Help for Small Businesses

When finances start to get tricky when running any small business is to not do nothing.

Don't hope it'll be ok, or that some miracle will occur so that the issue will fix itself. Leaving a cashflow problem unattended will only add to the problem, for example.

There is a lot of help and advice available to small businesses. This page brings together a number of useful contacts which can benefit your business.

My husband has been a self-employed sole trader since 1993, here in England. During that time he has known ups and downs, just like every other small business owner. Running a business is hard work - mentally, emotionally and physically. Even on your days off you're still thinking about the jobs ahead.

If you are considering becoming self-employed, the first port of call should be an independent financial advisor. These can often be approached for free, and when entering into any financial venture the more properly researched knowledge you have, and the more impartial advice you have, the better equipped you will be to survive the first three years (which is a period during which many new enterprises fail.) You will find independent financial advisors listed in your local telephone directory, newspaper, or look online.

Make an appointment to speak with your bank's business manager. This is the person(s) responsible for overlooking small business accounts. Here you will be given financial advice, and helped to choose the right banking package for you. This person's knowledge of banking and small business finance can be an assest - or also a hazard, if they're not as diligent at their job as they might be. Ask for a second opinion if you're ever in doubt, or simply enquire at another bank where you might get a better deal.

Hire a professional accountant. Never trust your money to someone who merely thinks they know what they're doing (and that includes yourself.) Tax is complicated. Do you really know how to properly calculate income and expenditure, and which items are tax-deductible? The answer is probably not - so hire a real accountant, who can save you money.

You will also need to pay National Insurance Contributions, and take out third party liability insurance and other relevant business insurances. A pension scheme for yourself is another important issue to consider. People in other countries will have their own tax and insurance obligations, of course, and should approach the relevant bodies for more information.

As soon as financial trouble occurs, make an appointment to see your bank's business manager. They can help arrange a better overdraft or business loans and offer free advice.

Before you sign that loan agreement, THINK. Loans have to be paid back plus interest. Can you raise the needed money in some other way? Do you have property you could sell, such as your car or gold and silver, which would save you from entering a loan agreement? Don't let sentiment hamper decisions on selling property. If you are still determined to go for a loan, shop around as different banks offer different deals. Don't stick with your usual bank merely because it's familiar to you. Loyalty borne of laziness can add to your woes.

Do your research into regional and national organisations set up to help the self-employed small business person, such as Chambers of Commerce. The Citizens Advice Bureau can also offer useful free advice or point you to useful contacts for specialist business help.

Think about running costs and how these might be whittled down. Do you provide fresh flowers and magazines for a waiting area at your place of business? Such things can be stopped immediately, at least for the duration of lean times.

If you buy supplies, go straight to the manufacturer and cut out any middle-man's fees.

Shop around for cheaper electricity, gas and telephone suppliers.

If you pay a mortgage and finances are tight, you might talk to your bank about paying only the interest on the mortgage loan for a while. When you come to start repaying the mortgage loan in full you will either pay a higher premium, or pay the same premium as before but over a longer time-span. The details of this will depend on how long you've not paid the whole mortgage for, and on your bank's own policies.

Start an online advertising campaign. Use social networking sites to your advantage.

For example, in the spring of 2010 when the UK recession bit deep, I posted all over MySpace, Facebook, our blogs and Twitter that anyone who came into the studio that week and said "sausages" got £5 off their bill. It sounds stupid but it worked, and worked well. Because it was silly and made people smile, they re-Tweeted and re-posted the offer, and it not only got people talking but it got paying clients into the studio.

Going on holiday? Cancel it. Buying new clothes? If they're not absolutely essential, make do with what you already have. Domestic economy could save your business.

Do not be in a rush to sell your home to raise capital! You have to live somewhere, and renting (here in the UK, at least) usually works out more expensive than a mortgage. Also, your home could be used as collateral on a bank loan.

Another option is to rent out a spare room in your home. That unused space, or the pokey room usually used to store DIY tools and the home gym gear no-one ever uses could bring in valuable cash. Letting furnished rooms in your home can earn you up to £4,250 a year tax-free. This is known as the Rent a Room scheme.

Do not EVER make financial arrangements with loan sharks - even the ones in smart offices who'll offer you an unsecured loan at an absurd interest rate. You will only be digging yourself into a deeper hole.

Get advice from qualified professionals. Too many people will offer business advice, telling you how to run your business and finances despite that fact that they either haven't ever run a successful business themselves or their information, no matter how well meant, is out of date.