Lots of my business support clients are busy people. We’re all busy people. But sometimes being busy stops us getting things done. There are lots of resources out there for managing your time better and I don’t want to just duplicate those, but to encourage you to do something other than work on your business for a change.

Rejuvenate yourself

What I see a lot of business owners doing is working very long hours to keep up, becoming very tired and then going home and only having the energy to slump in front of the TV. Why not do something with your leisure time which will bring you pleasure and rejuvenate you?

Go out with friends; have some human contact and some interesting conversations. When you’ve done your work for the day, why not go home and read one of the many business books which can inspire you? You’ll get ideas and a new lease of life for your business.

When you’re tired

Photo by Amy Messere

If you are just too knackered to think properly, or you want to switch off for a while and watch TV, you’ll probably enjoy it more if you’re watching something you recorded because you’re interested in it, rather than being drawn into the latest EastEnders because it happens to be on TV at the time.

Treat yourself to some proper relaxation, so you’ll bounce back in the morning.    I asked some friends what they do to relax, and they suggested, a good novel, Star Trek, folding towels, jumping up and down on a mini trampoline.  I guess that sums up my friends, but why not have a go?

Instead of seeing attendance at networking events in the evening as a necessary evil, why not see it as part of your social life? Get involved in running one of the events, or get active in politics or your kid’s school. Most business owners think that they don’t have time to do these things because they want to prioritise their business and don’t feel they have the energy for anything else, but my experience is that you get a lot back from being involved.

The successful business owners I know are people who are very active in their communities. Anything which widens your social circle is good networking; you never know what will come from your involvement with your local Amnesty group, or book group. At the very least, you’ll get a fresh approach which you’ll be able to take back to your business.

Friends and family

If you have a partner or family, then you’ll probably be focussed on making money in your business to provide for them financially. Which is great – it gives you an enormous incentive to develop your business. But, what about the time you spend with them? What about that quality time where you actually go out and do interesting and exciting things with your kids? If you did more of that, is it possible that you might feel more motivated in your business and see the point of all that hard work?

See this as investment

See all the wonderful things you do outside of work as an investment in yourself and your business and your business will thank you for it.

I’ve been doing quite a lot of work recently for clients who want to get some investment into their companies, and the question of EIS (the Enterprise Investment Scheme) has come up with a couple of people, so I thought I’d share some practical advice with you.

This article is quite a specific how to do things one, so if you’re not interested in getting funding for your business, you’d probably be better off reading something more interesting such as How to spot a gap in the market or Key Success Factors.

If you are thinking about bringing in angel investment, this will be fascinating. Promise.

EIS – what is it, and why is it important?

EIS is a government scheme that is actually useful for small businesses. Now, that it in itself is unusual enough to make it interesting, but enough of the politics.

Imagine you’ve got yourself an angel investor who’s going to give you a nice cheque for 100k so you can employ staff, develop your product, and generally do all the cool marketing things which are going to bring in lots of customers.

EIS means that as soon as the angel investor writes you a cheque, they get a cheque back from the government for 30% of that amount. So you get 100k, and they get 30k immediately. And when you sell the company for a million pounds, the investor doesn’t have to pay any capital gains tax. Brilliant!

Is there a catch?

Of course, there are a few more details to it than this, so the investor has to have actually paid the 30k in income tax that year, as HMRC don’t like to give away money with one hand unless they’ve taken it with the other beforehand. Here’s all the boring bits from HMRC.

Would my business be eligible?

You can get the Revenue to tell you beforehand if you are, by filling out a form (EIS Advance Assurance) but most of the small businesses I help to raise investment could make themselves much more attractive to angel investors by saying that they are eligible for EIS. So that probably means that you could too.

More articles on fundraising and investment

If you’re interested in getting angel investment or other juicy chunks of cash into your company, I’d recommend three things:
First, have a look at some of the other articles I’ve written on this area:

• Getting someone to invest in your company
• Why you need a woman on board

Second, sign up to my email newsletter, because I have lots of exciting things to say about how to grow and develop your business, including investment advice.

And third, if you buy me a coffee, I’ll give you some advice on whether this is a good route for your company, and tell you if I can help.

Julia Chanteray

Many of the small businesses I mentor started off as a passion for something. Carlo Albertoli loves gorgeous Italian food, so it was natural for him to open a deli selling some of the best food in Brighton/Hove. Nigel Berman believes in the importance of cutting carbon emissions, which led to the very successful Nigel’s Eco Store.

So passion is important, but it’s not enough. To get everyone to eat Albertoli’s food or putting their packed lunch in reusable sandwich wraps instead of plastic bags, you need marketing skills. And if you want to sell wonderful artichokes, or radiator boosters, you need to be able to sell enough to pay other people to help you, and to pay yourself too.

Photo by Sebastian Mary

Even if you make the best thing ever

Even if you have the most amazing product/service every, you need to be sure that other people share your enthusiasm. Are there enough people who want a game for a mobile phone featuring the speeches of Abraham Lincoln? Or do too many people share your enthusiasm, such as all the mums who sell baby clothes with cheeky printed logos? Please don’t do this by the way, there’s no money in it.

The passion runs out

Like a marriage, your original passion will run out after a while. I guarantee you, after a couple of years, the initial fire in your belly will no longer be there. But a good relationship can run forever, and so can your business. If you’re still learning interesting things, growing as a business and as a person, and making enough money to make yourself comfortable, you’ll have a very different sort of enthusiasm for the business.

Instead of passion

My advice here is to develop a passion for being really, really good at running your business. Learn everything you can about marketing, customer service, finance, how to manage staff and all the other areas that go to make up a successful business. Having spent years developing my skills in this area, I can safely say that there is never an end to what you can learn here. My passion for business rages on, long after my love affair with any particular business ends.

Want to increase your passion for business?

If you liked this article, and want to stay in touch to get my regular doses of passion, enthusiasm and observations about running a small business, plus some regular tips and practical advice, why not sign up to my newsletter?

You might also enjoy reading about key success factors in business – it’s another goody.

Photo by Community Friend

You might want to give someone shares in your business because they’re going to invest money. You might want to give someone equity because you want them to work in your business, or to motivate someone who already works there.

Getting an equity investment is a great way to get money into your business, because it helps cash flow. Unlike a bank loan, you don’t have to pay it back, so it doesn’t drain your bank account just when you need the money to build the company up. I’ve talked before about how to give someone equity to get them to work for you, often for free, and I’ll write something soon about why you might not want to give shares to employees.

Issuing shares to an investor

There are a few things you need to think about here. If you’re thinking about issuing shares to an investor, you need to think this through really carefully. Remember that, unlike a bank loan, equity is forever. You’re probably going to have that investor for the rest of the life of your company. Sure, in the future, you might buy the shares back, or the investor might sell their shares to someone else, but if you are the owner of a 1-50 employee type company, my experience shows that the investor is probably going to be around forever.

So remember that every time you pay yourself a dividend from the company, you’ll be paying that dividend to the investor as well. If you have 80% of the shares, and Ms Investor has 20%, and you have 100k of net profit to be issued as dividends at the end of the year, you’ll be paying her 20k. Every year. And she doesn’t have to do anything to earn that money. I’m not saying that this is a bad idea; I’m just saying that you have to be aware of this right from the beginning.

So do spend a little time getting to know your investor, what her motivations are, and working out if the investment is worth it for you.

Friends and family investors

Here’s a special note if you’re thinking about giving shares to friends and family. It’s very common to get investment in this way but be aware that your family may still see this as a loan and there may be an emotional price tag to the money. Will you always have to watch what they want on TV at Christmas if you take their money, or will they feel entitled to lecture you about the business because they invested 20k?

Get it all written down

Get a shareholders’ agreement when you issue shares. I can’t emphasise this enough, and have been known to jump up and down and stamp my little feet with clients who don’t think this is necessary. A shareholders’ agreement will make it very clear how it all works and what the expectations are on both sides. It will protect both of you. Ideally, get a good commercial lawyer to draw this up for you, but if you can’t afford this, then at least get one from Netlawman or another online legal docs company. For 35 quid, and an hour’s work, I promise you this will save you headaches in years to come.

How to actually issue the shares

Check that your memorandum and articles allow you to issue the shares, and how many shares you have already. If you only have 1 share, you might have to issue more in order to give 20% of your company to someone else. Fill out form SH01 with Companies House so they can keep a record of the shares. You don’t need a share certificate or anything 18th century – it’s what’s on record at Companies House that counts.

For all the boring stuff, Business Link has a good guide. My advice though is to get your accountant to do all the boring stuff for you. They like that sort of thing, and should do it properly. They can also go through the tax implications for you.

