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Last Updated: Tuesday, 7 October, 2003, 07:15 GMT 08:15 UK
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, or agonising over funding for a new business, our panellists can help you.

Following a strong response, BBC News Online is publishing several sets of answers to your questions. We have tried to include as many questions as possible.

BBC News Online will publish its final set of answers from our panel of small business experts on Tuesday, 14 October.

Maya Wagle, US
Dame Anita - your success has been phenomenal. My questions are: what was the feminine trait you had to suppress in order to conform to a world driven by men? What feminine trait did you find most useful in your journey?

Anita Roddick, founder of The Body Shop
Conformity to me is like a sliver of death, sneaking into your brain and stagnating what keeps you feeling alive. I conformed not one iota.

I turned the Annual Report and Accounts into a document to delight, I brought a child development centre right smack into the headquarters.

There were LOVE programmes where employees were given a certain sum of money to develop any interest they had (nothing related to the business) - the only stipulation was that no one could use the cash for learning golf!

There is a mythology going around that says the way for a woman to succeed is to act like a man, where you have to undergo a metaphorical sex change, be tough talking and express no feelings.

Women build alliances, bring people together and most importantly they build intimate, informal networks and their biggest strength is communication.

What feminine traits did I find most useful? Humour. It cuts through everything.

Mark Wilkes, UK
I and two partners are opening a restaurant in the North-East of England. Our anticipated gross annual turnover is 190,000.

We had initially budgeted for only 1,500 in advertising costs in the first year split as follows: leaflet drop/in local papers - 250, university freshers' packs - 400, radio broadcast - 800.

I have since found out that the radio advertising costs for one week on a well-listened-to station will be around 2,000, including design for six adverts daily.

This would push us above the budget, however the cost is not too prohibitive. Would you recommend only advertising on radio, distributing the finance amongst other advertising mediums, or some other formulation?

Our aim is to attract people from across the spectrum, from professionals to students, and to allocate offers to different days of the week for the different client sectors. Is there a general formula which can be applied to advertising costs based upon expected turnover or profit?

Simon Edwards, marketing director at Cobra Beer
Reading your question, I'm a little concerned that you are trying to be all things to all people. By targeting the student market and professionals, you are in danger of alienating both markets, as they require very different things from a restaurant.

It's likely that you will have a quiet night and you can use a price incentive or value promotion to attract customers - but as soon as you target a group of people in a serious way (through advertising), you are likely to be thought of as a restaurant catering just for that market.

The amount you spend on marketing is dictated by many things - including the amount of competing restaurants in your area, the amount that they advertise, the uniqueness of your restaurant, the profile of your restaurant etc.

There is no fixed formula but in our experience, restaurants spend on average 3-5% of their turnover on marketing. This would mean you might need to consider increasing your budget to ensure that consumers are constantly reminded of your restaurant.

Don't forget PR in your marketing mix. Make sure that the local papers and magazines are invited to the opening and keep an element of your menu fluid, so that there is always something to talk to the press about.

I think that advertising for just one week on the radio won't be enough to maintain the sort of awareness you need. It would make a good launch promotion but I am sure that you will need to find a means to advertise the restaurant on a regular basis e.g. in a local newspaper or magazine, to be really effective.

It's slightly away from your question but I showed your turnover projection to our sales director, Samson Sohail, who has worked with restaurants of all sizes for 10 years.

He thinks that any restaurant these days needs to be aiming for a minimum turnover of 5,000 per month to remain comfortably in business.

Sucheen Patel, UK
I have a business idea, which has a large fixed cost to set up, but the potential profits would cover the cost after three or four years. Are there any sources of funding available other than the traditional route of bank lending?

David Wilkinson, partner, Ernst & Young
Your ability to raise funding for a new business will depend on a number of factors. In this situation, banks, which do not have a particularly large margin on lendings and cannot therefore afford to accept significant risk, tend to be unwilling to lend without good asset backing as security.

If your business is a new, unproven concept they will be even more reluctant to lend, as they will not be able to get comfortable that you can service the debt. The government's loan guarantee scheme can help, but in circumstances where the risk to the funder is high and the return is also potentially high, equity finance may be more appropriate.

Other forms of debt for asset purchases, such as hire purchase and leasing, tend to be difficult for start-up businesses. You should also check out whether there are any grants, whether UK or European, available to you. This will depend largely on the type and location of your business.

