When it comes to setting up a new business, knowledge is power. "If you're the new kid on the block, you need to know your market," says Lee Wake, founder of Product Display Solutions (PDS). "How big is the market? Who are the main players? Who are our competition? How big are they? What do they do and can we make a difference?"
Lee set up PDS on 4 July 2012 – Independence Day. It was an apt date, as Lee had been thinking about setting up his own business for a long time. He landed his first job in food retailing with a major supermarket when he was just 16. "Going for that interview was the best thing I ever did," he says. "I worked my way up from store assistant, and held various management positions including in-house merchandising. Retailers are always looking to revamp stores and product ranges with the ever-changing customer demands."
Lee has held the positions of head of merchandising and business development director, and has been in the external merchandising environment since 2005. The next natural step was to start up Product Display Solutions. Based in Newcastle, PDS is a merchandising company whose workers go into shops to rearrange store layouts and products on shelves to clients' requirements. In the six months that PDS has been trading, it has secured work with well-known blue chip clients as well as supporting other merchandising companies.
"I'd had my learning, I knew the marketplace, I'd been in it for a long time," Lee says. "I wanted to try things out. There was plenty I wanted to do, but someone else was always holding the purse strings. I wanted to be in the position where those decisions would be up to me." When Lee started his retailing career, merchandising was generally done in-house. Now, however, it's more common for retailers to outsource this service, as it's seen as far more cost-effective – opening up opportunities for companies such as PDS.
But even though Lee knew the business well, he didn't assume that he knew everything.
"I researched the market," he says. "You need to know your market and know your competition. It can be difficult to explain to a potential client that we may be a new business but we're not new to this particular environment. But once clients understand that, their perception of PDS changes. Networking is massively important and understanding who uses external resource. If you know that, then you know who to target – this may identify retailers that currently do not use external resource so far."
Behind the scenes, there is a small team, all wanting to taste the same success, who have operated in the same environment, who bring their own knowledge to the business. He says that his people are his asset. "Without them, you have nothing. They are the ones that the client sees, the ones who do the changes in stores. I'm not selling anything apart from a service that my people provide – our asset is our people."
Lee's intensive research naturally led him to the vital role that banks play in startups. Typically thorough, he investigated several banks before settling on Lloyds TSB. "I've banked with Lloyds TSB since I was 16," says Lee. "I spoke to two competitors but Lloyds TSB came out ahead by leaps and bounds. One of the relationship managers I spoke to had already had dealings with another merchandising company and understood a lot more about my needs than anyone else."
Judith Irving, senior local business manager at Lloyds TSB, says that Lee impressed her from the start. "He had a very detailed business plan, which covered everything from potential growth areas for the business to cashflow forecasts," she says. "He had done his homework, and that is a key part of setting up a new business. He knew the sector he was going into and if you've got knowledge of the area you're going into, that's a great start. Lee is very focused. He knew what he wanted and he knew what he needed to do in order to get there."
Looking into company finance, Lee found that cashflow can be the number one pitfall for any startup, particularly an SME. How do you pay your employees if your clients don't pay you for 90 days? He found the answer in the invoice finance service offered by Lloyds TSB.
"I couldn't have run the business so far without this service," he says. "I looked at government loans but they would take too long. The quickest way was invoice finance. I can start work on Monday, issue the invoice on Friday, draw the money down from the bank on the following Monday and pay my staff. The bank lends me 80% of the invoice value and when the client pays I get the balance of 20%, less my agreed service charge. I looked at all kinds of ways and this was easiest – one phone call and it's done."
Financial support
Judith agrees that securing finance in order to build a business can be tricky. But, she says, there are plenty of ways Lloyds TSB can help. After all, SMEs are the lifeblood of the economy – it's in everyone's interests to help new businesses succeed.
"We can try and help by providing customers with different lending options that might suit them, such as the invoice finance service that Lee uses", she says, adding that it is simple to use. "The business releases an invoice to a client, but that invoice might not be paid for 30, 60 or 90 days. We then pay the business a percentage of that invoice within 24 hours, which can be up to 90%, depending on each individual case. If you can get 90% of an invoice within a few days, that makes a big difference to your business. The final 10% is paid to the business [minus the bank's fee] once the client pays."
After just six months, PDS is growing rapidly. And Lee is determined to stay true to its origins of good planning and sound business principles. "Our first invoice was for £750," he remembers. "It was probably the lowest invoice we ever had. But I was so proud that we'd secured our first ever piece of work that I framed it. Because one piece of work leads to another, which leads to another. So it's up on the wall as a reminder – the first piece of cash that somebody passed our way."
Business banking: more than finance
There's so much more to business banking at Lloyds TSB than just internet and telephone banking, says senior local business manager at Lloyds TSB Judith Irving. "Though, of course, we offer those, plus text alerts so you can keep an eye on your balance." But all new businesses can access a wide range of services and support designed to suit SMEs in every sector.
"At Lloyds TSB, all new businesses can receive guidance from a local business manager or relationship manager, depending on their business needs," explains Judith. "We offer free Sage Planning for Business software from the Lloyds TSB website, which guides you through things like forecasting cashflow, marketing and writing business plans. You can also benefit from a free 90 day trial and up to a 50% discount off Sage Start-Up and Instant Accounts software."
"Think about what makes you different," advises Judith. "What's your unique selling point? What are you going to do differently from everyone else that will make you stand out and make your business work?"
To get that all-important cash flowing, Lloyds TSB offers various financing options, including invoice finance, overdrafts, loans or hire purchase. It can also set up the facility to take credit or debit card payments, either in-store or over the internet. And when those first cheques start arriving, Judith says that Lloyds TSB can give your business the support it needs to make sure they're put to good use. "We provide services that are relevant to your business needs, whether you're a manufacturer, a shop, or selling online," she says. "We can let you know about services for your business that you might not have thought of yourself. And we can advise on the pitfalls and point you towards resources that will help your business work."
Judith goes on to explain that local business managers at Lloyds TSB can provide customers with support and guidance to help their business succeed. This can involve looking at cashflow predictions and identifying funding options to support the business' goals.
For more information on setting up a new business, visit lloydstsb.com/startup; or for more information on invoice finance, visit ltsbcf.co.uk.
This content is an advertorial produced by Guardian Professional to a brief agreed with Lloyds TSB, part of the Lloyds Banking Group.
Lloyds TSB Commercial is a trading name of Lloyds TSB Bank plc and Lloyds TSB Scotland plc and serves customers with an annual turnover of up to £15m. Authorised and regulated by the Financial Services Authority under numbers 119278 and 191240 respectively. Lending is subject to a satisfactory credit assessment. Invoice finance facilities are provided by Lloyds TSB Commercial Finance. Lloyds TSB Commercial Finance is a trading name of Lloyds TSB Commercial Finance Limited. Lloyds TSB Commercial Finance Ltd. Registered office: No. 1, Brookhill Way, Banbury, OX16 3EL, Registered in England and Wales no. 733011.
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