August 2001
- Small Business News
|
1.
PAYMENT
DELAYS
GOING
UP -
RECESSION
COMING?
Experian,
the
credit
information
agency,
reports
an
increase
in
the
time
it
takes
to
pay
an
invoice
in
the
UK.
It
now
takes
an
average
of
60-days
to
pay
an
outstanding
invoice.
This
figure
is
up
two-percent
since
the
introduction
of
legislation
that
allowed
small
businesses
to
charge
large
companies
default
interest
(currently
13%
per
annum):
legislation
that
is
at
best
a
minor
deterrent,
but
is
often
ignored
on
the
grounds
that
the
small
business
wants/needs
to
continue
supplying
the
large
company
irrespective
of
late
payment,
or
opt
in,
legislation.
Is
there
a
looming
commercial
recession?
The
USA
and
Euro-Land
are
there
now
and
it
seems
likely
there
will
be
one
here
as
UK
commercial
debt
is
creeping
towards
ukp250
billion,
and
with
interest
rates
dropping
to
fuel
more
cheap
but
potentially
bad
debt
borrowing
the
late
payment
figure
of
60-days
is
almost
certain
to
climb.
One
of
the
effects
of a
recession,
in
cash
flow
terms
to
small
businesses,
is
the
tactical
withholding
of
cash
by
larger
businesses
who
hope
to
borrow
less
from
financial
institutions
and
receive
cheap
credit
provided
by
small
businesses
-
whether
the
small
business
likes
it
or
not,
I
add.
Although
large
businesses
cause
unnecessary
suffering
by
not
paying
invoices
on
time
you
will
usually
receive
payment
if
they
avoid
insolvency
- I
am
not
saying
this
is
OK -
but
being
owed
a
debt
by
the
smaller
business
is
more
of a
terminal
risk.
Initiating
the
first
steps
of
debt
recovery
against
a
small
business
should
begin
within
30 -
35-days
from
the
invoice
date
with
a
courteous
but
firm
telephone
call.
With
larger
businesses
it
is
wise
to
make
every
effort
to
get
a
specific
payment
date
from
them
at
the
point
of
sale
and
not
to
just
rely
on
your
own
terms
and
conditions:
i.e.
because
you
state
30-days
on
your
invoice
you
expect
the
large
business
to
pay
no
later
than
30-days.
During
recessions
small
business
cash
flow
dries
up
virtually
overnight
and
the
policy
of
paying
those
who
shout
loudest
is
usually
implemented:
it
is
not
true
that
debtors
will
pay
the
suppliers
they
use
most
when
deciding
who
they
can
pay.
A
struggling
small
business
will
try
to
get
credit
from
any
possible
source
and
this
means
changing
suppliers
because
the
original
supplier
may
have
suspended/stopped
credit
sales.
If
you
are
the
next
supplier
(creditor)
you
could
be
one
or
two
sales
away
from
a
total
bad
debt
scenario.
Good
supplier/customer
relationships
are
built
in
good
times
as
value
and
quality
are
the
key
requirements.
Whereas
many
supplier/customer
relationships
initiated
in
times
of
recession
are
invariably
based
on
available
credit
lines
and
not
on
quality
which
can
damage
your
own
customers
value
of
your
business.
Finally,
producing
monthly
management
accounts
with
a
break-even
cash
flow
forecast
will
ensure
that
you
have
a
'game
plan'
based
on
minimum
cash
flow
requirements.
This
may
seem
to
be
overkill
for
the
small
business
owner
but
it
is
because
you
run
a
small
business,
with
smaller
revenue,
that
you
need
to
have
a
good
idea
of
what
you
have
to
accomplish
in
sales
and
cash
flow
this
month
to
be
able
to
meet
basic
costs
next
month:
getting
into
the
financial
control
habit
is
'gold
dust'
experience
for
any
growing
business.
Cash
Flow
Information
Credit
Risk
Information
Accounts
Preparation
Information
2.
CREDIT
INSURANCE
MADE
SIMPLE
For
many
small
businesses,
one
bad
debt
is
all
it
takes
to
force
them
into
liquidation.
Even
so,
they
have
been
reluctant
to
take
advantage
of
credit
insurance
which
is
rumoured
to
be
complicated
and
expensive.
With
the
advent
of
Internet
technology,
credit
insurance
is
easily
accessible
and
more
affordable
than
ever
before.
Businesses
can
obtain
free
quotes
upfront
and
Instant
Invoice
Insurance
(rather
than
the
traditional
"whole
turnover
insurance")
can
be
obtained
online
the
moment
a
sale
is
made
- 24
hours
a
day.
What
are
the
benefits?
Credit
insurance
policies
help
out
when
your
customer
pays
late
or
goes
insolvent.
The
policy
is a
safety
net
against
suffering
financial
loss
because
of
your
customer's
failure
to
pay.
How
does
it
work?
You
can
insure
selected
invoices,
individual
customers
or
your
whole
book
of
debtors.
The
insurance
is
purchased
before
the
sale(s)
you
want
to
insure.
