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Welcome to Fresh Threads, our weekly roundup of the best comments and advice from the forums.
Here are my top picks from this week.
I'm just starting a new business selling desserts online via an app to be delivered in the evening. I'm baking the desserts at home in my kitchen and I have no shop at present. I live in a residential area and don't like the idea of having my address on the website in case people turn up wanting to order, thinking I'm a shop or cafe. I don't think my neighbours would be too impressed either!
The business is registered as a Partnership and I will be taking online card payments. Do I really need to put my address on the website? I had thought about using a virtual address but wondered if this would be really necessary. Perhaps email and phone number would be sufficient?
Jeremy Hawke: A virtual office will look professional. Look at the trade you could miss out on if people avoid your company because it has no address. A virtual address will more than pay for itself.
estwig: Just put your home address on it – it'll look good for business. My address has been all over various websites for almost 20 years and I've never had a problem.
Mr D: I order online quite a bit. I do not bother checking if the business is run from a house, a storage unit, a garage, a shed or an industrial building. Presumably the tens of thousands of customers we have had do not bother checking either. It's ultimately irrelevant when it comes to your ability to get the product to the buyer.
I_Do_Marketing: I think it's really important to be authentic. If I see a website that portrays the business as something the business clearly isn't, it puts me off instantly. If I'm buying an artisanal home made product, I'd hope to see a home address, or at most a small studio address. Give me a rent-an-address virtual office or no address at all, or even worse stock photography that clearly isn't you, and I'm off.
I've got around £75k to invest and would really like to acquire a business rather than work for others. However, I've looked at a couple of sites such as Dalton's and for the most part, I'm seeing hair salons, cafes, restaurants and pubs. I know I don't have enough cash for a ‘serious’ business so I should expect these results but I wonder if I should be taking a different approach? I'm looking for online opportunities - not really interested in getting into shop lease complexities.
Helpful Johnny: Have you thought about a franchise? The franchise fee buys you a proven model, advice and a brand to work with. The British Franchise Association certifies that franchises are legit. It doesn't have to cost anywhere near £75k and you'd have your pick of industries, including ones which are man-in-a-van type roles that can rapidly turn into multi-van enterprises.
TheWebDesignCompany: Have you considered an investment type business? There are certain whiskeys that increase in value so fast that you could buy £20K or £30k of rare whiskey and sell it in just a few years for two or three times as much, or occasionally a lot more than that.
MBE2017: Why buy a job instead of making one? £75k should give you three or four years to build the business up. The hard part is deciding what to do, but if you can decide on something, it is almost always cheaper to start yourself.
Stedurham: What do you enjoy? What do you like doing? What are you good at? If you start with these questions, you're more likely to be successful.
We have a fairly new business supplying and installing kitchens and are having teething problems when it comes to pricing up our work. We price up for the kitchen but sometimes forget about the ‘extras’ such as fixtures and fittings (screws, silicone, rubble sacks) – should we just add a sum to each job to ensure we are covered for these extras as part of the sales of the kitchen? Secondly, we project manage the whole job, but as the fitters are paid direct by customers, we find we haven't covered ourselves for the added value of our contribution.
Root 66 Woodshop: Set up a simple ‘materials used’ in a spreadsheet, the first 4-10 lines of input at least, then leave the rest blank. Use this as the basis of a simple costing sheet for each job. Your last line should be your cost for labour. Assuming your tradesmen have quoted you a specific rate, or whether it's a per-job price. Then, simply add your mark up.
FinancialModeller: Remember that you need to apportion all the costs for your showroom – rent, rates, utilities, insurance, and so on – and all other costs (banking, accountancy, marketing) across the kitchens that you are selling. I suspect that the pricing problems are far more significant than tubes of sealant and bags of nails.
estwig: It's a big mistake getting the clients to pay the men direct. How do you make a mark-up on their time? How do you make a mark-up for your time organising them? You don't, which is what you have said. It's completely mad not to make money on your men – what's the point of having them? I assume that if there are problems with fitting, either you say, ‘Don't come to us, talk to the fitter’, or that they do come to you and you have to sort it. Either way, you're losing time sorting other people's problems, or losing business by not offering a guarantee.
I have an office in my house; the house costs about £1400 a month (mortgage, electricity, internet, council tax, and so on); there are four bedrooms and three rooms downstairs. My calcuation was £1400 ÷ 7 rooms = £200 per month, per room. I use the office probably 80% for business at least. So, say, £140 per month for the office? Would £100 per month be unreasonable? Or should I look at the lower end and charge the business £50?
MyAccountantOnline: Yes, that's a reasonable basis on which to charge your company rent, although 80% of £200 = £160. I don't see any reason to reduce it to £50 per month. I assume the mortgage is the interest only, you can't include capital repayments, and bear in mind when you complete your self assessment tax return and declare the rental income that tax relief is restricted on mortgage interest.
deaytch: I agree but... surely this is way less than if you rented a small office elsewhere? Have you been to your accountant to check? I am actually intrigued by this and would like to know the answer myself.
SteLacca: It will almost never be beneficial to charge rent to your company for use of your own home – you will simply incur an income tax liability. You also have to be very careful not to make use of the room exclusive, or you might give rise to capital gains tax and business rate implications. Proper, paid for advice is essential.
UK Contractor Accountant: Use the same calculation self-employed people use to work out what to charge their business for use of home – it will give you an accurate figure which stacks up on challenge by HMRC.
That's all for this week – have a great weekend!
Thank You for sharing this stuff!
After all said and done, not all businesses or websites need to worry about it. Most small businesses will not be affected right?