Advice for budding businesses

ACCOUNTING
ACCOUNTING is an unloved but essential discipline for entrepreneurs. Businesses that fail to keep the financial score are flying blind. Record and track your results to monitor your financial status. Measure sales, costs and working capital. Identify the key performance indicators (KPIs) that will keep your business on track, including orders, sales and gross profits. Vet your customers and focus on collecting your debts. Remember that businesses don’t go bust because of a lack of profitability, they go bust because they run out of cash.

Guy Rigby
Head of entrepreneurs
Smith & Williamson

BUSINESS ANGELS
BUSINESS angels are professional investors who typically invest in quality start-up companies with high growth prospects. Getting the backing of an angel can give you a huge advantage in terms of finance, as well as access to experience and contacts, so think about networking opportunities with angel investors wherever you can.

Phil Cox
Head of UK, Europe and Israel
Silicon Valley Bank

CROWDFUNDING
CROWDFUNDING is an alternative source of finance to traditional sources such as banks. Platforms are now available for both debt and equity. For early stage companies with limited history, equity crowdfunding is the most appropriate with the public having the ability to take a stake in the business for their contributions. UK platforms include: Crowdcube, Seedrs, BloomVC and coming soon BankToTheFuture.com.

On the Debt side, later stage companies with a minimum of a few years credit history are able to source funds through debt instruments. These are crowd syndicated SME bonds providing the investors with a declared rate of return. Players include FundingCircle, Thincats and Yes-secure.

Farid Haque
Campaign director
StartUp Britain

EIS
IF YOU’RE looking to raise or invest money in 2012, learn about the Enterprise Investment Scheme (EIS). Investors purchasing EIS qualifying shares are currently entitled to upfront income tax relief of 30 per cent of the amount invested, which, from 6 April 2012, can be claimed on investments made up to £1m. Qualifying companies must have fewer than 250 employees and current gross assets of less than £15m. EIS funds’ tax efficient nature makes them incredibly appealing to investors and rules on company size means EIS investments directly benefit UK start-up and growth businesses. This is great news for entrepreneurs.

George Whitehead
Venture Partner Manager
Octopus

SEIS
THE Seed Enterprise Investment Scheme (SEIS) could well be where Britain’s economic renaissance begins.

The SEIS offers 50 per cent income tax relief to anyone who invests up to a maximum of £100,000 per year into a young business. If you use capital gains to invest, the 28 per cent capital gains tax is also waived.

With the SEIS’s deeply discounted capital, starting a business could never be cheaper, and by waiving capital gains tax an investor in SEIS can hope for lucrative returns from successful young start-ups. It could just be one of the most extraordinary incentives ever created, so don’t miss out.

Doug Richard
Founder
School for Startup

VENTURE CAPITAL
LET’S be clear from the outset: Venture Capital should not be the first port of call for most aspiring entrepreneurs or small businesses. Sure, it can be crucial for companies with large capital outlays – but most start-ups don’t fit that bill.

In fact, relinquishing control of a company to investors who have little understanding of the product, the market or business model can significantly hinder the growth potential of a start-up. My advice is to focus on building a great business rather than slide-ware that you think VC’s want to hear. First look to other forms of finance, or dig into your pocket. You need less money than you might think – and the less you have, the less you’ll waste.

But if you think your company is at the stage where it might benefit from VC, look to industry body the BVCA for guidance.

David Richards
Co-founder, president and CEO WANdisco

PAYROLL
AS AN employer you have to deduct tax from your employees’ pay, give them a written pay statement and keep adequate records.

This will become all the more important come April 2013, when you will have to tell HMRC about tax, national insurance contributions and other deductions with every monthly employee payment. Employers will therefore need to be on top of their PAYE files at all times.

Sally Revell
Head of marketing
Intuit UK