New Enterprise Allowance scheme - My story

dktreesea

Stevenb wrote: »

A very sensible outlook to be fair, no point rushing and risking what sounds like a very good business model.

My own margins are averaging 400% and this allows some variations in costs and means any sales have a healthy profit regardless of changes.

I agree with your punt on the loan, people forget it needs paying back and that money has to come from somewhere , an extra £200 a month may only work out as the extra sales offered by the stock purchased via the loan equalling more work, more chances of issues and of course more tax to pay with little personal reward at the end.

Its good to see such a positive result in what sounded like a useless NEA experience. :beer:

We've borrowed tens of thousands of pounds over the years for the business. I try to stay under £30k. No particular reason for the amount, just one I am comfortable with. Yes, of course it needs paying back. But my only criteria for borrowing money is if I am going to make a better than three times the bank interest rate, usually between 6-10% per annum, on the money and how quickly is the money going to come back.

When we started out we would have loans that had a repayment period of 8 to 10 years. Nowadays anything we borrow is for a maximum of 12 months and if we still want to utilise the funds after the 12 month loan period is up we just take out a new loan.

Yes, more funds means more stock purchased, so more work to get it out, but if less than 10% of the profits on that stock are needed to cover the loan interest, then that's all the more profit to me once it does all turn over.

Andy2013

With respect I don't think any of us coming of NEA will be borrowing quite that much for some years to come but I get your point.

Stevenb

We've borrowed tens of thousands of pounds over the years for the business. I try to stay under £30k

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Most of us who come of NEA are worried about coping without the £33 a week for Christ sake , this statement is total nonsense , most couldn't borrow 30 quid let alone 30k

dktreesea

Andy2013 wrote: »

With respect I don't think any of us coming of NEA will be borrowing quite that much for some years to come but I get your point.

Growing a business organically rather than resorting to borrowing is a pretty good decision. I suppose I was just in a hurry to get a reasonable income out of it and the funding was there - it was pre recession - so I thought "why not?"

What is possibly a very good outcome from the recession is business people are nowadays far less likely to resort to the banks for funding, preferring instead to grow more slowly, or to make sacrifices for their business by lowering their own standard of living temporarily until the business is on a firmer footing.

dktreesea

tomterm8 wrote: »

As far as I know you are not entitled to Mortgage Interest Support, free prescriptions, free dental care and etc on NEA. You are entitled to working tax credit if you fulfill the other requirements.

You could ask your advisor to do several better off calculations.

As I understand it you will most likely have a shortfall, though, and be worse off in your situation unless your business makes enough profit.

You may be entitled to free prescriptions and dental care in England via the NHS' Earnings Specific Low Income Scheme, i.e. you get an NHS exemption card.

These are the relevant sections:

Q. I am self-employed. How do I make a claim?


A. You will need to send your profit and loss accounts for a period representing at least six months. The period they cover must end within 12 months of the date of your claim (or, if you are claiming a refund, within 12 months of the date the charge(s) were paid). If you cannot send profit and loss accounts, you can send a trading account showing your business receipts and expenses for the period ending within 12 months before the date of claim.

If the business has been trading for less than a year, or the trading pattern has recently changed, the assessment period will be adjusted to reflect this.

Q. I am in receipt of a Tax Credit. Do I automatically qualify for help with health costs?


A. If you are entitled to help via Tax Credits, the NHS Business Services Authority on behalf of the Health Departments in the UK will automatically send you a NHS Tax Credit Exemption Certificate. If this is not the case, you should apply under the Low Income Scheme using form HC1. If you are not sure whether you are entitled automatically, contact the HM Revenue and Customs on 0345 300 3900.

Links:

http://www.nhs.uk/NHSEngland/Healthcosts/Pages/nhs-low-income-scheme.aspx

Then click on the Low Income Scheme FAQs link and choose "Earnings Specific Low Income Scheme FAQs"

http://www.nhsbsa.nhs.uk/1876.aspx

TrueBlue1965

You generally have to invest money and a lot of time to grow your business. Starting any business is a risk game. The best business people take calculated risks and invest to grow. Without taking a risk or three. Your reducing the chance to reach your potential.

Anybody on NEA can get a loan of £2,500 if your business plan and cash flow is up to standard. Start-up loans are offering upto a £50,000 loan for those with new businesses. Average Start-up loan this year is £6,500. Everything is based on your business plan and cash flow and the businesses potential for growth.

Steveb, you have attended trade shows, etc. but the money never seems to come back in a large enough fashion to warrant the massive repayments that a loan brings and it will hang over you for years.

