Worryingly, research suggests that the fear of losing business is stopping many SMEs from chasing bad debt, with 74 per cent of small businesses stating that they are likely to accept late payment excuses. If firms knew about the alternative to rolling over, and I imagine many don’t, they might be offered some assurance. Compensation can be claimed for any invoice that is not paid within the credit period, amounting to £40 for debts of under £1,000, £70 for debts between £1,000 and £10,000, and £100 if the amount owed is £10,000 or more.

If these numbers sound paltry to you, you can claim more in the form of late payment interest, which is 8 per cent above the Bank of England base rate. Technically, you don’t need to warn customers you are doing so, but it is good practice to update all documents on which terms and conditions appear and circulate the revised terms and conditions to them.

According to Annika Bosanquet, founder and CEO of Wrapology, a small luxury packaging business, one of the biggest contributing factors to late payments is creditors themselves not stating their bank sort code and account number on invoices. ‘Invoices that are sent through without these details can expect to be paid late as the subcontracted book-keeper who may only come in once a week to pay bills will always pay the easiest invoices first,’ she says.

Sandi Goddard, managing director of branding consultants Goddard Delaney, normally works through a process to deal with late payment. ‘Two late payment reminder letters coupled with phone calls, then either we agree a payment schedule or I send out a solicitor’s letter. Negotiation has always proved most successful, and of course you keep the client. However if they won’t pay then legal action works!’ she says.

Even if you don’t feel ready to take your clients to court, you can at least get to the bottom of those excuses. If the director who signs the cheques is on holiday, find out what provisions are being made in his absence. If the computer is down, they should be able to send a manual cheque if it is a frequent problem. The cheque is in the post? Ask for postage details. And if they are waiting for funds from a large customer and can only pay you when the funds are received, ask the name and address of their debtor and the expected time of payment – the company should be able to arrange some form of credit with the bank on the security of the debt.

There is always more small firms can be doing to make sure they aren’t viewed as a pushover on late bills – there is no need to be a victim any longer.

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Average lease lengths fell by more than ten months to just five years in 2010, according to the BPF/IPD Annual Lease Review of 91,000 tenancies.

The review shows that 81 per cent of leases are signed for five years or fewer and therefore unlikely to face a rent review.

By comparison, just over 3 per cent of small businesses have a lease of over ten years.

Liz Peace, chief executive of the British Property Federation, says: ‘For small businesses, shorter leases are probably a good thing, with the pace of business change so fast these days it makes little sense for most small and medium sized businesses (SMEs) to tie themselves into the obligations of a long lease.’

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But is an API a business development asset, and over time, should it cannibalize business development?

Shaival Shah, who is VP of Business Development at Hunch, thinks so. In a post on his blog, he writes:

When I joined Hunch, Chris Dixon asked me what my goal would be and more importantly, how I would know if I achieved success. My response was to cannabilize my own function by popularizing the Hunch API into the wild. It was a simple lesson that I learned from Alan Spoon, former President of the Washington Post Company and Managing Partner at Polaris Venture Partners, who once told me that companies don’t move aggressively enough to cannabilize their business, but rather spend too much time trying to defend it.

Shah offers up some really good advice about growing an API’s presence in the market. For instance, he suggests that, at least in the beginning, a self-service API will still realistically require some one-one-one deals. He also recommends a “Bowling Pin Strategy” in which outreach is targeted at a “neighborhood of companies within an ecosystem.” The goal there: by targeting a vertical, it’s easier to build a brand. Finally, Shah reminds companies of the importance of knowing the metrics your API is designed to boost.

