Management Part 2 Continue...

Tim advised: "It's easy to be blinkered by enthusiasm when you have a new business idea and fall into a trap that it'll earn its keep sufficiently, which it might not.

"I would advise start-ups to be very cautious unless you've got serious experience of the market and product, or sales, before you give up your day job."

Location, location, location...

This time last year Tim started to look at UK manufacture possibilities compared with outsourcing manufacture to Asia. Because of low overseas wages, he found Indian manufacture would save about 50 per cent on UK quotes - obviously a huge advantage. Also, credit agreements are much easier to arrange with overseas outsourced companies than they are with small, UK-based companies which usually require payment on collection. But these factors didn't mean outsourcing overseas was a foregone conclusion.

Carriage costs shave a significant amount of savings from the overseas manufacturing wedge, and outsourcing abroad would need bulk ordering, necessitating storage which is another cost.

UK-based operations allow 365uk's customers to have their products within two-to-five weeks - much more quickly than if they were produced in Asia.

But most importantly, Tim was determined the quality of his product would not be compromised - a vital consideration for businesses such as Tim's where the product being made is unique and unfamiliar to the company producing it. Tim said: "If an order of 1,000 pieces went wrong over there, it would have been a terrible blow to the business so I couldn't afford that to happen.

"I wanted complete control so that if the business failed - which I didn't think it would knowing I was giving it everything I had - it was my responsibility alone.

"Also, with smaller UK companies I found to make the product, I was dealing with the people face to face, tapping into their serious knowledge base and they aided me with design. Had I chosen a big-volume operation in India, I probably wouldn't have received that help."

So quality won out over price and as a result, 365uk chose to entrust production to a team of six manual manufacturers based in Hackney, East London.

Value for money

Choosing whether or not to opt for foreign, cheaper manufacture depends greatly on the uniqueness of your product.

One of the questions manufacture start-ups should ask themselves is: can you compete on price? Once you have an idea your product's cost, you need to look at whether it can compete with existing products on price and value for money.

Tim was in a unique situation because his product was an original concept in this country, not in competition with similar products. If your product is one-of-a-kind, price is likely to be less of an issue than if you already have several competing products.

So British manufacture pushed Tim down the route of producing a more expensive item than those of other products on the market - the City Slicker scooter apron, offering optimum wind and rain protection in harsh wet and cold conditions and at speed, costs £99.99 - but this has not hindered sales because it is a niche product.

Looking for cash...

Tim had the courage of his convictions but no security to put up to start his new business, so how did he get going? In June last year he sat down with his bank manager and applied for the government's Small Firms Loan Guarantee (SFLG) scheme. This provides 75 per cent of the security for loans of up to £100,000 for businesses trading less than two years. When you start the tough process of looking for a grant or loan, you should be heartened that most schemes are biased towards manufacturing businesses - particularly those which will create jobs.

 Wales?

Another option Tim faced was whether to base 365uk in his native Wales.

West Wales and the Valleys are areas labelled Objective 1 in the European structural funds (others are Merseyside, South Yorkshire, Cornwall and the Scilly Isles). For these areas, the fund can cover up to 50 per cent of the total cost of a scheme with the rest covered by match funding with the aim of boosting business there. However, Tim decided not to opt for the Welsh location for his business, partly because his start-up efforts primarily involved pitching mostly in London and South-East England. As Business Link advises, new businesses need to think carefully about how close premises are to both suppliers and customers. If possible, you need to be close to both but finding a good mid-point can be quite effective. If you cannot be close to both, then it is normally better to be closer to the customer, especially as you have to pay for distribution to them while the supplier usually has to pay for distribution to you.

 Branding...

So we have seen how opting for UK manufacture pushed up the price of 365uk's products in comparison to overseas manufacture, but how was this offset by other benefits? In the company's early days, Tim thought little about branding because he was working so hard to ensure the product's quality so customers could find no fault with it. But (as we explored in the last issue of Start Your Business), branding is all about encapsulating your product's best qualities, and Tim found the high-quality sturdiness of his scooter accessories has been wholly boosted by the 'Made in the UK'

tag. His website and company logo are embellished with the Union Jack logo because, as Tim found, it was in fact a very effective branding concept.

Tim said: "While I was pushing the product, people normally asked me where it was made and I started to realise I could push the UK-made feature at that stage.

"The shops I'm selling to are scooter shops established for maybe 30 or 40 years and when I called these peo ple, the initial response was surprised and positive. This is because products made completely in the UK are still quite rare - a factor I have managed to turn to my advantage.

"Generally, I found it grabbed someone's attention when I told them my product was made in the UK - it's hard to say how many sales I have secured just through it but I think it's helped with a significant proportion."

 Now and beyond...

365uk has been up and running since last December which has been a difficult few months in terms of the scooter market but the company has still garnered success to merit Tim's hard work and tough decision-making.

The product is nicely developed and Tim has 12 specialist scooter shop accounts throughout London with 10-15 per cent of business orders coming directly from individuals through the company website - www.365uk.com. The future looks bright and Tim hopes to be distributing 365uk products to scooter-culture countries such as Italy, Spain and France by the end of this year.

He added: "My best piece of business advice is that if you are seriously looking at having a real go at your own new business, ask yourself one

question: are you prepared for your job to be your life? You've got to work as hard as you possibly can to give it a shot and look at it as job and life combined.

"I'm reasonably satisfied with what I've achieved so far and think the effort has definitely been worth it. There's a lot of free help out there from different organisations, so take advantage of them. By using these there are a few key people who have made a real difference to my progress.

"Last, and most importantly, I would say it's essential to be enthusiastic about your business as this will certainly come across to everyone you deal with, which means you're halfway there."