Tax things to think about when issuing shares

This really depends on whether the shares you’re selling are worth anything. If you’re a new start up, or haven’t got any sales yet, the shares are probably not worth anything, so there are no real tax implications. Don’t quote me on this; it’s up to you to check this out your own situation.

If you’re further down the road, or you’ve spent a lot of money on setting up the business, the shares could be worth money. So you need to speak to HMRC to see what they think. They want to know if you’ve given your investor something for nothing.

HMRC’s thinking goes like this:

• The company gives the investor shares worth (on paper) 500k in exchange for 100k of cash. So (on paper) the investor has made 400k. So HMRC want to tax them on the 400k they’ve just made. They want their piece of the pie.

You don’t want to lumber your investor with a fat tax bill, so it’s best to be really clear about this beforehand, and this is where an experienced accountant is really worth their sausages.

Summing up

• Think things through
• Keep it simple wherever possible
• Get a shareholders’ agreement or I’ll come round and shout at you
• Make your accountant do all the boring stuff and check out the tax implications with HMRC first

If you’d like some help to make a decision about whether an equity investment is the best route for you, and maybe to look at the options for getting cash into your business, then do get in touch. I won’t do the boring bits for you, but I can help you make the right choice.

Julia Chanteray

Nature by Tiltti

One of my lovely clients is ready to scale up his business. Until now, he’s been the only full-time person in his company, and has been using freelancers whenever he’s had a big job on. Over the last 6 months he’s had an upsurge in business, mostly due to taking my sound advice to get out networking in his industry and to build a much better website to demonstrate all the great things he does.

So, now he’s unhappy because he’s got far too much work to do, is constantly fire fighting and isn’t having any fun. He’s making lots of money, but hasn’t got any time to enjoy it as he’s working 10 hours a day and pulling his hair out because he risks letting down clients. He doesn’t have much left, so he can’t afford to lose any more follicles.

He’s got a plan in place to bring someone else into the business as a project manager and he can afford to recruit someone to actually do the work, rather than using freelancers on an occasional basis.

He asked me an interesting question. Of all the businesses I see which scale up in this way, what are the problems they’ve experienced, so he can avoid these. I thought I’d share this with you guys as well.

First thing to avoid – cash flow nightmares

My guy is in a good position, because all the money which has come into the business is still there, so he has a lump of cash to pay some extra people. The usual pattern when you take on extra people is that for the first 4-6 months they seem to be dead weight, because you’re still the main fee earner, and you’re supporting the salaries of the people you’ve employed. So you actually see a dip in profits for the first while, and this takes some courage to get through. It’s tempting to think, I won’t employ anyone else because that’s going to cost me money. It will cost you money at first, and it will take a while for the efforts of the new people to pay off.

Plan out your cash flow for the next 6 months, and make sure you either have the money in the bank, a nice overdraft, or work that you’re pretty sure of getting. Or all three, if you like belt, braces and elasticated trousers.

Next – don’t recruit your mates

Very often, a small business’s first hire is someone they know already. Your cousin needs a job, and is good at computers… that sort of thing. You might trust these people to remember your birthday, or buy a round, but you have no idea if they’re any good at their job. A bigger company will be used to recruiting and will have lots of great candidates to choose from, which means you’re more likely to make the right choice, so act like a bigger company right from the start.
I didn’t actually tell my client this, as he’s already offered a job to a friend of the family. Fingers crossed.

Don’t assume that people know what they’re doing

When you work primarily on your own, you’re used to knowing how to do things. That’s how you got to this stage in the first place, by being really, really good. The people you bring in might be really good but they’re still going to need to know how you want them to do things. They will quickly absorb the culture of the organisation, so if you get in late every day, they will start to be late as well. This doesn’t follow for staying late, by the way. Set an example of how you expect the work to be done, how customers should be treated.

And set time aside for training people, especially if you’ve recruited someone quite early in their career. I cannot stress enough how important it is that you spend time with new staff and help them to learn how to do things in the right way. I know it’s a nuisance, and you’ve got a million things to do, but it’s your job to support all the people who work with you and make sure that they are being as productive as possible. It’s a much more important investment into your business than any amount of cash will ever be.

Other articles on scaling up your business

If you found this useful you might also want to read:

From freelancer to grown up business

Your first member of staff

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