PRIME business club

easyJet founder and serial entrepreneur Stelios Haji-Ioannou is entering the serviced office business with a chain of easyOffices targeted especially at start-ups. The first opens in London on the 14th of November 2007. Other offices are expected to follow swiftly in Edinburgh and Glasgow.

Like other easyGroup businesses Stelios has given his serviced offices a twist. The price you pay for a unit depends on how much demand there is when you book. So a unit that costs the minimum of £99 a week if you book well in advance will cost more if you leave it till there are few units left.

The London site, located in Kensington, has 35 units, which you can hire for a minimum of one week up to a maximum of three months. Booking is online at www.easyoffice.co.uk. At the moment there is a special offer of £10 if you book now for the first week.

According to Stelios, easyOffice is “designed with the true start-up entrepreneur in mind who knows it’s a smart business move not to waste money, especially at the start of a new venture”.

There are off course plenty of other serviced offices on the market, so it remains to be seen whether easyOffice will shake the sector up, either by reducing prices or introducing more flexible bookings.

But even if not, Stelios has a second string to his bow. In partnership with established brokerage firm Instant Offices you can search and book offices NOT owned by Stelios in around 4,000 locations in the UK and worldwide from the www.easyoffice.co.uk site.

Yell.com has published a very encouraging piece of research into businesses started by older people. The survey focuses on business owners over 50 who have set up in the last five years, who it calls “senior startups”.

Overall this is a strikingly contented group, with 44 per cent of respondents reporting that they are now happier than they’ve ever been. Around a third of all respondents (30 per cent) say that they love their work, and (61 per cent) say they regret not having set up on their own earlier.

More than half (53 per cent) say that the key piece of advice they would give to other over-50s would be to “go for it”.

Other findings include:

• The average turnover of the people polled was £67,500 per year, with most working alone from home
• Most have no thoughts of retirement and see their business as their pension plan – more than two thirds (71 per cent) want to run their business for as long as they are able
• Businesses within this group tend to be financed by savings – with only 13 per cent funded by bank loans

Only 16 per cent of those questioned had run their own business before, with 41 per cent having worked in a completely different field before setting up on their own. Almost one in five (19 per cent) of the female respondents were not working immediately before setting up their businesses.

More details of the research along with tips and case studies are on Yell’s the people behind the numbers web site.

Disclosure: PRIME has a connection with this study through Professor Mark Hart, who did the analysis and who is a member of PRIME’s board of trustees (the equivalent in a charity to a company’s board of directors).

Mark, who is Professor of Small Business Research at Kingston University as well as a PRIME trustee, comments “This research adds greatly to our knowledge of the over 50s’ contribution to enterprise in the UK. There is now clear evidence that the entrepreneurial activities of this diverse group are capable of providing sustainable incomes.”

The over 50s are little studied compared to younger entrepreneurs, but are known from other evidence to account for one in six of new businesses in the UK.

The Economist summarises the latest thinking on the subject by big companies, including some such as 3M, Nokia and Google that are undoubtedly very good at innovation.

Just about everybody seems to agree that it’s not the idea itself but the hard work that follows afterwards that matters. But some are thinking too about the filtering process - about how to pick the winners from a lot of competing business ideas.

“The more ideas a firm comes up with, the more important it is for bosses to decide early on which of them to kill off. This is to avoid heading down countless and costly dead ends.”

There’s hope too for new small firms in all this, as one of the mistakes big companies often make when innovating is in pandering to the exotic requests of their existing most profitable customers.

It may be “better to make things simpler and easier for the bottom and middle of the market, rather than add needless bells and whistles for the handful of top customers who can afford and demand them”.

If you haven’t got many customers yet you may paradoxically be in a very good position to understand what people really need. You have less to unlearn than your established rivals.

As Edwin Land, the inventor who founded Polaroid, said “people who seem to have had a new idea have often simply stopped having an old idea”.

About a quarter of the people who have contacted PRIME over the last two years kindly filled in a form giving some details about themselves. The responses have now been analysed and here’s what you told us.

The results were independently analysed for PRIME by Professor Mark Hart from Kingston University Business School.

The purpose of this kind of formal monitoring exercise is twofold. Firstly it re-assures our supporters that PRIME, a charity, is reaching the people it should be reaching. And secondly it enables us to spot gaps where we should be doing more.

