David Gowans Coaching and MentoringBusiness Archives - David Gowans Coaching and Mentoring

Sole Trader, Partnership or Limited Company?

July 19, 2017 2:12 pm Leave a Comment

Too often when an entrepreneur is starting a business the excitement and enthusiasm is focused on just getting it going and building the business. They will jump into action without necessarily thinking too much about the legal structure of the business or the type of business we are creating. This is especially common for people who are just keen to strike out on their own.

There are however several ways to create a business. The most common in the UK are:

Sole Trader
Partnership
Limited Company

Sole Trader

When deciding to create your own business in the UK you would probably consider setting it up as a sole trader or a sole proprietor. It is one of the most popular business types for ‘one man band’ operations because it is very easy to set up. You as the sole trader retain full control and ownership. You own all the assets of the business and any profits made. On the flip side, you are also responsible for all the debts and liabilities the business accrues.

Although easy to establish there are significant drawbacks to setting your business up as a sole trader. The biggest drawback is around liability. As a sole trader, the business is not a separate legal entity to you as an individual. This means that if the business gets into debt or the business is sued you are personally liable. Worst case is you could lose your own personal assets such as a home or your savings etc.

Partnership

A partnership is the business structure often chosen when two or more people go into business together with the intention of making a profit. It’s always wise to create a formal agreement between the partners to set out the terms of the partnership.

Partners share the decision making, any profits the business makes and also any debt the business accrues. If the business runs into trouble both partner’s personal assets may also be at risk. Also, as there is no legal entity, once the partners retire, die or move on, the business ceases to exist.

There is another type of partnership that exists known as a limited liability partnership (LLP). This ensures that the individual partners are not personally responsible for the debt the business accrues. The partners still share the running of the business in the same way as partners in an ordinary partnership, but avoid the personal risk to their own finances in the same way as shareholders in a limited company avoid personal liability. The other main difference is that limited liability partnerships must be registered with Companies House.

Limited Company

When it comes to limited companies it’s easy to assume that they are only appropriate for the big companies or for businesses where there are multiple partners. However, changes in UK law means that a single founder can create a limited company and own 100 percent of the shares. Alternatively, one or more partners can form a limited company by registering the business with Companies House (UK registrar of companies) as ‘limited by shares’ or ‘limited by guarantee’. When a company is ‘limited by shares’ they are owned by one or more shareholders and managed by one or more directors. Limited by guarantee companies are owned by one or more guarantors and managed by one or more directors. The same person can be the owner and director, so you can set up a company by yourself or with other people. Each partner (or shareholder/member) is then allocated shares in the company. If they are equal partners then the shares are equal, if there is a less active partner then the share allocation may be altered to reflect that.

There are many advantages of forming a limited company over the other forms of business. For a start, the business becomes its own legal entity which means that it will survive beyond the life of the business partners. This is very important if you have an exit strategy that involves selling the business.

With a sole trader or ordinary partnership, as profits increase you will be subject to higher personal tax rates. However, if you set up a limited company from the outset the business will pay corporation tax (20% in 2017), making it much more tax efficient.

Obviously, it’s always wise to speak to a professional about your plans so they can help you make the right decision but if you plan to create a business that you may one day sell then a limited company is almost always the best option.

Contact me for more information on how I can help you to make the most of your business.

Why is a business Exit Strategy so important?

April 20, 2017 1:15 pm 1 Comment

Whatever it is, there is a reason why you started your business. Maybe it was to build it up, sell it, retire young and set sail into the sun or work on your golf handicap. You may have the dreams, but do you have a business Exit Strategy?

My dream when I started my company was to be free to travel the world whenever I wanted and to wherever I wanted – all the time! Shortly before I started my business, I had backpacked around the world for a year and had the most amazing experiences of my life. I had joined an unofficial club and I had well and truly caught the travelling bug. The opportunity to create a new business came unexpectedly but with a new and more relaxed outlook on life, I turned the opportunity into reality. From that day on, I was clear in my focus that the business would provide and opportunity to give me the financial freedom to be able to travel the world forever. And it happened!

It’s All About Planning

If indeed you want to retire at some stage then planning your exit strategy is as important as planning the business success. And having the final goal /dream in the back of your mind is key to pushing you to make the right decisions along the way.

Achieving business success is not plain sailing and business leaders face many challenges. Some will fail. In fact, it was reported by ‘Ormsby Street’ that 4 in 10 businesses would fail in the first few years. To grow a successful and profitable business takes time, especially if the nature of the business is labour intensive. It is not easy and it will drain energy from you. You can never really detach yourself from the business and no matter what you’re up to, you will always be thinking about work in some way. Thinking of the business idea is the easy part, even starting a business is simple compared to the difficulties you will face trying to run it.

