News - Small Business Insider

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

Posted on February 21, 2021 Written by Administrator

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 6^th 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.

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How to get started with a new food or drinks brand

Posted on February 17, 2021 Written by Administrator

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.

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How to Choose an Incubator for your Business

Posted on February 8, 2021 Written by Administrator

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/

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