Trade shows are the place to get your products or services seen and sold and to get other leads which can make your business take off big time. If they have not worked for you. Then, its time to look at what your offering or the way your offering your products or service. If you are getting lots of leads and good feedback at these shows. It sounds like there is a problem with how your following up your leads and closing those deals. Trade shows are one of the best ways to be seen and knoticed and to break in to difficult to reach markets suchas in my case, the garden centre industry. Companies dont spend thousands of pounds to attend trade shows for the fun of it or because they like showing off. They are there to sell and gain next years orders. Its the place where the buyers and sellers big and small, new ad old meet up and do their business. Its where massive orders are placed. Trade shows are where many companies gain a full years orders in just a few days. It depends on what your offering but for thousands of businesses. Trade shows work and are a very good and safe invesment that pays off!

I have plans in place to attend a few trade shows soon. Its the main way to get products such as mine in to garden centres. I was getting a little worried about my products popularity over the past month with the lack of sales on E-bay. This week everything has picked up and im now getting good sales again. Clearly, its been an E-bay issue with the site being hacked, ppl having to change pass-words and E-bay offering 20 free listings to sellers which had flooded the market in my sector. Good sales on E-bay suggests that I can take the very big step of investing in showing my products at a few trade shows. Its a risk worth taking to take the next step forward but the feedback re good E-bay sales again is very positive. Good E-bay sales is all I need as proof that my business is viable and has the potential for growth. Viability and the potenial for growth is the key to gainng a higher loan. Payments of £100 p/m will not kill my business but it could allow my business to take off big time!

Stevenb

Trade shows are the place to get your products or services seen and sold and to get other leads which can make your business take off big time. If they have not worked for you. Then, its time to look at what your offering or the way your offering your products or service. If you are getting lots of leads and good feedback at these shows. It sounds like there is a problem with how your following up your leads and closing those deals. Trade shows are one of the best ways to be seen and knoticed and to break in to difficult to reach markets suchas in my case, the garden centre industry. Companies dont spend thousands of pounds to attend trade shows for the fun of it or because they like showing off. They are there to sell and gain next years orders. Its the place where the buyers and sellers big and small, new ad old meet up and do their business. Its where massive orders are placed. Trade shows are where many companies gain a full years orders in just a few days. It depends on what your offering but for thousands of businesses. Trade shows work and are a very good and safe invesment that pays off!

For the vast majority of my network of business associates trade shows have not worked and don't work for small business as much as social networking can do, and that is free.

Trade shows cost a lot of money and unless your stand and product is quality then you get passed by, its just my opinion but you will find out yourself if you try, im just warning you because you sound in earlier posts like your prepared to spend big and that is a mistake because eta the moment your seeing things very rose tinted but it would be a shame to waste good money on a dated format like a trade show.

Social media is the modern trade show, it works for many more and is free and easy to access so give that a try aswell.

Facebook . twitter etc are brilliant , my business is internet based and I made over 25 k profit in my first year of NEA utilising social media.

dktreesea

I agree trade shows can be expensive, but they do suit some industries. I'd never sell things for computers at a computer fair, even though they do exist, because that's not how the vast majority of people buying things to go into a computer do their shopping. Their main shopping centre is online, because they want to compare specifications and performance, not to mention prices, because the items usually aren't unique and are offered by a number of resellers, so it pays to shop around.

That's not what happens in the gardening world and all industries related to it. In that industry potential buyers want to see the product set up, in the flesh so to speak, preferably in a setting that looks similar to how it would look in real life. And, if it's good quality, and unique, "Made in Britain" rules. Gardening shows are big business.

mattcanary

dktreesea wrote: »

HMRC don't ask for proof? For sure they do eventually. Make sure you all keep very good business records. Their auditors do get around to most people over time. Sometimes it is just a phone interview. Sometimes, especially if you have significatn tax records, they come out to your home or other place of work if you have one, and go through everything.

They are not so much interested in the hours you work though. They are more into establishing that you are running a genuine business, with full expectations of making a profit. They have definitely been clamping dwon on zombie businesses lately.

And yaay for Bernard Jordan, all of 89 years young, popping across the Channel for a bit of D-Day celebrating. More power him.

I believe HMRC ask for proof at random from a small percentage of total claims made.

mattcanary

Stevenb wrote: »

I'm not trying to change policies I am simply pointing out that a certain portion of people will work the system to there advantage ensuring they do the very minimum needed, and for those of us working hard and paying tax on our hard earned profits we have to pay for those peoples benefits , they don't come from nowhere and its not theory its total reality .

If you want to play the benefits game you can be self employed and earn £300 a month you wont pay tax , but will get full HB and CTB paid , the £300 is in your pocket.

To cover that rent and council tax would mean possibly £700-800 a month increase , just to pay the money straight back to someone else

The system is not fair for those whom are genuinely trying to make it work , it favours those who cant be assed and ultimately the economy wont be a better place for those people being self employed because they are giving nothing back to the state, just taking money out of it.

I feel very strongly about this because it goes against everything I was brought up to be, and for those who wish to argue the point its clear where your morals lie.

If you earn £300 per month from self-employment, you wouldn't get full Housing Benefit and Council Tax Benefit.
You may well get part of it paid, but it wouldn't all be paid.