Podcast Summary
Understanding Financials and Adapting to Challenges in Business Growth: To grow a successful business, understand your financials, adapt to challenges, and stay committed to your goals.
Building a successful business requires a solid understanding of your financials and the ability to adapt to challenges. My guest, Ben Walker, who runs a gymnastics business, shared his experience of generating 1.8 million in revenue but struggling to determine profitability. He faces challenges in expanding his business due to space constraints and consumer resistance to VAT payments. Additionally, he grapples with imposter syndrome when it comes to making money in the family market. These challenges are common among entrepreneurs, especially those who are immigrants and come from humble beginnings. It's essential to embrace the journey, learn from setbacks, and stay committed to growing your business. So, in summary, understanding your numbers, adapting to challenges, and staying committed to your goals are key takeaways for growing a successful business.
Building a gymnastics business in a challenging environment: Despite challenges like VAT regulations and staff management, with hard work, resilience, and the right support, it's possible to build a successful gymnastics business.
Starting a business with limited resources in a foreign country or any challenging environment requires courage and determination. Ben Walker, the guest from EA Gymnastics, is a great example of this. He built a successful gymnastics business, worth over £100,000 per month, within five years. However, managing a business with over 100 part-time staff across multiple locations is no easy feat. One of the significant challenges he faced was securing space for gymnastics clubs and dealing with VAT charging in children's services. VAT can be a significant barrier for businesses in the sector, as they have to pay 20% of their turnover once they exceed 85,000 pounds. However, there are ways to challenge these rulings, as demonstrated by Action Amanda, who successfully fought HMRC for five years and won. The key message is that with hard work, resilience, and the right support, it's possible to overcome these challenges and build a thriving business.
Seeking Expert Advice on Tax and Regulations: Consult professionals for tax and regulatory matters to avoid potential legal issues and build a sustainable business with high barriers to entry and protective moats.
When it comes to running a business, especially one involving education or children, it's crucial to seek expert advice on tax and regulatory matters. A story was shared about a successful business owner who avoided paying VAT by consulting a VAT specialist, but giving such advice could put James and I in a precarious position. It's essential to clarify that we're not providing tax advice, but instead, advocating for consulting professionals. Another concern raised was the potential issue of franchising a low barrier-to-entry business, as anyone could set up a similar venture, potentially leading to competition. The long-term goal for a business should be to build a profitable enterprise that can operate without the founder's direct involvement. This is achieved by implementing high barriers to entry and creating moats around the business to protect it from competition.
Focusing on easy-difficult businesses with a hungry audience: Consider the level of difficulty in starting a business and aim for those with a large, hungry audience and a moat around them, such as tuition, childcare, healthcare, and food businesses.
When starting a business, it's essential to consider the level of difficulty involved and aim for those with a hungry audience and a moat around them. The speakers emphasized that running a small business can be just as challenging as a larger one, and it's crucial to know this from the beginning. They suggested focusing on easy-difficult businesses, where people regularly buy from you due to their love, want, and need for your product or service. For instance, tuition, childcare, healthcare, and food businesses have a large, hungry audience. In contrast, a candle business might be easy to start but difficult to succeed in due to the low barrier to entry and the fact that people may not truly need the product. Additionally, the speakers highlighted the importance of understanding the psychology of consumer behavior and how people's needs, wants, and loves can impact their purchasing decisions.
Building a successful business with devoted customers: Creating a business that resonates with people can lead to great success, but requires financial management and protection from competition. Monthly management accounts and profit and loss reports are crucial for financial insight and control.
Creating a business that people love, want, and need can lead to great success, as exemplified by Apple and its devoted customer base. However, it comes with challenges, such as generating enough profit to sustain growth and protecting the business from competition. The discussion also touched upon the importance of producing monthly management accounts for better financial insight and control. Ben, a potential business partner, shared his experience of discovering the business through a podcast and Lucy and Mark, who have previously worked with them. The group also discussed the potential growth of the business, aiming for a monthly revenue of 130k, and the need to implement monthly profit and loss reports for financial management.
