What are angel investors looking for from small businesses?

Securing funding is a priority for all start-ups, entrepreneurs and small businesses. Without cashflow, it doesn’t matter how promising a business idea is. And one channel many entrepreneurs pursue for funding are angel investors.

How do angel investors work?

An angel investor is someone who uses their own personal money to invest in a small business, one that they personally consider worthwhile. They will choose businesses that have growth potential. Usually, they provide that business with equity finance and receive shares of the business in return – think a ‘Dragon’s Den’ style transaction.

Angel investors use their own experience, skills and knowledge to decide who to work with. They don’t rely on an external agent or advisor, it’s about them making gut decisions based on face-to-face meetings, or via online platforms.

A key differentiator between receiving funding from a bank and an angel investor is that you will also benefit from the angel investors contacts, experience and knowledge. Angel investors bring a lot more to the table that just funding, they can bring all kinds of networking opportunities to help the small business grow and succeed. Some choose to act passively as part of a group of investors or be the lead investor on a deal.

How can small businesses find an angel investor?

Networking is key here. The most productive way to approach an angel investor is through an introduction, either from a contact, client, other entrepreneur or even a friend. Angel investors are approached by many people with a lot of different pitches, so it can be difficult to get an ‘in’.

Events are also a possible avenue, with groups such as the UK Business Angels Association (UKBAA) regularly hosting investor forums. These can present opportunities to meet with business leaders, other entrepreneurs and potential investors. They also host regional hubs offering higher visibility of investors to entrepreneurs.

What interests an angel investor?

Investors want to understand how you are solving a problem or challenge present in society or a specific market. They will want to see market research that proves your start-up or project meets an actual need. It also must bring something disruptive or tangibly new to the market.

They also what to know that your business can be scaled, how you plan to grow, how you expect to make money and whether you’ve tested prototypes on customers. You must be able to prove there is real interest in your project. It’s not enough to turn up with an idea and expect funding, rather a strong business case must be crafted.

As well as short-term scalability, angel investors want to know about international possibilities. How will your start-up eventually fit in on a global stage?

Is there a limit on how much they can invest?

While some angel investors choose to do so alone, it’s more common to invest alongside others through syndication. The average angel investment from an individual is about £25,000. Syndicates provide approximately £190,000 on average.

Bigger SMEs on the cusp of international expansion naturally require more investment than a start-up. Investors tailor support to fit the project, something that is usually not possible from traditional lenders. Investors and the start-ups involved benefit from this flexibility.

Investing in this way usually doesn’t see a return or a possible exit for at least eight years. How long angel investors choose to remain part of the business again depends on individual circumstances. They rely on guidance from people who have long-term experience in building businesses to make decisions, as well as their own in-depth knowledge of the sector.

Start-up investment is increasing in the UK

Start-up investment is more popular and accessible in the UK than ever before. There are enough successful start-ups (for example, ASOS, JustEat and Zoopla) providing a clear framework for investors to make a decision. In addition, there are increasing policies and legislative changes implemented by various Governments to support this sector.

The biggest impact has come from the Enterprise Investment Scheme (EIS) in the late 1990s, and the Seed Enterprise Investment Scheme (SEIS), implemented in 2012. Both reward investors with generous tax breaks. For example, under SEIS, it’s possible to gain up to 72.5% of the investment as tax relief.

James Turner, Managing Director of Turner Little Limited, says: “These kinds of tax relief schemes have been exceptionally popular with private and angel investors. Each year. They invest more than £1.5 billion into high-growth opportunities using EIS and SEIS. This is why we are seeing more angel investors wanting to become involved at the early stages of start-ups.

“Angel networks are excellent tools for investors as they present various opportunities through online platforms and pitching events. Tech start-ups in particular are seeing results from angel investors, and it offers a financing opportunity that is more flexible than traditional banks.

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

Should small businesses focus on people or technology?

What’s more important for your small business? Is it your people or the technology you invest in? As the business sector transitions into a totally digital world, some entrepreneurs and small business owners are focusing more on tech than people.

New research from Yorkshire Bank’s Expect More report, shows that nearly half of UK SME owners believe technology is more important to their business than people.

Why is technology important to small businesses?

Expect More covers 2,000 small business owners, SME entrepreneurs and start-up owners from ten major UK cities.

More than 46% of small business owners say they think tech is more important to their business than people, with the highest number in London (56%). And it seems these tech-loving SME owners may be on the right track.

Successful, high-growth businesses are more likely to be driven by technology. The report shows that almost three-quarters of entrepreneurs find tech is the key reason for business growth. Interestingly, these high-growth businesses driven by tech are more aware of the environmental impact of their work. Almost 60% say their environmental impact is extremely important, compared with an average 44%.

The link between technology and funding

Tech also secures more funding for SMEs. More than 35% of small businesses led by technology find it relatively easy to land growth funding. This is significant when compared with those outside of the tech field, with just 19% of other businesses reporting the same.

This is partly due to the fact that tech-led SMEs are making more attempts to secure more funding than businesses in other sectors. The study finds that 90% tech orientated businesses attempted to access funding, compared to an average of 80%. Whether this is because there are more opportunities available, or whether tech businesses are being more proactive remains unclear.

James Turner, Managing Director of Turner Little Limited, says: “Technology is the biggest disruptor to our daily lives and to businesses across every sector. Advances in tech are revolutionising the way we live and work. This is opening up new markets to UK SMEs.

“E-commerce has allowed access to a sector that wasn’t previously available to small businesses, and many start-ups are tech driven for this reason. There are opportunities for tech-based start-ups that simply don’t exist for more traditional small businesses, particularly as the face of retail is changing so much. As e-commerce and traditional retail continue to adapt to each other, UK SMEs are taking advantage of this new channel of opportunity.

“It’s unsurprising, therefore, that tech-based small businesses are securing more funding and reporting higher growth levels. The SME sector has adopted a massive range of tech, ranging from social media and digital marketing to automation and artificial intelligence (AI). The introduction of 5G will continue to push tech boundaries and open up more connections, fuelling development in this area.

“However, people remain vital to the success of small businesses, and this shouldn’t be forgotten in the drive to adopt new technology. The personal element is the differentiator between businesses and can be the difference between success and failure. The importance of effective communication between business and client or customer should not be taken for granted. UK SMEs must strike a balance between people and technology as their focus.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

What is and Where are the tax havens?

A tax haven is any country that allows you to reduce the amount of tax you pay.

Let’s state at the beginning that there is nothing wrong with using tax havens provided you are careful not to break any rules in your country of residence.

Some people use tax havens to hide their money from the tax authorities in their home countries. This is not only illegal, it’s very stupid, because one day you will probably be caught and could end up with substantial fines as well as back-taxes and possible even a jail sentence.

Notwithstanding, if you have the legal right to use a tax haven you would be foolish not to take advantage of all the opportunities you can to maximise your wealth.

There are three principal types of tax haven:

Zero – Tax Havens

These are countries that do not have any of the three main direct taxes most of us are familiar with:

  • No income tax or corporation tax
  • No capital gains tax; and
  • No inheritance tax

Some of the nil tax havens, you have probably heard of or read about or even seen in films; you may even have been on holiday in some. Amongst others they include:

Anguilla
Bahamas
Bermuda
Cayman Islands
Dubai
Monaco
St Kitts and Nevis
Turks & Caicos Islands
Vanuatu

Although there are no direct taxes in these jurisdictions, the governments there still need to generate some income. What they tend to do therefore is to impose licence fees for company incorporation documents or annual registration fees for companies; these charges are usually fixed and relatively small. If you’re considering living in one of these territories, most of these charges won’t apply and you may be able to live with little state involvement in the way of taxes. The only tax charges that might then affect you would perhaps be import duties or local sales taxes.

Foreign Source Exempt Havens

These countries do charge taxes and sometimes they can be at a high level. However, they are tax havens by virtue of the fact that they only tax you on locally derived income.

