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Time to get off the buy-to-let bus

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There was a time when being a landlord was a sure-fire way to make a good return on your money. Not only did you get reliable equity growth over the long term, you also had the benefit of rental income from your tenants while you waited for the value of your bricks and mortar to increase.

In recent years, the wheels have started to fall off the rent-to-buy bus. The first screech indicating trouble came from George Osborne back in 2016. He saw landlords as a soft target for beefing up the treasury’s coffers, and over the next four years, landlords’ buy-to-let mortgage interest and fees ceased to be tax-deductible. This made a significant number of portfolios unprofitable and forced thousands of landlords to leave the market altogether.

As if this wasn’t enough, the government also introduced a 3% additional stamp duty penalty for all second home purchases, including landlords purchasing buy to let properties. This significantly increased the cost of entry into property investment and dissuaded many people from entering the fray.

But not all of the bad news has come from the taxman. The rental sector has seen a significant increase in the amount of regulation directed at landlords. Rogue landlords—those failing to provide decent and safe accommodation for their tenants—have been rightly criticized in the media. Consequently, the regulatory requirement now imposed on landlords has stepped up significantly, and this has added substantially to the cost of maintaining a rental portfolio.

So, where does this leave existing and prospective landlords today? Is property investment still a good long-term strategy, or has the taxation and regulatory reforms over the past five years made the prospect of property investment unviable for the investor looking to generate long-term capital growth and income?

Interestingly, the government has recently gone out of its way to create some significant property-related opportunities. These opportunities lie not in acquiring buy-to-let properties but in building the new homes that will help the government reach its 300,000-a-year target. They have done this by creating a raft of permitted development rights that allow non-residential buildings to be converted into residential homes without the need for planning permission. The answer, says the government, is to convert the ever-increasing number of brownfield sites that are well-suited to redevelopment as housing instead of building on our highly prized green belt.

But surely the major homebuilders have got this market sewn up? As it turns out, they haven’t. The significant majority of brownfield opportunities sit way below the scale necessary to interest the likes of Messrs Barrett, Persimmon, and Taylor Wimpey. The government has recognised this and is instead targeting small-scale developers, many of whom will be undertaking development projects for the first time.

This repository of buildings that are ripe for residential conversion has been increasing of late – look at the number of redundant stores in the wake of the recent collapse of Arcadia, Debenhams, et al. As our shopping habits have changed, so many High Streets have become ghettos. As these primary brands depart our town centres, the secondary retail around them is also affected. There is likely more to follow; when the furlough scheme ends, we will see a significant number of businesses collapse, and their properties, whether retail, commercial or industrial, will become vacant. One struggles to envisage there will be a sea of buyers waiting to snap them up.

So what’s the government’s plan? Well, they would like to convert many of the empty properties in our town centres into residential homes. And with people living once more in the centre of our towns, this will fuel demand for the ancillary services and facilities that the local population will require. This will include entertainment, dining venues, and boutique-style shops, where town centres once more become a destination for shopping and entertainment.

Where does this leave the humble landlord? Surely property development is more complex than snapping up a couple of buy-to-lets? Interestingly, the strategies are not as diverse as you might think. Some landlords undertake a renovation or a conversion of their buy-to-let properties before they rent them out, and many small-scale development projects are not much more complex than that. It is a highly leveraged business. The small-scale property developer has an army of professionals on their team, including a project manager, all of whom have a significant amount of experience in development. The developer’s key actions are identifying the opportunity, appointing the team, and ensuring the finance is obtained.

Ah yes, the finance. Don’t property developers need to have a small fortune in the bank to develop their projects? The answer in most cases is ‘no’. Whereas landlords typically fund their buy-to-let deposits personally, developers often secure a significant part of their deposits from private investors. The remainder of the asset capital and the development funding is obtained from a single commercial lender.

What are the skills that this new small-scale developer might need? Interestingly, very similar skills to those of a landlord, senior manager, or business owner. There has to be an overarching understanding of what’s involved in development, but most of the heavy lifting and technical issues are delegated to the professional team.

So, what are the advantages of development over buy-to-let investments? Well, one major difference is the speed with which capital is created. You can expect a small-scale development project that would typically return a six-figure profit to be completed within 12 to 24 months. For a buy to let investment, the pay-back period is usually a lot longer.

Arthur and Martha are a case in point. Both have £50k to invest in property, and each quite likes the idea of buy-to-lets. Arthur is a traditional sort, and he uses his £50k as a deposit on a £200k three-bed semi and then rents it out to a nice family. He clears around £300 per month in profit, but it will be several years before his equity growth enables him to remortgage and raise a deposit for buy-to-let number two.

