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Market research is an essential part of any business plan, whether a fledgling business or a multinational organisation. Knowing that there is a sustainable market for your product and understanding what your audience expects from you is vital to a successful business launch. Market research can generally be split into two categories; primary and secondary, and during this article I will explain both and discuss their respective merits and appropriate uses.

Secondary Research

Secondary research makes use of existing data from whatever sources are available. There are government censuses, Mintel surveys, and many private market research agencies that allow access to their data; some of it for free. It can be hugely advantageous, especially as a place to begin. Secondary research more often than not, proves to be a solid base on which to develop your own primary research. It plays the same role as research in general does to your product launch, and should be seen as just as vital. Also, this is of course far cheaper and generally quicker than creating your own research from scratch.

The negatives

The other side of that coin is that you have neither picked the panel to suit your exact needs, nor the questions. It is feasible that you can find some research somewhere that corresponds to what you are trying to achieve but it will almost certainly require some tweaking, and will not necessarily be the people you wish to interrogate; the use of qualitative research designed by someone else will almost certainly make the target specialised away from your goals. Another main issue with secondary research is that by the time it reaches you it’s often outdated; markets change so quickly in business that the only way to be truly current is through new research. This is not to rubbish the quality of secondary research.

Primary Research

Primary research is, essentially, the creation of your own research, whether a question that you ask to your friends and family or a survey put together alongside an agency and administered to a wide panel. Primary research will instantly let you feel more in control of your project; and that is the exact position you will find yourself in. You choose the questions and select your panel through qualitative research, allowing you detailed responses from individuals. You decide how, when and where your research is administered. You can ensure that your research is focussed: the number of participants and their backgrounds, the number and nature of the questions, the amount of time that your survey is available. This is the most accurate way to research a market sector that is specific to you and your product.

The down side

It is of course, more expensive, whether financially or on your time. If performing primary research alone it will take a lot of time, refining and will need some experience in producing quality questionnaires. It will also take time for your questionnaire to be completed if you don’t have direct access to a ready panel. Most of this can be avoided by using an agency, but at a cost higher than performing your research alone.

So what’s the best option?

Neither type of research will take you to your goal alone; however, a combination of the two will give you all the information you need. Using primary research alone, without first seeing what has or has not worked for other companies and possibly missing out on important data from research that you couldn’t afford to perform yourself, is likely to lead to irrelevant questions or missed opportunities. At the same time, relying solely on secondary research is likely to leave you with answers that are vague or inappropriate to your specific audience. The two compliment each other well, and when used in conjunction will give you a well rounded and accurate portrayal of the needs and opinions of your market sector.

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One of the first things you need to do when you set up your own business is to find yourself a good accountant. However simple or complicated your business’ finances are, you are going to get yourself in a muddle if you don’t know exactly what you need to record, how to fill in your tax returns or when to file your accounts.

Speaking to the Institute of Chartered Accountants in England and Wales (ICAEW)’s Clive Lewis the other day, I learned that many start-ups don’t use their accountant as much as they could or should.

You should be able to rely on your accountant to be there for you if you call up with a query about your book-keeping, however trivial it may seem, or if you have a sudden change of circumstances – for example if a client suddenly puts in a big order and your cashflow is thrown off-balance. They should also be reminding you of deadlines for self-assessment or, if you’re a limited company, when your accounts are due to be filed.

There is certain information your accountant will need from you in order for him or her to understand your business and do your accounts for you, too, but again, a good accountant will tell you what they need. According to Lewis, your relationship with your accountant should be a long-term one with regular contact.

Ask other business owners you know who they use, or visit one of the accountancy associations’ websites to do a search for your local accountants. Even if you have a good brain for maths, you still might need somebody to hold your hand while you work out how to use your new accountancy software. Ideally, you will choose an accountant who has previously worked with other businesses of your size and in your industry.

So, don’t be shy; pick up the phone and ask away. And if the person at the other end doesn’t want to help you out, take your fees elsewhere and find an accountant who will make life easier for you.

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It’s official 2009 could be one of the hardest years ever for any business.

Business will be tough and attracting customers will be a challenge. Whilst you may not be able to influence how much customers spend with you, one thing you can do is to CONTROL YOUR COSTS.

So lets get back to some basics about costs. There are two types of costs

VARIABLE and FIXED.

Variable costs change in relation to the amount you sell or supply. Examples would be the stock for the business, packaging, postage or delivery costs etc.

Fixed costs remain constant and do not change regardless of your level of sales. Examples would be the rent you pay on your premises, electricity bills, your accountants fees, bank charges and so on.

So how can you control your costs?

The very first thing to do is to write down all of your costs and to decide if they are fixed or variable.

This is a good exercise as it will establish exactly how much you are spending each day / week / month.

Once you have established all of your costs the next task is to reduce them – yes it can be done and it would not be unrealistic to set a target of between 10% to 20%.

Remember, anything saved on costs immediately means more profit for your business.

Reducing Variable Costs

Lets start with the variable ones first as these can be changed quickly and so should have an immediate benefit on your profit.

Have a look at the list.

  • What can you reduce or eliminate?
  • What can you re-negotiate, put out to tender or shop around for a better deal. It is a buyers market at the moment so don’t be afraid to ask. Barter and negotiate hard.
  • Can you get discounts by buying in bulk?

If a supplier does not offer a discount – ask for one! You will be surprised at what you can achieve if you ask. So be ruthless and say you will go elsewhere if the price is not reduced.

