Concise guide to choosing a business bank account

Once of the first things you will do when you set up a new business is to open a business bank account. The easy thing to do is to use your personal bankers to act for your new business, but this isn't necessarily the wisest move as there are significant differences between the services you will receive from the various high street banks. Here are some general tips to help you get the most out of your bank, and choose the best account for your business.

How to choose the best business bank account

1. If your business is incorporated (i.e. a limited company, or LLP), you must have a separate business bank account. For sole traders and even partnerships, it is optional, although we'd strongly recommend opening a separate business account in order to keep your personal and business finances separate.

2. To make the best decision, you should ideally compare several banks to see what types of deals they offer, particularly to start-ups.

For example, Barclays offer up to 2 years' free banking to startups (T&Cs apply) and also include some use of CREDITFOCUS - their award-winning credit control service, free business seminars and free i-sure business data backup.

Lloyds TSB offer 18 months free day-to-day banking, free Sage business planning software plus a variety of start-up support services and resources.

While NatWest have a complete start-up package that includes 2 years of free banking, 12 months free access to any Regus business lounge in the UK, a start-up course and a start-up hotline that you can call for advice.

3. Don't necessarily go with your personal bankers to look after your business needs, as they might fall short however good they have been to you as an individual.

4. Despite suffering from the backlash against bankers' bonuses, many start-ups will feel more comfortable opening an account with an established high street banking name.

5. Bank charges can vary significantly between banks. Although you may receive up to 2 years' genuinely free banking, you should find out what tariff you will be switched on to once the initial free period has expired. The effect of charges can be significant if you expect a large number of transactions to go through your account each month.

6. Although most business accounts offer virtually nothing in terms of interest currently (in 2011), some banks have bucked the trend and you may be able to earn some interest on your current account balance. Put your tax savings in a higher interest-bearing deposit account to make the most our of the limited interest available to business customers.

7. It goes without saying these days that you should expect your bank to offer online business banking as a matter of course. This is a massive time saver for small businesses, and you simply won't be able to do without it once you've tried it.

8. Try to find a bank which provides a dedicated small business account manager. Most high street banks offer a dedicated service, and it will help to be able to talk to someone who understands how real businesses work when you need assistance or advice.

9. Ask friends or fellow small business owners what kind of experience they have had with their banks. You simply can't beat a personal recommendation from someone you trust.

10. If it doesn't work out with your bank for whatever reason, you can always switch providers. Aside from a small amount of inconvenience, the switching process has improved greatly in recent years, so you're not tied to your current bank for life!

Some businesses will require regular contact with their bankers, so you should go with a team you feel you can build a good personal relationship with.

Business Valuation Guide - How to value a business

When it comes to selling a business, the most important question you need to ask is - how much is it worth? Unsurprisingly, there are no precise ways to value a private business. The seller will want to drive the price up, and potential buyers will want the opposite. Although there are relatively easy ways to value certain parts of the business - such as stock, fixed assets (land, machinery, equipment, etc.), there may well be a sizeable intangible element to the value of a business.

Intangible elements would include "Goodwill" - this could include trademarks, and the reputation of the company. Such things are notoriously difficult to value, and in many cases will come down to how keen a potential buyer is to acquire the business in question. When looking at the overall value of a business, there are a number of different valuation methods which are commonly used - from using earnings multiples, to calculating how much it would cost to create a similar business.

In this article, we look at some of the most commonly used valuation techniques, and how other factors may influence the value of a business at any given time.

Common Business Valuation Methods

EARNINGS MULTIPLES

Quite often, multiple of earnings are used as a business valuation method. This method would be suitable for companies with an established financial history. The Price/Earnings (P/E) Ratio represents the value of the business divided by its post tax profits. It may not be easy deciding what P/E ratio to use, some industries, such as high tech / IT ones will have a much higher P/E ratio than, say, an estate agency. The P/E Ratios used in the financial press should be reduced significantly when valuing a small business. Large businesses are generally more established and broader-based therefore have higher barriers to entry. Small businesses have a narrower focus and are often more reliant on a single individual, so are inherently more risky. The higher risk involved in buying a small business, means the P/E ratio will be lower than that commanded by a large business.

