Business advice sought from those with experience

I want to make my business work

[gazraa]

Situation:

- UK Based, North West
- Full time job - web developer
- Spare time - web freelancer
- Ltd Company set up and has been running for 3 years
- Not making money and bearly breaking even.
- Need to supplement my full time income to support my girlfriend in Uni from sept 2005
- hosting reseller
- business bank account (currently overdrawn again)

My question is really, how do i go about really sorting my business out so it provides that extra income without taking over my life. What steps should I take to make sure the direction I take will work, or at least have a good chance of working.

I suppose I need to re-evaluate my business... but how would I do that?

Currently I build small/medium sized websites with db backend if needed. I also do some graphics work, flash bits and some SEO.

I'm starting to think about whether I really need the Ltd company and business bank account which will reduce some expenses, I'm even thinking about moving my hosting to the US to take advantage of the exchange rate, but that will be a total pain moving all the sites I have hosted across.

I'd like advice from those in a similar situation, or those that have been there, done that and bought the t-shirt.

I'm tired of having all the hassle of running the ltd company with none of the benefits.

I'm not looking at ditching the full time job just yet as I need the income security while my girlfriend isn't earning for the next 3 years, but eventually, going it alone would be considered.

So, am I making sense in what I want to do?

[topr8]

>> how do i go about really sorting my business out so it provides that extra income without taking over my life

within this contradiction lies your problem.

[gazraa]

thought that might be the case.

ok, let me rephrase it.

How do I go about sorting out my business so it is managable with my other responsibilities.

[Leosghost]

Move your hosting! Now!

[Matt Probert]

You appear to have rushed into this headlong. For a start, why on earth did you form (I suspect buy an off-the-shelf) limited company? with all the overheads that goes with it.

Have you spoken to your business banker? They offer good advice, but really if you need to ask you should pack up and get a real job as an employee.

Sorry.

Matt

[gazraa]

i've got a real job as an employee, earning a decent wage, but in order to supplement my income to support my girlfriend through uni i need to do something, and the web is all i can do :)

[Essex_boy]

have you tried joining local business forums? Federation of small business is good. Quite often these types of organisations have business meetings where by you can pitch for work.

Have you tried flyers to local firms offering your services?

I see loads of small firms using free email addresses on on the vans and letter heads, you know like [e-mail], and Ive always thought that if you could get them a specific email address and offering all the hand holding they'd need, then they'd be great for repeat business. They dont do it because they dont know how.

id have thought its only a matter of going through the yellow pages to find them

At somepoint they may even wish to have a web site.....

Its very awkward working and running a business.

[ronin]

I'm starting to think about whether I really need the Ltd company and business bank account

If you'e not sure why you need a ltd company and a business bank account then you probably don't.

I set up my company as a sole trader two years ago and I've never felt any need to change the legal structure to a limited company. Even if I want to take on employees, I can still run my company as a sole trader.

I also set up a business bank account last summer, because I was under the impression that I was obliged to have one and should really have been using one since the inception of my company.

In fact the only thing I use it for now, is for one client who prefers to pay me cheques in my company's name rather than in my name.

This paragraph from Teach Yourself: Small Business Accounting by Mike Truman set me straight:

Having said that you need a separate account for your business, that does not necessarily mean that you need to tell your bank to open a business account. Many people trade quite happily using a personal bank account for their business. [...] This is why many small businesses are run through private bank accounts. Provided the number of transactions does not become excessively large for a private account, many banks will turn a blind eye to this.

[JKMitchell]

Just a couple of points from someone that's run their own business since 1983 in the IT industry as a consultant/freelancer and in the website field for nearly 10 years (1st website built in 1995!)

First of all, look at your business bank account - I don't know how much you pay for yours but there is at least one well known ex high street building society that opens "free for life" business accounts (a long as you don't pay in more than about 100 cheques per month or write more that a similar number - I forget the exact number).

Offering support to small companies can be counter productive - who will they ring at 2:30 in the afternoon when they can get any emails? What will your boss say?

As for local groups, I've found the Federation of Small Businesses hopeless, although there is a business club in my area that is quite good. You have to go along to meeting though to make the contacts.

Do you have a site yourself? Are you clients listed as part of your portfolio?

A small income could be generated by having adverts such as Adsense or Affiliate links on your site - I make more than enough to cover the hosting of my sites by this method.

Be careful about hosting in the US, if you run any form of advertising you may have to pay US taxes, the US Revenue count (I think) hosting in the US as having a business presence in the USA.

Apart from that, no matter what you do, if you don't want to leave your job, for very good reasons, be prepared for long hours in the evenings and week-ends to cope with building sites for your clients.

Hope this helps.

[johntabita]

Are you "not making money and barely breaking even" and "currently overdrawn" due to lack of work, mismanagement of funds, or both?

Assuming the root of your problem is lack of clients, then the solution is to have a strategic sales and marketing plan. Marketing is everything you do to "find and be found" by people who will buy from you. Sales is what happens after that.