Examples of where savings can be made are:

  • send invoices and delivery notes by email instead of printing them or only provide them if requested. This saves on paper, printing and postage costs.
  • use less packaging for products or charge for none essential items eg carrier bags.

Reducing Fixed Costs

These may take a little more time to alter but can actually result in higher savings. So they should not be ignored.

The target here should be to reduce all costs. So challenge everything you are spending. You may have to put some effort in but your hard work will result in huge savings.

Examples of where you can make savings:

  • on rent, ask your landlord for a rent reduction or a rent holiday
  • shop around for cheap utilities such as electricity and gas
  • change banks regularly to take advantage of free banking periods
  • shop around for savings on professional fees eg. accounting fees. By paying these monthly some accountants will provide a fixed fee service.
  • change your business telephone, internet or broadband packages to take advantage of special deals.

Remember:

  • be harsh
  • be ruthless
  • negotiate hard
  • challenge all fixed costs
  • do not be complacent

Control your costs and Beat the Credit Crunch

 
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If you haven’t already heard of it, ‘Spotify’ is the new way to listen to music. Well that’s certainly the case around our office at least! This start-up has become extraordinarily successful in an extremely short space of time by offering its users legal and free access to a huge library of music.  Registered users can share songs and playlists with friends. It even allows you to work together on collaborative playlists.  In today’s society of social networking where people expect access to the things they want instantly, and also to be able to share that experience instantly, Spotify has ‘spotted’ a gap in the market. 

Social technology is now so accessible and changing so quickly that there are plenty of opportunities for new businesses to thrive, even in an already saturated market. The trick is to find your businesses unique selling point. For Twitter it was ‘less is more’. It decided to limit its user’s updates to 140 characters, and so micro-blogging was born. 

Spotify proves that, even in a recession, a new business start-up with a good idea and proper planning can still become successful. So what are you waiting for?

 

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As an accountant I am often flabbergasted by some of the myths which exist about Accounts and Tax. I am not sure where these myths come from but the sentence usually starts with “my friend down the pub told me ……..”

Sounds familiar?    Well here are my top five myths starting with:

 
There are ways to pay no tax if you set up a limited company
My polite response to such a statement is that if this was the case then everyone would do it!Personally, I think there is confusion with the fact that there is no additional income tax to be paid on dividends (up to the higher rate threshold). However, dividends would have been paid to the shareholder after corporation tax had been deducted! So tax has been paid, albeit by the company.
 
You have to be good at maths to do accounts
Well you do have to add up and subtract some numbers but with calculators and spreadsheets this really isn’t too difficult. There are also some very easy to use software packages about if your needs are a bit more advanced.  However, I would recommend that you agree your accounting system, whether it be manual, spreadsheet or software, with your accountant in advance. You would be surprised how much of an influence this could have on your fees.
 
Your accounts have to be prepared by a qualified accountant
Not only is this incorrect but your accounts can be prepared by anyone. In fact anyone can call themselves an accountant!  Whilst accountants who are members of the recognised accounting bodies are regulated eg, ICAEW, AAT, ACCA, ACA to name a few, the fact is that there are no overall regulations in place which applies to someone calling themselves an accountant.  So how do you ensure that your accountant knows what they are doing? Well like anything, I would suggest going on recommendation.
 
HMRC get everything right
If I had a pound for every time I have received a frantic phone call or email from a client who has received an incorrect bill from HMRC then I might not be rich but I would have a few quid in the bank, after tax of course!  In fact I received a call from a client this week who had just received a tax bill for £67,000. Clearly wrong and sorted out in minutes.  Don’t just assume that all correspondence from HMRC is correct. Like anyone, they do make mistakes and it is always worthwhile checking. Especially if the bill is higher than you expect.  Your accountant should always verify the tax calculation and advise on any amounts due. So don’t be afraid to query anything you get through from HMRC.  They are not always right.
 
All companies need an audit
Not true at all. In fact most companies would be classified as ‘small’ and would not require an audit.  So what is small?  Generally, if your company has a turnover of less than £6.5 million and a balance sheet total of not more than £3.26 million then no audit is required. There are some exceptions to these rules so it is worth checking but an audit should be one less thing to worry about.
 
One final myth which didn’t quite make it to my list …
All accountants are boring.
Not sure I can dispel that one though!!
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I specialise in helping self employed people pay less tax and avoid fines – our clients are mainly one person businesses, usually working from home.

As such, I am always looking at ways of increasing their profits for a low cost – we have had several start up businesses recently where they are particularly looking for low costs in their first year as they build up the business.

The traditional way of doing things when you started a small business was to maybe print some flyers and distribute them, or to take out an advert in the local press or printed listing directory.

Vanessa Warwick started an excellent discussion on the propertytribes forum, regarding Social Networking for business, which very much applies to every small business owner.

I recently ran a talk on ‘Social Media for Business’ at the Epsom BNI group, where I am the chapter director, and was surprised by the number of people who hadn’t considered the business return that is possible from social networking.

This got me to posing the question: How many accountants offer advice on Social Networking to increase their client’s profits?

Following feedback from the talk I gave to Epsom BNI, in addition to continuing to promote ecademy and twitter for business to our clients, I have decided to offer a simple introduction to Social Networking for Business as part of the service I offer to small business owners, helping them to increase their profits.

Social Networking is ideally placed for the type of clients we specialise in, the small self employed business, as there are low costs and great potential benefits for the business.

A good example of what is possible is another propertytribes member, Sally Asling, who has in fact generated £6,000 of income via twitter in 3 months.

‘The twittering tax man’

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