Martha, on the other hand, uses her £50k as the deposit on a small development project, a retail building that can be converted into flats using permitted development rights. She obtains the remainder of the financing she needs through a commercial lender, and she expects to receive her profit of £150k within 18-24 months. She can also make up any deposit shortfall by tapping into private investment.

And while Arthur is still waiting for equity growth (and occasionally dealing with tenant issues and broken boilers), Martha has made enough profit in 18 months to buy three of Arthur’s buy-to-let houses AND has £50k left over to start her second development project.

Project things forward and, given that it’s possible to run multiple development projects at once, you can see how Martha’s portfolio growth could be stratospheric compared to Arthur’s. Or she could simply opt for a six-figure income and spend the money on whatever she wants.

Not surprisingly, this hybrid landlord-developer role is starting to become popular, as existing landlords discover that small-scale development is well within their capabilities. Plus, many are currently more than a little frustrated with their lot as a landlord. Now could be the perfect time to try something different.

ABOUT THE AUTHOR

Ritchie Clapson CEng MIStructE is co-founder of propertyCEO, a nationwide property development and training company that helps people create a successful property development business in their spare time. It makes use of students’ existing life skills while teaching them the property, business, and mindset knowledge they need to undertake small scale developments successfully, with the emphasis on utilising existing permitted development rights to minimize risk and maximize returns.

https://www.facebook.com/propertyceotraining/

https://www.instagram.com/propertyceotraining/

https://www.linkedin.com/company/propertyceo

How to renegotiate your office lease as your business returns

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There’s no denying that it’s been a long and difficult year. However, with many of us already vaccinated and the outlook  looking positive for a slow release of lockdown, you may be considering getting back to work in your office premises.

For those that run a small or medium sized business (SME), going back after working remotely, with many employees having been furloughed for long periods of time, it will be difficult to reinstate the financial balance straight away. You may have to alternate your employees so that they come into work part time. It may also be necessary to expend monies to ensure safety and sufficient social distancing.

So, is there anything you can do to mitigate the financial burden of your lease?

The answer is, yes! But of course there are no guarantees, as your landlord would have been going through similar circumstances, but a reasonable approach to any negotiation should prove fruitful for both parties.

Understand your lease

The first thing to do is to check your lease to see if there is any adverse clause in there that may prevent you negotiating. For example, a clause stating that ‘there shall be no rent negotiation after one year’ or ‘negotiation on rent will only be acceptable after three years’ etc.

You should also check the length of any ‘notice’ period, e.g. the notice you need to give if you wish to leave. The last thing you want is to start negotiating and threaten to leave in a month and then realise that you are legally bound to give three or six months’ notice, or that there is a clause stating: ‘there will be no break clause in your lease for two years from the date the lease commences, or from the date your lease is renewed’.

By understanding exactly what is in your lease you will find it easier to work with your landlord to find a mutually agreeable solution.

How to negotiate

If your landlord is approachable, then building a rapport with him/her helps you to understand the kind of person s/he is. Trust and honesty is key, and given the unprecedented circumstances, you may be able to come to some agreement in spite of the clauses(s) in the lease.

In any negotiation it’s imortant to understand the other party’s point of view and say so, or say something complimentary. For example, you could start off the negotiations by saying something along the lines of:

‘I know the last year has been difficult for us as I am sure it has been for you too…’ or

‘I really like these premises and I think you do a good job on every level. It ticks all the right boxes for the business..’

Then you could go on by saying..

‘.. but I hope you can understand that in order for both our businesses to get back on our feet and up to full strength, we need to have a reasonable stepped approach to the payment of rent so that we can build up our business again. I would like to retain my lease with you, but I would appreciate a bit of leeway…’

This is the diplomatic approach, rather than demanding a reduction: ‘It’s unfair to expect me to pay the full rental after what’s happened. You should reduce the rent…’

It’s always best to start thinking in terms of what you want to achieve. If your goal is to stay in the premises then you can aim your negotiations in that direction rather than say to yourself, ‘I will only accept this amount of reduction’ or ‘I won’t accept that…’.

Being too acerbic can have a really adverse effect. If you are too forthright, the other party will close ranks and not be willing to give an inch, as this could give the impression of a lack of integrity and being disingenuous. However, being too sweet and accommodating can also have the same effect, but not if it is perceived to be genuine. The right balance must be found.

Both parties need to participate in the communications as it cannot be a one-sided conversation and listening is the most important skill you can have. Everyone knows from social interactions, that bulldozing through a conversation, being opinionated, demanding and manipulative, will induce a reaction of: …’wow, I don’t like this person. I need to get away as quickly as possible – I’ll just go and get another drink…’ We have all been there!

On the other hand, being in the company of someone that is listening to what you have to say, and nodding occasionally, validates what we are saying and is perceived well.

