The small business panel of experts

A panel of experts on small business answer questions from BBC News Online readers.

Whether you are worried about growing your company without losing control, agonising over funding, or designing a killer marketing campaign, our panellists can help you.

Following an overwhelming response, BBC News Online is publishing a second series of answers to your questions. We have tried to include as many questions as possible.

Simon Edwards of Cobra Beer, writes about marketing on the web and research for a wedding business

David Wilkinson, partner at Ernst & Young, discusses how to value a business for attracting equity investment

Liz Barclay, presenter of Radio 4's You and Yours, on how to avoid issuing junk mail and on starting an internet business

Nigel Nicholson, Professor, London Business School, comments on dealing with your boss and defines good management

Peter Ibbetson, head of NatWest Business Banking, talks about unsecured loans and raising money for an acquisition

BBC News Online will publish the next set of answers from our panel of small business experts on Tuesday, 5 August.

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QUESTION
Jon Aslin, UK
I have a small online business at www.clickdocs.co.uk that does quite well selling legal documents for small businesses. However, I find that 90% of people I speak to have never even considered the idea of looking on the web for legal documents. How on earth can I reach the vast offline market, and persuade them to start using the web effectively? Or is it just a case of hanging in there as web usage becomes more commonplace?

ANSWER
Simon Edwards, marketing director at Cobra Beer
I hope that you are encouraged that no one has considered the idea of looking on the web for your product. It means you have got in first and therefore you have an advantage.

First-in-the-market tends to mean first-in-the-mind of the consumer. Whatever you do, don't hang around - someone else will establish their company as being the first and you will lose that advantage.

What you have to do now is to let people know about your service and why they should come to you for their legal documents. Make it clear what the benefits of your service are, compared to other channels for legal documents.

With something of this nature I think it is important that you include an element of reassurance in your marketing i.e. don't give people the opportunity to think there is anything sub-standard about your offer.

Don't try to reach the vast offline market. You can't - unless you have the budget to run ads in the middle of Coronation Street.

By focusing on a single market, using marketing that is relevant to them (talking to them in their language using subjects they understand), you can start to go nationwide.

You mentioned small businesses as one target. If that is a segment that is already showing an interest, why not start there. Send press releases to all the business advice writers, magazines and websites announcing your service to get some coverage of your site.

Find out what it would cost to put a banner ad on the business advice websites. A more traditional approach would be to create a database of small companies, region by region and send them information that explains your service and benefits.

QUESTION
Gary, UK
My partner and I are considering starting a business organising conferences, weddings etc. with no funding available. But how do we market ourselves?

ANSWER
Simon Edwards, marketing director at Cobra Beer
One of the key considerations for marketing, Gary, is to know who your competitors are. This doesn't mean just compiling a list of their names. You need to know what they are offering, which includes the service, or product they offer, the price they charge, the region that they cover.

By analysing the industry you're going into, you will get a good idea of which of the competitors are really good at what they do and why they are good. The reason you should go through this process is so that you can give customers a reason to choose your company rather than your competitors.

You should also include customers in your research to find out what they have experienced and what they think is good and bad about the companies that currently offer these services.

As you know from your own experience, people shop around and if you can't offer them something different, it is all too easy for customers to just look at price as the deciding factor.

If you're thinking that you can undercut the competition, bear in mind that it is highly likely that the established companies will be able to sustain a lower price point than you for longer than you, so a price war with your competitors might be something worth avoiding.

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QUESTION
Chris Hutchings, UK
I've been running my own business, Ensemble Tours, for just over a year now, and look set to achieve profitability for this tax year.

I'm now looking to attract some equity investment into the business to allow for expansion, but how can I place a value on the business for attracting equity investment?

ANSWER
David Wilkinson, partner, Ernst & Young
Valuations is a tricky subject, which comes down to a willing buyer and a willing seller meeting in the middle and shaking hands.

The process starts out as discounting back future cash flow to look at net present value of those cash flows, but after this, it becomes much more complicated.

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QUESTION
Pete Allison, UK
How is a new company supposed to sell a new product to businesses, when they don't like junk mail, junk faxes, junk e-mail or cold calling? Is the only way forward to make an appointment to see someone in charge? Then the problem is to get past the receptionist.

ANSWER
Liz Barclay, presenter of Radio 4's You and Yours
Businesses don't like receiving junk as you say, but junk is something that is of no interest to the recipient.

If you've done your market research and are targeting firms you know are likely to be interested in your product then you aren't sending them junk - you're sending them information of a product that could be useful to them.

Do the market research carefully and target your marketing material, such as brochures, faxes or e-mails directly. Follow up with a call asking to make an appointment.

It's hard to get new customers - much easier to keep them once you have got them - so you may not get as many positive responses as you'd like. But if there is a market for your product and that market isn't already saturated, you'll get enough to start you off. Then a good reputation will help you grow.

QUESTION
Nana Fifield, England
I am currently working on starting a small internet business selling jewellery and crafts. I am finding it particularly difficult to know where to start - there is a mine of information about writing business plans, knowing about legal matters in particular with trading over the internet, etc. The ideas are still all in my head and I am aware that I need to start putting them onto paper. Where and how do I start setting up an online business? Where can I apply for grants for such a venture?

ANSWER
Liz Barclay, presenter of Radio 4's You and Yours
Start at your local Business Link. Look for details in the phone book. Business Links have advisers on all the issues you're concerned about including the legal aspects and grants.