But some of Shah’s advice is, in my opinion, a bit off the mark. Most notably, Shah that “validation, PR and analytics” trump revenue. “Revenue will follow if you solve for those three missing variables,” he writes. That’s not, however, necessarily true. Here’s why:

• Validation means different things to different people. But ‘validating‘ the market for an API is different from ‘validating‘ a business model. There are plenty of popular APIs offered up by companies that have failed to validate that they have what it takes to make it as real businesses. Twitter, anyone? Unfortunately, far too many new businesses fail to recognize the importance of testing out business models and determining if there’s real market support for them as early as possible in the company’s lifecycle.
• PR is no doubt important for companies, but it hardly guarantees revenue. Plenty of startups have received boatloads of press attention but still failed to generate substantial revenue. And for good reason: popularity without a viable business model is just, well, popularity. Driving a million people to your website certainly won’t be profitable if there’s no business model in place to take advantage of the popularity.
• Many companies collect lots and lots of analytics data, but they either don’t know what to do with it, or they focus in on the wrong data points. Analytics can help companies better understand how their users are using their products, which can help them build better business models, but again, the business model is the key. Analytics for analytic’s sake isn’t helpful.

At the end of the day, I think most startups should draw a distinction between true business development and their APIs. The goal of business development is, by definition, to help develop business. If a startup, however, really isn’t yet a business (eg. an entity that has revenue or a model for potentially generating revenue), an API designed to deliver “validation, PR and analytics” isn’t likely to constitute a business development asset, at least in the near term. In other words, a company without a business model isn’t likely to magically to morph into a going concern simply thanks to a cool API. Thus, promoting the API is more accurately described as a marketing or product development activity at this stage of the game.

Of course, a company might focus on building up a wildly-popular API that itself could one day drive revenue through some unknown business model, but that’s sort of like opening a jumping off a diving board blindfolded and hoping that there’s water in the pool.

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A study by online debt recovery service Positive Collections, which surveyed more than 260 business professionals, found that SMEs are the most prone to suffer from late payers, with 74 per cent stating that they are likely to accept late payment excuses.

Interestingly, businesses with one to nine employees are less likely to worry about debt recovery, as 45 per cent claim they are always paid on time.

According to the survey, 17 per cent of businesses would try to chase debts but avoid legal action as they believe it will be too expensive.

David Green, CEO of online debt recovery service Positive Collections, says: ‘The fact that so many businesses in the UK have become accepting of this late payment culture is certainly a cause for concern as this has implications on the whole business community and economy.’

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There were over 260 responses to SmallBusiness.co.uk’s latest poll on the most inspirational success stories from the world of business. Branson’s Virgin came top with 43 per cent, followed by Steve Job’s Apple (17 per cent), while Alan Sugar’s Amstrad mustered 4 per cent.

In the UK, we’re still lacking that next generation of mega successful entrepreneurs. Julie and Steve Pankhurst became millionaires through their website Friends Reunited, but across the pond Mark Zuckerberg took social networking to the next level with Facebook. He’s a billionaire at the age 26.

At a conference not so long ago, the chairman of an online business from China told the audience: ‘Where are your new, successful entrepreneurs? Whenever you talk about entrepreneurs in the UK, all I hear is Richard Branson. Who is the next Branson?’

It’s a fair point. Perhaps it’s a cultural, British thing. Over the past couple of decades, there has been a huge amount of risk or even a stigma associated with starting your own business. Why put yourself on the line when you can train to become an accountant, teacher or go and work for a law firm?

Nowadays these professions don’t seem quite as secure. At long last, we might get some fresher entrepreneurial faces coming on the scene as younger people realise they have nothing to lose by registering a business with Companies House. After all, they could just as easily spend thousands of pounds training for a career that never really happens.

The UK’s triumvirate of successful entrepreneurs  – namely Branson, Sugar and James Dyson – all started their business before the age of 25. A recent survey showed that many students graduating over the next couple of years plan to start a business rather than become a salaried employee.

So maybe it won’t be too long before Branson can step down from the entrepreneurial throne and someone else can be the point of reference for showing others how it can be done.

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One of those companies is Yelp, and although it has plenty of competition, Yelp may be one of the few upstarts with the potential to put a dent, even if slight, in Groupon’s rise.

Although Yelp is still testing it out on a limited basis, Yelp Deals is clearly modeled on Groupon. In short, there’s a deal for a local business that lasts one day. Simple, but profitable for the most highly-trafficked group buying websites.

But while many different kinds of companies, including newspapers, are looking to exploit the group buying model, Yelp’s advantage is its
strong following is key cities — cities where Groupon also happens to be extremely
popular. And unlike Groupon, which largely has a one-to-one relationship with its subscribers/customers, Yelp is a full-fledged community.

