How Do I Fund My New Business Venture in the UK?

21/04/2018

A new business venture has been born. You have your killer idea, you have done your research and are putting the finishing touches to your business plan, but what’s next? Every successful venture needs some financial backing to get it off the ground. How do you go about securing that much needed business funding and how do you know which is the best option for you?

There are various ways you can go about this and you may need to combine multiple approaches to enable you to launch. From business bank loans and startup grants to angel investors, here are some realistic ideas for consideration that can enable you to get you off the ground.

Self-Funding

Raiding the piggy bank might not produce the capital you require but having a look at your own personal funds is a good place to start. It’s also a good way to test whether you truly believe that your new venture has prospects. Conduct a full personal financial review to assess your position. You may have funds that you have set aside intended for other purposes but that you can re-consider as investment in the business. Do you have any shares that you could cash in for example, or can you get a better deal on your mortgage to free up some capital?

Self-funding is more beneficial than you may realise as it allows you to have full control over your business and mould it the way you want to. It also demonstrates that you have complete faith in your venture which will in turn attract any future investors. If you are willing to invest your own assets then they are more likely to invest in you.

Family and Friends

Raising capital from within your immediate network might be a sensible option. Those who know you well are more likely to trust your business vision and are also have confidence in you that you will deliver on expectations. With interest rates so low in the UK this option is mutually beneficial. You can repay the loan with an interest rate that is higher than they would receive from that cash sitting in the bank. This rate will still be lower than you would have to pay the bank borrowing the money directly from them.

In addition, you can agree other terms and conditions that are specific to your requirements. For example how much the loan will be, when it needs to be repaid and the repayment terms such as frequency of payments. It is advisable to formalise any loan agreements with a written contract. Having the agreement in writing will formalise the details and allow for clarity on both sides.

A Promissory Note is a simple contract that records the terms of a small loan in place of a complex loan agreement. It should include the amount of money to be loaned, any interest rates that are to be applied, repayment terms and the date when full repayment of the loan is to be made

Small Business or Startup Bank Loan

A bank loan obviously comes with the added cost of an interest rate. These vary considerably and can be very high so you will need to do some research. The advantage is that it allows you to keep ownership of your business without having to give any shares away to investors.

The biggest banks in the UK all have specialised services for small businesses. The process for applying for a loan can be long and tedious and you are likely to have to offer up personal assets as security. It is vital to ensure that you don’t borrow too much capital in proportion to your equity. Ensure you have a realistic and convincing business plan drawn up before you embark on securing a loan.

Startup Grant

The UK Government has pledged to help SMEs through the stages of start-up and growth and now there is a range of funding for small businesses to take advantage of. Use the government’s Business Finance Support Finder which allows you to search for funding opportunities based on the location, size and type of business you run.

One option is to apply for a government backed Startup grant. This is a loan of between £500 and £25,000 specifically intended to start or grow your business. Unlike a business loan, this is an unsecured personal loan. In addition you will get free support and guidance to help write your business plan, and successful applicants also get up to 12 months of free mentoring.

Angel Investors

An individual angel investor is usually themselves an entrepreneur who is looking to invest their spare assets into a startup. The advantage of bringing an angel investor on board is that they will not only contribute substantial funds to your business, but also be able to share their experience and access to resources that will guide you towards growth.

You can rely on an angel investor to act as your business coach as they obviously have a vested interest in the success of your venture. You can sense check new ideas and business developments. An angel investor will also usually be able to open doors for you via their large business network.

The downside is that you will have to surrender a significant percentage of control as your investor will require a share of the business in return for their investment. You may also be under significant pressure to deliver your business projections to ensure your angel receives the value they expect.

Related reading: Angel investors vs venture capitalists

When you do get the backing of an investor you will need ensure the correct and relevant legal documentation is in place in order to protect all parties involved.

You may want to issue a convertible note to your investor. This is a form of short-term debt that converts into equity. So the investor would be loaning money to your startup and instead of a return in the form of interest, the investor would receive equity in the company. A Convertible Note Certificate is a certificate that evidences the investor’s title to the convertible note. It is issued after due payment of investment amount by an investor.

