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Starting a
Successful
Business
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Starting_SuccessBiz_TP:Layout 1 5/12/07 12:34 Page 1
Starting a
Successful
Business
6TH EDITION
Michael Morris
London and Philadelphia
Publisher’s note
Every possible effort has been made to ensure that the information contained in this book is accurate at the
time of going to press, and the publishers and author cannot accept responsibility for any errors or omissions,
however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action,
as a result of the material in this publication can be accepted by the editor, the publisher or the author.
First published by Kogan Page in 1985 as Starting a Successful Business
Second edition 1989
Third edition 1996
Fourth edition 2001 as Starting a Successful Business
Fifth edition 2005
This edition 2008
Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted
under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or
transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of
reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning
reproduction outside these terms should be sent to the publishers at the undermentioned addresses:
120 Pentonville Road 525 South 4th Street, #241
London N1 9JN Philadelphia PA 19147
United Kingdom USA
www.kogan-page.co.uk
The views expressed in this book are those of the author, and are not necessarily the same as those of Times
Newspapers Ltd.
© Michael Morris, 1985, 1989, 1996, 2001, 2005, 2008
The right of Michael Morris to be identified as the author of this work has been asserted by him in accordance
with the Copyright, Designs and Patents Act 1988.
The views expressed in this book are those of the author, and are not necessarily the same as those of Times
Newspapers Ltd.
ISBN 978 0 7494 5105 9
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Morris, M. J. (Michael John)
Starting a sucessful business : start up and grow your own company / Michael
Morris. – – 6th ed.
p. cm.
Includes index.
ISBN 978-0-7494-5105-9
1. New business enterprise. 2. Entrepreneurship. I. Title.
HD62.5.M677 2008
658.1'1– –dc22
2007044007
Typeset by JS Typesetting Ltd, Porthcawl, Mid Glamorgan
Printed and bound in India by Replika Press Pvt Ltd
Contents
Preface viii
1 First thoughts and foundations 1
What’s it like to run a business? 1; Family matters 4; Four
types of entrepreneurs 5; Women entrepreneurs 8; Male
entrepreneurs 9; Personal finances: spring clean while you
can 9; What sort of firm to start? 12; Buying a business 13;
Taking up a franchise 14; Your IT strategy 15; Web trading 16
2 Getting orders, making profits 18
What are you selling, exactly? 18; Choosing customers 19;
Finding out what you need to know 20; Forecasting your
sales 21; What exactly are you selling, then? 23; Why should
anyone buy from you? 25; Getting it all to the consumer 26;
Dealing direct with the public 28; Shops’ and distributors’
margins 30; Attracting the distributor 32; Visiting the
customer 34; Pricing for marketability 36; Selling via the
big catalogues: big orders, quick payment 37; Effective
advertising 38; Publicity: nearly free and better than
advertising 39; The web and your market 41; Sales via the
internet 42
3 Controlling the money 47
Costs and costing 47; Calculating an hourly rate 48; Controls
on costing 50; The importance of cash 52; Clever cash
conservation 53; Forecasting the cash situation 53; Why
vi Contents
cash-flow forecasting matters 54; Planning for profits 55; Credit
control 58; Positive strategies for credit control 59; When credit
control fails 61; Breaking through to profitability 63; Smarter
costing 64
4 Raising the money 68
Grants: free money is best 68; Beg, steal or. . . 69; Presenting
your case to the bank 71
5 Your business name and legal status 73
The options 73; Sole trader 74; Partnership 74; Limited
company 74; Your business name 76
6 Business and the law 79
Civil and criminal law: how the difference affects you 79;
Contract law 80; Tort 81; Going to law 82; Contracts to
buy 83; Contracts to sell 85; Conditions, warranties, guarantees
and exemptions 85; Product liability 86; Copyright, registered
designs, trade marks and patents 87
7 Premises 89
Can you work from home? 89; Finding small premises 90;
Planning permission 91; Applying for planning permission 92;
Appealing against a planning decision 93; Leases 94; Rates and
water charges 94