That, in theory, means that Yelp has the opportunity to build stronger relationships with Yelp Deals buyers, as they’re using already Yelp on a regular basis to find and review local businesses.

Additionally, Yelp has a potential SEO advantage: it is promoting deals on reviews pages, and these pages often rank very highly. So someone doing a search for a specific restaurant, for instance, might find a Yelp reviews page for the restaurant on the day a deal is being promoted. That, of course, could conceivably lead to a few sales.

Even with its potential advantages, however, Yelp will still face some significant challenges in making a splash in this market. For one, it’s getting a late start. But even more importantly, it’s audience may not be a good fit for local businesses. After all, if Yelp Deals provides bargains at already-popular local businesses, those local businesses may find that Yelp isn’t really delivering new customers insomuch as it’s delivering repeat customers who welcome the opportunity to pay less for what they’d buy anyway.

Finally, as with Yelp’s increasing list of commercial relationships and initiatives, it remains to be seen whether Yelp Deals could harm the perception that Yelp is independent forum for consumers to review local businesses.

At the end of the day, one thing is clear: group buying offerings will continue to proliferate on a variety of different kinds of online services. Those like Yelp, which already have a local focus and a large audience, may have the greatest opportunity to get a piece of an expanding pie, but what type of audiences will deliver the greatest ROI for all parties involved still remains to be seen.

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Small business owners clearly have their reservations too when it comes to the skills and training gap. Our latest poll asked whether young people are trained adequately for the world of work and the overwhelming answer was ‘no’ (46 per cent). Of the 205 respondents, 19 per cent said that basic skills are lacking; 18 per cent had to invest in training and only 17 per cent were happy about the readiness of young people to go on the payroll.

If the soaring pass rates at GCSEs and A-Levels aren’t forging the right skills for the workplace, then perhaps employers should be looking at older workers. The default retirement age of 65, which is due to be abolished by October next year, will open another pool of workers for employers who can contribute some real value to a business through sharing their experience and knowledge.

In late 2006, the number of 55-64 year olds in the UK workforce outnumbered 16-24 year olds for the first time. I suspect that more people in their fifties are going to extend their ambition beyond working for someone else and will look to start their own business.

People like Simeone Salik, who is 68 and has big plans for her affordable, temporary blinds company, Blindsinabox. ‘All the media is interested in is keeping older people in work for other people, rather than for themselves. Older entrepreneurs should be encouraged as often they have less to lose in that they own their own homes and understand financial implications,’ she says.

Salik is a prime example of how the modern-day workforce is evolving – it’s certainly a far cry from the notion of the gentle, cosy retirement of yesteryear. That said, it doesn’t address the skills gap among a younger generation and an education system that, from an employer’s perspective, has long rendered academic achievement virtually meaningless in many sectors.

Click here to take our poll: Would you hire someone over 60?

SmallBusiness.co.uk Blogs

The business model of the recording industry is broken. Just about everyone knows it, including record label executives. But the industry collectively still seems to have a hard time admitting it.

So it’s really no surprise that the Recording Industry Association of America (RIAA), which has gone so far as to sue grandmothers for illegal music downloads, is singing a new heartbreaker: copyright law is broken.

Those are the words of RIAA president Cary Sherman, who believes that the Digital Millennium Copyright Act (DMCA) is letting content creators down. The DMCA, of course, is the copyright law enacted in the United States in 1998 which has, in part, given online service providers, like YouTube, safe harbors from copyright infringement claims provided that they aren’t directly involved in the infringement and respond expeditiously to takedown notices from copyright holders.

The DMCA’s safe harbors, however, are nothing more than loopholes according to Sherman:

The DMCA isn’t working for content people at all. You cannot monitor all the infringements on the Internet. It’s simply not
possible. We don’t have the ability to search all the places infringing content
appears, such as cyberlockers like RapidShare.

