The Language of Small Business Texts and Vocabulary Training (for students of Economics) Part 2. Учебное пособие

Getting Equipped

UNIT 8.

Getting Equipped

One area which is infrequently covered by books and training courses is how you get your business equipped. Equipment is a very loose term to cover the infrastructure of your business. Obviously, if you are a manufacturing business, the equipment you need for the production line is very specific to the type of business. This may also apply to the equipment you need for an office.

The infrastructure of your business ranges from cars to phone systems, from office furniture to computer systems. One part of setting up your working environment is to select what you need, at what level of sophistication and for what price.

WHAT TO CONSIDER WHEN CHOOSING EQUIPMENT

There is equipment which is important to choose correctly and there is equipment which you are likely to spend a long time choosing. In the former category comes:

−the rigth telephone system;

−the right furniture;

In the second category comes:

−the right car;

−the right computer system.

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THE RIGHT TELEPHONE SYSTEM

Installing a telephone system which is suitable for your business is a highpriority task. Of course, if it is a one-person business, you need nothing more sophisticated than a telephone with a very efficient telephone answering machine to cover when you are out. However, you must realize that using a machine is making it clear to all callers that you are a one-person outfit, which may lower credibility.

Once your business is growing beyond this stage, spend some time researching to find a telephone system which meets your requirements. Failing to find one that is adequate can lead to inefficient working and great frustration.

THE RIGHT FURNITURE

Choosing the right furniture for your business depends essentially on the type of business. Cheap, second-hand desks and chairs may not be good business sense. If you think it likely that customers or suppliers are likely to visit your premises at regular intervals, it is crucial to select furniture which projects the image you have planned for your business. People are very affected by appearances, even other business people. Choosing good-quality furniture can suggest to customers that your business is good quality, too. And if exports are likely to play a big part in your business, smart offices are crucial.

Suppliers, too, can be affected by appearances. Wellplanned and smart offices suggest that this is how you run the business and can help in your negotiations on credit terms and prices. In the case of furniture, cheap may mean expensive in the long run. However, what you choose is obviously determined by what you can afford and so you must look for ways in which you can give the impression you want without necessarily paying very high sums of money. Tidiness and cleanliness play an important role in appearances.

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Getting Equipped

THE RIGHT CAR

A car can arouse great emotions. It is one of those peculiar purchases where it can be difficult to disentangle desires from needs. The car you drive somehow projects something about your own personality; it is often regarded as an extension of it. Nevertheless, caution is needed before personal desires get confused with business needs.

It is often argued by business owners that a prestige car is needed to project an image of credibility, for exactly the same reasons outlined above for furniture. But a cool, hard look is needed at that claim. Will customers and suppliers really see you driving into their car parks? To project the image that is needed, is the souped-up version essential? Will not the same effect be created by the slightly cheaper version? The argument that one car will only cost £50 more a month to lease than another is weak. You need to look at the cost over a longer period of time, say two years, or however long you intend to keep the vehicle. It would, of course, be a mistake to swing too far in the opposite direction and choose a second-hand car which is rusting or requires excessive maintenance.

Delivery vehicles provide an opportunity for advertising your company name and message which should be seized.

THE RIGHT COMPUTER SYSTEM

The first question you need to ask is whether a computer would be helpful in your business. The sort of tasks which can be carried out are:

− word processing: a computer can be invaluable if in your business you send out a lot of routine letters, such as sales letters, quotes, mailing shots. A word processor or a computer with a word-processing program can be time-saving and produce a higher-quality service than an ordinary typewriter;

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−accounts: there are a number of computerized acounting packages. But you might find it worthwhile to consider these only when the number of transactions has grown;

−financial control and planning: the programs range from cash management to sophisticated systems for working out forecasts and updating them at regular intervals. Again the importance of these depends on the size and complexity of your business. Ask your accountant for guidance;

−database-type work: if you have a large list of potential customers and send out mail-shots, storing the information could be time-saving;

−stock control: this can be important for retail outfits. Some computer systems link up to the cash till, so that levels of stock and need for reordering are worked out automatically.

A computer system is made up of:

−the hardware, that is, the computer and the terminals, which you attach to the computer so that more than one person can use the computer at the same time;

−the software, that is, what makes the computer carry out the jobs you want doing.

There are two sorts of software: the operating software which makes the computer go and the application software which does the specific job, for example, cash management, word processing. This software can either come as a ‘package’ or be designed especially for your own needs and systems. A small business cannot really afford to have software specially designed for it to carry out the basic business tasks.

Both aspects of a computer system are important, although with the development of cheaper and better hardware, choosing the software becomes the prime task. You can buy computer systems from several sources:

−high-street stores sell cheap computers;

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−computer dealers who specialize in business computers and software, but may be dealers for a limited range;

−software houses write custom-built software from scratch.

TIPS ON HOW TO PROTECT YOURSELF AGAINST THE COMPUTER WOLVES

1.Decide what you want the computer and the software to do, before you ask anyone for advice. But remember that a computer will not solve management problems caused by flawed systems. It is not a super-hero.

2.Ask the suppliers to come in, and set out for them what you want to do, and ask for detailed proposals and installation plans.

