#44: Top Tips for Start-Ups – Information Technology Issues

Today I follow on from last week’s articles on top tips on people and legal issues, and move onto a very 21^st century problem – information technology.

1. IT Budget

Budgeting and choosing the right equipment for the tasks that are required at the beginning, and that will be useful in the future for your business, is fundamental. Many small businesses do not realise the competitive advantages offered by technology, as they don’t have the resources or expertise to evaluate or implement the solutions available to them.

Another key problem is that many people try to spend as little as possible on technology and therefore disregard the potential cost savings that can be generated if they get it right.

Investment into IT systems is important and below are some key points relating to investment.

2. Creating an Internet Identity

Domain name and email addresses should be the first thing you think about, choose an unused domain name and register it with a professional organisation who can offer multiple email accounts and web/storage space.

Choose a domain name relevant to the name of the company or a name which directly relates to the company’s type of business; this will help later to self-promote your website on search engines.

From the chosen office location organise an internet connection; research the suppliers available to you at that location – e.g. BT, O2 or Virgin; there are deals and discounts available when you combine internet and telephone services through the same supplier.

3. Protecting your identity

If your business uses email, you’ll be targeted at some stage. The main problem is that such attacks are becoming more sophisticated. The malicious software used develops in your system and the threat of someone accessing valuable company information becomes more likely.

Fraudulent emails are increasingly authentic in appearance, purporting to originate from various sources, from banks to potential clients. The process is known as “Phishing”, and such emails will contain a link to a website on which you will be asked to re-confirm some details or confirm a password, with the aim of stealing your details and using them to access your account. Files coming into an organisation downloaded from the internet and transported on a flash drive or disc for example, can also be dangerous. These can contain malicious software, generally known as malware, that is sophisticated enough to hide itself from anti-virus software. Malware can log any key strokes that you make on the keyboard and send the information elsewhere when you connect to the web. This means that passwords and bank account details could be at risk, along with private company documents and emails.

It is recommended that you have a company policy to deal with such issues. Education and awareness for staff about the dangers out there is all important and for most organisations it is the first line of defence. It is as much the responsibility of the individual employee as it is for management to be aware of identity fraud and protect their own and the company’s interests. This could mean regulating the use of external hard drives, including iPods, flash keys and discs with dubious or uncertain origins in the workplace and, moreover, informing staff of the ways in which criminals might try to access their private information.

Data leakage is also an increasing problem. For businesses, corporate identity is as precious as their staff and preventing information from getting out could be down to something as simple as warning people not to share too much on social networking websites or not to send too much valuable company information across the internet.

4. Router and Firewall

Purchase a good brand wireless router – this may come free with the internet connection. Ensure that it has a built in firewall, as this will help to secure any equipment that will be connected to the internet. The router creates the connection automatically between your network and the internet via your ISP – Internet Service Provider.

A router, rather than just a modem, is used because it uses NAT – Network Address Translation – as part of its Firewall. This works by converting (translating) the internet address, TCPIP protocol, to a private address range on the inside of your network. Anyone trying to attack the external address will not be able to penetrate the firewall unless there are ports open to let traffic through.

5. Network

For a small network, the router that the ISP supplies will probably suffice, as it will usually come with four Ethernet Ports (normally 100MB).

In addition the router will normally be wireless enabled, which can be connected to a plethora of different devices – PC’s, Laptops, wireless printers, PDA’s, Phones and Games consoles.

If you require more than four hard wired devices then a small Gigabit network switch would be ideal, with 5 to 48 ports on a single switch, desk to switches 5 to 16 ports and rack mountable switches available from 16 to 48 ports. These switches are available in many price ranges and complex abilities, for larger organisations they may use PoE – Power over Ethernet.

Ethernet switches which can power IP telephones, wireless access points, cameras and many other PoE enabled devices.

 6. Server

For small and large networks it is important to have a server to centrally store the company’s data. For fast response and resilient availability, choose and design your server to cope with the company’s immediate needs. In the future storage can always be added on should it be required.

If the server is to run databases such as SQL or similar, make sure that the processor is well above the stated minimum specification for the application. Memory for servers is more expensive than for standard PC’s but it is very important to have enough for the server to comfortably run all of the systems it has to. If a server runs light on memory, it will slow down and use the hard disks to swap information that it is required and this will make the server slow to respond and will shorten the life of the hard drives.

7. Software

When installing Software onto a computer system you can never be too careful, especially if you keep important customer information stored there. Even if the software has come from a trusted source, complications can arise and it would be wise to take precautions beforehand. It’s always best, therefore, to make a back-up copy of important information before installing any new software.

