Startup in a mess help please

[HE100]

Hi all, my daughter and partner were experienced cleaners and lost their job in lockdown. So having nothing to lose they started working for themselves basically keeping track of what they were paid and receipts for all expenses, business insurance in place, HMRC advised. Very simple book keeping and cash flow problems chasing payments etc.Trouble is now, they seem to be doing too good a job as the contracts are really coming in and they need to take on help.They have asked me if I can help with the admin etc and start looking for 1-2 people but tbh I haven’t got a clue. I’m worried it’s too soon to take on people because of the cash flow and as to what is best ie zero hours etc is beyond me. Basically I can do admin but have no idea how to advise them. They have a solid little business starting but no business experience and the wrong choices could crash it. Is there any free advice available where someone will look at their entire business situation and advise/guide them on the best things to do and how to do it so they can grow it in the best way. As for VAT, not even sure if they should register or not?? I could really do with some or any advice please, there is just too much information. Thank you

 

[Shaun Gambit]

Hi all, my daughter and partner were experienced cleaners and lost their job in lockdown. So having nothing to lose they started working for themselves basically keeping track of what they were paid and receipts for all expenses, business insurance in place, HMRC advised. Very simple book keeping and cash flow problems chasing payments etc.Trouble is now, they seem to be doing too good a job as the contracts are really coming in and they need to take on help.They have asked me if I can help with the admin etc and start looking for 1-2 people but tbh I haven’t got a clue. I’m worried it’s too soon to take on people because of the cash flow and as to what is best ie zero hours etc is beyond me. Basically I can do admin but have no idea how to advise them. They have a solid little business starting but no business experience and the wrong choices could crash it. Is there any free advice available where someone will look at their entire business situation and advise/guide them on the best things to do and how to do it so they can grow it in the best way. As for VAT, not even sure if they should register or not?? I could really do with some or any advice please, there is just too much information. Thank you

[Edit in line with forum rules]

Hi HE100, it's really difficult without a lot more detail. The thing is that if you're looking to hire someone you would usually want a set amout as backup for that resource. So for example if the busines is going well you vould hire someone once you have enough saved up to run your business for 6 to 12 months, including all salaries. Another option is to hire on a fixed term contract basis, this limits the risk to thr amount of months you setuo the contract for. Hope this helps? Let us know if you have more detail that can help answer your questions

 

[WaveJumper]

its good to hear things are going so well. On the book keeping side I would start to look for an accountant to help you, it will save you a lot of heartache as their business grows and the accountant can also run your payroll. They will normally advice on the best accountancy software to use which will help you on the book keeping side.

Here are a couple of links you might find useful, you may need to skip down a couple of sections as the business is already up and running but all the same should be useful

https://transmitstartups.co.uk/operations/how-to-start-a-cleaning-business/

https://www.simplybusiness.co.uk/kn...7/how-to-start-a-cleaning-business-in-the-uk/

 

[Deleted member 335660]

Hi all, my daughter and partner were experienced cleaners and lost their job in lockdown. So having nothing to lose they started working for themselves basically keeping track of what they were paid and receipts for all expenses, business insurance in place, HMRC advised. Very simple book keeping and cash flow problems chasing payments etc.Trouble is now, they seem to be doing too good a job as the contracts are really coming in and they need to take on help.They have asked me if I can help with the admin etc and start looking for 1-2 people but tbh I haven’t got a clue. I’m worried it’s too soon to take on people because of the cash flow and as to what is best ie zero hours etc is beyond me. Basically I can do admin but have no idea how to advise them. They have a solid little business starting but no business experience and the wrong choices could crash it. Is there any free advice available where someone will look at their entire business situation and advise/guide them on the best things to do and how to do it so they can grow it in the best way. As for VAT, not even sure if they should register or not?? I could really do with some or any advice please, there is just too much information. Thank you

Hi HE, First step is take a deep breath and relax, panic never solved anything.
Either use a book or spreadsheet on a computer and record all income in one and all expenditure in the other. A good book keeper of accountant can sort it from there. You mentioned cash flow so spreadsheet is best for that.