In other words, if all your income is earned outside the tax haven, you will not pay any tax there. Please be aware though that you may incur a liability for tax in the country in which you actually earn the income. Some examples of foreign source exempt tax havens are:

Costa Rica
Hong Kong
Panama
Seychelles
Singapore

This type of tax haven exempts any income earned from foreign sources from tax, provided the foreign income source does not involve any local business activity.

Some of the other tax havens don’t even allow a company to conduct business of any sort internally if tax advantages are to be claimed.

Jurisdictions such as Panama and Gibraltar would require a company to decide at the time of incorporation whether it was allowed to do local business (and therefore be taxed on its worldwide profits), or only foreign business and therefore be free from taxation.

Low-Tax Havens

The final group of so-called tax havens are countries that do have a system of taxation and do impose taxes on residents’ worldwide income. You may well ask why these are still known as tax havens. There are principally two reasons:

  • Certain countries may grant concessions that offer tax advantages in specific situations (capital gains tax avoidance for example).
  • Appropriate use of double tax treaties that countries enter into with each other which may allow you to lower your tax bill.

Good examples of low-tax havens are:

Austria
Barbados
Belgium
Cyprus
Denmark
Switzerland
The Netherlands
The United Kingdom

Other Important Factors to Consider

When considering tax havens per se, whilst the amount of tax they levy is obviously important, it is not the only factor.

You may not for example, want to risk investing your money in an offshore account in a politically unstable country; particularly if there is a risk that your assets could be expropriated.

Tax planning therefore, is only one consideration. Other important considerations are:

  • Privacy. What is the level of confidentiality?
  • Ease of residence. Is it fairly easy to obtain permission to live in the tax haven?
  • Political stability. Is there a risk your cash could end up in the government’s coffers?
  • Communications. How good are telephone and broadband internet access?
  • How easy is it to travel to the country?
  • Lifestyle factors. What is the standard of living? Are schooling and hospitals up to standard?
  • Is the climate suitable?
  • How high is the cost of living?

Ultimately, it’s a question of what you want from life and from your tax haven; are you concerned only with the tax position or are other factors equally important?

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

New legislation to shake up offshore banking in Cayman Islands

The Government of the Cayman Islands unveiled three legal bills that will fundamentally alter its offshore banking legislation. The move comes just weeks before the European Union’s deadline of 31 December, after which the EU will release its latest blacklist.

A deadline has been implemented by the EU for all offshore financial centres to address measures over perceived ‘unfair tax practices’ in order to avoid the blacklist.

Offshore banking legislation changes

New legislation includes the International Tax Co-operation (Economic Substance) Bill as well as alterations to current company laws. All three legal changes must be debated and passed before the end of 2018 and will lead to a major shake-up in the offshore sector.

The changes will mean that offshore companies incorporated in the Cayman Islands will have to prove that they are carrying out tangible work there. If they can’t prove this or that they have some form of solid, economic presence, then they won’t be able to “satisfy the economic substance test in relation to any relevant activity carried on by that relevant entity”, as stated in the new bill.

Officials from the financial services ministry say that an “in-depth consultation” went ahead with commerce regulators and stakeholders, the Cayman Island’s financial industry, the European Union and the global Organisation for Economic Co-operation and Development (OECD) before the laws were completed. They say: “Since January 2018, many representatives from more than 15 financial services and commerce associations, as well as government stakeholders outside of the Ministry of Financial Services, have participated in the consultation. This breadth allowed government to ensure that our legislation is appropriate for both financial services, and local business.”

International financial centre

Offshore centres operate as global financial centres, which inevitably means that legislative changes take a lot of tine to be published. The new laws, and changes to current laws, are built on the Forum on Harmful Tax Practices (FHTP) by the OECD. This comes under the Base Erosion and Profit Shifting (BEPS) Inclusive Framework, that was joined by the Cayman Islands in 2017.

This framework outlines the global standards for tax structures developed to attract profit in jurisdictions where they don’t conduct real economic activities. The forum in turn supports the framework, by reviewing regimes that give better tax rates to these structures, as this can negatively affect tax collection in other jurisdictions.

European Union blacklisting

The EU also use the framework to identify harmful tax practices within jurisdictions it considers ‘non-cooperative’. As the Cayman Islands intend to implement the new laws by the deadline of 31 December, they will avoid being blacklisted by the EU.

Cayman has never been on the EU’s list of ‘non-compliant’ jurisdictions, however it is on a watchlist in terms of addressing economic substance. Officials say that the EU’s concerns “need to be addressed in order to correct the perception that our tax system provides an unfair tax advantage to any company operating in our jurisdiction.”

James Turner, Managing Director of Turner Little Limited says: “These kinds of legal changes will effectively usher in a new chapter for the offshore sector. Exempt companies will be allowed to do business locally but will have to follow the same rules as local businesses do. This will eliminate mailbox companies, who have just used the address in order to gain tax exemptions.

“The FHTP now covers more than 120 countries within its range, with the ultimate aim of making tax issues globally compliant. We are witnessing a real evolution of global standards within financial services. The changes for the Cayman Islands will be seen next year, as currently there are more than 106,000 exempt companies with barely any economic presence in the jurisdiction. It will be interesting to see how this change will affect the offshore sector and the wider economic impact it will have as we move towards a true global standard.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

UK renews crackdown on offshore tax avoidance

As part of the Autumn Budget, the Government announced that HMRC (HM Revenue & Customs) would publish a new offshore tax compliance strategy. The Government also reaffirmed its intentions of fighting offshore tax avoidance, tax evasion and general non-compliance.

The new strategy is designed to build on the strengths of the current one. According to the Government, initiatives have secured and protected more than £185 billion since 2010. They say that without its strategy, this amount of tax would not have been paid.

Ending offshore tax avoidance

The current tax strategy from HMRC was implemented in 2014, and is called ‘No Safe Havens’. Its core tenet was to ensure that there are no jurisdictions in which taxpayers can hide their assets and income from HMRC.

Since 2014, the strategy has overseen new legislation and disclosure facilities. These were devised to encourage people with unreported tax liabilities from offshore wealth to voluntarily come to the HMRC and sort their tax affairs. Some of the key terms of the Liechtenstein Disclosure Facility (LDF) included immunity from prosecution and a low penalty of 10% of the tax involved. These have been criticised by being far too generous, given that many using the facility were owning up to large amounts of tax fraud.

Recent changes include harsher measures

Due to the criticism, the Government has implemented harsher measures more recently. These include:

  • Substantial penalties measured by the value of the offshore assets.
  • Penalties based on the movement of offshore assets in a bid to avoid disclosure and detection.
  • The Failure to Correct (FTC) and Requirement to Correct (RTC) regime mean those who fail to correct non-compliance of offshore tax at a rate of up to 200% of the tax involved would receive harsh penalties and their details being made public.

Voluntary disclosers are usually made using the Worldwide Disclosure Facility (WDF). Exemptions include cases that involve serious fraud, which should be made through the Contractual Disclosure Facility (CDF). Disclosures made through the WDF can’t receive criminal immunity or a reduced penalty.

The UK Government has been making these changes as part of the general background for global tax transparency. Driven by financial austerity and fuelled by public demands for wealthy individuals and large enterprises to stop avoiding paying tax.

Common Reporting Standard for global transparency

The Common Reporting Standard (CRS), also known as the Organisation for Economic Co-operation and Development’s international information exchange, has included more than 100 countries. They have been sharing sensitive tax information since September 2017 in a bid to improve global transparency.

HMRC is a signatory, and as such have been given formerly unprecedented access to financial data of UK residents who use offshore accounts and investments. However, there are questions as to whether HMRC has enough resources to make use of this massive amount of data.

Earlier in 2018, the Public Accounts Committee (Parliament’s spending watchdog) reported on the Panama papers leak. The data leak led to 66 criminal and civil investigations and is expected to yield HMRC more than £100 million in unpaid tax. Despite this result, the committee says that it is “far from confident” that HMRC has enough expertise and resources to make proper use of the data it has access to.