You should try to scan all floppy disks, CD-ROMs, and DVD-ROMs with your anti-virus software before copying files from them or installing software that they contain. You never know if a nasty virus is lurking on a seemingly innocent disk.

Never install pirated software onto your computer. Illegal copies of software, such as those downloaded from hacker websites o sourced from file-sharing programs, may contain hidden viruses.

Before installing any software, be sure you know exactly what is being copied onto your system. Sometimes apparently innocuous software can contain viruses or ‘Trojans’ that might take control of your computer. This is a particular danger with file-sharing programs that allow you to trade music or videos.

8. Antivirus

Antivirus protection also plays an important role as it should safeguard you from the harmful Viruses, Spyware and those annoying spammed messages on your email. There are many free and paid for antivirus products available on the market but it is important to make sure that the one you chose is adequate for your needs and that you have it running up-to-date on all of you computers.

You should regularly check and scan your computers for Viruses and Spyware, as many infections are designed to steal your identity and passwords and can appear like Trojans at any time.

In addition, you should be careful when registering to anything online that it is provided by reputable company and that you are on a secure website. This is always indicated by the address starting with https:// or a locked padlock somewhere on your browser application. It is sometimes a good idea to use a temporary or online mail account when subscribing to an unknown source, so that your normal mail data is protected should the new source turn out to be bogus.

9. UPS

 Protecting your hardware from power spikes and disturbances is important. Laptops are usually alright as they predominately run on their own internal battery. PCs, servers, routers and other network components will require mains filtering and battery backup, as data corruption or loss can occur if the power is lost or spiked to your equipment.

UPS (Uninterruptable Power Suppliers) are available in all sizes and affordability but don’t scrimp on these. Ideally you would want it to stay running for at least 10 minutes, in order to give you a chance to save that important document that you have spent hours working on. Basic multiport units are available, which can maintain power for a few devices that would possibly loose data if the power was to fail.

Recommended devices to be protected would be PCs and servers; other devices such as printers network switches and routers do not require UPS protection but will require surge protection to protect them from spikes and mains interference.

10. Backup

A small network should have at least one form of data backup e.g. Tape, CD/DVD, External Hard Disk or Offsite Backup. It is not ideal to keep all your data in one place where it can be vulnerable to fire, theft or data corruption. It is always recommended that you keep a copy of your data in a physically different location to the work place, so that should the original data be lost, it can be replaced easily.

There are now many organisations and ISP’s who can supply you with off-site or internet based backups and most of these work very well, utilising your internet bandwidth at night when your requirement to use this is less. Always make sure that with whatever backup you choose that you regularly check the logs and periodically perform data restores from whatever source you have chosen, in order to verify that the backup is working and so that you understand how to do this in the event of actually needing the data back.

There are ten common mistakes made with technology in the work place:

1. Assuming that IT can be easily deployed and managed without expert support
2. Failing to test equipment thoroughly with real life scenarios
3. Poor testing of security vulnerabilities
4. Not setting out service requirements with IT providers at the outset
5. Ineffectively aligning IT to business needs
6. Focusing on short term cost gains due to time pressures and not the longer term productivity and revenue generating benefits of IT
7. Choosing IT that cannot cope with rapid changes in business needs
8. Not planning ahead so you can scale up your technology needs appropriately
9. Having the wrong return on investment expectations of technology which impacts badly on the bottom line.
10. Cutting IT budget or thinking managing IT in-house will be easier and more cost effective in hard times.

Choosing the right hardware and software is key to success when integrating IT into your new business.

My next article is on insurance, something you must never be without. It will also be the last in my Start-Up Business blog series, so make sure you don’t miss it!

#43: Top Tips for Start-Ups – People and Legal Issues

So you have launched your business and are well any truly on your way to becoming a big success, congratulations! Over the next few articles I will be sharing my tops tips for start-ups, starting today with any people or legal issues that may come your way.

Let’s start with the legal issues:

1. Dealing with Lawyers

It is likely you will need to use a lawyer at some point in your start up phase. Make sure you understand what you are asking your lawyer to do, and what you will and won’t pay for, and push for a fixed fee.

Don’t be afraid to say if you think you’re not getting value for money. The best business lawyers can be a real asset to your growing business and become a trusted advisor.

Ask for a package deal that includes support on ad hoc queries over the first few months of trading (note that you may be able to access this kind of legal support service through membership of organisations like the IoD or your local Chamber of Commerce).

2. Business name

Is anyone else already trading with a similar name? Check the business name you want to use is available as a website domain and (if you are going to incorporate a company or LLP) at Companies House. Even if the exact one you want is available avoid names that could be confused with an existing business.

