Business Essentials For Dummies Minibook

BusinessEssentials

Free Minibook!

Contains free sample chapters from:• Starting a Home Business

For Dummies

• Small Business Marketing For Dummies

• Bookkeeping For Dummies

• Persuasion & Influence For Dummies

• Pop Up Business For Dummies

Rachel BridgePaul EdwardsSarah EdwardsPeter Economy

Learn to:• Get your home business up and running

• Use e�ective marketing and promotion on a budget

• Make technology and the internet work for you

Starting a Home Business

Making Everything Easier!™

UK Edition

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Chapter 3

The ABC of Starting Your Own Business

In This Chapter▶ Making the move to working for yourself

▶ Starting a home-based business that lasts

▶ Discovering six financial entry plans

▶ Identifying 18 sources of start-up funds

▶ Developing an effective business plan

One of the biggest obstacles facing many prospective home-based

business owners is simply how to answer this important question:

what are you going to live on while you get your new business off the ground?

In order to ensure the long-term success of your business, you have to start

with sufficient income – from whatever source – to pay your bills.

Three out of every ten people in the UK dream of starting a business of their

own. Yet most of them don’t. Why not? In many cases, it’s because they’re

afraid they don’t have enough money to do it. The fact is, although certain

home businesses require a significant investment in equipment and prod-

ucts, many home-based businesses require little or no money to start. But

aside from start-up costs, you have to put in a lot of work and careful plan-

ning to build a business that can pay the bills over the long run, which is why

understanding the right ways (and the wrong ways) to make the move from

working for someone else to running your own business is so important.

In this chapter, we review the steps you need to take to set up a home-based

business – specifically, what you need to do before you leave your day job

behind. We cover how to secure financing and where to find the money you

need. We also show you how to develop an effective business plan.

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46 Part I: Getting Started with Your Home Business

Making the Move to Running Your Home-Based Business

Starting your own business is exciting. For those people who have spent all

their working lives employed by someone else, it’s often the culmination of

a dream that’s lasted for years, perhaps decades. Imagine the power and

personal satisfaction you’ll feel when you realise you’re the boss and you

call the shots – from setting your own work schedule, to deciding how to

approach your work, to choosing your computer and office furniture. Believe

us, it’s a feeling you won’t forget in a hurry.

But there’s a right way and a wrong way to make the move. Your goal is to

make sure you maintain a sufficient supply of cash to pay the start-up costs

of your business while paying for the rest of your life – the mortgage or rent,

the gas and electricity bills, school fees, your daughter’s karate lessons . . .

the list goes on and on.

The fact is, within the first six months of operation, few businesses – home-based

or otherwise – bring in all the money necessary to get them off the ground and

keep them going for a prolonged period of time. In other words, you may need

a lot of cash – from your current job, your partner’s job, your savings, or loans

from friends, family or a bank – to keep both your business and your personal

life going until the business generates enough revenue to take over.

Although you have to decide for yourself exactly what schedule to follow

while making the move to running a home-based business, unless you’re

unemployed or retired, we generally recommend that you start your business

on a part-time basis while you continue to hold down your regular full-time

job. Why? For a number of reasons, including the following:

✓ You can develop and test your new business with virtually no risk – you

still have your regular job to fall back on if your new business doesn’t

work out (and remember, no matter how great your business idea is,

there’s a chance it won’t work).

✓ You aren’t under the intense pressure to perform and produce enough

money very quickly that you’d be under if your new business were your

only source of income.

✓ You can keep your established holiday pay, pension contributions and

other benefits.

✓ You have a steady source of income that you can use to pay your bills

while you establish your new business.


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47 Chapter 3: The ABC of Starting Your Own Business

✓ You may be able to take advantage of tax benefits, like the ability to

write off business expenses against income (see Chapter 9 for more on

taxes and deductions).

✓ You have a stronger basis for obtaining bank loans and other financing

for your new business.

Indeed, so many people are choosing to start up their home-based business

this way that they even have a name: the five-to-niners, describing people

who do their regular nine-to-five day job and then come home to run their

home-based business in their spare time at evenings and weekends.

However, bear in mind the downsides to starting a business while continuing

to hold down a full-time day job:

✓ Doing both won’t leave much time for doing anything else – your social

life will definitely suffer and your family life may too as you find that all

your spare time is taken up working.

✓ Your health may suffer if you’re constantly working at 100 per cent

capacity and have no time to yourself.

✓ Once your home-based business starts making money you may need

to pay for an accountant to ensure that you’re paying the right amount

of tax.

✓ Your employer may not look too kindly on the idea of you starting up

a business in your spare time. Indeed, many companies have a specific

policy banning employees from taking up any other trade or occupation

which interferes with the performance of their duties.

Of course, the decision is ultimately up to you. When starting a home-based

business, make sure the transition fits into your schedule and your life.

In the following sections, we take a close look at six steps you need to take

before you leave your regular job to devote all your time and energy to being

your own boss. We also walk through the different steps involved in the pro-

cess of establishing your home-based business.

Knowing what to do before leaving your day jobAfter you’re consistently earning enough income from your part-time home-

based business to cover your bare-minimum living and business expenses,


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you’re ready to make the jump to a full-time commitment of your time and

attention. Before you hand in your resignation, however, take the following

six steps:

1. If you’re a member of the company pension scheme, find out how it oper-ates, in particular whether it’s a final salary or defined benefits scheme. Make sure you know what will happen to the pension pot you’ve accumu-

lated after you resign. If you’re near retirement age it may make sense to

time your resignation so that you maximise the benefits available to you.

For example, if you’re close to retirement it might be worth waiting, espe-

cially if you’re on a final salary scheme. Ditto company share schemes – if

you’re a member of one, find out if you’re able to sell your shares.

2. Find out when you can expect to receive any bonus money or profit sharing. You may, for example, be in line to receive an annual perfor-

mance bonus or profit sharing a month after the end of the company

fiscal year. This information can help with the financial planning for your

home-based business because it lets you know when you’ll have the

money available to help you get your business off the ground.

3. If you have medical insurance provided by your employer, have all the check-ups and routine procedures done while you’re still covered. If you want to continue having a medical insurance policy after you

leave, check to see whether you can convert your group coverage to an

individual policy at a favourable rate.

4. If you own a house and you need some extra cash to help you through the transition from salaried job to running your own home-based busi-ness, consider extending the mortgage on your home or taking out a personal loan before leaving your current job. Having a pot of cash

to draw upon can be invaluable during the first two years of your new

business, and your chances of getting a loan approved are much greater

while you’re employed in a regular job. Sadly, after you leave your job,

you probably won’t qualify for a mortgage extension or personal loan

until your business has been successful for at least three years.

5. Pay off as much as you can on your credit cards while you still have a steady job. You help your credit rating (a measure of how safe you are

for banks to lend to you; always a good thing) and provide yourself with

another source of potential funds to help finance various start-up costs

(and depending on the nature of your business, you may have plenty of

those).

Borrowing and always paying it down to the agreed schedule helps your

credit rating more than having no credit card borrowings. Check out this

website for ways to boost your credit score: www.moneysavingexpert.com/loans/credit-rating-credit-score#improve.

6. Take advantage of training and educational opportunities, conferences and meetings that can help your preparations or provide you with contacts who can help you in your own business. You can then hit the

ground running when you decide it’s time to start your own business.


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Don’t make your announcement or submit your resignation until you’re really

ready to go. Some companies are (sometimes justifiably) paranoid about soon-

to-be former employees stealing ideas, proprietary data or clients and may try

to speed up your exit!

After completing these steps, you’re ready to take what may well be one of

the most significant steps forward you’ll ever take in your life: starting your

own home-based business.

Understanding what you have to do to start your own home-based businessIn the sections that follow, we go through exactly what you need to do to

start up your own home-based business. We cover these topics in much

greater detail in Chapters 4, 6, 10 and 11.

Develop a business planDespite what you may read on many small-business websites or blogs, many

home-based business owners can get by without drafting a business plan.

Indeed, just the thought of having to draft a 50-page tabbed and annotated

business plan is enough to scare many potential home-based business

owners away from their dreams. The truth is that most business owners

Time for a flutter: The odds of success All kinds of alarming statistics abound about the likely success rates of home-based businesses and start-up businesses in general – it’s esti-mated that 80 per cent of all new businesses in the UK fail within the first five years, for exam-ple. Scary stuff perhaps, but the good news is you have several ways of making sure that you and your business don’t end up being one of the casualties.

The four key indicators of business success are:

✓ Sound management practices: Including an ability to manage projects, handle finances and communicate effectively with customers.

✓ Industry experience: Including the number of years you’ve worked in the same kind

of business you intend to start and your familiarity with suppliers and potential customers.

✓ Technical support: Including your ability to seek and find help in the technical aspects of your business.

✓ Planning ability: Including setting appropri-ate business goals and targets, and then cre-ating plans and strategies for achieving them.

If you, or the combination of you and a part-ner, possess all four traits, the probability of your business succeeding is much higher than if you’re missing one or more of these traits. If you’re missing any of these attributes, find people who can help you fill in the gaps.


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today use their business plans to obtain financing from third parties, such

as banks or investors, and many successful businesses – home-based or

otherwise – have been started without one.

That said, the process of drafting a business plan can be very beneficial –

both to you as a business owner and to your business. Taking the time to

draft a plan helps you do the right things at the right time to get your busi-

ness off the ground; plus, it forces you to think through potential challenges

and what you can do about them before they overwhelm you.

In essence, a good business plan:

✓ Clearly establishes your goals for the business.

✓ Analyses the feasibility of a new business and its likelihood of being

profitable over the long haul.

✓ Explores the expansion of an existing business.

✓ Defines your customers and competitors (very important people to

know!) and points out your strengths and weaknesses.

✓ Details your plans for the future.

Even if you think your business is too small to have a business plan, the pro-

cess of developing the plan for your business produces a clarity of thought

that you can’t find any other way and is more than worth your time. See the

‘Putting Together a Business Plan’ section later in this chapter for more details.

Consult outside professionalsAs a new home-based businessperson, you need to consider establishing

relationships with a number of outside professionals – trained and experi-

enced people who can help you with the aspects of your business in which

you may have little or no experience. If you run into questions that you can’t

easily answer yourself, don’t hesitate to call on outside professionals for help

as you go through the business start-up process (and be sure to check out

Chapter 10 for detailed information on this topic).

Any professional advice you get at the beginning of your business may well

save you heartache and potentially expensive extra work down the road.

Here are just some of the outside professionals you may choose to consult as

you start your home-based business:

✓ Solicitor. A solicitor’s services are an asset not only in the planning

stages of your business, but also throughout its life. A solicitor can help

you choose your legal structure, draw up incorporation or partnership


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paperwork, draft and review agreements and contracts, and provide

information on your legal rights and obligations. Look for a solicitor who

specialises in working with small businesses and start-ups.

✓ Accountant. Consult an accountant to set up a good bookkeeping

system for your business. Inadequate record keeping is a principal con-

tributor to the failure of small businesses. Regardless of how boring or

intimidating it may seem, make sure you understand basic accounting

and the bookkeeping system or software you’re using, and don’t forget

to closely review all the regularly produced financial reports that the

accountant compiles for your business using your software – such as tax

returns and VAT returns (and make sure you actually receive them!).

✓ Banker. The capital requirements of a small business make establishing

a good working relationship with a bank absolutely essential. They can

provide you with a business account, loans and overdrafts; and a good

business-focused bank can also help with more complex needs such as

credit-checking services and invoice factoring. Choose a bank with a

strong track record in supporting start-up businesses – bank websites

give you a good idea of where their priorities lie.

We recommend establishing a relationship with your banker before

applying for a loan, not after you decide to initiate the loan process. This

relationship may make the difference between getting approval for the

loan you need and being turned down.

Establishing a good relationship with your banker isn’t difficult – arrange

a meeting before you apply for a loan to talk through the prospects for

your business, or even invite your banker to visit and see your business

in action. Make sure you’re fully prepared with any financial facts and

figures to hand, and always act in a professional manner.

✓ Business consultant. Every person has talents in many areas, but no one

can be a master of everything. Consultants are available to assist in the

areas where you need expert help. You can use business, management

and marketing consultants; promotion experts; financial planners; and

a host of other specialists to help make your business more successful.

Don’t hesitate to draw on their expertise when you need it.

✓ Insurance agent/broker: Many kinds of insurance options are available

for business owners, and some are more necessary than others. An insur-

ance agent or broker can advise you about the type and amount of cover-

age that’s best for you and your business. The agent may also be able to

tailor a package that meets your specific needs at reasonable rates.

The relationships you establish with outside professionals during the start-up

phase of your business can last for years and can be of tremendous benefit to

your firm. Be sure to choose your relationships wisely. In the case of outside

professionals, you often get what you pay for, so be penny-wise but don’t

suffer a poor-quality outside professional simply to save a pound or two.


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Choose the best legal structure for your businessMost home-based businesses begin as sole traders or partnerships because

they’re the easiest business structures to run and the least expensive. But as

these businesses grow, many explore the transition to another kind of legal

entity. Before you decide what kind of business you want yours to be, con-

sider the pros and cons of the following legal structures:

✓ Sole trader. A sole trader is the simplest and least regulated form of

organisation. It also has minimal legal start-up costs, making it the most

popular choice for new home-based businesses. As a sole trader, one

person owns and operates the business and is responsible for seeking

and obtaining financing. The sole proprietor (you) has total control and

receives all profits, which are taxed as personal income. The major dis-

advantages include unlimited personal liability for the owner (if the busi-

ness is sued for some reason, the owner is personally liable to pay) and

the fact that it may be harder to sell a sole trader business than one set

up as a limited liability company because buyers can be worried about

possible undisclosed liabilities and future possible liabilities that the

sole trader themselves may not be aware of at the time of selling.

