Andrew Firth looks at what an ageing workforce means for small businesses, and what role company owners can play to maximise productivity.

Over-50s have increasingly become an innate characteristic of the UK workforce. As business owners observe an increase in the number of older workers remaining in employment for longer, employers need to prepare themselves and their workers for extended working lives. Here’s what an ageing workforce means for small businesses, and what role business owners can play to maximise productivity, whilst preparing all employees for the latter part of their working life.

Workers over 50 already comprise 27 per cent of the workforce in the UK, and by 2020 that number is expected to grow to one-third, according to the Department for Work & Pensions. Due to increased life expectancy and the removal of the mandatory retirement age (in 2011), employers are experiencing an ageing workforce like never before. Many older workers are reluctant to retire voluntarily, often because they have not saved as much as they had hoped to for a comfortable retirement (due to making ill-informed choices regarding savings). Additionally, the revelation that delaying retirement can have positive health benefits has encouraged older generations to stay put in their jobs, contrary to previous research suggesting early retirement leads to a longer life.

But what does this mean for small businesses? Older workers are more experienced, patient and bring expertise to the table, meaning they are perfect for mentoring younger employees. They can make a valuable contribution to the culture and morale of the staff, and are proven to have fewer sick days. Physically, there is little evidence that they are at higher risk of occupational accidents, however, if they do have an accident, their recovery may take longer than that of a younger colleague. This could well be a consideration for those businesses that require a high level of physical activity.

There are many ways that small business owners can embrace the growing proportion of older employees, and maximise the opportunities they bring. This will often require a shift in culture towards a more open dialogue from the outset about lifestyle and forward-planning for retirement.  Future plans should be discussed throughout working life, not just before retirement, as this allows employees to make informed choices about their savings (and can also facilitate an open conversation about the optimal retirement age). Helping to plan lifestyle changes, such as increasing levels of physical exercise, can also be advantageous. Investment in training to ensure skills are up to date should not be overlooked for the older generation of workers, nor should the importance of older staff members mentoring younger colleagues.

How can small businesses address retirement planning amongst the workforce? There is currently an acute lack of understanding and education around pensions; many employees are simply unable to make informed choices for their future as they do not have the information they need.  According to research commissioned on behalf of the Open University Business School (OUBS) two-thirds (64 per cent) of UK employees have never received personal finance education. The research also finds that, while 81 per cent of employees want personal finance help from their employers, only 7 per cent of those who have received financial education got this from their employer. How to invest their pension, when to retire, and how to start receiving benefits are all questions that employees are looking to address.

Making retirement planning accessible across the business, and listening to the concerns of the workforce is a great way to start. For all employees, young and old, the choices they need to make regarding their pension; how to invest, how much to contribute, and when to retire, can be intimidating. Employers can provide access to help them get a clear picture of the types of choices available and what they will mean for their future. There are many resources available from pension providers, along with guidance provided by Pension Wise, TPAS and Citizens Advice (for those approaching retirement).

Offering tailored expert financial advice should also be considered; it may be more cost-effective than business owners anticipate. Engaging an online advice service (or robo-adviser) can offer employees access to expert financial advice through online web apps or wizards for a fraction of the cost of face-to-face advice.

An ageing workforce certainly has its opportunities for businesses. Employers must overcome any perceived barriers and recognise the value older workers can bring. Preparation of the workforce for retirement is essential throughout working life; access to advice should be offered by businesses to all members of staff (whatever their lifestage). This will help to achieve optimum productivity levels in the workplace, and satisfaction among employees who feel confidence in their chosen retirement plan.

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From April 2017 businesses whose properties have a Rateable Value of up to £12,000 will not have to pay business rates at all, a rise from £6,000 previously.

Property with a Rateable Value between £12,000 and £15,000 will receive tapered relief. Chancellor George Osborne says the ‘typical corner shop in Barnstaple will pay no business rates at all’.

Despite this, a survey by CVS, shows more than a third (36 per cent) of business owners are unfamiliar or unaware with the changes put in place by the government.

What’s more, three in ten small business owners, with between one and 49 employees, say the changes in business rates aren’t enough to help local businesses and our high street.

