SMALL TALK
Page 52
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If you rush in unprepared, the dream of starting your own business can become a nightmare. Some good advice from a specialist service could make all the difference between going broke and staying solvent.
• Starting and running a business can be tough, and usually is. If you do not understand what needs to be done and do not bother to plan, it can be impossibly tough. Drawing up a business plan and a cash flow forecast, organising finance, marketing, and understanding legislation are among the many matters that must be dealt with. It's just as well that a special service exists to help with these complicated procedures.
The Small Firms Service, part of the Department of Employment, was established in 1972 after a Government inquiry was set up to see how small businesses could be helped. Initially it was a straightforward information service, giving factual answers to factual questions, but it soon became apparent that many of the questions were more complex.
A counselling service was added in 1978 and now there are 11 Small Firms Service offices across the country. They are staffed by civil servants, but the counselling operation draws on the skills of carefully-selected businessmen.
CHARTERED ENGINEER
Steve Walters is a counsellor for the East Midlands/East Anglia region, which stretches from the Derbyshire Peaks to Felixstowe. A former chartered engineer turned company director, he is one of more than 300 counsellors employed by the Small Firms Service nationwide. "We are all people who have set up and run a business and have been successful at it," he explains. "We are from different backgrounds but we have all had profit responsibility in one way or another."
Initial factual enquiries can be dealt with by the Small Firms Service enquiry officer at one of the regional centres, but if the issues are complex the services of a counsellor will be offered.
Counsellor and client will meet, usually for a discussion lasting an hour or more, at the local job centre or enterprise agency. "In a lot of cases we can get to the root of the problem and come up with
suggestions in this discussion," says Walters, "but it may be necessary for the counsellor to visit the client's premises or to have a further discussion, so a second session can be arranged."
The first three sessions are free, although subsequent appointments are charged at a rate of 230 a day. But Walters points out that the counsellor is not a business consultant. "It is not our job to write reports and tell a client what to do," he says. "We bring factual information and expirience to our clients to allow them to come to their own best conclusions about what they should do."
Statistics show that this help is much needed. The Cambridge office of the Small Firms Service received 30,000 phone enquiries last year and is on target for 44,000 enquiries in 1989. At the end of a series of counselling sessions, clients are sent questionnaires asking them to rate the helpfulness — or otherwise — of the service and the counsellor. They are also asked whether they would recommend the service to anyone else and Walters points out that "ninety five per cent of our clients say they would recommend it".
Two kinds of client seek help from the service — those trying to start up a business for the first time, and those already up and running who need advice because they are in difficulty or experiencing growing pains.
The counsellor will advise those entering business for the first time, including many transport operators, to produce a business plan. ''The client will probably have to go to the bank to raise money so will need a coherent, carefully worked out plan," says Walters, "but asking them to produce it also helps them to think things through."
Questions for clients to address in the plan include an estimate of their market, an idea of their costs, a consideration of their premises and a look at how much money they want to earn. "We explain what they need to know in terms of the Inland Revenue, VAT, the Department of Social Security and local authority planning departments," says Walters. "We cover all the nuts and bolts."
The next step is the preparation of a profit plan. The client is encouraged to look at his costs — including, for a transport operator, a reasonable figure for his salary, vehicle operating costs, repairs and maintenance, insurance, other wages, telephone, postage, stationery and the cost of an accountant — and a profit figure is arrived at. Then counsellor and client will work through a cash forecast to determine how much money needs to be raised to get the business off the ground.
LOUSY IDEA
The emphasis is on providing advice but, ultimately, letting the client make all the decisions. "We would never tell someone they had a lousy business idea which would never work," says Walters. "Instead we would try to point out the pitfalls so that the client begins to realise it is a lousy idea which won't work and does not go ahead with it."
Where the problems are highly specialised, requiring a depth of technical, accounting, marketing or other expertise, other counsellors can be drafted in to form an expert team. The Small Firms Service offers advice to firms of up to 200 employees, but Walters stresses: "We don't offer our services to firms which are members of large groups." Counsellors have, however, helped with a number of management buyouts following the recent deregulation of the bus industry.
On the transport side, most enquiries come from parcels operators and general purpose hauliers running between one and four vehicles. "We have also helped a truck dealership to get off the ground, and they are now very successful," says Walters.
The service is confidential and, in addition to counselling, provides a range of literature covering buying or leasing premises, partnerships, health and safety, insolvency, grants, employment law and other business questions.
The counsellors have regular seminars and training sessions in marketing, accounting, tax and counselling techniques, so their knowledge is always up to date. But they receive only 250 a day for their time and effort, so why do they do it? "We all feel we are putting something back," Walters explains. "We have all been pretty successful in business and see this as a way of helping other people be successful too."
Barbara `Millar