The British Camber of Commerce - BCC reports a £10bn rise in the cost of red-tape to £66bn in the last 12 month.

In a time when our economy is in a slow down cycle, this figure is staggering. The government policies are fiscal policies are failing on a grand scale while it is spending tax-payers money through red-tape at an unbelievable rate.

Not only the cost of red-tape will be of worry to most small business, but the inherent loss of competitiveness is not to be underestimated. The biggest burden is the working-time regulation with alone £1.8bn in a year - a total of £16bn since it’s introduction.

The governments claim of an overall reduction in the cost of red-tape have been exposed as wishful thinking, once again.

Francis Chittenden of the Manchester Business School who has co-authored the report with Tim Ambler from the London Business School has the hope, that the civil servants who actually reduced their cost of red-tape a little, would be promoted, in order to achieve better results in future years. But even he admits it may be too little too late.

This, in my opinion, should be the Labour Parties new slogan: Labour - Too little, Too late. ST.

In a report, due to be published next month, from the European School of Management - ESM, it is reported that there has been a marked decline in small business activity in the the UK under Gordon Brown.

In the last decade when most peoples idea of small business centered around reality shows, small business has suffered due to a flawed understanding of small business issues and a “reality show“ like incompetence of the government departments involved.

Here are some of the reported findings of the ESM‘s team:

• a decline from 29% in 1996 to 16% in 2006 of small businesses reaching a £1 Mio. turnover within five years of start-up;
• only 6.8% have a turnover of £7 Mio after five years, much lower than the 16% European average.

Professor Davide Sola, the report’s author and dean of the ESM said:

        “The tax system for small businesses in the UK is becoming less competitive. the changes to capital         gains tax in the 2007 Pre-Budget Report will further undermine the attractiveness of the Uk as a place         to grow a business. The implications for investment and job creation could be very damaging.“

The ESM’s report covers a time period of ten years on the quality and speed of small business growth, as it is said to be a better guide of entrepreneurship, than the number of companies starting. A third of all business start-ups fail in the first three years and only 10 per cent achieve high growth.

Given the fact that almost 70 per cent of all small business do not wish to grow, due to the red-tape burden in the UK, any changes to this trend will be hard to come by - especially under this government!

The report was commissioned by the shadow Chancellor George Osborne, so let’s hope the next government will correct some of the big mistakes made in the past ten years. I’m allowed to dream, aren’t I? ST.

Choosing an accountant/CPA is probably one of the most important decisions to get right, because you are unlikely to have an accountant’s grasp of

• taxation
• company law
• dealing with the tax authorities
• wide range of knowledge about small business.

You need to make sure you find an accountant/CPA who concentrates on small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants before you make any appointments.

Another aspect is size, make sure you are not “one among millions” sort of speak, smaller accountants practices are often more in tune with your small business needs, because they are a small business too.

Here are some questions I would be asking when starting out with a new business venture:

• Should I start my business as a sole-trader, partnership or limited liability company?
• Can you help me to find and raise finance? (Read about bootstrapping first!)
• Will you help me with setting up my cash-flow forecast?
• When do I need to register for VAT (UK), GST (Australia) or when do I need to charge sales tax (US)?
• Am I ready to start trading, or should I wait?
• Do I need to choose my financial year and trading year end date?
• Are you going to do my bookkeeping and accounting work?
• Will you work online with me, so we both can be up-to-date with my business progress?
• Will you deal with my employment issues, pensions, annuities and insurances for me?
• Will you help me to understand more and more of these issues myself, and will you be available for advice if and when I need it?

There are many more issues to consider and they depend on your business, that is where your accountant will help you too. If you find the accountant is dealing with other businesses like yours you are in good hands, they can give you better and more realistic planning guidelines about your business venture.

The most important question is the one you need to ask yourself, “do I trust this person and can I work with him/her long term?” If you feel intimidated, or misunderstood, get up and walk. An accountant should be your advisor, he/she should never be your boss, what I mean is you need to make the final decisions, not your accountant. No matter what advice you get anywhere, you are always responsible.

Most of all your accountant should be a trusted advisor, trust me you will need his/her advice on a regular basis! ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I’d be most grateful.

