topalidi (Web-Master)

FID Trust International Limited

Tags: Money Laundering

Dear All,

The Companies Act 2006 states that on the 6th of April 2008, Company Secretaries will not be mandatory for Limited Companies and Companies Limited by Guarantee.  Although, if required, a Secretary can still be appointed, if you wish. In our applications for Electronic and Standard Packages for companies Limited by Shares, Limited by Guarantee, Flat Management Limited by Shares, Flat Management Limited by Guarantee and Limited by Guarantee Company omitting LIMITED from its name you will be asked to provide a name or choose our Company Secretary, but YOU ARE NOT OBLIGATED, this will be shown in a Memorandum and Articles of Association.

Bare in mind that if you choose your company incorporated without Company Secretary - you will be responsible for an Annual Return to the Companies House and other duties normally in a Company Secretary field. To understand this better we prepared an article “Role and Duties of an Acting Company Director” for your convenience.

A PLC will still require a Secretary and can now be incorporated with the share capital either in sterling (GBP) or euros (EUR), previously only sterling was permitted.

If you have any questions or concerns regarding this please do not hesitate to contact our office, and a team member will be happy to help.

Best Regards

Mr. Sergios Topalidi (Web-Master)

FID Trust International Limited

Tags: Company Secretary

The basics of the branding

Building and managing a brand play is a significant role in making your business become a customer’s first choice.

The idea of a brand extends far beyond just your company / partnership / sole-business logo, it has his own core values and interacts with customers and suppliers. In fact, your brand creates and maintains your reputation and reflects your customers’ experience. The certain brands can build up emotional attachments, allowing for strong loyalties and even a sense of ownership from your customers and employees. This can help preserve employee motivation and boost your sales. In competitive markets only strong brands can make any business be noticeable.

If you want to create and manage a brand, you’ll need to concentrate on what your customers want and how you can deliver it. You’ll need to be steady in your service, answer promptly to every other point of contact customers have with you (phone calls, letters, faxes etc.) and understand what makes them buy from you.

How to start with brand creation

Unbeaten branding is about promoting your strong points, what you’re good at and what you believe in. For example:

• Your skills - you are excellent in …
• Something special in your customer service for …
• In your marketplace you providing the best value for money for …
• You occupy a niche market for a particular innovation of …

Be sure that you can always deliver your promises using your strong points which can be referred to your customers as “brand values”.

What your customers want

If you can match your brand values with your customers’ requirements - you are on the road to success!

What drives your customers? What makes them buy from you? In most cases, it’s not just low prices or performance. Location, your personality, availability, believes and other reasons can drive your customers to buy particularly from you. It is a very good practice to  ask existing customers what they like about doing business with you. Useful information on how to expand your business and brand can be obtained by asking potential customers what they look for in their buying decisions.

As soon as your brand values are in line with what existing and potential customers look for - you made a foundation of your brand. But if they’re not, you’ll probably need to reconsider either the benefits you offer to your present customers or whether you’re targeting the right people.

For example, a clothes shop that has high fashion as a brand value can capitalise on it if its customers and potential customers want to buy the trendiest gear. But if its customer base is made up of pensioners, it’s doubtful those brand values will be in line with its customers’ buying taste.

It is worth creating a document containing your core company values and benchmarks for how you want to operate and be seen to operate. Tell this to your employees to make sure you are all working towards the same goals, and re-examine this occasionally.

Building your brand

Once you’ve identified your brand values and your customers’ needs you can begin to construct your brand by consistently communicating your brand values.

Tell your customers

Keep in mind that every possible contact you have with a customer or potential customer needs to strengthen your brand values.

Key areas to consider are:

• your business name;
• names you give your products or services;
• any slogan you use;
• your logo;
• the style and quality of your stationery;
• product packaging;
• your premises;
• where and how you advertise;
• how you and your employees dress;
• how you and your employees behave;
• your company website.