At the end of the day, everyone has a different negotiating style. However, there are a few tips to hopefully get you to your win-win scenario:

  1. Understand who you’re dealing with. The more you know your Landlord and the kind of person she/he is, the more you will know how to pitch what you want.
  2. Know what you want to achieve.
  3. Put yourself in the shoes of the other party and/or say something complimentary.
  4. Don’t come on too strong or too sugary sweet. Integrity is the key.
  5. Listening is the best skill.

Can a paralegal help?

Once you have reached your goal, then ask a professional paralegal to assist you in drafting an agreement to reflect the negotiation you have reached. Paralegals charge a lot less than solicitors and can perform many of the same tasks, including drafting agreements or changes to your lease.

If negotiations fail or things unfortunately turn unpleasant, then a paralegal may be able to help here too. Sometimes taking the emotion out of the negotiation and letting independent third parties continue the talks, can help bring things back to the real issue of the lease negotiation.

Finally, if all negotiation fails and your landlord will not budge, then legally there is probably very little you can do. If there is a fixed rental period, then you could try again when this ends, or if the lease allows, you can give the required notice and look to relocate to premises with a lease that better suits you.

ABOUT THE AUTHOR

Amanda Hamilton is Chief Executive of the National Association of Licensed Paralegals (NALP), a non-profit Membership Body and the only Paralegal body that is recognised as an awarding organisation by Ofqual (the regulator of qualifications in England). Through its Centres, accredited recognised professional paralegal qualifications are offered for a career as a paralegal professional. 

See: http://www.nationalparalegals.co.uk

Twitter: @NALP_UK

Facebook: https://www.facebook.com/NationalAssocationsofLicensedParalegals/

LinkedIn – https://www.linkedin.com/in/amanda-hamilton-llb-hons-840a6a16/

What are the key consumer trends that retailers need to respond to?

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Given the rise of ecommerce in recent years and the change in consumer trends, here are what I believe consumers value highly today.

The need for convenience

Ecommerce has spoiled consumers for choice, but delivery has always been a sticking point. A product may be slightly cheaper online but once you add delivery charges, the cost can sometimes end up higher. And since the customer can’t touch, feel or try the product before they buy, there is less trust and far more returns.

However, websites like Amazon have spoiled customers with their free next day delivery and companies like ASOS are dominating fashion with their easy returns policy.

While it is very difficult for smaller brands to compete with free next day delivery, it should still be possible to find a middle ground, where shipping costs are kept to a minimum and arrive within a few days of placing an order.

There are now comparison sites for couriers, for example, dramatically reducing delivery costs and opening more online retailers to competitive delivery options.

Local retailers are in the perfect position as they can offer free in-store returns, as well as allowing customers to touch and feel the product before buying. This can increase trust, reassure customers that they can get support or return items, and opens independent retailers to more click and collect options. The challenge for local retailers is getting found.

The cost benefit to consumers

One of the main drivers of ecommerce has been the cost benefit to consumers. Not only do ecommerce products often cost less, but consumers can quickly and easily compare prices across multiple brands and websites to find the best deal. There are even shopping assistant browser extensions to alert users to the best price found online.

But this puts smaller retailers in a difficult position. They may not be able to offer the same price point, yet don’t want to miss out on being listed on an online marketplace, like Amazon.

One way to handle this is to carefully pick where you list your products. Not all online marketplaces are created equal. Amazon, for example, suffers from an influx of overseas retailers offering sub-quality items for much, much less.

Consumer shopping habits are changing, however, with a preference for local goods that both support the local economy and lead to fewer product miles, helping to care for the environment. Finding a marketplace, like DownYourHighStreet, for more local goods means you are being compared to like-for-like products and services, not cheap imported goods.

Another answer is to create your own audience of engaged brand fans using your social channels.

The pull of local

There has been a big trend towards purchasing from local businesses, with Google “near me” searches rising 500% year on year. Buying local supports the local economy, is more traceable, and is often perceived as being higher quality. Truly local retailers also benefit from being able to offer something unique ─ an ever more important quality shoppers are looking for, especially in the Instagram generation.

However, the trend towards local doesn’t excuse local businesses from having an online presence. Customers still want to be able to search, compare and complete purchases online. They’re just happier if the product is local, they can touch and try the product, and they know they can pick it up/return it quickly and easily.

One solution to this competition of needs is the creation of Business Improvement Districts (BIDS), where local businesses get together and chip into the creation of a combined ecommerce presence. For example, on DownYourHighStreet, we have a sub-page for Brighton called Brilliant Brighton.

Local retailers list their shop and products, allowing customers to find and compare products online before coming in-store to complete their purchase. The customer is happy that they’ve got the best product at the best price, while local retailers gain more business for a lower cost than setting up and managing their own web presence.

