Shareholders Agreements & Involving Family

One of the questions I always ask when introduced to a new client is "Are any family involved with the business"? My heart always sinks when they nod and whilst it's by no means a problem to everyone, it is not something I would encourage and in fact would positively discourage. It' can cause major family rifts and is just not worth it.

This brings me on to shareholders agreements. Obviously you should get a lawyer to do this but they are very important and set the rules of the game, before you play it, which is much better than making the rules up as you go along! Most small businesses do not have agreements in place and many lawyers have made tidy sums sorting out the mess that this can cause. So in summary, if you are setting up a new limited company, get the shareholders agreement incorporated into the memorandum & articles  from the outset. This is just as important when family are involved and possibly even more important. Also, as the mem's and art's for a small business are usually rather generic, you can get these tidied up as well. Not the most riveting read, but essential to your future well being I can assure you.

Letting Go

One of the main issues I see with small businesses is the same problem I had myself and that is letting go. This is not an issue with the digestive system but the fact that so many entrepreneurs are also control freaks and just cannot delegate or see the benefit of taking on new staff. They are stuck in a catch 22. "By the time I have told someone else, I could do it myself" or "I can't afford another salary so I do it myself". Both statements could be true but if you don't change the way you work, the business will never grow.

Let's examine the first statement. Handing over routine jobs to staff will motivate them and even if they make mistakes, they should get there in the end. It's difficult but necessary. Assume they will make mistakes and then you can only be pleasantly surprised.

The second statement is the biggest dilemma for most business people but if for example you consider yourself to be the best salesperson in the business, why are you bogging yourself down with accounts, admin, HR etc? You release your time to sell and guess what? You can afford the extra salary and what's more, you will make more money into the bargain. Many of the aforementioned jobs can also be carried out by part timers, homeworkers and contractors.

Finally, if you think you are overloading your staff by passing over work to them, my experience has been that staff can always make themselves look busy but are not often working at capacity.

Cold Calling Using Shoe Leather

It occurred to me recently that with the advent of the internet, email and PDA’s, nobody seems to talk to anyone these days and the thought of  cold calling will make the average salesperson go into shock. It would therefore seem a very good opportunity to beat competitors by having the gumption to walk the streets and actually speak to people face to face. It might even make you stand out from the crowd. I know in my past business, if no enquiries came in, we would literally pick a town and hit it. If nothing else, it gave a fair idea of how the competition were doing because it also doubled as a market survey.

Are you exposed to Foreign Currency?

Wipe the smile off your bank's face next time you have to a large currency deal. How? By getting http://www.fxstreet.com/rates-charts/live-charts/ on your PC and call the bank whilst you are looking at the live data. Just see how much you are being charged! Start talking to them about how many "pips" they are going to charge you for the transaction. You should be around 30 for £200K.Bear in mind that currencies are written 1.xxyy, where yy are the last 2 digits and would be where you add or subtract your 30 pips. I would love to hear of any significant savings made.

Stopping the "Sicky"

So you have an employee that always seems to be sick on Mondays? It's almost impossible to prove whether they are sick or not. However, as a concerned employer, you can pay for them to have a full medical, with the emphasis on full. I would suggest obtaining the latest advice from an HR professional before taking action because when we used this in one of my businesses, it was a few years ago and HR legislation changes all the time. The threat of a medical normally has an amazing curative effect though!

How to tell if your advertising budget is being wasted

As you may have heard, 90% of all advertising is a waste of time so when the Yellow Pages person comes to flog you another very expensive advert, you may want to be armed with data for the previous year. The old line of "If you took half a page instead of 1/4 page you would get much better results" just doesn't wash. How can you analyse response? Obtain an 0800/0845 number for each advert that you place and also use a different email address for each advert. Map the 08XX number to a different telephone number or line and you have a simple analysis. If someone rings 0800 123567 then it's Brighton directory. If they call 0800 567890, it's London. You can get these numbers free and if you want any, just drop me a response to this or use the enquiry form at http://www.mentornet.co.uk/contact.html

Effect of Blogs and Twitter on Web Site Hits

I have been experimenting with this blog and posting this automatically to Twitter. What I have found astonishing is the massive ramp up in hits to my web site and subsequent enquiries. In fact, August isn't over yet and I already have doubled my average hits (4315 at the time of writing. So if you are thinking of blogging, I would put some time aside because it's not completely intuitive but worth the investment in time. I am contemplating producing a training video so if there is sufficient interest, it might force me to do it.