The amount that could be saved is up to £5,900 for those with a rateable value of less than £12,000 per annum.

Mark Rigby, chief executive at CVS Business Rates says that, on the whole, the changes are very positive for local businesses.

‘For many small firms, it will mean smaller overheads, less administration and an overall cost saving of as much as £5,900 in some cases.

‘This is money that could be reinvested back into the business for better marketing, trialling a new product, or increasing staff hours, for example.’

The changes are scheduled to be introduced from April 1st 2017. This is also when the next business rates revaluation takes effect; the process by which each commercial property has its rental value assessed by the Valuation Office Agency. This rental value is then used to calculate the business rates you pay each year on your bill.

The Valuation Office will publish its draft new values for each property on 1 October 2016 for consultation with local billing authorities, Rigby says.

When the next revaluation comes into force, some businesses will move outside of the £12,000 threshold for rates relief, and some will fall within it. This largely depends on the specific nature of your property and where in the country it is located.

Rigby advises that the Valuation Office Agency is responsible for valuing businesses and it will often request information from a business owner via a ‘form of return’. However, because there are so many properties to evaluate (some 1.8 million), it’s easy for the Valuation Office to make mistakes in this process.

‘Every ratepayer has the right to challenge their business rates bill at any time between revaluations. There is only one opportunity to do this however. Your chances of achieving success through an appeal, and therefore saving money, are improved if you get advice from professional, accredited surveyors.’

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HM Revenue & Customs (HMRC) charge penalties for all CIS returns not received by the 19th of every month.

Any return not received from contractors by the due date will be liable to a fixed penalty of £100 and a further penalty for every additional month that the return remains outstanding.

Up to 43% of contractors are likely to be fined for:

• not informing HMRC of their nil returns
• not validating the status of subcontractors
• late monthly returns

Click here to read the white paper from Pegasus Software which looks at the rules and is designed to help you stay “fine-free”

Emily Coltman from Freeagent gives her top tips for successful business measurement.

When you’re running your own small business it can sometimes be a challenge just staying on top of your everyday work, let alone managing all the things you need to do behind the scenes.

But if you can dedicate some time to measuring a few important pieces of admin in your business, you may find that you’re likely to work more effectively and give your business the best opportunity to grow.

How you’re spending your time

If you bill clients by an hourly or daily rate, you’re probably already tracking your time to ensure you charge for all of the work that you do. But monitoring your time is still a very useful habit to get into even if you don’t bill this way.

By identifying how much time you actually spend on working for clients compared to managing your daily business admin, you’ll be able to see how profitable your business really is and which clients are potentially costing you money. If you track admin time, and other unbillable time, you’ll also be able to see exactly how much time you’re spending on your business that you can’t charge for. It may well be more than you think!

And if your business offers a range of different types of services, you’ll also be able to identify which areas are most profitable, which may enable you to spot new business opportunities or even pivot your business completely.

Your business’s financial position

Calculating your profit margin is very important when you run a small business, because you’ll see which of your customers or projects are most profitable and can then use that information to try and grow your business. But there are other areas of your finances that are equally useful to monitor.

Make sure you stay on top of your business accounts and look regularly at the overall financial position of your business; ie, your cash flow, profitability, how much tax you owe and the amount of money you actually have in the bank. We found that just 38 per cent of micro-business owners check their financial position every week, while one in ten only check that information once a year. That means they don’t really know how their business is actually performing and run the risk of not being able to identify or deal with potential cash flow problems until it’s too late.

Customer satisfaction

Expanding your customer base is an important way to grow your business, but it’s equally important to make sure your existing customers are happy. Research from customer service software company Zendesk shows that 95 per cent of people share bad customer experiences with others, while 39 per cent avoid vendors who they have a bad encounter with.

Therefore it’s important to understand how your customers feel about your business and whether they would recommend you to others. Carrying out a survey among your customer base and calculating your Net Promoter Score (NPS) is a great way to do this, but you may also want to look at other channels such as social media platforms to poll your followers and ask them for feedback about your business.

Staff morale

If you employ people in your business, you’ll want them to be as productive as possible, but you may also want to consider measuring how happy they are at work. Research suggests that high staff morale can increase productivity, so it’s a good idea to regularly survey your employees and measure their responses.