To be fair to Sherman and the RIAA, one can be fairly certain that Congress never anticipated the rapid growth and evolution of the internet when it wrote the DMCA. And that means they could have never contemplated the rise of services ranging from Napster to Limewire to YouTube. Recognizing this, it is quite possible that had Congress been equipped with a crystal ball, the DMCA would have been structured a lot differently. Perhaps the world would be much tougher for services like YouTube, which was vindicated this year in its copyright infringement battle against Viacom on the grounds that it is protected by the DMCA.

But even if we give recording industry heads the benefit of the doubt, the general problem with the RIAA’s position is that it’s untenable. If the RIAA can’t monitor every single online hub in which infringing content appears, neither can service providers. There is absolutely nothing that can be done to detect every infringement online, let alone prevent it from happening.

If service providers are forced to police the internet on behalf of record labels, movie studios and other copyright holders, you can be sure that the costs — both monetary and otherwise — will eventually be passed on to consumers. That’s not a good thing, and an overly expensive, overly policed internet won’t benefit the recording industry because for all of the challenges it presents, it’s still the industry’s future. Consumers are simply not going back to buying CDs like they used to.

But don’t tell that to the RIAA. It is trying to convince ISPs as well as “search engines, payment processors, [and] advertisers” to voluntarily become the industry’s eyes and ears. If that doesn’t work? Sherman has a stick; he claims he doesn’t want Congress to be involved, but “if legislation is an appropriate way to facilitate that kind of cooperation,
fine.” Translation: if we can’t get what we want, we’ll lobby for a replacement to the DMCA.

Unfortunately for the RIAA, it’s questionable as to what effect that would have at this stage of the game. The internet is global, and it’s really, really big. In other words, the cat is already out of the bag. The future for the recording industry may be bumpy, but there is no doubt that its future depends on innovation, not procrastination. If Sherman’s comments are any indication, the industry is still focused on the latter.

Photo credit: hiimniko via Flickr.

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Deciding whether or not to do a deal that requires exclusivity can be
tough. Such deals almost always come with clear advantages and
disadvantages. Here are a number of the most important to consider.

Advantages

The security. In many but not all cases, exclusive agreements can provide a level of security that is hard to find in non-exclusive agreements. For instance, an exclusive advertising agreement may provide for a guaranteed amount of revenue over a several year period.

The premiums. Oftentimes, exclusive agreements can be quite lucrative. After all, if you’re giving up the ability to deal with others in a particular area of your business or market, you are probably being paid a premium for that.

You get to build deeper relationships. Managing relationships is one of the most time-consuming tasks business owners and executives engage in. Forging relationships that are exclusive often reduces the number of relationships you need to manage, allowing you to build a stronger bond.

Disadvantages

There’s an opportunity cost. An exclusive agreement might look good on paper right now, but locking yourself into one always comes at a cost. After all, a better deal that you can’t avail yourself of might come along next week, next month or next year, and you won’t be able to take advantage of it.

It’s like a marriage. An exclusive agreement is a lot like a marriage. Marriage can be a wonderful thing, but it can also be painful when something goes sour. The other party could, for instance, fail to perform their obligations, leaving you high, dry and in panic mode as you scramble to find a new party to fill their shoes.

Losing touch is easy. Dealing with a wide range of parties enables companies to stay in touch with what’s going on in the market. When locked into an exclusive arrangement, it’s arguably easier to lose touch with the latest developments and trends, especially if the other party isn’t at the leading edge of them.

In short, an exclusive relationship is often a tough proposition to accept, and an equally tough proposition to reject. Making the right decision requires that you weigh not the advantages and disadvantages, both in the short-term and the long-term.

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A small plot of land near the World Trade Center in New York City has been thrown into the spotlight recently. A Muslim organization called The Cordoba Initiative set out to build a mosque and community center in the space, which has gotten them wrapped up in a national political battle of epic proportions. Numerous politicians have spoken out against the project, leading its supporters to make charges of racism and breaches of freedom of speach and religion. According to a CNN poll, 70% of Americans are opposed to a new mosque being built in the shadows of the World Trade Center.

The issue is full of pitfalls — words like “bigot,” “racist” and “extremist” have been flying all week — but one could have easily been avoided. That is the organization’s social media debacle. The Cordoba project hired a New York based social media expert to run its Twitter feed. While his snarky Twitter messages might have been fine when his audience was a small group of New Yorkers, Oz Sultan’s approach to Twitter did little more than antagonize people and embarrass the group…and himself.