Going one step further to delight your customers

Something customers miss from in-store experiences is the element of surprise and delight. When in a physical shop, there may be videos, imagery or other instructional material. There may be something fun to do or an experience to be had that is almost entirely missing from the online shopping experience.

These experiences connect people to brands and generate customer loyalty. The good news is, online retailers can benefit from surprising and delighting customers just as physical stores can, perhaps even more so.

Customers typically don’t expect much from a delivery. They want it to come on time and in good condition. That’s about it. So, the bar is pretty low. Going one step further and thinking about how to surprise and delight your customers with their deliveries can supplement in-store experiences and generate that same brand loyalty.

It could be a token such as a small bag of sweets included in the delivery, or a hand-written note thanking the customer for making their purchase. Connecting these experiences with your online presence, via your social media pages, for example, is a great way to capitalise on the feel-good factor and keep the connection going.

Whether you are an in-store or ecommerce only retailer, there are innovative steps you can take to that your customers get what they value most. Start now so you are ready to bring in more customers as we emerge from the pandemic.

ABOUT THE AUTHOR

Daniel Whytock is CEO of DownYourHighStreet.com – a free to join, low commission online marketplace on a mission to create the world’s longest high street by connecting community with commerce and giving the Great British High Street an online presence. DownYourHighStreet.com hosts thousands of products that were previously unavailable online, from100s of independent retailers, allowing sellers to create or integrate their online presence saving them time and the costs traditionally associated with establishing a visible online presence.

www.downyourhighstreet.com

https://www.linkedin.com/company/downyourhighstreet.com/

https://www.instagram.com/downyourhighstreet_/

https://www.facebook.com/downyourhighstreet

5 ways to unfurlough your mojo

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Perhaps Amazon isn’t breathing down your neck (for now), but whether it’s coping with extra red tape or adapting to changing pandemic restrictions, the chances are there has been, or will be soon, some sort of challenge for your business to deal with. The times they are a-changing, and it can feel more difficult to tap into your internal motivation or mojo. But so much of what we feel is actually a decision.

This isn’t a new idea—you’ll find it in Greek and Roman philosophy—but it has been confirmed by our modern thinkers, with a great deal of the science around positive psychology and happiness having roots in ancient philosophy.

Cognitive Behavioural Therapy (CBT), which is largely drawn from the teaching of Socrates, considers the origin of mental disorder, including a lack of motivation or absence of mojo, to lie not in brain chemistry but in our irrational beliefs. Roman Stoic philosopher Epictetus said, “Men are not disturbed by things, but by their opinions about them.”

What do we do about missing mojo? Micro-moments. They offer a quick, practical way to change our opinions about things and, as a result, change how we feel, the outcome and even our life.

  1. Make the right choice

One of the founders of CBT, Albert Ellis created his ABC model which can be a useful guide to regaining control over thoughts and feelings so we can better access our best self.

A is for activating event.

B is our beliefs that interpret that event and construct meaning.

C is the consequence – especially the emotional consequence. 

The next time something happens, or you feel stressed by some news from a client or a change in trading, or some other situation, take a moment to notice what you’ve made it mean. If a valued employee leaves to join a larger company in a more senior position, does that mean you are a bad boss, or does it mean that you a great trainer with an eye for talent? What we make something mean is not the only meaning on offer.

  • Decide to be happy

In Michael Singer’s book The Untethered Soul, he asks a really great question. Do you want to be happy? Yes or No? If it’s Yes, then what do you need to change to be happy?

Motivation is tough to access when we are miserable so take a moment to really think about and answer that question. We all know people who seem to be most content when they are miserable, but if you are not one of them, decide to be happy and do what you need to do to make space for happiness. If you do, your motivation will also increase.

There is nothing more powerful than a changed mind.

  • Aim for 1%

When we are in a slump or finding it hard to get motivated, the tendency is to pursue an all-or-nothing approach. This strategy is the worst thing we can do. Instead, start small and aim to be a little better tomorrow than you are today.

Take a moment to consider one thing you would like to change and focus on improving that by 1% every day. This approach is much more viable and is much more likely to produce the desired effect.

  • What is it NOT?

Take a moment to turn your lack of motivation on its head. Instead of wondering what’s happened or why you suddenly feel so flat and unenthusiastic, go in the other direction. Make a list of the things that DO NOT motivate you.

Sometimes it helps to focus on what we know we don’t want and won’t do as a way to gain clarity about how to regain our mojo. 

  • Gratitude Ritual

One of the most powerful mind tricks you can employ is the gratitude ritual. The idea is to start and end your day with three things that you’re grateful for. Do you have a supportive board and/or investor(s)? Is your team understanding about tough decisions you have had to take? Do you have a lead for a new income source? Try to come up with different things rather than the same few each time. And really connect to each gratitude as an emotion. Remember, it’s not happy people who are grateful, but grateful people who are happy.

