Yacht and Small Craft Surveying: Diploma in

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Diploma in
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Diploma in
Yacht and Small
Craft Surveying
2018/19
Module 4
Running a Successful Yacht and Small Craft Surveying Business
supported by
Yacht & Small Craft Surveying Module 4
NOTICES
When referring to personnel in this training module the author has generally used the term ‘he’ on all occasions.
The use of the masculine gender is for convenience only and is not intended to convey any bias, discriminate against or
offend female readers or students in any way.
The contents of this module are purely the opinions of the author. Students are encouraged to read additional material
where available to enhance their knowledge and to gain a cross section of opinion.
Rules and regulations vary from country to country. The author has based this training module on English Law
and regulation.
ACKNOWLEDGEMENTS
In preparing this training module the author has used a number of different reference documents as detailed below:
Chapter 2 – The Business Plan
Based on “A guide to writing a business plan” published by Business Link Wessex
Chapter 4 – Marketing your Business
Based on the information briefing “Marketing Your Business” published by Business Link Wessex
Chapter 5 – Preparing the SWOT analysis
Based on the information briefing “SWOT analysis” published by Business Link Wessex
Chapter 6 – Finance
Based on the information briefing “Finance for non-financial management” published by Business Link Wessex
Chapter 7 – Choosing your offices
Based on the information briefing “Choosing office premises” published by Business Link Wessex
Chapter 8 – Time Management
Based on the information briefing “Managing Your Time” published by Business Link Wessex
In all cases the original works have been edited based on the author’s personal experience to make the material
specifically relevant to yacht and small craft surveying; however, full credit is given to the original authors on whose work
these chapters are based.
The information contained in this training material is for general information purposes only. The information is provided by Marine Publications International Limited and/or the Maritime Training Academy Limited and while we endeavour to keep the
information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or correctness with respect to the training material or the information, pictures, graphs,
diagrams or related graphics contained in the training material for any purpose. Any reliance you place on such information is therefore strictly at your own risk. In no event will we be liable for any loss or damage including without limitation, indirect or
consequential loss or damage, or any loss or damage whatsoever arising out of, or in connection with, the use of this training material.
MPI Group, as a body, are not responsible for any opinions expressed in this module by contributors. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without prior permission of MPI Group.
© Marine Publications International Ltd 2019

2
BIOGRAPHY
Ian Biles
Master Mariner, BEng (Hons), MA, CEng, CMarEng, DipMarSur, RYA Yachtmaster (Ocean), Eur Ing, FNI, MRINA, MIMarEST,
MRIN, MSNAME, MIIMS, MSCMS, MHCMM, AMS (SAMS), MEWI
Ian started sailing with his father at the age of 12 and went to sea upon finishing school. He sailed worldwide for 13 years
on a range of commercial ships spending his leave sailing yachts around the United Kingdom and in the Mediterranean.
Throughout this time, Ian studied for various qualifications passing his Royal Yacht Association Ocean Yachtmaster
Certificate in 1982 and Class 1 Master Mariner Certificate in 1984.
In 1988, Ian was recruited by Shell International Marine who sponsored him to return to university and study for an
honours degree in Naval Architecture. He went on to take a masters degree in Business Management.
Ian began his own marine surveying and consultancy business in 1992. Since that time the company has grown and now
operates in thirty-seven different countries employing over 88 surveyors.
Ian is possibly one of the most qualified marine surveyors in the business.
Maritime Training Academy

E3 – E5 Heritage Business Park, Heritage Way, Gosport, Hampshire, PO12 4BG
Tel: +44 (0)23 9258 0395
E-mail: training@maritimetrainingacademy.com
www.maritimetrainingacademy.com
© Maritime Training Academy 2019

3
CONTENTS
1. RUNNING A SUCCESSFUL YACHT AND SMALL CRAFT SURVEYING BUSINESS 7
Introduction 7
Defining What a Business Does 7
Defining What the Surveyor Wants To Do 7
2. THE BUSINESS PLAN 8
Introduction 8
Your Personal Objectives 8
Business Description and Purpose 9
Business Vision and Long Term Objectives 9
Current Market Situation 9
Current Target Customers 10
Competition Analysis 10
Marketing Strategy 10
Marketing Plan 11
Sales Targets and Objectives 11
Operational Requirements 11
Current Financial Requirements and Financial Forecasts 12
Management Processes 12
Business Risks 13
3. THE VALUE OF YOUR TIME 14
Introduction 14
What Do You Charge? 14
The Effect of Competition 14
4. MARKETING YOUR BUSINESS 15
Introduction 15
The Main Factors Involved 15
You and Your Competition 15
Building the Marketing Plan 16
Common Mistakes to Avoid 17
Setting Targets 18
Continuously Review Your Marketing Plan 18
Everyday Marketing 18
Keep Ahead of the Competition 18
Publicity and Public Relations 19
Buying Advertising 19
5. PREPARATION – THE SWOT ANALYSIS 20
Introduction 20
The Stages of Conducting a SWOT Analysis 20
Strengths 21
Weaknesses 22
Opportunities 22
Threats 23
The Results of SWOT Analysis and the Action Needed 23
4
6. FINANCE 25
Introduction 25
Profit and Loss Accounts 25
Balance Sheet 26
Capital Employed 26
Cash Flow 26
Profit Margins 27
Budgeting 28
Performance Analysis 28
Depreciation 28
Managing your Cash Flow 29
Being Prepared 29
Credit Control 31
Poor/Bad Practice 31
Basic Bookkeeping 32
Paying Cash Out of Your Own Pocket 33
VAT 34
Cash Businesses 34
Accounting Software 34
Other Accounting Variations 34
Help and Assistance 34
7. CHOOSING YOUR OFFICE 35
Introduction 35
Look for a Location that Fits Your Business Needs 35
What Does the Business Need? 35
What Services and Facilities Do You Need? 37
How Much Cash is Available for the Office Space? 37
Office Checklist 38
8. TIME MANAGEMENT 39
Introduction 39
Have an Objective 39
Have a Plan 40
Develop Routines and Systems 40
Information Overload 41
Manage Distractions 41
Time Analysis 41
Time Bandits 41
9. CHALLENGES AND SOLUTIONS 42
Introduction 42
Chicken and Egg 42
Competition 43
Avoiding Complacency 43
Finding New Clients 43
Conclusion 44
10. STUDENT ASSIGNMENT 45
5
LEARNING OUTCOMES
After successfully completing this module you will:

• Understand the importance of a business plan and the essential actions necessary in order to complete one
• Understand how to properly evaluate the value of your time in the context of working as a yacht and small craft surveyor
• Understand the many different aspects that need to be considered in order to properly promote the survey services that a
yacht and small craft surveyor may wish to offer
• Know how to carry out a SWOT analysis and to evaluate the results
• Have an appreciation of the many different aspects that collectively influence the financial wellbeing of operating as a yacht
and small craft surveyor
• Understand the importance of choosing the correct office location
• Know the sorts of issues that will need to be considered when setting up an office from scratch
• Understand how to prioritise and plan
• Understand the need for routines and systems of work
• Be aware of the dangers of distraction
• Know how to analyse the use of your time
• Have an understanding of different strategies to help overcome an initial lack of experience
• Understand the need to keep clients happy
• Be aware of the pitfall of complacency
6
1. RUNNING A SUCCESSFUL YACHT AND SMALL CRAFT SURVEYING BUSINESS

Introduction
Some years ago the traditional route for may Yacht and Small Craft Surveyors was to come ashore from being at sea (often
on big ships) and when in semi-retirement set oneself up as a Yacht and Small Craft Surveyor. In the late 1990’s this started
to change when Ian Wilkins, then the Secretary of the International Institute for Marine Surveying, started to develop the
first dedicated training course for surveyors. As part of that training one of the objectives was to start students actually
thinking about what it is they wish to do and how they were going to do it once they had passed their examination.
Thus we start this module with a question. How many people taking the Diploma course understand exactly what it is
they are aiming to do?
Exactly what is it that a marine surveyor does? Is it to go out and look at things and then write a report? Is it providing
advice to a third party? Is it being trusted by somebody else (the client) remote from the location of the survey to tell them
the truth? Is it being an expert in a particular area? Or is it all of these things and more?
It is the objective of this section to introduce the basics of business management and to attempt to dispel some of the
many myths that exist about working as a yacht and small craft surveyor and running your own business.
Defining What a Business Does

The first step is to appreciate that the main function of running a business is to make money. Some individuals who
embark on becoming a marine surveyor may disagree with this if they are in the fortunate position of being on a second or
third career with either a pension or other financially stable source of income to negate the need to earn money. However,
such individuals would, in my opinion, be wrong. If the surveying activities do not make a certain amount of financial
sense when measured against business norms for the sector, the individual is not running a business; he is indulging in a
hobby. When indulging in a hobby the motivators are very different to working as a professional, and both the course as
a whole and this module in particular are directed at the professional yacht and small craft surveyor.
For the sake of clarity, it is not the author’s intention to be disparaging to those who wish to take up a hobby as a marine
surveyor. However, the motivation and dedication of such individuals, as well as the pressures on them, will be significantly
different to those who are starting a surveying business as a means of making their living.
Once again, for the sake of clarity, when stating that the objective of the business is to make money it is not the author’s
intention to suggest that the sole objective is to put money in the bank. Rather, it is recognition that any business needs
a certain amount of financial stability in order to survive. How that financial stability is used is then up to the owners of
the business. It may mean taking long holidays, it may mean having freedom of choice (either work or play golf ), or it may
mean saving money. However, if the business does not make any money, in other words it makes a financial loss in real
terms, none of these options are open to the surveyor.
In order to make money the business needs to generate more income than expenditure and preferably a sufficient surplus
of income over expenditure so that money can be withdrawn from the business. We will look later at the question of the
value that you, as a surveyor, place on your time.
Defining What the Surveyor Wants To Do

As a starting point the aspiring surveyor needs to establish (preferably in writing) exactly what it is he/she wants to do.
Whilst this might seem an obvious statement, in practice few people ever have sufficiently clear forward vision to be able
to define accurately what they intend to do. To this end, writing their intention down is the key.
Defining the financial requirement (i.e. an income of ‘X’ pounds per year) is as good a place as any to start. But, does this
provide enough information to enable someone to move from a position of no money, no work, no clients, no sales,
no management and no service (remember that surveyors work in the service industry), to that of running a successful
business?
All of the above issues are addressed in what is called ‘the business plan’.
7
2. THE BUSINESS PLAN

LEARNING OUTCOME
On completion of this chapter you will:

• Understand the importance of a business plan and the essential actions necessary in order to complete one
Introduction
The first question to be answered is: why prepare a business plan at all? Some might think that it is purely for the bank
manager’s benefit, but other than that it is a waste of time and effort.
This is a crucial mistake made by more than 90 per cent of start-up businesses. Many new and aspiring marine surveyors
will write business plans with the sole purpose of convincing a financier (bank, friends, family, etc.) to lend them money for
starting up. However, a good business plan is significantly more than this as it is the key starting point for the foundation
of your business.
At the most essential levels it can help to:
(i) Clarify your business purpose: exactly what is it you are trying to achieve? Identify ways for you to communicate
it to others (partners, family or staff ). In modern management terms this is known as your ‘mission statement’
(ii) Prepare for possible future scenarios: put plans in place to address them before they occur and before any
foreseeable disasters threaten the success of the business
(iii) Set targets and objectives so that you can monitor your business’s performance and thereby know (factually)
how you are doing against what you intended in order to dispel any illusions (both yours and those of other
interested parties)
Your plan needs to be a coherent description of how your business will move from where it is now to where you want it
to be (and when). Each individual business will be different, but what follows are suggested stepping stones or stages to
include in your business plan to ensure that you cover the most important aspects.
Your business plan is not a one-off document. It should become a constant ‘work in progress’ document as the business
develops, with the plan adapting and growing as experience demonstrates the fallacy of some of the early assumptions.
Furthermore, the fact that your early assumptions may be incorrect does not really matter. What really matters is being
able to identify your mistakes and to learn from them so that you do not make them again.
The following areas need consideration.
Your Personal Objectives

The first simple question to answer is: why are you in business and what do you want out of it? On the face of it, this might
seem obvious. However, when you truly set down exactly what it is you want the answers might not necessarily be the
ones you first expected. Keep on asking yourself: why do I want to do this?
Will the business supplement your main income or replace it? Are you starting it as an investment, to sell as soon as you
can? Is it to provide a job for a family member? Is it to provide you with meaningful and enjoyable activity whilst providing
a reasonable income? Is it a combination of the above? If the latter, what percentage can you allocate to each of the
different objectives?
The answers to questions like these will have an impact on the business’s aims, development and strategies. For example,
if you are starting a business as an investment opportunity, the focus of your planning will be leading up to your exit, the
sale of the business. Your strategies must focus on building the business quickly and maximising its value to get the best
selling price possible. On the other hand, if you are building up a business for a less experienced family member, your plan
will focus on a succession strategy. This might mean keeping the business small and easily manageable whilst maximising
on different opportunities to increase experience.
It is entirely probable that for most people truly identifying their personal objectives will be one of the harder tasks to
complete in this entire diploma course. Most aspiring yacht and small craft surveyors will know that they want to be
around boats and this in itself is not a bad thing, but they will have to answer the question: why?
A word of caution here: whilst having fun is a perfectly acceptable objective at a personal level, it is not terribly convincing
at a professional level. Try to go beyond such simple statements to identify why being around boats is fun and why this is
important to you. As an example, enjoying your work generally tends to mean you become good at what you do. This in
turn leads to personal fulfilment and quite possibly a lifestyle that is contented and rewarding. Be as specific as you can.
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Business Description and Purpose

