The Blog of an Entrepreneur

Posts Tagged ‘quick formations’

Anti-Competitive Behaviour of the Government

Posted in Entrepreneurialism on July 13th 2008 | No Comments

A few years ago there was an active industry with a good few hundred companies in the UK trading at varying levels of success, from big companies to small one man operations. This industry was just like any other, providing income and jobs to hundreds maybe thousands of people in the UK. This industry was the private numberplate industry.

That was until a Government agency, namely the DVLA, realised that they could make a lot of money from the private numberplate industry and decided to abuse their position and monopolise the market. They undertook extremely agressive marketing activities, from TV to magazine to Internet, and they basically “cleaned up” as the term would go. A Government agency basic abused their position, exploited it to great financial gain, and the end result was many businesses went into liquidation and many more lost their jobs. If this happened in the private business sector it would have gone through the courts with an anti-competitive law suit, but nothing happened, the Government which claims to encourage commerce did completely the opposite and did what in my opinion should be illegal.

Well guess what, it’s happening again!

Companies like one of my business, Quick Formations, are being forced by law to carry out very time consuming comprehensive checks on each and every one of our clients under the Money Laundering Regulations 2007. These checks not only take time, but also cost money too, and we must reflect these costs and time taken in the prices we charge. This isn’t just my business, but it is all businesses in my industry sector (that comply with this legislation that is, but that’s another story). However, what do Companies House do?

Companies House state that they are an “administrative” agency, who’s role is to store data for the public record. Yet, Michael Mouse is able to file forms 10, 12 and 288a with them and Incorporate a Limited company without question. He can use a completely fictitious address, he doesn’t even have to exist, and Companies House will incorporate this Limited company for Mr. Mouse without question. Mr Mouse can then go to one of a number of countries around the world to open a business bank account because a UK company does not have to bank in the UK, and then Mr. Mouse has all the tools he needs to launder all the money he likes out of the UK. By launder, and to quote the Governments own scare mungering about this required legislation, I mean to potentially finance terrorism. Companies House, a government agency, is openly flouting a legal requirements of the company formation industry. The businesses within the company formation agency must charge to cover the administrative burden of complying with this legislation imposed upon them, but Companies House by not complying with this same legislation do not and can abuse their position in the market. The DVLA story seems likely to repeat itself all over again.

However, I have a solution and have raised this to parliament. At first I thought it would come to nothing, but at least Sally Keeble MP is listening and has started to raise concerns and move them forward.

My solution is as follows;
All agents who provide a company formation service apply for an account with Companies House. The requirement of holding an account is that the agent must be registered with HM Revenue & Customs under the MLR2007 regulations, and as such comply with the regulations. Companies House then have no requirement to carry out due diligence on documents filed by that agent.
Any company formations filed by non-account holders will require due diligence, and Companies House will be required to operate under the same legal requirements imposed on all other businesses carrying out the same business activity. They will also have to cover their costs to carry out this activity, leveling the commercial playingfield.

Here is hoping that Sally Keeble can get some results on this.

The Bannatyne way, or the Osborne way?

Posted in Entrepreneurialism on May 16th 2008 | 6 Comments

I read Duncan Bannatyne’s autobiography last year, and must confess to finding it a good inspirational story. However I’d like to use one piece of advice he gives in his book that goes against much of the advice offered by many business advisors, and that I myself also disagree with.

My first business wasn’t a great success. I ran it for two years and it pretty much as good as went out of business. My second business struggled for the first couple of years, and that also nearly went down the pan until I changed my ways. It’s now a great success, so what changed? Well quite a lot of things changed about the way I approach my business, and one key area was that I started to use professionals to do things instead of struggling to do everything myself.

In Duncan’s book he gives reference to two examples. One is that he learnt how to form a Limited company, and then completed all the paperwork and formed his first business by himself. The second is he gives reference to learning about the legislation involved in running a nursing home. He then advises that you shouldn’t waste money paying other people to do things when you can in save that money and do the “thing” yourself. This I firmly disagree with, and I’m a true example of why it is wrong to take on that apprach and here is a couple of examples why.

Websites: I have lost count of how many businesses have poorly designed websites that they have tried to do in house to save money, without realising that all they are doing is making their businesses look too tight fisted to create a professional image of their organisation. They look tachy and I’d never deal with a business who takes pride in promoting a lame public image of themselves.

Business Cards: When someone passes you a business card printed on cheap do-it-yourself paper from a cheap stationer. Realistically it would cost you less than £50 to get some better quality business cards printed from a high street printer, on card. If you can’t afford £50 for business cards then you need to relook at your budgeting and startup costs.

Both the above reflect the impression you are giving other people about your business, and you should be thinking about creating a professional image. You want to portray a sustainable business that is going to be around for a while, not that of a business that can’t afford basic business cards. As for a website, it is better to have nothing at all than something that makes you look like an amateur.

Duncan does suggest contacting the relevant Government organistations and ordering their handout booklets to read and learn about whatever it is that you need to comply with. Personally I feel this is a waste of your own time, when you should be focusing your energies on growing, developing and selling your business. If I relied on the Government guidance on how to comply with the Money Laundering Regulations I could inadvertantly find myself breaking the law because their guidance is riddled with contradictions. If I followed their guidance on how to comply with the umpteen million different Emplyment Legislations I again could find myself breaking the law without realising, or worse still, I could find myself drowning in so much paperwork I’d never find time to run my businesses.

My advice is manage your time. It is actually sometimes a much more efficient and cost effective use of your time to use professionals to do what they are good at so you can get on with running your business safe in the confidence that “whatever” you could have done yourself more slowly has been done more quickly and professionally by a professional. I now surround myself with professionals who know how to do things much better than I do. I technically can do the programming that powers my Efiling business, but it is a much more efficient use of my time to pay others to do it better than I can. I could also technically learn how to write my staff contracts, but it is a much more efficient use of my time to pay someone else to do it. The end result is that my businesses get the attention from me that they need to grow and develop, and not have me tied up in books, leaflets and other unnecessary paperwork.

Using Duncan Bannatyne’s example of forming a Limited company. It probably cost him about £40 all in to form one of his companies himself, and by the time he received all his paperwork back it would have been about a week. So that is about 5 hours of his time learning and form filling, £40 paid out, and a week delay in delivery of his Certificate. He could have paid my “professional” company to do it for about £50, took him about 15 minutes and we would have had the paperwork back with him the next day (quicker than Companies House directly).

Even multi-millionaires can learn something from us mere trainee millionaires.