The last few years have seen a growing number of people either leave existing jobs to start a business, or go it alone out of school or university. In October, official statistics revealed the number of small businesses has reached a record 5.4m as Britons reject conventional jobs to work for themselves.
In association with American Express.
While many people will have had an idea for a business at some point in their lives a product or service they think people will go wild for not many go any further from that lightbulb moment. To take on the spark of an idea and grow a successful business requires extraordinary skill and determination.
Business Advice has been speaking with successful business owners to find out the crucial ingredients to success in the early years. It came down to three fundamentals.
Keep an eye on cash flow
For EverythingBranded.co.uk founder Paul Rowlett and his wife Jennifer who now heads up the business, getting a grip on the numbers wasimperative to making a success of the business. Their company, which produces brandedpromotional products and corporate gifts (supplying a wide variety of customers including bigblue chips, SMEs and charities), has achieved impressive growth since they started it in 2010.
From looking for work to becoming a successful entrepreneur, less than five years later, Paulhas been on an inspiring journey but believes the biggest hurdles they faced when starting outwere mastering cash flow and being able to capitalise on opportunities.However, Paul readily admitted that the excitement of running a business and being his ownboss did mean that he focussed too much on orders rather than on the profit margin in theearly days and this impacted on company spending. Nowadays the couple have a firm grip on cash flow, and manage seasonal variations in business demand with the help of an American Express? Platinumcard which has no pre-set spending limit (1) and extended payment terms (2) allowing him tomake purchases but not part with funds for up to 54 days.
we supply to large companies who often have longer payment terms for both high volumeand very small orders, which could otherwise make cash flow challenging, he explained.
Build strong relationships
Eastbourne-based business Lynns Travel is a local business that relies on footfall past the shop, as well as recommendations. Weve enjoyed slow, steady growth over the years to suit our lifestyle goals, co-founder Colin Offord explained. Building solid relationships with suppliers as well as customers has been key. We have excellent supplier relationships so can be really price competitive.
The nature of the business means that the most challenging time always falls in the first quarter of the year. During January to March each year, cash is always a crunch point as weve paid suppliers in advance of Christmas and then have a gap before deposits from customers start to come in again. Offord explained that they manage this cash flow challenge with an American Express Gold Business Card that offers extended payment terms. This means suppliers, who they rely on, get paid and their crucial relationships are maintained. At the same time the cash flow gap is managed which allows Lynns Travel to focus on what they do best selling holidays.
Lynns Travel has been in business for 20 years and continues to grow, recently buying the property next door in order to expand.
Focus on your strengths
Scorpion Shoes founder MojI RezvanI argued that despite many larger retailers focusing more on ecommerce, both to keep up with customer buying trends and to minimise bricks and mortar overheads, tapping into local demand with a traditional high street presence whilst finding an online niche to appeal to broader web-based audiences, is the key to success for smaller names.
independents have the opportunity to offer a more personalised level of service that inspires repeat custom, RezvanI explained.
RezvanI went on to say: As an entrepreneur you do have to sacrifice a lot, particularly in the early days, in order to survive and thrive. You have to be all things at all times lawyer, accountant, people manager, sales, marketing but, my advice is to focus on your strengths and seek outside consultancy on your weaker areas. For me, my key skills are creativity and trend spotting. The benefits of running my own business are that there is no cap put on that creativity and my vision by someone else in charge. And, it’s so satisfying to see my ideas come to life and reach the goals I set for myself and the business.
Paul Rowlett of EverythingBranded.co.uk echoed Rezvani’s recommendation of recognising your ownabilities, but also of recruiting the right talent where you might need extra support. He explainedthat having the right people in place has been crucial to making the most of opportunitiespresented to his business and is quick to reward talent. You need to incentivise staff. We have ateam of 18 and have helped some quadruple their salary by recognising their salesachievements.
Of the 500 small firms surveyed for the recent American Express Small Business Barometer*, the overwhelming majority (88 per cent) reported growth and all those surveyed anticipate turnover to increase by 24 per cent on average in the coming 12 months. All businesses experience challenges but the research reveals a positive outlook for all those starting out or thinking of starting their own venture this year.
Establishing or growing your business, find out more about how American Express Business Cards could help you manage cash flow, visit the American Express website.
The first year of Gold Cardmembership is complimentary (usually 125) (3). The American Express Platinum Business Card has a 450 annual Card fee. If youd prefer a Card without any rewards, other features or a Cardmembership fee, an alternative is the Basic Business Card.
* The American Express Small Business Barometer was commissioned by American Express and conducted by market researcher Coleman Parkes in summer 2015. The research polled 500 decision makers in businesses with under 50 employees in the UK.Terms and conditions:(1) No pre-set spending limit does not mean unlimited spending. Purchasing power can adjust with your use of the Card, your payment history, credit record, financial resources known to us, and other factors. We reserve the right to apply temporary spending limits in accordance with the Cardmember Agreement.(2) The maximum amount of time for deferred payment on purchases made with a Gold or Platinum Card is 54 calendar days and is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date.(3) A 125 annual Card fee will automatically be charged to your account on or after the anniversary of your account opening date. Applicants must be UK residents, aged 18 or over. Approval is subject to status and terms and conditions apply.Click herefor full terms and conditions.American Express Services Europe Limited has its registered office at Belgrave House, 76 Buckingham Palace Road, London, SW1W 9AX, United Kingdom. It is registered in England and Wales with Company Number 1833139 and authorised and regulated by the Financial Conduct Authority.