What exactly will your business do?
Be as specific as possible about the kind of business that you are starting. Is the intention to start a business that limits
itself to pre-purchase surveys in one geographical location providing sufficient income to support one person? Or is it to
develop, to offer a range of different surveying services in various areas providing employment for others?
Make an effort to describe your business in terms of a mission statement. Whilst this is relatively modern management
jargon, in real terms it helps to be able to clearly summarise in a succinct manner your business purpose so that it can
be easily understood by you and your customers. If you cannot describe your business in these terms, go back over your
business ideas focusing on your intended core activities and direction. What is it that you want to do?
A classic example of a failure of direction is seen in the numerous advertisements by surveyors who advertise that they are
based in a particular geographical location, offering a ‘local service’ but then end up by adding something like willing to
travel abroad if required. Exactly what is it that they are really trying to do? For me the addition of the willingness to travel
indicates a lack of confidence that they will have enough work locally and, therefore, the last few words convey a message
of desperation. If the intention is to stay local, the surveyor will need to be confident enough to turn down jobs out of his
‘patch’. However, if the intention is to work anywhere the work takes you, advertising should be directed towards this with
the relevance of your location relating only to the cost of travel.
Business Vision and Long Term Objectives

What and where do you want your business to be in five years?
If you are just starting out, does this really matter? To use a metaphor, if you blow up a balloon and let it go, you have
absolutely no idea where it will land. However, if you tie it to a piece of string you know it will land within a certain area of
the point of attachment (defined by the radius of the circle equal to the length of the string). Finally, if you hold it until all
the air has gone, you know exactly where it is and where it has been. More importantly, you have been in control of the
balloon situation at all times. The same is true for your business.
Try to envisage the intended future so that you can start to move your business towards that point. For instance, you might
work towards becoming a wooden boat specialist who is pre-eminent in a certain geographical area, or you may wish
to become the most respected general yacht and small craft surveyor in the marketplace. Without an objective, you will
wander aimlessly and this, in time, can become very disheartening.
Once again, a word of caution with setting your objectives: if you intend to be the best, how will you measure this? If you
cannot define a measurement, how will you know if you succeed?
Current Market Situation

Once you have a relatively clear idea of where you are going, you need to find out where your market is currently.
To earn enough revenue, your business must be able to achieve a share of the markets available. You will need to have a
thorough understanding of your market, including its size and the share that you can realistically achieve. The size of your
share will depend upon the following:
(i) Market trends - find out what influences your target market now and how your service can take advantage of this
(easy to say, yet difficult to do)
(ii) Target customers - describe who your target customers are and how many there are of them (if you do not know,
you need to find out). Also, justify your estimate of the market share you aim to acquire. However, once again a
word of caution: this is not a wild guess, you will need to research how many boats there are in your target area,
how many of these are sold on an annual basis and, of these, how many have surveys. All of this information is
difficult to research, but in doing so you gain a tremendous insight into your market as well as meeting contacts
who will probably be useful in the future
(iii) Competition – make a list of your competitors and describe their services. Also, describe how your service will be
different (what is your unique selling point or USP). This means obtaining copies of the competition surveyor’s
reports and evaluating them critically rather than emotionally
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Current Target Customers

Who will be your target customers during the next 12 months?
Define the characteristics of the target groups of customers who could buy from your business. To do this, think about
the type of people that are likely to benefit from using your services and why they would use your services rather than a
competitor.
(i) Make a list of the features that your service has and the associated benefits they can provide your customers
(ii) Build up a picture of your target customers. For individuals, describe them in terms of characteristics like age,
income, location, lifestyle and marital status. For businesses such as brokers, use indicators like location, number
of yachts listed and number of yachts actually sold by type, size and value
(iii) Research how many customers there are in your target group and how much they spend i.e. the average value
of a purchase
(iv) Identify trends that tell you whether this group is growing or shrinking (this is the same data as above but looked
at historically)
Competition Analysis
Exactly who are your competitors?
These may be in the same business as you (direct competition) or in similar businesses to you (indirect competition).
The level and strength of competition in a market indicates how difficult it will be to gain enough share of the market.
However, it is not simply the number of competing surveyors that should concern you. Analyse the following aspects of
each competitor’s business:
(i) Services offered: are their services really the same as yours? Do your competitors provide something that you do
not? Are they better, worse or the same as you? Try to answer these questions critically (with numbers) rather
than emotionally
(ii) Customers: are your competitors targeting the same customer segments as your business? If so, how are they
doing this?
(iii) Share of the market: how large is it? Can you realistically take some of it?
(iv) Strategies: how they grow, market themselves and price their services. Can you learn from how the competition
conducts its business, and/or can you do it better?
(v) Operations and facilities: what levels of service are customers demanding? This includes aspects such as
equipment being used, and methods of reporting and presentation
Marketing Strategy
How many customers do you want, and by when?
With a clear understanding of your market in terms of size, location, groups of potential customers, competitors, trends
and influencing factors, you can clearly define your overall strategy. Break this down into objectives and targets relating
to the volume and share of the market (or market segments, if more than one) that you hope to achieve and when you
intend to achieve them by.
For example:
(i) Who are your initial marketing targets (specific groups or market segments, brokers, insurers, private individuals)?
(ii) What products, services or particular ‘deals’ will you be offering to them?
(iii) Is there a specific volume, value or share of these markets that you hope to achieve? If so, what is it?
(iv) By when do you hope to achieve these targets?
(v) Why are you choosing these markets first? Why is one better than another?
(vi) Who will you target next, for example, in six or 12 months’ time?
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Marketing Plan
How will you do your marketing?
Once you have a coherent marketing strategy you need to be clear about how you are going to make it happen. A detailed
marketing plan should explain how you will go about achieving each of your marketing targets and objectives (set out in
your marketing strategy) either by particular target segment, by type of marketing activity or, realistically, by both.
Such a plan will include some or all of the following:
(i) Marketing methods you will use for each segment of the target market: advertising, direct mail, word
of mouth
(ii) Specific step-by-step actions you are going to undertake
(iii) A timescale for each marketing activity (keeping in mind that these will take considerably longer than you first
anticipate)
(iv) People or organisations that are going to carry it out: if it is you, it will take your time, if it is others it will take your
money
(v) Estimated costs to undertake particular marketing activities: brochures, website, mail costs, advertising,
networking, social media, etc
(vi) How you will monitor and review progress: if you do not know how much each activity yields in terms of
business, how do you know where to spend your money to best effect in the future?
(vii) How you will handle the response to your marketing: as a one-man operator, how can you balance answering
the telephone (24 hours a day) and actually doing the work?
It will also be important to identify how you will manage the overall marketing plan, ensuring that the entire budget is not
spent in the first couple of months, monitoring results, adjusting the plan and introducing new tactics as you go along
based upon the experience gained.
Sales Targets and Objectives

What are your sales targets and how will you achieve these?
Your marketing plan, when implemented, needs to be converted into your sales revenues, perhaps the most important
business goal of all. Without successful sales you will not have a business. Very few individuals are in a position to run a
surveying business at a loss!
Set out your sales forecasts in terms of:
(i) Sales of different service types by type and value
(ii) Sales from different customer (buyer) groups
(iii) Sales from different advertising and communication channels
Try to be realistic with your estimates. Until such time as you have gained some experience in undertaking sales it is all too
easy to over-estimate just how difficult it is to combine all of the different tasks involved in selling.
Operational Requirements
What do you need to turn your plans into action?
Up until now all we have been doing is dreaming (and no disrespect is intended here). Now we need to translate the
dream into practical realities.
Information about your operational requirements will be required for your financial forecasts: what is it all going to cost?
Other information will be needed for your basic operational planning: where is the money coming from and when?
Outline your plans for the following aspects of your business and estimate the respective costs involved:
(i) Premises
(ii) Equipment
(iii) Staff (including you)
(iv) Suppliers
(v) Regulatory compliance, insurance and licensing (if required)
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Current Financial Requirements and Financial Forecasts

How much money do you need now and for what purpose?
Your business plan should include a breakdown of your financial requirements, the sources of finance you have available
to you and any additional amounts that you may need. This should include:
(i) The estimated capital cost of starting your business
(ii) Your personal budget (i.e. how much you need to survive)
(iii) Details of your own personal finance that you intend to invest: how much are you going to commit? You need
to be very clear on this so that you do not over commit yourself financially
(iv) Details of additional finance that you have secured together with a good appreciation of the effect of any
changes in interest rates
(v) A detailed cash flow forecast that will help you to estimate how much available cash you will have in any
particular month
(vi) A profit and loss forecast to help you estimate when your business will start to make a profit, which will be
essential to your medium-term success
(vii) A balance sheet forecast to provide you with a snapshot of the trading position of your business, to identify what
your business will owe, what it will own and how financially strong it will be at a particular point in the future
To some people, terms such as cash flow forecast, profit and loss forecast and balance sheet can be daunting. However, as
will be discussed later, these terms are nothing more than jargon which can be easily understood with a little application.
Management Processes
How will you manage the business?
Getting organised will make work more efficient and enjoyable. Even if you are the only person involved in your business,
it is still worth looking at your key skills, responsibilities and management processes at this stage.
(i) Management team (you) - outline the skills and experience you can offer. Potential investors (e.g. the bank) will
be particularly keen to see strong skills here together with realistic goals
(ii) Key staff and responsibilities (you) - summarise their roles and contribution to the business. This will reveal
weaknesses which will need addressing and/or over-reliance on certain people. Be certain to cover tasks such as
marketing and sales, finance, general management (property and people) and administration. Try to break this
down by time as well as by cost and income
(iii) Monitoring and co-ordination-set out how you plan to monitor your business’s performance against objectives
and targets, and to co-ordinate the key roles in the business. What are you going to record? What are you going
to do with these records? What do they tell you? Aspects of this activity will be discussed again later
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Business Risks
What could go wrong and what would you do about it?
Your plan should include an honest awareness of the risks involved, as well as how you will minimise them. Consider which
of the following risks are relevant to your business.
(i) Lack of management experience: address this risk by getting advice or mentoring from your business adviser,
accountant, solicitor and colleagues already in business. There are many sources of help available to the start-up
business
(ii) No trading history: this will make it difficult to borrow money so initially you might need to make otherplans to
finance the business. It can also be a big obstacle in gaining the first survey
(iii) Economic uncertainties: if you are borrowing money and paying interest, for instance, make contingencies for
interest rate increases
(iv) Reliance on key staff: if you are going to be the only surveyor, what happens if you are taken ill or injured?
(v) Reliance on a small customer base and the risk of losing a good client
(vi) Customer bad debts: an unfortunate reality of business
(vii) Partnership difficulties: both professional and private
(viii) Increased competition: you won’t always be the ‘new boy on the block’
(ix) Security and insurance against loss whether financial or physical
(x) Failure to meet your sales targets with resulting lack of income
13
3. THE VALUE OF YOUR TIME

LEARNING OUTCOME

• Understand how to properly evaluate the value of your time in the context of working as a yacht and small craft surveyor
Introduction
For a surveyor starting out it can be quite difficult to determine exactly how much time and money can be allocated to
any given area. To overcome this, you will need to carry out a relatively simple exercise.
To start, make out a list of everything you purchase during the year. Include fixed bills such as mortgage, rates, gas,
electricity and other utilities, and also items such as expenditure on food, holidays, children and so on. Try to be accurate
and realistic. For illustrative purposes, let’s say this figure comes to £20,000 per year.
Once you have the total, increase it by 10 per cent, i.e. £22,000.
Now evaluate how much time there is for you to work during the year. To start with you have 365 days. Deduct from this
104 weekend days, 8 days public holidays and (say) 20 days annual holiday. This leaves a potential for 233 working days.
Realistically it is unlikely that you will end up working every working day of the year, therefore, you need to estimate how
many of these working days it is reasonable to achieve. As a general guide, I would suggest using the principle of ‘one at
home - one away’. This suggests that for every day of fee earning work it takes one day of ‘other’ activity to generate that work.
In the example we are using, this gives 116.5 days (rounded down to 116 days). Therefore, you will need to charge a
minimum of £22,000/116 or £189.66 per day to cover your essential living costs. Based on a 10 hour working day, this
equates to £18.97 per hour. Keep in mind we have not looked yet at your business costs.
You now know that if you cannot earn more than £18.97 per hour (after tax) your business is doomed to failure even
before it starts.
What Do You Charge?

