Lease Negotiations

We are in the midst of negotiating a lease. For me this is a particularly stressful period as it tests my patience. I want things my way. I want to dictate what happens. I’m grateful for our solicitor who is more objective and can pursue my interests with grace, persistence and authority. My brother is a solicitor and I know all the jokes about them and the disdain people have for their profession. However, I think this is unfair and really our uncomfortableness of the work they need to do. With our lease negotiations, our solicitor has been diligent in obtaining information so that he protects our interests. This is a good thing and I’m afraid if I did this, I’d come across as aggressive and impatient.

Here is a true Proverb 21:5 “The plans of the diligent lead to profit as surely as haste leads to poverty.”

Inventory Control

Yesterday we got our first order of inventory. I had placed the order in December (!) and on Wednesday I received a call from UPS asking for my VAT registration number. Although the number isn’t necessary at this stage, it did help get the items quickly through customs. There are downsides for being registered early for VAT (in terms of cashflow) that my accountant told me about; in our case 95% of our inventory is imported so delays can be just as bad as no cash flow!

I went through the order and unpacked each item and then checked it off our order spreasheet. The packing slip was very basic - 4 boxes: 2 copper, 2 silver plated copper - so it wasn’t of use. What is perplexing is that 50% is missing (customs had opened the box) without explanation. I’ve emailed to find out but the bottom line is inventory control methods are crucial. When we get our shop opened and our EPOS system online, we’ll be checking in each item not only manually but then inputing the information into the EPOS to manage the stock. Given this order has over 100 different products and is only 1% of our total inventory, it is going to be tedious but necessary daily task to manage the stock so that we are profitable.

Solicitors

We met with the property manager and agreed to a level of rent that is the high end of what I budgeted but agreeable. We need to negotiate a few other points and hope to receive the lease May 1. My advice would be have a solicitor when you negotiate and sign the lease. He/she can make sure what you are obligating yourself to, will knw what rates, fees, etc. are usual, and even play hardball on your behalf This latter point is important. Not that you want your solicitor to be a jerk, but in my case my solicitor stood impartially aside and represented my interests and was tactful in his requests and had the information and presence to persuade; he wants the best for me as it is the best for him.

For example, he asked what state do they want the unit returned should we vacate the premises. Odd question before you sign the lease? No, he doesn’t want you to be saddled with huge costs, effort, or legal issues should you need to leave the premises - what happens if you grow and want to move to a better location? Solicitors are necessary, very helpful, and honour God when they do their work to the glory of God. I’m grateful for mine and that he represented me well.

Negotiations

I am in the process of negotiating over a lease for a unit we hope to occupy for our business - The Bead Co. (UK) LTD. The original rent information I received regarding this new development was £X. Two weeks ago I found out they had a required independent assessment (as part of the housing association receiving government sponsored regeneration funding) came back and the rent is 75% higher than £X!!!

First patience and discernment come to mind. I do believe this can be negotiated down and I have a strong case - comparison to other commercial properties, convincing plans, local/national/global economic considerations, etc. I need to be patient to present my case and see where it leads. If I have faith that can move a mountain or faith that trusts in the providence of God, I need to work with a patience heart toward a conclusion. Second, I also believe this will force me to more clearly discern if this is the proper location and what financial implications this and my other decisions will have. I need to be clear in my mind that the investment is wise and this new ‘kink’ is making me build a stronger more secure knowledge of what is the best stewardship of resources I will have at my disposal.

Even a ‘kink’ like this can make one a more confident business person, develop a discerning mind, and even grow your faith.

Small Business Resources

I heard today on the BBC News:

“Corporation tax rates should be reduced to help revive the economy and boost competition, the Tories have said. The main rate is due to fall from 30% to 28% in April, but shadow chancellor George Osborne wants it cut to 25%Speaking ahead of Chancellor Alistair Darling’s debut Budget on Wednesday, he said he also wanted to scrap a planned 2% rise in the small companies rate. “

I agree that small business need help. I think government should be looking for ways to minimize the effects of taxation and regulations that hurt a businesses ability to compete or create a disincentive thereby stopping them from trying to compete. However, I also think businesses can do some work of their own to reduce their expenses, find cost savings through other means, and overall improve their profitability without any government intervention necessary. For example, I know that certain memberships will help small businesses in a variety of ways: legal advice, discounted banking, lower merchant account fees (Visa/MC), preferential rates with couriers, even discounts on telecom. I asked my Business Gateway advisor if he could recommend any associations as the ones I had found just were comprehensive in their offering of services to members and/or they were to expensive for the small business. He referred me to the Federation of Small Businesses. If I sign up with them and pay the annual fee, I estimate that the business will save minimally £2000/year on £200K turnover just through preferential merchant account fees. In addition, they can offer free banking for life (£360-500/year savings) and have a deal with BT offering free phone installation saving me £250 fee. Formed in 1974 they already have over 210,000 members. By concentrating the voice of small businesses and the self-employed their size has enabled them to champion small businesses and at the same time create economies of scale which they pass onto their members. IMHO, it is worth it and the government didn’t need to do a thing! 

Timing

They say location is everything. We know the mantra: LOCATION, LOCATION, LOCATION. What about timing, timing, timing? Two weeks ago I had a site visit of the shop we hope to rent. BTW - It is bigger than I expected (yeah!) and now we must reconsider the interior design - need to run with the industrial look since the cost to fit out the unit in a Victorian way would be expensive. However, in our time in the meeting, Nick, the project manager of the development, mentioned we could get the unit sooner.