8 Managing operations 96
Operations? You think I’m a surgeon? 96; Plan before you
leap 97; Being in control 99; Safety 103; Purchasing 103;
Quality 104
9 Financial housekeeping, VAT and tax 106
Financial records 106; Bank accounts 108; VAT – Value Added
Tax – in outline 108; Income and corporation taxes and National
Insurance 110
10 Employing people 113
People: the small firm’s powerhouse 113; The search for
good people 115; Define the job 117; Define the person 118;
Contents vii
Advertising 118; Shortlisting 119; Interviewing 120;
Deciding 125; Induction 126; The law; not as big a problem as
some think 127
11 Risk management and insurance 131
Risk management strategy 131; Insurance strategy 133;
Insurance suppliers 134
12 Sources of help 135
What advisers can do for business 135; Finding a generalist
consultant or adviser 136; Specialist advisers 137
13 After a successful launch. . . developing your firm 138
Your experience 138; Key issues 139; Expansion strategy 139;
Your new job 140; The three stages of growth 140;
Organisational culture 142; Your managerial development 142;
Your firm and consultants 143; Funding your growth 143
14 The PLG Programme for Growth 145
The PLG Programme: Prepare, Launch, Grow© 145; What it’s
for 146; How it works 146; Business plan introduction 147;
Business plan: Part one: overviews 148; Business plan:
Part two: Operating plans 150; Business plan: Part three:
Appendices 153; Business plan: Presentation 153; Business
plan: Implementation 154; Business plan: Growth 155; Executive
summary 155; Business plan: Part one: Overviews 156; Business
plan: Part two: Operating plans 158; Business plan: Part three:
Appendices 161; Business plan: Presentation 161
Appendices
1 Cash-flow forecasting illustration 162
2 Draft terms and conditions of sale 166
3 Small business contacts list 170
4 Help for small businesses 178
Index 181
Preface
Unlike other texts, this is really three books in one:
a conventional textbook, telling you all the important things you need
to read and absorb before starting in business,
a reference-book for once you are in business, to help brush up your
operations,
new for the sixth edition, it includes a major added extra: the PLG
Programme© (Prepare, Launch, Grow).
The PLG Programme helps you to create the business plan for your new
business, to get it up and running soundly and, once it is established, to make
it grow.
Starting a Successful Business is already the classic book of its kind. For
more than 20 years it has helped a whole generation of entrepreneurs to get
going with maximum effectiveness. The new sixth edition brings it up to date
and adds extra features.
Good luck!
Michael Morris
1
First thoughts and
foundations
This chapter covers:
being a business manager;
family and social life;
personality, experience and success;
family finances;
types of business;
IT.
What’s it like to run a business?
In a word, busy. There is a lot to do and, in the early days, probably only you
to do it.
It can be managed, though, and the key word is ‘managed’. Most of the
really effective managers use three tools:
the priority matrix;
Pareto analysis;
time targets.
2 Starting a successful business
All of these tools aim to do one simple thing: to ensure that you use your time
to best advantage. Take the example of two people of reasonable intelligence
and education who live to the same age. Over their lives they get exactly the
same allowance of time, yet one may be highly successful, the other not.
What makes the difference? The answer is: how they put their time to use.
The priority matrix
Everything you do, or don’t do, can be put into one of the four boxes on this
diagram:
IMPORTANCE
High Low
Urgent and Urgent but
High
important unimportant
URGENCY
Important but Neither urgent
Low
not urgent nor important
Figure 1.1 The priority matrix
The message is clear. There is never enough time to do everything, so train
yourself to:
1. look at each e-mail, letter, phone call or visitor;
2. stop for a split second to place it in the right box;
3. deal with them accordingly.
This way you get all the important things done. You may even do nothing
at all from the bottom right-hand box, at least until they have migrated to
another box, but a lot will just sit there and fade away. No problem: deal with
them once they migrate, but not before. You will save a lot of time.
Does it really work? Our next tool shows how formidable it can be.