✓ Partnership. A partnership is relatively easy to form and can provide addi-

tional financial resources. Profits are taxed as personal income, and the

partners are still personally liable for debts and taxes, meaning that their

personal assets may be at risk if the partnership can’t satisfy creditors’

claims. A special arrangement called a limited partnership allows part-

ners to avoid unlimited personal liability. Limited partnerships must be

registered and must also pay a tax to the appropriate authorities in their

Using the ‘five Cs’ to build a better banking relationship

Bankers consider the ‘five Cs’ of credit analysis, factors they look at when they evaluate a loan request. When applying to a bank for a loan, be prepared to address the following points:

✓ Character. Bankers lend money to borrow-ers who appear honest and who have a good credit history. Before you apply for a loan, obtain a copy of your credit report and clean up any problems.

✓ Capacity. This is a prediction of your abil-ity to repay the loan. For a new business, bankers look at the business plan. For an

existing business, bankers consider finan-cial statements and industry trends.

✓ Collateral. Bankers generally want you to pledge an asset you can sell to pay off the loan if you lack funds.

✓ Capital. Bankers scrutinise your net worth, the amount by which your assets exceed your debts.

✓ Conditions. Bankers are influenced by the current economic climate as well as the amount you’re asking to borrow.


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jurisdiction. On the plus side, partnerships allow people to combine their

unique talents and assets to create a whole greater than the sum of its

parts. On the other hand, though, a partnership can become a nightmare

when partners fail to see eye to eye or when relationships turn sour.

When entering into any partnership, consult a solicitor and insist on a

written agreement that clearly describes a process for dissolving the

partnership as cleanly and fairly as possible if the time comes.

✓ Limited liability company. A limited liability company can be a good

choice for new start-up businesses because it’s a separate legal entity to

its directors, which means although you’re responsible for the business,

you won’t be liable for its debts or other liabilities if it runs into trouble.

Setting up a limited company is costlier and requires more administra-

tion than registering as a sole trader, but it can be more tax-efficient

because the profits belong to the company, rather than you, so you’re

paid as an employee. You may also opt to become a shareholder and

take dividends from the company as well.

As you set up your new home-based business, take time to think through the

ramifications of your business’s legal structure carefully. Each option has

many potential advantages and disadvantages for your firm, and each can

make a big difference in how you run your business. If you have any ques-

tions about which kind of legal structure is right for your business, talk to

an accountant or seek advice from a solicitor who specialises in small busi-

nesses. Chapters 9 and 10 can also help you sort through the options.

Decide on a nameNaming your business may well be one of the most enjoyable steps in the

process of starting up your own home-based business. Everyone can get in

on the action: your friends, your family; even your clients-to-be.

Consider your business name carefully – you have to live with it for a long

time. The name should give people some idea of the nature of your business,

project the image you want to have and be easy to visualise. Names can be

simple, sophisticated or even silly. Try to pick one that can grow with your

business and not limit you in the future. Think of Ocado, Opodo and Qjump

and see what they conjure up in your mind.

Along with a name, many businesses develop a logo, which provides a

graphic symbol for the business. As with your name, your logo needs to proj-

ect the image you want, so develop it carefully. Spend a few extra pounds to

have a professional graphic artist design your logo for you.

After you come up with a name, check the Companies House website (www.companieshouse.gov.uk) to make sure it isn’t already in use and register

the name with them (see Chapter 10 for more details). Check that you can get

the domain of the same name for your website, ideally with both the .com and

.co.uk endings (you need both to stop anyone buying the other one).


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Take care of the red tape (and it will take care of you)Too many budding home-based entrepreneurs put off or ignore taking care of

all the legal requirements of starting up a business. Unfortunately, ignoring the

many legal requirements of going into business may put you and your business

at risk.

Getting through the maze of government regulations can certainly be one of

the most confusing aspects of starting up and running a business. But even

though this process can be intimidating, you have to do it – and do it cor-

rectly – because non-compliance can result in costly penalties and perhaps

even the loss of your business. This step fortifies the professionalism of your

business and at the same time helps you rest easy at night, knowing that

you’re following the rules.

Even very small or part-time businesses must meet certain legal requirements.

For example, if you’re going to be preparing food, you may need to get a licence

from your local council and arrange for their health and safety officers to inspect

your kitchen to ensure that it complies with their food preparation standards.

Adhering to regulations that apply to your business is your responsibility.

Fortunately, finding out what you need to do, and when, is straightforward.

The government website (www.gov.uk) covers all the legal requirements you

need to adhere to, and the HM Revenue and Customs website (www.hmrc.gov.uk) spells out all the taxation requirements. Other business organisations

such as the British Chambers of Commerce (www.britishchambers.org.uk) can also advise you on what you need to do. For your sake – and the sake

of your business – don’t hesitate to ask for help when you need it.

Get the insurance you needIn today’s expensive, litigious world of business, insurance isn’t really an

option – it’s essential.

So what kinds of insurance do you need for your business? We recommend

that you talk to an insurance agent to discuss your business and its needs.

Some of the most common kinds of business insurance – some compulsory,

some optional – include the following:

✓ Public liability insurance: Provides cover against claims arising if a cus-

tomer or member of the public is injured or even killed or if their prop-

erty is damaged because of your business.

✓ Employers’ liability insurance: Provides cover for claims made by an

employee who’s injured at work or who becomes ill as a result of working

for you.

✓ Product liability coverage: Covers liability for products manufactured

or sold.

✓ Professional liability insurance: Also known as professional indemnity

insurance. Protects your business against claims for damages incurred by

customers as a result of your professional advice or recommendations.


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✓ Building insurance: Protects the building from damage caused by disas-

ters such as fire or flood.

✓ Contents insurance: Protects the contents of your business from

damage, destruction, loss or theft.

✓ Vehicle insurance: Covers collision, liability and property damage for

vehicles used for business.

✓ Business interruption insurance: Covers payment of business earnings

if the business is closed for an insurable cause, such as fire, flood or

other natural disaster.

A homeowner’s building and contents insurance policy isn’t usually enough

for a home-based business for a couple of reasons. First, your typical home-

owner’s policy provides only limited coverage for business equipment and

doesn’t insure you against risks of liability or lost income. Second, your home-

owner’s policy may not cover your business activities at all. If you’re going

to be working from home, talk to your current home and contents insurance

provider to ensure you’re adequately covered.

Insurance is the kind of thing you don’t think about until you need it. And in

the case of insurance, when you need it, chances are you really need it! Take

time to set up proper coverage now.

Decide on an accounting systemAccounting is one of those topics that makes people nervous (with visions

of HMRC tax investigations dancing in their heads), but keeping the books

doesn’t have to be complicated. In fact, simplicity is the key to a good system

for home-based businesses. Keep in mind that your records need to be com-

plete and up to date so that you have the information you need for business

decisions and taxes.

When you establish an accounting system, we recommend you use one of the

excellent computer software programs dedicated to this purpose. You can

choose to buy a software program for a one-off fee to install or download on to

your computer, or you can choose to access an accounting system via a web-

site on the Internet for which you pay an ongoing monthly fee. Increasingly,

big accounting software suppliers such as QuickBooks and Sage offer both

options. The benefit of an Internet-based option is that it automatically

updates to reflect changes in VAT, for example, but ultimately the best option

is the one you instinctively feel most comfortable using.

The two basic bookkeeping methods are single entry and double entry. Single

entry is simpler, with only one entry required per transaction. We prefer this

method for most home-based businesses as the vast majority can operate

very well with the single-entry system. Double entry requires two entries

per transaction, and provides cross-checks and decreases errors. Consider

going with a double-entry system if someone else manages your books, if you

use your accounting system for inventory management or if you want more


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sophisticated reporting for analysing your business. The accounting methods

you use depend on your business. You may want to talk to an accountant for

help in setting up your system. Even with the support of a professional, how-

ever, you need to understand your own system thoroughly.

Many home-based businesses can get by without detailed financial reporting

or analysis – after all, if you can keep up with your bills and perhaps have a

little bit of money to put away in your savings account, you must be making

money, right? If you really want to understand your business’s financial situa-

tion, however, you need some basic financial reports.

The following financial statements are the minimum necessary to understand

where your business stands financially. With them in hand, you can review

your business’s financial strengths and weaknesses and make accurate plans

for the future.

✓ Balance sheets show the worth of your business – the difference

between its assets and its liabilities. Your balance sheet can tell you

whether you’d have any cash left over if you shut down your business

today, paid off all your bills and loans and liquidated your assets.

✓ Profit-and-loss (P&L) statements show you the difference between

how much money your business is bringing in (revenue) and how much

money it’s spending (expenses). If you’re bringing in more money than

you spend, you have a profit. If you’re spending more money than you

bring in, you have a loss.

✓ Cash-flow projections tell you where your money is going and whether

you’re likely to have sufficient money each month to pay your bills and

operate the business. For many start-ups – especially those with employ-

ees, rent and other significant recurring expenses – a cash-flow projec-

tion is the most important financial statement of all.

Years after starting his home-based business, author Peter still keeps a

detailed cash-flow projection that shows expected revenues – by client – on

a monthly basis for an entire year. By doing so, Peter can see any shortfalls

that may be dangerous to his business’s financial health far in advance and

he can address them before they become major problems.

For many more details about these and other financial matters, including the use

of financial ratios to gauge the financial health of your business and a much more

in-depth look at accounting software packages, check out Chapter 6 and take a

look at Bookkeeping For Dummies, 3rd Edition, by Jane Kelly, Paul Barrow and

Lita Epstein, and Sage One For Dummies by Jane Kelly (both Wiley).

Develop a marketing planIf you want to be successful, you need to let potential customers know about

your new business, get them in to have a look and encourage them to buy

your product or service. Marketing is all of this and more. Your specific


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approach to marketing depends on your business, your finances, your poten-

tial client or customer base and your goals.

Marketing sells your products and services, which brings in the cash you

need to run your business. Marketing is so important to the survival (and

success) of your business that it deserves a plan of its own. A marketing plan helps evaluate where your business currently is, where you want it to go and

how you can get there. Your marketing plan should also spell out the specific

strategies and costs involved in reaching your goals. You can integrate it into

your business plan (if you have one) as one comprehensive section, refer to

it regularly and update it as necessary.

Successful marketing for a small or home-based business is a terrific opportu-

nity to use your creativity and hone your business sense. For more informa-

tion on marketing your home-based business check out Chapter 4.

Seek assistance when you need itAn almost unlimited number of organisations and agencies – private, public

and not-for-profit – are ready, willing and able to help you work through the

process of starting up your home-based business. Check out the websites of

each of the following organisations for an incredible amount of free informa-

tion and help, and remember that this list is only the beginning:

✓ UK government advice and information: www.gov.uk

✓ British Chambers of Commerce: www.britishchambers.org.uk

✓ HM Revenue and Customs: www.hmrc.gov.uk

✓ Enterprise Nation: www.enterprisenation.com

✓ Intellectual Property Office: www.ipo.gov.uk

✓ Companies House: www.companieshouse.gov.uk

Six Ways to Get the Cash FlowingEvery new business starts at the beginning. No matter how much experience you

have in your current job or how many other businesses you may have started

in the past, when you create a new home-based business, you’re starting from

scratch. In the beginning, every sale counts, and your primary goal quickly

becomes building financial momentum. The faster you get the cash flowing

into your new business, the sooner you can leave your nine-to-five job behind

and dedicate yourself fully to your home-based business. Consider these six

approaches to getting the cash flowing as you start your business:

✓ Begin part time with your new business. When you start your own busi-

ness, you usually have a choice to make: keep your day job or quit. As

we mention earlier in this chapter, we recommend that you keep your


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regular job for as long as you can while building your own business part

time. That way you still have your regular job to fall back on if your own

business fails for whatever reason in its early stages. At some point – after

your own business has built up a sufficient clientele – you can leave your

regular job and devote yourself fully to your home-based business.

✓ Work part time at your old job. If you have enough work in your home-

based business to keep you fairly busy, but not enough to make it

your full-time vocation, consider working part time in your regular job.

Depending on your particular situation, your current employer may be

willing to be flexible with your schedule. For many employers, keeping a

good employee part time is better than losing them altogether.

✓ Turn your employer into your first client. If you’re really good at what you

do, what better way to get your business off the ground than to do work

for your current employer on a contract basis? Not only do you give your

employer the benefit of your expertise while contracting with a known

entity, but you also develop your business while working with people you

already know, using systems and procedures you’re already familiar with.

Take care, however, to clearly separate yourself from your former employer

as an independent contractor rather than continuing to work in the role of

an employee. If you don’t make this distinction clear, HMRC may decide

that you’re effectively still an employee and that income tax must be

deducted at source by the employer under the PAYE scheme. See Chapter 9

for a discussion on how to ensure you’re on the right side of this fine line.

✓ Take business with you (ethically, of course!). Although stealing clients

away from a previous employer is unethical (and may very well land you

in court), you may be able to get your employer’s blessing if you let them

know exactly what you want to do. When a company restructures they

may need to divest themselves of customers or product ranges that don’t

fit with their new business methods, which is where you can take over.

The advantage of taking clients with you to your new business is that

you maintain the strong working relationship you already have in place –

which greatly benefits both your new business and your new clients.

✓ Finance your business with start-up funds. You need money to start a

business – any business. By lining up sources of start-up funds, you can

ease the financial entry into owning your own home-based business.

Although the list of potential sources of start-up funds is practically end-

less, we let you in on the best ones in the ‘Working Out Where to Get

Your Start-up Funds’ section later in this chapter.

✓ Look to your spouse or significant other for support. If you have a sig-

nificant other, he or she may be able to support you financially while

you start your own home-based business. Although your overall income

will be reduced until you’re able to crank up your sales, you have the

shelter of one secure job and benefits. Such a shelter can save you a lot

of sleepless nights, allowing you to focus your attention where it’s most

needed – on building your business.


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Bringing a partner into your businessQ: I’m looking for a business partner for my com-pany. Do you have any suggestions on how to find one?