Government must do more

Criticisms have been levelled against HMRC for many years from Treasury and Parliamentary committees for not fully investigating tax fraud or being too late to benefit from it. There are measures in place aimed at both tax payers and their advisers. For example, a strict liability corporate criminal offense is in place for those failing to prevent tax fraud. Other initiatives penalise advisers who enable their clients to perpetrate fraud.

Some of these, such as the RTC and FTC, the strict liability criminal offence for tax avoidance, and the amount of information automatically provided to HMRC under the CRS, it seems an appropriate time for the Government to reassess the measures and work on improvements. Some clues are given as to the future of the Government’s offshore noncompliance strategy with HMRC’s consultation paper ‘Amending HMRC’s Civil Information Powers’.

James Turner, Managing Director of Turner Little Limited says: “It seems likely that the changes to the current offshore compliance strategy will be minimal. This is particularly likely given that many of the current measures are either very new, untested or don’t even come into effect until next year. The biggest changes are likely to include more emphasis laid on international co-operation, as HMRC makes use of the CRS and the UK’s already adopted co-operation directives.

“It’s reasonable to think that HMRC will make some difference to the ‘tax gap’ that relates to offshore avoidance. However, it clearly needs more funding and resources to properly make use of the vast amounts of information it now holds. This is something that can only come from the Government.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

 

Cryptocurrency businesses increasingly turning to offshore bank accounts

A report concentrating on the cryptocurrency and blockchain markets in the UK has revealed many businesses are turning to offshore bank accounts. The research was carried out by Digital Capital in a report called ‘Blockchain in Action: State of the UK Market’. Findings show that companies in this sector are finding it difficult to open traditional bank accounts.

Offshore bank accounts for crypto-businesses

Digital Capital is a digital innovation centre based in the UK. Its report surveyed 264 cryptocurrency related or distributed ledger technology-based businesses, which are divided into four distinct groups.

The categories are decentralised applications developers (dApps), centralised systems including crypto exchanges, service providers like consultancies and VC firms, and distributed ledger companies.

74% of blockchain companies have working applications and products in various sectors. Around 71% of these businesses are reporting revenue generation.

Uncertainty regarding regulatory bodies

Most small businesses working in the crypto and blockchain space have expressed some concern relating to the regulatory environment in the UK. In the same way as many other countries, there is a lack of certainty surrounding this industry.

Almost 75% of those surveyed say that they are not happy with the uncertainty facing the industry. Many concerns centre on the lack of clarity from regulatory bodies and authorities. There is no real consensus on certification, industry standardisation or crypto regulations, which makes it a risky sector to work in.

Other concerns centre on the difficulty in accessing technical advice and expertise, business consultancy or legal help. Almost half of the companies surveyed say that they want more services, particularly with regard to specialist legal services for distributed ledger issues.

Worries over Initial Coin Offerings

SMEs also express concerns surrounding Initial Coin Offerings (ICOs). This way of raising funds has experienced a big surge since 2016, with thousands of companies and projects choosing it as one way to raise money.

The report shows that the UK is second only to the US in terms of the total number of ICOs launched. The UK stands at a 10% share, with the US at 20%. However, out of the 264 businesses surveyed, just 4.5% used an ICO. Instead, around 80% of start-up founders used their own funds to launch their crypto-focused and digital ledger focused companies.

Uncertainty surrounding regulation also affects the entire ICO market. The Financial Conduct Authority (FCA) in the UK is examining regulating the ICO space, but has yet to formulate a framework to cover the legalities.

Problems with opening bank accounts

A key finding from the report relates to the trouble crypto businesses have when they want to open a bank account. More than half of the firms asked say they found it problematic when trying to open a bank account with a legacy financial institution.

Again, this is due to the uncertainty in the sector, particularly when it comes to anti-money laundering (AML) and Know Your Customer (KYC) checks.

James Turner, Managing Director of Turner Little Limited says: “The difficulty accessing a bank account has meant that many businesses in the crypto and distributed ledger space are turning towards opening offshore bank accounts. This allows more freedom and an alternative to the legacy banks, which are unsure about this sector.

“Until there is definitive legislation from the Government and regulatory bodies, there will be more challenges for small business owners in this sector. However, despite this, there is no doubt that the blockchain technology industry has huge potential to completely transform many sectors across the UK.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

UK cracks down on offshore banking fraud

Since the end of January 2018, UK authorities have been able to use Unexplained Wealth Orders (UWO) to crack down on financial fraud. Incorporated into law as part of the Criminal Finances Act 2017, it’s a specific order issued by a British court to force someone to reveal the sources of their ‘unexplained wealth’. It’s part of a wider push by the Government to combat fraud within legacy and offshore banking.

Combating fraud in offshore banking fraud

The first UWO to be issued under s362A (1) has just been upheld in the High Court, after it was challenged by the respondent. The first UWO was for Mrs Zamira Hajiyeva, who was asked to explain her wealth. The 55year-old woman is married to a jailed banker who owns the Mill Ride Golf Club in Ascot and went to the High Court to try to keep her identity hidden. This was denied by the High Court.

The order demands a statement from the respondent to explain various aspects of their finances. First, they must set out the nature and extent of their interest in a property, explain how they obtained it, reveal whether it is held by trustees of a settlement and give any other information under the order. If the respondent doesn’t comply within a specific timeframe, then the property in questions is deemed recoverable. The order can only be issued by the Crown Prosecution Service, HM Revenue & Customs, the FCA or the National Crime Agency (NCA).

Offshore incorporated business

The property in the order was bought in 2009 by a company called Vicksburg Global Inc. The business was incorporated in the British Virgin Islands and bout the property for £11.5 million. Three years ago, the respondent told the Home Office in her application for ‘indefinite leave to remain’ that she is the beneficial owner of Vicksburg. This was later confirmed by the British Virgin Islands police.

Mr Hajiyeva is the respondent’s husband and was formerly the chairman of the International Bank of Azerbaijan. Between 2001 and 2015 when he resigned his position, he was on a salary of £54,000. Later in 2015, he was arrested and charged with abuse of office, large-scale fraud and embezzlement in connection with his former bank. In 2016, he was sentenced to 15 years in prison and forced to pay the bank about $39 million.

The NCA convinced the courts that both Mr Hajiyeva and his wife are PEPs (politically exposed persons). Under the European Union’s newest Money Laundering Directive, PEPs come under various categories, including supervisory bodies of enterprises owned by the state.

Respondent contested order

The respondent argued that the UWO shouldn’t apply on eight different grounds, including that her husband isn’t a PEP, and that the NCA misrepresented his role to the courts. However, Mr Justice Supperstone of the High Court rejected all of her arguments and said he was satisfied that the Bank of Azerbaijan is a “state-owned enterprise”.

This judgement led to the anonymity order surround Mrs Hajiyeva to lapse. The NCA further suspects that illegal cash funded the purchase of a property called Mill Ride, which was bought through an offshore company based in Guernsey. The Judge says that the respondent’s spending habits appeared to corroborate the fraud allegations against her husband. The court pointed to the £16.3 million that was spent by the defendant between 2006 and 2016 at Harrods in London.

The NCA has identified approximately £4.4 billion of suspicious money in the UK. It wants to use UWOs more rigorously to target potential sources and users of illegal money. The NCA’s Director of Economic Crime has said that he wants to target money-laundering through buying and selling of prime real estate in London. The overall aim is to reduce the appeal of the UK as the ideal destination for money laundering and fraud.

James Turner, Managing Director of Turner Little Limited says: “Although UWOs are a civil matter, only law enforcers can use these orders. It’s likely that they will become more common in the ongoing fight against financial fraud. At the moment, the proceeds of any unexplained wealth are confiscated in accordance with the Proceeds of Crime Act. It’s not clear, however, how law enforcement agencies will determine the origins of stolen money. It’s also not clear whether the agencies will be fighting to return the money to the victims.

“There is a fear that UWOs are too little, too late and that it will mean agencies respond more slowly to initial reports of fraud.

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

Report shows why millennial women are choosing to start a company

A report published earlier this year by US-based small business agency SCORE uncovers the reasons why women from different demographics start a company. The 2018 Megaphone of Main Street: Women’s Entrepreneurship Report.

