How to grow your business: Investors
This blog is the eighth in a series of blog posts on how to grow your business, where we cover a new topic every week to help you make the most out of your small business. This week, we’re looking at how to make your small business attractive to private investors.
Attract investors
- Plan. Preparation is key when you are planning on approaching investors. You should know exactly what you are asking for, what you can offer in return and how much you are willing to negotiate on. Most of all, investors want to be sure that you have the potential to bring them returns on their investment. Being enthusiastic, passionate or talkative will not be enough to win over private investors; you need to able to prove that your business has a clear upward trajectory and that you have strong growth potential.
- Research. Once your plan is ready, it’s time to look for private investors. Using your private and professional networks is a good start, but you may also consider using platforms like Invest Europe or the Angel Investment Network. While conducting your search, you should research every name that comes up, particularly if you have no personal connection with them. Find out their background, what types of businesses they have previously invested in, and what their values are. This information will help you create a personalised pitch.
- Pitch. After you’ve chosen potential investors to approach, you need to get your pitch ready. It’s a good idea to create an ‘elevator pitch’ – a brief and catchy description of your business ideas – and practice your pitch numerous times. You want to be able to speak confidently to anyone and hopefully interest them in letting you make a full proposal.
Most importantly, make sure your business plan clearly shows what you are going to do with the money, and how this will help bring growth and returns on investment. You should have sales projections based on real numbers, and ideally, you will have conducted a market analysis already. You should be familiar with every detail of your strategy, and you should know how much you’re willing to compromise.
Don’t give up
Hopefully, your business plan will attract the right people who can back your business ideas. However, for many people, approaching investors will involve a great deal of rejection, and this can quickly put a stop to your plans. Keep in mind that some people who have funded their business ideas with investors may have given their pitch dozens or even hundreds of times. There’s no harm in returning to your pitch, refining it, and trying again. You may also get some constructive feedback if you ask for it. Although it’s essential to continue with business as usual, if you are confident that you can bring great profits in the future, you should have faith and keep trying.
Grow your business with Tax Agility
Tax Agility is the local London accountant who can help you grow your business. When constructing a business plan and a pitch, you will need to gather hard data and numbers to show you’re moving upwards. We know the ins and outs of small businesses, and with us you can create the perfect plan for the future.
To get help with investments or any other aspect of business growth, call our specialists at 020 8108 0090 or use our Online Enquiry Form.
If you found this blog interesting, you might also like:
- How to grow your business: Networking
- How to grow your business: Social media
- How to grow your business: The benefits of risk
- How to grow your business: Long-term planning
- How to grow your business: Customer Relationships
How to grow your business: Networking
Any budding entrepreneur should have an eye towards growth. From new starters to business veterans, networking will often contribute to your success if it’s done right. In this article, the seventh in our series focusing on how to grow your business, we’re going to discuss what networking is, why it is important and how it can help small business owners to build up their company.
Defining ‘Networking’
While it may seem like a toothless business buzzword, networking is actually a form of marketing. In simplistic terms, it could be defined as making use of business connections to create new opportunities and drive sales or growth. The obvious advantage of networking is it’s a relatively inexpensive approach to getting your business out there. It’s also a way of building fresh channels of communication through existing business relationships, creating new opportunities.
Where do you network?
Traditionally, networking has been performed through face-to-face conversation, either in formal gatherings such as corporate events and conferences, or in informal settings such as corporate parties and general discussions amongst peers. Even in this digital age, the tradition has endured.
According to a survey by Forbes, 84% of those surveyed stated that when it comes to making business connections, they prefer face-to-face meetings. Networking events, in particular, still play an essential role in fostering relationships with influential figures across industries.
A more direct approach is to cold call potential clients either through phone calls, emails or by visiting them for face-to-face discussions. This can still be a particularly powerful tool for growing businesses that are part of a local economy.
But despite the traditional methods of networking still being favoured, there’s no doubt that social media has changed networking.
Networking on social media
For SMEs with a negligible marketing budget, this is an area to focus on. Websites such as LinkedIn are perfect for entrepreneurs looking to grow their business and network. Social media allows you to build a profile of a potential contact before you even try and connect with them. You can see what articles they like, what topics they are engaged in and what piques their interest. This is not only helpful when building relationships via online platforms – by, for example, sharing content or directly engaging with them – but it can equip you to approach them in a face-to-face context too.
Social media and face-to-face networking events can also be combined, as the former has become a great tool for advertising and marketing the latter, and vice versa. If you’re not sure how to find networking events, jump onto social media and start following influencers in your industry. Most will be receptive to networking, and they will likely re-tweet and share events that will be of interest to your industry.
How to do face-to-face networking
Face-to-face networking can often be seen as a by-product of having an abundance of charisma or self-confidence. But even if you don’t feel like you’ve ever had the gift of the gab, there are ways to learn techniques that can mitigate the need for a big personality.