Are they happy in their jobs and with the business that they work for, or do they have any reservations? And are there areas that could be improved in order to make them feel happier? Armed with this knowledge, you’ll be able to address any potential problems as they arise and stop them from becoming bigger, morale-destroying ones in the future.

Social media impact

If you use Facebook or Twitter for your business, you probably try to measure the ultimate effect that these channels have on bringing new customers to you and, ultimately, improving your bottom line. But there are many other important metrics to consider when it comes to social media.

Look at how your individual posts are actually performing, and in particular how followers engage with those posts. Are there certain times of day when people click on the content you share? Are there specific types of post that generate more shares or likes than others? Do your followers tend to shun any advertising or self-promotional posts that you put out? A good social management tool like Hootsuite or Sprout Social can reveal that information, which will enable you to tailor your future social media activity and make sure it is performing as effectively as possible.

 

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In today’s day and age, more and more people are realising that the acquisition of valuable business skills can seriously help them in the world of work. Certainly, building a skill set of important business skills such as time management and conflict resolution can make your work day more productive and aid you in gaining career advancement opportunities. However, it’s also important for those skilled in business to understand that the skills which you’ve obtained can be valuable to your personal life, too.

Leisure time

The skills which you’ve acquired from working in or running your own business can actually help you enjoy your leisure time to its full potential. For example, you can use business skills such as knowing how to plan effectively, knowing how to choose the best people for your team and understanding when to take calculated risks can be pretty useful to help you win a poker game. Along with that, other business skills such as knowing how to look for the best value can help you find things such as good value vacations, cars, property and more that you can expect to spend money on.

Time management skills

When working in business, having good time management skills is absolutely imperative. In order to succeed, it’s crucial to be able to manage your own time effectively and understand how much time to allocate to different things and situations. Because of this, the time management skills which you’ll pick up when working in business can help you effectively manage your personal life and get the most from the different things that you do.

Communication skills

As a business owner, manager, or even an employee it is vital to have good communication skills. Working in business means that you need to communicate with a range of different people, from management to peers and customers. The skills that you learn while communicating with others in a business setting can directly transfer over to your personal life, giving you better skills and more effective results when communicating with people such as family and friends and dealing with conflict resolution on a personal level.

Money management

One of the most important transferable skills which you can learn from working in business is money and finance management. When working in business, it’s crucial to have good management skills when it comes to finance, and working out costs, expenses and cash flow is something that, after a while, becomes second nature to most people in business. Because of this, you will become more efficient at managing your personal finances, and be better at working out your personal cash flow and improving it.

Studying

In order to succeed in business, it’s important to always be open to learning new things. It’s definitely not uncommon for business people to constantly be looking for new opportunities to take courses and gain qualifications to help them in their field. As a result, your study skills will be hugely improved, something which can definitely be of use to your personal life.
Which business skills have you found useful in your personal life? We’d love to hear from you in the comments.

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Expectations that the economy will improve over the next 12 months are substantially down from previous highs in the last quarter, a study shows.

Confidence fell 11 points in the Smith & Williamson Enterprise Index as respondents reacted to ongoing global economic instability and two successive statements from George Osborne which were ‘less than friendly to SMEs’.

Guy Rigby, head of entrepreneurial services at the firm says that optimism among respondents for their own prospects over the next 12 months declined by 8 points to 74 per cent and there is little support for an interest rate rise.

However, 24 per cent of respondents recognise that business confidence is being adversely affected by the Bank of England’s decision to maintain interest rates at historically low levels.

The negativity surrounding the economy, and business prospects, over the next 12 months is offset by the belief in a growing talent pool, Rigby argues.

More than 64 per cent of respondents plan to increase headcount in the next quarter with 50 per cent believing the employment pool to be adequately trained, both reaching highs not seen since the end of 2013.

‘Uncertainty over UK interest rates, economic troubles in China, a potential Brexit and upcoming US political instability will continue to trouble financial markets throughout 2016 and so this declining confidence could be a sign of things to come,’ Rigby says.

