EU Referendum UK

To Vote or Not To Vote” that is the question. For many people the general state of confusion generated by both sides of the argument could well result in a low poll turnout since this is going to be a very difficult decision for all but the already totally committed “Leavers” or “Stayers”.

As stated elsewhere on this website, my take on the theme of Be Your Own Boss is broader than just working for yourself or starting a business. Freedom of choice in how we live our lives is a fundamental issue for those attracted to the independence of not having a boss but rather being the boss!

Many of the auguments for or against remaining in the EU focus on economics and trade, on the potential effects on public services or on the security of the UK. But the wider issue driving most of the “leavers” is the issue of Freedom and Independence. There is an inbred resistance in the British psyche to being told what we can or cannot do, and more so against being told what we must do. As a nation we have fought to retain our independence for almost a thousand years, not only against external aggressors but even internally. Magna Carta and the Scottish independence referendum are topical examples but we can look to the War of the Roses and the English Civil War as other examples.

With the coming Referendum we have the opportunity to have our say on this issue, I believe that not voting at all is not an option as it puts our future in the hands of others. So the next question is Stay or Leave. Stay in the EU or leave and make our own way in the world.

There is growing pressure to Stay coming from not only our own Government, but from many outsiders. Pressure from other EU countries, pressure from the EU organisation, pressure even from America, an ally who every year celebrates its own independence! There is also growing pressure from large multi-national companies, from some business organisations and from major banks. Are they acting in our interests or their own?

Then we have the “Leavers”, the people who have campaigned on this issue for years. Their over-riding message is about freedom and independence. They point to excessive regulation from the EU, interference in our way of life and our ways of doing business. But are they right? Is leaving in our interests or theirs?

THE FACTS

In order to help make up our minds we, the people, have been asking for hard facts on which to base a decision. Instead we have been given conflicting assumptions, official guesswork, selective statistics. The same statements repeated over and over in the hope that repetition will result in belief. It appears there are NO FACTS! Just suppositions and wishfull thinking.

So why is there so much confusion and disagreement?

WE JUST DON’T KNOW!

The answer is that we don’t know and cannot know what will be the result of either remaining in the EU of of leaving and following our own course. As far as I’m aware Nostradamos, that famed futureologist, is silent on the subject of this Referendum. Predicting the future is a very inexact science, but that is what we are being asked to do in order to make our choice.

The Remain team say “We know what staying in looks like, because we have been in for years”. Not true! Many things have changed in the EU since we joined the “Common Market”. What we do know is that many more things will change within the EU. Some we already know about, like more countries joining, but the future is otherwise unpredictable. Will the EU prosper? Or will it crumble? In its present state it’s hard to tell.

The Leave team say “We will be better off outside as we will have the whole world to trade with, we will be free of the shackles of an unelected EU bureaucracy and be free to follow our own destiny”.¬† Maybe! But will that road be a successful one? Who can tell?

One side says we will be better off out, the other says we will be better off in. Both are simply making predictions, otherwise known as guessing, or even gambling.

A ROLL OF THE DICE?

The die is cast, the referendum looms. All we can do is consider our own individual position and vote the way we truly feel. If we vote confidently with a sense of purpose then, whatever the outcome we will know we voted our way.

But if we vote due to fear for the future then the future we fear may just come about. If we are wrong we may regret being fearful.

YOUR FUTURE?

What I do know is this….

Change brings problems for the fearful and opportunities for the fearless. As individuals we can choose to embrace change. Whatever that change is, we can solve its problems and take its gifts. Or we can be a victim of change it’s our choice.

Whatever happens I wish you a great future ūüôā

I have made my decision!

Which way will you vote?

 

Happy New Year

I would like to wish all my visitors a very happy and successful New Year.

Starting a new business or growing an existing one is particularly challenging at the moment. In all my years of business I have never seen such an uncertain economic outlook. Yes we have been through a number of past recessions, this is my fifth, but there was always a degree of certainty Рalbeit not always positive!

