There seem to be more and more companies offering Wheelie Bin Cleaning franchises. This is a business I just don't get. Why would anyone pay to have their wheelie bin cleaned? Unless you are pouring rubbish into it without using bin liners, it doesn't really get very dirty, does it? Ours certainly doesn't. And I don't know anyone who pays to have their bin cleaned (although I suppose they wouldn't necessarily share this information with me unprompted).
But even if some people do pay to have their wheelie bin cleaned, I can't see how you can make any money out of it. I've just googled "wheelie bin cleaning" and got a bunch of companies wanting to sell me a franchise (and it is interesting that their primary aim seems to be to sell me a franchise, not to actually clean my bin. I'm always suspicious of any franchise company whose website is all about selling franchises, not actually selling the service being offered.)
Most seem to be saying that you can clean 150 bins a day, that's one every 3 minutes in an 8-hr day. That seems quite a lot, surely even the fanciest cleaning machine is going to take 30-60 seconds to actually do the cleaning leaving you 2 - 2.5 minutes to get to the next location. Possible, I suppose.
Those people that do pay for their bins to be cleaned apparently do so once every four weeks. So to get 150 bins a day over a four week cycle you need 3,000 customers (150 x 5 day week x 4 weeks). That's fully 3% of your allocated territory of around 100,000 households (that was the territory size in one franchise I was looking at). That's quite a high penetration: if, say, a quarter of households actually want to pay for a clean, plus there are, say, 4 other competing companies in your area, that leaves you expecting about 6% as a steady-state, well-established figure. So getting to 3% right away is going to be tough.
Or, to put it another way, you'd have to sign up 11 new customers every working day for a year to get to your 3,000. Is that doable? Seems unlikely, unless they are all coming over the internet or some other automated system. If you are having to go door-to-door to sign them up yuo wouldn't have any time to do the cleaning, would you?
I just doesn't seem to add up to me. I'm not at all saying these franchises are scams (at least one of them is a BFA member), I just can't see how it works.
Any wheelie bin franchisees reading this? Can you really do 150 bins a day? And can you economically sign up that many customers to provide that volume of bins?
Thursday, 29 March 2007
Tuesday, 27 March 2007
FSB red tape myths
The FSB (that's the Federation of Small Businesses not Federalnaya Sluzhba Bezopasnosti) keeps bandying around this figure that owners of small businesses spend an average of 28 hours a month filling in forms for the Government. Google helpfully finds me nearly 50 FSB press releases citing this statistic.
But I think it is codswallop.
28 hours a month is nearly one whole day a week. There is no way we (let alone me personally) spend a whole man-day a week filling out regulatory paperwork. What can all these forms that other businesses are filling out possibly be? Here are the tasks we do which involve some sort of statutory "paperwork":
Payroll
The additional statutory burden of administering payroll is practically zero. We'd have to check everyone's hours, number of jobs they'd done, etc. even if we weren't also deducting payroll taxes on behalf of the government. The calculation of payroll taxes takes milliseconds because, like everyone else, our accounting software (QuickBooks) does it for us. Although maybe there are people out there who still calculate payroll deductions manually? It was only last year I think that the Inland Revenue finally stopped sending us a big book of tax and NI deductions every April. They really did send this huge series of tables where you could look up in one column what you were paying someone, and then look across to another column how much tax and NI you should deduct. I mean, really, why would anyone in their right mind ever bother doing that, when payroll software is practically free (I think we pay a princely £70 a year to keep our QuickBooks payroll tables up to date, plus a few hundred quid every few years to buy the newer version of QuickBooks itself).
Once a year, we "fill out" (i.e. print) P35/P14 forms, but there is zero, zero, zero paperwork required during the year - we just send the cash to HMRC once a month (OK, so that takes 5-10mins to check the amount, go online, send the payment). I probably spend maybe 1-2 hours preparing our annual return (which consists of getting QuickBooks to prepare the figures, me check them over, then instruct QuickBooks to zap them over to the HMRC website, and er, that's it).
So that's, say, 2 hours a year = 10 minutes a month, plus the 10 mins to send our monthly tax/NI pot to HMRC, so 20 minutes a month.