‘With optimism surrounding recruitment normally reaching its peak at the start of the calendar year, it will be fascinating to see whether the Enterprise Index can maintain its strong reading if this early year hopefulness recedes.’

George Osborne announced major changes in the latter half of 2015 which threaten to adversely impact many entrepreneurs and their businesses.

In the Summer Budget he announced changes to the taxation of dividends and in his Autumn Statement he put forward his plan for quarterly tax reporting by 2020.

Following a ten-point drop in the last quarter, respondents continued to react with a further four-point decline in the belief that current government policy is supportive of private enterprise.

In particular, 59 per cent believe that the increase in the level of taxation on dividends will negatively affect SME business growth.

‘Essentially, these changes mean that businesses could end up bearing substantial extra cost just to maintain the status quo, Rigby says.

‘Many owner-managers will find themselves on the wrong side of the dividend tax changes and the introduction of quarterly reporting could be both burdensome and expensive.’

However, he adds that, notwithstanding these negatives, British business remains relatively robust with strong domestic demand and productivity starting to trend higher.

‘As a result over 68 per cent of our respondents believed that 2015 was a positive year for British business.’

 

Read more by Ben Lobel 

Picture the scene. Your customers can’t get enough of your products or services, you want to embrace growth and take on more projects. ‘Cash is king’ and is the lifeline of all businesses.

But there’s a problem. The long payment terms set out by your customers mean that cash flow is tight. So, how can you manage your cash flow better? We’ve put together our top tips for businesses to maintain healthy cash flow and keep growing.

1. Be aware of customer payment practices

You’ll be able to manage the payment terms of your customers better if you plan. Ask questions and do research before you strike up new trading relationships. Even without long payment terms in the picture, all companies have different payment habits. Maybe your customer pays everything on the same day each month? Perhaps it’s on an ad-hoc basis, which poses different challenges. You need to know.

2. Prompt invoicing

It seems like a no-brainer. If you don’t invoice your customers you can’t maintain your cash flow – but it’s easy to fall behind on issuing invoices when you’re already being pulled in a lot of direction, and that just causes further payment delay.

Make sure one person takes ownership of invoicing. If you’re a small business it might not be somebody’s entire job but set aside some time every week to prepare and send invoices. Keep an organised filing system so that you have everything to hand; using cloud accounting will streamline this process. Lots of cloud accounting systems have built in invoice systems; you can create, log and chase invoices within the software.

Finally, check for mistakes. You don’t want to fall foul of the processing system in a large organisation. Simple errors can lead to weeks of delay.

3. Pay smartly

Cash flow management for a growing business can be a delicate operation.

To get ahead, timing is crucial: don’t pay all of your bills at once. Instead, spread your payments out based on the level of importance and your priorities. Things like utility bills, salaries, rent should be at the top of your list and tend to be less flexible. If you build a good relationship, wholesalers, suppliers and vendors for small businesses can be flexible on payment schedules. Just ensure that there are regular payments and you keep them abreast of the situation with open communication.

4. Make use of technology

Advances in technology have transformed the way that businesses are run. Managing cash flow with Excel (or, Heaven forbid, on paper) is time consuming, inefficient and more easily susceptible to errors. 

Consider using a cloud accounting service like Xero, Quickbooks or Sage50 to make keeping track of your finances and invoicing easy.

An added bonus of this software is that it’s designed to work on your tablet and mobile as well, so you can be up to date with your financial situation 24/7.

5. Make it easy for customers to pay

For most businesses, paying online is a significantly better option for making payments.

It’s simpler, faster and easier to track, for both parties involved. If you’re waiting a long time for payment make paying you as pain-free as possible for customers. It also helps towards creating a positive consumer experience, making customers more likely to do repeat business.

At MarketInvoice we’re determined to ease cash flow pressures on small businesses. We’ve brought together experts in credit control, cash flow forecasting, small business accounting and invoice management to build a great cash flow toolkit for your small business.

 

 

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In this piece we explore why reducing your carbon footprint in the office is well worthwhile for your business.

Widespread flooding across the UK and extreme weather in other parts of the world have been directly linked to climate change by scientists. Experts have long warned that we need to reduce our carbon footprint to prevent environmental damage and recent events have pushed the issue into the spotlight once more.