Armed with the knowledge that you need to earn £18.97 per hour (after tax) just to maintain your current standard of
living, you now need to see how this fits into your marketplace.
In the first instance this involves identifying your local competition to find out what they charge. It is also worth
approaching your local yacht brokers to see what they consider to be a reasonable fee. As a general guide, many surveyors
charge using a formula of vessel length times vessel beam (both in feet) times a factor to equal the fee:
Fee = length x beam x factor
On the south coast of England, the ‘factor’ has been between 1.1 and 1.6 for some years.
Thus, for a 30’ yacht with a beam of 8’ and a factor of 1.1, the charge would be £264. Therefore, sticking with the example
used earlier you know that, provided you can complete the survey and report writing within 1.4 working days (264/18.97
= 13.9 hours), it is possible to satisfy your income requirements (although you are ignoring tax and business costs).
Do not fall into the trap of considering your fees or charges as fixed. When first starting out, be prepared to accept a lower
fee in exchange for gaining experience, however, as your experience level grows remember to increase your charges to
reflect your value. Every once in a while it is worth systematically increasing your price slightly for every job enquiry until
such time as you are turned down on price. That way you know exactly what the market in your area will accept.
The Effect of Competition

Historically, one of the criticisms from existing surveyors levelled at diploma training courses such as this one is that they
train competition who with relatively little experience set up a surveying business on ‘their patch’ and then aggressively
undercut the market in order to gain work. This may indeed be true, but it also relates back to all the preparation that you
have done in your business plan.
Competition is one of the facts of life of our world. If the only way to differentiate your service is price then the chances are
you will not survive running a yacht and small craft surveying business. There will always be someone out there willing to
undercut on price. These individuals might be start-ups, they might be hobbyists or they might have a lower time value
than you do. They might also do a much worse job than you do and indeed they might be totally incompetent. Whatever
the reason for them doing what they do, it is something you need to recognise and accept going in. After the fact that
you have trained and become a successful yacht and small craft surveyor, complaining about ‘cheaper competition’ means
that you will have forgotten the lessons taught in the first part of this module.
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4. MARKETING YOUR BUSINESS

LEARNING OUTCOME

• Understand the many different aspects that need to be considered in order to properly promote the survey services that
a yacht and small craft surveyor may wish to offer
Introduction
Previously, we touched on the marketing plan. When you read this, if you thought marketing was just another term for
advertising, it is time to think again. While advertising may play a part in promoting your business, marketing is a far
broader concept. Marketing is about getting your service right for your customers, making sure they know about it and
consistently delivering the promises that your business’s ‘image’ implies.
An understanding of good marketing practice is essential to a successful start-up business. It draws together the key
elements of your market and your business. Getting it right can play a large part in making (or breaking) the start-up
business. Getting it wrong can have serious financial consequences.
The following section guides the student through the different aspects of marketing and covers the following:
• The key rules of marketing
• Building your marketing plan
• Measuring the effectiveness of your marketing
• Keeping ahead of the competition
The Main Factors Involved

As has been stated previously, you must have a very clear picture of the service you are going to provide and the benefit
that your customer will gain from buying that service. In part this should have been developed as part of your business
plan discussed previously.
Your marketing and sales operations will be dependent upon customers’ understanding the benefit of using your service
compared to that of the competition. The benefit is what the customer buys, not the service itself. Benefits and features are
often mixed up. For example, a consumer who buys a drill in a DIY store does not (normally) want to buy a drill. The drill
is just a means to an end. What they really want is the holes that the drill creates. Therefore, the benefit of a drill is easily
made holes in the wall, of the right size, without damage to other parts of the wall etc.
The price you attach to your service will be essential to your marketing programme. From the work undertaken in
developing your business plan, you should already have a clear picture of your target market. By now you should know
who your most important customers are going to be. Be careful to focus on the section of your customer base that you are
most likely to be able to sell to. If a number of different areas seem promising, consider them objectively in financial terms
and then prioritise them. Concentrate on the 20 per cent of customers who will make up 80 per cent of your business.
This is known in the marketing world as Pareto’s Principle. The other 80 per cent of customers will take up a lot of your
time for little reward.
Once you have a firm grasp on the service you offer and the price, a thorough evaluation of your competition and
the anticipated or actual strengths and weaknesses of your business will lead to the construction of your sales and
marketing plan.
You and Your Competition

Every business will face competition. You may be the only surveyor in the immediate local area but even if this is the case
you will still have to compete with others who come into your area either because they live nearby or want to carry out work
there. More likely you will be one surveyor amongst a number of competitors in a given geographical area or market place.
In order to compete, you need to decide how you are going to differentiate yourself from the competition. Decide what
will make a customer buy from you and not from your competitor. This is known as your unique selling point (USP).
Your USP could be any number of benefits you might offer to your customers but normally it is one single but relatively
crucial factor that is used to make you appear ‘better’ than the competition.
To help identify your USP, try completing the sentence; “My clients will buy from me because my business is the only……...”
For example, a surveyor in an area that is well covered by others may seek to differentiate by offering a guaranteed two-
hour response time (with the emphasis being on the guaranteed aspect).
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Offering the lowest price for your product or service can be a USP, but it is dangerous to compete on price alone. Your
established competitors may have deeper pockets and may start a price war to keep you out of the market.
When starting up, there are often areas where lack of experience and/or lack of funds present significant challenges. Where
this occurs, review your weaknesses honestly and acknowledge these limitations rather than ignore them. With careful
and creative thought, you can turn many competitive weaknesses into strengths. For example, many small businesses
find it difficult to compete with large companies on price. The small business can, however, make a virtue of the personal
service it can offer (i.e. personal contact) and, therefore, justify a higher price.
Building the Marketing Plan

As discussed previously it is useful to write down your marketing plan and, once completed, it will become a useful
document in its own right. It will give you clarification as to how you intend to sell to your customers and promote your
business. It will also be an important part of your total business plan.
The marketing plan should be clear and easy to understand, and should cover the following main points:
• The most important elements of your service
• The features that provide the benefits your customers want
• Your USP
• Your target customers
• Your charges
• Who will do the selling
• How much time will they spend selling
How you are going to promote your service to your customers. Will this be by personal selling, advertising, networking,
mail shots or a website?
Your potential customers should be divided into groups, with the most promising and relevant groups at the top of your
list. For example, a start-up yacht surveying business may split its customers into private buyers, broker recommendations
and insurance-related work.
If you have already set your prices, you may want to revise them as a result of the competitive analysis undertaken to
create your marketing plan. Do not be afraid to do this. However, do not slash prices just because you can see a niche
in the market at that price. In the short term it might fill a gap but in the longer term it is self-defeating. Remember that
clever marketing can often overcome customers’ objections over price, and a good reputation and quality service certainly
can do so.
Any marketing strategy is useless without an effective sales capability to back it up. If you cannot sell your service, how
can anybody else? Make sure that you and any staff know everything that your clients would want to know about your
business and that this information can be communicated clearly and effectively.
Work out exactly what the most important aspects of the service are that you are going to offer. Your earlier research
should have given you a good indication of how your target clients prefer to buy.
What form of promotion are you going to use? There are many forms of promotion available such as advertisements,
websites, networking etc. and it is sensible to use a combination of all these.
Once you have completed a survey and dispatched the report, is the job complete? After-sales activity is the means
by which you continue to market your business to existing customers. It is generally recognised that word of mouth
advertising is one of the most powerful methods available to a surveyor. Therefore, you need to make certain that your
client is happy with the work you have done and encourage them to become a ‘champion’ for you.
Advertising and public relations (PR) can be useful for building awareness of your business; however, you need to make
certain that whatever method you use reaches your target customers in the area where you are advertising or promoting
yourself. For example, if you are starting a local surveying practice, the notice board of the local chandlers or the harbour
office may be a useful place to advertise. In comparison, placing an advertisement in the local paper will probably not
reach the target customers, and therefore, may not justify the expenditure.
A direct mail campaign can be used to spread your message to potential customers. While the initial costs of design, print
and mailing can be high, this activity can be a useful tool in the early stages as it helps to establish the business. However,
regular mailings come with a significant cost and a time commitment. In addition, researching the necessary contact
list is difficult and also time consuming. It is possible to purchase mailing lists, but these are expensive and may not be
targeted enough.
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Exhibitions can provide a direct route to customers but in the early stages taking a display stand at a boat show is probably
prohibitive in cost. An alternative is to spend time at such shows and meet as many people as you can. By doing this you
can collect leads to subsequently follow up with direct sales material. Try to make sure that your target customers will
attend the exhibition. For example, if you intend to work on the Inland Waterways there is probably little value in attending
the Southampton Boat Show, which tends to focus on boats intended for use at sea. Check with the organisers about
previous attendance statistics. How many people can you realistically expect to meet? It is also worth getting to know
your competitors who will probably be there too. Whilst business is a competitive environment, it is generally better to
co-operate where you can and only to compete when you have to.
These days many companies choose to promote themselves via the internet, surveyors included. For many, this can be a
particularly useful method as it has the potential to reach a large audience at a relatively low cost. Sites can be designed
for as little as £500 and maintenance costs start at around £30 a year for a simple promotional site. However, you need to
remember to maintain any website, keeping it up to date and, once the site is up and running, remember that everything
you say on that site is open to public scrutiny. You will also need to differentiate yourself from the competition just as with
any other form of marketing.
As previously stated, the most cost-effective promotion is to get satisfied customers to recommend your service to their
friends and colleagues. This is the ideal for the new business to aim for and is achieved by consistently exceeding your
customers’ expectations. This is easy to say but considerably harder to achieve. As a rule of thumb each individual knows
about 200 others. Thus, if you can convert a customer to tell his 200 friends with sufficient vigour that they are seriously
impressed, you are one step away from reaching a target audience of 40,000 (200 x 200).
Retaining customers is essential for any business. It is cheaper and easier than finding new business (once again governed
by Pareto’s Principle).
Common Mistakes to Avoid

Target customers to whom you have a good chance of selling rather than those you cannot hope to win.
For example, most insurance underwriters have established networks of surveyors with whom they are comfortable.
Is it realistic that you, as a new surveyor, can persuade an underwriter to use you in preference to his existing surveyor
network? Prior to moving into this market area it will be necessary for you to prove yourself and to establish a reputation
as a competent and reliable surveyor.
Make it easy for customers to understand what you do. The “John Smith Survey Company” tells your clients little about
the services offered. The “John Smith Marine Survey and Consultancy Company” at least identifies that the survey activities
are in the marine field. However, the “John Smith Yacht Condition Survey, Valuation and Reporting Company” tells them
much more.
Offer your customers what they want, not what you ‘think’ they want. Take time to find out what they really want,
remembering the example given earlier about drills and holes.
Avoid over-ambitious growth targets; until such time as you start, you are not really going to understand the problems
that you will face, therefore, avoiding overly ambitious targets helps to limit disappointment in the early stages.
Remember the marketplace is ever changing. What is right for your clients today may not be right in two years’ time. Do
not become complacent just because you have started well.
Ensure that your research has proved there is a gap for your service and check that it is the gap that you identified that
you are filling.
Do not presume that you will carry out 100 surveys in year one, 200 in year two and 300 in year three; it just does not work
like that. Cautious planning will help to ensure that your business will survive. If you subsequently exceed the targets set,
it will be a welcome bonus.
Finally, remember that if you conducted your research a year ago the competition may have changed. Keep up to date
with what is going on in your market.
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Setting Targets
Marketing is a continuous process, not a one-off event. To keep track of your progress and changes in the market you
will need ways to measure and evaluate your progress. This means establishing ways of measuring and evaluating that
will mean something to you.
Set realistic targets to measure your performance:
• What sales do you expect in your first 12 months for each client or each type of client?
• What sales do you expect from each type of service?
• What sales growth should you aim for?
• How much should you spend on marketing, month by month?
Even having set realistic targets it is quite possible that they will not be achieved. Investigate missed targets to identify
(truthfully) why they were missed. What has changed, or what did you not fully take account of in the first place. It is this
evaluation process (painful as it might be) that will help make the improvements necessary.
Continuously Review Your Marketing Plan

Has something gone wrong, or have circumstances changed? If so, what can you do about this?
As the market changes, so should you. A marketing plan is a working document and, like the business plan, it is not
set in stone. As the business grows and develops, actual work can often take over leaving little time to focus on sales
and marketing activities (particularly if you prefer field work to office work), however, if this area is neglected work will
eventually begin to tail off and you will find you have to go back to your marketing plan in order to survive.
Everyday Marketing
Marketing has to become an integral part of your business once you are operational. Every time your business has contact
with a customer, you are marketing your business. Remember that it is easier and cheaper to keep existing customers than
it is to get new ones.
You (or your employees) are the company as far as the customer is concerned. Everything you/they say or do creates
either a good or a bad image. Make sure that you and your employees are sufficiently skilled or trained to deal with each
customer professionally and not to waste their time.
Make sure that you are self-marketing. Make a point of asking each new customer how and where they heard about the
company, adding this as a prompt to the enquiry questionnaire will help. If you are advertising or sending out promotional
material, keep it consistent with your customers’ requirements and the image that you wish to portray.
The more people that you talk to about your business, the more sales you can potentially generate. Successful sales people
are always enthusiastic about their service and you will know when you meet one as a buyer. You need to become the
service champion for your business.
Finally, just because you are busy (which suggests your marketing is working) do not ignore your marketing function.
All too frequently a small business will become absorbed in the detail of day to day activity and will overlook the marketing
activity. Suddenly there may be a down turn in business (as a result of this oversight) and marketing activity will need to
increase. There is always a time lag between marketing effort, work flow and money in the bank and, if you are not careful,
the financial drain on cash flow may become significant.
Keep Ahead of the Competition

What are the trends in the survey market? The more you know about your business environment, the more you will be
able to anticipate change and turn threats into opportunities.
Small businesses can often capitalise on change, adjusting quickly before larger more established competitors can react.
This brings opportunities that you need to be prepared to exploit.
Keep a good look out for niches in areas where you have strengths and use these to customise your service.
Continually building and acquiring new skills and strengths needs to be a part of your business’s growth strategy.
Generally speaking, if a company stops growing and changing, i.e. it stagnates, it will quickly disappear.
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Publicity and Public Relations

Positive press coverage can provide a useful boost for a new surveyor. At an early stage, effective PR can help let the world
know that your service is there, generate leads and start to establish you in your market. To the outside world your service
may seem unexciting so it is worth trying to find a connection that will link it to something more interesting. For example,
you could invite the mayor or a local celebrity to the launch of your business, or offer prizes to the first few customers.
Articles in trade and technical magazines should concentrate on how your new business is doing something different in
your sector. If your target newspaper or magazine is excited by or interested in this news, you are on the way to creating
some successful publicity. Send a well-written press release followed by a telephone call to the local news editor(s).
When approaching the media, always think of the story from their perspective so as to be able to tell them immediately
what it is in your story that will interest their readers or listeners. Writing press releases can be difficult so do not be afraid
to go in search of assistance.
Buying Advertising
Many surveyors seem to believe that the sum total of their sales and marketing campaign is to place an advertisement in
Practical Boat Owner and to watch the jobs/money roll in. Nothing could be further from the truth.
For a start, it pays to make sure that whatever media you use are reaching the right people. Look at where your competitors
are advertising, as well as where they do not. This will help to focus your thinking. National newspapers are often the right
choice for high-volume consumer sales and direct response selling (air tickets, for example) but clearly have little attraction
for the surveyor. However, local paid-for and free newspapers and community magazines have the geographical focus
that is needed for a local service. They are also relatively inexpensive per advertisement and useful for testing the market.
Trade and technical journals, and club magazines may also be suitable although their circulation (as in number of copies
distributed) may be limited.
Business telephone directories such as Yellow Pages and trade directories such as the British Maritime Federation
work well as some customers naturally turn to this kind of reference source as they do not know where else to go.
These publications tend to have a high circulation and a long shelf life, but results can often be slow in materialising.
As discussed previously, it is important that you track where your job enquiries come from so that you can determine
if your advertising spend is working.
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5. PREPARATION – THE SWOT ANALYSIS

LEARNING OUTCOME

• Know how to carry out a SWOT analysis and to evaluate the results
Introduction
As part of your preparation for both the Business Plan and the Marketing Plan you will need to carry out a SWOT analysis.
SWOT stands for strengths, weaknesses, opportunities and threats and it is a very useful tool to help identify the challenges
and opportunities your business will face. A SWOT analysis provides a clear basis for examining your business performance
and prospects and allows you to focus on the key factors affecting your business, now and in the future.
Whilst a SWOT analysis is vital when starting out, it is also a useful when conducting regular reviews of your business’
performance.
If you are planning to raise finance, the bank will expect to see a SWOT analysis as part of your business plan.
The Stages of Conducting a SWOT Analysis

Decide who to involve
For a surveyor starting out, key people to involve are likely to include the family and close friends. Children in particular are
good at giving feedback (even if the delivery is not particularly diplomatic). Involving others will give you a fuller picture
and help to gain their commitment to the process. Be prepared for surprises. Try not to judge the comments until after
the process has been completed.
If possible, find out what customers think by using a customer satisfaction (market) survey.
Consider bringing in sympathetic outsiders who know and understand business (even if it is not in your market segment)
or who know your particular market area (e.g. customers and brokers).
Another option is to use an external consultant for the first SWOT analysis. Whilst this can be expensive, having proper
guidance early on can pay dividends later.
Brainstorm the issues

Ask everyone involved to identify any strengths or weaknesses that they feel you and the business have, and any
opportunities or threats that they think the business faces.
At this stage, do not try to evaluate what is being said; concentrate on capturing the as much detailed information as
you can. If you do not understand the reasons why a person holds a particular opinion, try to clarify these. However, as
previously stated, do not be judgmental or defensive as this will deter participation.
Evaluate the significance of the issues identified

During the brain storming session encourage people to make suggestions without trying to judge how important the
issue is. Concentrate especially on identifying weaknesses and threats.
Be aware that lack of honesty can be a common problem. For example, most people find it easier to identify strengths
and opportunities, particularly if the performance of key people (including you) is one of the weaknesses. In such a case
using an external consultant and confidential reporting can provide significant insight.
You may want to develop and use check-lists to prompt suggestions and ideas. A simple web search on SWOT analysis
will yield hundreds, if not thousands, of useful ideas.
Organise related ideas into groups. Recording suggestions on Post-it notes or cards that can be moved around and
rearranged makes this easy.
If you have carried out such an exercise before, update your conclusions from the previous SWOT analysis. For example,
a particular strength may no longer exist, i.e. last year’s cutting edge technology (e.g. digital cameras) may now be
commonplace.
Assess whether your strengths (or weaknesses) give your business a significant competitive advantage (or disadvantage).
For example, your strong research and marketing plan is useless unless you have the resources and ability to exploit the
results. Do not be surprised if certain factors crop up as both strengths and weaknesses.
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Create a simple, clear action plan

A SWOT analysis is only a tool. In itself, it cannot make your business successful. There is no point carrying out regular
(annual) SWOT analyses if they do not result in action.
Set out clearly, and in writing, what you will do to address weaknesses, capitalise on opportunities and deal with threats.
This includes the steps to be taken, the people who will be involved, the time frames and the budget.
Involve key people (particularly your partner) in drawing up the action plan to get their commitment and support.
Finally, keep the SWOT analysis and action plan close to hand for regular review particularly before making important
decisions.
Strengths
Your strengths are usually easy to identify. Most people have a reasonably good idea of what they are good at. If you have
any historical records from previous employment (e.g. employee reviews) these can help to indicate areas where you are
particularly strong.
For most businesses, strengths will tend to fall into distinct categories.
Finance
Sound finances may give you advantages over your competitors. Important factors might include:
• Positive cash flow
• Growing turnover and profitability
• Skilled financial management, good credit control and few bad debts
• A strong balance sheet
• Access to credit, a strong credit rating and a good relationship with the bank and other sources of finance
Marketing
Good marketing will almost certainly be the key to your success.
Management, personnel skills and systems.
These provide equally important background for success. This may include factors such as:
• A good reputation
• An established customer base
• An extensive service range
• Effective research and development, use of innovation/technology
• A skilled sales force
• Thorough after sales service
• The ability to make quick decisions
• Good motivation and morale
• Efficient administration
• A good location
• Effective purchasing and good relationships with suppliers
Be aware that strengths are not always what they seem. Strengths can in some cases imply weaknesses. For example, a
market leader may become complacent.
Strengths can often imply threats. For example, your star sales person may be one of your company’s strengths until he or
she leaves reducing your ability to maintain sales levels.
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Weaknesses
Weaknesses are often known but ignored. A SWOT analysis should be the starting point for tackling under-performance
in both yourself and in your business.
Weaknesses are often the opposite of strengths, reflecting areas where strengths are missing. Some examples are:
• Poor financial management
• Insufficient funds available for cash flow
• All available security (including personal assets and guarantees) is already pledged for existing borrowings
• Poor credit control leads to unpredictable cash flow
• Lack of marketing focus
• Unresponsive attitudes to customer requirements
• A limited or out-dated service range
• Complacency and a failure to innovate
• Over-reliance on select few customers
• Management and personnel weaknesses
• Failure to delegate and/or train successors
• Expertise and control locked up in a few key personnel
• Inability to take outside advice (unwillingness to listen to the advice of others)
• High staff turnover
• Poor location and shabby premises
• Out-dated equipment
• Low productivity
• Long leases tying the business to unsuitable premises or equipment
• Inefficient processes (time wasting)
• Poor time management
Be as honest as you can and ask for feedback from those who know you well.
Opportunities
Opportunities come in a range of different disguises. Often, they will not be obviously apparent and frequently they are
related to changing circumstance. Such change generally provides opportunities that a well-managed business can turn
to its advantage. However, change is often uncomfortable. Changes involving organisations and individuals that directly
affect your business may open up completely new possibilities. For example:
• Deterioration in a competitor’s performance, closure or insolvency of a competitor – someone needs to fill the void
hence a perfect time to attack his or her client list
• Improved access to potential new customers and markets (e.g. overseas)
• Increased sales to existing customers, or new leads gained through them (asking for referrals)
• The development of new distribution channels (e.g. the internet, social media etc.)
• Improved supply arrangements, such as outsourcing non-core activities (e.g. bookkeeping, sales and marketing)
• The opportunity to recruit a key employee from a competitor
• The introduction of financial backers who are keen to fund expansion (remembering that they will be seeking a return)
Much change will be beyond your control; the broader business environment may change as a result of such factors as:
• Political, legislative or regulatory change: for example, a change in legislation that requires customers to comply
with new regulations (e.g. the Recreational Craft Directive, Boat Safety Scheme, etc.)
• Economic trends: falling interest rates reducing the cost of borrowing, for example
• Social developments: demographic changes or changing consumer requirements leading to an increase in demand
for your service (e.g. the dramatic increase in power boats through the 1990s)
• New technology: new NDT methods, processes and information technology, etc
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Threats
Threats can be minor or can have the potential to destroy the business. Threats are real and to a start-up business they
are ignored at your peril.
Once again, threats also tend to come from changing circumstances. As before, changes involving organisations
and individuals that directly affect your business can have far-reaching effects, this time from a negative perspective.
For example:
• Improved competitive products or the emergence of new competitors (new surveyors move into your area and
undercut you on price)
• Loss of a significant customer (dramatically reducing regular income)
• Creeping over-reliance on one customer or group of customers
• Price rises from suppliers (rates, gas, electricity, etc.)
• Key personnel leaving (i.e. your secretary)
• Lenders reducing credit lines, increasing charges or calling in loans
• A rent review threatening to increase costs, or the expiry of a lease
• Legal action (e.g. being sued by a customer)
The broader business environment may alter to your disadvantage. This may be the result of:
• Political, legislative or regulatory change: for example, new regulation increasing your costs (e.g. VAT increase to 20%)
• Economic trends: for example, lower exchange rates reducing your income from overseas clients
New technology: for example, technology that gives competitors an advantage to which you do not have access or
cannot afford, e.g. infrared thermography
The Results of SWOT Analysis and the Action Needed

Consider each of the four headings separately and write down anything you can think of. As before, to start with do not
be judgmental or disregard anything. Ask close friends and colleagues for their opinion and, as discussed previously, just
because someone is critical try not to go immediately on to the defensive.
The results from a SWOT analysis will be different for every individual and every business. Sort the various items you have
noted down into obvious groups. Now is the time to try and review all aspects as objectively as you can.
Whilst it might seem obvious, capitalise on opportunities that play to your strengths. For example, opportunities that
match your strengths may prompt you to pursue a strategy of aggressive marketing. The SWOT analysis may also suggest
other strategic options, for example:
• Diversifying away from areas of significant threat to more promising opportunities
• Focusing on turning around weaknesses in areas of significant opportunity
• Taking defensive measures in areas of threat where you are weak
Address your weaknesses

Decide which weaknesses need to be addressed as a priority. Other weaknesses need to be acknowledged, respected and
remembered until time and resources allow a solution. Do not forget or ignore them.
Some weaknesses can be turned into strengths or opportunities; it might be possible, for example, to turn a shortage of
local surveyors in your area into scarcity value for your service (i.e. a higher unit price recognising that to use a surveyor
from outside the area may come with an increased travel cost).
Some weaknesses will have a clear solution; financial weakness might be solved by raising further funds and management
shortcomings by undertaking further training, for example.
Some weaknesses will take time and money to address; you may need to start a programme of improvements through
training or quality management (ISO 9000-2000), for example.
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Protect yourself against threats