If you do create a blog, don't forget to put the link in your email signature. It's a plug each time you send an email. www.mentornet.co.uk

Just experimenting with Video in my blog

Just experimenting with Video in my blog

Using Goal Seek in Excel

I have just completed a short video and uploaded an Excel file to show how Goal Seek can be used to great effect. Simply put, you can decide on the end result required and get Excel to recalculate a field to make the desired end result. Brilliant but little used. Find it at http://www.youtube.com/watch?v=hyyamRWQxqU

Low Cost Marketing in a Recession

I have just posted an updated version of this document at http://www.mentornet.co.uk/downloads.html. It now includes more online marketing ideas.

Free loan from HMRC?

Want a free loan? If cash is a struggle and the bank is unsupportive, then apparently HMRC will defer VAT payments. I know this was mentioned in government announcements but they are actually doing it (for a change!). You just need make a 'phone call and explain that the bank are not extending sufficient credit. If you don't get anywhere, I would like to hear from you.

Sales Recruiting

I am not sure that I ever entirely cracked this one! There are a few lessons you learn after recruiting several lazy idiots and these are:-

1. The best interview candidates can be the best "blaggers"
2. Always, ignore written references and make a 'phone call to the last employers. What they will say is far more than they will write! A key question... "Would you employ them again?"
3. If you really like the candidate it doesn't mean they can close a sale.
4. Use psychometric testing. It's only part of the picture but an important one.
5. Consider using IQ testing if the job needs a few brain cells.
6. It's often better to train someone to sell from scratch than to teach a salesperson your products - Can you train someone to sell from within your business?
7. Be more thorough about sales people that use agencies. If they are that good at selling, why would they use an agent?
8. If you do use an agency, make them work for their fee and do all the above.
9. Those that want big basics and small commission should be bypassed (in my opinion). Ask them their minimum outgoings and offer them less than that as a basic. It gives them hunger. You can always guarantee a bit of commission for the first couple of months.

Risk Share for Start Ups

Had a client a short time ago who presented me with a business plan requiring £200K+ start up capital. I suggested he went back to all his suppliers and asked them to risk share. Amazingly, all bar one agreed and that bought down the start up to circa £15K. If you don't ask......

Sales Prospecting - Cart before the Horse?

I don't know how many times I see people who are struggling with sales figures and yet they can't see that it's a numbers game. Anyway, to highlight the issues I have created a spreadsheet which walks you through an analysis of sales performance. It also homes in on conversion rates etc. It's only in its infancy but I will improve it over time (hopefully).

It also surprises me that people throw lots of salespeople (along with all the other expenses such as cars etc) at the problem and then don't spend any money generating leads. It all ends in tears and lots of wasted money. After 20 years of getting it wrong, the penny dropped for me. I.e. Marketing generates leads and when your sales people can't handle the leads, take another one on. Simple really.

The spreadsheet will be available at in the next few days from www.mentornet.co.uk

Calling UK Mentors & Coaches

A few mentors and coaches in the South East of England are interested in setting up an exclusive group of mentors, coaches and advisors to help small to medium businesses in the area. Anyone interested can email us via our website or reply to this blog. If you haven't been there, done it and got the T shirt, don't bother! We want people that know what it's like to run a business from the sharp end.

If, on the other hand, you are a small business needing some support from people that see it from your perspective, let us know. It doesn't cost anything to find out more.

Intellectual Property

I had a 'phone call last night from someone asking for a lawyer to help with a "copyright infringement". I said that he needed an intellectual property lawyer and what amazed me is that he didn't know what I was talking about! I find in my mentoring/coaching activities that so many people in business are completely ignorant about the value of IP. It's not unusual to find a company that sells nothing but IP (such as software apps) but have it written by a sub-contractor who will usually claim to own the IP! So if they decide to exit, the one and only substantial asset is owned by someone else.

So if you are in business, I would suggest you always think about the big day when you sell it and get your house in order now. I call it "Due diligence in advance". Any IP issues such as trade marks, designs, IP ownership need to be 100% documented and owned by you or the business. You wouldn't let your builder put an extension on your house and let him own it would you? Incidentally, if you want to make sure you are OK in this respect, go to www.pblegal.co.uk where you get London lawyer advice at substantially lower rates.