Is
this
the
same
as
factoring?
Factoring
is
used
for
short
term
cash
flow
and
credit
insurance
provides
you
with
"balance
sheet"
peace
of
mind.
In
some
cases,
the
credit
insurance
policy
will
make
the
debt
easier
to
factor.
3.
MARKET
RESEARCH:
WHAT
IS
IT?
In a
recent
newsletter
we
covered
the
'big'
question
of
whether
to
form
a
limited
company
or
to
go
self
employed.
Another
one
of
the
'big'
questions
that
you
will
need
to
deal
with
is
'will
my
product/service
sell?'
Finding
the
answer
to
this
question
involves
Market
Research.
This
article
will
not
teach
you
how
to
conduct
market
research
(good
books
and
courses
are
the
answer
to
business
knowledge)
but
it
will
help
you
make
your
mind
up
about
your
own
business
needs.
What
is
Market
Research?
Market
research
is
about
finding
out
answers
to
questions
that
specifically
deal
with
whether
or
not
there
is a
local/national
market
for
your
product/service:
be
that
about
price,
quality,
quantity
etc.
The
idea
is
not
to
find
out
if
'someone'
will
buy
your
product,
but
that
in
your
target
area
there
is a
sustainable
need
for
what
you
have
to
offer.
Further,
market
research
can
give
you
new,
up
to
date
and
powerful
information
that
could,
say,
highlight
clear
signs
as
to
how
to
break
into
a
market
or
take
a
market
to
higher
levels.
Competitors
may
not
be
able
to
match
the
knowledge
you
have
gathered
-
say
improved
product
features
- so
in
the
short-term
it
could
give
you
enough
of
an
early
and
powerful
advantage
to
grab,
or
consolidate,
a
share
of
the
market.
(From
the
Business
Link
web
site)
"There
are
two
main
sources
of
marketing
research
information:
Primary
research
-
involves
the
collection
of
new
information,
for
example
market
surveys,
telephone
questionnaires
and
focus
group
research
in
direct
contact
with
customers
Secondary
research
(also
known
as
desk
research)
-
involves
accessing
data
that
is
already
available,
for
example
economic
trends
and
specific
industry
sector
reports."
The
Myth
To
many
of
us,
the
term
'market
research'
was
something
you
did
if
you
had
a
multi-million
pound
business
and
you
required
highly
statistical
commercial/demographic/product
profiling
to
turn
probability
into
fact.
The
cost
of
hiring
experts
- if
you
could
convince
yourself
that
they
would
consider
taking
on
your
project
-
was
another
determining
factor
against
the
whole
mystique
of
market
research.
There
WAS
some
justification
in
the
past
for
thinking
that
market
research
was
beyond
the
small
business
owner.
There
were
a
number
of
problems
to
overcome:
the
lack
of
affordable
marketing
services/agencies,
no
in-house
analysis
skills,
poor/costly
demographic
information,
and
not
least
our
own
lack
of
knowledge
in
the
subject.
But,
none
as
big
as
the
business
owner
not
making
time
for
market
research
before
launching
a
business,
service
or
product.
Two
Ways
to
Approach
Market
Research
The
Minimum
Way
Look
in
local
libraries
for
commercial
information,
local
and
national
newspapers,
Yellow
Pages,
magazines
and
down
your
local
high
street
for
businesses
similar
to
the
one
you
intend
to
start
and
assess
from
a
distance
how
much
room
there
is
for
another
similar
business.
Talk
to
friends
and
family
-
especially
those
who
run
or
manage
a
business
-
about
how
you
have
thought
through
your
business
plan
and
seek
their
support:
and
possibly
to
the
extent
that
they
will
also
be
your
first
customer/s.
This
is
the
way
of
most
small
businesses
and
is
sometimes
sufficient
bearing
in
mind
that
the
small
business
owner
is
unlikely
to
be
competing
with
big
corporations
or
bulk
manufacturing
so
it's
a
case
of
producing
a
better
product
than
is
currently
available
locally.
The
Investigative
Way
Find
out
what
market
research
is:
what
you
have
to
do,
where
you
have
to
do
it
and
how
to
use
the
information
you
gather
to
reduce
the
possibility
of
failure
to
those
issues
that
could
not
be
avoided
pre-launch
of
your
business:
i.e.
BT
paying
5
billion
pounds
for
a
next
generation
mobile
licence
just
as
mobiles
reach
the
peak
of
usefulness
…so
if
they
get
caught..!
Preparing
for
Market
Research
As
research
is
time
consuming,
and
at
times
costly,
planning
is
vital
if
you
are
to
ensure
your
data
is
sufficient
to
cover
all
of
your
information
needs.
For
instance,
if
you
did
your
research
without
first
compiling
a
cash
flow
forecast
you
will
not
be
able
to
ask
people
if
they
will
pay,
as a
minimum,
the
breakeven
cost
of
an
item.
You
should
also
ensure
that
the
information
you
seek
is
the
most
critical
information
you
need
and
not
that
which
confirms
something
you
already
know.
