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Posts Tagged ‘funding’

What are your rights as a debtor to a loan organisation?

Friday, July 6th, 2012

In these current difficult economic times, many small business owners are not only seeking loans from their banks, but turning to independent loan organisations.  On such organisation, Wonga has recently been criticised by the Office of Fair Trading (OFT) for sending customers letters which falsely accused them of committing fraud.  The customers in question had either fallen behind on repayments and entered a debt management plan; or had contacted their bank requesting a previous payment to Wonga to be retracted.

Wonga was also alleged to have customarily told customers working in the public or financial sectors that by being in debt they were breaching their terms of employment.

The OFT has told Wonga it may face a fine of up to £50,000 every time it adopts aggressive or misleading practices with its customers.

Wonga argues that the alleged incidents were few and isolated, and that procedures are now in place to ensure similar problems to do not occur in future.

If you have any queries relating to your legal rights as a customer of a loan organisation, please contact Jo Tall at jo@offtoseemylawyer.com.

Can you afford to start up your own business?

Tuesday, May 15th, 2012

If you have any misgivings about whether you can afford to start up and run a business, Jo Tall will happily meet you for a preliminary consultation.  Off To See My Lawyer are proud to have successfully helped launch many small businesses – but equally we take pride in our honest and realistic advice.  If we consider that you will be taking too many risks (– financial or otherwise) we will let you know.

Here is a non-exhaustive checklist to help you assess whether you can afford to start a new business:

  1. Off To See My Lawyer provide an extremely cost effective service, but please consider whether you are able to afford legal advice.
  2. You may wish to pay for other professional advice, such as from an accountant, or a web designer, and/or advice from PR experts.
  3. You may require professional assistance in order to draft your initial business plan, and/or business plan software.
  4. Most banks incur a small fee in order to open a business account.
  5. As you would expect, there are fees incurred for incorporating a business into a company; for registering a trade mark; for registering yourself as a data controller; etc.  And you may need to purchase certain licenses and permits in order to run your particular business.
  6. You may wish to insure your business or assets.  Premium rates are variable.
  7. If you wish to rent or buy the premises from which you will run your business, you will need to consider these costs – as well as utilities bills.
  8. The costs involved in promoting your business will add up.  For example – stationery and printing; professional branding/advertising advice; etc.
  9. Machinery and equipment, and IT systems are pricey but necessary assets.
  10. It very much depends on the type of business you are running – but you may need to pay for materials from which to manufacture your products, or stock for wholesale.
  11. Of course, once your business is up and running, you cannot pocket every incoming penny, as there are various taxes to be paid!

While the intended outcome of employing staff is to increase your profits, employees add to your list of burdens and liabilities.  You will need to draft contracts of employment, deal with relevant taxation issues, invest in time (and perhaps money) in training your staff, etc.

Are you likely to want to borrow money in the future?

Tuesday, May 8th, 2012

It is advisable to maintain a good credit report (– ie. a record of your borrowings and repayments to date), because you may wish to make an application for a loan in the future.  Lenders will only agree to lend you money if they are satisfied you are in control of your finances, and are likely to make repayments on time.

Here are tips on how to maintain a good credit report:

  • Obviously you need to always pay your bills and make repayments on cards, loans and mortgages on time.
  • Make sure that every entry is correct.  Lenders have been known to reject an application for a loan due to clerical errors in credit reports.

If you have any concerns about repaying existing lenders, ask them whether you can negotiate a schedule for repayment, or arrange a temporary payment holiday.

Mayoral Election Campaign Lowdown for Small Businesses…

Tuesday, May 1st, 2012

Who should London entrepreneurs vote for?

Is it possible that the Mayor of London could help the cause of small businesses and entrepreneurs?  Some of the mayoral candidates hoping to be elected on 3rd May seem to think so, based upon the pledges they make in their manifestos.  So, how do their various manifesto promises compare?

Boris Johnson (of the Conservative Party) lists “Growing the London Economy” as one of his pledges.  He insists that London has already succeeded in its relative resilience against the economic downturn.  He suggests that his priority is to boost the economic well-being of the city – by stating his intent to continue his current endeavours to direct funds and tax money according to Londoners’ wishes; to secure record funding from No. 10; and not to waste money on bureaucracy at City Hall.  Johnson appears to suggest that his aim is to boost the general economic well-being of the city rather than directly helping businesses within it.

Ken Livingstone (of the Labour Party) makes no direct promises in relation to the economy, nor to assisting small businesses.  Rather, his emphasis is on increasing funds for education, in order to increase young people’s prospects of employment.  He pledges a commitment to “restoring a London-wide Educational Maintenance Allowance of up to £30 per week in term by bringing together existing funds in colleges, universities, and local authorities.”

Brian Paddick (of the London Liberal Democrats) states, “We will establish a London Small Business Fund. We will work with socially responsible banks, so all viable small enterprises get the finance they need with mentoring support and advice too.”  This promise comes under the heading of his ambitiously entitled “Jobs and Opportunities for All” pledge, which is mainly focused on improving employment prospects for youths.  He promises a “London Youth Contract” to assist Londoners up to the age of 25 to attain work experience leading to a job; a new “Adult Skills” initiative; a fund to facilitate youth opportunities in needy areas gained via a voluntary £1 a night luxury hotel bedroom levy; the creation of “Youth Hubs” to provide advice, support and socialising opportunities for young people; and an enhanced careers advice service in schools.