If all these are reliably in line with your brand values, your brand will be strengthened. But if all of them are not in line, your brand - and your business - could be seriously spoiled. A brand makes promises to customers and if they aren’t fulfilled, your customers wouldn’t t want to buy anything from you again.

For example, Delightful Jewellery’s “Elegant” range may be beautifully produced, stylishly packaged and glamorously advertised in glossy magazines. Its brand values could be “classy, special, elegant”. But if staff are impolite or unprofessional on the phone, customers won’t think about Delightful Jewellery’s elegance - they’ll think about its staff’s impoliteness. As a consequence the brand - and possibly the business - will be diluted.

Your logo can be of particular meaning to customers. You should create a policy on its usage, making certain it is used time after time and its superiority is always preserved. This acts as a reassurance when customers are thinking about buying your products or obtaining them after purchase. Your logo can perform as an initial assurance of quality in these situations.

Likewise, make sure that you bear in mind the design and quality of your invoices and receipts, which can often be the last stage in a communication with a customer. This can have an effect on their willingness to give you repeat custom and even to pay on time.

Managing your brand

If you can’t take responsibility for your brand strategy then it’s a good idea to appoint an employee instead to do it for you.

Employees play a vital part in managing your brand because how they act has an important impact on what customers think of you. If your employees believe in what your brand stands for, they’ll be able to communicate it much more successfully to customers.

Keep employees engaged by setting up a suggestion scheme, or occasionally taking the time to talk about your brand and how your business is performing.

Constantly reinforce the message that what they do is important. And make sure they know that violating the promises to customers that your brand makes - even just once - can damage the brand and your business.

Outside your business

Get regular feedback from customers to learn if your business delivers on the promises your brand makes. Ask displeased customers or former customers as well - you can achieve beneficial information from them about how your brand is professed. Honest and constructive criticism can help you see where there’s room for improvement.

Reviewing your brand

A victorious brand can have a long life, provided it’s kept up-to-date and in line with customers’ requirements and expectations.

When reviewing your brand, remember that your customers and employees will have often built up an emotional connection to it, and even feel a sense of possession of it. It is therefore significant that any changes you make are vulnerable to their existing relationship with your brand. Use your findings from meetings with your customers, suppliers and employees to consider the wider insight of your brand.

If there are any inconveniences with your customers’ experiences, don’t be convinced to just change your logo (often mistakenly referred to as a “rebrand”) to solve them. This is a costly process and would not solve the problems, if they are focused on failings in your systems or staff training, for example. Remember that your brand represents the whole customer experience, not just your signage or stationery, and cannot be changed overnight.

Growth opportunities

The reviewing process can often give you a sign of areas into which you can enlarge your business. However, it is equally important to use the findings from your review to ensure if your brand can survive being stretched to other products or services. For example, if you find that customers powerfully relate your brand with particular products, it may be clever to present new products under a new or sub-brand.

To develop your business, you should persuade modernism and the development of your products and services. This will help you to stay in advance of your competitors and take action to the modifying needs of your customers. However, your brand should always support your core values and supply customers with a constant and trustworthy experience. Your brand may therefore become identical with innovation, but in itself may never change.

Budgeting for a brand

Creating and managing a brand can cost you as much or as little as you want it to. The cost of your time to set it up and manage it is the only area of spending that is guaranteed.

But it’s a good idea to set a budget, or else it’s simple to spend money without need. A budget will focus the mind and push you to prioritise your spending on your branding attempt.

The key areas you could budget for are:

• design needs, such as a logo, signage, business stationery or product packaging;
• your premises;
• your advertising;
• time you’ll need to spend with employees to make sure they understand your brand;
• any resources you’ll have to provide for employees to allow them to carry out what the brand promises;
• keeping your company website updated.

You don’t need to do everything at once. As long as employees understand and deliver what your brand promises, it stands a good possibility of success.

You can create stationery, logos, packaging and advertising quite cheaply if the budget is firm. However, it is a good idea to think about your future growth when developing your image as changing it later can prove costly. You may also find that customers and employees will have already built up a relationship with your brand, which can then make it more tricky to change.