In terms of increasing contracts you have four choices. Stop taking on more contracts, ditch less profitable ones, work longer hours or pay for extra help.

Assuming you want extra help then you could use hourly paid part time people. I’m not sure if current rules, so either research them yourself, get advice from your local job Centre or, as someone suggested, talk to accountant.

Unless your turnover isn’t over VAT limit you need not register, but if you are cleaning clients are companies they might prefer you to register so they can claim VAT back.

As for someone taking a look at your operation and helping it’s likely to cost a lot of money unless you know someone. The local Chamber of Commerce might help and would certainly have lots of information for you.

Bearing in mind the current situation they have done well, so build on it and good luck

 

[Mark T Jones]

It's often a good idea to get up and running and let things fall into place. In this case I'd recommend that your daughter contues doing the jobs that she is doing but holds off future work until you have a grasp of the business itself, which in reality is likely to take several months

There is a very high chance that they are under-pricing and getting into vague contracts which may backfire Only once you really understand the costs of running a business with raw, insurance, systems, professional advisors, staff etc can you actually price effectively.

There is lots if good advice above. Well done them for getting it off the ground and you for recognising the need for order.

 

[ethical PR]

There is lots of free advice available from your daughter's local council business team, chamber of commerce and other business support organisations with training, support etc so she could start there.

It sounds like your daughter and her partner need someone who can come in and set up their systems and processes for running their business. If you don't have that skillset then they are better getting in specialists who can, including reviewing their contracts with clients and developing contracts for contracting with or employing staff.

They also need to make sure they have the correct insurance etc.

Developing a business plan will help them understand where they want to go, develop a budget to understand their costs, how much they need to generate to have the profit they want/need and identify what gaps they have in their systems and processes.

It's great your daughter is getting work in but she won't have a successful business if she ignores the basics. She would be better sub contracting some of the cleaning work so she can focus on developing a sustainable profitable business.

 

[HE100]

Hi everyone sorry for the late reply. You have given some great advice which will be taken onboard. It’s obvious from your answers you know exactly what you are talking about. The nail has been hit on the head several times Thanks for taking the time to reply

 

[JEREMY HAWKE]

I would certainly take the advice on holding back on new contracts. Your operation could become a victim of unsustainable growth.
I always say have 3k in reserve per employee for a small business

 

[Chris Ashdown]

Make sure you have professional contracts in place stating under what terms you are doing the work and as others have stated insurance, i.e. what happens if they accidently cause damage to the company they work for and or each other

You can by a "Idiots guide to running a business" or something similar as a title where they can learn the basics https://www.worldofbooks.com/en-gb/...KqBaOKjEOftL0iMJY0mc5-HAL1bO5NURoC8PIQAvD_BwE

 

[Blackford Biz]

Hi all, my daughter and partner were experienced cleaners and lost their job in lockdown. So having nothing to lose they started working for themselves basically keeping track of what they were paid and receipts for all expenses, business insurance in place, HMRC advised. Very simple book keeping and cash flow problems chasing payments etc.Trouble is now, they seem to be doing too good a job as the contracts are really coming in and they need to take on help.They have asked me if I can help with the admin etc and start looking for 1-2 people but tbh I haven’t got a clue. I’m worried it’s too soon to take on people because of the cash flow and as to what is best ie zero hours etc is beyond me. Basically I can do admin but have no idea how to advise them. They have a solid little business starting but no business experience and the wrong choices could crash it. Is there any free advice available where someone will look at their entire business situation and advise/guide them on the best things to do and how to do it so they can grow it in the best way. As for VAT, not even sure if they should register or not?? I could really do with some or any advice please, there is just too much information. Thank you

Hi HE100.

I worked as a consultant for a friend who inherited a 5 person office cleaning business and grew it dramatically. In that business, adding new people and growing the business are huge drains in admin, working capital and sanity (of ensuring cleaners are attending work every day).

Co-incidentally my son started a home cleaning business where the clients pay the cleaners directly and pay him his fee by direct debit. The cleaners provide confirmation that they are self employed and thus no payroll issues which is a huge plus. He is accountable for their timing and performance. His business is all online. I say this only as a matter of information.