According to The New York Observer, Developer Sharif El-Gamal did not realize his pet project (now known as Park51) would ignite a firestorm. And Sultan, who normally works for beauty companies and luxury brands, was hired to reach out to the lower Manhattan Muslim community via social media.

But when the conflict erupted, Park 51’s Twitter did not adapt well. Overwhelmed by negative and aggressive tweets, Sultan and his team lashed out.

In response to a mistatement from Jewish newspaper Haaretz, the Park51 Twitter feed wrote:

“On a side note, if Haaretz likes publishing fables, perhaps they could
go back to the Yiddish ones with parables #welikethosebetter”

That comment brought increased criticism and attention to the group. The Twitter feed has been called “disturbing,” “dismissive” and
“snarky.” More importantly, it added fuel to the rhetoric against the
project. With Imam Feisal Abdul Rauf and his wife out of pocket and not giving comments to the press, the Twitter feed was one the only places to get new information from the group.

The Park51 Twitter feed is often written in the first person. After the Yiddish comment raised concerns, the tweet was deleted and a new one appeared:

“Note: we will be replacing one of the interns on the park51 account.”

As Capital writes:

“A native of the New York social media scene, Sultan treated Park51’s
tweetstream as a means of communication with the natives on Twitter,
who’d have been able to get the “snark” without blinking,
notwithstanding the fact that the tweeting was being done in the name
of an institution in the thick of a overheated, international
public-relations crisis.”

Tweets that work for entertainment companies are not necessarily the same kinds of
messages that should come from a mosque under fire from angry
politicians and misinformed citizens. 

Tact might not be Sultan’s strong suit. The first time
I met the social media strategist, it was at a marketing event, where he explained he did social
media for beauty brands — then started trying to guess my
bra size. While I grew visibly irritated, he seemed not to have a clue why his comments might be inappropriate.

Others I’ve spoken with have had similarly awkward interactions. Such miscommunications also seem rampant on Park51’s Twitter. Like this response to an apparently Amish person:

“Amish saying stop Muslims? 1. What are you doing on the computer? 2. That’s not very Amish 3. Shouldn’t you be making butter?”

Not particularly funny. Considering
the context of the current debate, a Twitter feed that
informs people of misconceptions about the project and elucidates some
of the ways the group hopes to cross cultural boundaries and work
with New Yorkers and Westerners to understand the Muslim faith would be useful. At the least, the group’s feed should help deflect the conflict rather than contribute to it. Unfortunately, this initial strategy only served to make more trouble for Park51.

As Capital’s Gillian Reagan wrote:

“Sultan’s tweetstream actually fell into the middle of a series of other culture clashes, really: The clash between New York City and the rest of the country, and
between the young generation of digital natives and their elders.”

Social media strategists must bear in mind the fact their target audience is not the only one who will read their messaging. In a channel like Twitter, tone is a critical issue. Regardless of the fact that many people in this debate are ill-informed
and probably obnoxious, stooping to the same level is harldy advisable.

Since reorganizing its team, the Park51 feed has toned down. Gone are the jokes, and back is the information
and explanation campaign.

In the wake of all the controversy, The Cordoba Initiative’s project may never even get built. According to Politico,
the group only has ,000 of the 0 million it needs to build Park51.
Without that money or architectural plans, it may never become a reality.
As Politico writes:

“El-Gamal and the project’s religious anchor, Imam Feisal Rauf and his
wife, Daisy Khan, have at times offered conflicting information. They
don’t have a single person handling their message, and are often
setting up their own interviews.”

As the storm continues, the debate over the construction in this space two blocks from the World Trade Center is so fraught with landmines that the unthinkable is happening. Among the surprising statements from different public figures, Maureen Dowd has asked former president George W. Bush to come to the aid of Obama.

At a certain point, a political thuderstorm is out of the hands of the group that created it, whether intentionally or not. But there are certain things that can be controlled, and hopefully The Cordoba Initiative has now learned that lesson.

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