Business Essentials: Big lessons for growing companies

They'll pamper wannabes but who'll pamper them? Bubble Glam Parties wants to make a go of makeover events for young girls. But, finds Kate Hilpern, it needs funding
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"Emma works part-time and I work full-time, but we wanted to have a business of our own on the side that we could enjoy and build up over time," says Ms Ingram.

The two women are both creative and they had been seeking a way of capitalising on this. "We looked around the market to see how we could utilise our talents," adds Ms Ingram. "Emma has a daughter who loves make-up and we thought, 'What about makeover parties for little girls?' We researched the idea and found these types of parties are already huge in America, but that there are very limited options here."

As their business plan matured, they decided to move into other kinds of party too. "We mainly do children's birthdays but we won't rule out special events - anything from school fêtes to pamper evenings and from school disco nights to prom nights," she says.

Ms Yeldham has children to look after, so Ms Ingram is currently doing most of the work. When the business takes off, however, which they are predicting will be next month, Ms Yeldham will work full-time.

But the two women, both of whom run Bubble Glam Parties from their Essex homes, have come up against a challenge. Even with the most accurate business plan, they are struggling to keep up with all the costs of getting their company off the ground. It is still early days and they are financing it themselves, so there isn't a pool of money they can dip into.

They want to know if they can gain any kind of government grant and what they should do in the meantime while they rely on their own resources.

Among the biggest costs are advertising, setting up a website and buying goods for the parties themselves. "At some point, we need to get public liability insurance as well," adds Ms Ingram.

She has looked into applying for grants and believes that Bubble Glam's best bet lies with either the Prince's Trust, which offers support for entrepreneurs, or with the East London Small Business Centre.

"But we keep being told that the business will need to provide evidence of contributing significantly to the community, which I don't think our parties do," she says.

"Also, we've been told we need a sector to work within, and our parties don't really fall into a particular category. So that's proving difficult too."

Until they secure a grant - if they succeed in doing so at all - Ms Ingram thinks that the money required to launch the business to its full advantage will be hard to find. So, she says: "We want to know if there is anything we can do to make this process easier."

www.bubbleglamparties.co.uk, or contact Emma Yeldham on 07961 930396.

WHAT THE EXPERTS SAY

Fraser Mackay, head of small business customers, Barclays Bank

"This is a problem faced by many businesses. Ms Ingram and Ms Yeldham should continue developing their business plans and forecasts so they know how much money they will need in the future. To raise cash, they could apply to their bank for either an overdraft facility or a loan.

"An overdraft helps a firm bridge the short-term gap between having to pay money out to set up and run that business, and getting money back from customers. Provided by most banks, they are simple to use and easy to apply for.

"Alternatively, they could seek to take out a loan. They could then spread the set-up costs across a number of years. The Small Firms Loan Guarantee, a government-backed scheme, is particularly suitable for firms that have little in the way of security to support a loan."

Rob Bryant, partner in consulting, Deloitte

"They are right to worry about costs, but with the school holidays more than halfway through, they also need to focus on growing revenues. The purchase process for Bubble Glam Parties is complex (a combination of parents, children and their friends) and a focus on trials of the 'makeover' service should help prime the pump for September.

"Building a network of influences may help reduce current costs in exchange for offering a limited commission on future sales. Establishing online links to local 'what's on' guides and websites that offer ideas for children's parties will maximise the return on their investment.

"Advertising spend should be focused on the locations where parents are having their own makeovers - beauty salons and studios, say - and on local attractions where families spend time over the holidays.

"A link with a local photographer would provide a memento of the party and a longer-term referral mechanism as proud parents show off the transformation of their child into a princess."

Kim Fletcher, business adviser, Business Link

"As Ms Ingram and Ms Yeldham have discovered, obtaining a grant is a complex process. But there are avenues for them to explore. They could try the Grants and Support Directory, a free service that allows businesses to search a database of 2,500 national, regional and local government programmes. Visit the Finance and Grants section at www.businesslink.gov.uk.

"The website may throw up many opportunities, but their local Business Link could help decide which ones are really relevant to Bubble Glam Parties. Grants and support schemes are only made available for specific activities or initiatives, and they need to be clear what they want to use the money for. It is a competitive area, and considering the criteria for each funding body is essential.

"I would suggest examining the business and seeing why funds are tight. Is it a simple lack of initial capital or are overheads too high?

"A review would highlight what type of funding would be most appropriate."

The week ahead

The Chinese economy and its insatiable appetite for commodities will be the centre of attention this week as key players in the resources sector release results. The world's biggest mining company, BHP Billiton, which releases its full-year results on Wednesday, has been a big winner from the boom. Analysts are expecting profits to rise by around 80 per cent as the Melbourne-based company starts to benefit from substantial rises in its coking coal and iron ore contracts. It will also be boosted by the higher oil price, analysts say.

The expected strong figures from BHP Billiton follow on from healthy recent results at Rio Tinto and Xstrata. The main point of interest will be what chief executive Chip Goodyear has to say about the global demand for commodities and whether the boom is sustainable.

While BHP Billiton has cashed in on the resources boom, China's industrial rise has led to mixed fortunes for other companies in the sector. At the UK's largest steel maker, Corus, it has meant a fall in prices for its products, with China set to raise its steel output by a fifth this year. To offset this, producers including Corus and Mittal Steel have announced cuts to production.