3.Do not be overwhelmed by jargon or be drawn into discussions about the number of bytes or the operating systems. Insist that the suppliers explain what the computer system will do for your business.

4.Ask the suppliers for a full customer list, so you can take up references. Be suspicious of anyone who will only tell you the names of two or three customers. Take up the references fully and carefully.

5.Ask the supplier these specific questions: «How many systems identical to this one have you installed?», «Are the businesses similar in operation and size?»

6.Ask to see everything and anything you need working. If there are any excuses, however plausible, do not commit yourself to any order. You must see it all working and doing what you want.

7.Always buy software packages; never agree to have anything which will need to be designed from scratch. If necessary, bend your system to the package. Building software

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from scratch on a customized basis can prove to be expensive and unpredictable in timing.

8.If an important part of what you need is not ready yet and «is coming in a couple of months», delay buying until it has come and been fully demonstrated to you. Do not be the «first» buyer of any computer system. You have your own business to run without pioneering for the computer industry.

9.Be prepared to spend more now to install the right-size system with the right back-up. If you choose the cheapest version, you may well find that you upgrade the system within a short space of time and the cost could be much higher than doing it right in the first place.

10.Remember the binary law of computing: it will do half as much, cost twice as much, take twice as long, as the salesman says or you think.

HOW TO PAY FOR EQUIPMENT

There are four main ways you can pay for equipment. Two of them involve buying the equipment, so you become the owner; the others do not, the ownership being retained elsewhere. The ways are:

−buying outright;

−hire purchase;

−leasing;

−contract hire.

BUYING OUTRIGHT

This does not necessarily mean buying it with your own money; you could use a bank loan or overdraft to finance the purchase of the equipment. The advantage of buying outright is that you own the asset, which will be entered in your balance sheet.

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This will make your balance sheet stronger. The disadvantage is that it uses up large lumps of cash, maybe at a time when you are short of funds.

HIRE PURCHASE (OR CREDIT SALE)

Ultimately, you will own the asset outright at the end of the hire period. This means that hire purchase confers some of the same advantages of buying outright. As with outright purchase, you can claim a capital allowance from the time you start using the equipment, and you will be able to take the equipment into your balance sheet as an asset, with what you owe as a liability on the other side.

Using hire purchase also means that you are not laying out such a large sum initially, compared with buying outright, which can be helpful for cash flow. However, the payments you make will consist of capital, as well as interest. You only get tax relief on the interest part of the payments.

LEASING

If you lease equipment, you never become the owner of it. The company who organizes the lease remains owner. The main advantage of leasing is that there is no capital outlay, so it can be a big help to cash flow.

You do not claim the capital allowance for the equipment; the company organizing it claims the allowance, although you should get some benefit such as reduced rental. However, all the payment you make is treated as an expense and so you get full tax relief on it.

There are different sorts of leases. If the lease is a closedended one, it means there will be a fixed period of one to five years. At the end of the agreed period, there may be an option to take on a further lease for a nominal rent. Or you may be able to buy it. An open-ended one means you can end it when you like

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after the expiry of an agreed minimum period. Yet another type of lease is a balloon lease, which allows you to make part of the capital payment at the end of the lease.

CONTRACT HIRE

This is a form of leasing, mostly used for financing a fleet of vehicles. In this case, what is in the contract is not a specific vehicle or vehicles, but the use of an agreed number of the specified type. The length of the agreement is usually shorter than the estimated life of the equipment. Use of the vehicles can be provided with or without the maintenance.

Definitions of Terms

Hire-purchase agreement COM@FIN. – a form of consumer credit, being a contract to hire an article with the right to buy it, i.e. become its owners only when the last instalment has been paid. Until then the article remains the property of the hirer / seller although used by the buyer. The agreement (which must always be in writing) is usu. made between the customer and a hire-purchase finance house which buys the article from the shopkeeper and hires it to the customer, but in some cases the finance house advances the money to the shopkeeper, using as security the shopkeeper’s hire-purchase agreement with the customer.

Bank overdraft BKG. – an agreed sum of money which by arrangement a bank allows a customer to overdraw his account, i.e. to run into debt to the bank by drawing more than the amount standing to his credit in the account. The customer can make use of

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this money when he wishes, and for an agreed length of time. Interest is payable only on the amount overdrawn at the end of each day, but the bank may make an additional charge for agreeing to the arrangement, and will usu, demand that the customer should deposit easily saleable stocks and shares as security for repayment of the debt.

Capital allowances TAXN. – a certain amount of profit allowed free of tax to a business to cover the cost of replacing the wear and tear of its fixed assets, esp. machinery and industrial buildings. Capital allowances may be more favourable than the depriciation allowance used by the business in its accounts. For example, to stimulate investment, a government may allow a business to write off the whole cost of an asset against tax in one year.

Summary

1.Выбор соответствующей телефонной системы может оказаться очень важным для эффективности вашего бизнеса.

2.Мебель и интерьер вашего помещения могут оказать влияние на создание доверия к вам со стороны клиентов и поставщиков.

3.Автомобиль, которым вы пользуетесь, меньше влияет на имидж вашего бизнеса, чем вы полагаете.

4.Существуют четыре способа оплаты оборудования: прямая покупка, покупка в рассрочку, аренда инаем по договору.

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