However, uncertainty creates opportunities for those who can see past the present negative press reports. In my experience an economic downturn can provide as many opportunities as boom times and sometimes even with less risk. Yes, I did say less risk. In a downturn people take more care and are more alert to risk whereas during an economic boom they can be careless, as we have seen all too clearly in the last couple of years or so. But the key business factors never change:

  • Clear and specific business objectives and business plan
  • A hungry market with specific needs or wants
  • A quality product that delivers exactly what they want at an affordable price yet still produces a profit
  • Customer service and reliability that gains trust and a good reputation
  • Active and consistent targeted marketing
  • Fast response to enquiries and systematic follow-up
  • ¬†Sound cashflow and financial control
  • Minimal borrowings relative to cashflow
  • A positive attitude to your¬†market place¬†and your business and a willingness to ‘go the extra mile’ to satisy your customers

So, where do you want to be at the end of this year? How do you propose to get there? Whose needs can you best serve? What can you do for them that will please and delight them and ensure that they will tell all their friends?

Somewhere out there are people who need what you have to offer, all you have to do is find them and tell them what you have and how it will help them, then over deliver to the best of your ability.

Good luck and have a great year.

Sales Commission Abolished

Before all sales people, associates and affiliates panic let me explain that the above headline applies only to Financial Services Products in UK.

The UK Financial Services Authority have had concerns for some time that financial services products are too often recommended by unscrupulous financial advisers on the basis of the amount of commission they receive rather than being the best product for the client.

The majority of professional financial advisers in UK, and elsewhere, take pains to provide clients with the best advice they can but there has been a persistent band of rogue advisers who think only of themselves.

If your business is in financial services you will probably have seen this coming. But read on as I shall be coming back to you later…

If you are not in financial services then this doesn’t affect you, does it?

Well, yes it does! Especially if you have been used to getting your financial advice for free. Or apparently for free…

Most people in UK don’t pay an adviser for recommending life insurance, investments, pensions etc. because the adviser has been remunerated by the life, investment or pension company by way of commission on the sale. Obviously the companies paying this commission have to make it back in some way and that is by some form of management charge built into the product. This means that the client is actually paying this commission indirectly.

Under the new system, the client (you) will be expected to pay the adviser a fee for the financial advice given. This should mean that the product should be better value for money as there are no commission charges to account for and your adviser has no reason not to recommend the best product for your needs.

However, if you take financial advice but take no action on that advice you will still have to pay the adviser’s fee. Unlike in the commission situation where you can just walk away leaving the adviser with nothing.

Now, back to the financial advisers out there.

The good thing about this change is that you will always be able to get paid for financial advice you give regardless of whether the client takes that advice or not. You will be free to advise the client on any course of action you feel is appropriate to their financial circumstances without any concerns about likely remuneration.

Your only problems, if you have not been charging on a fees basis up until now, is one of educating the client in the new ways of financial services and setting up the appropriate contracts and procedures to handle the new regime.

I’ve been talking to a very senior¬†financial adviser about this as he has operated a fees based financial service for over twenty years now. He certainly understands the problems facing commission based financial advisers over the next couple of years.

In fact he has been helping many financial advisers move over to a fees based system for the last ten years or so.

His name is Terence P O’Halloran, ‘ Terry’ to his friends, and he has been a major player in the industry for well over thirty years. Terry first unveiled his Fee-Pac product for financial advisers over ten years ago and has steadfastly kept it up to date, improved, evolved and expanded¬†it over the years into a major package suitable for any fees based profession.

Fee-Pac now includes a full video training seminar on setting up a fees based business, complete client and adviser documentation as well as all the admin files needed to set up a successful fees based practice. This is an extremely professional piece of kit.

If you are a financial adviser or thinking of getting into that business then check out Fee-Pac here. I can’t believe how little he is charging for it considering its potential value to you in the coming months.

Interesting times ahead!