A Simple Agreement for Future Equity (SAFE) is a contract by which an investor makes a cash investment into a company in return for the rights to subscribe for new shares in the future. Contrary to a convertible note, a SAFE does not carry interest, does not expire, and does not specify a minimum amount of investment that the investor will make.

A Seed Investment Agreement (Ordinary Shares) is a contract by which funds are raised by issuing new ordinary shares to new investors. Raising funds by a Seed Investment Agreement is simple and direct. The new investors have the same class of shares as the founders and therefore have equal rights.

Incubator

As the name suggests, an incubator is a company that protects and nurtures a fledgling business enabling it to develop and grow. An incubator can offer training, guidance, networks, capital and coworking spaces. Utilising an incubator will also give you credibility with respect to any future investors.

Final Thoughts

There are some alternatives to traditional ways of raising investment that are gaining in popularity. Funding Circle for example is a peer-to-peer lending marketplace that allows investors to lend money directly to small and medium-sized businesses.

Related reading: When should your startup consider crowdfunding?

Lastly, have you considered Crowdfunding? Essentially this involves encouraging people to club together to fund a new project or venture. You will need to raise many small amounts of cash from a large number of people typically via the Internet. Propose your business venture to the masses and if it’s popular enough you can raise the necessary capital to get it off the ground. You will need to offer some sort of incentive though to attract investors and remember, it’s not the done thing to attempt to crowdfund for a vacation or a new sports car!

Zegal can assist you with the necessary documentation when raising finance for a business venture:

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Think You Are Productive At Work? Think Again.

16/04/2018

After spending the first half of the morning reading and clearing emails, followed by working on a project for the entire afternoon before heading home, it might seem that your work day was relatively productive. After all, you managed to get some progress on that important project that your team has won right?

Well, that might not be the case as compared to the rest of the world!

A recent study conducted by enterprise software firm Unit4, has found that office workers in Singapore are the least productive among the 11 countries surveyed. The firm surveyed approximately 1,500 office workers in the service sector from these countries: United States, Canada, United Kingdom, Australia, Singapore, Spain, France, Netherlands, Germany, Norway and Sweden. While the study found that Singapore workers spend a significant amount of time (60%) on their main work duties, this is still lower as compared to the poll average of 72%. Essentially, an approximate 380 hours a year are spent on completing administrative or repetitive tasks. Converting this to work days, this figure is equivalent to 47.5 work days or two months of the entire working year.

Comparing across the different age group, respondents aged 41 and above estimate that they spend significantly more time on their primary duties as opposed to those aged 26 to 30.

Moreover, the survey results came out amidst studies that show labour productivity in Singapore is decreasing as a result of challenges from structural transformation and ageing demographics.

While this result might not have a significant impact on office workers, this loss of productivity can have a detrimental impact on the Singapore service industry. In fact, the study revealed that this drop in productivity is costing the Singapore service industry more than SGD36.5 billion a year! Given the fact that the Singapore economy has been placing more emphasis on the services sector over the past few decades, this will certainly hit the services sector hard.

The study also identified the amount of time in which Singapore office workers spend on specific daily administrative tasks that prevent them from focusing on their primary work. 30% of respondents cited manually collating and entering data as one of the main reasons and 26% citied tracking their project status as one of the administrative tasks that affected their primary work. Other reasons citied included handling invoices as well as submitting expenses and planning travels.

However, Unit4 mentioned that technological advancements such as digitalisation or software applications can help employees manage administrative repetitive tasks. This will then free up more time for office workers to spend their time on more value-added services. Moreover, more than a quarter of the workers in Singapore surveyed agree that deploying technology that aids administration is important for their company to remain competitive in the long run.

The future of work is no doubt one that is heavily supported by state-of-the-art technology, allowing employees to deliver more value to their customers as opposed to their direct competitors. This, in turn, will definitely boost the workforce productivity in Singapore, beyond just the services sector.

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This a guest post by RenQun Huang of Gpayroll. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Zegal here.

About Gpayroll

Gpayroll is an easy to use, self-run online payroll service that will redefine and revolutionize the payroll industry. Its intuitive and automated system will help business owners focus on their core business without the hassle of managing payroll.