Exit planning is something you should do years before you actually hand over the keys to your business. You should create a vision of what you want to happen in the business, how big it will be, how many employees it will have, the geographical locations it will operate, the types of customers, the financial results, and what it will be worth. A clear understanding of this will help you to create a well put together strategy of how you will actually make this happen. You are effectively Designing Your Destiny.

A good exit plan will help you to drive your company to greater success. Understanding your plan will help you to make the right decisions and even more importantly, let go if the things that are not important. Getting involved in the trivia is something that too many business leaders do, and it causes undue stress and takes up way too much time that should have been allocated to the important task of running the business. Knowing your exit plan will keep you focused on the priorities and get you to your goal a lot quicker.

Find a Mentor

Using a business mentor is an excellent way to building your exit strategy. Rather than trying to learn things the hard way, you can tap into their wealth of experience and set a robust strategy that gives you confidence. In fact, using a good mentor throughout your business journey is an investment well spent. I would always suggest that you use a mentor who has actually led a business to sale and exit rather than someone who deals in theory. Working with a fellow entrepreneur who understands exactly the position you are in would be the best route.

Buyers want to buy a business that will stand on its own two feet so that they know that when they took over it would still be able to be run when you left.

Building a management team is the key to this. It will generate new ideas and energy, and will help you to build your business quicker. You will create a layer of staff who can take responsibility and be accountable for their element of the business. You will delegate many of the tasks that you shouldn’t be doing and you can focus on the strategy – the exit strategy.

When I built my exit strategy, I found that I was enjoying running the business more. By building a good management team, and letting go of many of the tasks that held me back, I had more time to focus on what was important. I believe business leaders should be focusing 80% of their time on strategy, and looking for the next opportunity. When I learned this and put it into practice, I started to enjoy my role so much more. I allowed the management team to get on with what they were good at and had been trained on, and I focused on the high level elements only, and got back to my entrepreneurial ways of thinking of new ideas.

Business leaders who have already started planning their exit route, tend not to get so stressed, as they have already passed on the responsibilities to their management team. They have a belief that they will be ready to leave the business when the opportunity comes, knowing that they have a strong team developed that will continue to run the business very effectively into the future.

Everything that arises, passes by. At some stage you will need to leave your business. Doing it under your terms is a lot better than being forced to do it from unfortunate circumstances or outside pressures. So start planning your Exit Strategy now.

Contact me for a free initial consultation on how I can help you to build your business and exit strategy.

How to Get your Life Back as a Business Owner

November 30, 2016 12:03 pm Leave a Comment

As a small business owner, do you know how to change your business and get your life back? I’ve seen it way too often, Entrepreneurs working too many hours, trying to do it all themselves and not delegating. Or micro managing because they don’t trust their team to do the task, or instead they’ll just do something themselves as they think it’ll take too long to show someone else.

Then they wonder why they never have enough hours in the week to finish their tasks, and are not happy with their work/life balance. Entrepreneurs often need to start out wearing many hats and make all of the critical decisions in their company. As the company grows and the number of decisions to be made increases, they tend to only let go of those decisions they see as non-critical. This forces their direct reports to continually bring issues and decisions to their boss’s door.

So, if you find yourself in a similar situation then lets look at some simple tips that will free your workload and help to get your life back.

Learn to Delegate more

Probably the most effective method for business owners to reduce their workload is to delegate to their management team. However, this is easier said that done and small business owners find it difficult to let go of the control. If you do not show trust in your employees then you will always be trapped in the business. Learning this, and more importantly having the patience to persevere with it, will have a huge positive impact on the success of your business, and time.

By delegating to your direct reports you will empower your team, which will provide a feeling of value within your team. This is key to retaining good employees and their commitment to your business. It also lets your team know that you trust them and in turn they will be more loyal and more productive.

Everyone needs a little direction in their life, and more so in their work life. Therefore you should set a clear strategy for the business and get buy in from your team and all employees. Holding several strategy workshops with your key employees and getting their input from the outset will make them more committed. Your team will feel valued for being allowed to set the strategy and will take their role a lot more seriously.

Accountability

Once everyone has a clear understanding of the strategy, its time to set clear job responsibilities and objectives for all of your team. Let them know exactly what is expected of them and let them repeat this to you so that it is crystal clear. Making people accountable provides more ownership for the employee, but also adds some healthy pressure, as they know that there can be no excuses. This often results in improved performance with deadlines met. You’re not trying to catch them out, you are trying to help them develop so let them make mistakes and do not interfere too much.