There have already been three delays in the development already: originally it was to be ready March 07, then pushed to December 07, then June 08…now up a month to May 08. Timing is critical. Glasgow holiday is the first 2 week of July, I have personal obligations the end of July/start of August, the kids go back to school mid-August, the West End changes when the students come back mid August (a good thing), and the park across the street from the development will be a construction site as they refurbish it (short term bad, long term excellent). How do I manage all these considerations let alone the shop fitting and start up process for the business? If we get the timing wrong, we could start off poorly and besides being a discouragement, it could be a cash flow problem. We need to time it well in order to consider the advertising strategy, shop fitting, inventory purchases, hiring, training, etc. In my case, I’ve moved from the location mantra to the TIMING mantra: TIMING, TIMING, TIMING! A healthy dose of prayer, mixed with ongoing disciplined planning, a great deal of flexibility and patience should cure the soul!

For a good project management tool to help manage TIMING (and free) check out: http://openproj.org/

Ecclesiasticus 38

My friend and a board member of the company I am starting sent me this. It is from the  apocrypha and is thorough in its theology of work imagery. Enjoy:

The wisdom of the scribe depends on the opportunity of leisure; only the one who has little business can become wise. 25How can one become wise who handles the plough, and who glories in the shaft of a goad, who drives oxen and is occupied with their work, and whose talk is about bulls? 26He sets his heart on ploughing furrows, and he is careful about fodder for the heifers. 27So it is with every artisan and master artisan who labours by night as well as by day; those who cut the signets of seals, each is diligent in making a great variety; they set their heart on painting a lifelike image, and they are careful to finish their work.  28So it is with the smith, sitting by the anvil, intent on his ironwork; the breath of the fire melts his flesh, and he struggles with the heat of the furnace; the sound of the hammer deafens his ears, and his eyes are on the pattern of the object.He sets his heart on finishing his handiwork, and he is careful to complete its decoration.  29So it is with is the potter sitting at his work and turning the wheel with his feet; he is always deeply concerned over his products, and he produces them in quantity. 30He moulds the clay with his arm and makes it pliable with his feet; he sets his heart on finishing the glazing, and he takes care in firing the kiln.  31All these rely on their hands, and all are skilful in their own work.  32Without them no city can be inhabited, and wherever they live, they will not go hungry. Yet they are not sought out for the council of the people, 33   nor do they attain eminence in the public assembly. They do not sit in the judge’s seat, nor do they understand the decisions of the courts; they cannot expound discipline or judgment, and they are not found among the rulers. 34But they maintain the fabric of the world, and their concern is for the exercise of their trade.  

Planning

I heard just before Christmas that there is a delay in the building project for the shop unit we will be renting. I’ve had to reconfigure my plans and with a number of other things going on, it became an imperative to plan more specifically. I found a resource that is helpful and thought I should post it here as it is free, similar to Microsoft Project and I think a tool a modern day Proverbs person would use: http://openproj.org/

Values & Hiring

Update: The good news is that the shop unit we want is still ours and the price is still the same. The bad news is the mezzanine was placed at the wrong height and this along with general building delays means instead of March it will be May before we get into the unit. I’m learning patience and to pray at a depth and for a breadth of aspects regarding this venture. I’ll receive the delay as a blessing in disguise. Also, on the 25th of November we became officially The Bead Co. (UK) LTD !

Values & Hiring: I met up recently with one of the directors of the board to discuss values and hiring. We spoke about how it is necessary first to know what you value and what you want to value as a business(person). From there you can then establish an ethos or set of values you want employees to embrace and allow these values to guide your hiring. We discussed the normal order of hiring - experience, capability, knowledge, motivation, integrity. However, a quote we read from Doing God’s Business reorders these so that they are the complete oppostite. Dee Hoeck former CEO (and founder) of Visa, says we should hire first based on integrity, motivation, etc.

Reading through the Proverbs, 26:23-27 reflects this: “23Be sure you know the condition of your flocks, give careful attention to your herds; 24 for riches do not endure for ever, and a crown is not secure for all generations. 25 When the hay is removed and new growth appears and the grass from the hills is gathered in, 26 the lambs will provide you with clothing, and the goats with the price of a field. 27 You will have plenty of goats’ milk to feed you and your family and to nourish your servant girls.”

To determine integrity & motivation, you really need to know someone. This takes time but it also takes time as the owner, CEO, manager, to think through what you want to value and see lived out in your company. I’ll post next some resources for values, ethos, etc. in a business.

Using a Company to Save Tax

Friday I received the book Using a Company to Save Tax. I’m almost done as it is a short book but it is packed with information. If you are thinking about going into business, it is worth the investment (£23.95) as it will help you determine the most tax advantageous structure for your business. I don’t agree with avoiding tax as a means to not paying your fair share for services the government provides, but I also think we need not unwisely pay tax if we don’t need to. In fact that would not be good stewardship. Using the information in the book and always staying within the law can save thousands of pounds ~ and yet all you did was become a limited company rather than trading as a sole trader.

Proverbs 31:16 gets at the discernment and then the ability to develop more resources which can be a good thing: “She considers a field and buys it; out of her earnings she plants a vineyard.” Had she paid too much, she wouldn’t have the earnings/resources to plant the vineyard. Likewise, pay too much tax unnecessarily and you cannot offer that position to the uni student in need of work (e.g.).