4 Takeaways From The Singapore Budget 2018 For HR Directors

09/04/2018

The Singapore Budget 2018 was delivered in Parliament by Minister for Finance, Heng Swee Keat on 19 February 2018. In his speech, he addressed the major shifts that our Singapore society is facing today, namely, the economic shift of Singapore in Asia, the emergence of new technologies and the aging population in Singapore.

Minister Heng also highlighted the goals the Budget 2018 aims to achieve, which involves developing a vibrant and innovative economy in Singapore as well as building up a smarter and greener Singapore society. At the same time, the Budget 2018 also strives to foster a more caring and cohesive society, as well as planning ahead for a fiscally sustainable and secure future for Singapore.

With numerous plans being laid out to address the current and future needs of Singapore, here are 4 highlights of the Budget 2018 that are most relevant to manpower and HR challenges.

1. Increased support for businesses and workers

The Wage Credit Scheme (WCS) has been extended for an additional three years and will continue to provide co-funding of wage increases for Singaporean employees. The WCS will co-fund 20% of wage increases for 2018, 15% for 2019 and 10% for 2020. This extension will cost approximately SGD1.8 billion over the next three years.

There have been previous announcements on the intention to increase Foreign Worker Levy rates. However, for the sectors that still face weakness, particularly the Marine Shipyard and Process sectors, the increase in Foreign Worker Levy rates will be deferred for another year.

There will be efforts to strengthen employment support for lower to middle income workers through the Career Trial scheme, an upgrade from the existing Work Trial Scheme, which will provide higher funding to support workers to try out new careers.

2. Encouraging innovation and building the capabilities of the workforce

The Budget aims to support businesses to purchase and make use of new solutions by offering a single Productivity Solutions Grant (PSG).

In order to help business partner with relevant companies to build innovate and build new solutions, the Government will pilot the Open Innovation Platform, a virtual crowd-sourcing platform, in 2018.

In a bid to ensure that employees in Singapore keep up with ever-evolving digital skills, there will be an expansion of the Tech Skills Accelerator (TeSA) into new sectors such as manufacturing and professionals services, whereby digital technologies are increasingly important.

3. Supporting adoption of digital technology in firms

To drive further adoption of digital technologies, automation and robotics, programmes such as the Aviation Transformation Programme (ATP), Maritime Transformation Programme (MTP) and National Robotics Programme (NRP) will be launched in Singapore.

4. Forge stronger local and cross-border partnership

The eventual goals is to anchor Singapore as a Global-Asia node of technology, innovation and enterprise. As such, the Global Innovation Alliance (GIA) was launched in 2018 for Singaporeans to gain valuable experience and networking outside the local borders.

Similarly, there will be more initiatives such as the Singapore Week of Innovation and Technology (SWITCH) as well as development of an ASEAN Innovation Network which will hopefully foster closer relations with Singapore’s neighbouring countries. At the same time, build a business partnership with overseas companies.

You may read more about the Singapore Budget 2018 here.

Start managing your legal needs with Zegal today

This a guest post by RenQun Huang of Gpayroll. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Zegal here.

About Gpayroll

Gpayroll is an easy to use, self-run online payroll service that will redefine and revolutionize the payroll industry. Its intuitive and automated system will help business owners focus on their core business without the hassle of managing payroll.

Why Dedicated Servers are Ideal for Data-Intensive Workloads

A dedicated server is one of the most powerful IT infrastructure solutions available today. Convenient for data-hungry and compliance workloads, dedicated servers are highly in demand among both enterprises and smaller businesses.

If your company is working with big data, analytics, or other forms of intensive workloads, public cloud and virtualized environments may not meet your performance expectations. A dedicated server, on the other hand, offers a major benefit in that respect. It has multiple advantages over cloud environments, and the most significant ones are outlined below.

1. You do not share bandwidth or storage resources

 The number one reason to invest in a dedicated server is the separation of resources. By definition, dedicated servers are single-tenant environments. That means that you do not share any of the memory, bandwidth or other resources of that physical server with any other data stream on the planet.

The phenomenon that many virtual server clients experience, the “noisy neighbor effect,” cannot occur on a dedicated server. This noisy neighbor refers to the fact that even though each client on a virtual server experiences a singular user interface, the physical resources on the shared server can still be taken up by another client. This will lead to lag and other harmful effects that do not occur on a dedicated server.