A: The best business partner is someone with whom you have a long track record of work-ing well – someone with whom you share common goals and compatible work styles. The more experience you’ve had working together, the better. But don’t despair if you can’t find anyone from your existing pool of contacts to team up with. You can find part-ners by networking through professional and trade organisations, or by getting referrals from others whose judgement you value and respect. Here’s what we suggest:

✓ Don’t go directly from stranger to business partner. That’s like getting married on the first date. Instead of telling people you’re looking for a business partner, put the word out that you’re looking for an associate to run a joint venture with. This initial joint ven-ture should be a short-term or separate proj-ect that gives you a chance to get to know a prospective partner and see whether you have the chemistry to work well together.

✓ Ask for referrals from those in a position to know people who will meet your criteria: the officers of a trade association, the president of the chamber of commerce, the editor of the trade journal, or a valued supplier or client. You can network with such indi-viduals online as well as in person. These days, you need not limit yourself to teaming up only with colleagues in your local area. Many people successfully use email, col-laboration software, landlines and Skype to team up with associates anywhere in the country or even internationally.

As you talk with people about the possibility of collaborating on an initial venture, look for com-patibility in the following areas:

✓ Strengths that complement yours

✓ Honesty

✓ Fairness

✓ Professional attitude and etiquette

✓ Personal integrity

✓ Positive attitudes about family/work priorities

✓ Good understanding of money and financial issues

✓ Timeliness and punctuality

✓ Strong work ethic

✓ Good manners and treatment of others

✓ Positive attitudes about your profession or business

Take note of any red flags. If anything like the following comes up in initial conversations, watch out!

✓ A history of financial problems

✓ A history of combative relationships or lawsuits

✓ Soap opera tales of woe about previous partners or joint ventures

✓ Unprofessional behaviour, such as being late to meetings or frequently putting down others

✓ Unwillingness to put plans and agreements in writing

When you find someone you click with, do several short-term projects or joint ventures together before committing to a formal, legal partnership. Make sure that your initial assess-ment is accurate and that you can, in fact, trust your partner and work well together.

Head to Chapter 13 for more about finding a business partner.


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Working Out Where to Get Your Start-up Funds

The number-one concern for most people who plan to start their own home-

based businesses isn’t what kind of business to start, where to start it or

how to market their products and services. It’s not who their customers will

be, who their competition is or whether they should involve a partner in the

business. Their number-one concern is money. More specifically, it’s where

to get the money they need to start up their home-based businesses.

Although many home-based businesses don’t need much money to get started,

with cash, you can buy the things your business needs to operate, and stock

up on the inventory of products you plan to sell to your customers and clients.

But where does this initial money come from, and what are the best ways to

pull together the cash you need to start up your home-based business? Here

are 18 of our best suggestions:

✓ Bartering. Although not strictly a source of cash, bartering with others –

trading your products or services for theirs – can be a great way of getting

the things you need to get your business off the ground. Need a com-

puter? Well, if you’re starting a massage business in your home, you

may be able to find someone who’d love to trade some massages for a

second-hand computer. Craigslist (craigslist.co.uk) or Gumtree

(gumtree.com) are good places to give bartering a try.

✓ Business idea competitions. Some organisations run business idea

competitions, with the prize for the winner being start-up funding to get

their business off the ground. Shell Livewire (shell-livewire.org),

for example, offers start-up awards of £1,000 in cash each month and

£10,000 annually to young entrepreneurs aged 16–30 in the UK.

✓ Charitable organisations. The Prince’s Trust (www.princes-trust.org.uk) offers small start-up grants and loans to unemployed young

people between the ages of 18–30 as part of its Enterprise Programme.

✓ Credit cards. Home-based business owners often turn to credit cards

as a source of cash for business start-ups. A word of caution: beware of

high interest rates and extra fees for cash advances. If you do decide to

use a credit card for your business, try to dedicate one solely to your

business expenses. Doing so makes working out your taxes for the year

a much easier task.

✓ Credit union loan. Because credit unions are owned by their mem-

bers, they often offer better interest rates than regular banks or other

financial institutions. If you belong to a credit union, try there for a loan

first. Keep in mind, however, that credit unions are generally even more


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averse to risk than regular banks, so your credit has to be very strong

for you to have a chance of getting the money you need.

✓ Crowdfunding. The Internet has made it possible to raise start-up funds

by equity crowdfunding: asking lots of individuals to each invest a small

amount of cash – as little as £10 – in return for an equity share in your

fledgling business. They (hopefully) reap the rewards when you eventu-

ally sell your business for many millions. Social media such as Facebook

and Twitter has made it easy to let people know what you’re up to and

how they can get involved.

Alex Kammerling managed to raise £180,000 from 85 investors, in return

for a combined 23 per cent equity stake, to fund his start-up spirits busi-

ness Kamm & Sons via Crowdcube (www.crowdcube.com).

Other popular crowdfunding options include Seedrs (www.seedrs.com)

and Kickstarter (www.kickerstarter.com).

Individuals who own a tiny slice of equity may feel a sense of ownership

towards the business and the entitlement to ask you questions about

the way it is run.

See Crowdsourcing For Dummies by David Alan Grier (Wiley) for heaps

more on crowdfunding.

✓ Disability payment. If you’ve been granted a disability payment or insur-

ance payout because of an on-the-job injury that prevents you from pur-

suing your former vocation, the cash you receive may be useful as you

begin a new career – running a business from home.

✓ Funds from investors. Many new companies rely on cash from investors

to fund their start-up and initial operations. Be aware, however, that when

you accept money from investors, you probably have to give them some-

thing in exchange. That something is usually equity in the company. And

with equity comes the power to have a say in how the business is run. If

you don’t want anyone telling you how to run your business, you may not

want to use investor funds to help you start your business.

✓ Grants. The days of government grants for start-ups are sadly long gone,

but you may still find the occasional grant being offered by regional

enterprise agencies and local development organisations. Check out the

Business Finance and Support finder function on the government website

www.gov.uk for details of any available financial assistance in your area.

✓ Home equity line of credit. If you have a home and have built up equity

in it (the value of the home being over and above what you owe for

it), you may be eligible for an equity line of credit. This is similar to an

extension of your mortgage, except that you only pay interest on the

additional amount borrowed when you actually draw on it (you may

have to pay some sort of loan origination fee to set up the line of credit).

Home equity loan terms are often much longer than standard loans – up

to 15 years or more.


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On the downside, you have to put your home up as security – which

means that if you default on your loan, you may lose your house. You

also need to secure the funding before you quit your job because the

amount you can borrow is determined by your salary – and of course

the assumption that you’ll be using that salary to repay the loan, so you

need to be absolutely confident that you can make the monthly repay-

ment from your home-based business after you quit your job.

✓ Inheritance. Although an inheritance may be subject to taxation,

depending on exactly how much you inherit and in what way (check

with a tax adviser for all the details, and see www.hmrc.gov.uk/rates/iht-thresholds.htm), you may still be left with a substantial

amount of funds that you can use to start your new business.

✓ Incubator programmes. Some businesses and organisations encourage

start-ups within their industry by providing office space and funding for

a limited period of time – typically six months to a year – in return for

a stake in the fledgling business. This model is particularly likely in the

new technology or bioscience sectors where the business sponsoring

the entrepreneur might benefit from the innovations being developed.

Telecoms firm O2 Telefonica, for example, runs the Wayra programme,

in which tech start-ups are provided with free workspace, training and

support at Wayra’s headquarters in London for six months in return for

O2 Telefonica taking a small stake in the business. Head to www.wayra.org/en for more details.

✓ Life insurance policies. No, we’re not suggesting bumping off your

spouse! Depending on the kind of life insurance policy you have (term,

cash value and so on), you may be able to cash it in or take out a loan

against it. Read the fine print of your policy or consult your insurance

provider to see whether you have this option.

✓ Loans from friends and family. When aspiring home-based entrepre-

neurs don’t personally have the resources to finance their new business,

friends and family are often the first potential sources of funding they

turn to. As long as your request for a loan doesn’t cause your relation-

ships to sour, loans from friends and family can be a great way to put

together the financing you need. Be sure to treat relatives and friends as

professionally as you would any business partner, using signed, written

loan documents with clear terms and conditions.

✓ Local seed-money funds. Some regional enterprise agencies offer a small

amount of initial funding (seed money) to help finance new businesses

in their communities. Contact your local enterprise agency – details on

the National Enterprise Network website www.nationalenterprisenetwork.org – to find out what’s available in your area.


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✓ Microloan programmes. The government provides loans to start-up busi-

nesses through its Start Up Loans programme (www.startuploans.co.uk). You must be between 18 and 30 and living in England or Northern

Ireland to be eligible for a loan, which will typically be for around £2,500

depending on your business plan. The unsecured loan must be repaid

within a five-year period at a fixed rate of interest, currently 6 per cent.

✓ Personal assets. You may be able to find some of the start-up funds

you need by selling some of your superfluous personal assets such as

furniture, games consoles, unwanted gifts, household items and so on.

Think car-boot sales, eBay, Gumtree, or the classified ads in your local

paper.

✓ Personal savings. Savings accounts are probably the first place most

soon-to-be home-based business owners turn to when looking for cash

to start up their new businesses. And why not? You get instant loan

approval – no matter how good or bad your credit report may be – and

you can’t beat the interest rate of zero per cent!

How to patent your ideasQ: I’ve invented a product and I want to take out a patent to protect it before I show it to anyone. How do I go about doing this?

A: A patent provides protection for a new inven-tion or process for up to 20 years by giving the owner the right to take legal action to stop anyone else from making or selling it without their permission. Having a patent also enables an inventor to sell or license their invention to someone else.

Patents are awarded by the Intellectual Property Office (www.ipo.gov.uk). Your first step should be to check that nobody has thought of your idea already, by checking their database of awarded patents. If you still think your idea is unique you can apply to the IPO for a patent by submitting a full description of your invention, including any drawings. You can do this yourself but if your idea is in any way complicated, hire

a patent attorney to do it on your behalf. Failure to use sufficiently precise wording can render a patent useless.

It can take two to three years for a patent to be granted but after your application has been filed you’re free to discuss your invention with third parties, although you must ensure you stick to only what you have filed. You’re also entitled to put the words ‘patent pending’ on your product while your application is granted, to deter would-be copycats.

The Intellectual Property Office produces two free booklets to help first timers called Patents: Basic Facts and Patents: Essential Reading, which you can download from its website. And check out Patents, Registered Designs, Trade Marks & Copyright For Dummies by John Grant, Charlie Ashworth and Henri Charmasson (Wiley).


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Putting Together a Business PlanWhether you write it on the back of a napkin or fill hundreds of pages with

full-colour charts and photos of happy customers, your business plan can

help you prioritise the actions you take to start up and run your business.

Although today’s businesses usually put together business plans for the

benefit of bank managers and potential investors, even if you’re lucky

enough not to need external capital, the process of putting together a

business plan for your home-based business is an education in itself – one

you can’t get anywhere else.

Even though you have some flexibility in determining the exact format of

your business plan (especially when it’s an informal one for your own use),

if your intent is to use the plan for securing financing from a bank or inves-

tors, they expect to see certain information presented in specific ways. These

expectations allow banks and investors to make informed judgements on the

viability of your business and its potential for growth and profitability.

A formal business plan needs to contain, at the very least, the following

elements:

✓ Mission statement. Your company’s mission statement sets the tone for

the business, relating it to its values and goals. Mission statements are

inspiring and serve to galvanise you and any employees to work hard to

attain the company’s goals. For example, authors Paul and Sarah’s mis-

sion statement is: ‘We’re authors, broadcasters and facilitators. Our mis-

sion is to explore new and better ways of living and working through the

interface of nature and technology.’

✓ Description of the company’s products and services. Here you provide

a complete description of all the products and services your company

presently offers and plans to offer in the future. If your home-based busi-

ness specialises in producing the best wedding cakes in the UK, using

the latest in confectionery technology, you’d explain that here. Be com-

plete – leave nothing to the imagination.

✓ Market analysis. If you’ve already put together a marketing plan for your

business (see the ‘Develop a marketing plan’ section earlier in this chap-

ter for a description of a marketing plan), you already have the material

you need to fill out this part of your business plan. The market analysis

takes a close look at the markets in which you intend to sell your prod-

ucts and services, and details the number of potential customers, the

potential growth rate of the market, information about your competition

and the particulars of your marketing strategies.


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✓ Financial projections. Do you plan to go from £100 a month in revenues

to £100,000 a month? This part is where you present your financial

projections, including revenues, expenses and profit or loss. Include

the three basic financial statements – a balance sheet, a profit-and-loss

(P&L) statement and a cash-flow projection – and be ready to back

up your guesses and forecasts with hard data. (See the ‘Decide on an

accounting system’ section earlier for more details about these financial

statements.)

✓ Management strategies for achieving company goals. You have your

products and services, your marketing strategies and your financial

projections. Now, exactly how do you intend to achieve your goals? This

section presents the details of the strategies for accomplishing your

company’s goals and lays out when and how you plan to achieve them.

For example, what directors you plan to hire to help you grow the busi-

ness and what their specific roles and responsibilities will be.

Check out Business Plans For Dummies, 2nd Edition, by Paul Tiffany, Steven

Peterson and Colin Barrow (Wiley), for details on writing a successful busi-

ness plan.

Outsourcing your business planQ: I want to start a business, but the bank needs a business plan before I can get a loan. I don’t know how to write a business plan and am not good at writing. Can I hire someone to write a business plan for me?

A: You can certainly employ a professional busi-ness plan writer and you can find many adver-tising their services online. If you decide to go down this route, look for someone who has a general business background in the areas of accounting, bookkeeping and marketing, and familiarity with financial statements, business jargon and your local business community.

However, a business plan isn’t just to impress a bank manager; it should also reflect you and your passion for what you do. Most importantly, you need to be able to explain and discuss your business plan in detail and bring it to life. This is far harder to do if you’re reciting someone else’s words and perceptions. Also, an overly polished glossy document can give the impression that your business is all style and no substance.

Our advice is to use a business plan template, perhaps provided by the bank itself, and ask a friend to help you get the wording and spelling right.


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Paul Lancaster

Develop the right marketing strategy for your business

Attract new customers and keep them coming back

Harness social media as a marketing tool

Make use of a wide range of simple, e�ective marketing tools that suit your budget

™ FreeSampleChapter

Chapter 11

Getting Interactive with Social Media

In This Chapter▶ Starting up your social media efforts

▶ Looking at the biggest social media sites

▶ Becoming an active participant on social media

▶ Monitoring your social media program

By the end of 2012, Facebook had more than 1 billion active users.

People on Twitter posted over half a billion tweets daily. Meanwhile

YouTube reported that 72 hours of video were uploaded every minute.

Wowza!

Social media is where the action is. By December 2012, the Pew Internet

Project (www.pewinternet.org) reported that 67 per cent of online

adults use social networking sites, yet marketers – especially small business

marketers – still question whether social media is the right place for their

messages. The answer is a resounding ‘Yes, but’.

✓ Yes: Social media networks are where marketers need to be, because

these networks are where the majority of all consumers are. Social

medis is where your customers are – or, on the slim chance your cus-

tomers aren’t there, you can bet those who influence their decisions are.

✓ But: Social media can consume hours without a return on the invest-

ment if you don’t have a good marketing objective and plan. And even

then, marketing participation can backfire. You absolutely have to enter

social media networks with an intent to build relationships and interact

with consumers, not to hawk yourself or your wares through promo-

tional messages that intrude, annoy and harm more than they help your

business and brand.

This chapter helps you manage the balancing act.


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160 Part III: Marketing in a Screen-Connected World

Benefiting from Social Media ActivityMarketers used to have debates about whether to get involved with social

media. Those days are gone.

Research by Social Media Examiner (www.socialmediaexaminer.com),

the world’s largest social media online magazine, shows that nine out of ten

marketers now consider social media important for generating business

exposure, and that more than two out of three marketers want to know

more – particularly about Facebook and blogging. Here are a few other facts

about social media to get you going:

✓ It doesn’t cost much. Doing it well takes an effort, but most small busi-

nesses invest next to no money and handle social media interactions

without additional staff or services.

✓ It’s not an all-or-nothing proposition. You don’t have to start every-

where. Figure out which networks the people you want to build relation-

ships with use and start there. You can always expand to other networks

down the road.

✓ It addresses a longstanding marketing need. For as long as people have

sold goods and built reputations, they’ve sought ways to talk with those

who can affect their success. This communication is what made rotary

clubs, chambers of commerce, business lunch places and industry gath-

erings so popular. Those same motivations drive escalating interest in

social media networks, which let you reach your customers where they

are and when they want to receive messages.

Getting Started in Four Necessary StepsTo engage your business in social media, take the following four steps – if you

haven’t already done so – and then dive in. After that you need to commit

to a managable set of ongoing activities. The result: Greater business expo-

sure that leads to more website traffic, more qualified leads, and improved

search engine rankings. Did you just hear the door slamming on your lingering

doubts?

1. Define your objectivesIn descending order, most small businesses say that their social media objec-

tives are to connect with customers, enhance visibility and awareness, pro-

mote business offerings, share news quickly and stay on top of market and

industry news and trends. What are your aims?


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161 Chapter 11: Getting Interactive with Social Media

✓ Do you want your business to become known as a trusted thought

leader in your field?

✓ Do you want to attract the attention of new customers or influencers by

getting useful information in front of them?

✓ Do you want to broaden your network of contacts with others in

your field?

✓ Do you want to spark more conversation with and receive more input

from customers and prospective customers?

✓ Do you want to tap into consumer conversations to find out what people

are saying about your business or business sector?

✓ Do you want to build relationships that lead to sales?

Out-and-out selling is repellent in almost any social situation, and doubly

repellent on social media. No matter how you define a successful sale –

whether you’re aiming for cash register transactions, speaking engagements,

press coverage, mailing list opt-ins or simply favorable impressions – don’t

push. Instead, take a social and roundabout route by delivering entertaining

or educational messages of value with links that people want to follow to your

website and point of purchase. Inspire their interest; don’t require it. In social

media, sales come as a result of achieving all your other objectives.

2. Choose the name that you want to use across all social media networksIf you’ve already reserved your business name as your website domain name,

the logical next step is to simply use your domain name as your social media

user name.

For example, For Dummies has the domain name fordummies.com, which

it presents as @fordummies on Twitter and For Dummies on Facebook and

LinkedIn.

Sometimes, though, using your domain name as your social media user name

isn’t possible because the name is too long (Twitter restricts names to 15

characters max) or because the name is already reserved by someone else

on major social media networks. If that’s the case, turn to Chapter 10 for

advice on coming up with an alternate name for use on social media.

Sites such as http://checkusernames.com, http://knowem.com and

http://namechk.com provide free, almost instantaneous services for check-

ing to see whether user names are available across social media networks.


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3. Develop your social media BioEverything you’ve heard about ‘social media noise’ is true. A whole lot of

posting never gets through the online static. People tune out all messages

except those that seem relevant to their wants and needs and those that

come from sources they know and trust.

To work your way into your users’ inner circle, introduce yourself in a way

that causes people to take note and think, ‘This sounds interesting’ or, ‘This is

what I’m looking for’. Follow these tips:

✓ Create a Twitter Bio that conveys at a glance what your business does

and for whom, along with what makes it trustworthy, distinct and likable

(this is, after all, social media).

✓ Twitter limits Bios to 160 characters, and that’s a good limit for descrip-

tions on other networks as well.

✓ Include keywords – the words or terms that people use when searching

for businesses like yours – so you show up in search results.

✓ With your Bio, deliver a sense of the kind of information people can

count on you to deliver, as well as the tone – whether humorous, seri-

ous, controversial, authoritative, whatever – your messages will convey.

Steer clear of self-aggrandising terms like expert. Convey why you’re an

expert instead, preferably in a way that makes people smile and want to

find out more.

✓ If you’re the primary player in your business, help people locate you by

your personal or business name by incorporating both into your Bio. As

proof it can be done, here are Twitter Bios for a couple of the marketing

experts featured in sidebars throughout this book:

@ronjdub: I do things like Knodes & Snapgoods.

Doer|Thinker|Speaker. I use technology to create new possibilities

and I’m a funraiser. Yes, fun.

@JeanneBliss: Customer Crusader. President, CustomerBliss.

Author, Chief Customer Officer and I Love You More Than My Dog.

Be sure that your social media Bio is an exact reflection of how you introduce

your business and what customers encounter off-line as well. Consistency

builds brands, and brands power success, whether with people entering your

business through your front door or via your online pages. (If the term brand

raises a question mark in your mind, Chapter 7 is for you.)


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4. Set up an online home base Social media isn’t an end unto itself. Before getting involved in social media,

establish the online home base to which you’ll direct the interest your social

media activity generates.

✓ If your business doesn’t already have a website, flip to Chapter 10 for

advice on building one.

✓ Turn to Chapter 17 for information about the online media centre your

site should include, especially if your objective is to enhance credibility

by becoming recognised as an authority in your arena.

✓ See Chapter 12 for information on creating a blog, which most social

media powerhouses consider essential to social media success. A blog

can double as your website or be a page of your website. Whichever you

choose, it offers a source of continuously updated content and a place

for all-important customer interaction.

Include the address for your website or blog in your social media descrip-

tions and in content that you develop and offer through social media posts.

By sharing your address, you help people reach your business online while

also building relevant inbound links to your website, which help improve

search engine results for your business name.

Diving into Social MediaIf you’ve already taken the important step of reserving your user name

across social media networks, then you know from looking at the hundreds of

opportunities that being everywhere is impossible. (If you haven’t reserved

your user name, look back at Step 2 in the preceding section for tips.)

Narrow your options by taking one easy step: Talk with your customers and

ask which networks they use. Where they are is where you need to be.

Beyond talking with customers, go to your competitors’ websites and see

which social media networks they use. Then visit their social media pages.

See what kind of followings they’ve acquired and the nature of the informa-

tion they share.

Then consider your own target audience and marketing objectives. If you’re

working to reach consumers, Facebook and Pinterest are strong choices.

For business-to-business marketers, LinkedIn reigns. For general awareness

development, Twitter and Pinterest are top contenders, while Facebook is

great for building loyalty and customer service, and LinkedIn and Twitter

help generate leads.


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The most prominent social media networks fall into these categories:

✓ The big dominant social media networks: For networking, target audi-

ence interaction and Search Engine Optimisation (SEO), the three big

players are Facebook, LinkedIn and Twitter. Google+ currently gets less

user time and attention, but because it’s indexed by Google and inter-

woven into other Google products like Gmail and YouTube, it should

be included in your social media activities. For retailers and restau-

rants, Pinterest became a mega-player in 2012, and no doubt others will

emerge as well, which is why following news from sites such as www.socialmediaexaminer.com is so important. It keeps you up to date in

a constantly changing online world.

✓ Location-based check-in sites: If you find that your customers use

mobile phone apps to check in and redeem purchase incentives at par-

ticipating businesses, don’t miss the chance to get in on the action. Use

sites like foursquare to create valuable – and free – social media visibil-

ity for your business, prompting customer visits with your own check-in

incentives and reward.

✓ Review and rating sites: TripAdvisor and industry-specific sites affect

all businesses.

The following sections describe the lay of the social media land by sum-

marising the major categories and sites. But what you see on these pages is

just the tip of the social media iceberg. For video, you have YouTube. For

photography, you have Flickr and Instagram. For books, you have Goodreads.

For an updated list of social media networks, go to http://traffikd.com/social-media-websites.

FacebookFirst a distinction: A Facebook page is different from a Facebook profile. Profiles are for people and pages are for businesses. A page gives your busi-

ness presence on Facebook. It provides a place Facebook users can go to

access information, news and offers from your business. Plus, when users

‘like’ your page, your updates appear in their Facebook news feeds, where

they can click to interact with your business.

Seeing why businesses use FacebookSummarising from Facebook’s own site, here are seven reasons ‘why your

small business needs a Facebook page’.

✓ More than half of users log in at least once a day, allowing you to main-

tain an interactive presence with them.

✓ By clicking ‘like’, customers can connect with your business and share

their association with their Facebook friends.


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✓ Facebook pages are public (unlike personal profiles). Businesses that

update their pages with new content and posts are ranked highly by

search engines and enjoy improved search results.

✓ When you post news, events, photos, or other content, your update

shows in your fans’ news feeds. If they comment or click to ‘like’ your

post, their update shows in their friends’ feeds. Then, if their friends

also comment or click ‘like’, that’s how viral sharing gets started.

✓ You can survey your page followers for free by using the easy Question

or Poll tab.

✓ You can promote events for free. Click the Events tab on your page to

announce events, invite customers, receive RSVPs and monitor antici-

pated attendance.

Creating and using a Facebook pageTo create a Facebook page, log into your personal Facebook account or the

Facebook account of the person who will serve as your Facebook-required

‘page administrator’. At the bottom of the home screen, click Create a Page to

get started, taking two precautions:

✓ Take care with the first page-creation step, which is to choose the classi-

fication and category for your business. This step is the one part of your

page that you can’t change later.

✓ When Facebook prompts you to share the fact that you’ve created a

page, hold off. Wait until your page is complete before you announce it.

After your page has been created, you need to choose a Vanity URL. By

default, your page address is a long string of impossible-to-remember charac-

ters. Go to www.facebook.com/username to register a name that features

your company’s social media user name. For example, the For Dummies page

is www.facebook.com/ForDummies, as you can see in Figure 11-1.

After you’re all set up, start using your page. If you don’t do it yourself, assign

someone to keep your page updated with interesting, relevant information that

can engage your audience and prompt participation. And above all else, use

Facebook to interact with your following. Send thank you messages to those

who like your page, respond to messages and posts, survey followers and

share the results and always follow up – promptly – on customer suggestions.

TwitterTwitter is a messaging tool. In short posts of 140 characters or fewer, people

tell what they’re doing, what they’re reading, who they’re listening to and

what they find interesting and important enough to share with others.


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Figure 11-1: Features of a Facebook

business page.

Weighing the pros and cons of TwitterThe biggest criticism of Twitter is that ‘no one cares what you had for lunch’,

but Twitter posts feature a whole lot more than trivial updates. Businesses

use Twitter to share news, tips and useful information. They also use it to

stay on top of news and opinions in their market areas. In the process, they

acquire connections and stay in touch with local or far-flung audiences.

Just don’t try to get opportunistic on Twitter (or any other social media net-

work, for that matter). Start spewing sales pitches and people drop your feed

faster than they can finish the cup of coffee you didn’t want to read about.

Instead, use your tweets to draw attention by sharing information and links to

content that your followers will want to share and that – and this objective is

your ultimate one – makes them think more highly of you as a valuable busi-

ness resource.

For everything you could possibly want to know about why and how to use

Twitter, read the Twitter Guide Book by Mashable.com, available at http://mashable.com/guidebook/twitter/. Mashable is the largest indepen-

dent news source dedicated to covering digital culture, social media and tech-

nology. After your Twitter account is live, consider following @Mashable to

stay on top of the latest news.


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Creating and using a Twitter accountJust go to http://twitter.com/signup, register your user name, fill

in the required information and you’re ready to start posting messages, or

tweeting. That’s it. Then, anyone who wants to can follow and read your

tweets – with no requests or acceptances required – and you can follow

others just as easily.

To find Twitter users to follow, use the search function on your Twitter home

page to locate friends, business associates, local and industry media outlets,

customers, suppliers, businesses you use or admire, people of influence in

your world and anyone who sounds interesting. When you find accounts full

of interesting tweets, click Follow to add their posts to your Twitter feed.

Beyond following interesting people on Twitter, click on their accounts to

see which accounts they follow. When you see an interesting account, click

to follow it as well. After that, you need to get involved. Start reading what’s

called your tweets timeline, where posts from everyone you follow show up.