Ten tips on branding

To build a successful brand you should:

• Concentrate on what your business accomplishes for its customers. Your brand is no good to you if it isn’t delivering what customers want.
• Take ownership of your brand. Pay attention to customers’ needs, but you should still control what you want your brand to mean to them.
• Be honest. If you don’t believe in your brand, no one else will.
• Keep your brand straight forward by focusing on a small number of key brand values.
• Be consistent. Every feature of your business should make customers feel the same way about you.
• Be thorough. Look at all your systems to make sure they help to support your brand.
• Involve employees. Make sure they understand your brand and believe in it.
• Communicate your brand. Make sure every advertisement, brochure and letter helps reinforce the same message. If you have a logo, use it everywhere, but make sure the quality is consistent.
• Meet and surpass what your brand promises. Failing, just once, will damage your brand.
• Manage your brand. frequently look for opportunities to make improvements. And don’t be afraid to make changes to reflect shifts in the way you do business or new trends in your market.

Tags: branding

To be able to operate successfully, your business will need to acquire assets or capital equipment. These assets may include office furniture, computer equipment, company vehicles, engineering machines or service equipment. You could buy all of this equipment outright, or you might decide to rent or lease it instead. There are advantages and disadvantages in both options.

Assets finance

There are two main ways you can pay for the resources and equipment your business needs:

1. Buy it outright.
2. Hire purchase or lease.

Buying outright is a good option if you have the capital available, or if it is essential that you own the equipment. However, this large capital expenditure can affect your cashflow.

Paying for goods on hire purchase or leasing equipment:

• allows you to use an asset over a fixed period in return for regular payments;
• lets you choose the equipment you require, with the finance company buying it on behalf of your business;
• usually makes your business responsible for the maintenance of the asset.

If you lease the asset, a finance company buys the equipment on behalf of your business, and you pay for the asset in regular instalments over a fixed period of time. These smaller payments will leave you with more cash, but because you pay interest on the instalments, you will pay more for the asset in the long run.

Leasing means you may never own the asset outright, although some lease arrangements let you buy the asset at the end of the agreement. However, you can often update your equipment without the expense of buying newer models. The business can generally deduct the full cost of lease rentals from taxable income as a trading expense.

With hire purchase, the business owns the asset once all the payments have been made. You can also claim capital allowances against tax from the beginning of the hire purchase contract. Another advantage of hire purchase is that the interest rate you pay will be less than if you needed to get a bank loan or overdraft to buy the item outright.

Types of leasing

There are different kinds of lease arrangement. It makes sense to look at each one to see which is best suited to your business, your particular circumstances, and the asset that you are acquiring.

The three main types of leasing are:

1. Finance leasing

• A long-term lease over the expected life of the equipment, usually three years or more, after which you pay a nominal rent or can sell or scrap the equipment - the leasing company will not want it anymore. 
• The leasing company recovers the full cost of the equipment, plus charges, over the period of the lease.
• Although you don’t own the equipment, you are responsible for maintaining and insuring it.
• You must show the leased asset on your balance sheet as a capital item, or an item that has been bought by the company.
• Leases of over seven years, and in some cases over five years, are known as “long-funding leases” under which you can claim capital allowances as if you had bought the asset outright. 

2. Operating leasing

• A good idea if you don’t need the equipment for its whole working life.
• The leasing company will take the asset back at the end of the lease.
• The leasing company is responsible for maintenance and insurance.
• You don’t have to show the asset on your balance sheet.

3. Contract hire

• Often used for company vehicles.
• The leasing company takes some responsibility for management and maintenance, such as car repairs and servicing.
• You don’t have to show the asset on your balance sheet.

Buying equipment outright

Buying equipment outright may at first seem like the best option, but it’s always a good idea to think about whether this makes best use of your working capital. It may be more cost-effective to rent or lease certain items.