CIS Scheme (yes, I know, an example of RAS syndrome)
I do moan about this to anyone who will listen, but it doesn't really take that much time (to comply with, rather than to moan about). I moan because I dislike the fact that we and any subcontractors that we use are assumed to be fly-by-night tax avoiding scamsters unless we jump through a few hoops to prove otherwise, just because HMRC deems us to be operating in the "construction industry".
(CIS=Construction Industry Scheme. Basically a system whereby anyone operating in the "construction industry" claiming to be a subcontractor, not an employee, is assumed to be telling porkies unless they specifically prove otherwise. In practice if we pay an invoice from any small subcontractor -- whether an individual or a limited company -- we have to deduct 18% of it and send straight to HMRC, because HMRC assume said subcontractor is fiddling his taxes. Said subcontractor is of course not fiddling his taxes, and has to offset the deduction he has suffered against his true tax liability for the year).
For us, we have to fill out a little voucher each month summarising any payments we have made to subcontractors and pop them in the post to HMRC. This probably takes us 20 mins per month. The actual cash we deduct we just lump in with our real payroll taxes and pop that over to HMRC, so I have included the time taken to do that already. And even the monthly paper vouchers (which are a bit silly) are being abolished in April, and we'll only have to make a single annual return, just like we do for real employees.
So, at an extra 20mins for CIS (which will be nearly zero after this month) we are now at 40mins per month.
VAT return
I hear other SMEs really moan about this, but I just don't get it. As long as you are keeping accurate accounting records (and how can you run a business without them) filing your VAT return takes minutes. Our version of QuickBooks (2005 Pro) can't actually send the return directly to HMRC yet, we still have to type four numbers onto the HMRC website four times a year, but it really doesn't take a significant amount of time. Let's give it 30mins per quarter, 10mins per month, taking us to 50mins per month in total.
Annual Accounts
Spend a fair bit of time on this, but not to satisfy any regulatory requirement really. I'd want my accounts to show a "true and fair" picture whether or not I had to submit them to Companies House. Indeed, the version we actually submit to Companies House is far simpler than the version we use for internal management purposes (note I'm saying simpler not different. The two versions are of course based on the same figures, but we only have to file a summary balance sheet to Companies House, whereas we have a detailed P&L and a detailed balance sheet for our management accounts. Plus a stack of fancy metrics churned out from our super-dooper schedule / job / customer management software).
And our Corporation Tax return is based on pretty much the same figures, with a few adjustments (some small bits of expenditure we'd consider to be business expenses while taxman doesn't; depreciation becomes capital allowances; etc.). I suppose our accountants maybe spend a couple of hours a year on those bits. Let's allow them a half-day, four hours, 20 mins a month.
Then we have a bit of health & safety stuff. Very little time required on a regular basis, occasional few minutes filling out the Accident Book, a few more minutes, maybe half-hour, going on line to report the rare accident that requires a RIDDOR notification, annual review of our "stuff" for which I'd generously add an hour a month, maybe two if we really went to town on our annual review and spend a few man-days on it (like we did last year, see posts passim).
So I'm at something like 3 hours a month, and I just can't see how I could get to 28 hours a month. Are we missing something? Is there some huge raft of paperwork that everyone else is completing which we are just missing?
I think this whole red tape thing is mostly a myth, perpetuated by business lobby groups (I'm sure FSB is not the only one) and other businesses. Certainly some specific industries (waste management? farming? food preparation? house builders?) do have much larger regulatory burdens. Would that be enough to skew the average so heavily? FSB's stat is presumably the mean figure from some survey. Maybe the median would be more meaningful if there are some sectors massively burdened by red tape while the majority are not?
But you have to have some regulation to keep the real charlatans and scamsters in check. Are there any developed countries with less red tape than us? I doubt it. United States certainly regulates SMEs more closely, mainland Europe too. South East Asia? Not sure. Australia / New Zealand? Building regulations are certainly more onerous (e.g. re-tiling your bathroom requires a "waterproofing certificate"), don't know much about business regulation generally down there.