Pay attention to how people word their messages. Click the links in their

tweets to view the content they’re tweeting. Check on the keyword or topic

hashtags (words preceded by a #) they use to see conversations in areas that

interest you.

As you start posting your own tweets, go to the ‘Twitter Help Center’ at

http://support.twitter.com and click Twitter Basics for all kinds of

useful information. Among the tips:

✓ Make sure that you appear in Twitter Search by completing your description, including your user name, full name and bio, using key-words that you want associated with your account.

✓ Tweet, retweet, reply and mention others to keep active in search results.

• To tweet, just type a message into the ‘Compose new Tweet’ box

and hit return.

• To retweet, hover your mouse beneath a message and click

Retweet. The post appears with the author’s name and user name

and is followed by a retweet icon alongside your user name. As an

alternative, you can hover over the message, click Reply and then

paste in the message you’re retweeting. Consider adding RT at the

beginning of the tweet to indicate a retweet. Also consider adding

a few words of comment to add value to the message.

• To mention others, use their user names preceded by the @ sign.

Mentions of others can help your message gain visibility, prompt

conversations, get shared and gain replies – sometimes even from

celebrities.


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✓ Keep tweets under the 140-character limit. When you’re composing

a message, Twitter shows the character count, but don’t take it to the

limit. Keep posts under 120 characters because when people retweet,

‘RT @yourusername’ gets added to the tweet, eating up the characters

you left unused.

✓ Include links to useful content. To shorten long links so they don’t

consume tweet characters, use an URL shortener such as bit.ly or let

Twitter shorten the link for you. Just paste the link into your tweet and

a message box pops up that reads, ‘Link will appear shortened’. Then,

in your message, give a good reason to click on the link; for instance, ‘3

great Twitter tips’, or, ‘Our newest customer survey results’.

✓ Get familiar with Twitter third-party apps like HootSuite. You can

organise followers into groups, schedule messages and manage multiple

Twitter profiles on the go from your mobile device without using a web

interface.

✓ Explore Twitter’s advanced features. After you’re familiar with the

basics, use the Twitter help area to explore how and why to tweet

images and videos; connect Twitter to your blog, website or Facebook

page; and develop your Twitter following and community.

LinkedInLinkedIn (www.linkedin.com) is the world’s largest professional network

with over 200 million users. If you use business cards, Rolodex files and net-

working opportunities, you’vea basic understanding of how LinkedIn works.

It helps you exchange knowledge, ideas and opportunities with your contacts

and those they’re connected to.

You can set up a LinkedIn profile for free. What’s more, LinkedIn profiles

rise to the top of search results for your name, allowing you to control the

information others see about you. To get started, go to http://learn.linkedin.com.

Viveka von Rosen knows how to use LinkedIn. Named one of Forbes’s Top Ten

Women in Social Media, she’s not associated with LinkedIn but is a top trainer

and consultant to those who leverage LinkedIn for personal and business suc-

cess. You can benefit from her expertise by following the advice and using the

checklist that appears in Tips for Becoming Successful on LinkedIn, which you

can find at www.dummies.com/extras/smallbusinessmarketing.


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Google+Probably the most compelling benefit of a Google+ business account stems

from its Google heritage. If your business is on Google+ and you develop an

active Google+ community, your business is more likely to appear high in

Google search results, and we all know what that means: website traffic.

Google makes joining Google+ super easy. Here’s what to know:

✓ Connections: After you open a Google+ business page, you can put a

+1 button anywhere you’d like, allowing your business to easily invite

people to simply click to follow and recommend your business and

products or services to friends and contacts across the web.

✓ Target sharing: As people follow your business, you can choose which

Google+ circles to add them to based on their interests and their rela-

tionship with your business. Then, when you post content, you can

make your posts public for all to see or you can make them visible only

to followers in one or several circles.

✓ Collaboration: Through Google Hangouts, up to 10 people at a time can

take part in a live video conference, which can be broadcast ‘On Air’ to

anyone watching via your Google+ page or YouTube Channel.. On Air

Hangouts are automatically posted onto your YouTube Channel where

even more people can watch them and you can embed them in your

website or blog or share on Facebook or Twitter.

✓ Measurement: Google’s measurement tools show you what people are

saying about your business, how many +1’s your business receives and

how your online activity affects your site traffic.

To create a page, go to http://google.com/+/business, follow the

prompts and then customise your page with your logo, photos and other

information that presents your image and offerings.

You have to tie your Google+ page to a specific Gmail account, which is dif-

ficult to change later. Consider setting up a specific account that you use only

for your business activity on Google.

PinterestThink of a corkboard where you pin pictures of your wish list and favourite

memories and you’vea good idea of what Pinterest is about. Except Pinterest

goes further, letting you browse and re-pin images and videos from others

as part of a global share-fest that, as of early 2012, was driving more online

referral traffic than YouTube, Google+ and LinkedIn combined.


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Businesses use Pinterest just like individuals do, creating boards on a range

of topics that reflect the character of the brand and interests of customers,

and then pinning business-generated content, re-pinning images from others

and calling for and pinning content from followers. (For complete informa-

tion, go to http://pinterest.com/about/help.)

To get your business started on Pinterest, follow these steps:

1. Request an invitation from a Pinterest user or from http://pinterest.com.

2. Register, authenticating your business account using a Twitter account rather than a personal Facebook profile.

3. Go into Settings to complete a keyword-rich profile, designate your email settings and determine how you want Pinterest to interact with your other social media pages.

4. Start making boards – and here’s where you have to get inventive.

Pinterest isn’t your business photo album. Pinterest is about portray-

ing the culture of your business and the interests of your customers. If

you’re a local retailer, what inspires your store offerings? Where do your

customers dine, gather, exercise, holiday or otherwise spend their days

and enjoy their interests? Feature those interests as you pin captivating

photos, infographics, videos or other attention-stopping images on your

boards.

Create boards that cover a range of topic areas and use keywords as you

give each a name. Use them to share bold graphics, videos and photos

that people will want to re-pin. Post your content on your own website

or blog first and then pin it on Pinterest. That way, the pinned image

includes a link back to your site, driving traffic and search rankings.

Location-based and check-in sitesOver half of all mobile phone users carry smartphones in the UK, and more

than half of those smartphones access location-based services such as maps,

directions and location-based social networks like foursquare.

If you’vea walk-in location that serves customers, people may well be check-

ing in as they enter your front door, whether you know it or not. The follow-

ing services and networks are worth your consideration.


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Google+ LocalThe easiest way to lead people to your business is with a free Google+

Local page and Google map. To get going, all you need is a physical mailing

address, a free Google account and a location in a country where Google

Places is available. Go to www.google.com/places, click Get Started,

follow the prompts and take these steps:

✓ If your business already appears on Google Maps but you didn’t submit

it, take advantage of the offer to claim your business with a Place page.

✓ Verify your listing and then enhance your Place listing by adding photos,

videos, coupons and updates such as weekly specials. For help, see

Chapter 7.

After you set up and manage your listing through Google Places, your cus-

tomers can find your business through your Google+ Local page, where they

also find information from other Google properties, including Search, Maps,

Zagat scores and customer reviews and recommendations (see Chapter 6

for more).

foursquarePeople using foursquare arrive at a business, check in and compete against

others to become the ‘Mayor’ by racking up the most check-ins. What’s in

it for the business? Every check-in is free advertising within the customer’s

social media network. To get involved, take these steps:

✓ Go to http://foursquare.com/business to see whether your

business is already listed as a venue. If so, click where it asks, ‘Do you

manage this venue?’ If not, click, ‘Add new venue to foursquare.’

✓ Provide the requested information, including the address of your busi-

ness website’s contact page or Google page.

✓ Wait 7 to 10 days for foursquare verification.

After that, start offering visitors rewards and incentives for foursquare check-

ins, at no cost beyond whatever promotional offer you’re extending.

New location-based and check-in networksSocial media is rapidly evolving, and probably no area of the field is undergo-

ing more change than location-based networks.

To stay on top of the news and opportunities, read the world’s largest

online social media magazine, Social Media Examiner (www.socialmediaexaminer.com). From the magazine’s home page you can click to follow on

Facebook, sign up for free email updates, add the site to your Google+ circles

or follow @smexaminer on Twitter.


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Rating and review sitesProbably the quickest way to grab the attention of small business owners is

to mention the topic of bad online reviews. By taking some upfront and ongo-

ing steps, you can improve the odds that good reviews outweigh and over-

shadow the occasional, usually inevitable one-star rating. Here’s what you

need to know and do.

Claiming your presence on review sitesIf you aren’t sure which rating and review sites are important, just ask your

customers which sites they check out.

✓ Almost any business-to-consumer company can benefit by claiming its

presence on Google Places (www.google.com/places).

✓ If you’re in the travel business, your customers likely use TripAdvisor

(www.tripadvisor.com).

✓ Restaurants get active on sites like TopTable (www.toptable.co.uk)

and all kinds of local sites.

✓ Each business sector – legal, medical, consumer electronics and so

on – has a set of review sites where customers weigh in and where smart

businesses participate.

Encouraging reviewsThe best way to get good reviews (and drown out the noise of bad reviews)

is to offer amazing products and services. Around the corner from where I

live is a foot spa, and here’s how one review starts: ‘I can’t believe this salon

has any reviews less than five stars. I wish that I could give it MORE than five

stars.’ If somewhere down the feed is a rant, the words from this totally satis-

fied customer more than silence the complaint.

To encourage reviews:

✓ Display review site logos in your business and on your website so

people know where to go to post reviews.

✓ Directly invite your best customers to share their opinions. To make it

easy, give customers cards featuring your review site URLs, possibly

including a next-visit discount or offer – valid whether or not they post

a review.

✓ Take care not to bias customer comments. Google offers the following

precaution about soliciting customer reviews, which serves as good

advice across all review sites:


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✓ ‘Reviews are only valuable when they are honest and unbiased. Even

if well-intentioned, a conflict of interest can undermine the trust in a

review. For instance, do not offer or accept money or product to write

positive reviews about a business, or to write negative reviews about a

competitor. Please also do not post reviews on behalf of others or mis-

represent your identity or affiliation with the place you are reviewing.’

✓ Don’t blitz your review pages with a deluge of reviews posted over

a short period – a signal to review sites that some incentivising may

be going on. Instead, cultivate a steady stream of reviews for the best

results.

Keeping cool when a bad review shows upSooner or later, someone is likely to post a bad review of your business.

When it happens, do the following:

✓ Look for a shred of truth in the rant. If the review points out even a tiny

deficiency, fix whatever’s wrong. Then use your blog, Facebook page,

or direct contact with the reviewer (if you can reach the person, which

isn’t always possible) to describe the changes you’ve made. Research

shows that disgruntled customers aren’t just placated by businesses

that resolve their issues – they actually become proponents, sharing the

positive outcome of their experience with others.

✓ Don’t hit back. The more attention you give a bad review, the more

people notice it and the more you inspire the rage of an already disgrun-

tled person. Instead, push the review out of sight by encouraging new,

positive reviews. Remember that those who use online review sites take

an occasional poor review with the grain of salt it deserves.

Announcing Your Social Media DebutAs soon as you create social media pages, launch your social media presence

by getting the word out:

✓ Invite employees, suppliers, clients, friends and family to join and inter-

act with your social media sites.

✓ Promote your profiles by including invitations to join you online in all

your marketing communications.

✓ Cross-promote your profiles on each of your social media pages. For

instance, add your Facebook and Twitter URLs to your LinkedIn profile,

and add your Facebook URL to your Twitter Bio.

✓ Add ‘Join us on’ icons, to your website so people can simply click to join

your social media networks. Just enter the word widget in the help

search box.


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✓ Include ‘Join us on’ signage at key points in your business.

✓ Include your Facebook and Twitter URLs in your email signature and on

your business card, but only if you’vea plan to stay active and engaged

in the networks. Nothing looks worse than a link to a page that hasn’t

been updated in months.

Keeping Your Social Media Efforts Active and Engaging

Participate with your social media networks through a combination of three

activities:

✓ Sharing useful, relevant, interesting information, called content, created

by your business.

✓ Sharing – basically re-gifting – useful, relevant, interesting content cre-

ated and shared by others.

✓ Sharing your thanks, praise, expertise and input by adding your com-

ments to others’ posts.

Sharing contentBusinesses that pull people to their pages online do so with useful, relevant,

consistently presented information that takes time and discipline to create.

If you’vea blog this part gets easier, because maintaining a blog forces you

to create useful information that you can then repurpose to feed into your

Facebook and LinkedIn pages, feature on Twitter, pin on Pinterest and compile

into newsletters and mailings. Chapter 12 is all about blogging and definitely

worth checking out.

With or without a blog, however, take these steps:

✓ Develop content that supports your social media objectives, described

earlier in this chapter.

• If you’re seeking awareness and credibility, share content that

gains attention and establishes your business as a uniquely valu-

able resource. Examples include links to publicity, favourable

reviews, research findings and white papers or blog posts with

helpful and interesting content that people will want to read

and share.


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• If you’re seeking interaction with your target audience, create

and share surveys, host forums, or announce online or off-

line events that prompt input, comments and conversations.

LinkedIn Answers is a good place for this activity, as are Facebook

Questions or Polls and Twitter Chats, which you can stay on top of

by following @ChatSchedule.

• If you’re seeking customers, create and share content that draws

people to your business, perhaps by offering free samples or

material, such as white papers, e-books or other useful, relevant

information. Just be sure that you link the offer to your website

home page or, better, to a landing page on your website that’s cus-

tomised to greet new visitors, fulfil their interest and invite them to

join your mailing list or any customer-registration database.

✓ Develop a reputation for content that supports your brand image. For

example, become known as the business that puts out a monthly list of

top five tips in your business arena or that releases a quarterly opinion

poll or annual best-practices white papers. The For Dummies brand

is known for reader-friendly reference information. Other brands are

known for their unique (and highly shareable) graphical presentations

of information, known as infographics. By deciding on a type of content

to share on an ongoing basis, you not only make content development

easier but also create higher awareness, recognition and credibility.