Set KPI’s and monitor these every month with your team. Let your team tell you how they are performing against the KPI’s as it will make them more alert and committed to actually completing the objectives successfully. Be careful to only focus on the high level elements of the business (i.e. the key elements that are critical to the success of the business).

Now that you have delegated most of your actions, make sure that you spend no more than 20% of your time on the day-to-day activities. You should be focusing on the future strategy and growth of your business so that your team always have something to focus on.

Reward those who do the Work

Reward your employees based on results and be generous. Make sure you have a good structure in place so that you reward those who do the work. It’s not all about the money so look at other ways to incentivise your people. Employees are more incentivised by feeling valued and part of the success of the company.

Run the business from the balcony, and be very very vigilant that you do not step back into the business.

The final part to get that work/life balance is to set yourself non-work related objectives with deadlines. Set yourself some goals relating to fitness which will also improve your stress levels, and learn something new or visit somewhere new. Make yourself accountable to someone, perhaps a coach who will keep you focused on achieving these goals. By focusing on targets that are not only work related will automatically give you more ‘life’ balance.

If you are in the majority and complain about long work hours while failing to provide direction and delegate in a reasonable manner, guess who’s the problem? That’s right. YOU are the problem. Your people won’t step up unless you give them clear authority and assure them you don’t expect them to be perfect.

When I built my business, I fell into the same traps as many entrepreneurs and took on too many tasks and found it difficult to allocate time to other parts of my life. Then when I learned these simple methods to get my life back, not only did I enjoy more time and holidays, the business grew very quickly and very successfully (I’m now semi-retired). Nowadays, I often help business owners to get their work/life balance right, so if you’re in this position and would like some help then please do get in touch.

Best wishes and Good Vibes

Make Money While you Sleep

September 4, 2016 6:17 pm Leave a Comment

Doesn’t it just sound amazing? Make money while you sleep! Well, it certainly is possible and not only that, its possible for anyone to achieve. Don’t get me wrong, there is a lot of hard work required and it may take some time but it doesn’t have to.

Finding a source of income that makes you money without being there or continuously working is the key to having a steady income and still having time to enjoy life. It’s normally one or the other – have time but no money, or have money but no time. Its just too common in this day and age that people work loads of hours, get promoted and make a good bit of money and have a couple of weeks holiday to recharge the batteries before getting back into the rat race and going through the motions of basically making money for someone else. With bills to pay and mouths to feed, many people get stuck in this routine and spend their hard earned cash by purchasing the latest gadget or clothing to fill that invisible void. They just don’t have ‘time’.

On the other hand, there are people who don’t have the career and income but have a lot more time on their hands. With a lack of funds in their bank account, they don’t have the opportunity to get out and do the things that they want, or to get on holiday.

Wouldn’t it be great to have a steady income and also the free time to choose the experiences you want to enjoy in life?

Now money doesn’t buy you happiness. I can certify that from my experience of becoming wealthy after a business success. But in this world system, money is required in order that you can have options to pay for the things and experiences that will supposedly make you happy.

So, what can you do to make that passive income to get cash paid into your account even when you are tucked up in bed anywhere in the world? Well that answer depends on you and what you determine your passion and skillset is. By setting up a side business that truly excites you, you can create a service or product based on something that you enjoy. That way, it does not feel like a job. The key is to create something that you work on once and then receive payment many times thereafter.

To skip forward a little, lets assume you already know your passion (if not please read my previous post Find the Passion Within You). You’ve found out what you’re good at and what you can share with the world and enjoy doing it. Here are 3 of my favourite online examples of how you can turn your ‘hobby’ into cash.

1. eBook

Get the laptop out and start writing. Write about something you are passionate about and share your experiences and advice. This could be a training course about knitting or how to improve your golf swing. Absolutely anything. There are good options out there of platforms that will sell your eBook for you, the most common being Amazon. Even with their hefty 30% commission, you can still make a nice return since they do have a huge audience. Once you have written your eBook and had someone review and edit it, you can easily create an account and list your masterpiece online. You don’t even need to spend any money at this stage, however you will want to consider some marketing online to attract buyers. A simple holding web page can be created that showcases your eBook with links to the online store. You can then place online ads to attract traffic to your webpage by using Google Adwords, Facebook or other social media advertising.