Build long term relationships with your suppliers and customers. Switching suppliers on an annual basis to save a few
pounds can be a short term gain but a longer term loss when trading conditions become difficult, and you need as much
help and flexibility as you can achieve.
Ensure you have clear and reasonable contracts (in writing) with suppliers, customers and (if applicable) employees.
When you can afford it, take out insurance cover against obvious disasters. This includes not only insurances such as
buildings, contents, car and travel, but also items such as medical (so you can receive treatment quickly if needed) or key
man insurance (which insures your income in the event of an accident or illness).
Draw up realistic contingency plans to cope with potential crises. This is a question of being prepared. Once again, write
things down so that they are readily available (e.g. telephone numbers of people such as your bank, solicitor, accountant,
handyman, plumber, computer support etc.).
Consider taking out insurance for legal protection. On a standalone basis this can be expensive but it is often included in
professional indemnity insurance cover and should be a consideration when buying such insurance.
Take advantage of low fixed interest rates to move any overdraft to long-term loans. However, do not then be tempted
to increase the loan just because the repayments are lower. Good, conservative, financial management is essential to the
future viability of the business.
Successful start-up businesses tend to focus on capturing market niches and creating ‘barriers to entry’ to reduce potential
competition. In the surveying world, there are few barriers to entry and you will find new surveyors entering your market
from time to time. One typical problem that is frequently faced by a start-up surveyor is the need to gain experience. To
do this, you will need to find a mentor who will be willing to share his or her time and experience with you. In doing so,
however, the practising surveyor is, in effect, training competition and so you will find many surveyors reluctant to do this
as it would mean creating a barrier to entry.
When reviewing your SWOT analysis, keep in mind that sometimes it can be based on unrealistic and unfounded
assumptions. In order to maximise the effectiveness of the process, find out as much as possible about ’your’ market
and justify any assumptions or conclusions with relevant data. N.B. This should have been done as part of your original
business plan.
Gather in-house information from your contacts, for example, ask your local broker what they know about market facts
and figures, number of boats sold in the local area last month, number of boat moorings in the local area, etc. All of this
helps to build a relationship.
Gather as much information as you can on your competitors. Read company reports (more about profit and loss and
balance sheets later), trade magazines and industry research carried out by relevant trade organisations (such as the
British Marine Federation (BMF) and the International Council of Marine Trade Associations (ICOMIA). Also, remember to
use your professional body - International Institute of Marine Surveying (IIMS), Marine Surveyors Society (MSS), Society of
Consulting Marine Engineers and Ship Surveyors (SCMS), and the Yacht Designers and Surveyors Association (YDSA). These
bodies often hold a lot of useful information and contacts.
Outcome of the SWOT analysis

On completion of the SWOT analysis, you should have a very substantial understanding of exactly what you need to do
to formulate a list of actions from your business and marketing plans. As you do this, give the action items a target date
and keep them handy so that you can review them frequently (at least monthly). When you miss a target date (and most
people will at some time) do not beat yourself up over it. Instead, think about why you missed it and, in the light of this
review, set a new target date or, if the target is no longer appropriate, abandon it.
However, one word of caution that relates back to planning discussed earlier. If you start to miss targets on a regular basis,
it is very tempting to give them up altogether. In doing so, you lose the advantage of ‘knowing where you are going’ and
the quality of your business decisions will therefore suffer.
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6. FINANCE
LEARNING OUTCOME

• Have an appreciation of the many different aspects that collectively influence the financial wellbeing of operating as a yacht
and small craft surveyor
Introduction
When first starting out in business on your own account, areas such as tax, VAT, company accounts, profit and loss, balance
sheets and cash flow can be very daunting. However, remember that if you plan your marketing well so that your business
starts to develop, the income received can be used to buy assistance from professionals.
Often, accounts are seen as a necessary but not particularly desirable ‘expense’. If such is the case, then you have the wrong
book keeper or accountant. Like a good surveyor, a good book keeper or accountant will listen to their client’s needs and
adapt the service provided to those needs (subsequently charging the client for the privilege). If the advice is good, your
business gains and the advisor gains a stronger client relationship. Finding such a book keeper or accountant is not easy,
but perseverance will be worth it in the end.
As a starting point for finance there is an old saying (provenance unknown to the author) “Turnover is vanity, profit is sanity,
cash is reality”. If you remember this, you will not go far wrong.
Profit and Loss Accounts

Profit is essential in the longer term to every business. Without profit, you will need to continually raise additional financing
(or sell assets) to keep trading. Clearly, unless you are very wealthy, such a course of action is a recipe for disaster.
The profit and loss (P&L) statement of account is a tool that provides a picture of the company’s trading performance over
the last ‘accounting period’ (usually a year). The P&L statement records sales, costs and expenses, profits (and losses), and
any tax provisions for the period, even if they have not yet been paid.
Examples of what is normally included in a P&L statement are:
• Sales and purchases: recorded when the sale or purchase is invoiced even if it has not yet been received (this is
called an accruals basis)
• Costs of fixed assets: for example, the cost of vehicles, equipment, computers etc. are spread over their useful
working lives, therefore, rather than charging the full cost when the asset is purchased, an annual depreciation
charge is made instead - the depreciation charge being a fixed percentage of the purchase price
• Prepayments and accruals: for example, prepayments might be rent in advance, payment on account, and accruals,
such as interest payable later, are matched to the period to which they relate, i.e. in the correct accounting period
• Transactions that do not directly affect profits: for example, financing activities (e.g. taking out a new loan) are not
included, but interest payments and bank charges are
The statement usually follows a relatively simple format.

• Turnover (or sales), excluding VAT
• Cost of sales: ‘direct’ costs, such as raw materials or sub-contractors fees, which usually rise in line with the volume
of sales
• Gross profit: turnover less cost of sales
• ‘Indirect’ costs (or overheads):rent, rates and salaries. This will include any depreciation on fixed assets
• Operating profits or profit before interest and tax: including non-operating income and costs (e.g. if you sell an
asset)
• Net interest payable: for example, on bank loans
• Profit before tax: after deducting interest charges from operating profit
• Tax payable
• Net profit
You may need to ask questions of your financial advisor to get a clear understanding of exactly what the P&L statement is
telling you (other than the fact that you are making a profit or loss).
In preparing the P&L statement, there is an element of judgement involved. For example:
• How much of the income from a long-term contract (e.g. five years) should be included in that year’s profit?
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• What adjustments should be made for customers who are unlikely to pay (bad debt)?
• How quickly to depreciate fixed assets? To some extent this is limited by legislation
The choices made will also affect your balance sheet.
Balance Sheet
The balance sheet gives you a picture of the company’s financial strength at the end of the accounting period. It
summarises assets (what you own) and liabilities (what you owe). Examples of these are:
• Fixed assets: equipment, car, office building if owned, for example. Fixed assets are shown on the balance sheet at
their depreciated values
• Current assets (short-term assets):including stock (which is not normally relevant to a surveyor),work in progress,
debtors (customers who owe you money) and cash
• Current liabilities (amounts you owe which are due for payment within one year): for example, trade creditors
(suppliers you owe money to), bank overdraft and hire purchase
• Long-term liabilities (creditors due after more than one year):bank and directors’ loans, for example
• Shareholders’ funds: including share capital (i.e. the amounts paid into the company for shares if a limited company)
and reserves (including retained profit)
Capital Employed
The total financing involved in the business is called the capital employed.
Capital employed equals long-term financing (e.g. bank loans) plus shareholders’ funds (your money). The figure for capital
employed will always equal (which is why it is called a balance sheet) fixed assets, plus current assets, less current liabilities.
If it does not then something is wrong with the accounts.
Once again you may need to ask questions of your advisor in order to get a clear understanding of exactly what the
balance sheet is telling you. Like the P&L statement, the balance sheet reflects an element of judgement. For example:
• How quickly to depreciate fixed assets (although this is to some extent governed by external influences as stated
previously)
• How to value intangible assets if applicable (e.g. licences, where a value could be attributed, but its validity would
depend on the state of the market when the licence was sold)
• How to value work in progress
• What adjustments to make for customers who are unlikely to pay
The choices made will also affect the P&L statement, i.e. the profit and loss statement and the balance sheet are very
closely linked and altering one will have an effect on the other.
For a limited company, the P&L account and balance sheet form part of your ‘statutory accounts’ for Companies House;
more about this will follow.
Cash Flow
Cash flow is the short-term priority for every business (large or small). If you run out of cash and cannot raise additional
finance to cover the shortfall, the company will be insolvent i.e. you will not be able to pay your bills. It is for this reason
that all good businesses focus on their cash flow.
The cash flow statement shows what has happened to your cash position over the accounting period. In these terms, cash
means the actual cleared funds in your bank account.
The cash flow statement differs from the P&L statement because it shows the timing of payments and receipts. It can be
prepared by adjusting the P&L statement for ‘non-cash’ items. Typically, these include:
• Depreciation
• Changes in debtors and creditors: for example, if the amount you are owed for sales has increased, your cash
position will (all other things being equal) be reduced
• Financing activities (e.g. new loans)
Initially the cash flow statement can look complicated. However, it carries a simple but important message and it is,
therefore, worth making the effort to understand it. In the most basic of terms it tells you whether your business is
generating cash or using it up.
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A mature, profitable business will usually be cash generating. By comparison a younger, growing business may be using
up cash even if it is profitable. In such a case, the business will need either sufficient reserves to cover the shortfall or it
will need to raise a short-term loan.
As the business grows cash flow can become even more threatening through what is called ‘over trading’. In this case the
company is doing so well it is making significant profits but the difference in timing between invoicing and cash received
and cleared means that the business cannot pay the suppliers in accordance with their terms. Subsequently, the suppliers
stop supplying and the business can no longer supply, therefore, losing customers.
Profit Margins
Your profit margins can be calculated from the P&L statement, i.e. the percentage of profit in relation to turnover.
For example, if your turnover is £200,000 with a cost of sales of £60,000, you have a gross profit of £140,000 and a gross
profit margin of 70 per cent.
The operating (or net) profit margin compares operating profit (i.e. after taking account of indirect cost) to turnover. For
example, with turnover of £200,000 and operating profit of £30,000, the operating profit margin would be 15 per cent.
The value of profit margins is that you can compare them to get a clearer picture of your performance against previous
trading years and against the competition.
Compare profit margins to other companies to highlight where you are doing well and if you need to improve.
Compare profit margins to previous periods to see where your selling prices are coming under pressure or where costs
are increasing.
Compare profit margins on individual service lines (sale and purchase, valuations, insurance surveys) to see which services
are the most profitable. Although the formal P&L statement will not give this level of detail, your internal management
accounts should.
Profit margins also tell you how much room for manoeuvre you have on pricing and what sales you need to break even
(remembering back to the section on the value of your time). As long as you have a positive gross margin, each sale will
make some contribution to covering your overheads. Dividing your total overheads by your gross margin tells you what
sales you need in order to break even. For example, with overheads of £50,000 and a gross margin of 25 per cent, you will
reach breakeven with a turnover of £200,000 (i.e. £50,000/25 x 100).
If you decrease your margins (e.g. by reducing prices), you will need to increase sales to maintain the same profits. Using
the simple calculation above gives you an indication of how much.
Comparing profits to assets also provides a measure of profitability. Return on capital employed is profit before interest
and tax as a percentage of capital employed. This shows what return you are making on the money financing the business
(both as loans and shares). It is this figure that the bank will be very interested in to see if your business plan is viable and
realistic.
Return on equity is profit before tax (but after interest has been deducted) as a percentage of shareholders’ funds.
Generally, this is only of interest if you have ‘other’ stakeholders in your business who are providing finance. In effect, this
figure tells them how you are doing compared to other markets, e.g. the stock exchange.
These percentages can also be compared to the same figures for other companies as an indication of how effectively your
business is using the money invested in it.
You (or your accountant) can also use your accounts to get further information on your financial position. Areas that a
start-up business should focus on include:
• Growth: for example, comparing sales from one period to the next
• Financial strength: for example, looking at how large a proportion of your financing is borrowed and how well you
could cope if business conditions became difficult
• Control of working capital (i.e. current assets less current liabilities): for example, how much money you have tied
up as work in progress, how efficient you are at collecting debts, and how quickly you pay suppliers
As with the measures of profitability, comparing key ratios to other businesses, and against the same figures for previous
periods, helps to highlight areas where you may need to take action.
A word of caution should be included here: annual financial statements are not enough to control your business. You also
need to forecast what will happen and to have up-to-date information on recent performance. These numbers come from
management accounts.
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Budgeting
The reason for preparing a budget is to set financial targets (based on your business and marketing plan) and to determine
necessary financing requirements.
You must produce a cash flow forecast. If you do nothing else, at least this will help you to survive. It is good practice to
produce P&L and balance sheet forecasts as well.
Detailed budgets (e.g. sales and costs broken down for each service) allow you to see where your profits and cash flow
are coming from.
Your cash flow budget enables you to anticipate any financing requirements before you need them and, therefore, enable
you to be prepared.
It is important to create realistic budgets rather than an ill-informed ‘best guess’. While the previous year’s figures provide
a guide, forecasts must also take into account changes (e.g. new competition).
Forecast monthly (or weekly) figures that take account of seasonal variations. In my experience, for the yacht and small
craft surveyor, January and August are always dead months and so this is a good time to take holidays or catch up on
more routine business matters.
Include timing effects. For example, if you know from experience that the average customer pays 60 days after delivery of
the report (even though your terms state 30 days), this needs to be taken into account.
Calculate a range of forecasts and the probability of achieving them. Accounting computer programs can make budgeting
and investigating ‘what-if’ scenarios easier. For example, what the effect will be if your sales are 10 per cent lower than
forecast.
Performance Analysis
Compare actual performance against budgets to identify problems (and opportunities). Record actual outcomes (from
your accounts) and compare them to budgeted figures. It is easiest to see how significant the variances (i.e. differences)
are if they are expressed as percentages. The greater the variance the worse your original judgement, why?
If possible, identify the cause of the variance. This will be a different volume (e.g. sales of 100 surveys against 110 surveys
budgeted), a different price or a combination of both.
As with your business plan, regularly update your budgets to take account of actual performance. Be aware of real
problems. Budgets can build in assumptions rather than questioning them. For example, always budgeting for a wastage
level of two per cent or a sales growth of 10 per cent without investigating whether this is realistic, or could be improved.
Aggressively controlling performance against budgets can lead to setting ‘comfortable’ budgets. These represent targets
that are easy to meet, so that no one pushes themselves.
Finally, avoid setting over-ambitious and unrealistic budgets as this serves no purpose other than to deceive together with
the potential to de-motivate.
Depreciation
Depreciation is the accounting term used to describe spreading the cost of fixed assets over their working life. For example,
a £3,000 computer system that lasts for three years could be said to cost you £1,000 per year. Without depreciation you
would have to charge the full £3,000 against profits in the year that you purchase the system and that would give
unrealistically low profits for that year. Subsequently, charging nothing against profits for the remainder of the computer
system’s life would give unrealistically high profits for these later years.
Your financial advisor/accountant will give you guidance on what depreciation rates to use. The key decision is how
quickly to depreciate an asset. For example, you might choose to charge:
• 33 per cent of the cost of a computer system against profits over three years
• Two per cent of the balance sheet value of a building you own against profits each year
Occasionally, depreciation may lead to unrealistic profits or losses and an unrealistic balance sheet. For example, if an asset
becomes obsolete before you expected it to, it will lead to an additional charge on profits. Your accountant should be able
to make one-off adjustments to correct this within your accounts.
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Managing your Cash Flow

A business can survive for a short time without sales or profits, but not without cash. It is cash that pays the bills and allows
trading to continue and, if you are growing and extending credit to more customers, the need for cash is even greater. This
section of the module briefly explains:
• The main components of cash flow
• How to forecast and control cash flow
• Tactics for generating more cash
• Suggestions on using the right types of finance for your needs
Your cash flow is the balance of all the money that flows in to and out of your business each day. Cash flow is the actual
payments of money, as opposed to what is owed by your debtors or to your creditors.
(i) The main inflow of cash is usually the cash from sales
If you sell on credit, your cash inflow is delayed until you are actually paid. Therefore, effective credit control
becomes essential. A business that purchases on credit and is paid in cash is at a great advantage in cash flow
terms. Many surveyors in the yacht and small craft market tend to operate on this basis for private clients
(ii) New finance provides a one-off boost to your cash flow
In the past, many businesses have relied on bank overdraft finance and, in some cases, have reached their
borrowing limits quickly. These days there are alternative methods of funding that allow you to raise more finance
(iii) The main outflow of cash is the money used for expenditure, including paying for your overheads
Salaries (including National Insurance contributions) are often the largest and most inflexible cost
Many businesses have to fund large amounts of work-in-progress. For example, a surveyor might have a regular
client but knows that this client only pays on 90 day terms. Therefore, the surveyor needs to foot all the bills to
continue trading whilst waiting to be paid
(iv) VAT and PAYE (income tax) are regular cash outflows that tend to be paid out in large lumps. You can be penalised
heavily for late payments
Buying significant items just before a VAT period ends, rather than at the start of the next one, can help your cash flow
(v) Your business needs to give its owners and financiers a return on their investment
You must pay interest and repay capital to lenders such as the bank. If you do not, they will probably exercise
their contractual right and foreclose on your loan causing your business to go bankrupt
If there is spare cash, you and other shareholders may want to draw back any personal loans made to the business. Care
is required here and if you find yourself in this situation it would be wise to take professional advice.
The cash flow generation of your business will, to a large extent, depend on how well you run your business. The more
warning you have of cash flow peaks and troughs, the more time you have to deal with them; hence the cash flow analysis.
Being Prepared
Accounting software makes it easier to prepare budgets and revenue and expenditure forecasts for the months and years
ahead. You can quickly update your projections and make ‘what if’ calculations, e.g. what if sales are 20 per cent below
forecast for six months in a row? If so inclined, you could use graphics to make it easy to detect patterns and step changes.
These can be useful when trying to persuade your bank manager or financial backer to increase your credit line.
Prepare budgets showing the level of sales and profits you expect to achieve and the costs involved in doing so. Estimate
the sales revenues and margins, based (where possible) on past experience. Overheads such as rent, rates and other costs
can be accurately predicted with a little bit of investigation.
Prepare monthly cash flow forecasts, looking ahead one year, and update them monthly. These forecasts show what cash
you expect to come in and when (if at all) you expect to run into problems.
Identify your major outgoings, especially those on fixed dates such as the monthly payroll. Make sure you will have sufficient
cash on the day to cover each payment. Do not mistake the reference to payroll as meaning you have to employ staff. If you
do not have sufficient cash to withdraw your own income on a regular monthly basis, how are you going to live?
The key is to be realistic. For your regular sales, use the established figures for sales volumes, debtor periods and bad debts
(which you obtain from a review of your annual accounts). For any new services or customers, be pessimistic. Expect
problems and delays and do not ‘book’ a sale until the customer has paid the invoice.
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Be aware that monthly forecasts do not take into account weekly fluctuations and sometimes, particularly when cash
becomes tight, short-term variations can cause significant problems.
Include key indicators that give a picture of the health (and prospects) of your business, e.g. the volume and status of sales
enquiries and the volume of orders outstanding.
Include the budgets and forecasts in the management accounts. If being financed by a bank, you will be required to
forward these to them regularly. A bank that trusts your forecasts will be more prepared to extend your borrowing facility
when you need extra finance, therefore, make certain they are realistic.
Monitor your actual performance against the budget and the cash flow forecast regularly, preferably once a month.
Identify any problems and take immediate action. For example, if you know you will be short of cash in three months’ time,
you might slow down sales growth (by number of sales?) or agree extended credit from a major supplier for that period.
The only way to generate cash over the long term is through retained profits. By comparing your performance with the
budget, you can quickly judge whether sales and profits are going to plan.
Before taking on any greater financial commitment, including major new orders, check that you will have sufficient cash
flow (or other finance) to pay the costs involved. Create a useful yardstick by working out how much extra working capital
is required to fund each 10 per cent increase in monthly sales.
Restrict the growth of your business to whatever you can comfortably afford to finance. Always keep a financial reserve
(somewhere between five and 10 per cent) available for contingencies.
Develop a system to warn you automatically if something needs querying within your accounts.
You need to know as early as possible if leads, orders or sales fall below a certain threshold; if planned sales will be later
than forecast; or if a substantial customer stops buying from you.
Your financial controls should warn you if key indicators (profit margins) deteriorate beyond an identified limit. You also
need to know about any substantial invoices that are in dispute; particularly late debts and customers exceeding their
credit limits.
Build productive long-term relationships with your key suppliers (as discussed earlier) so they are prepared to extend extra
credit to you when you need it.
Always keep in mind that today’s sales are tomorrow’s cash flow, so your overall aim is to keep increasing sales and
profitability within the limits imposed by the available cash.
Increasing prices may reduce sales (and therefore cash flow) in the short term. However, this is often outweighed by
its major positive impact on profitability and cash generation over the longer term. Remember the discussion earlier
regarding the value of your time and not underselling your services.
Even profitable companies can, and do, become insolvent through over trading. This happens when you have to pay the
costs incurred fulfilling orders before you receive payment from your customers. To avoid this risk, you may need to delay
some orders and decline others.
When negotiating contracts with customers, make generating cash flow one of your primary objectives. It can be
surprisingly easy to obtain deposits once you learn the right way to ask.
Negotiate stage payments for contracts that will take time to complete. Include a timetable for the customer to pay
invoices as part of this agreement.
Agree a clear specification for the work to be completed (as discussed earlier) to minimise the chance of the customer
disputing any invoices.
Improve your sales and profit margins by making sure all your work is invoiced for as soon as possible. Surveyors are often
asked to perform beyond their original remit. When this happens (provided there was a clear understanding of that limit
before you started) it is reasonable to negotiate additional payments in these circumstances.
If you need to improve your cash flow temporarily, adjust your sales and marketing plans to suit. Bring forward sales
by offering customers incentives to purchase quickly. Bring forward payments by offering customers incentives (e.g.
discounts). Focus your marketing on short-term lead generation, rather than longer-term objectives like brand recognition.
If you pay sales commission, link it to receipt of payment rather than receipt of order. There is a double cash flow benefit
in doing this:
• Delaying payment of the commission
• Your sales people will persuade their customers to pay promptly
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Credit Control
An efficient credit control system speeds up your cash collection and reduces the number of bad debts. It also saves you
time and shows your customers that you run your business professionally. Control how much credit you provide and to
which customers. Avoid giving any customer more credit than you could afford to lose if the sale turned into a bad debt.
Send out invoices immediately after you have supplied what the customer ordered. If appropriate, make a follow-up call.
Confirm that all the invoice details were correct and that there will be no problem paying it by the due date.
Monitor late payments and chase them up methodically, largest debtors first. All businesses have a legal right to charge
late-paying customers interest on contracts. However, this is not of much use if the business goes bust in the interim.
Using a debt collection agency, or a specialist solicitor, can be an effective method of dealing with non-payers.
Shop around, so you know the prices and service that you should insist on from your suppliers. Consider whether you
could make savings by purchasing some types of equipment second hand.
Implement simple cost control systems across your whole business in order to identify scope for cost savings. For a start,
four types of easy savings can usually be found in the following areas:
• Overcharging by your suppliers, such as double billing or missing discounts
• Unnecessary costs, such as heating your premises at night
• Excessive costs, such as high-priced suppliers providing a product or service that a low-price supplier could provide
• Inefficiency, such as laborious paper-based systems, which could be computerised (to reduce costs in the long term)
Overdraft and loan finance is often limited by the security you can give the bank. However, other services such as
‘factoring’ can help to overcome this. Factoring allows you to raise finance based on the value of outstanding invoices.
Growing businesses in particular often find that factoring provides a more substantial and flexible source of working
capital than overdrafts or loans.
Consider using asset finance to purchase computers, vehicles, plant and machinery. For example, both hire purchase and
leasing allow you to spread the cost of the acquisition, with the asset itself providing the main security.
A strong financial base of equity finance (and directors’ loans) is vital when a business starts up. Subsequent injections of
equity finance can help you achieve step changes in the growth of the business.
Poor/Bad Practice
Poor or bad business practices cause many needless business failures. Examples include:
• Taking on financial commitments (such as new employees) before the business can afford to pay for them
• Overvaluing work-in-progress and fixed assets, such as machinery
• No provision for major expenses that you know are likely to happen
• Failing to do any cash flow forecasting, particularly if your business is struggling to grow
• Failing to agree the details of an order or the payment terms with the customer, leading to a dispute
• Failing to implement an effective credit control system, starting with credit checking prospective customers
All of the above are easy to consider from an academic perspective, however, when faced with real life situations things
are often not quite as black and white as the list suggests. Take care with your decisions in all your business activities.
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Basic Bookkeeping
Bookkeeping makes your paperwork easier. It provides a system that tells you, and your accountant, exactly what is
going on. Whether you use a manual or computer-based system, the same principles apply. It is worth deciding if you are
going to computerise your accounts at an early stage. While a traditional paper-based system will look suitable for many
new businesses, the accounting function can soon swallow valuable time as the business starts to grow. If you start with
computerised accounts, there will be no need to go through the time-consuming process of transferring your paperwork
on to a computer package. In this part of the module we will consider the following:
• How to record business income and payments
• How to use your bank statement to check that you have not made any mistakes
• Tips for cash businesses to avoid common mistakes
You have to record all the money coming into your business and all the money going out, both to keep track of your cash
flow and for your tax records. In order to do this you will need:
(i) A record of every sale
Cash businesses can use till rolls and point-of-sale systems to record sales, however, this is not normally a
workable solution for a yacht and small craft surveyor. Non-cash businesses (cheques and bank transfers) should
issue an invoice for every sale. Keep them in two files: Sales Paid and Sales Unpaid
(ii) Invoices or receipts for every purchase
Keep two files: Purchases Paid and Purchases Unpaid. Keep either in date order or in numerical order if you use
purchase orders
(iii) Records of payments into and out of your bank account
Open a separate business bank account. Ask for monthly bank statements. Reconcile the bank statement every
month (without fail)
(iv) Records of payments made by cash
Keep receipts for cash purchases in a file labelled Petty Cash. Try to keep them in date order
(v) A cash book for summarising the information
Cash books come in hard copy and electronic forms. You can buy an analysis book (a book with several columns
on each page) from your local stationer. This can be used as a hard-copy cash book. If you have accounting
computer software it will perform the same functions as a cash book
The cash book, whether hard copy or electronic, simply records all the money coming in and going out of your
bank account. Your accountant can help you set up a simple book-keeping system, choosing headings to suit
your business
You need a simple routine procedure to keep track of your sales:
(i) Every time you make a sale, issue an invoice
Give every invoice an original number (1, 2, 3 and so on) and keep a copy of each. File the copy invoices in Sales
Unpaid. Put the most recent invoice on top. The invoices will automatically be in date order
(ii) When an invoice is paid, pay the customer’s cheque into your account using the paying-in book provided by the
bank
On the stub of the paying-in slip, write the date, invoice number(s) and amount(s). Take the invoice from the
Sales Unpaid file. Write ‘paid’ plus the date in the top right-hand corner. File the invoice in Sales Paid. Put the most
recently paid invoice on the top. The invoices will automatically be in the order they were paid. Ignore the invoice
numbers, which do not have to be kept in any order
(iii) Once a week, update your cash book or software package/spreadsheet
Look through your paying-in book stubs. Enter into the cash book details of all the invoices paid. Check the cash
book entries against the invoices in the Sales Paid file. Put a tick against the invoice number on the invoice to
show that the invoice details have been entered into your cash book
(iv) Once a week check through your unpaid invoices and chase any that are falling due
The longer a customer has owed you money, the further back in the Sales Unpaid file the invoice will be.
Therefore, when chasing up you should start from the back of the file. Everything should match. Invoices are in
the same order as entries in the cash book, which is in the same order as your bank statement
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From time to time your business will have other income apart from sales. This might include:
• New loans or grants
• Interest on your deposit account
• Equipment disposals
• Tax refunds
You will not necessarily receive invoices for all of these, but they will appear on your bank statement. Therefore, every
month enter details of these exceptional transactions in the cash book below the entries for money received from sales.
Every time you make a purchase, ask for an invoice or a receipt. Keep a note of all purchases for which you do not have a
receipt. File the bills in Purchases Unpaid in date order, with the most recent on the top.
When you pay a bill, write the date, supplier and amount on your cheque stub. If you pay several invoices with one cheque,
write down each amount and the total. Take the invoice out of the Purchases Unpaid file and write the date and cheque
number in the top right-hand corner. File the invoice in Purchases Paid in date-of-payment order. The most recent goes
on top. If you have a receipt, as well as an invoice, staple them together.
Once a week update your cash book or accounting programme. Look through your cheque stubs. Enter the details of the
bills you have paid into the cash book. Check the details against the invoices in the Purchases Paid file. Put a tick against
the cheque number (in the top right-hand corner) to show that the invoice details have been entered into your cash book.
Everything should match. Invoices will be in the same order as entries in the cash book, which will be in roughly the same
order as entries on your bank statement.
Paying Cash Out of Your Own Pocket

It is very easy when running your own business to lose track of legitimate business expenses if using cash. Few people
carry two wallets one with business cash and a second with private cash. Every time you make a cash purchase make
certain you obtain a receipt and write details of the purchase on the receipt. Keep the receipts in a Petty Cash file or use a
spike, which is convenient and automatically keeps the receipts in date order until you deal with them.
Once a month, total all the petty cash receipts. Write yourself a cheque for the total. Attach the receipts to an A4 sheet
and file in Purchases Paid. Enter the details in the cash book. Thus, if you spent £10 on stationery and £5 on parking, you
would enter:
• Your own name and “petty cash refund” in the “supplier” column
• £15 in the “total” column
• £10 under “stationery”
• £5 under “travel”, which includes parking
You can treat purchases by personal credit card in exactly the same way. Refund yourself the total of all the business
purchases with a business cheque when the credit card bill arrives. Staple all the receipts to an A4 sheet. Enter details in
the cash book, with your name and ‘credit card refund’ in the supplier column.
Every month compare your bank statement and cash book. After any errors are corrected, both balances should be the
same.
Match each entry in the cash book with the entry on the statement. Tick them both off. If you regularly pay batches of
cheques into your bank, you need a ‘bank’ column in the ‘money in’ section of your Cash Book. This shows the total value
of money paid in each period, which will match the figures shown on your bank statement.
Payments made by direct debit or standing order will not yet be recorded in the cash book. Nor will bank charges and
interest. Enter the details in the cash book below the list of entries for cheques that have been written out that month,
then tick off the item in the cash book and on the bank statement.
Make certain that every item appearing on the bank statement has been ticked off. Some items will not yet appear on the
bank statement. Money paid in by you but not yet cleared (e.g. customers’ cheques). Cheques you have sent to suppliers
which have yet to be paid into their accounts. To allow for this you will need to calculate the adjusted bank balance.
The adjusted bank balance is what the bank balance would be if all the money paid in and all the cheques paid out were
shown on the bank statement. It equals the end-of-month balance showing on the bank statement, plus money paid in
but not on the statement, less cheques written but not on the statement.
Reconcile the bank statement. Write down the adjusted bank balance at the start of the month. Add the total sales
revenue paid in and other income for the month (taken from your cash book). Deduct the total payments for the month
(taken from your cash book). This should equal the adjusted bank balance at the end of each month. When the figures
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agree, you have successfully reconciled your bank account. If the figures do not agree, there is an error. If the difference
is £5.25, look for a sales invoice, other income, or payment entry for £5.25. It should not take too long to find it. It only
becomes more complicated when multiple mistakes have been made.
VAT
If your business registers for VAT you will need to make some changes. There are very few complications on the sales side.
You must issue VAT invoices. You should enter the details of the VAT in a separate column in the cash book. The golden
rule is that you must have a VAT invoice for all purchases.
For small purchases of standard-rated goods, you can calculate the VAT paid and enter the details of the VAT in a separate
column in the cash book. Enter the total under “total” in the cash book, enter the total less VAT under the individual
heading (e.g. stationery).
For any help needed for VAT, contact HM Revenue & Customs for free leaflets on every aspect.
Cash Businesses
If you sell for cash, as opposed to allowing customers to pay after a credit period, the basic principles are much the same.
However, cash businesses face two particular problems.
(i) If you take cash (from sales) and spend it (e.g. on wages) it is easy to lose track of what is going on;
(ii) The tax office (and the VAT office, if you are registered) will always be more suspicious of cash.
However, there are simple steps you can take to avoid any complications. Keep your till rolls or Electronic Point of Sale
cash summaries. Use them like sales invoices in your book keeping. Keep a separate record of all money going in and out
of the till. Reconcile this record daily or weekly to check that the amounts add up to the actual cash you have. If you use
money from the till for a purchase, put the receipt in the till immediately.
Accounting Software
There is a wide variety of different accounting software on offer varying from free shareware to significant cost. A quick
Google search using “small business accounting software” will bring up many thousands of results. Various web site
give reviews of the various pros and cons of the different software packages and it is well worth studying these to find
something that suits you as an individual.
As a company we have used Sage (which is one of the industry standards) for many years and have found that it provides
everything we need to give good control over company accounting.
Other Accounting Variations

If an invoice is amended:
Issue a new invoice. Write ‘Cancelled: see invoice no. xxx on the original invoice and file it in Sales Paid.
If partial payment is received:
Write ‘part paid’, the date and the amount on the invoice. File a photocopy in Sales Paid and keep the original in Sales
Unpaid. When you update the cash book, put P by the invoice number, e.g. P169.
If you issue a credit note:
Give the note a number, like an invoice (1, 2, 3 and so on) and file it in Sales Unpaid.
When updating the cash book, record the details as usual but put the amount in brackets to show that it must be
deducted from the sales total.
Help and Assistance

Many surveyors when first starting tend to be concerned about accounts and accounting, and in particular tax and VAT.
Whilst it is sensible to be mindful of these, it is important to keep them in perspective. If a business is successful and it
makes a profit then at some point both tax and VAT might be due. If such is the case, a book keeper and/or accountant is
the person to assist and can be paid for from the profits. However, if the business does not make a profit, the tax man will
not be interested and, therefore, tax is not an issue.
If in doubt remember that there are numerous sources of advice both free and paid for that the surveyor can turn to.
Like with a survey, if in doubt, ask.
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7. CHOOSING YOUR OFFICE

LEARNING OUTCOMES

• Understand the importance of choosing the correct office location
• Know the sorts of issues that will need to be considered when setting up an office from scratch
Introduction
Finding the right office premises will help you improve productivity and give a positive impression of the business to your
customers. This part of the module will look at the various stages of looking for an office. It covers:
• Choosing a location
• Deciding on the size and type of office
• Understanding different types of tenure
• The search process and its costs
Look for a Location that Fits Your Business Needs

Should you be near your customers and potential customers?
Some businesses can operate successfully at long distance, using the latest technology. Others know that proximity to
their customers is vital.
Should you be near to other similar businesses?
For a surveyor there may be a benefit from being near a yacht broker.
Should you be close to your suppliers?
For example, if you subcontract work that needs close monitoring.
Decide how accessible you need to be.
Consider the trade-offs between location and cost.
A marina site will always be more expensive than working from home. However, proximity to potential customers
(sometimes known as ‘footfall’) can offset the additional cost involved.
Should you be near the motorway system, or a railway station, or an airport?
For example, if you need to travel extensively.
Lower prices in an area with a lot of vacant property could mean the area is bad for business. There is probably a good
reason why the area is cheap.
What Does the Business Need?

To start, decide on your total space requirement. Work out what space each person needs. Even as a one-man band you
might wish to use part time secretarial services. Take into account any space that could be saved through using a hot desk.
Desks can be shared by different employees, e.g. two secretaries work sharing, if they are not all in the office at the same
time. Include any additional space that will be needed for meetings and storage.
Decide on the type of layout you want. Open-plan space is more flexible, since you can divide or reorganise the space as
your needs change. Regular rectangular floors with a minimum number of pillars provide the maximum amount of usable
space. Individual rooms offer privacy and are quieter. Often a combination of both offers the best solution.
Decide what your technical requirements will be. What sort of telephone and computer system will you need? Look for
premises that will allow you to expand or contract. Consider modern buildings with air conditioning, cabling ducts and
good security systems built in.
Consider how much natural light comes into the building. Statistics suggest that dark offices lead to more sickness and
lower productivity. Money saved by renting a basement office may, therefore, be a false economy.
Make sure the services are adequate. For example, power points and telephone sockets wherever they are needed. Going
into a serviced office block may allow you to shift from one office to another, larger or smaller, while keeping the same
address. This saves money on relocation costs and cuts down on the disruption of moving.
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Consider whether the nature of your business may change, so that you need another kind of premises.
Do all your operations need to be under one roof? For example, you could keep archive records in a less expensive location
such as an offsite lock-up storage area.
A common problem can be that many businesses under-estimate how quickly they will outgrow their premises.
Decide what image you need to project. A large, clearly visible office may add to your prestige. Consider the advantages
of perceived size. Many companies other than the advertising firm occupied the ‘Saatchi building’, but the impression was
given that Saatchi and Saatchi occupied all of it. This helped add to their prestige.
If you initially sub-let part of your office (provided your lease allows you to do so), you have the potential to expand in
due course.
A marina may seem an obvious choice of location but there are pros and cons.
Advantages include the following:
• You may be able to maximise your visibility to your potential market
• Agood address may be important to your business
• You will be close to other marine related facilities such as brokers, chandlers and riggers etc
• Many marina locations offer a choice of eating, shopping and sometimes other leisure facilities
Disadvantages include:
• ar parking may be difficult and expensive, for both employees and visitors, particularly during the sailing/summer
C
season
• Access for deliveries may be restricted
• Noise from ‘frapping’ may be annoying
• Office space can be more expensive
Many new office developments have been built away from towns and these can offer substantial advantages such as:
• There is usually plentiful parking
• Business parks generally have modern, well-equipped office space
• The environment will be cleaner, more attractive and usually safer
• The geographical location is normally well connected to transport infrastructure
Disadvantages are less obvious but may include:

• Estate maintenance and management charges in a business park can be surprisingly high
• Some business parks are located in run-down former industrial areas
• There may be few shops or places to eat nearby
Buying premises is usually a long-term investment. A lease is a rental agreement, usually over several years. A licence is a
rental agreement on a more temporary basis. All kinds of buildings can be bought or leased. The premises available on a
licence are mainly offices, studios or workshops suitable for smaller businesses.
In the first instance, if not working from home a short term, one year licence is probably the most sensible option. As
the business begins to build this can be converted over to a lease and ultimately, if the business proves successful and
profitable, a property can be purchased.
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What Services and Facilities Do You Need?

Licensed premises often give you access to shared fax and copying machines on a pay-as-you-go basis. Secretarial and
switchboard services may be available, if required. Meeting rooms or extra offices can often be hired by the hour, half-day
or day.
Premises that are bought or leased do not usually offer day-to-day support services or the opportunity to use communal
facilities for special projects.
How much flexibility will your business need?

New businesses may prefer the ‘easy-in/easy-out’ nature of a licence agreement. You can usually terminate a licence
agreement at a month’s notice. Your landlord can also give just one month’s warning, but is unlikely to want to move you
out if you are a good tenant (you pay on time and cause no problems).
Leasing gives you security of tenure for the term of the lease, which is generally between three and 25 years with regular
break points and rent reviews. You should be able to negotiate a break clause that gives you an option to end the lease
at, say, five-year intervals. Without a break clause, you might be left paying the rent many years after your business ceases
to use the premises.
In theory, buying gives you complete control over when you move out. In practice, this will be subject to market conditions
and your ability to find a buyer for the property. If you no longer need the premises for your business, but cannot sell the
property, you have the option to become a landlord and lease or license space to other businesses.
How Much Cash is Available for the Office Space?