Ensure
the
questions
you
ask
are
those
that
get
the
fullest
and
most
honest
response
and
not
the
easiest:
for
those
asking
or
telling!
Learning
about
Market
Research
In
the
UK,
Business
Link
and
local
government
funded
business
centres
will
normally
have
an
expert
available
who
will
give
you
free
advice
about
market
research
in
your
industry,
with
a
phone
call
to
your
local
office
worth
the
effort
even
if
they
are
not
upbeat
about
your
survival
prospects.
(From
the
Business
Link
web
site)
"Commissioning
market
research
can
be
an
expensive
step
for
a
small
company.
Before
you
start,
it
may
be
worth
just
making
doubly
sure
that
you've
done
a
thorough
review
of
existing
secondary
research.
When
it
comes
to
commissioning
research,
the
most
important
element
is
the
'research
brief'
that
you
provide
to
the
agency
or
consultant.
The
brief
should
include:
*
Relevant
background
information
about
your
business
and
its
products
* A
definition
of
the
problem
*
Clear
objectives
for
the
research
*
Timescales
and
budgets
available
*
Any
special
factors
that
the
researchers
may
need
to
take
into
account.
Once
you
have
appointed
the
research
agency
or
consultant,
the
programme
of
research
should
be
formulated
and
agreed
with
you
before
any
activity
takes
place.
A
benchmark
for
expenditure
on
commissioned
marketing
research
is
that
the
benefits
to
your
company
should
be
worth
70
times
the
cost
of
the
research."
My
favoured
option
is
to
visit
a
dedicated
business
book
shop
and
find
a
book
that
matches
my
capability
and
therefore
one
I
can
understand:
the
books
'Idiot's
Guide
to…',
and
'…
for
Dummies'
are
a
great
way
to
understand
a
subject
and
are
intended
for
those
who
are
good
at
making
their
product,
but
struggle
with
the
essential
areas
of
running
a
business.
So
look
for
something
along
the
lines
of
'Idiots
Guide
to
Market
Research'.
Choosing
a
book
is a
personal
thing.
What
one
person
thinks
is a
great
book
at
explaining
marketing,
another
will
think
baffling.
If
you
are
not
sure
what
you
are
looking
for
you
should
start
at
the
beginning
and
get
a
book
that
simply
(as
far
as
you
are
concerned)
explains
the
big
picture:
in
my
opinion,
it
is
not
advisable
to
buy
a
book
on-line
based
on a
few
words
(probably
written
by
the
author)
and
possibly
no
use
to
you.
Where
to
get
Market
Research
You
can
gather
information
from
the
public
(high-street
surveys),
from
potential
customers
(telemarketing
&
mail-shot
surveys
-
don't
try
to
sell
at
the
same
time),
from
company
employees
(that
you
know),
off-line
market
research
services.
If
you
are
an
established
business
and
you
are
conducting
market
research
for
a
new/altered
product
it
would
be
sacrilegious
not
to
ask
your
current
customers:
they
would
love
to
tell
you
what
they
really
want
and
will
discount
any
concern
about
product
development
cost.
If
you
have
a
main
city
library
the
amount
and
quality
of
free
information
is
usually
huge
with
many
libraries
now
having
business
sections
coupled
with
staff
that
are
extremely
knowledgeable.
Some
libraries
will
actually
allow
you
to
book
appointments
with
their
business
staff
and
should
arguably
be a
starting
point
for
all
entrepreneurs
as
spending
time
and
money
on
market
research
just
to
find
out
something
that
had
already
been
established
and
written
in a
book,
a
web
page
or
cheaply
available
from
a
marketing
agency
is a
lost
opportunity
to
find
out
something
new,
and
possibly
valuable.
Using
the
Internet
is
always
recommended
-
where
you
will
find
articles
like
this
one,
or
better
of
course
-
and
possibly
an
article
specific
to
your
industry's
marketing
peculiarities.
There
are
a
number
of
on-line
market
research
agencies
who
will
take
your
money
irrespective
of
their
knowledge
in
your
industry.
My
other
comment
about
on-line
market
research
services
is
that
unless
you
spend
a
lot
of
money
the
research
is
unlikely
to
involve
anyone
expending
shoe-leather
in
your
target
location:
if
that
is
relevant
to
your
needs.
However,
they
will
probably
have
general
information
that
will
save
you
a
lot
of
time
and
therefore
money.
Finally.
If
you
correctly
conduct
market
research
and
you
do
not
like
your
findings
it
would
be
foolish
to
ignore
your
results
if
they
are
not
as
positive
as
you
wanted.
After
all,
if
your
research
shows
you
that
your
product
is
not
viable
and
you
cannot
adjust
cost
or
quality
then
your
market
research
HAS
been
successful!
The
following
link
are
about
all
you
need
to
find
on-line
market
research
information
and
resources:
Market
Research
Information
A
few
of
our
other
marketing
articles:
Marketing
a
Small
Business
Business
Plan
10
Ways
to
Get
Customers
Before
Starting
Your
Business
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