Business Development & Marketing Cash Flow & Forecasting Finance

VOIP a phone solution for growing SMEs

VOIP replaces the old-fashioned switchboard

As a SME develops and grows costs can quickly escalate, no more so than its phone and communication systems and yet there is a cost-effective solution called VOIP that some may not be aware of.

VOIP stands for Voice over Internet Protocol and is essentially a broadband-based phone service that can include a free switch board.

A business can make calls using laptops or PCs but equally using VOIP telephones, which cost very little and are the only additional piece of hardware needed if bought upfront since the exchange is either embedded in the phone or provided by the VOIP supplier who is normally also the broadband service provider.

A VOIP system allows the business to dispense with call handling and an in-house switching system, all of which can be set up and automated by someone familiar with IT systems. You can have unique phone numbers and set it up so that calls can be switched from one number to another.

With a phone-based service, you use VOIP the same way you use a regular landline: by picking up the phone to answer it or dialling a number to place a call.

Calls are not confined to only others who are using a VOIP system and usually there is no additional or at most a minimal cost for calling overseas. The system can also be used to make conference calls and it allows you to take your number with you when you travel.

It has been estimated that savings using VOIP can be as high as 95% per month but if you are considering this option, there are some things to remember.

Getting your VOIP system right

Basic requirements are a high-speed internet connection and VOIP phones which are inexpensive. You should also remember that in the event of a power cut your phone set-up will not work and it is therefore wise to have a secondary power source, such as a generator, as a standby.

For businesses with multiple users, a separate PBX (Private Branch Exchange) is not required as the phones can be set up to manage calls within a network and can also be set up to transfer calls between phones like in a normal office exchange as well as routing incoming and outgoing calls. Most Internet Providers offer hosted/virtual PBXs, so that your SME does not have to go to the expense of buying and installing expensive equipment.

There is one caveat if considering using VOIP for your business, and this is that you will likely come across many phone company providers, such as BT, as well as specialist providers, who will offer to install and manage your set-up and hire you the phones.

You should remember that the uplift charged by VOIP phone companies is their gross profit plus phone hire if they supply the hardware and for the small, but growing SME this means a significant, and unnecessary, expense.

This website is a very useful introduction to all things VOIP.

Cash Flow & Forecasting Finance Turnaround

September Key Indicator – energy and fuel costs

energy and fuel costsWhile the biggest overheads for industrial and manufacturing businesses are generally staff, equipment and premises costs, energy and fuel costs also have a significant impact on profitability.
Indeed, for those in the transport industry, the cost of fuel can make the difference between profit and loss and is often difficult to pass on to customers.
UK businesses are particularly vulnerable to rising energy and fuel costs for several reasons.

Electricity and gas

Approximately 50% of the UK’s electricity is produced from fossil fuels, mainly natural gas and coal, most of which are imported.
21% comes from nuclear reactors however the UK’s nuclear power stations will close gradually over the next decade, with all but one expected to stop running by 2025.
24.5% of electricity currently comes from renewable sources, mainly wind farms.
As backup the UK imports electricity but it also exports some.
Gas, on the other hand is mostly imported.
Energy companies buy supplies many months ahead on the wholesale market. The UK’s six largest suppliers, nPower, British Gas, EDF Energy, Eon and Scottish Power have announced at least one price rise this year, by an average of 5.3%, and some have also announced a second rise. They are blaming these rises on higher wholesale and policy costs (such as Government requirements for the installation of smart meters).
According to most analysts the price trend is inexorably upwards and likely to remain so. It is not helped by the reduction in the value of £Sterling following the 2016 EU referendum outcome, which has made importing anything, from raw materials to goods and services considerably more expensive.


Oil prices are vulnerable to supply and demand but here, too, there has been a steady upward trend, certainly for the last two years.
Brent Crude (from North west Europe) has risen from a per barrel price of $48.48 in July 2017 to $74.25 in July 2018. This is the source of much of the UK’s petrol and diesel. OPEC oil prices have also risen from a 2017 average $52.52 per barrel to an average of $69.02 in 2018.
Some analysts are predicting that world prices will start to reduce into 2019, but the Brexit impact on exchange rates may mean UK still having to pay more for oil. In addition, geopolitical uncertainty such as the change in the US attitude to Iran and the threat of sanctions makes a drop in prices less certain.
This is easily monitored at the petrol pump which has seen a steady rise in the prices of both petrol and diesel, currently as high as 133.1p per litre in some petrol stations.

How can SMEs reduce their energy and fuel costs?

Each company is different and much will depend on how many vehicles you need, how many and how large your buildings are and how much energy is required to run your production processes and offices.
While domestic consumers are constantly exhorted to switch energy suppliers to reduce bills, much less attention is paid to business customers doing the same. According to the website Money Saving Expert, which also provides advice for businesses, it is possible to make substantial savings through switching and negotiating with suppliers, also through collaborating with others to achieve volume discounts.
It claims: “On average small businesses spend approximately £5,100 on electricity and £4,100 on gas per year” and shopping around can save £1,000s. There are a number of buying clubs and membership organisations that are negotiating volume deals for members which again can achieve significant savings.
So, it can make sense for a business to shop around for the best deal, albeit that dual energy tariffs are not available to businesses. It is, however, possible for businesses to get one to three-year fixed rate deals.
Similarly, it makes sense to ensure vehicles and buildings are as energy efficient as possible where there are a number of grants available, although many are EU grants so don’t delay if you want to take advantage of these. Useful sources of information about grants can be found at the Energy Saving Trust and from your local authority where the development officer is normally the best person to contact.