(On a non-business note, I am also a paraglider pilot. Paragliding in the UK is almost completely self-regulated, the CAA basically leaves it to the British Hangliding and Paragliding Association to make sure its members are trained and fly sensibly. I don't think any other countries do this. Certainly Germany and France have proper legal requirements to fulfill before you can throw yourself off a hill with a glorified parachute on your back, similar to what you'd need to fly a real plane)
We should be celebrating the fact that the UK runs so well, with such limited bureaucracy. By constantly harping on about "red tape strangling business" I think the FSB et al are being counter-productive. A civil servant contemplating some new regulation is going to think, hey, if these guys are already doing 28 hours a month of red-tape-complying, what difference will it make if my new regulation adds an extra half-hour or so? But if he thinks we are just doing 3 hours a month, then an extra half-hour is a huge increase and, maybe, Mr Civil Servant will just shelve his regulation, or work harder to make it less burdensome.
But I think it is codswallop.
28 hours a month is nearly one whole day a week. There is no way we (let alone me personally) spend a whole man-day a week filling out regulatory paperwork. What can all these forms that other businesses are filling out possibly be? Here are the tasks we do which involve some sort of statutory "paperwork":
Payroll
The additional statutory burden of administering payroll is practically zero. We'd have to check everyone's hours, number of jobs they'd done, etc. even if we weren't also deducting payroll taxes on behalf of the government. The calculation of payroll taxes takes milliseconds because, like everyone else, our accounting software (QuickBooks) does it for us. Although maybe there are people out there who still calculate payroll deductions manually? It was only last year I think that the Inland Revenue finally stopped sending us a big book of tax and NI deductions every April. They really did send this huge series of tables where you could look up in one column what you were paying someone, and then look across to another column how much tax and NI you should deduct. I mean, really, why would anyone in their right mind ever bother doing that, when payroll software is practically free (I think we pay a princely £70 a year to keep our QuickBooks payroll tables up to date, plus a few hundred quid every few years to buy the newer version of QuickBooks itself).
Once a year, we "fill out" (i.e. print) P35/P14 forms, but there is zero, zero, zero paperwork required during the year - we just send the cash to HMRC once a month (OK, so that takes 5-10mins to check the amount, go online, send the payment). I probably spend maybe 1-2 hours preparing our annual return (which consists of getting QuickBooks to prepare the figures, me check them over, then instruct QuickBooks to zap them over to the HMRC website, and er, that's it).
So that's, say, 2 hours a year = 10 minutes a month, plus the 10 mins to send our monthly tax/NI pot to HMRC, so 20 minutes a month.
CIS Scheme (yes, I know, an example of RAS syndrome)
I do moan about this to anyone who will listen, but it doesn't really take that much time (to comply with, rather than to moan about). I moan because I dislike the fact that we and any subcontractors that we use are assumed to be fly-by-night tax avoiding scamsters unless we jump through a few hoops to prove otherwise, just because HMRC deems us to be operating in the "construction industry".
(CIS=Construction Industry Scheme. Basically a system whereby anyone operating in the "construction industry" claiming to be a subcontractor, not an employee, is assumed to be telling porkies unless they specifically prove otherwise. In practice if we pay an invoice from any small subcontractor -- whether an individual or a limited company -- we have to deduct 18% of it and send straight to HMRC, because HMRC assume said subcontractor is fiddling his taxes. Said subcontractor is of course not fiddling his taxes, and has to offset the deduction he has suffered against his true tax liability for the year).
For us, we have to fill out a little voucher each month summarising any payments we have made to subcontractors and pop them in the post to HMRC. This probably takes us 20 mins per month. The actual cash we deduct we just lump in with our real payroll taxes and pop that over to HMRC, so I have included the time taken to do that already. And even the monthly paper vouchers (which are a bit silly) are being abolished in April, and we'll only have to make a single annual return, just like we do for real employees.
So, at an extra 20mins for CIS (which will be nearly zero after this month) we are now at 40mins per month.
VAT return
I hear other SMEs really moan about this, but I just don't get it. As long as you are keeping accurate accounting records (and how can you run a business without them) filing your VAT return takes minutes. Our version of QuickBooks (2005 Pro) can't actually send the return directly to HMRC yet, we still have to type four numbers onto the HMRC website four times a year, but it really doesn't take a significant amount of time. Let's give it 30mins per quarter, 10mins per month, taking us to 50mins per month in total.