Why start a company?

The report reveals that 27.8% of millennial (generally defined as those born between 1980 and 2000) women start businesses when they spot an opportunity. A similar number of the older generation, commonly called baby boomers, gave a different reason. Just over 28% of baby boomers (born between 1946 and 1964) reported starting a company due to financial necessity. And women from Generation X (1961-1980) cited family consideration as the main reason for taking the leap and starting their own business.

Results were derived from an online survey sent out to 280,956 respondents across many different sectors. The results highlight the diversity of small business owners in the US and shows how entrepreneurs thrive across different industries. It’s the ninth annual survey covering this data, issued by PricewaterhouseCoopers. More than 25,100 people responded to the survey, out of which 12,091 were female entrepreneurs.

Women in small business representation

Women represent 39% of all small companies in the US, and in the UK the number is growing at a faster rate than ever before. Analysing why women decide to go into business for themselves makes it possible to increase the number representing small companies.

Questions in the survey centred around questions to determine how businesses owned by women compare in terms of success with male-owned companies. Attempting to determine whether women face different obstacles when seeking finance, and how mentorship appears to women as opposed to men.

Sectors headed by women

Female business owners are more likely to develop a business offering professional services (29.4%). The next most common for female entrepreneurs is healthcare services at 14.1%, retail at 12.5%, educational services at just under 9% and hospitality/restaurant and food at 8.2%.

Statistics also show that there is no discernible difference in success rates between companies owned by men and women. Approximately an equal number of businesses owned by women and men are sustaining their size (32%), expanding moderately (29%), increasing revenue (28%) or expanding aggressively (5% men, 7% women). On the flipside, approximately the same number of businesses owned by men and women are struggling (33% and 34% respectively).

Financing differences between male and female owned companies

Just under a third of women-owned businesses sought out financing over the past 12 months, compared with a higher percentage of 28 for male owned businesses. The impact of mentors also shows roughly the same influence over businesses regardless of which gender owns it.

James Turner, Managing Director of Turner Little Limited says: “Both in the US and the UK there are an increasing number of small businesses owned by women. Whether they are choosing to start their own company because they see a great opportunity or need to increase earnings to look after their families, the net result is the same – more SMEs started and run by women.

“While the SCORE report is US-specific, it shows that businesses owned by women are just as successful as those owned by men, and this is a trend we can expect to see at home too. With equal levels of revenue growth and business success, along with higher levels of start-ups, many independent measures show they are equally matched. However, there is still a lot of work to close the gender gap particularly in terms of hiring practices, revenue and financing.

“In the UK we can expect to see a greater number of small businesses from both genders over the next few years, as economic necessity drives opportunity for many. Accessible technology and entrepreneurial support from the Government should shore up a sector that is increasingly forming the backbone of the economy.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

How off-market is the not-so-secret key to buying a luxury home in the UK

Over the last two years, there has been a sharp increase in wealthy buyers in London selling and buying off-market. Estate agent Hamptons International released research that shows off-market sales account for 25% of sales over £1 million in London. This is up from 14% just four years ago and shows how much off-market has become part of the asset protection strategies used by wealthy investors and buyers in the UK.

One in four homeowners are choosing to sell their property without advertising online or in estate agent literature. Behind this increase is widespread concern about the contracting market. Increasingly, the best way for wealthy buyers to find the ideal luxury property is behind closed doors.

Asset protection strategies

Brexit and recent legislative changes have led house prices and transactions to fall since 2016, leaving the sector in disarray. Wealthy sellers and buyers have lost clarity on realistic pricing and demand, thanks to the contrasting media reports and an uncertain economy. Off-market selling is part of the asset protection strategies used by this level of buyer and seller.

Rather than taking the risk of a public launch of their sale, sellers are asking agents to discretely approach potential buyers. This allows them to get a feel for a price point without publicly having to drop the price and influence perception of their luxury property.

Johnny Morris, Head of Research at Hamptons International, says: “If you make your home available to buy quietly you can see if you can achieve the price you want without having a public record. Part of this is about sellers wanting to keep their options open.”

Off-market affects luxury market

The off-market share across the country also increased from 14% in 2014 to 20% in 2018. Unsurprisingly, the figures also show that these off-market sales overwhelmingly concern the top end of the property market.

In London, just 0.9% of off-market sales concerned properties priced at £500,000 or less over the past year. At the upper end of the scale, 27% of all off-market sales were for properties worth £2 million or more. Wealthy homeowners are driven to sell privately to test out the potential value of their property, and it assuages the traditional worries of the wealthy – security and privacy.

If a property doesn’t sell publicly, then owners can remove it from the market before later targeting selected parties at a lower price. This avoids the new targets from seeing the previous price online.

Supply and demand driving off-market sales

Off-market selling is even more attractive to the super-rich. For properties worth over £10 million, the pool of potential buyers drops significantly. Agents typically know who may have an interest, or who is looking for a specific property.

Selling in this way makes an expensive home accessible only to those who could realistically afford it and are serious about making offers. Director at buying agent Huntly Hooper, Oliver Hooper, says that there is a “massive imbalance” of supply and demand in the high-end property market in central London. This has led to a clear trend among transactions completed by clients in London. He says: “In 2016, about 60% of my deals were off-market. For the past two years, the proportion has been 100%.”

Keeping identities secret

The secrecy of off-market sales can run deep. For example, when a wealthy Middle Eastern woman wanted to find a property in London, estate agent Carter Jonas was able to recommend a period home priced at more than £50 million.

While the property had never been publicly for sale, with no for-sale sign or listing with an estate agent, its owners had simply told Carter Jonas that they wanted to sell. The buyer ended up going through a purchase process using a company structure that meant even her identity was kept secret.

James Turner, Managing Director of Turner Little Limited says: “Prices and access to serious buyers are important factors for off-plan sellers and buyers, but their most important priority is privacy. This is becoming more difficult to maintain since both our Government and those of other countries have stepped up measures to fight money laundering in the real estate sector.

“The Government has signalled its wish for a tougher stance on people who use property to hide the proceeds of crime. This was shown by the reveal in October of the wife of an ex-chairman of an Azerbaijan bank as the first unexplained wealth order after she acquired assets that include a Knightsbridge property worth £11.5 million. These orders oblige the subject to explain to the National Crime Agency how they can afford the assets, and if they can’t, their assets can be seized.

“Measures like this won’t stop off-market sales for the wealthy, but they may cause some buyers concern. With an increasing focus on the wealth gap in the UK during this uncertain economic period, the uber-rich often want to hide their massive transactions from a public that could be hostile.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

UK trademark laws to undergo big changes in 2019

The Government has released new guidance designed to support the new UK trademark laws, due to be implemented in January 2019. Aimed at providing information to trademark owners or those considering filing a trademark application, the documents cover the EU’s Trade Mark Directive 2015. These laws will be implemented in the UK with the Trade Marks Regulations 2018.

New laws will set out how businesses and individuals should make a trademark application. It also covers their obligations in terms of searching for any potentially conflicting trademarks, disputes between parties and general management of registered trademarks.

New UK trademark laws – rules for trademark application

The guidance covers various alterations to current legislation to bring it up-to-date. These were finalised earlier in the year and will come into force in the first month of 2019.

Previously, individuals or businesses making a trademark application were obliged to provide a visual representation of the mark. The new law modernises this process, by allowing trademarks to be registered using various electronic formats. Among those accepted under the new legislation are MP3 and MP4 audio and video files, which can only be filed online.

Other changes include the Intellectual Property Office (IPO) no longer informing people registering for trademarks about any expired trademarks that could possibly conflict with the new one. The guidance says that businesses should do their own online search to find out whether their potential trademark could conflict with others that have recently expired. This is because any expired trademarks can be restored or renewed any time up to 12 months after the renewal date.

However, if an owner of a trademark that was expired and then renewed tries to stop a new registrant using theirs, as long as the new users can show they were using it in good faith, they won’t be liable for infringement. This only applies for a fixed period of time.