Accounting & Bookkeeping County Court, Legal & Litigation Finance General

Business insurance – are you properly covered?

business insurance protectionThere are many situations that can be covered by various types of business insurance, some compulsory, others advisable but how does a business choose what is essential?
To some extent it may be about assessing the risk for a specific business but inevitably it will also be determined by how affordable non-essential cover may be.

Business insurance required by law

Most employers must by law insure against liability for injury to their employees arising out of their employment under the Employers’ Liability (Compulsory Insurance) 1969 Act. It should cover all the places where employees are working, whether in the UK or elsewhere.
The minimum level of cover is £5 million and businesses must both display copies of the certificate of insurance prominently where employees can see it and they are advised to keep a copy of the insurance document for a minimum period of 40 years.
The Health and Safety Executive (HSE) is responsible for enforcement and has the power to fine up to £2500 for any day when you are without suitable insurance. If you do not display the certificate of insurance or refuse to make it available to HSE inspectors when they ask, you can be fined up to £1000.

Other business insurance policies to consider

While not required by law other types of cover may be advisable and these will depend on the nature of the business.
Professional Indemnity cover, for example, is likely to be important to such businesses as legal and accountancy firms, architects & design practices and professional advisers.
For anyone selling products whether online or via e-commerce, it is important to have product liability cover in case a product they have either manufactured themselves and supplied or simply bought in and supplied causes damage to either a person or their home for which the customer may then claim compensation. Remember the Samsung phones that caused fires.
Public liability insurance is another business insurance that many would be advised to have, especially if members of the public, suppliers and others visit their premises, as is the case with retailers, but also if they supply a service that is carried out at customers’ premises.
The fundamental question to ask is whether there is a chance that your business activity could cause damage to the public or to their property. Lawyers love customers who are injured while in a shop.
Equally, where a business has contractors regularly supplying services at others’ premises and therefore using vans to travel and to transport expensive tools and equipment insurance cover against theft from the vehicle may be essential, as indeed are the obvious vehicle and premises insurances.
There are also lots of add ons to consider such as policies that cover production delays due to strike action or when equipment breaks or loss of profit due to flooding or fire, and many more scenarios that might be considered.

Where do you go for insurance cover?

The first step is to seek advice from any trade association of which your business is a member. It may be also that appropriate insurance cover is included in your membership fees. One example is the market traders’ association who provide insurance for those who sell goods at craft fairs, indeed many event organisers carry insurance that covers the stall holders.
Failing that, seek out a knowledgeable insurance broker, who can provide advice as well as discuss the pros and cons of the different policies. They can also search out relevant cover specific to the business’ needs.  That way cover may be more appropriate and affordable than a combined all-risk policy, parts of which may not be relevant.

Business Development & Marketing Cash Flow & Forecasting Finance General

Business premises – lease, licence or buy?

business premisesWhich is more important for your business: security, stability or flexibility?
This is an important question to answer when a business is considering the commercial premises it needs for its operations and under what type of agreement.
Basically, there are three options and these are ownership, a lease or a licence and each has its advantages and disadvantages.

Buying a commercial property

Realistically, a business would need to have existed for some time and be reasonably confident of its future to consider owning its premises.
However, the building is a tangible asset and provided it is kept well-maintained and in an established business location it can be an insurance for the future. Owning business premises is a long-term option and for an owner-occupier it can be used as part of a pension scheme.
But, it also ties up business capital and it does mean that the owner is responsible for maintenance & repairs, for safe access, insurance and health & safety which need to be factored into any cost of ownership. As will the cost of selling or vacancy if the premises is no longer suitable for the business.
Generally ownership should be regarded as a form of investment by the owners of a business who value assets and security more than growth where they prefer to tie up capital rather than invest in growth.

Leasing commercial property

Formal leases are governed by the Landlord and Tenant Act 1954 although a lot of landlords provide lease agreements that require tenants to contract out of the Act in a way that benefits the landlord.
Leasing tends to provide for longer-term security of occupation although, according to some commercial letting agents, the average term of the lease has been reducing from approximately 25 years to between five and eight. Nevertheless, if a business needs the security of longer term occupation a lease is likely to be the best option where the lease term and its renewal can be covered in the lease agreement.
Under a leasing arrangement both landlord and tenant have legal obligations and these should be clearly outlined in the leasing agreement.
By law, tenants must take care of health and safety within the premises, including fire and electrical safety and gas safety if applicable.  The tenant is normally required to take care of internal maintenance and repairs and there is usually a clause in the lease about paying for repairs at the end of the lease such as returning the property to the state it was in when you first rented it.
While leases can be quite long, flexibility can also be included in the contract by having a break clause that gives the landlord and the tenant an option to give notice during the fixed term of tenancy.
Generally, a lease provides stability by giving the tenant a legal right of occupation and renewal at the end of the tenancy.


For a start-up or a small business expecting to grow rapidly, it may not be possible to forecast sales and in particular staffing or premises capacity requirements. This is where flexibility becomes the primary consideration and licensed occupancy provides for the right to vacate with minimal notice.
In addition a lot of licensed premises include additional services such as power, servicing, web access, even access to copying and printing.
There are a large number of business hubs that supply communal support services which for start-ups and many SMEs may be the best option. Equally it may be that a business like an online retailer wants to trial a fixed site retail proposition by renting one as a pop-up shop for a short-term opportunity like Christmas or to test the market for its products or services.
The licence is the most flexible of the three options, but it gives no right of renewal at the end of the rental period and it tends to be more expensive.