✓ Establish and stick to a posting schedule. You can’t achieve visibility

or credibility with once-in-awhile social media involvement. Commit to a

schedule that keeps your business visible without inundating your audi-

ence. (The consensus seems to be that eight Twitter messages and four

Facebook posts a day touches on the outer limit.)

✓ Involve your employees by sharing your social media objectives and

approaches and assigning responsibilities that allow you to share the

burden – and the enthusiasm.

✓ Automate the process of posting across multiple networks by using

free tools like HootSuite (http://hootsuite.com), or Buffer (www.bufferapp.com).

The Checklist of Content-Generating Approaches, which you can find at www.dummies.com/extras/smallbusinessmarketing, features ideas to con-

sider as you develop content for social media sharing and interaction.


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Becoming a content conduitIf you share content from others, you benefit in a number of ways:

✓ You become known as a connected person who relays valuable

information.

✓ You generate social media activity without having to generate content.

✓ You attract the attention of those whose content you share, likely lead-

ing them into your network and possibly gaining their interest in sharing

your content as well.

To find interesting and shareable content, study your own social media feeds,

read news sites that carry interesting information and scan industry blogs,

sites and pages. Identify several sources worth watching carefully and use a

RSS reader to receive alerts every time the sites are updated. When you see

something that may interest your audience, don’t just share it – let your audi-

ence know why you’re sharing it and where it came from (for example, ‘Great

industry stats: Tip of the hat to @greatcontact’).

On social media, sharing is the sincerest form of flattery.

Getting conversationalUse the social media networks that you establish to interact with customers,

associates and followers online.

✓ Watch for comments posted to your content and respond, preferably

within 24 hours. On Facebook, a simple ‘like’ may be enough. On

Twitter, a retweet with a ‘thx’ may do. Best of all, a thoughtful response

posted as a reply gives you a chance to say thanks and provide more

information.

✓ Watch for any mentions of your business, products or people. Whenever

appropriate, immediately retweet, repost, share or reply with thanks.

You amplify your own presence and deepen connections all in a few

keystrokes. The next section, on monitoring your social media mentions,

helps with this step.


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Keeping an Eye on How You’re DoingMonitor your social media programme in two ways:

✓ Watch to see who’s talking about you and what they’re saying.

✓ Observe how your comments and content are received and how your

network is expanding as a result of your efforts.

Monitoring your social media mentionsSet up alerts so that you’re notified when your personal name, business

name, product name, business category, competitors’ names and any other

terms you want to monitor are mentioned online.

✓ Set the preferences on Facebook and Twitter so you’re alerted by email

when someone interacts with your posts.

✓ Use sites like http://search.twitter.com to search for posts about

the names and terms that you’re following.

✓ If you use Constant Contact, set up NutshellMail (http://nutshellmail.com) to email a summary of activity on the schedule you request.

✓ Set up online alerts through sites like Google Alerts (www.google.com/alerts), Bing Alerts (through your Windows Live ID account) and

Social Mention (http://socialmention.com).

To make your life easy, direct all responses to a single RSS aggregator so you

can open that one resource and see alerts for all your mentions in one place.

Measuring your social media effectivenessSocial media isn’t just a popularity contest, although the number of friends,

follows and likes you accumulate matters, especially if they come from mem-

bers of your target audience or, even better, those who influence members of

your target audience.


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Most social media platforms feature areas where you can monitor your

effectiveness.

✓ From your Facebook page, click Insights to view a summary of your

activity and see which posts drew the most views and interaction.

✓ From your Twitter profile, click @Connect to monitor your interactions

with and mentions by others, including which of your tweets was most

shared.

✓ For location-based sites like foursquare, monitor redemption levels of

exclusive promotional offers.

✓ Use Google Analytics to monitor your website traffic. Go to your account

and open Traffic Sources to see which networks are driving traffic to

your site.

✓ If your content and posts aim to generate leads, monitor which offers

drive traffic and result in conversions.

The purpose of monitoring is simple: to help you do more of what works best.

Social media dos and don’ts ✓ Never ignore hard questions, whether on

review sites, social networks or your own blog.

✓ Never participate online simply to sell or to place your URL.

✓ Always be open to advice and even criti-cism, which you should never delete.

✓ Always keep your communications helpful, useful and friendly.

✓ Always sound like a person and not a face-less corporation.

✓ Always be consistent in the way you pres-ent your business – and your brand.


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Jane Kelly, ACMAChartered Management Accountant

Learn to:• Manage day-to-day records like sales

and purchases

• Produce Pro�t and Loss Statements and Balance Sheets

• Prepare year-end accounts and VAT returns

• Handle employee payroll and bene�ts

Bookkeeping3rd Edition

Making Everything Easier!™ FreeSampleChapter

Chapter 2

Getting Down to Bookkeeping Basics

In This Chapter� Keeping business records

� Getting to know the lingo

� Navigating the accounting cycle

� Understanding accrual accounting

� Making sense of double-entry bookkeeping

� Clarifying debits and credits

All businesses need to keep track of their financial transactions, which iswhy bookkeeping and bookkeepers are so important. Without accurate

records, how can you tell whether your business is making a profit or taking a loss?

In this chapter, we cover the key aspects of bookkeeping: We introduce you to the language of bookkeeping, familiarise you with how bookkeepersmanage the accounting cycle, and show you how to understand the morecomplex type of bookkeeping – double-entry bookkeeping.

Bookkeeping: The Record Keeping of the Business World

Bookkeeping, the methodical way in which businesses track their financialtransactions, is rooted in accounting. Accounting is the total structure ofrecords and procedures used to record, classify, and report informationabout a business’s financial transactions. Bookkeeping involves the recordingof that financial information into the accounting system while maintainingadherence to solid accounting principles.

06_058152 ch02.qxp 1/19/07 7:21 PM Page 21

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The bookkeeper’s job is to work day in and day out to ensure that transac-tions are accurately recorded. Bookkeepers need to be very detail-orientedand love working with numbers, because numbers and the accounts the numbers go into are what these people deal with all day long.

Bookkeepers aren’t required to belong to any recognised professional body,such as the Institute of Chartered Accountants of England and Wales. You can recognise a chartered accountant by the letters ACA after the name,which indicates that he or she is an Associate of the Institute of CharteredAccountants. If they’ve been qualified much longer, they may use the lettersFCA, which indicate that the accountant is a Fellow of the Institute ofChartered Accountants.

Of course, both Scotland and Ireland have their own chartered accountantbodies with their own designations. Other accounting qualifications exist,offered by the Institute of Chartered Management Accountants (ACMA andFCMA), the Institute of Chartered Certified Accountants (ACCA and FCMA),and the Chartered Institute of Public Finance Accountants (CIPFA).

The Association of Accounting Technicians offers a bookkeeping certificate(ABC) program, which provides a good grounding in this subject. In reality,most bookkeepers tend to be qualified by experience.

If you’re after an accountant to help your business, use the appropriate chartered accountants or a chartered certified accountant as they have the most relevant experience.

On starting up their businesses, many small businesspeople serve as theirown bookkeepers until the business is large enough to hire a dedicatedperson to keep the books. Few small businesses have accountants on thepayroll to check the books and prepare official financial reports; instead, theyhave bookkeepers (either on the payroll or hired on a self-employed basis)who serve as the outside accountants’ eyes and ears. Most businesses doseek out an accountant, usually a chartered accountant (either ACA or FCA),but this is usually to submit annual accounts to the Inland Revenue, which isnow part of HM Revenue & Customs.

In many small businesses today, a bookkeeper enters the business transac-tions on a daily basis while working inside the business. At the end of eachmonth or quarter, the bookkeeper sends summary reports to the accountantwho then checks the transactions for accuracy and prepares financial state-ments such as the profit and loss (see Chapter 17), and balance sheet (seeChapter 18) statements.

22 Part I: Basic Bookkeeping: Why You Need It

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In most cases, the accounting system is initially set up with the help of anaccountant. The aim is to ensure that the system uses solid accounting principles and that the analysis it provides is in line with that required by the business, the accountant, and HM Revenue & Customs. That accountantperiodically reviews the system’s use to make sure that transactions arebeing handled properly.

Accurate financial reports are the only way to ensure that you know howyour business is doing. These reports are developed using the informationyou, as the bookkeeper, enter into your accounting system. If that informa-tion isn’t accurate, your financial reports are meaningless: As the old adagegoes, ‘Garbage in, garbage out’.

Wading through Basic Bookkeeping Lingo

Before you can take on bookkeeping and start keeping the books, you firstneed to get a handle on the key accounting terms. This section describes the main terms that all bookkeepers use on a daily basis.

Note: This list isn’t exhaustive, and doesn’t contain all the unique terms youhave to know as a bookkeeper. For full coverage of bookkeeping terminology,turn to the Glossary at the back of the book.

Accounts for the balance sheetHere are a few terms you need to know:

� Balance sheet: The financial statement that presents a snapshot of thebusiness’s financial position (assets, liabilities, and capital) as of a par-ticular date in time. The balance sheet is so-called because the thingsowned by the business (assets) must equal the claims against thoseassets (liabilities and capital).

On an ideal balance sheet, the total assets need to equal the total liabili-ties plus the total capital. If your numbers fit this formula, the business’sbooks are in balance. (We discuss the balance sheet in greater detail inChapter 18.)

� Assets: All the items a business owns in order to run successfully, suchas cash, stock, buildings, land, tools, equipment, vehicles, and furniture.

23Chapter 2: Getting Down to Bookkeeping Basics

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� Liabilities: All the debts the business owes, such as mortgages, loans,and unpaid bills.

� Capital: All the money the business owners invest in the business. When one person (sole trader) or a group of people (partnership) own asmall business, the owner’s capital is shown in a Capital account. In anincorporated business (limited company), the owner’s capital is shownas shares.

Another key Capital account is Retained Earnings, which shows all business profits that have been reinvested in the business rather thanpaid out to the owners by way of dividends. Unincorporated businessesshow money paid out to the owners in a Drawings account (or individualdrawings accounts in the case of a partnership), whereas incorporatedbusinesses distribute money to the owners by paying dividends (a por-tion of the business’s profits paid out to the ordinary shareholders, typi-cally for the year).

Accounts for the profit and loss statementFollowing are a few terms related to the profit and loss statement that youneed to know:

� Profit and loss statement: The financial statement that presents a sum-mary of the business’s financial activity over a certain period of time,such as a month, quarter, or year. The statement starts with Sales made,subtracts out the Costs of Goods Sold and the Expenses, and ends withthe bottom line – Net Profit or Loss. (We show you how to develop aprofit and loss statement in Chapter 17.)

� Income: All sales made in the process of selling the business’s goods andservices. Some businesses also generate income through other means,such as selling assets the business no longer needs or earning interestfrom investments. (We discuss how to track income in Chapter 9.)

� Cost of Goods Sold: All costs incurred in purchasing or making the products or services a business plans to sell to its customers. (We talk about purchasing goods for sale to customers in Chapter 8.)

� Expenses: All costs incurred to operate the business that aren’t directlyrelated to the sale of individual goods or services. (We review commontypes of expenses in Chapter 3.)


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Other common termsSome other common terms include the following:

� Accounting period: The time for which financial information is beingprepared. Most businesses monitor their financial results on a monthlybasis, so each accounting period equals one month. Some businesseschoose to do financial reports on a quarterly basis, so the accountingperiod is three months. Other businesses only look at their results on ayearly basis, so their accounting period is 12 months. Businesses thattrack their financial activities monthly usually also create quarterly andannual reports (a year-end summary of the business’s activities andfinancial results) based on the information they gather.

� Accounting year-end: In most cases a business accounting year is 12months long and ends 12 months on from when the business started or at some traditional point in the trading cycle for that business. Manybusinesses have year-ends of 31 March (to tie in with the tax year) and 31 December (to tie in with the calendar year). You’re allowed to change your business year-end to suit your business.

For example, if you started your business on 1 July, your year-end will be30 June (12 months later). If, however, it is traditional for your industryto have 31 December as the year-end, it is quite in order to change tothis date. For example, most retailers have 31 December as their year-end. You of course have to let HM Revenue & Customs know and gettheir formal acceptance.

� Debtors (also known as Accounts Receivable): The account used totrack all customer sales made on credit. Credit refers not to credit cardsales but to sales in which the business gives a customer credit directly,and which the business needs to collect from the customer at a laterdate. (We discuss how to monitor Accounts Receivable in Chapter 9.)

� Creditors (also known as Accounts Payable): The account used to trackall outstanding bills from suppliers, contractors, consultants, and anyother businesses or individuals from whom the business buys goods or services. (We talk about managing Accounts Payable in Chapter 8.)

� Depreciation: An accounting method used to account for the aging anduse of assets. For example, if you own a car, you know that the value ofthe car decreases each year (unless you own one of those classic carsthat goes up in value). Every major asset a business owns ages andeventually needs replacement, including buildings, factories, equipment,and other key assets. (We discuss how you monitor depreciation inChapter 11.)


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� Nominal (or General) Ledger: Where all the business’s accounts are summarised. The Nominal Ledger is the master summary of thebookkeeping system. (We discuss posting to the Nominal Ledger inChapter 4.)

� Interest: The money a business needs to pay when it borrows moneyfrom anybody. For example, when you buy a car using a car loan, youmust pay not only the amount you borrowed (capital or principal) butalso additional money, or interest, based on a percentage of the amountyou borrowed. (We discuss how to deal with interest expenses in a busi-ness’s books in Chapter 12.)

� Stock (or Inventory): The account that tracks all products sold to customers. (We review stock valuation and control in Chapter 8.)

� Journals: Where bookkeepers keep records (in chronological order) ofdaily business transactions. Each of the most active accounts, includingcash, Accounts Payable, and Accounts Receivable, has its own journal.(We discuss entering information into journals in Chapter 5.)