Collective trademark changes

There are also several legislative changes surrounding collective trademarks. These are defined as trademarks belonging to an organisation and its members. The guidance states that a wider range of bodies will be able to apply for collective trademarks. This includes any created by a charter, a statute, co-operatives or associations. Groups of producers, manufacturers or suppliers of services with the legal standing to be able to enter into contracts, will also be allowed to apply for collective trademarks.

It further clarifies where the burden of proof should lie in any trademark disputes. In cases where a trademark holder applies to detain counterfeit products that are using its mark, it’s down to the person shipping the products to prove that the trademark holder doesn’t have the right to insist they aren’t marketed in the destination country.

The laws surrounding defence against trademark infringement are also changing. Organisations and individuals may face infringement proceedings if they are found to be using a company name that conflicts with a trademark registered to someone else. However, there will still be a defence available if the individual is using their own name.

James Turner, Managing Director of Turner Little Limited says: “The guidance provided by the Government is a comprehensive explanation of the changes in law that will come into force on 14 January 2019. With all of the media coverage surrounding Brexit and its potential impact, it can be easy to forget that legislation is still moving forward as it always has.

“It’s worth noting that the rules regarding infringements will affect cases that take place on or after the 14 January. If you’re wondering how Brexit will affect trademark legislation in the short-term, the answer is it won’t. The changes we will see in January will still apply after the UK has left the EU in March. This is to ensure continuity for brand owners, something that is particularly welcome given the uncertainty affecting every sector of the UK as we head towards the end of 2018.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

Research shows UK small businesses are ahead on AI and automation

Small businesses are faster at automating and implementing AI into business practices, according to research from the Chartered Institute of Management Accountants (CIMA).

Artificial Intelligence (AI) and automation of services and processes are becoming firmly entrenched in the UK business world. The sector is experiencing the first phase of the most important tech revolution since the start of the Internet. Some experts are heralding it the beginning of the Fourth Industrial Revolution.

This means that AI and automation will change every aspect of business over the next few years. This includes UK corporate bank accounts, financial services, who (or what) carries out certain tasks, customer service bots. It means streamlining and speeding up behind-the-scenes processes, to deliver faster service, using AI and machine learning. And it’s the businesses that are first off the starting blocks in terms of innovation that will take the lion’s share of the market.

Small businesses leading – UK corporate bank accounts

CIMA’s research shows that small businesses are leading this race. Compared with bigger companies, 18% say they’ve already implemented AI and automation in parts of their business. A lower 15% of mid-sized companies say they have taken similar steps. This is despite 26% of mid-sized companies saying that they could automate most of their operations, compared with 13% of small businesses.

These figures suggest that, although mid-sized companies have more room to automate processes, small businesses are more flexible to doing so. This could be partly due to the legacy systems that mid or large sized businesses are tied to, making it more expensive and difficult to implement new systems.

Adoption levels low

Real-life adoption of AI and automation is still quite low across all company sizes. This could be investors holding back due to the ongoing economic uncertainty the UK is experiencing because of Brexit. It can seem daunting to go ‘all in’ on brand new technologies. The perception is often that machine learning and AI are still at very early stages, and that there will be too much risk in investment.

However, investment right now in this sector will pay off long-term. There is no doubt that moving quickly to automate services and adopt AI tech will give businesses an advantage. And, while small and medium businesses can’t match the massive levels of investment necessary to develop overarching new tech, such as drones and automated cars, there are other steps to take.

Implementing AI and machine learning tools on a customer service website, for example, can reduce costs and improve service. For SMEs considering adopting new tech, the most important consideration is ensuring their workforce are upskilled. If the workforce can’t maximise the use of the new tech, then it will be a waste of money and time.

People are key to automation

There is a lack of understanding regarding how workers see their future in terms of AI and automation. For example, just 38% of workers surveyed think that technological innovations will affect their roles, and 26% have not even thought about it.

In contrast, 62% said that aspects of their businesses could be automated by 2023. While the interest level is high at investment and development level, it seems that the workforce is not given the same levels of focus.

New technology is altering workers’ roles within businesses, by shifting their focus into areas that technology can’t reach. For example, while machine learning can hugely speed up processes and reduce man hours needed to complete projects, people are still necessary to implement empathy, creativity and judgement. Despite this shift in focus, CIMA’s research shows that 25% of employees have had no in-work training over the last 12 months.

James Turner, Managing Director of Turner Little Limited says: “We are on the cusp of a technological revolution that could change the way the business world works. SMEs that take notice of the rapidly evolving AI and automation tech will reap the rewards that are there for the taking. And, while investment and development are obviously vital to making these changes, businesses must train their employees too.

“A change in attitude towards training and learning is needed across all businesses. Small businesses have the advantage of flexibility and not being tied to deeply embedded legacy processes, but they must include all employees to properly benefit from the advantages this technology could bring.

“It is a necessary step for businesses to ensure their workforce is given the requisite training in order to future proof their skills. While employees should also be proactive and take ownership of their careers, businesses must provide the tools and training. Without this, they could fall behind the competition.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

Rental payment data included on credit reports for first time

Experian has announced that it now includes rental payments in its credit reports. This innovative change could make it simpler for renters to get onto the property ladder.

The changes affect 1.2 million tenants who will now see their rent considered on their Experian credit reports. Tenants could find it easier to buy property, access mortgages and secure finance deals. If you’ve ever wondered how to improve your credit score, this step change by Experian could help.

How to improve your credit score – bridging the credit score gap

Tenants who consistently pay rent in a timely fashion and have joined The Rental Exchange Scheme can use this information to improve their credit score and potentially access better credit card, loan and mortgage deals.

Millions of tenants pay out tens of thousands of pounds to rent property every year but struggle to prove that they could pay a monthly mortgage or pay back a personal loan. It’s this discrepancy that Experian is seeking to tackle. This ‘Catch-22’ scenario of paying out a lot of money but not being able to prove mortgage-worthy finances prompted 150,000 fed-up renters to sign a petition in 2017.

The petition is titled: Make paying rent enough proof that you are able meet mortgage repayments. Although it was cut short due to the snap General Election, it was debated by Parliament. And while the Government pushed the decision back onto lenders, The Rental Exchange is tackling the problem head on.

Data integrated into statutory report

More than 150 local authorities, letting agents and social housing providers now report data into The Rental Exchange. Developed by the Big Issue Invest (owned by the Big Issue Group) and Experian, the Exchange can also be used by private renters via different routes.

Tenants who have opted in can see their rent payments on the Credit Expert tool provided by Experian, as well as on their free statutory credit report. It shows their name, address and monthly rent. It’s reported in a very similar way to mortgage payments and is updated every month to show whether the tenant paid on time.

The new data should help tenants build a better credit history, showing a history of regular payments. In turn, this will help them pass credit checks. According to Experian, adding rental information onto credit reports will also help tenants prove their identity online. They anticipate this figure will leap from 39% to 84%, massively improving the kinds of financial services they can access.

Thin-file information

Research by Experian from March 2018, shows that approximately four million UK adults have ‘thin-file’ information. This means they essentially have very little or no information that can be accessed by lenders to check their credit-worthiness. It’s likely that these applicants will fail to secure the best value loans, credit cards or mortgages.

The changes should create a more level playing field for accessing credit. Managing Director of The Big Issue Group, John Montague, says: “We recognised that people in poverty were routinely penalised. The Rental Exchange has succeeded in making more inclusive data available to credit service providers, and it is this data which has the potential to reduce levels of financial and digital exclusion and improve the circumstances of some of the poorest in our society.”

Improving credit report scores

Many lenders are interested in including rental data into their decision making processes for giving out credit. However, it’s not yet clear which firms have pledged support.

For the time being, although lenders can access credit reports for tenants who have opted in to the new scheme, the data won’t yet affect credit scores. This is because it’s not yet certain how lenders will use the information in their decision-making processes. Experian say that they will update relevant credit scores when it receives enough feedback from lenders to explain how they’re using the information.