Annual Accounts
Spend a fair bit of time on this, but not to satisfy any regulatory requirement really. I'd want my accounts to show a "true and fair" picture whether or not I had to submit them to Companies House. Indeed, the version we actually submit to Companies House is far simpler than the version we use for internal management purposes (note I'm saying simpler not different. The two versions are of course based on the same figures, but we only have to file a summary balance sheet to Companies House, whereas we have a detailed P&L and a detailed balance sheet for our management accounts. Plus a stack of fancy metrics churned out from our super-dooper schedule / job / customer management software).
And our Corporation Tax return is based on pretty much the same figures, with a few adjustments (some small bits of expenditure we'd consider to be business expenses while taxman doesn't; depreciation becomes capital allowances; etc.). I suppose our accountants maybe spend a couple of hours a year on those bits. Let's allow them a half-day, four hours, 20 mins a month.
Then we have a bit of health & safety stuff. Very little time required on a regular basis, occasional few minutes filling out the Accident Book, a few more minutes, maybe half-hour, going on line to report the rare accident that requires a RIDDOR notification, annual review of our "stuff" for which I'd generously add an hour a month, maybe two if we really went to town on our annual review and spend a few man-days on it (like we did last year, see posts passim).
So I'm at something like 3 hours a month, and I just can't see how I could get to 28 hours a month. Are we missing something? Is there some huge raft of paperwork that everyone else is completing which we are just missing?
I think this whole red tape thing is mostly a myth, perpetuated by business lobby groups (I'm sure FSB is not the only one) and other businesses. Certainly some specific industries (waste management? farming? food preparation? house builders?) do have much larger regulatory burdens. Would that be enough to skew the average so heavily? FSB's stat is presumably the mean figure from some survey. Maybe the median would be more meaningful if there are some sectors massively burdened by red tape while the majority are not?
But you have to have some regulation to keep the real charlatans and scamsters in check. Are there any developed countries with less red tape than us? I doubt it. United States certainly regulates SMEs more closely, mainland Europe too. South East Asia? Not sure. Australia / New Zealand? Building regulations are certainly more onerous (e.g. re-tiling your bathroom requires a "waterproofing certificate"), don't know much about business regulation generally down there.
(On a non-business note, I am also a paraglider pilot. Paragliding in the UK is almost completely self-regulated, the CAA basically leaves it to the British Hangliding and Paragliding Association to make sure its members are trained and fly sensibly. I don't think any other countries do this. Certainly Germany and France have proper legal requirements to fulfill before you can throw yourself off a hill with a glorified parachute on your back, similar to what you'd need to fly a real plane)
We should be celebrating the fact that the UK runs so well, with such limited bureaucracy. By constantly harping on about "red tape strangling business" I think the FSB et al are being counter-productive. A civil servant contemplating some new regulation is going to think, hey, if these guys are already doing 28 hours a month of red-tape-complying, what difference will it make if my new regulation adds an extra half-hour or so? But if he thinks we are just doing 3 hours a month, then an extra half-hour is a huge increase and, maybe, Mr Civil Servant will just shelve his regulation, or work harder to make it less burdensome.
Tuesday, 20 March 2007
Corporate memo becomes TV channel
It wasn't so many years ago that if you had just merged two global companies, you might communicate the details of this to the staff by sending them all a memo.
Such a memo would no doubt have spoken about "opportunities", "synergies", "securing the future", and that kind of corporate guff.
Arcelor-Mittal does it with a dedicated TV series, which employees can view on-line, to get the inside story of the merger and what it means for their job. Nice, I like it. (This via Real Business blog).
I have a similar plan (albeit on a slightly smaller scale): in our new office (which we should be occupying in April) we are going to have a webcam permanently broadcasting what's going on in the office, so you can all see how hard we work juggling the day around to get our handyman to your door on time.
Such a memo would no doubt have spoken about "opportunities", "synergies", "securing the future", and that kind of corporate guff.
Arcelor-Mittal does it with a dedicated TV series, which employees can view on-line, to get the inside story of the merger and what it means for their job. Nice, I like it. (This via Real Business blog).
I have a similar plan (albeit on a slightly smaller scale): in our new office (which we should be occupying in April) we are going to have a webcam permanently broadcasting what's going on in the office, so you can all see how hard we work juggling the day around to get our handyman to your door on time.
splendakills.net
Interesting post here via Seth Godin's blog about Johnson & Johnson attempting to avert negative publicity about their Splenda artificial sweetener by buying up lots of domains that might be used by campaigners against their product. Domains like "splendakills.net" and "splendasucks.net".