3. Data Protection

Register your new business with the Information Commissioner’s Office and make sure you understand the rules on handling personal data.

4. Business Plan

Does your business plan contain confidential or proprietary information about your products or services? Include an appropriate disclaimer and confidentiality statement on the first page, and in the footer “© [Name] Ltd, 2010. Confidential.” Consider whether you should ask recipients to sign a specific confidentiality agreement.

5. Founders’ Agreement

If your business has more than one founder, then whether you are a company, LLP or partnership you ought to have a properly drafted shareholders/partnership agreement. If not you will be bound by the default regime in the relevant legislation which may not be appropriate for your situation.

Think of it as a “pre-nup”: what to expect from your partners, how are you going to run the business on a day to day basis, and what will you do if you fall out?

6. Terms and Conditions

You will need properly prepared terms and conditions for dealing with your customers/clients. Make sure you understand what your obligations are in terms of the quality of your products or standard of service, delivery, and refunds. Always insist on trading with your customers on your own terms and conditions.

7. Distance Selling

If you are selling to consumers (B2C) over the internet or phone you will need to comply with distance selling regulations that specify what information you must give to customers, and an unconditional right to cancel and get a full refund in the first seven days.

8. Consumer Credit Licenses

If you are dealing with consumers (B2C) and either hiring goods for more than 3 months, or selling on hire purchase, or offering other credit terms you may need a Consumer Credit License.

9. Raising Money

If you are looking to raise money from investors you need to make sure you don’t fall foul of the rules on financial promotions – what you can say and to whom. If you get it wrong your investors can ask for their money back so this is one area where you should obtain specialist advice.

10. Intellectual Property

Keep your know-how and proprietary data safe and use a confidentiality agreement if you are going to disclose it. Is it important that you stop others copying your ideas, products or services? Applying for patents and trademarks is expensive and can take a long time and only effective if you are prepared to enforce (very expensive and time-consuming). You can use the ™ symbol without registering a trademark, although it has no legal significance in the UK.

Now that we have covered the legal issues, it’s time to turn our attention to people. Here are my top tips for people issues you might encounter:

1. Recruitment

You are bound to need people working with you in your new business. Recruiting the right individuals is important. A good place to start is using your network to identify known candidates.

You could also place adverts online – there are several cost effective job boards which can harvest lots of CVs. Bear in mind that if you get someone with 75% of the skills you need you are doing well. If you still don’t find someone then use a recruitment agency, but make sure that you negotiate a good fee rate upfront.

Always carry out thorough interviews and ensure that you draw up a list of competencies and skills that you want for the job.

2. Reference checks

Once you have identified the right person make sure you carry out independent reference checks before they join. Many people are not completely honest on their CVs. Do not accept previously written “To whom it may concern” references. Always contact previous employers.

You may wish to conduct a Disclosure and Barring Service (DBS) check with the criminal records bureau (CRB) and Independent Safeguarding Authority (ISA). These were previously known as CRB checks, but are now called DBS checks.

3. Pay

An important part of the business dynamic is how much to pay yourself and your team. Take advice from your accountants regarding tax because this will drive the pay structure. Make sure that you appoint someone competent to run your payroll and to manage issues like PAYE, P60s and P45s. You can download the forms for PAYE here.

Pay is likely to be one of your largest overheads and so make sure that you do notoverpay staff. Try and be creative such as offering commission for increased sales so that your increased income can improve pay for some staff.

4. Employment contracts

If you employ staff make sure that you give them some form of employment contract. This should lay out key aspects of employment such as salary, notice period, holidays, benefits, disciplinary and grievance procedures.

There are several HR outsource businesses that can provide low cost help such as Right Hand HR (previously HR Advantage). The main aim of the contract is to avoid any misunderstandings later on.

5. Organisational Structure

Most small firms have a fairly flat reporting structure. However, as you employ more people it is important to be clear about who does what and who is responsible for what. A brief job description for each job including who the individual reports into will avoid problems later on. This will also help when you appraise performance.

6. Policies and procedures

It will be useful to have some basic people policies and procedures once you employ more than two or three staff. The main reason is to try and capture all the small employment issues before they arise. A staff handbook can outline how you will deal with issues such as maternity leave, disciplinary issues, compassionate leave, benefits and any restrictions post-employment. As the business grows you can add policies as appropriate.

7. Performance management

Most people want to know how they are performing at work. You should have some form of performance appraisal process. As a minimum formally appraise everyone at least once a year. Use company and individual objectives to ensure that everyone’s efforts are focussed in the same direction. Also take into account learning and development for your team. Improving skills will end up adding value to the business overall.