Things are really challenging for a lot of businesses right now, but we all need to stay motivated and positive. Micro-moment suggestions focus on changing your meaning or choosing a better frame or belief through which to view the circumstances of your business. Making these little changes to your thinking can make a huge difference.

ABOUT THE AUTHOR

Sid Madge is founder of Meee (My Education Employment Enterprise) which draws on the best creativity and thinking from the worlds of branding, psychology, neuroscience, education and sociology, to help people achieve extraordinary lives.

To date, Meee has transformed the lives of over 20,000 people, from leaders of PLC’s and SME’s to parents, teachers, students, carers, the unemployed and prison inmates.

Sid Madge is also author of the ‘Meee in Minute’ series of books which each offer 60 ways to change your life, work-, or family-life in 60 seconds.

Web: www.meee.global

Web: www.meeebooks.com

Twitter twitter.com/Meee_HQ
Facebook https://www.facebook.com/MeeeHQ/
Instagram www.instagram.com/meeehq
YouTube https://youtu.be/fISupZWZMQc 
TEDx https://www.youtube.com/watch?v=bR3Cyjs62c8

Is this the year for you to start a property business?

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The last year we have seen more changes to the planning rules In England than in the previous 10 years, as the government looks for a way to reach its target of creating 300,000 new homes a year and simultaneously stimulate the economy as part of the COVID recovery efforts.

The Government’s plan is that our high streets will be transformed into centres of independent commerce, with empty stores and other properties becoming homes or new independent businesses.  High streets have been culturally significant in the UK for the past 100 years or so, and most people would be sad to lose theirs so this is a plan that will be welcomed.  

With many larger retailers already having moved out of town and online, there is room for more specialist, independent shops and boutiques, as well as cafes and restaurants, to move back in. Why would they do this? A key driver for this transformation is a plan to increase the volume of housing in and around the high street, with the government introducing further Permitted Development Rights to allow even more non-residential buildings to be converted into new homes.

Increasing homes in town centres will increases demand for local shops and other amenities. With a wider, diverse range of independent retailers, restaurants etc., the high street will also become a leisure destination for visitors from further afield.

How can this be achieved and what might your role be if you decide to become an independent property developer?

Permitted Development Rights

Permitted Development Rights (PDRs) were introduced to try to improve the predictability of the planning approval process. These PDRs allow developers to change the use of a building without having to apply for full planning permission. Instead, they must notify the council using a process known as ‘prior notification/approval’, which gives local authorities fixed timescales to assess the application against a small number of set criteria, and make a decision. No decision within that timescale, means approval is given by default. This guarantees developers a clear timescale and greater certainty.

In September 2020, the government changed the classification of various types of non-residential buildings, putting them into a new ‘super-category’ called Class E. This means that developers won’t need prior approval or planning permission to change the use/class of any building in Class E to another use class within Class E (because effectively they are now all in the same use class already).

Also, the government recently announced plans to make it possible to change any building in Class E into residential use under Permitted Development. Following consultation, the new rules are expected to take effect later this year.

Making property development more accessible?

This latest proposed PDR will be fundamental to the government’s high street rejuvenation plans.  And could lead to an increase in independent property developers.

The property developer’s main role is to assemble a team, find a good opportunity, and oversee the project- a different scale but not dissimilar to home renovation. Landlords and other business owners already have the necessary skills, though they’ll need training in overseeing the property development process. It’s not without risk and  it’s certainly not easy. But as a means of creating significant returns, property development is arguably one of the most highly-leveraged business models.

The way that independent property development works

It is possible to get started in property development with a less upfront capital than becoming a landlord.

When applying for a mortgage, the lender will typically look at you first and then the building you intend to purchase to see if it will retain its value. If everything looks good, you get your mortgage.

With property development, specialist commercial lenders will assess the deal first and create what-if scenarios. What if the contractor goes bust? Or the market declines?  They’ll look at your team: contractor, planning consultant, architect etc. to see how robust and experienced they are. Finally, they’ll review your skills and experience.

Commercial lenders will typically lend up to 70% of property cost and 100% of development costs (assuming you have planning permission or permitted development rights), releasing the money for development in tranches over the course of the project.

To fund the additional 30% of the upfront property cost, you can use private lenders. Commercial lenders usually want to see your commitment, so may require you to put in at least 10% of the 30% deposit yourself.

Setting up your business and assessing property deals has expense – a website, back-office, accounting, professional fees for architect’s reports etc. However, with less than £10,000 you could acquire a £300,000 property that could return a potential six-figure profit once developed. With experience, you can scale up, taking on several projects at once.