Quite often, business advisers will suggest a valuation of around 3 or 4 times the annual post-tax profit, but higher valuations are possible.

ENTRY COST

Quite simply, this is the predicted cost to set up a similar business to that being sold. This would include the cost of developing a customer base and reputation, recruiting and training staff, purchasing assets and developing products and services.

ASSET VALUATION

This method is more appropriate for established companies with a large amount of tangible assets (such as property companies). The valuation is made by calculating the net realisable value of all assets.

Assess a company's assets

Once you have found a business you are interested in, the first thing you should do is find out exactly what is for sale, or decide which parts of the business you are interested in buying. You may agree to purchase the whole business or just its assets, ie its equipment, stock and order book. If you only wish to buy the assets, you will need to determine whether the seller will sell them with or without compensation due to loss of tax benefits, for example from a share sale.

Whether you want to make an offer for the whole business or just its assets, there are several important things to check, including whether:

·         The business has full legal ownership of all key assets such as plant, equipment and property. Ask to see documentation that proves all equipment and stock you are purchasing has been fully paid for and is not purely leased by the business - for example, check computer software licenses.

·         It has warranties and guarantees for any major pieces of equipment included in the deal such as computers, photocopiers, vehicles, etc.

·         Any intellectual property is protected and registered. The Intellectual Property Office or a patent lawyer can help you check.

·         What supplier and key customer contracts involve. Make sure you understand what these legally require from the business.

You will then need to decide how much these assets are worth, although to value the business as a whole you will also need to look at documentation such as its profit and loss account.

The above list is not exhaustive. There may be other things you need to check depending on the business you are considering buying. It is sensible to take advice from professionals with experience of valuing businesses and their assets, such as accountants, lawyers, chartered surveyors, business transfer agents, business brokers and corporate financiers.

If it is registered with Companies House, you can also obtain copies of the company accounts, the annual return and the other key documents filed by your target business using the Companies House WebCHeck service. The documents can be downloaded from the Companies House website, some at a small fee, helping you assess the value of the business and its assets. 

Obtaining information on a business you are thinking of buying

Buying an established business is a good option for some aspiring entrepreneurs. Much of the groundwork for success may have already been done by the existing owners. Before making an offer there are some important things to investigate. Initially you may only have access to the business' sales memorandum. Sellers will usually ask you to sign a confidentiality undertaking or non-disclosure agreement before you can access sensitive or detailed information. They will usually also ask for details about you (via a CV) and evidence of your ability to fund a purchase.

After an offer is made and accepted, due diligence is carried out. This is where the buyer looks at the business in detail, including its finances, its employees, outstanding litigation, major contracts, IT and other technology. It may sound complex, but professionals such as accountants, solicitors, chartered surveyors, business transfer agents, business brokers and corporate financiers can help. You can also do some of the research yourself.

Professor of Business Administration

The Faculty of Natural Resources and Agricultural Sciences and the Faculty of Forest Sciences are in the process of creating a joint platform for the Business Administration subject area within SLU. This platform will adopt a two-fold focus on agri-food chains and networks, and on rural-based enterprises. The research will span the entire value chain for food and fibres.

The Department of Economics is now collaborating with the Department of Forest Products at the Faculty of Forest sciences to establish a theme-based approach concerning economic analyses of agri-food and fibre chains networks. This is an integrative approach that seeks to relate to, and include, competences and skills from other key departments within SLU.The two departments offer a stimulating research and teaching environment of a high international standard.

The Department of Economics conducts research related to economic activities regarding the management and sustainable use of natural resources. The profile is based on how business entitles, organisations, and consumers actually behave, their roles within the agri-food sector, and how they can accomplish their formal and informal aims. Subject area: Business Administration, specialising in the organisation and management in food-related supply chains and networks.