2. Affiliate Marketing

This takes some time to setup and can be a slow burner but if you set up the right product, attract the right audience and have the right structure in place, you can be earning a tidy sum in no time. I’ll cover this subject in a lot more detail in another post, so here is a short review for now….. Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought to the business. The key here is to collect email addresses from people who are genuinely interested in the topic/product that you are talking about. To do this you need to setup a website/webpage with appropriate content and a sign up form. To get more people signing up, its advisable to give away a free gift such as an eBook, product or video. Once you have your list of email addresses, you can use Mailchimp (or similar) to manage emails sent to your list which would contain offers on new products and services that you’ll receive a small commission on should any of your list click and purchase. As I said, it’s a small commission so the key is to have a very high number of addresses on your list to make it worthwhile.

3. Create/Buy a product and sell it online

The success is mostly in the purchasing! Buy the right thing at the best price. If you can create a niche product then fantastic but this could take lots of time not to mention the cost to develop the product. Therefore, if you can find a product in a niche market, preferably in something you enjoy, then you can really make this work. Alibaba is a good source of bulk products that you can purchase from places like China. Setup an online store on a platform such as Shopify or BigCommerce to list your product(s) and also embed the store into your own simple website. At a cost, you can arrange for a dropshipping company to hold the items and send them out when you get an order. This could take a big chunk of your profit but if you have your numbers right then it does take away all the hassle of handling the goods and lets you focus on finding the next big selling product! Since payments are made online you’ll need a merchant account (Paypal etc) which is relatively easy to setup and then you can look forward to seeing your sales reports!

In summary, to Make money while you Sleep is possible, but there is a lot of hard work required and also a good bit of research required to find a new niche with more profit and less competition. If you would like some help to set any of these examples in place, or to work out the product/service that would best suit your skills then please do get in touch and sign up to my newsletters.

Peace and Good Vibes

Why you should use a Business Mentor

June 29, 2016 10:37 am Leave a Comment

People like to do things by themselves, to be independent and often don’t seek help. In today’s working environment, there seems to be huge pressure placed on results and often people don’t have that much time to plan accordingly as they’re caught up, head down, churning out work to meet the usually tight deadlines set. The week flies by and you don’t seem to have achieved a great deal of those good intentions set at the beginning of the week. Sound familiar?

Today, business leaders face more challenges than ever due to the high demand our system places on results, and if not handled properly, this can lead to a disaster in the business, and uncontrollable stress to the individual.

Every great athlete is surrounded by coaches, mentors and advisors. In a business context, you can think of a business coach as a mentor or advisor who can help you set goals, implement strategies and track your progress so that you can reach your goals in the shortest possible time. You also benefit from a non-emotional objective view of your business and their experience in handling a vast range of situations.

I used a business coach, a very good business coach I must add, when I had taken my company to a reasonable level, and the results from a few months’ of coaching sessions changed my life and my business. You can read more on my business success in the website, but I’d like to share the main reasons on why I think it’s imperative that you should use a Business Mentor.

1. It’s tough at the Top

It can be a lonely job at the top of an organisation and many entrepreneurs I have spoken to admit that they wish they had someone to ‘bounce’ ideas off because often they are unable to discuss certain issues with people in their organisation. If the going gets tough, then the business leader needs to maintain a positive attitude among their team and conceal ‘delicate’ issues so that morale is not affected.

There may also be certain topics and discussions that they are unable to have with their team due to confidentiality, especially for new ventures or partnerships. So whilst the team are working away on the day-to-day activities of the business, the buck stops with the leader and therefore there is always that added pressure.

2. What got you Here, may not get you There

Running a small business has many different dynamics to running a large business, and with the typical goal to grow your business, there comes a time when you need to learn new approaches on how to manage your business.

When running a small business with a handful of employees, the leader tends to take on many tasks themselves and adopt a repetitive approach on how to lead. Many entrepreneurs (falsely) think that because they are the leader that they must know everything and be able to do all types of tasks from operations to finance and HR. But this often leads to delay and failure because people are consumed by tasks that just don’t suit their skills and they lose focus and enthusiasm for the main duties of the business.

Using a coach who will be looking at things from a different perspective will help to identify which areas of the business can be outsourced or delegated so that the leader can work on the areas that suit their skills more and to concentrate on the future strategy too.

3. Personal Growth

Being a good business leader starts with having a good personal attitude. If you look after yourself then you can look after your business more effectively. Using a coach allows you to not only focus on the business goals but probably more importantly focus on your personal goals too such as health, fitness and general wellbeing. There really is no point achieving successful business goals whilst living a stressful and unhealthy lifestyle or enduring toxic relationships.

You can learn new positive habits, live a more balanced life having time for your family and for yourself, whilst still achieving positive growth and results in your business. Achieving this ‘balance’ is one of my definitions of success.