8. Dealing with disputes

When you employ people there will inevitably be disputes. Make sure that you always treat everyone fairly and be consistent when dealing with problems. Make sure that you follow due process if you have to discipline anyone – failure to do so can be regarded as unfair and claims can be made accordingly via an employment tribunal. The ACAS website is helpful in this regard.

9. Non-executive Directors

As the business grows it is worthwhile appointing non-executive directors. These are typically people who have expertise and can advise you on how to take the business forward. Initially they may be unpaid but in due course you should pay them a nominal fee.

10. Succession Planning 

In order to ensure business growth you should plan for changes of personnel. People leave firms for a range of unexpected reasons so it is worth thinking about who could replace key roles. Some entrepreneurs are always interviewing potential candidates in order to keep the people pipeline alive. It is also important to provide development opportunities where possible.

Next time I’ll share my top tips for information technology issues.

#42: Delivery, monitoring and launching your business

We really covered this in my pervious articles under “Characteristics of a Successful Business” in the Reflection Phase. The key, if you recall, is to follow a process that enables you to have satisfied clients, who either buy from you again or refer other people to you.

Just remember, every time you are in contact with a client, your aim should be to ensure that it is a positive experience.

Monitoring:

We now need to keep the business on track!

To use a medical drama analogy, what happens in a medical soap is that a nurse comes around to the patient’s bed, checks temperature, pulse, blood pressure etc., scribbles something on a chart, adds the time and her initials, and moves on. If she is worried she takes immediate action and calls for reinforcements.

You need the same for your business; you need to know if your business has lapsed into a coma without you noticing. KPIs – Key Performance Indicators – will help you to do that.

Now we can do the KPIs for your business. These tally with the numbers in the Profit and Loss Forecast and Cash Flow Forecast we created earlier in the blog series (if you missed these let me know!)

We have five KPIs:

• Billable days
• Corresponding revenue run rates
• Cost control
• Pipeline value
• Liquidity ratio (this is what we have in the bank, plus what we are owed, against what we owe).

Let’s imagine for a moment we do a check at six months. This is what’s known as a ‘Flash Report’. Remember we wanted to be on a run rate by this stage of eight billable days a month at £250 per day. The bad news is we are only getting £200 per day but we are doing 12 days. So we are ahead of our first two KPIs.

Further good news – we have kept our costs to less than 20% of turnover; our pipeline is fractionally ahead of the next quarter, which is also good news.

And finally our liquidity ratio is very healthy. Remember what this means is that you look at what you have in the bank, add to that what you are owed, take off what you owe and hope that the ratio is better than 1:1, i.e. if the business stopped on that day you would be in a good position to pay all your liabilities as they fell due.

If it was the other way round, you would only be surviving with the goodwill of the bank and your creditors. We have checked, and you are not in a coma, so we can press ahead. If the KPIs and the Flash Report had shown something worrying, we could have taken immediate action.

Remember to keep these in mind and make sure you do a Flash Report every six months to make sure you are still on track. You don’t want to wake up one day only to find that your business is about to go under, no amount of coffee will make that day any better!

Flash Reports:

If you have followed all the steps, you should now be ready to take a deep breath and launch. As a last check before you “blast off” you may want to complete the self-diagnostic below, just in case you have inadvertently skipped something along the way.

Score < 30 You may want to delay launch

Score < 60 You may want to opt for a soft launch while you complete your hard launch plans

Score > 60 You probably have enough momentum to proceed with a hard launch.

If your score is at the lower end of the range it’s worth getting things right now rather than trying to get then right later. If however your score gives you the confidence to start, then strap yourself in and prepare for the ride!

Good luck, and don’t hesitate to contact me for further advice or to ask any questions you have. I’m always happy to help so if something is playing on your mind, just ask!

#41: Closing A Meeting – Part 2

Last time I went through various ways to close a business meeting, each one having a different result but all with the aim that you have won the clients business.

Another situation you may face is where they say they will think it over, which often is a polite way of saying no.

If someone says this to you, there is not much you can do, but what you can try is to say: “That’s fine. I understand you want to think it over because it is a big decision; just tell me before I go if there is any aspect of what I have told you that needs clarifying, so that you can think it over properly; I would hate you to be under any misapprehension, or worry”.

Sometimes they tell you, sometimes not. If they do tell you, this is an opportunity to get back on track and complete the sale. If you cannot close the sale, you will need to do further follow-up. Sometimes this will be successful, sometimes not! We use the “rule of seven” approach. If after six attempts to contact the prospect we have had no joy (i.e. calls/emails not returned) our seventh action is to close off the file.