They run various courses for starting up, growing businesses and business planning. A good business plan is your most useful tool - showing you where you're going and whether you're getting there.

You'll need one if you have to raise finance through the bank. It should be constantly referred to and revised - it's like a road map. Get that right and the rest will follow - so get help and that gives you someone to discuss and clarify your ideas with.

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QUESTION
Hermione, England
I work in a small bike shop (the owner, four mechanics and me working in the shop full-time, plus three people doing accounts/banking). Our boss is very hands-off in managements style which is good in some ways (people are encouraged to do what they're good at, with responsibility, freedom, etc), but the lack of structure also makes it hard to deal with any issues that arise.

There is no training, as such, and things like bad customer service, 'flabby' stock-ordering, and so-on don't get dealt with. It feels as if we're muddling through - great when we're in a collectively good mood, and horrible when we're not! I also feel that there is not enough investment in people, and motivation/morale is generally low.

I've suggested having regular meetings with us all, but my boss can't see the point and is resistant. How best do you think I can put a bit more structure in place without killing the good 'family' aspects?

ANSWER
Professor Nigel Nicholson, London Business School
Your boss is probably a trusting guy with interests that are wider than the bike shop. But it's reasonable for you to want more structure and direction than he's giving to the business.

This doesn't mean that you're right and he's wrong, but it does mean that you need some open dialogue about these issues. You need to have a 'decentring' conversation with him where each of you tries to get a better perception of what it must be like to be the other person in their situation.

It's a two-way street. You need to understand more about his view of the world as much as he needs to understand yours.

You don't say what the morale problems are. Is this just your feeling or is there evidence that he might care about? Maybe it's only you that wants meetings?

You need to open up a dialogue with him about what might come out of them and how one could avoid whatever it is that he would not want them to do. I think he'd respond well to your concern for the business and desire not destroy its good family feel.

QUESTION
Angela Meijer, Switzerland
Our research institute is holding a 'retreat' this September. Issues to be discussed include management and leadership. I would welcome hearing from an expert such as you as to what constitutes good management and effective leadership.

ANSWER
Professor Nigel Nicholson, London Business School
You ask simple little questions don't you! Seriously though, people have been writing about this for millennia, and still no consensus.

Here's my view. Management is a set of techniques and behaviours for getting things done. Management I define as the coordination of people, processes and resources to achieve a common goal.

Management skills are universal. Parents do it in the home. Sportspeople do it on the field. Secretaries do it in the office. We know what these skills are and what most often goes wrong (giving feedback, handling emotional people, communications, making decisions etc.) and we know how to improve them.

In contrast, leadership is about being yourself. Leadership is uniquely individual. Every leader must find their own true way of leading that comes out of their personal identity and engages their personal passions. Leadership in my definition is taking charge of people and situations.

Both these aspects are covered in depth in my programme at London Business School, "High Performance People Skills":

www.london.edu

So the short answer to your question is that a good manager is someone who does things right, and a good leader is one who does the right things.

Reviewing tribal leadership I conclude there are three main tasks for the leader:

• strategic direction and choice
• governance & team building - the systems that hold the organisation together, and
• culture building - creating the values and the bonds of trust throughout the organisation that help it to function as a community.

Enjoy your conference. These are important and interesting issues.

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QUESTION
Tarick, UK
In 2001 I was working for an internet incubator when we purchased a dot.com company. In November of that year I took over the dot.com company in an MBO and took 61% and a debt of £355K. I turned the company around and instead of losing money we were starting to break even and make a slight profit.

I have recently taken over the rest of the shareholding and I now own 70% and the staff 30% between them. I have also managed to negotiate the debt of £355K down to £25K. Due to cashflow, we do not have the available funds to pay the £25K.

What do you recommend as the best course to raise the funds? We need the first £10K now and the other £15K in six months. I called my bank and they have asked that I send them in a proposal to borrow the money which I am doing now but they want guarantees i.e. my house. I can get a personal unsecured loan for £25K from finance companies - why can't the company get one?

ANSWER
Peter Ibbetson, head of NatWest Business Banking
Raising finance for personal expenditure and for a business are not comparable, a business can be complex with far more variables, which in turn can mean a higher level of risk.

This is not the case for personal finance where a regular income is often evident. When a bank is asked to provide business finance we need to assess the business' ability to meet repayment of the debt. It is therefore quite correct that you have been asked to submit your proposition. If your bank is willing to support your proposal then it should be able to tailor the finance to meet your repayment schedule.

QUESTION
Kelly Robinson, UK
I am currently looking to grow my recruitment business via acquisition and really have had no experience of this. In fact we have built our company to nearly a £10m turnover organically and I wondered if you had any advice for raising money?

ANSWER
Peter Ibbetson, head of NatWest Business Banking
I recommend that in addition to your bank manager you should discuss your proposition in full with your professional advisers - your accountant and solicitor.

This is because you will need advice on your tax position and will also need to ensure that you are clear on exactly what it is you will be purchasing.

Your bank manager will want to know exactly what is involved so that he can provide you with suitable advice on the most appropriate finance vehicle for you.

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The opinions expressed above are those of the panel of experts, not the BBC's. The advice is not intended to be definitive and should be used for guidance only. Always seek professional advice for your own particular situation.