Ways to money-proof your business
You might have a great idea for a business but do you know how to make money from it? As in BBC's Dragon's Den, many budding entrepreneurs have genius inventions but fail in their bid for investment because the figures just don't add up.
So, if you're a mum and about to launch headlong into your first business, here's a crash course in money basics from businesswomen who've been there and learnt the lessons.
- Become a forecaster
- Love the profit and loss sheet
- Think seasonal
- Have a plan
- Don't be scared of investing
- Three start-a-business books to get you going
Emma Hewitt, 29, mother of Madison, 3, set up Flo's Fancies, in October 2010, supplying car air fresheners to large retail chains such as Halfords.
"A good forecaster isn't smarter than everyone else. She just has her ignorance better organised! When I set up Flo's Fancies selling cupcake-shaped scented air fresheners for cars, my product was completely new, so I had no previous sales figures on which to base my forecasts.
"First, I had to work out the cost to produce and distribute my product. Then I needed to understand the mark-up the multiple retailers would expect and what customers would pay. After all, anyone can make money but it's harder to make a profit!
"Next, I spoke to a lot of industry experts and learnt the best way of sales forecasting was to break down my product into units, so I can modify either the number of units or the price when I need to. Keeping a close eye on my sales forecasts is key to my business's success."
Mum of two Karen Hallam, 46, founded her online jewellery business in 2008.
"When I launched my business designing and making jewellery, it started expanding rapidly. 'Woo-hoo,' I thought, 'better make lots more stock.' So I bought loads of silver only to find I couldn't pay my bills at the end of the month. I hadn't taken into account that retail clients don't pay immediately.
"Fortunately my suppliers gave me credit, saving me from going under. But I couldn't lose track of my finances again. My brother, an economist, showed me how to see my design production costs at any time by using a simple spreadsheet, and from there I moved on to master the profit and loss sheet, an accounting tool to track your progress month by month.
"I'm evangelical about it now and try to get my friends who run small businesses to use one, too. It's easy to think just because you can make beautiful things, you don't need to worry about the financial side."
Mum of two Fiona Wood, 34, founded children's skincare company Naturally Cool Kids after winning the Barclays Take One Small Step business competition in July 2010, winning £50,000.
"The thought of summer sales taking a dip in the winter didn't occur to me at first. I was up to my ears in packaging designs, and product prototypes, while trying to keep the home running. It was completely mad.
"It wasn't until production began that I thought about how we were going to ensure our products would bring in profit all year round. To be honest, it was a scary moment. This wasn't just a dream any more — I was actually running a business that needed to be profitable.
"It wasn't long before we thought of products for winter holidaymakers, then having a hair and body wash that could sit on people's shelves all year round. Seasonality is important to consider in any business and when I'm stuck for inspiration, I get away from the office, grab a nice latte, and think about the problem without distractions."
Mum of two Rachel Berg, 40, founded Pushy Mothers, an exercise class for new mums, in 2006.
"The idea for my business, providing buggy workouts for new mums, was born with my first son Max. Instantly, I saw the demand and knew mums were happy to pay for it. But we were a bit pie in the sky at first and I was more focused on the emotional, supportive and nurturing service we were offering than the finances.
"The company grew organically, but it felt uncontrollable and there comes a point where you need to have a good business plan in place so you can see how you're going to make profit. For me, it involved getting a friend to show me how to do a financial business plan which has given me direction and focus."
Mum of two Sharon Blackstone, 40, set up her online business, Expressyourselfmums.co.uk, selling baby equipment to new mums, in 2004.
"I'm naturally cautious when it comes to spending money whereas my partner, Carly, is less risk averse. Recently Carly suggested we printed a catalogue. We have a website selling supplies and equipment to new mums and you might think, ‘Why does an online company need a paper catalogue?' Especially as print costs a lot of money.
"But new mums do like to leaf through something with a cup of tea. We researched what other online companies do, and decided to take a chance! Sometimes you need to take more money out, even if it's a bank loan, and go for something bigger to grow the business.
"You need to be able to afford to see it not work and be committed to the outcome, not attached. And as we go into the catalogue's second redesign and print, it's so far, so good for us!"
Why mums are good at business
- The Financial Times Guide to Business Start Up 2011
By Sara Williams (Williams Paperback £13.99)
Updated annually and totally comprehensive, this book will tell you everything you need to know about how to get started in business and is particularly good at explaining how to get on top of the finances.
- Start a Family Friendly Business
By Helen Lindop and Antonia Chitty (As an e-book [LINKTO: www.businessplusbaby.com] for £6.99 or in printed book form at Amazon for £9.99)
A great starting point for any mum thinking of setting up their own company and unsure of what to do. It has 129 start-up business ideas and is written in an easy to read style in useful A-Z format.
By Jason Fried and David Heinemeier Hansson (£6.40 from Amazon.co.uk)
Written by the bright lights behind an American software phenomenon, this book is particularly applicable to technical start-ups but is full of brilliant advice and ‘blue-sky thinking' that works for any kind of business which you ignore at your peril.
Head to Barclays on Mumsnet for lots more:
- Expert information on starting your own business
- Family budgeting and saving tips
- Money-saving videos and inspiring start-up videos
Barclays Bank plc takes no responsibility for the content of third party websites or the views and recommendations expressed by named third parties in this webpage. The material on this webpage is for information only.
Barclays Bank PLC. Registered in England. Barclays Bank PLC is authorised and regulated by the Financial Services Authority (FSA). Registered No 1026167. Barclays Insurance Services Company Limited is authorised and regulated by the FSA. Registered No 973765. Registered Office for both: 1 Churchill Place, London, E14 5HP. Barclays Business is a trading name of Barclays Bank PLC. Barclays Bank PLC subscribes to the Lending Code which is monitored and enforced by the Lending Standards Board and is licensed and regulated by the Office of Fair Trading for the provision of credit products to consumer related services. Further details can be found at www.lendingstandardsboard.org.uk