Featured Business: All Things Bikes

Guest Post: To inspire and inform... here is the story of successful business 'All Things Bikes' as told by founder Alex.

www.allthingsbikes.com

The decision to leave paid employment and start working for ourselves wasn’t one we took lightly. Like many people, my partner and I had often dreamed of leaving the corporate rat race with it targets, deadlines and politics behind and getting the perfect work life balance by setting up our own business and having the ability to decide how hard we wanted to work. Again like most people, these the dreams were often dreamt whilst on holiday relaxing without a care in the world except deciding whether it was worth rolling over to top up the sun tan lotion.

For us, our business grew from what was essentially a hobby. I’ve always loved cycling and got my first proper bike at age six. Growing up in the coastal town of Bournemouth in the 80s, the I took full advantage of the freedom that cycling gave me to roam and explore the New Forest cycle tracks, Hengistbury Head, Corfe Castle and the plethora of other places that might have been inaccessible to me had I had to rely on public transport or the taxi of mum and dad.

As my interest grew, like many kids, I coveted the latest and greatest models as they came out (in my case it was the dream of owning my very own 1984 Kestrel MXZ) but unfortunately at circa £2200.00 a pop, these was far outside my teenage budget. That didn’t stop me dreaming though and once I could afford to I began my search for the bike of my dreams.

Obviously almost 25 years after the MXZs hit the market, I couldn’t just walk into a shop and buy one off the shelf and I found that the second hand ones that infrequently popped up on internet auction sites were either in very poor condition having been chucked into the back of a shed for two decades or worse still been so “upgraded” with cheap “modern” parts that they bore very little resemblance to the design beauties they once were.

So I decided to build my dream bike from scratch and instead of looking for a complete bike, I started my hunt for the original parts piece by piece. This introduced me to a whole world of similar minded enthusiasts – People who like me were trying to recreate a childhood fantasy and would go to the ends of the earth to find authentic original pieces to complete their projects.

Whilst on the hunt for my own parts, I began to find other parts that people were looking for, people started asking me to source parts for them and as time went one my opinion and advice was sought on all things bike related. And so All Things Bikes was born in the summer of 2010.

Although I registered myself as a sole trader at this point, I still wasn’t ready to fly solo and I didn’t want to completely leave the relative security of a regular salary, so along with my partner we began to work on building the business up to an extent that we could rely on it to support both of us.

Because of the line of business we were into, we found that social media was key to getting the word out about what we did. We wanted to build our own community of like minded people whilst not alienating those new to cycling so from the very start we chose to use our Facebook page to share cool pictures and project details rather than a means of advertising out products per se. We have dabbled a bit in Twitter and Pinterest and will probably do more with these platforms soon but for now Facebook is working really well for us.

My partner and I both finally left our jobs this year – She went first in February and I was close behind her saying my final goodbye to the 9-5 life at the end of March. We knew we were ready having saved our target sum of money to cover our baseline monthly expenses for around 6 months, and paid off any outstanding loans we could afford to as well.

It hasn’t all been plain sailing however, although we love working for ourselves and the dealing with (and learning from) the day to day challenges as they come up, having both worked salaried jobs for close to 2 decades, of course we sometimes have a little panic when we have a quiet day on the sales side and wonder if it is the beginning of a downwards slide.

Many years ago someone asked me if I would rather look back on my life in my twilight years and regret the things I had done or the things I HADN’T done… I didn’t have to think very long to realize what my answer was so, now, we’re mostly pinching ourselves in disbelief that we finally did it… We’ve made the jump and done what so many people only dream of doing.

Our two biggest challenges from the start have been sourcing parts (we can’t just buy them from manufacturers so we need to spend a considerable amount of time trawling the internet for used parts or bikes being sold for parts or repair) and getting our website right.

The former, I believe will always be a challenge but in some ways, that’s fine as that is why businesses such as ours exist. The latter though, is a problem we are currently working on, and although Allthingsbikes.com exists and has for quite a few years now, we are in the process of developing our brand new website with will include a blog / forum section and a for sale ecommerce section allowing customers to by directly thorough the website rather than through our eBay shop as is mostly the case at present. We hope to launch the new site in late summer / autumn 2014.