Of course this isn’t the only way we get feedback. Indeed, you are very welcome to email us at any time or post comments in the forums.

On the 1st of July 2007 the prohibition on smoking that has been in place in Scotland for well over a year and in Wales and Northern Ireland since April finally arrives in England.

For most businesses it won’t involve more than putting a few notices up - but there are penalties for failing to comply so it is worth checking what is required.

There are separate official guidance sites for England, Wales, Scotland and Northern Ireland. They all contain brief summaries of the law, frequently asked questions and officially-approved no smoking signs you can download for free.

The ban affects almost all enclosed places of work and indoor premises open to the public. Strictly speaking it will be illegal for workers to smoke - or to permit customers or other members of the public to smoke - even if they all want to.

Vehicles used for work by more than one person must also be smoke free. And they must display No Smoking signs.

There some exceptions - residential accommodation, designated rooms in hotels, submarines and - bizarrely, refueling vessels.

In Northern Ireland interpretation of the law has already been relaxed to allow actors to puff away “if the artistic integrity of the performance makes it appropriate for them to smoke”. In Scotland this concession was only achieved after a struggle.

So England will probably get the law with some of the rough edges knocked off - but there is no guarantee of this. Basically, from the 1st of July smoking at work will be forbidden across the UK - but with some local variations.

Does the law apply to sole traders? It does if you work with someone else indoors or have customers or suppliers visiting you regularly in your enclosed space. But if you work entirely on your own, particularly in your own home, you are permitted to make your own decision.

Meanwhile the BBC is reporting that Cherie Blair has been hired by an erotic nightclub to challenge the smoking ban about to come into force in England.

“Dave West, who runs the HeyJo nightclub in London, believes the ban will breach the rights of staff and his guests.”

Google is making big changes to its search engine that may affect how much traffic businesses receive from the site.

If your web site currently comes in high up the list for typical queries you may find it coming in lower. Conversely the changes might be good news, promoting your site up the list into a more visible position.

The modifications are being rolled out immediately starting this week. Google has decided to rejig its famous page ranking system by merging the results of its more specialised search services - for example its image, patent and book searches, into the general results.

For PRIME this may turn out to be bad news as we do pretty well under the current system thanks to all the organisations that link to us. We’ll now be competing with pictures and books about prime ministers, not just news stories about them.

On the other hand if you are promoting your small business using blogging software you may find you do better, as blog results are expected to suffer from less discrimination under Google’s new “universal search” system.

The change-over will affect both Google.com and Google.co.uk but not necessarily simultaneously.

“Search marketers must understand that the supremacy of web page search just took a major hit.” Danny Sullivan.

Official Google announcement
Detailed analysis from search engine guru Danny Sullivan.

Barclays has extended the deadline for entries to its annual Trading Places business award. You’ve now got till the 18th of May 2007 to get the simple entry form in (ignore the date on the form).

This award differs from most of the others in that it’s about overcoming adversity. So if you have got your business going after a struggle it might be worth entering. Here are the stories of last year’s finalists.

For more information please ring or email the Barclays Trading Places Awards Office, telephone 0208 673 2020.

Entries can be sent to: Barclays Trading Places Awards
Aspect Communications
Stable Yard
16 Balham Hill
London
SW12 9EB

Citizen’s Advice (formerly The Citizen’s Advice Bureau) is asking people for their experiences with Working Tax Credit. This is to enable the charity to lobby government more effectively for changes in the scheme.  Last year CABs across the UK dealt with more than 150,000 tax credit problems.

Citizens Advice is in fact a network of independent charities that help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. 

Tax changes announced in Gordon Brown’s March 2007 Budget will make little difference to most self-employed people this year, but herald a major shake-up starting April 2008.

The abolition next year of the 10 per cent income tax rate means that those on low incomes – which will include many engaged in starting a new business, may be worse off in financial year 2008 to 2009. That is unless they claim any tax credits due to them.

Growing role for tax credits

A key message of the Budget lies not in the headline-grabbing changes to income tax rates, but in the growing role that working tax credit and child tax credit are playing in the personal tax system. PRIME believes it is more important than ever that self-employed people claim tax credits they are entitled to, otherwise they will lose out.

