Electric Train(er)

Hi-tech and lo-tech innovations in Africa

I spent Saturday at one of the most inspiring conferences I've been to. It was called Africa Gathering, and it was the first event under that banner to focus on mobile and other technologies being used in Africa. (My small role was to lead a discussion on distance learning for African trainees, something we've been doing for 4 years.)

I couldn't attend all the presentations, but the few that I sat in on were a revelation. Ken Banks talked about a nifty piece of software he's developed called frontlineSMS, which allows people to send alerts and information, not via the internet, but by hooking up a laptop to a mobile phone network. Mobiles are ubiquitous, but the internet is not. So SMS is a great way to disseminate info. (Check out kiwanja.net for more.)

Simon Berry spoke about his project colalife, which is based on the premise that if Coca Cola can reach every corner of Africa then why not use the same delivery network to distribute medicine, mosquito nets or anythings else. Simon's use of social media (Facebook, Twitter, etc) and old media (the BBC's PM programme) is an object lesson.

What made these speakers (and many others) stand out was their extraordinary tenacity in the face of big business sluggishness, and a seemingly limitless amount of energy to help people find their own solutions to local problems.

And here's a video from an Austrian agency which gives a flavour of how mobile phones are changing the lives of ordinary Africans – Tanzanians in this case.

Long may the dialogue continue. See you at the next Africa Gathering in Brussels?

Mr Darling, self-employment, flat rates and other VAT musings

Survivors of my redundancy or 'sole trader' courses will know we have a bundle of fun with VAT.  Remember all that info I gave you?  Well it's all changing!

Following the Pre-Budget Report on 24 Nov 08 I've been updating and improving all the downloads and handouts which trainees can access through our secure website. The spreadsheets now cope with VAT much better, and I'm just redoing the relevant tip sheets. They'll be ready to roll by Monday.

The main change (for the moment) is the reduction in VAT,  so that's only really going to affect people who are VAT registered. The change in the standard rate from 17.5% to 15% from Monday 1 Dec 08 will have been noticed by anyone who's not been living under a rock.

What you may not have noticed is the reduction in the flat rates for anyone who uses the Flat Rate Scheme for Small Businesses.

There is a note hidden away on the HMRC website at this link (PDF file, 384 KB - Look at Annex E for the new rates).

You'll see that Film, TV and Media production is down from 10.5% to 9.5% from 1 Dec 08 until VAT goes back up again, probably in Jan 2010.

Incidentally I have a theory about why Mr Darling reduced VAT rather than, say, reducing income tax. There's been a lot of moaning in the papers about a 2.5% reduction being tiny in the scheme of things. And if you consider the saving to you and me when we buy a flat screen TV it is indeed just a couple of quid.

However, reducing VAT allows retail businesses to either pass on the reduction to customers in full or keep price tickets nearer their old level, and increase their own cashflow. Cash is king in a recession, so this may be a better way to stop the wheels falling off some struggling businesses.

In other words, reducing VAT allows retail businesses to make business choices. The fact that it sounds like a benefit to customers is politically expedient because it makes the headlines, but it's not quite so relevant to the economy as a whole.

How to survive a recession

There's an elephant in the room during my business skills workshops these days.  Countries around the world are starting to fall into recession, but the people I meet don't seem to be thinking very hard about how this might affect them.

The media have been focusing almost exclusively on the big picture (central banks bailing out retail banks) or defaulting to dinner party economics - the fall in house prices and rise in food prices.

So if you're just starting out as self-employed what should you do? Well it's not rocket science...

Here are my top tips for weathering a recession:

1. Hang on to ready cash - don't assume you can borrow
2. If you have an overdraft imagine what you would do if the bank withdrew it overnight - something they're perfectly within their rights to do.
   
3. Make sure you know the minimum figure you can survive on - and your breakeven point
4. Try to lower your breakeven point
5. Make sure you know what your value proposition is.  Why should your clients come to you, as opposed to anyone else?
6. If others work for you, make sure they understand your value proposition too. You'll need them as your ambassadors.
7. Don't kid yourself. Be realistic.

Actually this is good business practice in any circumstances. Doubly so when times get tough.

If you have any other tips on beating a recession I'd love to hear them.

How to get paid

The thing that gets me hotter under the collar than anything else is people not being paid for work they've already done.

It's a common problem, especially for freelancers and consultants.

That's why there's legislation designed to protect small businesses. Read all about it on the Pay On Time legislation website.

You'll see that the law states you must be paid within 30 days unless you have actively agreed that it will be longer.  (And only an idiot would agree to that.)

My advice to anyone is chase a payment on the 31st day after you slung in the invoice. Use your politest voice and gently ask the accounts payable people to check your payment is going through the system. After all, they may never have received your invoice.

Give them another week - presuming they say the payment is on its way. Then call again - restraining your urge to shout down the phone. As soon as you're aggressive you'll just be put at the bottom of the pile.