4. Focus

Many people get caught up in the detail and day-to-day running of the business and sometimes all they seem to be doing is putting out fires. It seems normal to them and they will continue in this loop.

If you don’t know where you want to go then how will you ever find your destination?

A coach will assist you to set clear goals of where you want the business to be in the future, and they will help you to focus on this rather than the more trivial matters that take up your time. By focusing on the priorities you will achieve your goals so much more quickly and be better organised. You will learn to manage your time better so that you can capitalise on new ideas and creativity.

5. Let go of the Rope

How hard do you find it to delegate? Do you say that it’ll take longer to show someone what to do, so I’m better off just doing it myself, plus I’ll do it the way I want it? It is very common to be in this mode and people often take too much work on and can never seem to get on top of things.

By passing on tasks to your team, not only will you release lots of time for yourself but you will also make your team feel so much more valued and part of the company. Providing ownership to your team may seem daunting at first, but you’ll be amazed at the results once you finally do pass on important tasks and decision making.

By working with an experienced coach you can identify an action plan on how to create more time for yourself and when and who to delegate other activities to.

6. Accountability

When you don’t have anyone to answer to, its easy to slack and allow procrastination to creep in. Then it becomes a habit and you wonder why things are not happening for the business. You may set new to-do lists and have good intentions but because there is not much accountability then it often results in an under par performance.

Having someone to check in with every other week provides you with this accountability, someone independent for you to answer to. We all perform a lot better when we know there is a deadline or there is someone to answer to. This will undoubtedly lead you to gain the confidence, assertiveness and self motivation you need.

7. Value for Money

Finding the right coach is important. Someone who has a track record of success in business and someone who has had positive results with their clients. Many coaches talk the talk and learn the theory but may not necessarily have any real business experience

Of course, there is a financial commitment, and you may think that your business just cannot afford this overhead. However, when you consider that you can make instant improvements in your business, gain more direction and confidence, lead a more balanced lifestyle, pass on more trivial tasks to your team, or drop some unnecessary tasks, and deliver greater results overall, then it shows that an investment in a good business coach can be an investment well made.

Don’t be too proud to ask for help, for that request may just be the answer you have subconsciously been seeking. Good Luck and Good Vibes!

Launch of David Gowans Coaching & Mentoring

May 17, 2016 10:02 am Leave a Comment

It has been two years since I left the company that I created which eventually gave me the status of millionaire at 38. But things have changed now. I no longer crave those material things for satisfaction. I no longer aim to have the status or be ‘the man’. Things have certainly changed. I sold my fancy car and now drive a Volkswagen campervan, I downsized my home and love my new apartment. I sold some and gave away lots more of my ‘things’. This stuff just doesn’t float my boat anymore.

I live a great life. I’ve just spent the last four months in Brazil, escaping the Scottish winter. I have the means to be anywhere in the world when I want, and Brazil was a great choice (more on my experiences on other blogs to come). However, something was missing. After being the leader of a fast growing business and taking it to a successful sale in 2012, I had lost my purpose. My aim was always to grow the business, make lots of money and then travel the world forever. And the last few years I did travel a lot. But something was still missing – my Purpose. I dabbled with new business start-ups, gave some coaching sessions to entrepreneurs and worked on some property projects, but I didn’t commit enough to anything because it didn’t excite my passions within.

The reason for coming to Brazil was two-fold – to escape the dark, wet and windy winter of Scotland, and to truly find my purpose and next step of my life. And it didn’t take long to find it. I dreamt up this website and instantly got excited about the opportunity to pass on my many experiences in business and life that could help other people. It wasn’t about making lots of money anymore, as that didn’t make me any happier. I’m excited because I get the chance to see people achieve things that they never thought possible. They can learn simple new daily habits that will make a big positive difference in their life.

For entrepreneurs, I will offer to design their exit from their business, whether that is a sale in the coming years, or to achieve freedom by empowering the existing team to take over the day to day running. One of my specialities is strategy and creating a detailed plan of what needs to be done to get the business ready for exit.

For employees, I will help to find that passion within you that can perhaps lead you to a new profession, a business start up, or just help to make your job more enjoyable. By changing your perception on work, you can really start to enjoy it more.

Like other coaches, I will of course offer coaching sessions via Skype etc. but the number of clients will be limited. So the aim is to provide free advice, ideas and news via the Blogs. These blogs are based on my three passions of Business, Life and Travel. I already have a number of topics to write about based on some questions that people have sent me so far, and I will continue to write about the things that my community are asking me. So if you want to start making the desired changes in your life and achieve that Success that you’ve always wanted, then sign up for free, get in touch and share your views with me.

Peace and Love.

Category Archive: Business