Understanding Monthly Finances for Business Growth: Regularly monitoring monthly finances helps identify strengths and weaknesses, make informed decisions, and plan for future growth. Being proactive and adaptable in securing resources can lead to business expansion despite challenges.
Having a clear understanding of your monthly numbers is crucial for business growth. Ignoring this can lead to missed opportunities and potential financial instability. The speaker emphasizes that knowing your monthly finances allows you to identify strengths and weaknesses, make informed decisions, and plan for the future. He also shares his experience of acquiring units during a difficult time by being proactive and planning ahead. This strategy enabled his business to expand and grow despite the challenges. Therefore, focusing on monthly financial management and being adaptable in securing necessary resources can significantly contribute to a business's success.
Struggling to find suitable locations for expansion in Chelmsford: Speakers face challenges in securing large units for their business due to high costs and landlord resistance, exploring partnerships with leisure centers as an alternative to expand reach.
Despite their success in acquiring and revitalizing struggling fitness centers, the speakers are facing challenges in finding suitable locations for their business in Chelmsford. They've identified a large, 20,000 square foot unit as a potential solution, but have been met with resistance from landlords. The cost of such a unit would significantly contribute to their revenue, estimated at around £15,000 per month. To expand their reach, they've also explored partnerships with leisure centers, turning underutilized spaces into full-time gyms. Their approach involves testing the market with a lower kit-out and building a reputation before expanding into a full-time facility. Currently, they generate around £17,000 per month from their existing gyms in Chelmsford and Milton Keynes.
Starting a gymnastics business involves high upfront costs and ongoing expenses: High investment for gymnastics business includes rent, equipment, staff, and additional offerings, but ownership creates a competitive advantage
Starting and running a successful gymnastics business involves significant upfront costs and ongoing expenses, making it a high barrier to entry. The costs include renting or owning a large space, purchasing expensive equipment, hiring and training staff, and providing additional offerings like badges and insurance. The experience and expertise required to run the business effectively also add to the challenge. Despite these hurdles, owning the location creates a moat around the business, making it harder for competitors to replicate the model. The business operates seven days a week, with parents bringing their children in for playtime or preschool-style classes during the day. While the initial investment may be high, the potential rewards of running a successful gymnastics business can be substantial.
Building relationships with local authorities for business success: Identifying market needs and networking can lead to prime business locations through partnerships with local authorities. Persistence and regular communication are key.
Identifying a market need and building relationships with local authorities can lead to successful business ventures, particularly in the areas of education and community services. The speakers shared their experiences of starting businesses in the gymnastics and daycare industries, highlighting the high demand and long waiting lists in these sectors. They emphasized the importance of organic marketing and networking to reach potential customers. When it came to securing physical space for their businesses, they recommended reaching out to local authorities, who often have underutilized properties that could be repurposed. The speakers' success stories involved persistence and regular communication with property departments in local councils, leading to valuable partnerships and prime business locations. They also suggested exploring opportunities with other large organizations, such as the NHS and government, which often hold vast property portfolios and may be open to collaborations.
Exploring alternative methods to save on business costs: Directly approaching property owners for real estate deals, seeking VAT exemptions, and incorporating non-VATable items into service prices can help businesses lower costs.
There are opportunities to save on costs, particularly in the real estate sector, by directly approaching property owners outside of popular listing platforms to secure better deals. Additionally, exploring potential VAT exemptions or reductions, such as those related to children's services or digital products, can help businesses lower their turnover taxes. Another strategy mentioned is finding ways to incorporate non-VATable items into the price of services, like safety equipment or educational materials. Remember, it's essential to ensure these methods are legitimate and comply with HMRC guidelines. Overall, being proactive and creative in navigating tax laws can lead to significant savings for businesses.
