Wealth Check: 'How can I make my business more successful?'
Saturday 27 February 2010
Angela Durrant, 40, gave up her job selling houses after a near-death experience convinced her to pursue her dream career: voice coaching.
The mother of three from Cardiff was thrown 10ft into the air when she crashed her car while travelling at 80mph, but amazingly she escaped uninjured. She says: "I felt my life had stopped and I didn't know how to restart it. I decided to follow my dream of making a career in music."
Angela, who studied music at college and has since worked as a singer in her spare time, lives with her record producer husband, Paul, 53, her daughter Ella, three, and her step-son Jordan, 15. She recently launched her business using savings, but although she works as much as she can, the profits are small and she has debts to pay off.
Income: £20,000 from her husband's earnings; new business income has not yet been determined
Monthly family outgoings: £2,626
Savings: £800 in a Skandia stocks and shares ISA, £1,200 in a Friendly Society endowment
Debt: £18,600 with Lloyds
Mortgage: £150,000 at a fixed rate of 6.03 per cent
Advising her this week are Richard Barrett from Saffron IFA, Danny Cox from Hargreaves Lansdown and Anna Sofat from Addidi Wealth...
Increasing her number of clients will be tough and most self-employed people find the first few years a slog, according to Cox. He suggests choosing a target market and getting as much exposure within it as possible. "Marketing her business does not necessarily mean spending more money," he says. "One of the easiest and cheapest ways is to ask existing clients, friends and relatives for a referral."
She could also use social-networking sites such as Facebook or offer promotions, "introduce a friend for a free lesson", for example. To improve cash flow, Cox also recommends giving clients the option to pay for a number of lessons in advance at a discount.
Angela should look beyond the short term and formulate a clear business plan, recommends Sofat: "Angela needs to see herself as a professional business, not a one-man amateur set-up. Knowing what you want to earn means you can work backwards to see how many people you need to see each month," she says.
Clients need to know they cannot miss appointments, so Sofat suggests a system to enforce cancellation fees, such as a deposit requirement. If Angela is working to full capacity, she should consider running classes for groups or corporate clients – which she would be able to charge more for.
Sofat adds: "Singing is increasingly seen as a feel-good recreational activity and she may want to provide group sessions aimed at hen parties, children's parties and so on."
Angela's voice is her fortune now, so it is imperative that she takes out insurance on it. "If you had a money-making machine in the shed, you would want to insure it against breaking down," says Barrett. "You should view yourself as that machine. Inability to work because of accident or sickness would be a real problem."
Because Angela has no company scheme to fall back on, she should investigate her own accident and sickness cover as well as critical illness and personal health insurance.
Although she is keen to get out of the credit card trap, Angela is nervous about using her savings to pay off her debts. "The question of maintaining savings versus clearing debt is a controversial one," says Barrett. "Interest on debts is almost always significantly higher than the interest earned on savings and therefore the obvious answer would seem to be to sink any savings you have into clearing debt."
However, he warns that debt providers are currently reducing credit limits, which could leave Angela unable to take out another load should she need it. Cox recommends clearing the most expensive debt first: a £5,600 credit card consolidation loan charged at 14.9 per cent.
Sofat says Angela is paying over the odds for her mortgage at Abbey, and recommends opting out if the penalties are less than the benefit from a lower interest rate. "She should start by talking to her current provider and see if they can help. If not, then go and see a financial adviser – don't be put off and definitely don't feel stupid," she says. "Many more people are in your situation than you realise and at least you are doing something about it. Ensure they are independent so you get the full range of options."
The business may well take off, but for the meantime Angela needs to keep to a strict budget to avoid sinking into further debt. "The real key is to get really brutal about managing your income and expenditure," says Barrett. "Keep a record of all spending each month, and then decide whether this is typical of normal expenditure. This will help highlight any areas where Angela might be overspending." A number of accountancy tools can be found online to make this easier.
Retirement savings are not Angela's biggest priority right now, but should be once her cash flow increases. Cox says she should take out a private pension, explaining: "A £100 contribution costs just £80 and the fund grows almost free of tax."
For a free financial check-up, write to Wealth Check, The Independent, 2 Derry Street, London W8 5HF; or email firstname.lastname@example.org
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Pension mortgages: 'The advice I was given was wrong and now I face losing my home'
You'll need £220,000 for a minimum wage in your retirement
Questions of Cash: I checked in with Air France in time and still missed the plane
Minister's pension promise to firefighters challenged
Bank-beating exchange rates on your international payments
- 1 Planes go hybrid-electric in important step to greener flight
- 2 Christmas comes early to Hong Kong, as millions of bank notes spill out onto busy street
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens