Financial planning for growth workshop
MyCake is giving advice at Cockpit Arts’ financial planning for growth workshop on Wednesday 11th August 2010. We invite you to come and explore how to use your own financial information to make more informed decisions about your business.
You’ll look at the pros and cons of different record- keeping systems and which approach is best suited to you and your business. Through practical group exercises, you’ll cover budgeting, financial planning and how to improve your cash flow on a day-to-day basis.
You will also look at improving profitability and using designer-maker case studies, you’ll be taken through a profit and loss forecast and show you how to interpret your own figures to make better decisions about your business.
What you’ll get:
- Guidance on setting up a record system that works for you
- Improved financial literacy and confidence in financial planning
- A clearer understanding of your own business model and how to develop this to improve cash flow and profitability
Wednesday, 11th August 2010 from 10:00am to 12:00 noon.
The cost is £10 and open to studio and non-studio members. Book here
have your art and eat it
cake and art ~ some of our favourite things come togehter…. baker Caitlin Williams Freeman gets inspired at her work place, the San Francisco Museum of Modern Art. An interesting story of how an artist turned a photo project into a new career… read more here and you can see more of her designs here.
Tax doesn’t have to be taxing… part one
from Cockpit Arts Making It Blog:
….unless of course you have better things to do with your time than read through the pages and pages of manuals, help sheets, leaflets and guidance notes on the HM Revenue & Customs website. The help sheets on completing your tax return alone stand at more than a thousand pages and they include nothing about VAT, National Insurance, PAYE or any of the other tax issues that small businesses face. That said, if you know where to look, there can be some very useful gems on the website and I have outlined some of the better ones below:
Working from Home:
Just because you rent a studio it does not mean that you cannot claim for business use of your own home. Many studios are not suitable for storing all the important financial paperwork which means the business is effectively operated from home. In the good old days accountants, like myself, used to advise clients to estimate the additional costs they incur from having to operate their businesses from home. This may have been an extra £5 or £10 per week, depending on the type of business, but relatively small amounts in terms of tax savings. However, when HMRC were forced to publish all their internal guidance manuals, we discovered a list of examples that are much more generous. HMRC have inadvertently confirmed that all businesses operating from home should claim a proportion of their rent, rates, service charges, mortgage interest, council tax, gas, electric, repairs and insurances. Some accountants to this day argue over whether council tax should be included but it is listed in black and white within HMRC’s own guidance and anyone not claiming is paying too much tax. Make sure you make that claim.
The Employment Status Indicator Tool:
Rather than take on members of staff and deal with the administrative burden that comes with being an employer, many small businesses will use freelancers and sub-contractors to take up the slack when things are busy. This is all well and good but what happens if HMRC come along and say that you should have put them on the books and deducted tax and national insurance contributions at source. Well, if you are unsure whether someone should be treated as an employee or a freelancer then use HMRC’s Employment Status Indicator Tool. You work through a series of questions and the tool then tells you whether they should be an employee or whether they can be paid as a freelancer. Nothing gets sent to HMRC and you do not give any personal details. However, a reference number is generated so if HMRC ever question your decision then you can state that you used their ESI Tool and present them with the reference number as evidence. Further point: The ESI Tool is not 100% accurate so if you disagree with its outcome then it is best to discuss your concerns with an accountant.
Read more tax advice in part two published soon…
About the author: Dean is an accountant and founder of Tax By Design, a firm specialising in helping small businesses in the creative sector. He is a member of the Chartered Institute of Taxation and holds a 1st class honours degree in Multimedia Design. He will be running Free Tax Surgeries over the summer in both Holborn and Deptford studios and will be giving a Tax Return Made Easy seminar in January for anybody that has left their Tax Return to the last minute!
The creative brief: are you doing enough?
Thought provoking research into the creation, value and effectiveness of creative briefs by Jasmin Cheng
Exploiting Digital Tools Workshop for Creative Industries
Digital tools play a key role in driving innovation in today’s creative industries. But what new tools are on the horizon and how will creative businesses harness them to drive exciting new business opportunities? What will creative professionals – from architects to fashion designers to games developers and others – be using to create and produce content in the future? How can digital tools cut production costs and improve efficiencies? What can the different creative sectors learn from each other?
Creative Industries Knowledge Transfer Network are holding a free workshop and networking event on Wednesday 21st July 2010 at IPA, London.
To book free tickets for Exploiting Digital Tools, contact events@citin.org
Financing Your Dream: What’s the Right Path?
With the news full of stories about banks and credit unions cutting back on lending to small businesses, here are a few alternatives to consider when choosing the path to financing your dream.
Read some ideas from Jeff Bussgang over at 99%
The Budget, what does it mean for design?
The Design Council held an interesting post-budget design discussion on Facebook this week. The most important budget in a decade “has awakened some familiar concerns, from designer-client relations to the complexity of winning public sector business. But it’s also focused minds on emerging opportunities”.
You can read the key points here and the full Facebook discussion here.
How to Motivate Creative People (Including Yourself) workshop
Mark McGuinnness is hosting his popular How to Motivate Creative People (Including Yourself) workshop at Cockpit Arts Holborn on evening of Wednesday 14 July 2010.
He will be giving advice to designer-makers and creatives on how to motivate yourself to overcome obstacles and create amazing work – and a sustainable career.
Topics covered include:
- Why motivation is crucial to creative success
- The four fundamental types of motivation
- What Iggy Pop can teach you about work
- Why focusing on rewards can harm creative performance
- How to write 47 novels before breakfast
- Why some people seem so weird — and how to deal with them
- The positive side of peer pressure
The numbers are limited to 25 places, so book early.
There is an special offer price if you purchase the Time Management for Creative People workshop at the same time.
Should I bet the house?
First of all let’s make a distinction between gambling the equity in your house unwittingly vs. agreeing with a bank that your house is security on a loan.
In the case of the former I’ve seen examples of entrepreneurs using either their credit cards to fund the business or telling themselves that they are making an investment in the business when they write cheques against their mortgage to cover costs of a loss making enterprise. Many do the first example and recover; the latter is more dangerous as you are increasing your debt but have a reducing capacity to pay it back.
But what about knowingly using your house? I’d like to look at how you evaluate the decision as to whether to use your house as security against a bank loan…
Under what circumstances would you be asked to use your house as security?
Well if you want a loan rather than an overdraft from a bank it is not uncommon for them to want security against the monies lent. The most common form of security is a ‘personal guarantee’ which essentially means that any assets you have could be seized by the bank to pay back the debt should you default on the loan.
If you are seeking venture capital investment then investors like to see you have some ’skin in the game’ ie investing some monies into the development of the business at the same time as they are providing the main funds (your previous investments don’t count at this stage as these are essentially sunk costs that have already been accounted for in the growth to date and the valuation of the company). However these sums are likely to be less than 5% of the total funds raised and VC’s know they are asking for a ‘gesture’ rather than a significant investment. It is much less common for VC’s to ask for a personal guarantee.
Is your business worth the risk?
Well at the end of the day we can’t answer this for you but here are a few things to consider….
- if you have a clear budget as to how much income you need to payback the loan and you’ve already accounted for the ‘what if’ scenarios of increased cost but reduced income and you can still see how it will be paid then these are indications that the business is likely to be able to pay back the loan.
- if you are in need of working capital to develop the business to a point whereby the income will start to be able to payback the loan but at the moment you can’t see what the revenue stream or scale of income would be that would have this capacity then you are considering taking on a debt without a route to payback and this is more risky.
- if you have other sources of income and or savings and investments that you could use to payback the loan if the business was not able to then whilst you are still incurring the risk of losing the monies you put into the business but you do at least have a backup plan.
You might also look at the stage of development of the company/product. One key question when considering any investment into the business is whether or not it is sufficient funds to get you to market (and thus achieve income to pay off the investment). Typically entrepreneurs invest at the very earliest stages when the ability to achieve revenues from products and services sold are at their lowest ie when the risks are greatest; furthermore it is all too easy to under-estimate the cost and time involved in getting to market so inevitably there are stressful patches when you need to progress faster than funds will allow.
It is at these points that you need to take a bit of care … as you are likely to feel that ‘if only we had x,y,z’ then everything would be ok … you risk making non-rational decisions based instead on your emotional involvement. To help avoid this scenario again the answer is a budget looking 12 to 36 months ahead where you can see where the pinch points will come and therefore can make plans ahead of time as to how to resolve this … asking for credit from suppliers or for early payments from clients are both ways to avoid seeking loans or equity investment when you are at your most vulnerable!
If you have a partner or other source of income into the household then again whilst you are risking the money you may be able to avoid not losing the roof over your head!
Financial insights from Bangalore
Marion came across this in a printers in Bangalore whilst preparing to get our Market Day materials produced there.
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