Equity funding can come from a variety of sources, including venture capitalists, business angels and friends and family. Your ability to raise venture capital will depend on the quality of the business idea and the management team you have assembled to execute the plan.

You will also find that the scale of your proposed business will have an impact - venture capitalists will only want to invest if they see the opportunity to create a business with significant value. They therefore tend not to invest below 1m and often not much below 5m. Further information on Venture Capitalists can be obtained through the British Venture Capital Association (BVCA) at:

Below this level, angel investors, who are generally people who have been successful in business and are prepared to invest their time and money in young companies, are a potential source of finance and they are best contacted through one of a variety of angel organisations. You can find details by contacting the National Business Angel Network on 020 7329 29 29 or at:

Angel investors were very active during the dotcom boom, but there are fewer now and they tend to be more risk-averse.

Many founders of businesses, particularly those starting out at a smaller scale and with little track record, have found that friends and family are one of the few sources available for equity finance.

Bob Findlay, Ireland
I want to return to the UK and set up a "British" safari park - i.e. re-grow a small forest in the north east of England, where land is cheap and there are few people yet near good transport, and stock it with once British animals such as wolves, bears, wild boar, beaver wild cattle, deer etc.

What grants could I get towards this from the UK government, the EU, and wildlife and environmental organisations?

Judith Rutherford, head of Business Link for London
What you are proposing is an interesting concept, but you need to go further than this and ensure that you believe there will be sufficient demand for the offer.

In particular, the size of the local catchment area will be key. In addition, the start-up costs for such a venture would be substantial in order to ensure appropriate safety measures were in place and this should be taken into consideration.

In terms of grants, there are a vast number on offer in the UK, although I am not aware of any that specifically match up to your business idea. Objective Two areas (an EU definition of regions going through the process of economic restructuring) are a frequent focus of grant funding. However, they tend to be well-defined zones closer to city centres and conurbations rather than in the countryside and so they might not provide any opportunities.

However the WWF may have a specific initiative that matches well with your idea. In addition, there are a number of designated Rural Regeneration Zones in the UK and business assistance grants are available in some of these.

It is worth visiting:

to further explore the grant options available to you. Contacting your local tourist board would also be beneficial. It could perhaps assist with marketing details and also advise on the opportunities available for turning over land from agricultural to leisure purposes.

Lee Head, UK
I have toyed with the idea of opening up a cafe-bar for a couple of years now but have never taken it any further. I am in a secure IT job but would love a change.

I need to find information on start-up costs, potential grants available, financial support and projected income.

What's stopping me is the thought of leaving a secure income of around 28k and diving into the great unknown. If you can point me in the right direction to clarify some of those unknowns and reduce my risk, it could be the start of a new direction for me.

Judith Rutherford, head of Business Link for London
I can understand that the thought of leaving a secure job unnerves you and quite rightly - starting a business is not a frivolous undertaking and there a number of key steps that must be taken to ensure you are making the right decision.

You need to be sure that you have a commercially viable proposition. Have you researched the market in your area? How stiff is the competition? Is there a gap in the market for what you are thinking of offering? You need to be clear on these issues before proceeding any further.

Given that you are considering changing your role from employee to owner-manager, you should also reflect on the commitment and work involved in setting up a business - particularly one in the hospitality sector, where 15-hour days are the norm (not including activities outside trading hours, such as sourcing food and day-to-day operational and management planning).

Unfortunately, there are no generic answers to the specific questions you ask, since the responses will differ on a case-by-case basis. I suggest you take further advice in person, either via your local Business Link, Chamber of Commerce, an accountant or start-up lending team at your bank.

Christopher Gore, Hungary
I started a business in Hungary in 1991 and over the past 12 years have developed the largest owned network of insurance brokers in Central Eastern Europe. To date it has been almost impossible to raise small amounts of finance to develop our business in the region. Your advice would be useful.

Peter Ibbetson, head of NatWest Business Banking
You have obviously already established a successful business, but you are right to continue to develop your business further. In the UK, the two main sources of finance open to you are loan and equity. I assume you have already investigated loan finance with your banker.

You do not disclose the size of the finance you are seeking, but if appropriate you could consider equity finance, Venture Capital firms or business angels, who can provide equity finance in return for a share in your company and may also offer personal managerial and entrepreneurial know-how to the business (as a non-exec director, for example).

They may also be able to use their network of contacts to access extra and complimentary sources of finance. Additionally, you may be eligible for grant aid from the government - you should explore this option with your government offices.