There isn’t enough evidence as yet to talk specifics in terms of positive or negative impact. However, it’s certain that a well-maintained, regularly paid rental account should add strength to the user’s credit history. Experian estimates that 79% of tenants would see an improved credit score should lenders utilise rental data.

What about other credit agencies?

Lenders can, of course, use any of the three available credit reference agencies to credit score applicants for loans and financial services. Experian is the first agency to include rental data in its free statutory and paid-for credit reports, but others also have plans to do so.

TransUnion (formerly Callcredit) says: “We already take a broad range of consumer financial information into consideration and are investigating and looking at additional sources of data to help enrich a consumer’s credit report. Rental is one payment type in a wider set of non-discretionary financial commitments to potentially adopt, such as council tax, utilities, insurance and telecoms.”

Rhona Parry is Vice President of External Affairs for Europe at Equifax. She says: “The cost of living is a major issue for renters and they often pay more for credit than people with mortgages just because they cannot easily prove to lenders that they pay their rent. Equifax is working hard with landlords and lenders to find safe, easy ways for renters to share their data and access better financial products at better prices.”

James Turner, Managing Director of Turner Little Limited says: “If you’re wondering how to improve your credit score, then measures such as the Exchange by Experian are encouraging. If you’re a council or social housing renting tenant, then ask your landlord to give The Rental Exchange your payment data. For those in private rentals managed by a letting agent, it could be possible to self-report through an Experian partner.

“If you’re renting and you want to buy property in the future, signing up to a way of tracking your rental payments is undoubtedly a good idea. While the information isn’t yet included in your credit file, it’s likely that it will be. Either way, it will help the lender make an informed decision about whether you can pay back a loan or mortgage.

“We can expect to see the other agencies follow suit over the next few years, and for lenders to be clear about how they will incorporate this information into credit files. There are more people renting in the UK than ever before, and it’s vital that lenders begin to treat both homeowners and renters equally when it comes to granting loans and financial services.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

What does the 2018 Budget mean for small businesses in the UK?

As the Chancellor unveiled the 2018 Autumn Budget, the final one before Brexit in March 2019, there were various nods towards small businesses in the UK. These range from personal tax allowance increases to business rate help.

Mr Hammond began his opening speech saying that it would be “a Budget for hardworking families… the strivers, the grafters and the carers who are the backbone of our economy.”

Personal Tax Allowance

This is the amount of money workers can take home without paying tax on it. Any amount above the Personal Tax Allowance rate is taxed. The rate is variable, depending on the total income of the person.

The Budget raises Personal Tax Allowance to £12,500 for basic rate tax payers, and to £50,000 for high rate tax payers next year. At the moment, the standard personal allowance is £11,850.

Cash for the UK’s High Streets

For small business owners operating from a bricks and mortar retail space, the Budget introduces the Future High Streets Fund. This consists of £675 million of funding for local councils to apply for. The idea is that it will go towards planning for the future of the High Streets, which are increasingly empty.

Mr Hammond specifically said that it should be used for converting commercial premises into residential properties. This, he claims, would increase footfall and counter the rise of online shopping.

Savings for independent businesses

Up to £8,000 of savings will be introduced for the very small businesses, according to Mr Hammond. He says that he will cut business rates for businesses with a rateable value of £51,000 and under. This will mean their bills will be slashed by a third during the next two years.

Digital service tax

There were worries before the Budget was announced that an alleged new digital services tax would negatively affect small businesses. This was a particular concern for online retailers. However, the announcement only applies to global businesses that generate a massive amount of sales. It’s not yet certain whether this could affect small businesses that sell through large retailers, such as eBay and Amazon.

Green taxes

Just one tax was introduced in the Budget to cover environmental concerns. Companies that manufacture plastic made from less than 30% recycled material will face a charge. This could affect small businesses, depending on their product and sector.

Other changes that could impact small businesses

The main takeaways from the Budget that will affect small business are covered above. However, small business owners should also be aware of the following:

  1. The annual investment allowance increases from £200,000 to £1 million for two years.
  2. Small businesses only have to contribute 5% to the apprenticeship levy.
  3. All toilets available to the public will mean new business rate relief, whether they are privately or publicly owned.
  4. England’s roads will receive a £30 billion relief package for repairs to potholes and bridges.
  5. Fuel duty will continue to be frozen. This will save van drivers about £2,500 and car drivers about £1,000.
  6. No changes to the VAT threshold.
  7. National living wage will increase to £8.21.
  8. Duties on cider, beer and spirits will be frozen.

James Turner, Managing Director of Turner Little Limited says: “Taken at face value, it appears that the Government sees the importance of small businesses thriving. They form the backbone of the UK’s economy, and as we continue through uncertain economic and political times, I hope that this support also continues.

“It’s important to understand the implications of the 2018 Autumn Budget, of course. However, it’s also important to note that the Chancellor himself announced that should the UK leave the EU without a deal, then this Budget will be scrapped. The major announcement in the Budget is the so-called “end to austerity”, but if negotiations continue to stall, this won’t be the case.

“As the business world waits for the Government to provide clarity on the exit deal, it’s becoming more likely that we will all face a no deal scenario. In which case, we will be waiting for a completely different set of Budget announcements.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

The challenges of starting a small business – and how to avoid them

With some business leaders in the UK demanding a People’s Vote or a second Referendum for leaving the EU, small businesses find themselves arguably operating within the toughest economic circumstances for decades.

The effect Brexit will have on small businesses, or indeed any businesses, is still unknown. This is despite the fact that the 2018 Budget has been released and the Government is in the final stages of the negotiating process. Whatever happens with Brexit, starting a small business is a challenge. It’s also a key moment in any business person’s life, and an opportunity to turn a passion into a living.

High fail rate

Figures from the Office of National Statistics show that the number of UK businesses that started between 2015 and 2016 went up from 383,000 to 414,000. The figures also show that the number of these businesses that failed rose from 283,000 to 328,000.

So, while a high percentage of people are ready to start a small business, the number of those that fail shows a need to get the basics right. What are the challenges small business owners can expect to face and how can they avoid failure?

Creating a solid business plan

Every business, no matter their size or longevity, must have a comprehensive, workable business plan. It should cover market research, realistic and viable financial forecasts, marketing details and the benchmarks needed to measure progress.

A business plan must be a document that is constantly revised and updated. It is not a static outline that is only looked at to secure funding, for example. It should be a workable document, that accompanies the small business owner through the rest of the challenges they will face in the first years of their new company.

Understanding the legalities of starting a small business

Many entrepreneurs are all about the excitement of starting their new business. And while, the legal nitty gritty isn’t necessarily the most interesting part of the process, nevertheless it’s vital.

For those operating as a sole trader, it can be as simple as ensuring they are registered with HMRC. However, many will choose to form a limited company and need to understand payroll and corporation tax.

Forgetting about the competition

Ignoring competition is a big mistake. Business owners must be in the loop in terms of their competitors. Proper market research and competitor analysis should form part of the ongoing updates to the business plan.

It’s important to understand that this isn’t a one-off job, and needs time and resources allocated to it. By keeping fully informed about competitor activity, small business owners can get ahead. Find out what they’re doing well, what and how they’re selling and any media presence they have secured. This helps to ascertain niche markets or complementary services that can be offered by the start-up.

Forming a brand identity

Branding is vital for every small business. As the digital world expands every year, branding becomes even more important. A brand comprises different elements. It shouldn’t be thought of as simply a logo and name, but more the style and tone of all visible communications, the experience a customer can expect and how the business is run.

Building a solid, recognisable brand that lights up for customers is essential for new start-ups that want to make it in a crowded sector.

Pricing services and products correctly

How to price goods and services often forms a stumbling block for start-ups. The temptation is always there to lower costs in order to gain new business. Depending on the sector, this could be a big mistake.

Most customers, and particularly those in the B2B sector, are seeking a service that provides value, as well as competitive prices. To price correctly, a small business should consider how they are adding value for customers, and price accordingly.

James Turner, Managing Director of Turner Little Limited says: “This information shows that there are steps that all start-ups should take when they decide to form a business. It’s unfortunately not enough to have the vision and ideas. Legalities, financing, business planning, marketing and much more must also factor in.