What misguided corporate PR advisor suggested they do this? Obviously they can't buy up every conceivable domain that might be used against them, so this strategy can surely only backfire? People hear about it (it is all over the blogosphere now) and some will assume that Johnson & Johnson / Tate & Lyle know something about the safety of the product which makes them expect people to campaign against it.
That's no way to manage your brand. If there is something genuinely wrong with the product they should fix it or withdraw it. If there is nothing wrong with it (and, without having done any proper research at all, my money would be on it being completely safe), then they should treat their consumers as adults and just explain the facts.
What misguided corporate PR advisor suggested they do this? Obviously they can't buy up every conceivable domain that might be used against them, so this strategy can surely only backfire? People hear about it (it is all over the blogosphere now) and some will assume that Johnson & Johnson / Tate & Lyle know something about the safety of the product which makes them expect people to campaign against it.
That's no way to manage your brand. If there is something genuinely wrong with the product they should fix it or withdraw it. If there is nothing wrong with it (and, without having done any proper research at all, my money would be on it being completely safe), then they should treat their consumers as adults and just explain the facts.
Monday, 19 March 2007
Cowboy builders (2)
Been thinking about what Steve's doorstepping cowboy builder would need to do to commit a criminal offence. It isn't that easy to prosecute someone for this sort of thing. As a consumer in a free market I am free to strike any bargain I wish. If I choose to pay someone several thousand pounds to do work on my roof that doesn't need doing, I am free to do that. Someone accepting my offer to pay them for that service is not necessarily a criminal, although they might well be be fleecing me.
So, had Steve been better prepared, and strung his cowboy builder along for a little longer, what might our friend have done which would be a definite criminal offence? Here are some suggestions:
1. Steve could have agreed to have the roof fixed, but asked the guy to come back in a few days time to do the work. He has then entered into a (verbal) contract in response to an unsolicited approach at his home, so Doorstep Selling Regulations kick in. Our cowboy builder needs to inform Steve that he has a statutory seven day cooling off period. Failure to mention this means a visit to Magistrate's Court and a maximum £2.5k fine.
2. Get him to fix the gas cooker. Gas Safety Regulations, certainly a fine, a lot more if he breaks it/leaves it unsafe and endangers the house.
3. Get him to do add a couple of new sockets in the kitchen. Part P of the Building Regulations prohibits this unless our cowboy builder is a "competent" electrician (a member of NICEIC or similar body), which is unlikely. (Although strictly speaking, the detail about whether you should be adding new sockets in kitchens is in the accompanying guidance -- the Approved Document -- to the building regulations and doesn't actually have the force of law. If our cowboy managed to safely install these sockets, it is unlikely (I think) that he could be prosecuted.)
4. Trade Descriptions Act. He's probably breaching this just by recklessly claiming the roof is in urgent need of repair. And what was that bit of paper he was waving, which he seemed to be saying showed he was "a genuine builder"? If it was false or misleading, then that too would get him nabbed under the Trade Descriptions Act.
That's the best I can do, which is probably enough to get him a few healthy fines, but unlikely to keep him off the streets for long.
So, had Steve been better prepared, and strung his cowboy builder along for a little longer, what might our friend have done which would be a definite criminal offence? Here are some suggestions:
1. Steve could have agreed to have the roof fixed, but asked the guy to come back in a few days time to do the work. He has then entered into a (verbal) contract in response to an unsolicited approach at his home, so Doorstep Selling Regulations kick in. Our cowboy builder needs to inform Steve that he has a statutory seven day cooling off period. Failure to mention this means a visit to Magistrate's Court and a maximum £2.5k fine.
2. Get him to fix the gas cooker. Gas Safety Regulations, certainly a fine, a lot more if he breaks it/leaves it unsafe and endangers the house.
3. Get him to do add a couple of new sockets in the kitchen. Part P of the Building Regulations prohibits this unless our cowboy builder is a "competent" electrician (a member of NICEIC or similar body), which is unlikely. (Although strictly speaking, the detail about whether you should be adding new sockets in kitchens is in the accompanying guidance -- the Approved Document -- to the building regulations and doesn't actually have the force of law. If our cowboy managed to safely install these sockets, it is unlikely (I think) that he could be prosecuted.)