Mr. Browns Labour Party must be thinking, “Attack is the best defense!” After all the “goodwill” they generated with their tax-hike for small business in the Pre-Budget-Report, they now send out the former home secretary Charles Clarke - who had to resign, because he couldn’t even follow very simple rules, regarding foreign inmates, repeatedly - to lecture small business about doing better and “promised” more red-tape.

This at least is what AccountingWeb, is reporting in this piece.

While small business is being blamed and punished, big business seems to get away with receiving generous tax breaks and “public” funding - one guess who’s tax-money is being used for this. It is startling, how incompetent politicians are in dealing with small business, could it be that most of them have never had any experience in the real world, since most of them are career politicians?

To me this all sounds like the bad old days, the government is failing on more and more fronts, NHS, schools, crime, public services, not sure if I should mention the war, and many other areas - yet will insist on lecturing us about our “failures”. What ever happened to “leading by example“?

It is time for change. ST.

Running a small business and start-up business, like SOHO-, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants from home, is one of the most cost-effective ways to start a business, so here are some costs I can foresee:

1. Office Set-Up. You may have a desk and computer and internet already, the kitchen table can often be used for your production work, depending what you do, it may be the garage. If you do not have desk, computer, buy some second hand stuff, look in the local paper, ebay or other auction sites, to find what you need cheap. I estimate $1,000 / £500 for that one off, if you don’t have the office equipment.
2. Telephone & Fax. Get a second telephone line, get your faxes via email and get someone to answer your telephone. Use a virtual assitant, I hate small businesses who do not answer their telephones, it’s one of the biggest business turn-off’s. Estimated set-up cost $100 / £ 50, monthly cost about $60 / £ 30 per month.
3. Online Presence and E-Commerce. I am a little biased here - use our OnlineOffice and get your web-site - for customer information, e-shop - for selling online, online blog - for marketing and PR, online file-store - to keep you data safe, accounting software - to work with your accountant online in real time, and be able to outsource and work with virtual assistants, to save time, money and make yourself look professional. This all includes free 24/7 live support. Per month $20 / £10.
4. Accountant and Bookkeeper. Important, to get an accountant as early as possible, to plan your cash-flow talk about special rules that apply for taxation, insurance and other red-tape. One of you most important business partners if you get your choice right. Estimate on average $100 / £50 per month, the initial consultation should be free.
5. Bootstrapping. Do not spend any money on flyers and other printed material, don’t spend any money on any marketing until you can afford it and you know you will get a result - because it’s all free on the internet.

So you are looking at a professionally run home-office with telephone and accountant back-up for a total set-up cost of around $ 1,100 / £550 and a monthly average cost of $180 / £90. You may need some insurance, depending where and what you do?

This is the cost for running your small business from home, your accountant can talk to you about tax-breakes for working from home too. ST

Disclaimer: As with any of my readers questions, I do not have all the answers and this is not business advice, since I only know very little about your business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below - I thank you for your effort.

Jeff Cornwell has an article about the failure of US small business to export. A Study by UPS reveals:

“…..that most of America’s small and mid-sized businesses have failed to explore the significant growth opportunities offered by an increasingly global economy. Specifically, 67 percent of the nation’s small-to-mid-sized enterprises (SMEs) are still relying solely on the U.S. economy. This figure is surprisingly low given the increasing ease of importing and exporting in today’s economy.”

These numbers do not surprise me at all, in a survey we did in 2004 we found that the hurdles have been considerable:

• 36% finding local partners;
• 21% understanding local markets;
• 16% Financing export activities;
• 11% defining local customer profile;
• 11% language barriers;
• 5% other.

You can read more about our findings here. Having spent many hours in trade commissions around Europe, it is also clear to me that each country is interested in exporting activities of their own small businesses, but less helpful when it comes to importing. In fact the red-tape barriers are considerable.

My personal impression has always been, that many of the “advisors” still have a pre-internet mentality to export/import, which makes it even more difficult for small business to export. This coupled with a less than basic understanding of small business, makes for a poor export/import advisory infrastructure.

With the help of online technology we should see this changing, at least in the services industries. Even very small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants, will find it less difficult to export their services, using services like LiveNet.

With LiveNet it is no longer important where on the planet you live, I call this Globelization 3.0. ST.