Some advantages of buying equipment outright:

• you own the asset and it can’t be repossessed - unless it has been used as security for a loan;
• you are treated as the owner for tax purposes and can claim your own capital allowances;
• you don’t tie your business into long-term agreements which may be difficult to terminate;
• you will almost certainly pay less overall than you would through a lease or hire purchase agreement, although you may need to borrow in order to make the purchase.

Some disadvantages of buying equipment outright:

• you have to pay the full cost of the asset up front out of cash which can affect your cashflow;
• if you use an overdraft or loan to fund the purchase it will add to the cost - overdrafts can be withdrawn at short notice, and in some cases early repayment of loans can be demanded;
• a small company is unlikely to get the same deals on price as a large leasing company, and may not have the same product knowledge and experience;
• you may end up buying equipment that you will not need in the future;
• you can’t easily spread the cost to coincide with money coming into the business;
• you are entirely responsible for the maintenance of the asset;
• you won’t be able to take advantage of the tax benefits of deducting the cost of rental from your taxable income;
• the value of the asset may depreciate over time and be worth less than you paid for it;
• you take on all the risk if the equipment breaks down or needs replacing.

Leasing or renting business equipment

Leasing or renting an asset means you can free up working capital for use in other areas of your business and you don’t need to take out large loans to pay for it.

You should think about leasing or renting equipment that has high maintenance costs, can quickly become outdated, or is only used occasionally.

Some advantages of leasing or renting equipment:

• you don’t have to pay the full cost of the asset up front, so you don’t use up your cash or have to borrow money;
• you pay for the asset over the fixed period of time that you use it;
• as interest rates on monthly rental costs are usually fixed, it is easier for your business to forecast cashflow;
• you can spread the cost over a longer period of time, and ease your cashflow by matching payments to your income;
• the business can usually deduct the full cost of lease rentals from taxable income;
• you won’t have to worry about an overdraft or other loan being withdrawn at short notice, forcing early repayment;
• if you use an operating lease or contract hire, you may not have to worry about maintenance;
• the leasing company carries the risks if the equipment breaks down;
• the leasing company can usually get better deals on price than a small company, and will have superior product knowledge;
• on long-funding leases (over seven years, and sometimes over five years) you can claim capital allowances on the cost of the asset.

Some disadvantages of leasing or renting equipment:

• you can’t claim capital allowances on the leased assets if the lease period is for less than five years (and in some cases less than seven years);
• you may have to put down a deposit or make some payments in advance;
• it can work out to be more expensive than if you buy the assets outright;
• your business can be locked into inflexible medium or long-term agreements, which may be difficult to terminate;
• leasing agreements can be more complex to manage than buying outright and may add to your administration;
• your company normally has to be VAT-registered to take out a leasing agreement;
• when you lease an asset, you don’t own it, although you may be allowed to buy it at the end of the agreement.

Tax implications

Capital allowances allow you to offset the cost of capital assets against the taxable profits of your business.

Capital allowances are used instead of normal accounting depreciation, which you cannot offset against tax. They are defined and set by HM Revenue & Customs (HMRC) and they are often used as a way of encouraging certain types of investment.

If your business is profitable you can claim your own capital allowances by using hire purchase or buying assets outright. With hire purchase agreements, your business is treated as the owner of the equipment and so you can claim capital allowances, offsetting the asset against your tax bill. You can also claim capital allowances if the lease is a long-funding lease - more than seven years, and in some cases more than five years.

If your business reaches a low profit or loss, it may not be worthwhile claiming the full capital allowances. With shorter leases - less than five years and sometimes less than seven - the leasing company will claim the capital allowances against its own profits and should pass on the savings to you in reduced rental charges. Businesses can usually deduct the full cost of lease rentals from taxable income as a trading expense.

Depreciation

The value of your assets, such as vehicles, machinery and equipment, will fall as they are used and eventually wear out. This is depreciation, and is used in your business accounts to write off the value of the assets over time.