We will write and state that we have tried without success to contact on a number of occasions with no success; we will add that we do not wish to irritate them, and appreciate that their priorities and needs may have changed; they know who we are, where we are, and what we do, and are welcome to contact us at any time. We stay in control.

Finally, there is the “Jim close”. I used to work with Jim in New York and he had the reputation of being one of the top software salesmen on the Eastern Seaboard. If anybody remembers the original Miami Vice, Jim was a dead ringer for Ricardo Tubbs; he dressed like him, walked like him and talked like him – he was very smooth!

We did some calls together. When Jim felt the meeting had lasted long enough he would steeple his fingers, lean forward, using body language to draw everyone in, and then lower his voice. He would then indicate that he felt that we had taken the discussion as far as we could and that there was just one thing he needed to know before he left – was there any reason other than price why they would not sign there and then?

A good question – not cheeky – but he left knowing that he either had to get the price right or overcome a roadblock, be it operational, technical or political.

Importantly, he was in control.

When somebody asks you for the price you have choices. Either give them the price quickly and confidently, then stay quiet, or, if it is complex, advise them you will get them a price within say 24 hours. Whatever you do, do not think aloud in front of them; any rambling or waffling will not help your cause!

Final tip – you can possibly solve two challenges with one tactic. The first challenge is winning your first clients; the second is obtaining positive references from them. I have seen a number of people use an “early adopter” strategy to good effect, e.g. “If I offer you an early adopter price, discounted from my full rate, would you be prepared, assuming you are satisfied with my product or service, to act as a reference site and allow me to put a testimonial on my website”?

This is always a good tactic to use if you are in need of references and want to win business at the same time. Why do two jobs when you can do one and get more out of it?

Next time we are moving on from sales and business meetings – it’s time to focus on your delivery!

#40: Closing A Meeting – Part 1

Now that you have your sales pipeline sorted, the final part of the sales process is asking for the business.

Let’s start with the “alternative close”. If the meeting has gone well, you could use this. In my world a successful sale is typically when somebody agrees to do some kind of workshop, so I might say “would you like to do the workshop in October or November” – it’s not cheeky; it’s an open question and it does work!

The second option is the “summary close” and this is helpful if you have done more than one meeting and if there is more than one decision maker. I had one situation where there were five directors and three meetings with a different mix of directors at each meeting.

At the final meeting I said, “We have had three meetings, you have identified over those meetings half a dozen benefits, so for these six reasons would you like to agree a date to do this?” This time you are risking the answer “no”, but by reiterating the benefits message you are reminding them of all the different things that they have told themselves – remember they did not all attend all of the meetings.

The third option is the “assumptive close”, where you make the decision for them. The meeting has gone so well you make the decision.

I did one meeting on the south coast with a husband and wife team, who ran a very successful engineering company. I had persuaded them that they needed to do the workshop off-site and the husband and wife then had an interesting debate about which pub in the town they should use.

One had a romantic view; the other did good real ale. It was fairly obvious that they had already made their buying decision so I said, “why don’t we settle on the first Friday in December and you let me know which one of the pubs you have booked”, and then left them to it!

The “buy signals” were so strong. You can do that when it is clear they have made the decision; you just need to be brave and make the decision for them.

The fourth option is the “concession close”. This is particularly helpful if you are doing design or consultancy work where it’s clear you need to give something away to get the business – but trade time not money. If there is nothing tangible that you can throw in you are probably reduced down to some sort of trade and I would always trade time and not money.

To keep the maths simple, if somebody says to me “what is this going to cost?” and I say, “it looks like it is a day’s work so that is £1,000” they might respond: “I did not expect to pay that much”, so I might respond “Let’s have a look at the seven parts to this job; we could defer a couple of these to another day, one you could do yourself, so if we work hard on the other four parts we could get it done in a half day, so that would be £500”.

They might say they agree to that. I have not given it away; I have traded time for money.

The worst thing I could have done is say that I would do the whole day for £500 because that devalues me in their eyes. Try to find out if trading time for money works; it often does, particularly if you have pitched in a modular format where you can take components out of your solution.

The key to each of these ‘closes’ is planning. Do you research on who you are meeting with; do they have enough funds to actually pay you for what you do, or are you more likely have a concession close and trade time for money? If so, you’re going to have to do some sums before hand so that you don’t seem underprepared in the meeting.

In my next article we’ll continue on how to successfully close business meetings, looking at a further two ways that you may find useful in future. In the meantime, do contact me if you have any queries or simply want more advice.