“It can be tempting for start-ups to dive in, without doing the right kind of research. And this could add them to the long list of start-ups that fail within their first year. The good news is that there are many ways to counteract the risks of starting a small or medium sized business. By taking care to create an effective and flexible business plan, taking advice on the legal side of starting a business, and carrying out thorough and relevant marketing research, a small business can ensure that some of the more common challenges don’t ruin their long-term success.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider and business consultancy. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

What small businesses will thrive after Brexit  

According to media reports, the UK Government is still trying to thrash out a deal for leaving the EU in 2019. While some accuse coverage of scaremongering, others are concerned about the increasing likelihood of a ‘no deal’ Brexit and what that could mean for the economy.

Whether the UK leaves with a deal or not, it seems that things will change for businesses and people investing in certain asset classes. For example, it’s likely that financial services businesses that rely on easy access to the European market will suffer. However, there will be winners too. Specifically, the opportunities presented by Brexit to small businesses.

SMEs could form the backbone of the economy post-Brexit, and the Government is certainly taking this stance. For those looking for financing, there are positive options such as the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). This is because we are witnessing a time in the market where businesses are looking for investors, and investors are seeking out opportunities, leading to a ‘sweet spot’

Investment opportunities

Small and growing businesses offer investors the kind of opportunities that will continue to appeal after Brexit. These are the businesses that will flourish when the UK has left the EU, for various reasons.

The first is that they often operate in niche areas, specialising in specific sectors or services. This gives a measure of protection against any Brexit fallout, as they will still have that niche afterwards. Small businesses are also agile, flexible and able to adapt quickly to changes. This is one of their standout advantages over corporate giants.

Smaller businesses have an ability to pivot quickly, if necessary. Should circumstances demand a change in product or service, they are better placed to do so without enduring major adverse effects on their bottom line.

Strong Government support

The final reason for small businesses’ strong position as the UK heads towards Brexit, is the Government’s support. There is a renewed vigour in the support for entrepreneurship and innovation since the Referendum. Ministers are increasingly keen to encourage small businesses to continue to innovate and exploit niche opportunities, and to expand into larger markets.

In the current market climate, smaller firms that are potentially disruptive are increasingly attractive to investors. Entrepreneurship is at the heart of growth businesses, and the opportunities for financing are stronger than ever right now. The support available is not limited to funding, as many investment funds are providing mentoring which can be just as important as the funding itself.

James Turner, Managing Director of Turner Little Limited says: “These small, disruptive, niche businesses will form the economic backbone of the UK after Brexit. There is no doubt that the economy and market is experiencing a time of uncertainty as we wait to find out the Government’s final exit deal, but small businesses can mitigate the risks by securing funding and mentorship at the same time.

“SMEs must also retain their flexibility and ability to adapt to a potentially fast changing market. The reality is that no-one can yet forecast exactly what will happen to any business sector when the UK is out of the EU, but by focusing on being adaptable, agile and staying alert, small businesses can weather any potential storm.

“As we approach Brexit, investors should be turning more to these kinds of businesses, as they offer the best chances of thriving in the new, post-EU business landscape.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

New report shows negative impact of employee’s financial problems on workplace productivity

Financial concerns cause UK workers to take four million days off work every year, according to new research from Aegon. The insurance and asset management company carried out the survey in conjunction with the Centre of Economics and Business Research.

The Financial Wellbeing in the Workplace Report explores and analyses the financial state of UK employees, and works out the detrimental impact on productivity in the workplace. In addition to the massive amount of working days lost due to financial concerns, the report found that those who keep working lose up to two hours of productive output every day.

By combining absentee levels with ‘presenteeism’ (that is, employees attending work but operating at lower levels of productivity), it was calculated that this costs UK businesses £1.56 billion a year.

Small businesses suffer most

According to the research, younger workers experience the highest level of concern over finances. This generation also reports the lowest financial wellbeing scores. Despite this, they also consider themselves as the group of people who are doing the most to actively prepare for their future. Around 46% of respondents under the age of 35 believe that they are doing everything possible to improve their financial future. When it comes to people aged 55 and over, this drops to just 37%.

Employees working for SMEs suffer the most, with just over a third of staff working for small businesses (defined as fewer than 50 staff members) saying they only just get by financially. This compares to just over a quarter in large businesses (defined as more than 250 staff members). The report suggests that this lower number is likely to reflect the more impactful efforts made by large employers to encourage financial wellbeing among their employees.

Financial assistance needed

Around 35% of SME employees state that they would like to receive some kind of financial education or help, but only 16% are receiving this from their employer. However, Aegon also discovered in separate research that just under half (45%) of SME business owners think that it would be intrusive to approach their employees about their personal finances. Despite three quarters of SME employers saying that their workforce productivity is adversely affected by employees’ money worries, almost 50% state that it is not their place to get involved.

A wider campaign by Aegon aims to delve deeper into the financial wellbeing of employees in the workplace. Various recommendations include employers taking responsibility for raising awareness among staff regarding the Government’s £500 allowance available for advice on pensions. They say that employers should consider financial wellbeing as part of mental and physical wellbeing. As part of this, greater support should be made available by the Government to offer financial advice and education within their workplace.

James Turner, Managing Director of Turner Little Limited says: “The research findings show the impact on small businesses of poor financial wellbeing among employees. It’s an important issue that is negatively impacting both employees and employers in many cases. There is a significant amount of evidence that financial problems among the workforce are damaging productivity and mental health.

“Employers should be better supported in order to assist employees with their financial wellbeing. Lots of employers are unaware of the kind of help they can offer staff, while many others feel it’s not their place to do so. This should change. It’s clear from research that many employees actively want financial support from their employers, in terms of advice and raising awareness.

“It’s clear that this is an issue that should be addressed by small business owners as it has been a long-term problem for them. It’s likely that those who chose to focus on addressing the problem and offering financial help to their workforce will benefit.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

Should there be a tax break for SMEs investing in productivity technology?

Leaders across the business sector are asking the Government to introduce a ‘Productivity Allowance’ in a bid to push the UK forward. The suggestion is featured in a report from the Institute of Directors (IoD) called Lifting the Long Tail: The productivity challenge through the eyes of small businesses.

The idea is a new tax allowance for businesses investing in productivity and technology. Other measures are also suggested in the report, such as developing a formal business support framework that works nationally, increasing the Apprenticeship Levy and creating a wider training Levy. The report also talks about improving the knowledge transfer between businesses and academia.

Government’s Industrial Strategy

The report’s proposals are outlined in the foreword by the Chief Economist for the Bank of England, Andrew Haldane. He calls them: “useful food for thought for Government, as it begins to put in place the nest stages of its important and ambitious Industrial Strategy.”

Through the strategy the Government wants to boost productivity by supporting businesses. It pledges to create jobs and increase employee earning power by investing in infrastructure, industry and skills. This includes boosting the foundations of productivity – defined as the things that support an innovative, skilled and balanced economy. The five foundations, taken directly from the Government’s strategy, are:

  • Ideas: encouraging the UK to be the world’s most innovative economy
  • People: ensuring good jobs and greater earning power for all
  • Infrastructure: driving a major upgrade to the UK’s infrastructure
  • Business environment: guaranteeing the best place to start and grow a business
  • Places: creating prosperous communities across the UK

Solving the puzzle

The author of the IoD report is Senior Economist Tej Parikh. He says: “Solving the productivity puzzle has been a defining challenge for the UK over the past decade. The success of our post-Brexit economy hinges on our ability to unlock the vast untapped potential among UK small businesses.”

It’s important to recognise that there is no single way to achieve this. The debate has always talked about broad trends. Instead, as the IoD are urging the Government, the discussion needs to move into the real world of the office floor.

Mr Parikh adds: “To lift itself, the long tail will first need to twitch into action. This means shifting mind-sets and a series of small steps. Directors of smaller firms need the support and encouragement to spend more time working ‘on’ and not just ‘in’ their organisation, and to confidently adopt new management techniques and technology. We also need to retool our currently patchy national architecture for business advice, and there is no time to waste.”