We’ve learnt a few things along the way, both from experience and from invaluable advise found online or given to us by others. Here are my top five tips for anybody thinking of not only starting their own business, but also planning for that business to be their sole (or at least main) source of income:

1) Sort out your finances – It seems obvious, but the last thing you want to do when you re trying to build a new business is to be worrying about where your next meal is coming from. Whether you choose to go it alone like we did and save until you have a few months worth of bills in your savings account, or you decide to get outside help from the bank, government grants or even the general public, make sure you know how you re going to support yourself and run your business in your first 6 to 12 months

2) Choose something you actually enjoy! Even if you aren’t completely gaga about your product or service, it helps if you at least like it! Remember the top reason people leave work to set up on their own is because they don’t like their job… Why then would you replace it with something else you don’t like? A wise man once said: “Choose a job you love, and you will never have to work a day in your life”… Makes sense.

3) Don’t hide it under a bushel: One of my early mistakes was not talking over my plans with others for fear that they would either steal my idea or laugh it out of the room. Truth is, we all need to hear a different perspective to avoid missing obvious problems or gaps in our plans. I read a great LinkedIn post on the topic recently that puts the point across a lot more succinctly than I could. If you are interested, you can find the post here

4) Understand your customer. In order to get anything right – from your website, your tone and style on social media, your choice of social media platform, your choice of product or service, in fact anything at all, you need to know who your customer is. Our website build is taking longer to complete as we are currently doing a lot of work to understand not just the age and gender of our customers, but where they live, what they typically do for a living, what the read / watch play etc so that we can understand the different personas that engage with us and make better product choices and marketing decisions to suit them.

5) Remember to be kind to yourself! Again, this may sound obvious, but in the first month after we left our jobs we literally worked ourselves ragged such was the fear of failure! Having talked to a few friends that are self-employed, we now try to take a lunch break and get at least 30 minutes of exercise each day. We still sometimes get carried away and forget to take a break, but these days it usually because we are really excited about something and forget to slow down rather than that we are too scared to.

The reality is that we’ve never worked harder and we still have things to worry about but we would not change our decision to start working for ourselves for anything. The biggest plusses from my point of view are: The fact that we are much more in control of our time, we now are able to fit in regular exercise (something we couldn’t while commuting because of our long hours) meaning that we feel healthier and less stressed, we can really spend time researching ways to expand the business and take it to the next level, and finally we can put to use all the experience we gained working full time for other people and making profits for them!

Filing your VAT return

We recently registered for VAT and I had to file my first quarterly return. It was quite a headache and I had an accountant to help me. So how does it all work?

Your business must register for VAT if the goods you are selling pass a threshold set by HMRC. The VAT threshold for 2014 is £81,000. It goes up each year so be sure to look it up on HMRC's website: http://www.hmrc.gov.uk/vat/forms-rates/rates/rates-thresholds.htm#2

Sounds simple enough. But as our business sells online mainly via Ebay and Amazon we came across all kinds of problems. Firstly we were only counting the income which Amazon passes on to us every fortnight. But, the sales income has to be what is being charged to the customer. Therefore our accounts now show what the customer paid (including postage) and then the portion that Amazon takes in seller fees.

The next challenge we had was that from everything we read on HMRC's website we understood that sales outside of the EU are exempt from VAT. Whilst this is true, those sales still count towards the threshold. So, if you sold £81,000 worth of goods, and £10,000 were to the USA you would still need to register for VAT but only pay VAT on the £71,000 sold here in the UK or in the EU.

Just to clarify, you pay VAT on goods sold within the UK and also goods sold within the EU. At the moment the VAT rate is 20%, so you need to factor that into your sales price.

Our final challenge was that some of the items we sell are zero rated for VAT. We sell baby clothes and items on which VAT is not charged. You do not include those sales in your calculation of the VAT threshold. So if our overall sales were £81,000 but £10,000 of those were of baby clothes then we would not need to register for VAT.

As it turned out we were well past the threshold and because of this misunderstanding about including our worldwide sales we registered late for VAT. We had to fill in a form to explain why we were registering late, and we were liable for a penalty or a fine. Thankfully HMRC accepted that this was a genuine mistake and we did not have to pay a penalty.

Remember, when calculating the VAT threshold you need to use a rolling 12 months figure. So whilst your accounts might show what you made during 2013, you need to look at what you made in the previous 12 months from now.

So what has registering for VAT done for our sales? We have had to put the prices up, but not by 20%. On the items for which we charge VAT (usually maternity clothes) we are already paying VAT to our suppliers when we purchase the items. When you do a quarterly VAT return you have to calculate what you have already paid in VAT to any of your suppliers.

Sales have definitely been affected by us registering for VAT but we diversifying in order to compensate. We are increasing our products which are exempt from VAT and also working harder to make sure our prices are as low as possible and that we offer sales all across the world.