� Payroll: The way a business pays its employees. Managing payroll is akey function of the bookkeeper and involves reporting many aspects ofpayroll to HM Revenue & Customs, including Pay As You Earn (PAYE)taxes to be paid on behalf of the employee and employer, and NationalInsurance Contributions (NICs). In addition, a range of other paymentssuch as Statutory Sick Pay (SSP) and maternity/paternity pay may bepart of the payroll function. (We discuss employee payroll in Chapter 10and the government side of payroll reporting in Chapter 20.)

� Trial balance: How you test to ensure that the books are in balancebefore pulling together information for the financial reports and closingthe books for the accounting period. (We discuss how to do a trial bal-ance in Chapter 15.)

Pedalling through the Accounting CycleAs a bookkeeper, you complete your work by completing the tasks of theaccounting cycle, so-called because the workflow is circular: Entering trans-actions, manipulating the transactions through the accounting cycle, closingthe books at the end of the accounting period, and then starting the entirecycle again for the next accounting period.

The accounting cycle has eight basic steps, shown in Figure 2-1.


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1. Transactions: Financial transactions start the process. Transactions can include the sale or return of a product, the purchase of supplies for business activities, or any other financial activity that involves theexchange of the business’s assets, the establishment or payoff of a debt,or the deposit from or payout of money to the business’s owners. Allsales and expenses are transactions that must be recorded. We covertransactions in greater detail throughout the book as we discuss how to record the basics of business activities – recording sales, purchases,asset acquisition, or asset disposal, taking on new debt, or paying off debt.

2. Journal entries: The transaction is listed in the appropriate journal,maintaining the journal’s chronological order of transactions. (The jour-nal is also known as the ‘book of original entry’ and is the first place atransaction is listed.) We talk more about journal entries in Chapter 5.

3. Posting: The transactions are posted to the relevant account. Theseaccounts are part of the Nominal Ledger, where you can find a summaryof all the business’s accounts. We discuss posting in Chapters 4 and 5.

1. Transactions

2. Journal Entries

3. Posting7. Financial Statements

4. Trial Balance

8. Closing the Books

6. Adjusting JournalEntries

5. Worksheet

The Accounting Cycle

Figure 2-1:The

accountingcycle.


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4. Trial balance: At the end of the accounting period (which may be amonth, quarter, or year depending on your business’s practices), youprepare a trial balance.

5. Worksheet: Unfortunately, often your first trial balance shows that the books aren’t in balance. In this case, you look for errors and makecorrections called adjustments, which are tracked on a worksheet.Adjustments are also made to account for the depreciation of assets,and to adjust for one-time payments (such as insurance) that need to beallocated on a monthly basis to match monthly expenses with monthlyrevenues more accurately. After you make and record adjustments, youtake another trial balance to be sure that the accounts are in balance.

6. Adjusting journal entries: You post any necessary corrections to the rel-evant accounts after your trial balance shows that the accounts balance(after the necessary adjustments are made to the accounts). You don’tneed to make adjusting entries until the trial balance process is com-pleted and all needed corrections and adjustments have been identified.

7. Financial statements: You prepare the balance sheet and profit and lossstatement using the corrected account balances.

8. Closing the books: You close the books for the Revenue and Expenseaccounts and begin the entire cycle again.

At the end of the accounting year (year-end) all the accounting ledgersare closed off. This situation means that Revenue and Expense accountsmust start with a zero balance at the beginning of each new accountingyear. In contrast, you carry over Asset, Liability, and Capital account balances from year to year, because the business doesn’t start eachcycle by getting rid of old assets and buying new assets, paying off and then taking on new debt, or paying out all claims to owners and then collecting the money again.

Understanding Accounting MethodsMany not-for-profit organisations, such as sports clubs, have very simpleaccounting needs. These organisations aren’t responsible to shareholders to account for their financial performance, though they are responsible totheir members for the safe custody of their subscriptions and other funds.Consequently, the accounting focus isn’t on measuring profit but more onaccounting for receipts and payments. For these cases, a simple cash-basedaccounting system may well suffice, which allows for only cash transactions –no provisions are made for giving or receiving credit. (We cover not-for-profitorganisations in more detail in Chapter 19.)


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However, complications may arise when members don’t pay their subscrip-tions during the current accounting year and the organisation needs toreflect this situation in its accounts. In this case, the accrual accountingmethod is best.

A few businesses operate on a cash basis, and their owners can put forward a good case for using this method. However most accountants and HMCustoms & Revenue don’t accept this method as it doesn’t give a very accurate measure of profit (or loss) for accounting periods.

In the next sections, we briefly explain how cash-based accounting worksbefore dismissing it in favour of the more accepted and acceptable accrualmethod.

Realising the limitations of cash-based accountingWith cash-based accounting, you record all transactions in the books whencash actually changes hands, which means when the business receives cashpayment from customers or pays out cash for purchases or other services.Cash receipt or payment can be in the form of cash, cheque, credit card, electronic transfer, or other means used to pay for an item.

Cash-based accounting can’t be used when a business sells products oncredit and collects the money from the customer at a later date. No provisionexists in the cash-based accounting method to record and track money duefrom customers at some point in the future.

This situation also applies for purchases. With the cash-based accountingmethod, the business only records the purchase of supplies or goods that are to be sold later when it actually pays cash. When the business buysgoods on credit to be paid later, it doesn’t record the transaction until thecash is actually paid out.

Depending on the size of your business, you may want to start out with cash-based accounting. Many small businesses run by a sole proprietor or a smallgroup of partners use the easier cash-based accounting system. When yourbusiness model is simple – you carry no stock, start and finish each jobwithin a single accounting period, and pay and get paid within this period –the cash accounting method can work for you. But as your business grows,you may find it necessary to switch to accrual accounting in order to trackrevenues and expenses more accurately, and to satisfy the requirements ofthe external accountant and HM Revenue & Customs. The same basic argu-ment also applies to not-for-profit organisations.


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Cash-based accounting does a good job of tracking cash flow, but the systemdoes a poor job of matching revenues earned with money laid out forexpenses. This deficiency is a problem particularly when, as often happens, a business buys products in one month and sells those products in the nextmonth. For example, you buy products in June paying £1,000 cash, with theintent to sell them that same month. You don’t sell the products until July,which is when you receive cash for the sales. When you close the books atthe end of June, you have to show the £1,000 expense with no revenue tooffset it, meaning you have a loss that month. When you sell the products for £1,500 in July, you have a £1,500 profit. So, your monthly report for Juneshows a £1,000 loss, and your monthly report for July shows a £1,500 profit,when in reality you had revenues of £500 over the two months. Using cash-based accounting you can never be sure that you have an accurate measureof profit or loss – but as cash-based accounting is for not-for-profit organisa-tions, this is not surprising.

Because accrual accounting is the only accounting method acceptable toaccountants and HM Revenue & Customs, we concentrate on this methodthroughout the book. If you choose to use cash-based accounting becauseyou have a cash only business and a simple trading model, don’t panic: Mostof the bookkeeping information here is still useful, but you don’t need tomaintain some of the accounts, such as Accounts Receivable and AccountsPayable, because you aren’t recording transactions until cash actuallychanges hands. When you’re using a cash-based accounting system and you start to sell things on credit, though, you better have a way to track what people owe you.

Our advice is to use the accrual accounting method right from the beginning.When your business grows and your business model changes, you need themore sophisticated and legally required accrual accounting.

Recording right away with accrual accountingWith accrual accounting, you record all transactions in the books when theyoccur, even when no cash changes hands. For example, when you sell oncredit, you record the transaction immediately and enter it into a Debtorsaccount until you receive payment. When you buy goods on credit, you imme-diately enter the transaction into a Creditors account until you pay out cash.


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Like cash-based accounting, accrual accounting has drawbacks, doing a good job of matching revenues and expenses, but a poor job of tracking cash.Because you record income when the transaction occurs and not when youcollect the cash, your profit and loss statement can look great even when youdon’t have cash in the bank. For example, suppose you’re running a contract-ing business and completing jobs on a daily basis. You can record the revenueupon completion of the job even when you haven’t yet collected the cash.When your customers are slow to pay, you may end up with lots of income butlittle cash. Remember – never confuse profit and cash. In the short term cashflow is often more important than profit, but in the long term profit becomesmore important. But don’t worry just yet; in Chapter 9, we tell you how tomanage Accounts Receivable so that you don’t run out of cash because ofslow-paying customers.

Many businesses that use the accrual accounting method monitor cash flowon a weekly basis to be sure they have enough cash on hand to operate thebusiness. If your business is seasonal, such as a landscaping business withlittle to do during the winter months, you can establish short-term lines ofcredit through your bank to maintain cash flow through the lean times.

Seeing Double with Double-EntryBookkeeping

All businesses use double-entry bookkeeping to keep their books, whether they use the cash-based accounting method or the accrual accountingmethod. Double-entry bookkeeping – so-called because you enter all transactions twice – helps minimise errors and increase the chance that your books balance.

When it comes to double-entry bookkeeping, the key formula for the balance sheet (Assets = Capital + Liabilities) plays a major role.

In the bookkeeping world, you use a combination of debits and credits toadjust the balance of accounts. You may think of a debit as a subtraction,because debits usually mean a decrease in your bank balance. On the otherhand, you probably like finding unexpected credits in your bank or creditcard, because they mean more money has been added to the account in yourfavour. Now forget everything you know about debits or credits. In the worldof bookkeeping, their meanings aren’t so simple.


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The only definite thing when it comes to debits and credits in the bookkeep-ing world is that a debit is on the left side of a transaction and a credit is onthe right side of a transaction. Everything beyond that can get very muddled.We show you the basics of debits and credits in this chapter, but don’t worryif you find these concepts difficult to grasp. You get plenty of practice usingthese concepts throughout this book.

Before we get into all the technical mumbo jumbo of double-entry bookkeep-ing, here’s an example of the practice in action. Suppose you purchase a newdesk for your office that costs £1,500. This transaction actually has two parts:You spend an asset – cash – to buy another asset – furniture. So, you mustadjust two accounts in your business’s books: the Cash account and theFurniture account. The transaction in a bookkeeping entry is as follows (we talk more about how to do initial bookkeeping entries in Chapter 4):

Account Debit Credit

Furniture £1,500

Cash £1,500

To purchase a new desk for the office.

In this transaction, you record the accounts impacted by the transaction. Thedebit increases the value of the Furniture account, and the credit decreasesthe value of the Cash account. For this transaction, both accounts impactedare Asset accounts so, looking at how the balance sheet is affected, you cansee that the only changes are to the asset side of the balance sheet equation:

Assets = Capital + Liabilities

Furniture increase = No change to this side of the equation

Cash decrease

In this case, the books stay in balance because the exact pounds sterlingamount that increases the value of your Furniture account decreases thevalue of your Cash account. At the bottom of any journal entry, include abrief explanation that explains the purpose for the entry. In the first example,we indicate this entry was ‘To purchase a new desk for the office’.

To show you how you record a transaction that impacts both sides of the bal-ance sheet equation, here’s an example on recording the purchase of stock.Suppose that you purchase £5,000 worth of widgets on credit. (Have youalways wondered what widgets were? Can’t help you. They’re just commonlyused in accounting examples to represent something purchased where whatis purchased is of no real significance.) These new widgets add value to your


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Stock Asset account and also add value to your Accounts Payable account.(Remember, the Accounts Payable account is a Liability account where youtrack bills that need to be paid at some point in the future.) The bookkeepingtransaction for your widget purchase looks as follows:

Account Debit Credit

Stock £5,000

Accounts Payable £5,000

To purchase widgets for sale to customers.

This transaction affects the balance sheet equation as follows:

Assets = Capital + Liabilities

Stock increases = Accounts Payable increases + No change

In this case, the books stay in balance because both sides of the equationincrease by £5,000.

You can see from the two example transactions how double-entry bookkeep-ing helps to keep your books in balance – as long as you make sure that eachentry into the books is balanced. Balancing your entries may look simplehere, but sometimes bookkeeping entries can get very complex when thetransaction impacts more than two accounts.

Don’t worry, you don’t have to understand double-entry bookkeeping totallynow. We show you how to enter transactions throughout the book dependingupon the type of transaction being recorded. We’re just giving you a quickoverview to introduce the subject right now.


Double-entry bookkeeping goes way backNo one’s really sure who invented double-entrybookkeeping. The first person to put the prac-tice on paper was Benedetto Cotrugli in 1458,but mathematician and Franciscan monk LucaPacioli is most often credited with developingdouble-entry bookkeeping. Although Pacioli iscalled the Father of Accounting, accountingactually occupies only one of five sections of his

book, Everything About Arithmetic, Geometryand Proportions, which was published in 1494.

Pacioli didn’t actually invent double-entry book-keeping; he just described the method used by merchants in Venice during the ItalianRenaissance period. He’s most famous for hiswarning to bookkeepers: ‘A person should not goto sleep at night until the debits equal the credits!’

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Differentiating Debits and CreditsBecause bookkeeping’s debits and credits are different from the ones you’reused to encountering, you’re probably wondering how you’re supposed toknow whether a debit or credit increases or decreases an account.

Believe it or not, identifying the difference becomes second nature as youstart making regular entries in your bookkeeping system. But to make thingseasier for you, Table 2-1 is a chart that bookkeepers and accountants com-monly use. Yep, everyone needs help sometimes.

Table 2-1 How Credits and Debits Impact Your AccountsAccount Type Debits Credits

Assets Increase Decrease

Liabilities Decrease Increase

Income Decrease Increase

Expenses Increase Decrease

Copy Table 2-1 and post it at your desk when you start keeping your ownbooks (a bit like the chief accountant in the nearby ‘Sharing a secret’ sidebar).We guarantee that the table helps to keep your debits and credits straight.