I usually let them know I'll call them every day to check it's 'going through the system'. That usually unglues the payment straight away.

I'm always amazed how few accounts people know what the law is. So I usually put the following paragraph at the bottom of my invoices. You'll find it on the pay on time site:

Please note: David Thomas Media Ltd understands and will exercise its statutory right to claim interest and compensation for debt recovery costs under the late payment legislation if we are not paid according to agreed credit terms. For more information on late payment legislation please see:
www.payontime.co.uk

Good luck and don't let them get away with it.

Paying less tax

One of the parts of my business skills workshops that people enjoy the most is a simple exercise called 'match the expense to the tax return'.

OK - so it's not exactly a catchy title for a game, but it's more fun than it sounds.

This financial year the tax people (HMRC) have changed a few of the guidelines for small businesses, and even some quite hardened freelances are apparently unaware of the changes.

The good news is that there is a £50K allowance for small businesses to cover capital equipment this year. That's different from previous years, where you've only been able to put 50% of the cost of a capital item down against tax.

That makes this rather a good year to buy kit, presuming you have any cash at all what with the credit crisis.

In fact that's such good news I hereby predict that the rules will change again within a year or so. Let's see.

HMRC have also clarified some of the allowances if you use your home for part of your business. Everyone knows about heating and lighting (percentage of), but there are some extras.

Read the updated guidance here - and make sure you bring it up with your accountant!

Keeping the faith as a new business

Yet another story from one of my former business trainees about the length of time it can take to get up and running.

This particular person said it was 8 months before she got any income from her new coaching business. And she wasn't sitting around doing nothing in those 8 months.

This underlines the importance of having enough savings (or a big enough loan) to see you through the first year.

I always tell new freelances and small business people that it took me 9 months of hard 'networking' (ie coffees and chats) before someone decided they needed what I was offering.

A marketing person once told me to expect 7 points of contact (and about 6 months) before anyone trusts you enough, and has the right sort of project to give you some work.

Wise words.

Taxing times for the nation

It's not often I get to feel smug - at least not with justification.

I've been mesmerised by the sudden realisation throughout the land that Gordon Brown effectively doubled the starting rate of tax in the 2007 budget.

Doubled?? Surely you mean "abolished"? Well don't get me started (again). I went through all that a year ago.

It amazes me that almost no one saw this tax change as a problem a year ago. Even my most fiscally challenged trainees can spot this during our business skills training.

I have no time for Labour MPs who are suddenly feeling rebellious. Last year they either didn't realise their Chancellor was pulling a fast one, or if they did realise, they thought they could keep it under the carpet.

Either way they look less than in touch with the reality of their constituents, and at worst highly cynical.

But that was before the election that never was, and plummeting approval ratings. Now some Labour MPs are worried about their seats. Surprise surprise.

As Polly Toynbee writes today, the problem is that people don't seem to perceive a need for taxes at all. Although I don't agree that New Labour never made the case for tax increases. Tony Blair did that in 1997, saying you had to pay for the services you want.

Perhaps a bit of honesty on taxes - and some fairness - is long overdue. And perhaps more journalists need to cover taxation stories in ways that make sense to their audience.

Business advice for thesps and other freelances

I'm always on the look out for places that support one-person businesses and freelances. Working for yourself is hard enough so all tips and tricks are very welcome.

I was asked to supply some blurb for The Stage the other day, and their Dear John section is a wonderful font of wisdom.

Check it out.

Keeping track of invoices - the low tech way

There are any number of software providers who will sell you some clever widget that will alert you to outstanding payments. Personally, I prefer something simpler and much more low tech - a whiteboard.

I'm not talking about anything huge - just a small version. Mine leans up against the wall just to the right of my computer screen.

It's so handy that every time I send an invoice I simply pick up the whiteboard and add the number, the client, the amount and the date. When I get paid I just cross out that line. When I get to the bottom of the board I rub everything out and start again at the top.

See if you can spot it:

It's disarmingly simple and means I never lose sight of payments I should have received.
As for getting paid on time...that'll be the subject of another posting.

Top tip 2 - We all hate filing

One of the reason people hate filing so much is that they'd rather be doing something more exciting.  Unfortunately if you run your own business and have an office at home you can't avoid it.

The trick is to make the filing so easy that you can't put it off. Don't use filing cabinets for the stuff you need to deal with every day. A filing system that relies on unlocking filing cabinets is doomed to fail; all you will do is put the stuff in a pile on any clear surface - and leave it there.

So have a little shelf within arm's reach and keep things like invoices, receipts and current project files nice and handy.

Another good tip is to touch any piece of paper only once. Never put it in an 'in tray' to deal with later. Just put it straight away in the place that it belongs. If you're not sure where it belongs it probably needs to go in the shredder.

Any more filing tips? I'd love to hear them.