A good place to start is by making a business plan, writing down your objectives and quantifying not just finance but operations too.

Accounting system can be bought very cheaply but as others suggest Excel is a good place to start. The number one issue is ensuring every hour is billed and every pound collect early or on time. Making payments is a mandatory, but you can generally depend on your suppliers reminding you !

I do all my son's accounts, statutory returns and advice every year. It takes me about 40 hours a year (I'm retired now so don't keep timesheets for billing ). As it's all online, there's no office, no cash and not many issues. The limited company 50+ employed cleaners had a part-time receptionist book keeper, a van and an area manager and I assisted with finding a part-time book keeper, area manager and business planning/tender applications.

Remember that selling time is low profit, but selling cleaning materials, special projects, landscaping, gutter cleaning etc can all be useful add ons.

Hope this helps.

 

[Mitch3473]

I would be holding my horses at the moment but increasing my prices, ( cleaners are notorious for under charging ) that way you'll know if they are growing because of the quality of work or, worst case scenario, they are too cheap not only will they be running around like idiots earning nothing but it will attract the clientelle they dont want. After 6 -12 months and business is still on the up then put your plans into action.....plus you'll have a bigger pot to play with and a bit more experience.

 

[Employment Law Clinic]

The cleaners provide confirmation that they are self employed and thus no payroll issues which is a huge plus. He is accountable for their timing and performance.


The limited company 50+ employed cleaners had a part-time receptionist book keeper, a van and an area manager

Is this "self-employed cleaners" in the same way the Uber argued its drivers were "self-employed"? It doesn't matter what status any party agrees to say they are, only what the relationship is in practice.

It certainly sounds peculiar to be accountable for the timing & performance of a completely independent third party... and your post does mention "employed" & a manager.


With that number of cleaners, would be wise to ensure the status of the relationship is correct, not just what the cleaners say they are for the purposes of getting the work.


Karl Limpert

 

[JEREMY HAWKE]

way the Uber argued its drivers were "self-employed"? It doesn't matter what status any party agrees to say they are, only what the relationship is in practice.

It is worth pointing out that the User drivers were effectively running their own business. They brought their own cars and applied for their own Hackney licence and still the court granted them some level of employment status. Be warned people

 

[SillyBill]

Anecdotal but this is one of those businesses, like tradesmen, where a lot of people I've known that have taken on staff have reversed course quickly enough; prices have to increase substantially when you scale the operation and then all of a sudden you are up against the same sized set-ups as you once were but without your overheads and without the reliability problems of employing staff. So you almost need to be massive or tiny to make it work. That is my take anyway as the in between (few staff) looks pretty low return on investment to me relative to very high aggravation factor (most probably), outside looking in ofc.

Providing a service or product yourself is the easy bit of running a business (in my view) as put simply you care about the job more than anybody else would and work harder than anyone else would. The cleaner that does my place used to have 20 people "working for them" (all SE), now back on his tod, probably wealthier for it too, certainly happier for it. He packed it in when he got sacked by his biggest contract because of staff reliability/theft issues.

 

[Assistant Advice]

Just joined the forum and thought I would throw my tuppence worth in - rather than go down the route of employing someone what about if they use a Virtual Assistant? They are already running their own business and understand how to set things up so they run smoothly. There are plenty of VAs out there now - just make a list of the tasks you need done and then see who fits the bill.

 

[Sheila Harris]

Congratulations on the set-up of the new business and also am very glad to hear that you're getting lots of work. You mentioned at the start that you were having some problems with Cash Flow and chasing payments, if this is still posing a problem for you, then I may be able to help, and it would cost you a lot less than taking someone on, even on a part-time basis. Please PM me for more info.

 

[Scalloway]

HE100 was last seen on May 22.

 

[shopomatix]

If its a cashflow problem you could talk to their bank or see what grants are available. Its good that the business is taking off again, good luck.

 

[AW-UK]

Didn't there used to be a site that offered free Excel templates for managing a small startup? I know there is no replacement for an accountant etc, but might be worth looking in the interim.