Monday, 21 July 2014

Business Plans - The Basics

We consider why you should draw up a business plan and what it should include. If you are starting, or have recently started a business we, at Levicks, can help you develop a business plan.
Every new business should have a business plan. It is the key to success. If you need finance, no bank manager will lend money without a considered plan. It is one of the most important aspects of starting a new business. Your plan should provide a thorough examination of the way in which the business will commence and develop. It should describe the business, product or service, market, mode of operation, capital requirements and projected financial results.

Why does a business need a plan?

Preparing a business plan will help you to set clear objectives for your business and clarify your thinking. It will also help to set targets for future performance and monitor finances and profitability. It should help to provide early warning for when you might need to reconsider the plan.

Always bear in mind that anyone reading the plan will need to understand the essentials of your business quickly and easily.


The business plan should cover the following areas.
An overview of your plans for the business and how you propose to put them into action. This is the section most likely to be read by people unfamiliar with your business so try to avoid technical jargon.
A description of the business, your objectives for it and how you plan to achieve them. Include details of the background to your business for example how long you have been developing the business idea and the work you have carried out to date.
Details of the key personnel including you and any external consultants. You should highlight the skills and expertise that these people have and outline how you intend to deal with any weaknesses.
Details of your product or service and your Unique Selling Point. This is exactly what its name suggests, something that the competition does not offer. You should also outline your pricing policy.
Details of your target markets and your marketing plan. This may form the basis for a separate, more detailed, plan. You should also include an overview of your competitors and your likely market share together with details of the potential for growth. This is usually a very important part of the plan as it gives a good indication of the likely chance of success.
You will need to include information on your proposed operating practices and production methods as well as premises and equipment requirements. 
Financial forecasts
The plan should cover your projected financial performance and the assumptions made in your projections. This part of the plan converts what you have already said about the business into numbers. It will include a cash flow forecast which shows how much money you expect to flow in and out of the business as well as profit and loss predictions and a balance sheet. Detailed financial forecasts will normally be included as an appendix to the plan. As financial advisers we are particularly well placed to help with this part of the plan.
Financial requirements
The cash flow forecast referred to above will show how much finance your business needs. The plan should state how much finance you want and in what form. You should also say what the finance will be used for and show that you will have the resources to make the necessary repayments. You may also give details of any security you can offer.

The future

Putting together a business plan is often seen as a one-off exercise undertaken when a new business is starting up.
However the plan should be updated on a regular basis. It can then be used as a tool against which performance can be monitored and measured as part of the corporate planning process. There is much merit in this as used properly it keeps the business focused on objectives and inspires a discipline to achieve them.

How we can help

At Levicks we can look forward with you to help you put together your best possible business plan for the future.

Friday, 18 July 2014

Employment and related matters - National Minimum Wage

We highlight the main principles of the minimum wage regulations including the hourly pay rates together with the penalties for failure to comply. If you are an employer we, at Levicks, can provide you with assistance or any additional information required. We also offer a payroll service.
The National Minimum Wage (NMW) was introduced on 1 April 1999 and is reviewed each year by the Low Pay Commission. Any changes normally take place on 1 October. There have already been a number of instances of employers being penalised for not complying with the legislation. HMRC are the agency that ensures enforcement of the NMW.
We highlight below the main principles of the minimum wage regulations.
Please contact us for further specific advice.

What is the National Minimum Wage?

There are different levels of NMW, depending on your age and whether you are an apprentice. The rates are given in the following table:
Age Rate from 1 Oct 2013 Rate from 1 Oct 2014
the main rate for workers aged 21 and over £6.31 £6.50
the 18-20 rate £5.03 £5.13
the 16-17 rate for workers above school leaving age but under 18 £3.72 £3.79
the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship £2.68 £2.73
The age at which you become entitled to the main rate was reduced from 22 to 21 on 1 October 2010. The apprentice rate was introduced on the same date.
The apprentice rate applies to:
  • apprentices under 19
  • apprentices aged 19 and over, but in the first year of their apprenticeship.
If you are of compulsory school age you are not entitled to the NMW.
In addition, there is a fair piece rate which means that employers must pay their output workers the minimum wage for every hour they work based on an hourly rate derived from the time it takes a worker working at average speed to produce the work in question. The entitlement of workers paid under this system is uprated by 20%. This means that the number reached after dividing the NMW by the average hourly output rate must be multiplied by 1.2 in order to calculate the fair piece rate.
There are no exemptions from paying the NMW on the grounds of the size of the business.

Key questions

Who does not have to be paid the National Minimum Wage?

  • The genuinely self–employed.
  • Child workers – anyone of compulsory school age (ie. until the last Friday in June of the school year they turn 16).
  • Company directors who do not have contracts of employment.
  • Some other trainees on government funded schemes or programmes supported by the European Social Fund.
  • Students doing work experience as part of a higher education course.
  • People living and working within the family, for example au pairs.
  • Friends and neighbours helping out under informal arrangements.
  • Members of the armed forces.
  • Certain government schemes at pre–apprenticeship level, such as:
    • in England, Programme Led Apprenticeships
    • in Scotland, Get Ready for Work or Skillseekers
    • in Northern Ireland, Programme Led Apprenticeships or Training for Success
    • in Wales, Skillbuild
  • Government employment programmes
  • European Community Leonardo da Vinci, Youth in Action, Erasmus and Comenius programmes
  • Share fishermen.
  • Prisoners.
  • Volunteers and voluntary workers.
  • Religious and other communities.
Please note that HMRC have the power to serve an enforcement notice requiring the payment of at least the NMW, including arrears, to all family members working for a limited company.

What is taken into account in deciding whether the NMW has been paid?

The amounts to be compared with the NMW include basic pay, incentives, bonuses and performance related pay and also the value of any accommodation provided with the job.
Overtime, shift premiums, service charges, tips, gratuities, cover charges and regional allowances are not to be taken into account and benefits other than accommodation are also excluded.

What records are needed to demonstrate compliance?

There is no precise requirement but the records must be able to show that the rules have been complied with if either the HMRC or an Employment Tribunal requests this to be demonstrated. Where levels of pay are significantly above the level of the NMW, special records are not likely to be necessary.
It is recommended that the relevant records are kept for at least six years.
Normally there is not likely to be any serious difficulty in demonstrating compliance where employees are paid at hourly, weekly, monthly or annual rates but there may be difficulties where workers are paid on piece–rates and where, for example, they work as home–workers.
Where piece rates are used, employers must give each worker a written notice containing specified information before the start of the relevant pay period. This includes confirmation of the ‘mean’ hourly output and pay rates for doing their job.

What rights do workers have?

Workers are allowed to see their own pay records and can complain to an Employment Tribunal if not able to do so.
They can also complain to HMRC or to a Tribunal if they have not been paid the NMW. They can call the confidential helpline 0800 917 2368.

What are the penalties for non–compliance?

Enforcement notices can be issued if underpayments are discovered and there can be a penalty equivalent to twice the hourly amount of the NMW for each worker that has been underpaid multiplied by the number of days that enforcement notices are not complied with.
There could also be a maximum fine of £20,000 for having committed a criminal offence.
Employers who refuse to pay the NMW may also face a fine in excess of £200 for every worker they underpay. Employers have to pay back arrears they owe to workers and those who refused to pay up could be penalised.

How we can help

We will be more than happy to provide you with assistance or any additional information required on the National Minimum Wage. We also offer a full payroll service - please contact us at Levicks if you would like more information.