Business Systems

Have you ever felt you were running harder and faster in your business and yet appear to be staying in the same place. If so you probably know the feeling; the working days get longer, the backlog gets larger, leisure time gets shorter (or even disappears altogether). Running a business can tie you down rather than give you the freedom you expected.

Way back in the dim and distant past I was introduced to the concept of working on my business instead of working in my business. This was quite a revelation and is actually the key difference between creating a job and building a business.

Working in your business means spending your time doing all the work involved in getting customers, providing them with the products or services you sell and doing all the admin stuff that goes with it all. This means that growth is limited by the time you have available. Even taking on staff to do some of the work can often involve you in more work training and managing the staff.

The magic formula for getting you as a business owner off this endless self-imposed treadmill is systems. The systems I have applied  to my business have given me time to plan strategically and, more important, given me more time for myself and family. In fact I now work only 3 days a week and yet the business keeps running just fine.

Setting up systems can take quite a bit of time initially, but will pay dividends for years to come. The first thing to do is to list all the jobs and tasks that need to be done on a day to day basis. Then for each task identify all the steps in the order they are carried out and the specific ‘how to do it’ process. Then write a detailed description or procedure for each task. The real trick is to document the procedure in such a way that anyone with the necessary skills could just walk into the business and take over that task with the minimum of training.

The next thing is to look at each task to see if it can be improved, streamlined or automated. Can the task be computerised or mechanised. Start by looking at what the end result of the task should look like and consider alternative means to the same end. Just because a task has always been done a particular way doesn’t mean that it is still the best way!

Think of it as producing, task by task, a complete operating manual for the business covering every area of the business.

Once the ‘operating manual’ is complete, look at who will carry out each task and what equipment, if any, is needed. Make use of check lists for each task to ensure quality control.

One of the most popular books on setting up small business systems was “The E-Myth” by Michael Gerber. That’s now out of print but was later replaced by “The E-Myth Revisited”.

Partnership

A Business Partnership can have unlimited or limited liability. A normal partnership has unlimited liability but a Limited Liability Partnership (LLP) has similar advantages to a Limited Company. As such it needs to be registered at Companies House.

Operating a business as an unlimited partnership is similar to operating as a sole trader from a legal perspective. The key differences are as follows:

  • A partnership has more than one owner
  • Accounting and taxation are more complex due to the need to prepare partnership accounts and allocate profit shares for tax purposes
  • The business and the partners have ‘Joint and Several’ liability which is unlimited. This means that, any losses or other liabilities fall first on the business, then on the partners according to their share of the business, then fully on each individual partner. This means that any single partner could end up carrying all liabilities personally if the business and the other partners are unable to pay their share.

The last of these is quite a frightening prospect. It is for this reason that the Limited Liability Partnership form of business was created. It is a much safer option for the individual partner¬†than operating as a ‘regular’ partnership.

In either case you should have a partnership agreement drawn up by a business lawyer as well as taking full financial and legal advice from qualified professionals.

‘Personally I prefer the simplicity of the sole trader for the very small ‘one man band’ low risk venture or the formal structure of the limited company for anything bigger or riskier.’

Limited Company

There are two types of limited liability company in UK. Private Companies are designated as Ltd or Limited, Public Companies are designated as Plc. I shall just deal with Private Limited Companies in this article as they are the most appropriate for small businesses.

The main point of a limited company is to give personal protection against company liabilities. As long as you comply with the relevant regulations, you will not be personally liable for the debts or other liabilities of your business. It is therefore a more appropriate business structure for any business that might face high risks in business.

There are also tax advantages in operating as a limited company once your business profits exceed the personal higher tax threshold. It may also be possible to get more favourable tax treatment for pension contributions, though this is a complex area needing specialist advice.

Another advantage to a limited company is that it is easier to build up a company as a tangible asset which you can sell in the future, perhaps to retire. This is because it is structured as a separate legal entitity and not entangled with your personal assets in the same way as a sole trader business.

The Companies Act separates out the owners of the company from the managers of the business. The owners of the business are the shareholders, of which there must be at least one. The shareholders’ liabilities are limited to the amount of money they have put into the business as a shareholding.

The managers of the business are the directors, of which there must be at least one. The directors are responsible for the running of the company and compliance with all regulations. They are also responsible for filing of financial accounts and annual return to Companies House as well as filing a corporation tax return to HMRC.

Providing the company is run legally and competently, there should be no liabilities for which the directors are personally responsible.

The regulations can be quite complex, so good legal and financial advice should be sought before proceeding.

Running a limited company can face more red tape and additional costs than a sole trader business, but the benefits usually outweigh the drawbacks.

For more detailed information go to www.companieshouse.gov.uk.

Sole Trader

Sole Trader is the simplest business format of all. You can trade under your own name or a business name and you can set up almost anytime, anywhere with little restriction or red tape. There are a few key things you need to do first though:

  • Register with HM Revenue and Customs (HMRC)¬†– For Tax and National Insurance
  • Open¬†a separate business bank account
  • Set up a system for recording all sales, income and expenses
  • Check to see if your type of business needs any kind of license, there are very few
  • If you are working from home, do you need planning permission?
  • Check with HMRC to see if you need to register for VAT
  • Get yourself a set of guidance leaflets for business from your local Trading Standards office – pay particular attention to Business Names regulations and Consumer Protection

The main things to bear in mind as a Sole Trader are:

You and the business are legally the same. This means that you are personally liable for all the debts and other liabilities of the business to the full extent of your personal assets. If the business goes bust, you could lose everything.

Your business profits are taxed as your personal earnings along with any other earned or investment income you may have. If your profits are high, you will very rapidly become subject to higher rate tax.

In addition to tax you will have to pay two types of National Insurance contributions. Class 2 contributions are a fixed weekly amount, Class 4 contributions are a percentage of your profits between a lower and upper limit. You will be given the current rates and necessary information when you register with HMRC.

For the reasons above it would be wise to consult an accountant experienced in working with small bsinesses prior to starting out.

You can get more information from your local Business Link who will provide you with a business aviser free of charge. Find your local office at www.businesslink.gov.uk.

Company or Sole Trader?

A key decision facing the new business is what business format to choose when starting out. Basically there are a number of options which will be influenced by factors such as:

  • How many of you will there be running the business?
  • What potential risks and liabilities will you face?
  • What are the tax implications of each option?
  • How much bureaucracy (red tape!) are you prepared to face?
  • Do you want to build a business with an assest value?

 

If you are setting up by yourself, there are two choices:

  • ¬†Sole Trader
  • Private Limited Company

 

If there are two or more of you the choice is wider and adds:

  • Partnership
  • Limited Liability Partnership

 

I shall deal with each of these in separate articles to try to keep things as simple as possible!

Be Your Own Boss Reborn!

Be Your Own Boss has had a long overdue ‘makeover’.

It’s been rebuilt using WordPress, a great tool for content managed websites, incorporating some of the latest Web 2.0 features. This makes it much easier to incorporate new content, so now I have no excuse for not adding lots of new information on the subject of starting and running your own business ;-). That should keep me busy!

The articles now give you the opportunity to comment and ask questions, blog style, so feel free to join in the business discussion. But please be nice ūüôā

A few simple community rules:

  • No fighting
  • No abuse
  • No Spamming
  • No blatant self promotion
  • Don’t include links in posts, put your email address and website in the boxes on the comment form

 

Your email address remains private, it’s just between you and me. Your website will be linked to from your name on the comment.

Comments are moderated, if they break the rules, they won’t appear!

I hope you like the new site. Join in, learn and have fun!

John

Know Your Destination

You wouldn’t get on a bus or train without knowing where you want to go, would you? Yet thousands of people go into business with only a vague idea of where they want their business to be in say 5 years time.

Whether you are starting a new business or growing an existing one, success depends on three things:

A. Knowing where you are now
B. Knowing where you want to be and when
C. Figuring out a route from A to B.

Then all you have to do is follow your route plan.