Businesses are being put under increasing pressure to do more to help the environment. Many companies are enforcing green initiatives to offset the carbon footprint of their enterprise. For instance, Clearance Solutions follow a reuse and recycling protocol and save far more CO2 than they produce, while the SAP recruitment agency Eursap have pledged to plant a tree in The National Forest for every consultant placed.

Green office design has gone from niche enterprise to major industry. The relationship between people and the building in which they are working is vital. A recent study found that having a sustainable workplace can boost employee health and productivity which in turn enhances financial performance.

From energy efficiency to lower levels of absenteeism, here are three reasons why having a green office boosts business performance:

Having an energy efficient office can cut bills by 20 per cent

Investing in new office equipment that has better energy efficiency can reduce energy consumption by 70 per cent. Alternatively, cheaper and simpler measures such as using energy-saving light bulbs, switching off office equipment and using the correct setting of room temperatures could cut office bills by up to 20 per cent.

It is important to utilise as much natural light as possible. Not only does this reduce an office’s reliance on artificial lighting, it can increase the productivity of employees. People who work in artificial light are more likely to feel fatigue while those who work in natural light are able to concentrate for longer.

Open Workspace Design have discussed the correlation between exposure to natural lightduring work hours and sleep, activity and quality of life. Workers exposed to natural light during work hours sleep for an average of 46 minutes more each night than those who are not.

Temperature can also have a profound effect on the environment, employee productivity and office costs. Reducing room temperatures by just 1°C can cut office fuel consumption by around 8 per cent and save enough energy to print over 40 million sheets of A4 paper.

Telecommuting cuts office space costs and decreases carbon footprint

Since office-to-residential permitted development rights were made permanent, office space in major UK cities has become more expensive and harder to find. Vacant property security companies like Oaksure Property Protection can heavily reduce expensive business rates adding even more value to property.

In response, many businesses are tapping into the potential of flexible workspace. By allowing employees to telecommute or hot desk, the need for permanent office space is reduced. Embracing flexible office space or renting short-term lets when required can help a business to avoid soaring office costs.

Employees need little encouragement to telecommute, 36 per cent of people would shun a pay rise in favour of being able to work from home. Allowing staff to telecommute instead of driving into work could also reduce carbon emissions by over 51 million metric tons a year.

Digital technology has made telecommuting much simpler. Cloud-based services allow employees to exchange and collaborate on work electronically, allows a business to cut costs on storage while also helping the environment by going paperless. For instance contractor accountants 3 Wise Bears uses cloud-based accounting software that allows home businesses and freelancers to keep on top of finances without needing face-to-face meetings with their accountant.

Improving office air quality leads to lower levels of absenteeism

More than 130 million workdays are lost in the UK each year through sickness absence, costing businesses an estimated £32 billion. One of the main causes of illness outbreaks in the workplace is poor air quality.

Many modern office blocks have not been designed to effectively circulate air. Without adequate ventilation, airborne toxins and contaminants build-up in the atmosphere increasing the spread of germs. The air inside an office can often be up to 100 times more polluted than the air outside.

Air conditioning can be used to regulate air quality but a more eco-friendly and energy-saving solution is to introduce plants to the office. Certain varieties absorb toxic compounds commonly found in offices such as benzene and formaldehyde. Studies have found employees are 15 per cent more productive when plants are present and have improved performance on a number of aspects such as memory retention.

 

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Here, we look at the options for SME funding that have emerged since the recession and how there is a method of finance for every business need.

The SME sector has been through a turbulent period over the past ten years, to put it mildly. A long recession made consolidation a priority over growth for many SMEs for a long period of time. Finance was a considerable problem; the banks were not lending and companies were being starved of funds in a world that had yet to see a developed alternative business finance market.

However, as the recession ended, there became a growth in exciting new options for finance, from equity-based crowdfunding to peer-to-peer loans to invoice finance.

While still a competitive and cut-throat business landscape where SMEs face cash flow challenges, the past year has shown reason for smaller companies to be optimistic. For starters, the political stability of a Conservative majority and the pro-business policies it brought arguably was a boon for business confidence, but also the alternative business finance market has seen considerable promise, enjoying a continuing boom in online lenders.