VAT and Company Structure in the Nursery Industry: In the nursery industry, childcare is VAT exempt, meaning no VAT charged or claimed back. Aim for 0 rated status to claim back VAT on expenses for significant cost savings. Consult a VAT specialist for expert advice.
For businesses, especially those in the nursery industry, understanding the nuances of VAT (Value Added Tax) and company structure is crucial. VAT treatment for services in this sector can be complex, with childcare being VAT exempt, not 0 rated. While this means you don't charge VAT, you also can't claim it back on your business expenses. To maximize savings, aim for a 0 rated status, which allows you to claim back VAT on your business expenses. This can lead to significant cost savings over time. It's essential to consult a VAT specialist for advice and guidance to ensure your business is optimally structured for tax purposes. Remember, the small investment in expert advice can lead to substantial long-term benefits.
Controlling key assets for strategic business advantage: Understanding property ownership and VAT exemptions are crucial for effective business management in franchising and day nurseries.
When it comes to business ownership and expansion, particularly in the context of franchising, controlling key assets such as property leases can be a strategic advantage. This was discussed in relation to a gymnastics club, where the speaker mentioned that McDonald's operates by first owning the property and then franchising out the business. This approach, they argued, creates a protective moat around the business and allows for greater control over the overall operation. Another key point from the conversation revolved around VAT exemptions for day nurseries and the difference between zero-rated and exempt goods, such as cakes versus biscuits. Despite some confusion, it was agreed that understanding these nuances is crucial for managing the financial side of a business.
Maintaining control in franchises through corporate ownership: Corporations can maintain control in franchises by owning and managing a significant number of sites, ensuring consistency and success through clear agreements and effective management systems.
While you may not always own the freeholds of a business, such as a franchise, you still hold significant power. Long-term leases can be taken out and sublet to franchisees, but if they fail to meet standards, the corporation can step in and take control. McDonald's is an example of a company that still runs a third of its sites corporately in the UK. This model provides the corporation with the ability to maintain control and ensure consistency. It's essential to have clear agreements and effective management systems in place to ensure the success of the franchise. Additionally, attending industry events, such as live podcast recordings, can provide valuable learning opportunities and networking experiences.
Creating a professional image to attract more customers: Investing in signage, buildings, and car parks can help build a moat around your business, increasing its value and attracting more customers.
Even in low barrier to entry businesses, it's essential to build a moat around your company to make it stand out and increase its value. Ben, a gymnastics entrepreneur, shared his journey of expanding his business and the importance of investing in signage, buildings, and car parks to create a professional image and attract more customers. This strategy not only makes the business more profitable but also increases its exit value. Ben, who started his passion for gymnastics at a young age, showed signs of being a great entrepreneur with his untold resilience, passion, and innovative approach. While he may not have all the 8 traits of a great entrepreneur yet, his willingness to learn and act on free content demonstrates his potential. Overall, the key takeaway is that building a moat around your business, no matter the industry, can lead to long-term success.
Key traits of successful entrepreneurs: Be teachable, curious, and understand networking and marketeering, but continue learning and improving, especially with digital platforms like Google Ads and Facebook.
While the individual in question may not have extensive marketing experience or education, he demonstrates several key traits of successful entrepreneurs. These traits include being teachable and curious, as well as having a strong understanding of the basics of networking and marketeering. However, there is still room for improvement, as he lacks experience with platforms like Google Ads and Facebook. To further encourage growth and learning, a suggestion was made to seat attendees at entrepreneurial events based on their trait scores, with higher scorers seated closer to the front. While this idea was met with some skepticism, the overall message was one of encouragement and support for entrepreneurs at all stages of their journey. It's important to remember that everyone starts somewhere and that continuous learning and improvement are key to success. So, keep listening, keep learning, and keep growing your business. Don't forget to subscribe, rate, and review this podcast to help spread the word and support the entrepreneurial community.