New rules

When Permitted Development Rights were first published, there were no minimum unit size requirements placed on what was built, making it easier to repurpose larger commercial buildings. However, a few unscrupulous developers created cramped, substandard accommodation. As a result, the government introduced a requirement that all permitted development projects submitted from 6th April 2021 must meet National Space Standards i.e., a minimum standard in terms of size and light access.

Rejuvenating town centres needs the right mix of housing, shops, cafes and other commercial space. So, government and councils need to adopt a balanced approach to get an appropriate blend of development.

The Permitted Development Rights, expected to become effective from August 202, should help independent property developers to start building a new business or further expand an existing one.

ABOUT THE AUTHOR

Ritchie Clapson CEng MIStructE is co-founder of propertyCEO, a nationwide property development and training company that helps people create a successful property development business in their spare time. It makes use of students’ existing life skills while teaching them the property, business, and mindset knowledge they need to undertake small scale developments successfully, with the emphasis on utilising existing permitted development rights to minimize risk and maximize returns.

https://www.facebook.com/propertyceotraining/

https://www.instagram.com/propertyceotraining/

https://www.linkedin.com/company/propertyceo

How to get started with a new food or drinks brand

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With products such as drinks many people have ideas for new products which they think could be better than, or be a useful addition to what is already available on our supermarket shelves. However, starting a new company in Food & Drink is far from easy.

If you see a mass of products in a category such as Kombucha, then chances are you have missed the boat. What you need to have a POD (point of difference); something that others aren’t doing and is clearly a direction for the market. The trend now is ‘health, taste and low or no sugar’, especially since Covid-19 as everyone wants to get healthy and fight off potential viruses or illness.

So, here are some steps you should take before investing in your new product.

Start with Research

Many clients come to us with little idea of the competition in the category they want to enter. The more established a category is (e.g. energy drinks), the harder and more expensive it will be to make inroads.

Don’t just look at the UK, research the rest of the world. You can learn from other brands’ mistakes and get some great ideas from the flavours they have used.

Point of Difference

There has been A LOT of innovation in the drink’s category. However, too many products simple don’t stand out enough to make a real difference in the market.

To stand out you must have a point of difference; a unique, tasty blend of ingredients to ensure that your target audience will cross the road to buy your drink rather than accepting what’s immediately on offer. Creating a following will make your brand attractive to the big players to buy in the long term.

Funding

This isn’t a cheap industry to get into and one of the issues is the minimum runs for production. You can develop a production recipe (as opposed to one made in the kitchen), get a brand name and branding, and then attempt to raise the money in order to pay for a production run; but it’s virtually impossible to raise money just on a basic idea.

It’s essential to have a clear financial budget for your business – whether you are self-funding or going out to investors.  With many products you can start with what is known as an MVP (minimum viable product), but this doesn’t work in the drinks sector. The taste, the name, the branding, the distribution, the samples, the presentation pack for buyers – all this needs to be spot-on from day one.  And that requires money.

Recipe Development

Just because you have made your drink in the kitchen doesn’t mean that it can be exactly replicated in a mass-production situation.

This is a very specialised area, and the recipe needs to be perfect. So, you will definitely need expert help. Any contract manufacturer will expect an exact recipe. And, for the packaging, you will need all the nutritional information for labelling.

Often overlooked is the regulation on Novel Foods. This applies within the UK and the EU. If your ingredient falls under ‘Novel Foods’ you’ll probably need to pay for research to prove it is safe for human consumption. (See: https://ec.europa.eu/food/safety/novel_food_en)

Not all ingredients can be used in drinks and this is protected by Novel Foods, so you need to be sure that all your ingredients are allowed.

Packaging

This can make a huge difference to your cost outlay.

Glass is the cheapest option as you can do the smallest production run. However, neither wholesalers or retailers like glass, the former due to the weight, and the latter because it may break.

Second cheapest option is Hot Fill PET (plastic) which is small volume as the PET bottles can be filled with high temperatures. The negatives are that the bottles are ugly and with PET polluting the oceans, consumers are turning away from this packaging.

Next is Aseptic Fill where the PET bottles are blown on-the-line. However, you cannot do a small run with this method. With productions running at 25,000 per hour, you can imagine how many you’d need to make this option viable.

Fourth is cans. These are popular, but minimum runs are high. For example, minimum runs for printed cans are 150,000 and minimum filling runs are 75,000. There are options to fill blank cans from as low as 12,000 volume with sleeves added afterwards. More expensive but a better way to test the market.

Fifth, is Tetra Pak. Printed runs of the cardboard are around 100,000 and need to be used within a year.

Finally there is HPP (High-Pressure Processing).  This is great for juices as the temperature is only 4C so it preserves all the goodness, antioxidants and flavour. The runs are small, but the cost is 10-15p per bottle just to put them in the machine as they use pressure, not heat to pasteurise. The distribution must be chilled with only a one or two-month shelf.

