What a few months!

I haven't written anything for a while now mainly because I've been busy with the direction of the company. Since I last wrote, we have drastically changed our business model. It took us a few months to get to our current position but I'm glad we're here. At the time, we thought our original way of doing things was the best and the only way to proceed with business. However, after talking to lots of different stakeholders, including potential customers and vendors, our intended service was deemed too complex for the vendors we were servicing. The market needs to mature for a few years before we proceed with our original idea.

So, I guess the lesson to learn is know when you are beaten and change before investing too much time and money. The changes mean that marketing material, stationery, market research conducted, etc... has become somewhat redundant. The sooner you can recognise when a change a is needed in your business the better. If a business plan is based on good research, meaning talking to potential customers face to face, looking at the current market conditions, the occurrence of major changes will be kept to a minimum.

In all honesty, I think we made the mistake of thinking we could turn our great idea into a great service and all potential customers would come running. In short, our intended service had far too many complications that would put off potential customers. Also, we did not talk to customers enough. We relied on only the personal contacts we have rather than entering into dialogue with the wider community. I think we were scared to talk customers because, in the back of our minds, we knew they would be negative about what we had to offer. We wanted to develop a fully functional service before talking to them about it. Obviously this is very risky.

I'm glad to say that what we have now is much more viable, with much less risk, and the chance of quicker returns.

Business cards

We had our first proper deadline this week. On Tuesday, my colleague attended a networking meeting at 7am. We were introduced the business breakfast club by our soon-to-be accountant who took my colleague along as his guest. My business partner spoke about our business intentions for a couple of minutes to a room of 30. At these networking meetings it is standard practice for each person to take a business card from each other person. We didn't have any business cards printed up until 5pm the day before.

Over the previous weekend our luck was in and we finalised the logo and layout of our business cards with our graphic designer, who is usually based in London, but happened to head north for the weekend to see friends. We collared her for a few hours on saturday and hammered out the design between ourselves. Because we wanted a specific colour printed on the business cards, we were advised to use a printer that allowed us to pick a pantone colour and thus used a lithographic printing press.

No printers were open on the weekend so I waited for Monday. I went to the two local printers and only one could do the Pantone printing, and the shop assistant told me about the service and that it would take 3 days to finish the job. It seems that lithographic printing is not a simple process. It involves printing using a press, which needs to be set up, plus the ink needs to be sourced and set up.

I got a quote anyway and returned home and rung around a number of other printers to get quotes and timescales. The best quote was around £30 cheaper and could be done in a much quicker timescale, but not quick enough. In the end, I opted for a short-term solution of digital printing 50 business cards. The quality is not as good and the colour was not exact, but it sufficed for the early morning meeting.

We're gathering all the documents that we wish to print so that we can print everything at once. Apparently it is cheaper if we are using the same colour ink, as part of the charge is due to setting up the printing press and installing the ink.

Letter Of Intent

Our aim is for 50 clients to sign a letter of intent before we approach the bank for lending. By doing this, we have proven to ourselves and the bank that we have clients willing to use our service before any heavy investment occurs.

The letter will outline our service and provide a general overview of the obligations the client must fulfil. The client is under no obligation to use our service by signing the letter and remain free to walk away from the proposed deal up until a final contract has been signed.

I'll post it here as soon as we have worked out the correct wording.

Accepting payments online

I don't know if every business is like this, please tell me. From what seemed like a simple concept, there are a million and one things to think about. Everyday new things to do pop up from nowhere, which means the stuff that I was doing before gets put on hold. Nothing ever seems to get done. It's a management nightmare.

We're setting up an e-commerce business of sorts and everyday there seems to be a new cost associated with the functioning of the system. After two weeks of speaking to various sales people on the phone is it that I have begun to understand the flow of accepting payments online. Rather than host a secure server ourselves, we will use a payment processing firm who charge per transaction. They handle all security, fraud checks, etc., and take payments from a customer's credit / debit card and forward it into our merchant account. The payment processing firm, Protx, charge 10p + VAT per transaction and forward the money to our account each day at 2am. It takes up to 3 days for the money to arrive in our merchant account. Upon arrival in our account, the bank take a percentage (somewhere between 2.5% and 5% depending on the bank) and some also charge a transaction fee of £0.50 - £1.00. Any money we collect, we must forward to our clients minus our commission. So the next payment flow is from our bank account to our clients' bank accounts. We will do this via the BACS system which takes around 3 business days, and depending on the type of business account, you can do for free.

It certainly pays to shop around for business bank accounts. Remember, banks want your business, and this is proven by the fact that they all offer deals to business start-ups. Some are better than others of course. We've been to a few of the high street banks and most helpful were Lloyds TSB (they gave us a free book called Lloyds TSB Small Business Guide) and Royal Bank of Scotland.

Re-starting the business plan

I thought of the idea for the business back in January 2005. During my masters I took a module on Enterprise and my group needed an idea. We got a pretty good mark for the plan and its presentation to a scary bunch of business gurus and we entered the plan into a business competition run by the universities in the north east. We made the final but had to drop out because people were either too busy with other coursework or were not fully committed to the idea. Over the course of the year my housemate persuaded me to consider going into business for real. Suffice to say we are both now working on the idea pretty much full-time.