Analysts are expecting a modest dividend of 0.5p a share to be paid when Corus releases its interim results on Thursday. The company, which was formed through the merger of British Steel and Hoogovens, has turned its financial performance around in recent years, but analysts have voiced concerns about the drop in steel prices and the effect of higher raw material costs.

Away from resources and across the Atlantic, there will be much interest in food giant HJ Heinz, which releases its first- quarter results tomorrow. The company recently bought HP Foods from Danone.

Also in the US, technology group Novell releases its third- quarter results on Thursday. In Europe, insurer Swiss Re reports on Thursday.

Closer to home, the health of Britain's industrial economy will be revealed this week. The CBI's Industrial Trends Survey for August will provide a pointer, while a number of British-based manufacturing and engineering companies are reporting.

Among them is Tomkins, which makes air-conditioning components, transmission belts and taps. It releases its second- quarter results on Thursday and analysts will look for signs that conditions in the US auto industry have improved.

Also reporting on Thursday is the world's largest drinks can maker, Rexam, with the market hoping that trading has recovered since its most recent update. In May, the company's chairman, Rolf Borjesson, warned that sales were lower than expected.

Trading conditions have been even worse at pest-control group Rentokil, where the interim results on Thursday will be the first since Doug Flynn's appointment as chief executive in April. There has been speculation that Rentokil may try to offload some of its business units as it looks to revive its flagging fortunes. But analysts do not expect any major changes yet as Mr Flynn is still finding his feet in the job.

A day earlier, Brambles, the world's biggest supplier of pallets, releases its full-year results. In a trading update in June, the company said profit would rise on increasing earnings from its CHEP pallets business.

It isn't just the big hitters of industry that will be grabbing the markets' attention. Advertising firm WPP is reporting on Friday. In June, it said sales had increased by more than 20 per cent in the first five months of 2005 as it received a boost from its acquisition of Grey Global Group.

There will also be interest in the insurance group Standard Life ahead of a vote by its members on demutualisation. Standard Life is now in favour of ending its independence, having previously told its members to reject a switch to public status. Its interim results on Tuesday will also provide an update on its solvency position.

Also causing a flutter will be hotel and gambling business Hilton, the owner of Ladbrokes, which is releasing its interim results on Thursday. The group is looking to offload up to £400m worth of hotels, and the market will be hoping that it sticks to its promise to maintain strict financial discipline. There will be investor interest in how much its hotels business has suffered from the recent London bombings.

On Tuesday, the housing market will come into focus as the biggest listed homebuilder, Persimmon, releases results. Analysts expect a solid performance after the company said in late June that pre-tax profit would rise, despite tough conditions.

The week that was:Corporate misdemeanours, from Merck to JPMorgan

It was not a good week for a number of high-profile companies and individuals, as a string of legal disputes saw some reputations end the week a little the worse for wear.

Among them was the US drug company Merck, which was ordered on Friday to pay more than $253m (£140m) to the family of a Texas man who died after taking its Vioxx painkiller. Merck said it would appeal against the decision.

Also suffering a setback was JPMorgan Chase, which reached an agreement worth $1bn to settle charges relating to the collapse of Enron.

Meanwhile, the chief executive of the Icelandic firm Baugur, Jon Asgeir Johannesson, was in the spotlight as he was formally charged with fraud, embezzlement and breach of trust.

Another high-profile executive facing fraud charges was the former right-hand man of one-time media baron Lord Black. David Radler, the ex-president of Lord Black's Hollinger International, confirmed that he would plead guilty and co-operate with investigators.

Also in the news last week was the Financial Services Authority, which secured two criminal convictions for market abuse. A London jury found Carl Rigby, the former chief executive of software company AIT, guilty of "recklessly" making a misleading statement to the market. Earlier in the week Mr Rigby's ex-colleague, Gareth Bailey, was also found guilty on the same count. Mr Rigby and Mr Bailey could face up to seven years in jail, or a fine.

Away from corporate misdemeanours, a number of deals -or proposed deals - grabbed the market's attention last week.

The Royal Bank of Scotland sealed a long-anticipated deal with Bank of China. The bank is head of a consortium paying $3.1bn for a 10 per cent stake.

Mining group Xstrata was busy, too, acquiring a 19.9 per cent stake in its Canadian rival Falconbridge for £945m, amid speculation that it could go on to buy the rest of the business.

Meanwhile, medical products group Smith & Nephew put its hospital supplies business, BSN Medical, up for sale with a price tag of up to £700m.

Across the Atlantic, the search engine company Google was as industrious as ever. It revealed last week that it planned to raise more than $4bn by selling 14.2 million new shares to fund possible acquisitions. Since floating a year ago at $85 a share, Google shares have tripled.

Away from corporate deals, but also in the US, retail giant Wal-Mart posted its smallest quarterly profits gain in four years. Wal-Mart, considered a barometer of consumer sentiment, said it was concerned about the impact on the US economy of the surging oil price.

Back in the UK, last week was dominated by the results of two mid-sized players.

The asset management group Schroders unveiled a 70 per cent rise in first-half pre-tax profits to £123.5m. It also said it planned to break into the competitive US retail fund market. And recruitment group Michael Page reported a 14 per cent rise in first-half profits as it received a boost from its European business.

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