Understanding the best type of packaging for your drink and your target market is important – it’s a large part of your initial outlay so you want to get it right.

Co-packers (Contract Manufacturers)

These people fill your drink in bulk and you need to be careful who you choose to work with. Do your research and make sure that the company you select has a good reputation and cares about start-ups. Also make sure they have the right certification as once you start to get listings, that question will be asked by retailers and wholesalers.   

This is a tough sector to enter so use the steps outlined here and give yourself the best chance of success with your new food or drink brand.

ABOUT THE AUTHOR

Richard Horwell is the owner of Brand Relations, a specialist food and drink marketing and branding company based in London. Over the last 10 years, Brand Relations has been behind the launch and development of over 80 brands in the UK. Richard has also built up and sold companies of his own in the Food and Beverage sector. He has over 30 years’ experience in marketing FMCG brands around the world, having lived and worked in the US, Australia and the Middle East.

www.brandrelations.co.uk

https://www.linkedin.com/company/brand-relations-ltd/

https://www.instagram.com/brandrelations/

https://www.facebook.com/brandrelationsltd

How to Choose an Incubator for your Business

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We are witnessing a marked proliferation of business accelerators and incubators, marked by the idea that programmes of this kind are the best way to embed entrepreneurial skills and mindsets, discover the brightest talents, and bring business propositions to life.

Broadly speaking, accelerators tend to last for a few months and will equip their participants with business skills and knowledge via mentorship, workshops and networking. Business incubators usually operate on a flexible time frame, ending when the business in question has a proposition to pitch to investors or potential customers.

Incubation programmes generally adopt a more flexible approach to their participants’ needs, reacting to and addressing them on a case-by-case basis.

There is plenty of choice  as you can see in Entrepreneur Handbook. This lists 153 accelerators and start-ups in the UK alone. (https://entrepreneurhandbook.co.uk/incubation-centres/)

Given the wide choice what do you need to take into consideration when looking for an incubator?

Identify the best fit

Some business incubators are sector agnostic, others are very sector-specific. Some require you to have a solid business idea and a plan, others want growth-stage businesses. With some you don’t even need an idea to begin with – they will give you a proposition to develop and hone. The first step is to look for an incubator that suits the current stage your business.

Look for one that works specifically in your sector. A tailored, sector-specific package of support and expertise will bring your idea forward in leaps and bounds. Working with experts who are well-versed in the emerging trends within a particular industry and networked with the big players in that space could provide a real fillip to your fledgling business.

If your business is less technical, or there aren’t any suitable incubators for your sector or niche, then a sector agnostic incubator can be a good choice as it will give you access to experts across a range of businesses areas. If choosing one of these incubators, the next few points become even more important when making your final decision.

The Cardiff Medicentre is a business incubator focussing on health,  wellbeing and the life sciences, while BioAccelerate at AberInnovation is designed to bring innovations in biotechnology, agri-tech and food and drink to life.

For a more generalist incubator, London-based Seedcloud support all ideas in the B2B space while the long-established YCombinator is sector agnostic and has two intakes per year.

University affiliations

As you might expect, universities are a hotbed of ideas and innovation. They bring together pre-eminent scholars, world-leading facilities and significant tranches of funding in an attempt to solve some of the world’s most pressing challenges and to create new knowledge and understanding for the benefit of society as a whole.

Done right, university-affiliated business incubators can greatly enhance this knowledge exchange mission and allow startups to capitalise on new findings and insights coming from the academic base emergent at universities. In other words, you want to be as close as possible to where research, development and innovation are thriving.

This is particularly important if your business is tech, sciences, health, or climate-related.  Where access to experts, research, or testing facilities is important, linking with a University can be a major benefit.

Facilities can be state-of-the-art

Innovation does not come cheap, and machinery and specialist kit costing millions are often required. Fortunately, for innovative companies, universities are often happy to collaborate and allow use of such equipment via specific R&D projects.

Some of the better business incubators will have easy access to the requisite equipment and will actively encourage their cohorts to make the most of the facilities to develop their propositions. Also, they can provide training, technicians, and academic expertise to help you make the most of the services available.

So, think about the technology you may need, or the testing facilities that will help take you from beta to launch. And then look for an incubator that offers access to these.

For example, AberInnovation has a newly-built pilot scale biorefinery connected to its Future Food Centre. Having both capabilities under one roof makes it unique in the UK and a perfect site for circular economy innovations. In a similar vein, incubation programmes offered by the European Marine Science Park in Scotland have all the equipment and facilities (not to mention the ocean environments!) needed for marine science companies.

Connect

Having developed and refined your idea, you are very likely to need to bring in others at some stage. A good incubator will be networked with key professional services that you can access over the course of the programme, such as intellectual property attorneys, human resources experts, finance support and so on. What’s more, you’ll want a programme that has strong links to the venture capital community.