There is a great new blog out - Red Tape Rants - by Sylvia Tidy-Harris, here is one - it’ll make you’re head spin:

“I was looking to import an electrical item currently sold in the USA - below is the advice on what areas of legislation apply - The cost of getting all the compliance testing done would be about £4000 on a product that would only sell in small quantities (100 a year would be a great success) at a margin of around £25 per unit… LVD, EMC, RoHS, WEEE. Under the LVD, you would need to comply with the current versions of EN60335-2-9 and EN50366. Under EMC you would need to comply with the current versions of EN55014 and associated standards.”

There is much more, some of it I have said here before. ST.

A few days ago I was once again reminded by Joshua Levy and his piece “One Blogger Asks: Is the Grass Really Greener on the Web Worker’s Lawn?” on his blog Web Worker Daily that I wanted to write a piece about what I believe to be the social impact of home working.

Joshua is asking some interesting questions about working from home:

So is all of this freedom actually liberating us? Does web work actually represent an evolution in the working conditions of the masses? Or are we fooling ourselves, blind to the reality that we can’t have it two ways — you can’t have the freedom AND have someone else, er, pay the bills.

If I ask myself these and other questions I’m invariably drawn to find answers in my personal work life and how it has changed in the last decade.

In 1999 I was still office based, traveled from one of our offices around the world to the next and was rarely home. In fact most of the time those years I came home Friday very late or Saturday and then often left Sunday night again. So I saw little of my family and especially my son who is now grown-up and ready to go to university.

Then in 1999 I sold my ISP-business and went back to run WinWeb. This time around I worked from home, right from the start I did not want to be in an office and lead the same life as before. So for the past eight years I have been there when my son came home from school, I even picked him up often enough. I was here when he came home with the latest music CD, I had to listen to - not always easy, I admit - or the latest sport-shoes form addidas had finally arrived at the shops.

Similarly I spend much more time with my wife, going for lunch, doing some “essential” gardening - I hated gardening, but love it now. I could give you many more examples, but you get the picture.

While there are many challenges for home workers, I believe we are seeing the beginning of an “reversal” trend. I would like to list here some challenges I believe our society is facing currently:

• Child care - in our work dominated society we often outsource most of our child-care, in kindergarten, boarding schools, and other institutions, here our children will not receive the same level of care and love they deserve and need;
• Care for the Elderly - our lifestyles often separate us from our loved ones and in times of need we are often not able to care for our relatives or friends, because we live in different cities or even countries for example;
• Environment - many of us spend hours every day alone in cars or on trains - not alone, but still isolated - and contribute to the carbon emissions that change our climate.

There are many more examples. This whole process began with the “Industrial Revolution” some 150 years ago. Some of us may even remember a time when three or even four generations of a family lived in one house. People worked in their villages, child-care or care for family “just” happened - was that a bad or good thing? Looking at single parent families and the impact on our children, I would argue it was a good thing, and so would the many parents working from home exactly for that reason - to provide a healthy family environment for their loved ones.

I believe that the whole trend of home working may in the future allow us to have a much more natural work/life balance and will reverse some of the damaging effects of the post industrial revolution changes in our society. People will live closer to family, local communities will be revived - I believe that is happening as we speak, and our children will benefit from “more family”, and all this will have a profound impact on all our lives and the environment.

I would encourage Joshua and everyone else working from home to relearn the social skills of building local friendships, or live near family and give you the social life you need.

After all, this technology we at WinWeb and others supply makes it possible to work from anywhere, gives you a tremendous amount of freedom to live the life you want, where you want.

Let’s hope in hundred years from now people will see this era not only as the “Information Age”, but also the age when we learned to live a better work/life balance, in tune with our emotional and social needs as individuals, families and society as a whole. What do you think?

Have a great weekend with your family and friends.

I get regular questions about what we really mean by WinWeb’s Small Business Infrastructure?

On-demand Small Business Infrastructure™ centers around the idea that business start-ups and growing small businesses need help with numerous administrative tasks that are not core to the business success - such as bookkeeping, it services, internet services, call handling and other such services.

These services - if performed by the business owner - cause a great deal of time wasting - while the fixed cost of a business is still accumulating. This is in our minds a fatally floored business model and can easily be remedied with our infrastructure approach.

We should not expect business start-ups and small business in general to be accountants, bookkeepers, lawyers, marketing & PR gurus and so on. We should provide small business with an infrastructure in which it can concentrate on core business tasks, while at the same time enabling the business owner to stay informed of all relevant business facts like cash flow, sales, HR issues, tax position and more. This will enable him / her to make informed decisions, maybe with the help of an external advisor.