Duties: The successful candidate will be expected to lead and develop an internationally strong research group within the stated specialist area, and capable of attracting external funding. It is important that the successful applicant is able to develop and explore collaborative opportunities within the department, as well as with research groups and stakeholders within and outside SLU. The research area represented by this position integrates social, economic and environmental aspects related to the agri-food networks. This means that the successful candidate must interact with the industry, government bodies and other stakeholders in order to improve the competitiveness and sustainability of the food sector. Within the specialist area, the successful candidate will also be expected to take responsibility for the planning and development of teaching activities at all levels; to supervise students on a bachelor,master and PhD level and to take part in teaching activities at all levels.The successful candidate should be able to use Swedish as a working language in due course.

MBA Programme

The Edinburgh Business School MBA Programme is a long-established and highly successful programme. Since 2003, the distance-learning route has ranked as the second largest in the world. The Edinburgh Business School MBA Programme is a demanding and broad-based  management degree It enables students to gain core knowledge of subjects fundamental to  management, develop analytical skills which are indispensable in problem solving and  decision making, understand the process of management and human behaviour in  organisations, and gain insights into the changing business, economic, social and political environments which affect the commercial world. 

Student Numbers

The effectiveness of the Edinburgh Business School MBA Programme is demonstrated by its success.  To date, some 12,500 students have graduated from the MBA from 150 countries making it the world’s largest international MBA programme.  All students, no matter which mode of study they pursue, must pass the same examinations and there is no difference in  standards amongst the different modes.

Self-study

The Edinburgh Business School MBA Programme is based on the principle that individuals learn in different ways.  In order to make it possible for students to achieve the MBA who did not wish to, or could not, attend campus the self-study course texts were developed containing the learning resources necessary to succeed. Today, the course texts are augmented by the Edinburgh Business School Course Website. This allows you to post questions to the Faculty through the Faculty Web Board and access case studies and past papers.  The interactive Profiler software also allows you to check your exam readiness by monitoring your performance in the questions at the end of each module. In addition, you have access to both PDF and HTML versions of the course text that make it very easy to search.  You can register for exams, defer exam entries, notify us of any change of details and access your exam results with speed and security through our Student Services website. We find this enhanced learning experience reduces the sense of isolation felt by some distance learning students.

On-campus

Other study routes include the full-time and (part-time) executive on-campus programmes at Edinburgh Business School.  Students learn using the course materials and course websites and receive tuition support from Edinburgh Business School Faculty.  Teaching time is devoted to the value added application of real life situations and case studies/simulations.

In addition to the full-time or executive programmes, it is possible for self-study students to attend intensive four-day seminars or two-day revision sessions. Attendance is not mandatory, and students can choose which, if any, of the course(s) they wish to attend in Edinburgh. Approved learning partners Edinburgh Business School has a network of Approved Learning Partners (ALP), approved by Edinburgh Business School and Heriot-Watt University, which provide academic and administrative support. ALP are appointed only when they have satisfied the approval procedures of Heriot-Watt University.

Business strategies

The concept of sustainable development has received growing recognition, but it is a new  idea for many business executives. For most, the concept remains abstract and  theoretical.  Protecting an organization’s capital base is a well-accepted business principle. Yet organizations do not generally recognize the possibility of extending this notion to the world’s natural and human resources. If sustainable development is to achieve its potential, it must be integrated into the planning and measurement systems of business enterprises. And for that to happen, the concept must be articulated in terms that are familiar to business leaders.

The following definition is suggested: For the business enterprise, sustainable development means adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future. This definition captures the spirit of the concept as originally proposed by the World  Commission on Environment and Development, and recognizes that economic  development must meet the needs of a business enterprise and its stakeholders. The latter  include shareholders, lenders, customers, employees, suppliers and communities who are  affected by the organization’s activities.  It also highlights business’s dependence on human and natural resources, in addition to  physical and financial capital. It emphasizes that economic activity must not irreparably  degrade or destroy these natural and human resources.

This definition is intended to help business directors apply the concept of sustainable development to their own organizations. However, it is important to emphasize that  sustainable development cannot be achieved by a single enterprise (or, for that matter, by  the entire business community) in isolation. Sustainable development is a pervasive  philosophy to which every participant in the global economy (including consumers and  government) must subscribe, if we are to meet today’s needs without compromising the  ability of future generations to meet their own.