Having physical separation has many advantages. Many companies prefer a dedicated server to a hypervisor. However, dedicated environments may work better for certain organizations. Although there are different types of virtual environments convenient for multiple business purposes, in some respects they can never be as dedicated servers. The purpose of a virtual server is to put up virtual walls between these clients on the same server. A dedicated or bare metal server has the true physical singularity according to this article comparing bare metal servers to virtualization.

2. Dedicated resources can scale more quickly to accommodate changes in web traffic

Because the physical resources on a dedicated server (bandwidth, memory, etc.) are only used by one client, those resources can be changed more quickly than if they were on a shared or virtual server. This is great news for a company that is looking for a hosting solution that has to grow and shrink with business.

If a client was on a shared server or virtual server, the resources that are shared could not easily scale if they are being used by the other clients. However, this also works the other way around. If a client needs fewer resources, this may not be able to be accommodated, either.

Virtual servers rely on the use of all resources to take advantage of the server. The plans that come from this server usually require a client to specify a certain amount of resources that he will use over the next reporting period. If business dips, the client will still be responsible for paying the amount of money for the unused resources that are in the chosen service plan. This is one of the weaknesses of cloud computing in the virtual world – the inability to scale up or down in real time.

3. Dedicated servers perform excellently during peak times

Data-intensive workloads in the digital space work about the same as workloads in the real world. If you put too much work in one place, such as on a shelf, that shelf will bend and possibly break under pressure. You may think that computers do not bend or creak under pressure, but they do. If you have a data-intensive workload, then you need a server that is capable of handling that workload without a problem.

The dedicated server can bend more without breaking under a data-intensive solution. There is more room for data spikes as well, which can occur during the sudden success of a marketing program or a viral video. The virtual environment may not have the extra resources to handle such a request. There may also be limitations built into a resource grab based on the program that is purchased month by month by the client.

4. Security of a single-tenant environment is much better than in shared environments

There is a major need for security if you are dealing with sensitive workloads. The dedicated server environment gives its clients security that can be counted on regardless of the fluctuating need for resources at any given time. This is simply not something that the virtual server environment is always prepared to do.

The virtual server environment also suffers from bad neighbor syndrome when it comes to security. If another data stream is interrupted or hijacked by hackers, it is possible that the problems could move over into the stream of other clients on the same physical server. Although a virus or a ransomware hijack may not show itself in a neighboring stream, the resources that are coerced into the hijacked stream are now resources that the rest of the clients cannot use.

On top of this, if a security breach causes one of the clients on a shared server to lag, that lag can translate into slower load times or data distribution times for the rest of the clients on the server. This is impossible on a dedicated server because of the single-client definition.

There are many other security concerns that are alleviated by keeping the data stream of a client physically separate from any other client that is online.

The final aspect is physical security. It is much easier to physically protect a colocated server or a dedicated server with a definitive location than it is to protect a virtual server with data that may be on separate nodes.

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This a guest post by Jessica Anderson of phoenixNAP. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Zegal here. 

About phoenixNAP

Founded in 2009, Arizona-based phoenixNAP®, a global IT services provider offering cloud, dedicated server, colocation and Infrastructure-as-a-Service (IaaS) technology solutions, has always maintained a mission of providing outstanding value and service to customers using state-of-the-art technology.

Hiring Employees in the UK? Contracts, Policies and Procedures to Consider

If your small business is expanding and you are thinking of taking on employees then what do you need to consider? Getting the right candidate for the job is firstly essential and that will depend upon implementing an effective recruitment process.

If you have selected the right candidate then where do you go from there and how do you create a valuable company culture that ensures retention of staff? What workplace policies or procedures do you need to think about implementing to ensure a positive working environment and maximise productivity?

Offer of Employment

Once you have selected your potential employee then the first step is to send an Offer of Employment Letter. This is a formal letter stating a conditional offer of employment to the candidate. Whilst this letter does not have to contain the full details of the employment terms, it should at least summarise them. It is important to include in this letter a deadline by which the candidate should accept or decline the position.