Based on these facts, we have devised a six point on-demand Small Business Infrastructure™ concept, which consist of:

1. WinWeb On-Demand Software Solutions - Anywhere At Anytime.

AccountsOffice and OnlineOffice are our two software offerings, which are based on the SaaS - Software as a Services model, to allow for the following key business benefits:

• tight inclusion of business advisors from the start,
• cultivating outsourcing techniques at the outset, i.e. virtual assistants,
• no IT knowledge needed and hassle free operation,
• real-time multi-user access from anywhere, increasing mobility.

2. WinWeb 24/7 Live Support - We Are Here For You Always.

Providing customer care and support only during business hours is not acceptable to our clients. Experience has shown us that most admin work gets done by small business before nine in the morning or after five in the evening. This practice is essential if the business is to survive it’s early years.

This is why we have provided our much acclaimed customer support for 24 hours a day, seven days a week from the outset. Saving our clients wasted time and money - while setting new standards in customer support. No manuals need to be read - all problems can be solved in real-time online.

3. WinWeb Live - Networking Community for Small Business Only.

To foster collaboration and outsourcing we have expanded our WinWeb Live™ offering to allow for small business community networking - thus enabling the business owner to make decisions about his / her current needs, with the following benefits:

• timeshare virtual assistants for professional results,
• offer contracts of work to contractors on a case-by-case basis,
• promote the business to a large audience or even locally,
• find new work and contracts online

4. Business Advice

Our On-Demand Small Business Infrastructure™ enables business advisors, accountants, bookkeepers and other advisors to have a “Up Close and Personal” relationship with the small business owner, providing key elements for the success of a small business:

• timely and up-to-date advice from anywhere at anytime,
• more efficient advisor function due to SaaS technology, less travel,
• easily expandable advisor network.

5. Solution Partners

Third parties provide external services to complement our services, such as parcel service, office supply services, printing services. These and other services are provided on a bulk buy arrangements by leading businesses in their respective sectors - to provide the most reliable and up-to date service possible - with the effect of enhancing the professional appearance of our clients.

6. ClimateByte™ Technology - For A Cleaner Future.

Our clients are among the biggest demographics concerned with climate change and carbon footprint neutrality. It is a fact that employing remote working and collaboration techniques drastically reduces the damaging business side affects on our environment. We enable our clients to be more eco-friendly and aware, by providing them with our green technology - an ongoing development commitment of WinWeb.

WinWeb welcomes any suggestion that will further enhance our On-Demand Small Business Infrastructure™ concept - especially the development of even more eco-friendly business processes - to serve our small business and business start-up client-base.

A few years back we used to have a product called GlobalOffice - it was targeted at foreign small businesses who wanted to export product or just support their customers in local markets. We learned that our customers just used our OnlineOffice and made arrangements for the “Live” services themselves - and this has been the way ever since we withdrew GlobalOffice to focus on our “core” business to provide a Small Business Infrastructure - SBI.

Small Biz Labs have a post today about Laurel Delaneey’s Global Small Business Blog and one of her recent posts, some of the data is quite interesting:

• Only about 4% of US companies are exporters and the US has the lowest level of exports as a % of GNP of the G7 countries - roughly 10%. The highest is Germany at almost 45% and the 2nd lowest is Japan at a bit over 15%
• SME’s (defined as less than 500 employees) accounted for 29% of US export value in 2005.
• While the number of exporting businesses in the US grew rapidly in 90’s, it has stayed relatively flat since 2000. In 2005 there were roughly 239,000 exporting companies, 97% of which are SMEs.
• 58% of exporting companies traded in only one export market.

Localization, local red-tape and the often horrendous cost associated with exporting make it difficult for small business to work in foreign markets. I believe these barriers are slowly disappearing, not only with the help of technology, but with the understanding of technology.

Globelization 3.0 as I call it - I have written about it before - will enable very small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal business, to take full advantage of global markets for products and services. Even personal business, like contractors, freelancer, self-employed, sole-trader and virtual assistants can now use social networking communities to develop international virtual project teams or at least be part of at least one or more.

In ten years time these numbers will be very different - as it will no longer matter, if your customer is next door or half way around the globe. For some this is a reality already - have you thought about this when planning your start-up business?