Most incubators offer pitching opportunities, but be mindful of the make up of those panels. Are you going to be in front of the right people? Having worked on your idea tirelessly, you’re going to want your efforts to be rewarded with a chance to impress those groups or individuals possessing the wherewithal to help you make your next step.

Funding

It’s also worth drilling down into exactly what’s on offer at these pitching events. What are you pitching for? Some panels might boast the right organisations, but they may be there in more of a feedback-giving role. You’ll want to know whether there’s actual ‘money on the table’ at the end of the programme. Moreover, what are the stipulations attached to spending or drawing down this money? Some terms and conditions will be stringent and rather onerous, while some programmes are happy to take a more hands-off approach to how you spend it – within reason of course!

Location. Location, location

The age of dashing around the country to meet prospective collaborators, clients and stakeholders may be behind us. It’s fair to say that recent events have shown us what a credible job video-conferencing programmes can do in lieu of actual face-to-face meetings. With that said, it would be unwise to disregard location completely when it comes to choosing an incubator.

A good programme should be hands-on and for that there is no substitute for working with people in-person. By the time you get to the incubation stage, you’ll want to begin prototyping or iterating designs of your product/service as well. This will using the expertise, facilities and equipment on offer. That’s why it makes sense to find a incubator close to where you are based, if possible.

ABOUT THE AUTHOR

Ben Jones is from AberInnovation. Aberystwyth Innovation and Enterprise Campus (AberInnovation) provides world-leading facilities and expertise within the biotechnology, agri-tech, and food and drink sectors. Set in stunning scenery between the Cambrian Mountains and the Irish Sea, the £40.5m Campus offers an ideal environment for business and academic collaboration to flourish.https://aberinnovation.com/

https://www.facebook.com/AberInnovation

https://www.linkedin.com/company/aberystwyth-innovation-and-enterprise-campus-ltd

For more information about BioAccelerate: https://aberinnovation.com/en/our-community/bioaccelerate/

Setting up an Amazon Business account

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If you run any kind of small business, you are almost certain to have discovered that the purchase of your essential supplies and materials is both frustrating and time-consuming. It takes a lot of time and effort to track down suitable products at affordable prices and on payment terms you find acceptable.

Amazon Business aims to provide the solution to just that problem – freeing up your valuable time for far more pressing business needs and activities.

What is Amazon Business?

Just as the name suggests Amazon Business is the universal online trader specifically designed to supply businesses. It is rapidly changing how companies throughout the UK – and, indeed, the world – buy their supplies.

How does Amazon Business benefit my business?

If you have ever made any personal purchases on Amazon, you’ll know that the company aims to offer the widest possible selection, at good value for money, and ease of purchase.

Amazon Business strives to be that same kind of marketplace – but one that is designed for specific business to business transactions and features such as:

  • bulk purchase pricing;
  • invoiced payments (subject to the usual credit checks and expenditure limits);
  • VAT invoicing; and
  • management tools to monitor and control your expenditure.

The Amazon Business marketplace behaves rather like a reverse auction. Sellers compete for the purchase of widely-demanded “stock-keeping units” (SKUs, that define products by their unique characteristics – such as sizes, styles, colours, and so on). The process not only secures good value for money but also saves time and hassle.

Using Amazon Business

To run a successful business, you need your shopping experience for supplies and materials to be simple and fast, together with flexible payment options, and reliable delivery dates and times.

That’s what Amazon Business aims to give the business customer – in just the same way you might have experienced it with your personal shopping on Amazon.

Because it is purpose-designed as a business account, it also comes with the controls and management tools to keep your purchasing activities watertight. You can ensure that only authorised purchases are made on your account, for example. The package also provides detailed analysis and projections of your purchasing activity, through tools that can be effortlessly integrated with your in-house purchasing systems.

If you have ever scoured the internet for online suppliers, you are almost certain to have come across subscription-based retailers or so-called warehouse clubs.

Amazon Business is a free to use service

Amazon Business, by contrast, breaks new ground by letting you set up your account for free – no matter how many purchasers you choose to authorise for that account.

Who is eligible for an Amazon Business account?

Any business or business-associated organisation may apply to set up an account for their exclusively business activities*.

You will need to provide a valid email address.

To Amazon validate and check the accuracy of your application, the company reserves the right to use your business name, VAT number, address, business identification number, or any other information you have provided. Amazon may also ask for any additional information they consider necessary for validating your application – including enquiries to or through third parties.

* Amazon reserves the right to accept or to refuse your application for or use of an Amazon Business account.

Registration number: 4797388.
Telephone: 01843 831088
Email: enquiries@speedieconsulting.co.uk
Website: www.speedieconsulting.co.uk