Jenny Jones (of the Green Party) is the only candidate who explicitly pledges to help the plight of small businesses as “an absolute priority for City Hall”, as set out in her 10-point “Small Business Manifesto”.  She pledges to:

  1. Support a renaissance of micro, small and medium-sized businesses
  2. Use the Greater London Authority budget to support small businesses
  3. Protect and re-develop the traditional “high street”
  4. Prevent chain stores taking over independent shops
  5. Encourage Londoners to “buy local”
  6. Ensure public sector contracts go to small businesses
  7. Maintain the CompeteFor system
  8. Ensure small and local businesses aren’t disadvantaged by congestion and parking
  9. Only work with banks that lend to small business
  10. Increase small business representation in the community

Carlos Cortiglia (of the British National Party) does not appear to have a website stating his manifesto for London Mayor.  A Uraguayan national who has been living in the UK since 1989, he says he is “astonished” by the “hostility shown by many of the migrants towards the British and their way of life”, and emphasises, “I want to help preserve the freedoms, values and traditions that help make this a great country to live in.”  He appears to make no promises in relation to boosting London’s economy or helping small businesses.

Lawrence James Webb (of Fresh Choice of London) is affiliated with the UK Independence Party.  Of his various manifesto pledges, those of relevance to small businesses include:  cutting rates for “local businesses employing local people”; “saying ‘No’ to open-door immigration” in order to “create more jobs for Londoners”; and fighting any “EU red tape strangling London businesses”.

Siobhan Benita talks at length of her intentions to “create jobs and boost economic growth” in her Manifesto.  With regards London’s budget she promises to establish an “Independent Office for Budget Responsibility”.  For jobseekers she proposes free travel, and reduced fares for low earners.  For youths she pledges her commitment to working “with councils and businesses to ensure apprenticeships effectively deliver real employment and career prospects”, and working “with businesses, schools and colleges to improve pre-apprenticeship training”.  Of greater interest to Off To See My Lawyer clients, she states that she “will work with landlords to make better use of empty commercial property, including temporary use for community projects and for entrepreneurs to trial their ideas, negotiating Business Rate discounts and exemptions for innovative new businesses… My initial priorities will be the support of the creative industries and the life sciences sector.”

Crowdfunding – a viable alternative for raising capital?

Tuesday, April 24th, 2012

Aiming to bring businesses and backers together, US crowdfunding site Kickstarter specialises in film, art and design.  It allows for people to pitch ideas for which they need financial backing, and for potential backers to come forward with offers.  A deadline is set by which a certain funding target must be met.  If it is not met, backers’ pledges are returned and no money transactions take place.  And if the funding target is met, the party who has pitched its project retains complete creative control, but Kickstarter retains 5% of the total funds raised.  The backers are given a role in the development of the product; the right to give feedback on its progress; and a copy of the finished product.

Justin Kazmark (Communications Director at Kickstarter) explains, “There’s always a value exchange between creators and the backers that pledge financial support to a project.  In exchange for pledging, backers receive creative rewards, one of a kind experiences and behind-the-scenes access to the creative process as the project comes to life.

Kickstarter was founded on the idea that there is value in the world beyond things that can make money. Ideas should be able to exist because people feel an affinity toward them, not because of the promise of profit.”

San Francisco-based developer Double Fine Productions has successfully raised a phenomenal amount of money by pitching the idea for their game “Double Fine Adventure” on Kickstarter.  It took a mere eight hours for the required £250,000 to be raised by thousands of on-line backers; but people continued to contribute funds for several weeks.  The final amount raised reached £2 million ($3.3 million), and the number of backers exceeded 87,000.  The game will now be developed for the next six to eight months and will be available on PC, Mac, Linux, iOS and android.

Greg Rice (Producer of “Double Fine Adventure”) enthuses, “Kickstarter allowed us direct communication with our fans and ultimately means we’ll be able to make the game we want and also directly benefit from it financially.”  He states that crowdfunding websites like Kickstarter are “getting more and more important…  It’s truly amazing that people with a great idea now have a way to fund making those ideas come true and are able to do that by speaking directly to their customers.”

New legislation in the USA,  the “Jumpstart Our Business Startups Act” will allow backers to own equity in the companies they invest in and let those businesses raise up to $1million (£600,000) through crowdfunding websites such as Kickstarter.

In Britain, one crowdfunding website is already offering equity to investors without the need for any change in the law.  Exeter-based Crowdcube launched last year and has already funded 15 projects, raising £2.8million.

Crowdcube vets in-coming business plans, and presents the approved ones on its website in a video clip, awaiting offers from potential backers.  Crowdcube functions in a similar way to Kickstarter, in that it takes a 5% fee on pitches that reach their target.

Luke Lang (Co-founder of Crowdcube) boasts, “We’ve completely democratised the whole investment industry…  We’re trying to make investing in business easy and inclusive rather than it being the exclusive preserve of the elite who have got lots of money or lots of experience…  We’ve broken down those barriers and enabled ordinary people with modest amounts of money to get behind small businesses.”

Crowdcube’s greatest success story is the £1 million which was raised for the Rushmore Group to build a new private members’ club in London.

There are other crowdfunding sites such as London-based PleaseFund.Us, which has raised around £100,000 for projects since it launched last September.