Depreciation has the effect of spreading the cost of the asset so it is written off against the profits of several years rather than just the year of purchase. Depreciation is not allowable for tax. Instead you may be able to claim the cost of some assets against taxable income as capital allowances.To work out depreciation you need to know:

• the date you started using the asset;
• the asset’s estimated useful life;
• the asset’s initial cost;
• any possible value it may have at the end of its use - eg as scrap;
• any costs that are likely for disposing of it.

Choose a finance company

Companies providing hire purchase and leasing contracts include:

• subsidiaries of major UK banks;
• providers owned by manufacturers, such as car manufacturers;
• non-UK banks;
• independent finance houses;
• equipment suppliers;
• members of the Finance and Leasing Association (FLA).

When assessing the most appropriate leasing company to use, make sure:

• the provider is a reputable company, preferably a member of the FLA;
• your contract corresponds with any verbal or written quotations;
• the period for which you need the asset is covered by the length of the leasing agreement;
• you are aware of any financial penalties if you wish to end the agreement early;
• the equipment you are leasing is new;
• you have read the contract carefully before signing it, checking the amount of rental, the period of hire and notice periods;
• you understand all terms and conditions, and the costs you will have to pay.

Tags: lease

This information shows you how to create the right impact, how to display your business name, take into account whether your business name will be your brand and get your name on the web. It also outlines the detailed rules that you must follow when choosing a company name for a limited company, sole trader or partnership.

Creating the right impression

First rule: never focus on your personal preference, instead consider the customer first! And remember that your business name will be the foundation of your brand. It must work well wherever you use it - on the phone, in your logo, stationery, advertisements, website, uniforms and any other media you plan to use to reach the market.

How you need to decide on a name for your business:

• If your business just about one thing (framing, moving, cleaning, building, etc.) - the name which reflect what your business does is a good idea.
• Include your own name if you are sole-trader, family running partnership.
• Traditional-sounding name, old-fashioned values, modern name? It is just about what your business does. More suitable for LTDs and LLPs.
• Think about the forthcoming events - avoid words or phrases that are likely to date quickly, particularly numbers.
• Check meaning of your proposed name in all major languages if you’re going to trade overseas. In this case - the shorter is the better.
• For businesses which take calls from customers - avoid long names, strange wordings and unusual spelling.
• For businesses which planning to advertise in directories such as the Yellow Pages - think about using a name that appears near the beginning of the alphabet - it will ensure it’s an early entry.
• If you’re focusing on the local market for your product or service, think about using the name of the city or town in the business name.
• Keep your trading name creative, but your corporate name bland. This will give you the flexibility to develop other brands and trading names in the future.

There are also regulations that could affect your choice. Read information on business names at the Companies House website.

Limited company names

If you’ve decided to form a limited company, you’ll need to register your name and other details with Companies House.

Before you fill in the forms it’s essential to check that your proposed name doesn’t break the rules.

Company names - the rules

To make sure your company name is acceptable, work through this list before you send your application to Companies House. Ensure that:

• your company name ends with limited, plc, Ltd or Welsh equivalents - this must not be used anywhere other than at the end of the name
• the name isn’t offensive
• the name isn’t the same as - or very similar to - one already in the register
• the name doesn’t include any sensitive words or expressions - unless you have obtained permission to use them

The full version of these rules is given in the Companies House guidance booklet Company Names. You can call the Companies House Contact Centre on Tel 0870 33 33 636 for a copy - alternatively, you can access the booklet on company names at the Companies House website.

For an explanation of how to register your company name with Companies House and a list of forms you need to complete, see our guide on how to set up and register a limited company (private or public).

Trade marks

It’s a good idea to check that your proposed name isn’t too similar to a word or expression that someone else has registered as a trade mark. This isn’t compulsory, but it could save time and trouble later on.

Find out whether your chosen name has already been registered as a trade mark on the UK-Intellectual Property Office (UK-IPO) website.

Sole trader and partnership names

People operating as sole traders or in partnerships can trade under their own names, or choose a different business name.

Sole trader and partnership names - the rules

If you decide to use a business name, there are a few rules to bear in mind. The name must not:

• be offensive;
• include the words limited, plc or equivalent;
• contain