I've been taught that you should have at least 3 marketing activities that will leverage off of one another. But first you must define who your target prospect is, then learn how that person typically finds someone like you. For example, does your typical prospect generally find a web developer by looking in the newpaper, reading a flyer or asking a business associate? So before you have all of those flyers printed, be sure your prospects are going to be looking at them. Otherwise, your marketing will be as untargeted as throwing handfuls of business cards in the air at a sporting event and hoping someone who needs your services will pick one up.

Next, in the same manner that you have a process for developing websites and databases, you'll need a process for face-to-face selling. The same way you had to master certain skills in order to be able to develop websites and databases, you'll need to master certain sales skills in order to sell your services effectively. If you do not have the skills and a proven methodology, you'll either lose the sale once you do find qualified prospects, or you'll get taken advantage of from experienced buyers who will sense your inexperience from a mile off.

[le_gber]

ok, here are my 2 pennies,

I am also UK based, sole trader, freelance/self employed with business bank account.

Re: UK Limited - if you are thinking of, one day, really pushing your business, I wouldn't revert back to being a sole trader (well depends how far away that day is) because I believe it might be a nightmare for your accountant (i.e. it's going to be expensive for you) to go sole trader and then revert back to Ltd.

I am a sole trader, been in business full time for two years and thinking of going Ltd with VAT registration as well (far away from VAT threshold though) for a couple of reasons:

I am thinking of buying a house, and if the business goes pear shaped I don't want to loose it.

I would like to take some employees at some point in the near future, and if it goes pear shaped I don't want to loose everything I've worked for because I've been sued or lost a lot of businesses because of an ungrateful employee.

I meet a lot of people on a day to day basis and I fell that the ltd status gives a better image to potential customers - plus I believe you can justify to charge more as well if your ltd ;)

the VAT registration is because after talking to a friend (accountant) he told me that I could get quite a lot of VAT back into the company - I didn't realised I could recoup that much - it's worth the hassle.

Re: Business bank account
Had a business bank account from the start with one of the big names - had 18 months free banking (which ended end of last year) and I am now thinking of finding a new one or doing everything electronically (I don't get charged for that). I know of at least two banks that do free business banking (even for cash and cheque handed over the counter) in the UK - Abbey and A&L - not affiliated with any of them.

Re: customers
My market is also small/medium sized companies and I find them through different ways - but I am a firm believer of networking breakfasts/luches/diners

join the local chamber of commerce

join your local business link

try and find local business clubs (city specific or BRE, BNI): the good thing about those it that only one person per profession is represented - ie referals should come to you / the bad thing is that they can be expensive especially the very big ones (profit making) BRE and BNI - try to find a non profit makin one

also try the FSB - also not a networking organisation per say, their networking events varies greatly from regions to regions - but also because should you get a tax inspector coming to see your accounts, they will send you a FREE tax expert to assist you during THE WHOLE INSPECTION. They also provide loads of other services such as free legal advice, downloadable contract template etc...

Try broadening your marketing (as johntabita said) as well as you services. Try speed networking - it's agreat way to meet loads of people in a very short time.

Re: Hosting
I also run a hosting service and took a UK based dedicated box from the start - it became worthwhile after 10 customers signed up. Try uping your prize and offering more services (spam, virus blocker, remote email accessing, stats etc...)
I don't want to go and host my sites in the US 'cause my customers have .com's but UK-targetted and I told them it was not a good move to have a .com site not hosting in the UK (if you're targetting UK customers) because of SE geo targetting.

Re: Girlfriend
Nobody pointed this but while at Uni one can still work ;)- it's not like she won't have any spare time - I use to work roughly 20-25 hours per week (paid between £5 and £6.50/hours - I only had 20 hours lectures weekly), which was enough to pay for the rent and food. During term breaks I worked almost full time to put aside some cash to be able to take a week off should there be a big assignment due during uni terms.

I hope this helps and I wish you good luck.

Leo

[gazraa]

thank you for all the advice, you have all been helpful... as is the norm on WebmasterWorld!

I have also been speaking to a few people about it over Easter and have now decided to make my limited company dormant, in case I need it in the future, and start to trade as a sole trader. I will also be cancelling my business account as I really don't need it.

As for moving my hosting to the US, I am still thinking about that, but I need to actually work out what I need and how much time and effort it will take to move all the sites and whether the cost savings of doing it all out weigh my time spent doing it. If anyone has any hosting recommendations UK or US, please sticky mail me and I'll check them out. Basically I need to support ASP, PHP, MySQL, webmail, email virus scanning and spam filtering, webstats of some reasonable type.

I will work on the marketing side, and building up contacts as I have found a few people over the easter weekend who can assist with that (beer festivals are great places!).

So, I am a lot happier about the way things are going to move forward. I'm already dabbling in affiliate marketing which should take off a bit more once I get a bit more of the ground work in place.

Thanks again, but keep chucking your pennies worthin if you want. The more advice the better!