Sharing a secretDon’t feel embarrassed if you forget which sidethe debits go on and which side the credits goon. One often-told story is of a young clerk in anaccounts office plucking up courage to ask thechief accountant, who was retiring that day,why for 30 years he had at the start of each dayopened up his drawer and read the contents ofa piece of paper before starting work. The chief

accountant at first was reluctant to spill thebeans, but ultimately decided he had to pass onhis secret – and who better than an up-and-coming clerk. Swearing the young clerk tosecrecy, he took out the piece of paper andshowed it to him. The paper read: ‘Debit on theleft and Credit on the right.’

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Elizabeth KuhnkeExecutive Coach

Learn to:• Become more influential in the workplace

• Develop effective listening and rapport-building techniques

• Adapt to your listener’s style

• Use persuasive language to reach your goal

Persuasion & Influence

Making Everything Easier!™ FreeSampleChapter

Chapter 15

Ten Sure-Fire Ways to Influence Anyone

In This Chapter▶ Venturing beyond words

▶ Supporting your side

▶ Making the most of others

▶ Working together

In Henrik Ibsen’s play The Master Builder, the lead character imagines that by wishing for something, it will come true. At the end of the play, he falls

to his death. I’m not suggesting that you might die by wishing to become a great influencer! Rather, I’m suggesting that becoming a skilled persuader leads to a much happier outcome than simply wishing, hoping, thinking and praying ever can.

If you’ve ever watched in awe as someone persuaded another to do some-thing she originally disdained (or at least doubted), this chapter serves up ten secrets from successful persuaders that you can utilise in your own interactions.

Establish TrustTry to get someone to follow your lead without first establishing trust, and watch your efforts collapse at the starting gate. If someone doesn’t trust you, why would she possibly want to follow you? Being perceived as trustworthy requires that you demonstrate your credibility.

‘Walking your talk’ is one way of building a reputation for being trustworthy and credible. Behaving in a way that reflects your beliefs and values shows you’re a person who’s true to your word. Walking your talk manifests itself


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in simple, everyday activities: show up on time, tell the truth and act in other people’s interests. Do these consistently, and people see you as someone whom they can trust to do what you say you’ll do. See Chapters 1 and 5 for more on trust and credibility.

When my sister Wendy wanted our late grandmother to do something she wasn’t convinced was in her best interests, all Wendy had to do was look her in the eye, smile and say, ‘Trust me, Memaw!’ Sure enough, Memaw would do what Wendy wanted. Memaw and Wendy liked one another, and because Wendy always told Memaw the truth and acted in her best interests, Memaw trusted her. ‘Trust me, Memaw!’ has become the rallying cry in our family whenever we want our parents or siblings to do something they’re not so sure about doing.

Set Out Crystal-Clear GoalsThe best persuaders and influencers are confident about what they want. They state their desired outcomes from the start in clear, concise and com-pelling terms that their listeners can understand and relate to.

Revisit your goals regularly as you travel along your path to persuasion. Whether your goals are quantitative or qualitative, simple or multi-faceted, you’ll struggle to achieve them unless you know what they are. See Chapter 1 for more on clarity and Chapter 4 for advice on using compelling language.

Step Into the Other Person’s ShoesSun Tzu writes in his classic The Art of War that the person who knows both the enemy and himself need not fear the result of a hundred battles. The more you know about what matters to other people, the more ammunition you have for persuading them to accept your point of view. Gear your pro-posal to the other people’s needs and concerns, and watch them flock to your fold.

You can find out how to identify what motivates your listener in Chapter 2, and in Chapter 3 you gain tips for figuring out people’s attitudes and beliefs. Ask questions and focus on the answers you receive. Listen not only for the words others say but the way they say them too. Someone’s non-verbal behaviour – including body language and vocal qualities (see Chapters 13 and 14 – often reveals feelings and attitudes that are as much a part of her perspective as the words she speaks.


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Find out as much as you can about what matters to your listeners and let them know that you respect them as individuals as well as respecting their points of view. The more you acknowledge their perspectives, the more will-ing they are to take on board your suggestions – or even join your proposed plans. Turn to Chapter 12 if you want to figure out who you’re talking to.

Behave CongruentlyWhen the words you’re saying and the way you’re saying them match, you’re behaving congruently. Your message and delivery match, and your listener knows what you mean. If your words say one thing and the way you say them communicates something different, your listeners are likely to feel bewil-dered. Consider the pitch, pace and tone of your voice. People generally believe what they observe more than the words they hear, so also pay atten-tion to your non-verbal behaviours such as your posture, movements and gestures.

The way you talk and the way you move your body tell what’s going on inside (see Chapters 13 and 14). Make sure you’re certain about what you’re saying and say it as though you know what you’re talking about.

If you’re uncertain and unconvincing in the way you present your case, you send out a message of doubt, uncertainty and indecision that your listeners will remember. Speak clearly, concisely and with conviction. Move like you mean it and eliminate ums, ers and ahs from your vocabulary.

Ask for More than You ExpectMy son has a quote on his pinboard that says, ‘Shoot for the moon. Even if you miss you’ll land among the stars.’ Or to paraphrase former US Secretary of State Henry Kissinger, your effectiveness at the conference table depends on overstating your demands.

Asking for more than you expect to get gives you some wiggle room, some space for negotiating. For example, when you’re selling, you can always come down from your initial offer, but never expect the buyer to suggest that you ask for more. Conversely, if you’re buying something, your offer can always go up, but you’d be hard pressed to go down from your original offer. See Chapter 12 for the ins and outs of establishing useful expectations.


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Respect Your RelationshipsWhat goes around comes around. How you treat people determines how they respond to you. Treat people with respect and watch them return the favour.

Aim to identify with, understand and respond to other people’s feelings, emo-tions and experiences. Demonstrating empathy (see Chapter 3) goes a long way in building a positive relationship that in turn benefits you.

Build Your CaseAs Henry Ford said, ‘Before anything else, getting ready is the secret to suc-cess.’ Knowing what you want, knowing your audience and knowing how to present to your audience in a way that captures their attention and sustains their interest boosts your chances of walking away a winner.

As I detail in Chapter 9, the most successful influencers present themselves as credible characters appealing to their listeners’ emotions as well as to their logical minds.

✓ Start with a strong opener that grabs your listeners’ attention and reso-nates with their values.

✓ Express each point clearly in a single sentence and assert your claims as statements of fact.

✓ Avoid overwhelming your listener with too much information. Try limit-ing yourself to three main messages, each of which needs to be compel-ling on its own.

✓ Back up your claims with appropriate supporting material that your lis-tener can believe and accept. Make sure your claims are correct.

✓ Deliver your message with feeling.

✓ Conclude your case with a call to action that ties in with your opening. Make your case short, sharp and memorable.

Whatever you say, make sure it’s relevant. Be creative. Include stories, analo-gies and vivid language to help your audience visualise and connect with what you’re saying.


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Offer Your Most Captivating ReasonsPeople need reasons for knowing why you want them to do what you want them to do. Although ‘Because I said so’ may gain their compliance, it’s unlikely to gain their hearts and minds.

Let your audience know how your request benefits them. Appeal to their values and tie your reasons into their self-interests and then watch them jump over themselves to comply with your request. Use language that’s both accurate and exciting to get your audience visualising your recommenda-tions. Provide your listeners with significant facts and figures if they’re into the detail. Tell them captivating stories, including metaphors and analogies if they like to look at the big picture. The more captivating the way you present your case, the more chance you stand of success.

Limit the number of reasons you throw their way. Too much information is overwhelming and results in no decision at all.

Seek Common GroundWhen people like you, they’re more likely to comply with your requests. The more you have in common with the people you want to persuade, the more likely they’ll like you. Turn to Chapter 10 to find out about the power of liking someone.

Effective persuaders seek out similarities between themselves and the people they want to influence. The more you know about your target audience and the more you establish genuine shared aims and chances for camaraderie, the more likely your chances of persuading them. Chapter 2 is filled with tips for finding out about other people.

Own Up to Your WeaknessesTo gain buy-in – to get people to commit to you and your proposals – you’ve got to gain trust. One of the most effective ways to persuade others that you’re trustworthy, honest and credible is to admit your weaknesses.


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Before giving all the reasons why someone should agree to your request, pres-ent a minor, relatively obvious drawback immediately and then hit them with your most compelling reason for gaining their agreement. Admitting a small weakness builds credibility. And the more credible you are, the more willing others are to follow you.

In Chapter 6 you find out how to admit to your weaknesses without damaging your credibility.


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Dan ThompsonFounder, Empty Shops Network

• Plan and launch a successful pop-up business

• Find the perfect space – and landlord!

• Promote and market your pop-up

• Manage day-to-day business tasks with ease

Learn to:

Pop-Up Business

Making Everything Easier!™Free

SampleChapter

Chapter 16

Ten Reasons Why Your Pop Up Is Good for Business

In This Chapter▶ Making a difference▶ Fostering fun

Pop ups are an incredibly useful tool for doing business; they’re like a Swiss army penknife, which pops out in

all sorts of useful ways. So what you do with your pop up is entirely up to you. The only limit is the edge of your imagination.

This book doesn’t give you a template, but it can make starting a pop up easier and help you avoid mistakes.

In this chapter, I list ten common pop up themes.

Have a MessagePop ups aren’t just shops; they are, by their very nature, something special. They have a magical, ephemeral quality, like blossoms in spring, and they do something that other shops on the high street just don’t do.

Whether your pop up is testing a new idea, giving something special to valued customers or has a social purpose, make sure that your message is clear. Use your decor, kit-out, marketing and social media to convey your message and tell the story behind your brand.


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Part VI: The Part of Tens 232

Be LocalMany people are living much more locally in the last few years. Social media has helped people form strong, local groups – global networks, for local action! And people are keen to ‘Shop Local’, too.

The best pop ups are celebrating the local by discovering what’s distinctive about the place where they happen and exciting the neighbourhood. Make your pop up relevant to the place where it happens and the people who live nearby. Not only will you find your pop up more rewarding, it will be easier too, as local networks mobilise to support your work.

Do Something DifferentAre you bored of the nine to five grind? Find yourself doing the same things, week in, week out?

Pop ups exist so that you can break out of the routine, be cre-ative and do things differently. They’re still part of your core business, especially if you get your aims right in the first place and stick to them throughout the time you’re planning and running your pop up (see Chapter 2 for more on aims).

But pop ups are about innovation and give you the perfect chance to test and prototype new products and services. The risks aren’t as great as they would be if you took a long-term lease. You can be in and out in a matter of weeks, from the day you start planning to the day you get back to normal.

So take a chance; use a pop up to do something different.

Change the RulesPop ups, even the most corporate ones, have a mischievous, slightly anarchic spirit. They’re about finding new uses for old spaces, being temporary not permanent and trying new things. They’re not about doing things the way they’ve already been done.


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Chapter 16: Ten Reasons Why Your Pop Up Is Good for Business 233You don’t have to be dangerous; this book covers risk assess-ment (Chapter 2), finance (Chapter 4) and leases, licences and the legal stuff (Chapter 5). (I did say only slightly anarchic!) But pop ups do give you a chance to build new teams, push the boundaries and bend things to meet your aim.

It’s time to rewrite the rulebook.

Be a Coffee Shop

The prototype Next store in Shoreham by Sea sells clothes and furniture and has a Starbucks cafe. The Orange community shop in Monmouth is used as a community shop but still sells mobile phones. The Rough Trade record store in London’s Brick Lane is a cafe, bookshop and occasional venue.

Some people predict that, in the future, everything will be a coffee shop that does something else as well.

What they really mean is that the social element of shopping will become more important. Add a coffee machine, stock up on biscuits and make cups of tea for your customers; you create a more friendly pop up and keep customers engaged for longer. (For additional ways to make your pop up more inviting, see Chapter 10.)

Don’t Hang AroundIn the past 50 years, people have assumed that permanent equals important, that being old gives you authority and that the established equals the powerful. But the world is accelerating.

Things that exist for a short time add interest and meaning to places. Think about the number of events you go to that pop up; farmers’ markets, craft fairs, street performers and music festivals all bring life and vibrancy to the places where they happen. And nobody thinks of their website as a permanent, set in stone, unchanging thing.

Be proud to be a pop up and be agile (see Chapter 2 for more on this concept). Don’t try to be permanent!


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Part VI: The Part of Tens 234

Learn from FailureIn today’s culture, success is all that matters. Creative people know, though, that failure is more important; by making mistakes, you learn and do better next time. As playwright Samuel Becket said, ‘Try again. Fail again. Fail better.’

Entrepreneurs know that failure fosters success, too. Virgin Brides, Virgin Cosmetics, Virgin Megastores and Virgin Cola weren’t successes, but they all helped Sir Richard Branson become one of the richest people in Britain.

Pop ups are a perfect place to test and prototype, but it means some ideas will fail. Don’t be scared to fail, but do reap the lessons when you do. Fail faster!

Recycle Empty ShopsPop ups recycle old shops, old furniture and shop fittings, and many even sell recycled and remade goods, too.

Creating new things from old is common to lots of pop ups. Think of your pop up as part of the cycle of life on the high street. Make sure that you reduce, reuse and recycle. Whatever’s left at the end of your pop up, pass on and share.

Come TogetherGet people together to make your pop up work. Working with a group is more fun than working alone, so find people you can trust and let them do what they’re best at. Don’t micro-manage.

Pop ups are often shared spaces, with loose partnerships deliv-ering mixed programmes of activity in their shops. Chapter 3 tells you how to build a team and form partnerships. Round up a posse, and you’ll find that, as singer Sufjan Stevens says. ‘We can do much more together – it’s not so impossible’.


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Chapter 16: Ten Reasons Why Your Pop Up Is Good for Business 235

Have FunWhether your pop up flies or crashes into the ground, it’s an unusual chance to try things out. You work with a great, hand-picked team of people to achieve a common aim. You get a chance to be creative. You meet interesting visitors, too; pop ups do attract the local characters!

So make sure, amongst all the planning, the push to open on time and under the pressure of delivering, to have fun.

That’s why people like me become pop up addicts; because it’s just about the most fun you can have on the high street.


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Documents

Business Essentials For Dummies Minibook