Before around 2009 of course, it was much easier for a small company to raise business finance through the banking route. Today, that might be a viable option for more established companies with a demonstrable track record of financial success. For this route, it still pays to have a strong balance sheet and an exhaustive grasp of your numbers and projections if you want to secure a business loan, as well as strong relationships with your bank manager.

However, the case for banks becomes weaker when considering figures released by the British Bankers’ Association, that show that the value of all newly approved loans and overdrafts to London SMEs in Q3 of 2015 was down 40 per cent on 2014 totals, from £1.7 billion to just over £1 billion.

But as the banks’ appetite for risk has waned in the ensuing years, companies have turned to alternatives for business funding. Companies based in London raised an estimated £350 million through peer-to-peer lending in 2015.

Indeed, the popularity of peer-to-peer lending is still strong, offering unsecured business loans through a variety of operators such as the market-leading Funding Circle, which has recently crossed the £1 billion barrier in funds lent. Here, you can ‘advertise’ your business and loan proposition on an online platform to potential lenders, who then proceed to indicate their interest and the amount they are prepared to lend. In a world of low interest rates and poor returns for savers, investors are incentivised by such platforms, which offer higher rewards than a building society.

The equity route

Equity funding is also a good choice, particularly for businesses yet to be fully established. Businesses can apply for equity from such operators as Crowdcube and Crowdbnk, with the process often involving a thorough scouring of the business plan and growth projections, together with producing and supplying a promotional video. The pitch will then go live on the online platform and investors have the opportunity to take a slice of the operation in exchange for their funds.

If you need business capital to buy equipment or machinery, leasing assets/hire purchase agreements could be the option for you, while if you have issues with being paid late or other cash flow complaints, debt factoring and invoicing discounting might be viable approaches. Both of the latter are based on the notion of selling your company’s invoices to a third party, which is charged with processing the invoices. Your business can receive loans based on the expected invoice payments.

If you are struggling to get a loan, lenders of last resort can be considered for small loans where the business has been refused by a bank. These are typically charities or regional/local council initiatives and can offer a loan for business up to around £20,000. Interest is charged on the unsecured loan, generally slightly higher than a high street lender. Another option if you are stuck could be short-term lenders such as Everline, which offer businesses short-term emergency loans to solve cash flow problems, but it is important to consider the interest rates and affordability.

Start-up owners can achieve success with equity crowdfunding, but there is also a chance to secure a personal loan of up to £25,000 from the government’s start-up loan initiative. The average granted is around £6,000.

Merchant cash advances

Other methods include a merchant cash advance (MCA), which allows the borrower time to breathe and increase their business with no pressures of repayments. It works by linking borrowed funds to the businesses card payments. Payments are made as a percentage of card payments taken meaning you only pay back the advance when your customers are coming through the door. Therefore, advances are paid back at affordable rates and dependent on the business increasing its customer spend.

For example, Merchant Funding from Chip & PIN solutions is an MCA that provides unsecured business finance from £2,500 to £500,000. To date Merchant Funding has secured more than £7,000,000 of funding to SMEs across the UK and intends to fund a further £10,000,000 in 2016.

The system works by businesses can apply for funding equivalent to an average month of their card sales. So, for example, if you take £2,500 in card transactions, your maximum cash advance would be £2,500. The amount repayable is agreed at the beginning and paid back as a fixed monthly percentage of credit and debit card sales. Funding can be 150 per cent of the average monthly card turnover and funding can be made within 24 hours of application.

Chip & PIN Solutions’ managing director David Maisey says, ‘As a business owner, I understand the importance of maintaining a healthy cash flow. Merchant Funding is a great product as it provides businesses with immediate funding and there are no limitations on how the money is spent.’

Ian Cass, managing director of the Forum of Private Business says that merchant cash advances are key for seasonal businesses, particularly those in the leisure industry that may want to invest at a time when they are quiet; construction work on a hotel being a great example.

‘This is ideal for an established business and may be preferable compared to a loan from the bank,’ he adds.

 

Read more by Ben Lobel