The letter must include details of the job such as salary, benefits and number of days of annual leave. It should also state if there is a probation period and notice required for termination of employment. A potential employee must accept the offer under the Offer of Employment Letter by the specified deadline. After acceptance, the employer and the employee will enter into a formal Employment Contract.

Related reading: 5 Top Tips for Onboarding New Hires

Employment Contract

An Employment Contract sets out specific details on various aspects of employment and clearly states the rights and duties of both employer and employee. It is essential to have this formality in place, indeed every UK employee has a statutory right to a written agreement of employment. It is also recommended to have this contract in place to help avoid any disputes in the future.

The contract should include specific details of the job and the duration of any probation period if there is one. Remuneration package, holiday entitlement and notice required for termination are also necessary inclusions.

It is important to include certain statutory provisions in the terms of employment or you can risk a fine. Statutory rights of employees include receiving an itemised payslip, being paid the national minimum wage, entitlement to 28 days paid holiday (including bank holidays) and in some cases, maternity pay. Statutory sick pay and also enrolment into a workplace pension scheme are also necessary provisions.

Employment Law

Expanding a business and taking on employees is a very exciting time. It does however require your company to adhere to all the necessary laws and regulations when hiring employees. Employment law includes a number of different laws and acts in relation to the rights of employees.

As well as outlining statutory rights of employees, employment law identifies various other issues. These include ensuring health and safety compliance, discrimination rights, senior rights, regulations against bullying and requirements for maternity/paternity or adoption leave.

Further reading on this important topic can be found in the relevant section of the UK Government Website.

Employment Policies and Procedures

It is recommended that employers have some written employment and HR policies in place. These are necessary to clearly stipulate expectations and processes and can also reduce legal risk. Clear policies will also contribute towards a positive working environment and reduce conflict in the workplace. If any issues do arise, these policies will help you to deal with them.

Data Protection Policy ensures that everyone in a company understands the importance of data protection and data security. Employees are informed about how their personal data is handled, as required by the law. The policy describes procedures for collecting, working with, and storing data in the company.

It also covers the rules that employees must adhere to in the handling and collection of customer personal data. This ensures that the company fulfils its legal obligation to protect the security of personal data. With the new GDPR rules coming into force on 25th May, such policies will be mandatory for any company that handles data of any resident in the European Union.

A Health and Safety Policy sets out your commitment to health and safety in the workplace and states your responsibilities and legal obligations as an employer. The policy also covers an employee’s responsibilities for workplace health and safety.

The details of this policy will include safe practices and procedures to be followed in order to prevent workplace injuries and illnesses. It will also stipulate attendance requirements for health and safety training workshops as well as emergency procedures and consequences for not abiding with the policy.

Bring Your Own Device Policy covers an employee’s acceptable use of personal devices on corporate networks, defines security controls, and describes supported devices and apps. It ensures that the company’s network security is not compromised. The policy also outlines the procedure during termination of employment, as well as disciplinary consequences for violations.

Related reading: The lowdown on Bring Your Own Device Policies

Social Media Policy is important in order to educate employees on the legal and security risks involved in social networking and what they can do to protect themselves and the company. A clear and informative policy encourages employees to use caution and good judgement at all times. It can also protect employees from online bullying and harassment.

Such a policy is crucial to adequately protect a company’s brand and business interests while upholding their employees’ personal data rights and freedom of speech. It covers legal issues that could arise for the company, including confidentiality, intellectual property infringement, and defamation, as well as personal liability of the employee.

Disciplinary Policy and Procedure provides a framework for a company to handle situations where employees have not met the required standards of conduct. It sets out a clear process for your disciplinary procedure and can be very useful in any future disputes.

This policy is intended to ensure prompt, consistent, and fair treatment for all employees and to enable both the employee and the company to be clear about the expectations of both parties.

Some Final Thoughts

Bringing fresh talent on board could be the key to expanding your enterprise so don’t be hesitant in taking the next step. With the right contracts and policies in place you can create a company culture that values and rewards its employees and attracts even more talent!

You might consider producing an employee handbook that provides guidelines for everyone in the workplace. Employees will feel more valued and organised as a result and will also positively contribute to retention of staff.

Zegal can provide you with guidance and ensure all your employee contracts and workplace policies and procedures are in place: 

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