Firstly, don’t be afraid to utilise any pre-existing contacts. If you know someone at an event, then approach them about making introductions to other connections. Even if these connections aren’t the people you are looking to talk to, there’s a chance that one of them will know one of your targets.
Secondly, as tough as it may sound, going alone to a networking event can be beneficial. When you’re with people you know, such as colleagues or friends, it’s easy to slip into conversations with them at the expense of others. Not only will this inhibit you from reaching out, but your language will also likely be too informal or personal for others to join in. If you go alone, you force yourself to open up to new relationships.
Lastly, think about how you communicate. Keep your body language open and work on keeping eye contact with people. If you struggle with confidence, then prepare an elevator pitch before you attend the event. This will give you focus and allow you to explain your business to others with clarity and without hesitation.
What to avoid when networking
Despite the focus on ‘identifying’ targets and ‘using’ others, it’s important to not get too forceful or impatient with your goals. When you’re targeting someone, you should be targeting them with a relationship in mind – not as a buyer or a career stepping stone. If you make a memorable first impression, then often sales, opportunities and growth will follow naturally.
It’s also a good idea to avoid topics that could be considered inflammatory or cause ill will. You may be the most political person in the room, but that doesn’t mean you should push an agenda on others you barely know at a networking event. There’s nothing wrong with being a bit informal, but don’t get caught up in complaining about something or going into details about your personal life. Keep the conversation open, inviting and positive.
The benefits of networking
In conclusion, networking isn’t a black and white area – it’s about opening yourself up to opportunities. It can allow you to meet other like-minded entrepreneurs and business figures while building a reputation amongst your peers. These people can provide inspiration and share strategies that can help boost your business.
It’s not solely about the benefits to you either: other entrepreneurs are there with the same goal of growing their brands and businesses. By listening to others and being helpful with introductions, you can casually strengthen your own network. This may even bring benefits to your business that you previously didn’t visualise.
Finally, the most important benefit of networking is that it makes you visible. Don’t get caught up in rejection or failure: what matters is being noticed, and therefore being visible. Visibility means you’re succeeding at marketing yourself and opening yourself up to possibilities that will allow your business to grow.
Business growth advice from Tax Agility
At Tax Agility, our accountants specialise in small businesses. We've helped many of our clients grow from one idea into the companies they are today.
Get in touch on 020 8108 0090 or use our Online Enquiry Form
If you found this blog interesting, you might also like:
- How to grow your business: Social media
- How to grow your business: The benefits of risk
- How to grow your business: Long-term planning
- How to grow your business: Customer Relationships
How to grow your business: The benefits of risk
Richard Branson said one of the distinct skills that the greatest entrepreneurs share is they take calculated risks and “the luckiest people in business are those that are prepared to take the greatest risks”. So in this fifth post in the ‘How to grow your business’ series, we look at why taking risks is beneficial to your business and how to apply risk management principles before going ahead with a new idea or project.
The benefits of risk-taking
Without a doubt, taking a business risk can feel dangerous as the possibility of having a loss is real, but it’s also vital in order to make progress. Launching a new product, implementing a new marketing strategy or expanding a business function, risks are inherent in every business decision. Risks arise from uncertainties, but staying in your ‘comfort zone’ means you will continue at the same pace which may not be healthy for long-term growth. In fact, PayPal co-founder Peter Thiel once said to Facebook’s Mark Zuckerberg that "… in a world that’s changing so quickly, the biggest risk you can take is not taking any risk."
Here are three reasons why risk-taking is beneficial to you and your business.
1. Taking risks can lead to new opportunities. You should consider risks as opportunities to succeed.
2. Taking risks helps you stand out. In a competitive world, having the drive to do something new or different can put you ahead of the rest.
3. We learn from risk and failure. Not every risk leads to success, but the ones that don’t will also help you understand what works and what doesn’t. Every high-profile entrepreneur has experienced failure at some point, but they learn from their mistakes and bounce back.
Risk management
Risk management is the process of identifying risks and setting up procedures to avoid or minimise them.
Before embarking on a new project, you should create a detailed risk management plan which helps with the followings:
• Identifying risks. The first step is to identify risks by asking when, where, why and how are risks likely to happen in your business. Questions from what will happen if your design blueprint or your business idea is stolen to what will happen if one of your key suppliers go out of business help you to review procedures and establish an alternative plan.
• Analysing risks. This is all about the likelihood of any particular risk happening and the consequences it would have on your business. It is best to create two tables with one charting the likelihood and the other the consequences.
For example, it is unlikely that you will lose internet connection for a day (level 1, the lowest on the scale of likelihood). But if it happens, the consequence is severe as you cannot process any online orders and the financial loss is about £5k (level 4, the highest level on the scale of consequences because you cannot afford to lose £5k).
• Controlling risks. This stage helps you to plan your responses. Considering the example above, you now have to decide if you want to accept the risk of having no internet connection for a day and losing £5k or take action to reduce the risk (using mobile broadband as an alternative). You can also transfer the risk by switching to a different supplier.
• Reviewing and updating your risk management plan. As your business evolves, your risk management plan will follow and change too. Reviewing your risk management plan regularly helps you to identify new risks and monitor the effectiveness of your responses.
When it comes to financial risks, it is helpful to talk to a chartered accountant who understands small businesses and can provide practical advice pertaining to a wide range of areas from credit risks to operational risks.
Grow your business with Tax Agility
From the moment you first set out to become an entrepreneur, you’ve been taking risks and hopefully they’ve paid off so far. But as time goes on, you are likely to come across even bigger opportunities and you’ll need the right help. At Tax Agility we have shown many small business owners how to turn risky moves into success by having the right plans in place.
Tax Agility is the local London accountant who can help you grow your business. To get help with risk management or any other aspect of business growth, call our specialists at 020 8108 0090 or use our Online Enquiry Form.
Childcare Vouchers for Directors
If you’re a director of a Limited Company and a parent or step-parent of a child whose expense is maintained by yourself, or you have parental responsibility for a child who lives with you, you may be able to save money by way of the Childcare Voucher Scheme.
For a company director to be eligible for the Childcare Voucher Scheme you must be both an employer and an employee of your company, meaning you take a salary from your role as well as receive remuneration through company shares. The scheme is not available to self-employed individuals or contractors.
Recent changes to Childcare Vouchers
The Childcare Voucher Scheme was initially due to be phased out in April 2018 and replaced with the new Tax-Free Childcare Scheme, but the deadline for new applicants has been extended to 4 October 2018. This means that from the date of this post, you have exactly one month to sign up for childcare vouchers if you are not already using them.
If you’ve already joined the scheme, you can keep getting vouchers as a Director, as long as you do it through the same employer and you don’t take an unpaid career break of over a year. If you successfully apply for Tax-Free Childcare you can’t continue using vouchers or re-join the voucher scheme, so now is the time to consider the relative benefits of each option and work out what will be best for you and your family.
How to Implement Childcare Vouchers for Directors
Firstly, you must check that your childcare provider, au pair, or after school club (in certain circumstances) is registered with Ofsted.
Next, you must contact HMRC or an independent scheme administrator to register for the Childcare Voucher Scheme. Handing this over to a third party will result in you having to pay a commission to your scheme administrator, though you should be able to put this down as a reasonable business expense.
You must also contact your accountant to let them know of the changes.
Keep in mind that if both you and the child’s other parent live with or have parental responsibility (or both) over a child, and you’re both directors of your Limited Company, you may both claim under the Childcare Voucher Scheme, doubling your potential household savings.
As a company director, you may receive childcare vouchers under the scheme even if you don’t take a salary from your role within the company. In this case, the vouchers will be seen as a tax-free employee benefit. If you do receive a salary as an employee of your company, however, you must ensure that your salary sacrifice (see below) doesn’t reduce your salary below the National Minimum Wage (NMW).
Your Savings
Here’s the crux. As a director-employee of a company there are two ways for you to receive childcare vouchers; via your employee payroll as a salary sacrifice (whereby the value of the vouchers is taken out of your salary, meaning you’ll save through reduced tax) or by treating them as a business expense, deducting them from your company profits.
To ease the pain of making this decision the Government provides a childcare voucher calculator online to help you determine how much better off you would be under both options.
In terms of the former, employee childcare vouchers are worth the following tax and National Insurance exemptions a week (regardless of your director status):
- £55 a week (£243 a month) for basic rate taxpayers
- £28 a week (£124 a month) for higher rate taxpayers
- £22 a week (£97 a month) for additional rate taxpayers
If you’ve been in the scheme since before 6 April 2011 you should be receiving the full basic rate exemptions, even if you pay tax at a higher rate.
From your perspective as a director, not only will opening your company up to the Childcare Voucher Scheme allow you to benefit from childcare vouchers by way of beneficial tax and National Insurance exemptions, if any of your employees choose to receive vouchers in exchange for part of their salary (salary sacrifice) this lowers the National Insurance Contributions (NICs) you have to pay on their behalf due to childcare vouchers being exempt from NICs.
Experienced Support with Childcare Vouchers
To speak with a professional to discuss the use of the Childcare Voucher Scheme in your Limited Company and how to implement childcare vouchers for Directors, or to discuss other childcare schemes, contact Tax Agility today on 020 8780 2349 or use our Online Form to arrange a complimentary, no obligation meeting.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.