Adventures In Micro-Business: From reviewing and expanding to selling

Russell Smith answers your queries

Q. I want to implement annual performance reviews. Could you offer some guidelines please?

Q. I want to implement annual performance reviews. Could you offer some guidelines please?

A. Unless done properly, staff appraisals can often end up being a ghastly experience for employee and employer alike. Firstly, do all of your employees have written job descriptions that define what is expected of them? Without them, it's hard to review how well they are doing their job. Secondly, did you set specific milestones for the year against which performance can be measured? If not, their impression of good performance may differ substantially from your own. If you don't already have them, job descriptions and performance targets might be the place to start this year with annual appraisals set for next year. With them in place, the appraisal process becomes quite easy since it's simply a matter of reviewing actual performance against expected activities and specific objectives. However, don't fall into the trap of thinking that appraisals should only happen once a year - you should be discussing performance with every employee on a regular basis.

Q. I am looking to expand my IT business and take on new facilities and more staff. In particular, the fit-out of the new offices will be quite expensive because of all the new IT equipment. Can you suggest an efficient way to finance this please?

A. Asset finance, in which funds are made available against the new equipment that you purchase, may be a suitable solution here. Your own bank will almost certainly offer this facility but I suggest that you also speak with your accountant about this.

Q. Having set up my own business in the last 12 months, should I consider setting up a will?

A. It's a good idea to set up a will in any case but most advisers will suggest a review is due if you set up a new business. The Law Society offers a guide about making a will that is downloadable from their website, www.lawsociety.org.uk

Q. My small business is growing and I now have seven employees. We've had a good year and so I'd like to make some promotions - do you have any advice?

A. A "good year" may suggest profit sharing via bonus payments rather than promotions. An employee is usually promoted when there has been a significant change in their level of responsibility. Such a change might include (i) taking on responsibility for the management of other employees - an "internal" responsibility or, (ii) taking on responsibility for getting new work - an "external" responsibility. When additional responsibility is of a temporary nature, eg covering for someone who's been ill, then a bonus is more appropriate. All promotions should be accompanied by a letter stating any revised terms and conditions to the contract of employment.

Q. I'm thinking about selling my business and I would like to know more about the tax and VAT implications. Can you suggest a source of straightforward advice?

A. Business Link, in association with the Inland Revenue, Companies House and Customs & Excise, has developed an interactive tool to check tax and legal issues when selling a business. See www.businesslink.gov.uk

QUESTIONS PLEASE

Send your questions to Prof Russell Smith at ios@businessboffins.com. Selected questions will be answered each month. Answers are for the general guidance of owner-managers only; always seek professional advice.

Professor Smith is the founder of Oxford-based Business Boffins Ltd which, in collaboration with Oxford Brookes University Business School, delivers sustainability support programmes to small businesses nationwide. Independent on Sunday readers can enrol on the university-accredited programme at a discounted rate; see www.businessboffins.com/ios