A business strategy describes how a particular business intends to succeed in its chosen market place against its competitors. It therefore represents the best attempt that the management can make at defining and securing the future of that business. A business strategy should provide clear answers to the questions:

• ·         What is the scope of the business (or offering) to which this strategy applies?
• ·          What are the current and future needs of customers and potential customers of this business?
• ·       What are the distinctive capabilities or unique competence that will give us competitive advantage in meeting these needs now and in the future?

·         What in broad terms needs to be done to secure the future of our business?

These questions should have been addressed during the process of strategy formulation. The processes and techniques and processes described in Part III may have contributed to answering them. In this chapter, we are concerned with some of the practical issues that arise when thinking and analysis leads into action and commitment. We are concerned also with what makes the difference between good and indifferent business strategies. We suggest that a good business strategy will meet six tests of quality:

• ·         It will be correctly scoped.
• ·          It will be appropriately documented.
• ·         It will address real customer needs.
• ·          It will exploit genuine competencies.
• ·          It will contribute to competitive advantage.
• ·          It will lay the ground for implementation.

Business books

So every year, we look for nominees in unexpected places. We carefully select reviewers, like O’Toole, who have a wide range of experiences and perspectives, who are willing to look far and wide for the ideas and stories that executives will find most relevant to their work and their thinking. One theme running through all the essays this year is the presence and power of human behavior in business, especially in the executive suite. Economist Diane Coyle notes that the subject of her choice for the best book on capitalism — the infamous economist Joseph Schumpeter — appreciated that the economy represents “a human order with social, political, and cultural implications.”

Futurist Howard Rheingold selected three books this year on behavioral theory. They present provocative views on the ways in which network information technologies — the Internet, mobile phones, PDAs, and the like — are changing the behaviors of billions of people around the world. In reviewing the best books on human capital, R. Gopalakrishnan, executive director of the Indian multinational Tata Sons, deftly relates his observations to his own experiences managing people and watching others do it, too. MIT’s Michael Schrage and journalist Tom Ehrenfeld highlight the importance of humility to innovation and entrepreneurship, respectively. The essay by science and health-care expert Joe Flower exposes the human hopes and fears raised by the risky business of biotechnology.

Of course, our list of the year’s best business books is not complete without a selection on strategy and competition. This year, David Newkirk — the head of executive education at the University of Virginia’s Darden School of Business — has selected five of the best guides in print for helping executives redirect their companies in an ever-changing world.

Use a business plan

Select the business plan product that is best suited for your business or aspirations. Save yourself from the endless do-it-yourself calculations necessary with all other generic business plan programs. Use the business specific pre-written business plans to save you even more time writing your business plan without having to invent everything from scratch. In minutes you can be optimizing your business plan, and creating your financials. Enter sales estimates, personnel, loans and investments, and view your income statement, cash flow and balance sheet come alive.

You don't need any specific business expertise to use our business plan products, you learn as you go with the extensive business plan guide. Each of our programs covers all aspects of the business plan process, completing the written plan, forecasting close-to-reality financial results with feasibility checking, as well as preparing your presentation.

Business documents

All-Business-Documents helps you create nearly any imaginable piece of professional business paperwork. With a simple interface and impressive templates, this could be an essential tool for any office.

The program's interface looks a lot like a cluttered version of traditional word-processing software. With three separate screens squeezed below the editing command icons, you may need to close one or two boxes before feeling comfortable. Fortunately, navigation and operation are easy enough not to require a trip to the Help file. Creating a document was mainly a matter of surfing through the file tree of templates provided. Topics range from human resources, accounting, legal, sales and marketing, and technology. Within each topic are dozens of templates for every conceivable document, from an offer letter to a patent license. All are laid out professionally, with obvious spots into which you input your information, quickly converting an item from a template to a corporate document. This will undoubtedly save time and headaches for anyone previously lacking the capability to create such works. The program also provides great features, such as single button commands that run spell checks, grammar checks, and a thesaurus.

The only things we weren't thrilled about were the program's short, 10-use trial period and the enormous black watermark on each document that made it hard to read the text. But thanks to its simple operation and an impressive bank of templates, we still feel All-Business-Documents is a great download for any business person.