Kenneth, UK
I am about to start a small business importing plumbing accessories from China. My products are items like metal casting, ball valve and other plumb fitting accessories widely used by all residential properties. My target customers are plumbers merchants, wholesalers and plumbing accessories manufacturers.

I can see my biggest business risk is bad debts or non-payment by customers. It is common practice in this trade to give credits. Since I am a start-up with very little cashflow at the beginning, can you please advise what I can use to help protect against a customer not paying? I understand that a Purchase Order issued by customers is not very useful in the event that I am not getting paid, is that right?

Peter Ibbetson, head of NatWest Business Banking
You are not alone in your concerns about late payment. Recent research by NatWest shows that late payment of commercial debts is an increasing concern for small businesses.

Measures have been introduced in a bid to alleviate the problem: the Late Payment of Commercial Debt (Interest) Act 1998 enables small businesses to claim statutory interest for late payment of commercial debts. It includes the right to claim reasonable debt recovery costs, the right to challenge grossly unfair contractual terms that undermine the purpose of the legislation and the right for small- and medium-sized enterprises to ask a representative body to challenge unfair terms on their behalf.

There are measures that you can put in place yourself that may help you in minimising the risk of late payment, for example, ensuring that your payment terms are clearly stated on all documentation so that there can be no misunderstandings between you and your customer. You could also consider offering a discount for early payment.

Once your business is established, you could consider Invoice Financing which will offer you a way of off-setting some of the problems caused by late payment. You will find useful information on the procedures for the importing of goods on the HM Customs and Excise website:

Ian Black, UK
In his latest book, John Adair still maintains that one can "learn to lead". As a management lecturer, I think I can teach people to adopt a management approach, with hints of leadership, but if that leadership spark is not there then they will not be able to adjust what is really a basic personality trait. Any thoughts?

Professor Nigel Nicholson, London Business School
I share your perspective, but let me qualify that a little. The most important trait for a leader is wanting to lead - by which I mean a genuine desire to be accountable, to be responsible for people and their work, plus the qualities of character that enable the individual to weather storms with good humour and adaptability.

I also think that lots of people don't realise what good leaders they might be if they were to step up to the plate. Confidence is important, but it does grow and shouldn't be a pre-requisite.

On the other side there are lots of people who don't have any interest in being leaders because they know they would dislike it and find it stressful. They should be left in peace, and I strongly resist any philosophy that makes them feel they ought to want to be leaders.

Where I think "leadership" is universal, is that everyone in an organisation, at any position, should take responsibility for the people around them and take initiatives to help others, wherever they can see an opportunity to play a constructive role in the difficult issues to do with tasks and people that we all face. Keep teaching people and see what emerges!

Timo, England
If I have an idea, but think the idea is already being used elsewhere in the world, how do I check the idea is patented, and can I still produce the idea over here if there is no patent in the UK?

David Ladds, law lecturer, King's College London
You can check whether your idea has already been patented by visiting the Patent Office's website:

which holds details on more than 30 million worldwide patents.

If no one has already done so, then you may apply for a patent by filing a description and relevant drawings with the Patent Office. To be patentable, your invention must be new, involve an innovative step, be capable of industrial application and not be on the Patent office's excluded list.

Beware! Obtaining a full patent is a long and complex process. Although the initial application for a UK patent is free, obtaining a full grant will cost a few hundred pounds in fees - many times more if you require the expertise of a registered patent agent or are looking to market your invention abroad.

Remember that patents are territorial rights so a UK patent will only give the holder rights within the UK and rights to stop others importing the product into the UK.

Mr N Singh, England
I am thinking of becoming a sole trader but all the information that I have been able to gather so far is very complicated to understand.

What do I need to do to start the business? Who do I have to inform and when? What level of earnings can I earn before paying tax? Do I have to pay National Insurance contributions? Do I need to employ an accountant?

When will the VAT be applicable - as in year one I will not know what my earnings will be and will not be charging VAT to my customers? Will I need to make my own arrangements for pension requirements?

David Ladds, law lecturer, King's College London
You should consult my recent article on BBC News Online:

which answers most of your questions. You are not legally obliged to employ an accountant, although you may find it easier to do so when it comes to filling in your tax return.

You will need to make your own pension arrangements, which may take the form of additional voluntary National Insurance contributions, a stakeholder pension or some other personal pension plan.

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.

The BBC is not responsible for the content of external internet sites


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