Here’s a summary of the major tax changes. Note that if you are a sole trader or a partner corporation tax is not relevant to you as you will still be taxed via the income tax system. If on the other hand you have decided to set your business up as a company then it has a separate identity. This means that as well as paying income tax as an individual on any dividends or salary you receive, the profits of your company are subject to corporation tax.

Few changes this year

There were no major surprises in personal taxation for this coming financial year (6 April 2007 to 5 April 2008), with tax rates and thresholds all as outlined in the Chancellor’s earlier pre-budget statement in December 2006. However, for small firms paying corporation tax on their company’s profits, the rate is going up immediately (from April 2007) from 19 per cent to 20 per cent.

Big changes start in 2008

The major changes to personal taxation start in in April 2008, with both income tax and the tax credit system shaken up.

Income tax: The 10% starting rate for those on low incomes disappears, and the basic rate is cut from the present 22 per cent to 20 pence. This leaves a simpler structure of two just rates - the 20p in the pound basic rate and a 40p higher rate.

But you’ll go straight on to the 20 per cent rate as soon as your income exceeds your personal allowance. In 2008 the standard tax free allowance for those under 75 will be £8,990, up from £7,280 now.

Tax credits: This makes tax credits critically important. If you fail to claim them despite being eligible you are likely to be worse off if your income (or net profit) is under around £17,000.

For an explanation of the way tax credits are calculated see PRIME’s free booklet. Tax credits are a kind of reverse income tax paid to those on low incomes - including the self-employed.

The good news for those qualifying for working tax credit is that you will be able to earn £1,200 more before you lose any of your entitlement. From April 2008 the income threshold for working tax credit calculations is increased from the present level of £5,220 to £6,420 per annum.

However the bad news is that once your income (or net profit) is over the threshold the amount of working tax credit you will get tapers off more quickly. From April 2008 the “withdrawal rate” on tax credits will be 39 per cent rather than the present 37 per cent, which means you will lose from your award 39p in the pound for every pound your income exceeds £6,420 per annum.

Child tax credit: Anyone who is eligible for working tax credit (WTC) who is caring for children under 16 is likely to also be eligible for child tax credit (CTC).

CTC is complicated but the amounts involved make it worth investigating, and the taper for CTC is much more gentle than for WTC. As your business income builds up you will lose WTC sooner than CTC. From April 2008 the value of the child element for each child rises to £2,080 a year.

Corporation tax: The Chancellor has decided to tax the profits of small company more and of large companies less, partly to reduce the incentive to set up lots of small phony companies.

For small companies the rate rises in one per cent steps over the next three years to 22 per cent by April 2009, starting immediately in April 2007 with a rise from 19 per cent to 20 per cent. Meanwhile the rate for large companies (profits of over £300,000 annually) will come down from the present 30 per cent.

But on the plus side small firms will be able to claim 100 per cent tax relief for new capital investment up to £50,000.

Small firms in the UK are having to wait longer to get paid than in the past. And their customers pay more slowly than those dealing with larger firms, according to a study of company accounts conducted by Siemens Financial Services.
In 2006 the small, owner-managed firms in the study had to wait an average of 80 days to receive payment, compared to 69 days two years earlier. By contrast the large firms whose books were examined got paid in 47 days.

More at Freelance UK

If you are running a web site - or even just sending business emails, new rules require you to say who exactly you are. The sort of information required is similar to that already required for letterheads and invoices - full business address, registration number, VAT number etc., so the requirements are not too onerous. The rules apply to all limited companies and limited liability partnerships and came into effect on the 1st of January 2007.

More from law firm Pinsent Masons

What’s the best way to structure a compensation system for partners in a small startup firm?  This article by US business writer David Maister makes some interesting points that apply equally here.

On October 28, 1906, around 50 people died when a train fell off a bridge in Pennsylvania. The railroad responded by issuing probably the world’s first press release - and by putting on a special train to help reporters get to the scene. Modern PR was born.

Read more on the railroad’s PR man Ivy Ledbetter Lee, whose career perfectly exemplifies both the good and bad side of PR.

There’s a surge in demand for environmentally friendly products as consumers respond to predictions of doom, according to this BBC report. “British shoppers increasingly look to shop with a clear conscience,” research firm Mintel says. The trend is strongest among people with more money.