4. Trade Descriptions Act. He's probably breaching this just by recklessly claiming the roof is in urgent need of repair. And what was that bit of paper he was waving, which he seemed to be saying showed he was "a genuine builder"? If it was false or misleading, then that too would get him nabbed under the Trade Descriptions Act.
That's the best I can do, which is probably enough to get him a few healthy fines, but unlikely to keep him off the streets for long.
Cowboy builders
Love this post from our Epsom franchisee, Steve Williams, who was himself approached by cowboy builder offering to "repair" his roof. Hilarious. I so wish that had happened to me. I'd have had the guy in, let him look around, quietly flicked on the video camera, spent a while discussing the state of the tiles, called my own voicemail to record the conversation just in case the vid camera didn't work, see if he says something which would actually be a criminal offence, take up a good hour or so of his time, see if he'll offer to "repair" our gas boiler, tempt him with a "mislaid" cubic zirconia earring on the floor of the loo, and the then call our good friends at Trading Standards and /or the cops (depending on whether he went for the earring or not).
My grandparents were the victim of such a scam a few years ago. A "passing builder" offered to fix their soffits etc ("in need of urgent repair"). They did all the right things, got a written quote, confirming what was to be done, total amount wasn't huge and maybe the soffits were in need of a lick of paint. But then it all went horribly wrong. "Builders" started deliberately breaking stuff they were supposed to be fixing, price for the "work" went up every few minutes, grandparents realised they were being fleeced, tried to call a halt, brought out the bit of paper on which was written what was supposed to be done (and for what price) and found that the fraudsters had switched the bit of paper.
They had placed it on the kitchen windowsill (I can imagine in now: "There you go, Mr Tolliday, I'll leave that there, that says exactly what we'll be doing, you've nothing to worry about, it's all there in writing") and then, in the confusion, switched it for a blank piece of paper. Scoundrels. People like that aren't cowboy builders, they are just criminals using "building" to perpetrate their particular brand of fraud.
My grandparents were the victim of such a scam a few years ago. A "passing builder" offered to fix their soffits etc ("in need of urgent repair"). They did all the right things, got a written quote, confirming what was to be done, total amount wasn't huge and maybe the soffits were in need of a lick of paint. But then it all went horribly wrong. "Builders" started deliberately breaking stuff they were supposed to be fixing, price for the "work" went up every few minutes, grandparents realised they were being fleeced, tried to call a halt, brought out the bit of paper on which was written what was supposed to be done (and for what price) and found that the fraudsters had switched the bit of paper.
They had placed it on the kitchen windowsill (I can imagine in now: "There you go, Mr Tolliday, I'll leave that there, that says exactly what we'll be doing, you've nothing to worry about, it's all there in writing") and then, in the confusion, switched it for a blank piece of paper. Scoundrels. People like that aren't cowboy builders, they are just criminals using "building" to perpetrate their particular brand of fraud.
Thursday, 15 March 2007
HSE responds on SafeContractor
Jim Neilson of the Health & Safety Executive has responded with a thoughtful and detailed letter regarding our disagreement with National Britannia and our SafeContractor renewal. (see earlier posts)
He broadly agrees with our position, saying that "health and safety should be about practical actions that make a difference, and not paperwork for its own sake."
He advises me that a colleague will raise this issue with National Britannia, and draw their attention to what the HSE considers to be sensible risk management. And they will write to me again advising me of the outcome of those discussions within a month.
Which I think is very good of them, top marks to HSE, zero marks so far to National Britannia.
I note in passing that if you Google "safecontractor renewal", you get my blog at #1 spot, with SafeContractor's own site some way down the search results. And even just Googling "safecontractor" has me at #5 or thereabouts.
He broadly agrees with our position, saying that "health and safety should be about practical actions that make a difference, and not paperwork for its own sake."
He advises me that a colleague will raise this issue with National Britannia, and draw their attention to what the HSE considers to be sensible risk management. And they will write to me again advising me of the outcome of those discussions within a month.
Which I think is very good of them, top marks to HSE, zero marks so far to National Britannia.
I note in passing that if you Google "safecontractor renewal", you get my blog at #1 spot, with SafeContractor's own site some way down the search results. And even just Googling "safecontractor" has me at #5 or thereabouts.
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