Urgency needed

There’s a new sense of urgency for ideas, technologies and solutions to boost the small business community. Unsurprisingly, this is being driven by the uncertainty surrounding the Brexit agreements, and the date to leave the EU moving closer.

James Turner, Managing Director of Turner Little Limited says: “With just six months to go, it’s time to move small businesses on. While the Government is correct to prioritise closing the gap between high and low performing businesses, changes must happen soon.

“In the UK we are lucky to have a layer of innovators that are pushing through new frontiers. But this must translate down throughout the entire business community to boost the economy. Raising business productivity is one of the country’s most urgent economic challenges.

“This is particularly the case as we see automation transform many sectors. The Government must find innovative ways to support businesses of all sizes. Support is needed with funding, but also to improve management capability and expertise, to adopt the newest technologies and to spread information across the economy. By focusing on what can be done at company level, the IoD’s report is giving the Government new ideas on how to improve performance, and therefore productivity.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

New £12 billion lending fund for UK SMEs launched by HSBC UK

Good news for SMEs – HSBC UK has doubled its original SME Fund, boosting it to £12 billion. The money helps companies to grow, and this is the fifth year this cash is being made available to SMEs.

Total funds committed to SMEs by the bank between 2014 and 2018 now reach £46 billion.

Overseas funding boost for SMEs

The fund also incorporates £1 billion ring-fenced to help UK SMEs grow their businesses overseas. As the UK heads towards a potentially drastic split from the EU, overseas business is becoming more crucial for small and medium sized businesses. The bank’s research shows that more than 72% (over two-thirds) of businesses in the UK are anticipating cross-border trade to increase over the next 12 months.

In addition, it includes a minimum amount of £300 million specifically for agricultural businesses in the UK. It’s allocated to different regions across England, Scotland, Northern Ireland and Wales, to ensure the fund remains country wide.

Head of Commercial Banking Amanda Murphy says: “British companies are optimistic about their trade growth prospects but it’s important they can get the finance they need to achieve it. With this in mind, we have set aside £1 billion of the fund to support international businesses in the UK. We cover more than 90% of global trade and capital flows and are uniquely placed to help these businesses trade overseas.”

Keeping SME’s afloat

BiFunds like this are especially important in light of research that shows 30% of SMEs actually need them just to survive. A report from finance provider Liberis finds that just under a third of small businesses need funding just to keep their heads above water.

The research looks into a range of criteria and records that ‘keeping afloat’ scores as one of the highest. Other in the top five reasons for business owners requesting funding include ‘purchasing new equipment, ‘general operating costs’ and ‘keeping up-to-date’.

The most common amount requested by SME owners is approximately £30,000. This is the amount of money needed to take a small business through to the next level. Despite initiatives like the HSBC UK fund, there is resistance from major banks to lend to small businesses. There is a perception among business owners that UK banks are reluctant to invest in innovation.

Economic backbone

According to Kelly Tolhurst, the Government’s Small Business Minister, more than 1,000 SMEs start up every single day. The 5.7 million small businesses in this country are its economic backbone and will continue to increase in significance post Brexit. She says: “Through our modern Industrial Strategy and industry-led initiatives such as this [HSBC UK fund], the Government and industry are building an environment in which businesses all over the country can thrive.”

SMEs contribute in excess of £200 billion a year to the country’s economy. Forecasts expect this to increase by around 20% by 2025. However, without enough cash going to the right places, this vision could be limited.

Almost two-thirds of small businesses in the UK see funding as a way to help them grow. And yet, 55% find it impossible to access the cash they need. This is leading increasing alternative providers, which reduces the pressure on banks and mainstream financial providers.

James Turner, Managing Director of Turner Little Limited says: “We’re experiencing an uncertain economic and political climate, with no real idea of what comes next. This means there is a greater need for the Government to support small businesses and ensure they can access the capital they need.

“While it’s becoming more difficult for small businesses to access funds from traditional channels such as business loans and funding, it’s encouraging to see new channels forming. Research by UK Finance regarding bank loans and overdrafts provided to small businesses over the past five years show that there is a drop of almost £6 billion. FinTech is filling this gap and providing new ways for SMEs to access funding.

“Combined with traditional funding options, we’re hopeful that the future of funding is strong. The Government must provide stability and support for the SME sector in the UK. Its importance is only going to increase as we leave the EU, and reform is essential. In particular, SMEs need encouraging to export outside of Europe and expand overseas.”

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

How to build a great sales team for a small business

There are many exciting and daunting challenges for any new and growing company. One of these challenges is how to build a great sales team? As this will form the backbone for your future success, it’s important to get it right.

There are four keys to success:

  1. Choose the right people
  2. Learn to perform
  3. Use the best technology
  4. Focus on the right activities

Here is how to do it:

Hiring the best people

To scale your new or growing business, you must attract the right talent to your team. The first step should be clarifying why you want to recruit for specific roles. An incorrect hire can be hugely costly when you’re starting out, or for any established SME. To get it right, you should review the current needs for your business and identify any gaps that are ready for expansion.

When you have a concise job description in writing, then it’s time to reach out to potential candidates. Carry out your searches strategically and be clear what you are prepared to compromise on for the right person.

It’s important to remain open-minded when it comes to background and experience; the candidate must be relevant. No matter how personable they appear, someone with ten years in manufacturing sales will probably not match the needs of a property company, for example.

The final stage is to work out a clearly defined interview process that includes the values you want from the candidate. Having a list of clear behaviours that represent your company’s culture and aspirations will help you score interview candidates in a useful way. Whether you’re looking for passion and aspiration or experience and an inquisitive instinct, understanding what you actually need will help you find the best person. And in a sales candidate, you want to see a good track record and evidence of success.

When you have a candidate that fits, make an offer and see how they negotiate. A good salesperson will try to get the best offer possible. If they can convince you to alter your salary and commission stricture, then this is a clear indication they are right for your sales team.

Your sales team must perform. It’s a key function for every business. No matter how good your product or service, if you can’t communicate this to potential customers then the business with fail. To succeed, your small business must sell itself and its products to a high standard.

Deciding who to hire for your sales team, which systems to use and when to scale up are all key considerations for business owners.

Take advantage of technology

When you have the team in place, you must provide the right tools to allow them to succeed. Many SMEs neglect this step, and salespeople are expected to achieve the impossible. Research by YouGov, covering 1,000 sales professionals in the UK, has found that 25% rely on pen and paper to keep track of their sales pipeline. This is an incredible number, given the sheer number of digital tools freely available to salespeople in 2018.

Sales tracking is incredibly important to effectively manage sales. To scale up as a business, it’s vital to be able to optimise and refine your sales processes as you go. This is a constant process and needs technology to work well. Build your team using a high-quality CRM (Customer Relationship Platform) platform from day one. This will allow them to track metrics and understand where and how they can change their process for better results.

Focus on ‘winnable’ tasks

A major factor in building a successful team is focusing on the right sales activities. The best route to success is by focusing on quality rather than quantity when it comes to chasing leads and closing sales.

It doesn’t matter how good the salesperson is, some deals are never going to close. Spending too much time chasing the impossible wastes other opportunities. Sales teams should be trained to understand how to spot low-quality leads and drop them in favour of those than can be converted.

Remember that rigidly focusing on end targets rather than the steps that could be taken to move deals on, can be counter-productive.

James Turner, Managing Director of Turner Little Limited said: “A good sales team really matters. Research shows that SMEs in the UK are losing an average of £15,000 every month due to poor quality sales processes. This must change if you want your small business to smash through growth targets and become successful.

“The market in every sector in increasingly competitive. Teams are increasingly needing to secure both national and international sales, for example. By allowing inaccurate or unfocused sales activity to slide, your business could be losing substantial amounts of money on a regular basis.

“Invest in decent technology and tools to allow your sales team to do their job. The importance of this can’t be underestimated. A well maintained and productive sales team shouldn’t be something business owners take for granted. It should be nurtured, encouraged and supported.

About Turner Little

Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

Turner Little