With minimal legal fees (if any) and only a small deposit to pay, taking premises on a licence is usually the cheapest way
to set up an office in the short term. Licence terms vary, but typically you will have to find a month’s rent as a deposit and
pay your rent monthly or quarterly in advance. Local authorities and Enterprise Agencies often subsidise rents in licensed
office space as one of their policies to encourage small businesses and start-ups.
Rents on leases are usually paid quarterly in advance. You may also have to pay a deposit of, say, six months’ rent. Most leases
include provisions for rent reviews at fixed periods. Reviews can be a problem. In a rising market, your rent may increase
considerably. If you take a lease and rents start to fall, you may be stuck paying above market rates for several years.
Buying ties up your money for a long time, especially as deposits for commercial property mortgages can be as high as
50 per cent. Few businesses buy office premises unless they have large amounts of spare cash (or spare funds in a self-
administered pension scheme) and are looking for a long-term investment. Buying is obviously the most expensive option
in the short term. However, it usually works out less expensive than paying rent after the first ten years or so and you do
own the premises once any mortgage is paid off.
Licensed space will be maintained and repaired by the landlord.
If you lease, the landlord is usually responsible for external repairs and maintenance, and for any common areas. You may
be responsible for internal repair and maintenance work.
If you buy the premises, you are responsible for all the repairs and maintenance.
Make the most of personal contacts, especially people who have offices in the area. To start you may be able to share
premises with someone e.g. another business may have space to sublet to you. By using contacts in other areas you may
hear of suitable premises that have not yet come on to the market.
Visit several commercial agents who are active in the area you have chosen. Question them about the state of the market
and any new developments. Ask for printed specifications of different premises to be sent to you. When comparing
different premises, use the total cost per square metre (including annual charges) as a benchmark. Local agents will know
the market and what is available.
Consider using a Chartered Surveyor. They are experienced in negotiating the price and terms of a contract on your behalf,
taking commercial factors into account. For example, they will know whether you should be paying a premium on your
lease or asking for a rent-free period. They will protect your best interests, unlike commercial agents, who work for the
landlord or seller. A surveyor can view several premises before recommending a shortlist to you.
Fully involve your professional advisers before committing to any kind of legal agreement. Depending on the
circumstances, there may be a need for a structural survey, legal due diligence, and much more.
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Office Checklist
When searching for office premises, make certain you draw up a list of criteria that the premises should meet before you
start looking. Then, give each element a score out of 10 when you visit each property.
As a guide your list should include:
• Location
• Size (floor area)
• Structural condition
• Cost
• Maintenance liabilities
• Tenure
• Accessibility
• Layout
• Parking
• Front elevation and reception appearance
• Security
• Surroundings
• Lighting (electric and natural)

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8. TIME MANAGEMENT
LEARNING OUTCOMES

• Understand how to prioritise and plan
• Understand the need for routines and systems of work
• Be aware of the dangers of distraction
• Know how to analyse the use of your time
Introduction
Time is very similar to money. If you control it, you can have a satisfactory and productive life. If you do not control it, you
can spend your life frustrated and confused.
Few people have sufficient time to do everything they wish, so it is important to prioritise.
Have an Objective
Some people call this ‘setting goals’. Irrespective of the title used, it means knowing where you are going. If you know
where you are going, you can allocate your time appropriately in order to achieve your desired objectives.
In allocating your time, activities can be broken down into four main areas:
1. Important and urgent
2. Important but not urgent
3. Urgent but not important
4. Neither important or urgent
Important and urgent

Generally, these types of tasks come under the title of ‘fire fighting’. For example, when a client calls and is unhappy with
some aspect of a recent survey, or when a supplier calls threatening to cut off their supply because you have not paid a bill.
These tasks require immediate and probably an unplanned allocation of time otherwise they are liable to have adverse
negative consequences.
Important but not urgent

Generally, these types of tasks are the ones that are essential but difficult, that can easily be put off to another time.
For example, updating your monthly cash flow forecast, revising your business plan in the light of new information or
following up with a difficult client.
It is the nature of these tasks that they tend to be less desirable than others and can be easily overlooked. However, it
is the tasks in these areas that if ignored suddenly become important and urgent tasks without the time to adequately
manage them.
Urgent but not important

These types of task are the ones that immediately demand your attention, but in real terms add nothing towards achieving
your objectives and/or positively prevent you from reaching your objectives. Examples include such things as unsolicited
sales telephone calls which immediately distract you from the job in hand and drop in visitors who want to chat (because
they have nothing to do).
Some of these tasks (such as a cup of coffee with a friend) tend to be pleasant and desirable and so they tend to drift and
consume large amounts of time. However, if you have a specific and set number of things to do in any given period, i.e.
finish a report and dispatched it before close of business that day, these distractions can become very costly.
Neither important or urgent

These are the tasks that you really should not be doing. They provide nothing towards achieving your objective.
Examples of these include responding to unsolicited e-mails to take a survey or playing solitaire on the computer because
you are putting off doing something. Essentially, these tasks just rob you of your limited time and you really should not
be doing them.
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Have a Plan
To help manage your time more efficiently and recognising that you wish to achieve your objectives, it is necessary to
have a plan.
Start by identifying on a weekly basis what it is in the ‘Important but not urgent category’. Make a deal with yourself that
these items will be done during the week no matter what.
Now, plan out your day in terms of allocating lumps of time to the different tasks that have to be done. Recognise that
there are always things that will take time and that need to be done (clearing e-mails, listening to voicemail, etc.). Allocate
a specific time and stick to it.
For the main activities, try to allocate a realistic lump of time in terms of start and finish. For example, when writing a report,
set the start time as 1000 and the completion time as 1300 rather than ‘Write report – 3 hours’.
Give each main task a priority, 1, 2, 3 and stick to it. Be realistic. Different people have different ways or styles of doing
things. You might be better at physical activities in the morning and the more cerebral activities in the afternoon or
evening; allocate your time accordingly.
In your planning, allow time for contingencies but do not use the time to allow other tasks to drift.
If you are new to time management from a self-discipline perspective, i.e. previously your employer has dictated your use
of time; go easy on yourself until you have built up sufficient experience to know how long particular tasks take. When
I first started as a surveyor it used to take me many hours to write a report, however, these days, depending upon the
type of report, I can finish far more quickly. What changed? To start my typing speed, but also software has become more
user-friendly; there is a greater familiarity with the expressions I am going to use; I follow a more systematic check list and
report layout along with a myriad of other small efficiency gains, i.e. experience.
Develop Routines and Systems

Time management is about organisation; organising your activities into a systematic routine will bring major efficiency gains.
To start make sure your on-site check list and your reporting format are consistent, i.e. they follow the same order. That way
you avoid the need to be constantly turning the pages of your notes back and forth as you write your report.
Use standardised templates where possible but be cautious about constantly overtyping. It can be very embarrassing
when a client calls you up to point out that on page 3 the name of the boat is wrong!
Establish a set routine together with associated documents for receiving an instruction; preparing for the survey; executing
the survey; writing the report; raising the invoice; dispatching the survey and invoice; checking payment; archiving the job.
Find a way that works for you to capture everything that happens in your day such that it feeds into your time management
system. The author is a great fan of spreadsheets, particularly since the advent of workbooks. I use a workbook in which I
list every single new task I have to do as it crops up. At the end of each day the last thing I do is to go over my general to
do list and allocate the tasks (cut and paste) into my weekly planner. As each task is finished, I cut and paste the task into
the job sheet for the work, ready for invoicing.
Organise your paper and files to minimise the number of times you need to actually touch a document. For example,
when you open the post do not open all the letters and make a pile of them only to go back through again but as you
open each item make a decision (Do, Delegate or Dump):
1. Do something with it there and then (as long as it can be done swiftly)
2. Delegate it: assign it to a specific time when it will be dealt with and then move straight on
3. Dump it
Sometimes things crop up which are difficult to assign to the three relatively clinical groups above. To deal with these
create a ‘too difficult to do today’ (TDTDTD) file and put in there. Now one of two things will happen:
1. Events will change such that you will need to act on the item, removing it from the TDTDTD file and put into the system
for action
2. Events will change making it no longer relevant and can be dumped
Sometimes it helps to write the date on the item to show when it was received. If after a year it is still there, the chances
are you should have dumped it.
Computers are meant to be a tool to aid efficiency and should be used as such. E-mail and text are immediate and
effective ways to communicate with clients
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Information Overload
As a technical specialist information can be vital to doing a good job. However, in the modern world where there is
relatively easy access to vast amounts of information sometimes the volume of information can itself become a distraction.
To overcome this use your filing system for single touch capture of information. If it is a useful article in a magazine tear it
out or photocopy it and file it straight away in the relevant technical file for that sort of information.
Be selective in what you really need to keep. As long as you know where to find a specific piece of information, realistically
it does not need to be kept immediately available.
Establish systems for filing of electronic media, documents, spreadsheets, photographs, digital video, digital recordings,
e-mails, web addresses, etc. Consider using Customer Relationship Management (CRM) software. Whist originally
specifically designed as a sales tool these days, CRM systems are very powerful databases which help organise multiple
document types within a user-defined reference system (client name, job number, etc.).
Manage Distractions
In today’s world immediate communications are both a blessing and a curse. With e-mail, text, mobile telephone and
social networking media there are constant demands on our time over and above the traditional. These multiple inputs
must be managed effectively to avoid wasting significant amounts of time on relatively unimportant tasks.
For activities such as e-mail it might be better to assign time at both the beginning and end of each day to clear your
inbox rather than constantly interrupting your work each time a new message arrives.
Be prepared to manage telephone calls ruthlessly. Obviously there needs to be some flexibility in how you approach
every call to determine if it is a potential or existing client. However, if not, be prepared to close down the conversation
permanently or until such time as it suits you.
Plan your use of office space to limit the possibility of interruptions. Do not have a second chair adjacent or close to your
desk. If you do, somebody will sit on it to talk to you. If you have a scheduled visitor, bring a chair in before they arrive and
remove it as soon as they have gone.
Try to keep your desk clear of anything other than the item you are working on. If documents are within your view they
will nag at your subconscious.
Time Analysis
Whilst all of the above is relevant, how do you know if you are being effective with your time management. To answer this
question you need to analyse what you do and evaluate how productive you have been.
Using a spreadsheet (or any system that works for you) record every 20 minutes the main activity that occupied that
period of time. Do this for a fixed period (one day or one week) and then review the results grouping the various activities.
Now using the objectives criteria discussed above (urgent and important, important but not urgent, etc.) see how you
have actually used your time. Only you can decide if you have used your time wisely, however, if you have been spending
more the 20 per cent of your time on things that are neither important or urgent, the chances are something is wrong.
Remembering back to Pareto’s Principle (80-20 rule);if you are spending 20 per cent of your time on matters that are
important and not urgent that is probably about right.
Time Bandits
The following are some of the major pitfalls that will rob you of time.
1. Trying to do everything yourself. Delegate where possible
2. Poor communication. Make sure others understand your objectives before you start to discuss the tactical detail
3. Beware of perfection paralysis. Doing a good job is vitally important but perfection is an ideal not a reality
4. Decision making. Agonising over decisions can drain vast amounts of time. Evaluate the advantages and disadvantages,
determine the worst possible outcome and decide if you can live with the worst possible outcome: if so, go ahead; if
not, do not, move on
5. Disorganisation. There is a saying that “People with tidy desks are just too lazy to look for things” and whilst amusing it
perfectly summarises the problem with disorganisation
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9. CHALLENGES AND SOLUTIONS

LEARNING OUTCOMES

• Have an understanding of different strategies to help overcome an initial lack of experience
• Understand the need to keep clients happy
• Be aware of the pitfall of complacency
Introduction
Up to now this module has focused on the essential principles behind running a yacht and small craft surveying business.
In this section we will attempt to identify the common challenges a start-up yacht and small craft business will face and
suggest possible courses of action to assist in overcoming these challenges.
Chicken and Egg

The most frequent challenge for new entrants to the yacht and small craft survey market is gaining experience. It is a
classic chicken and egg type issue. Potential customers are generally unwilling to take a chance on somebody with no
experience (even if they do know their subject) and yet you cannot gain experience unless somebody gives you the
chance to start.
The author was in exactly the same situation when he first started and, therefore, appreciates the frustration that this brings.
Buy experience
The first suggested solution is to ‘buy’ experience. This can be achieved in one of two ways.
1. Find a local surveyor who is willing to at least talk to you and come up with a proposal whereby you actually pay
him to allow you to follow him around and shadow him on a survey. Any deal you put together for this will probably
also involve some sort of undertaking not to compete directly with your new mentor in the future. Historically one
professional surveying organisation attempted to formalise this route to gain experience but it proved very difficult to
match students to mentors
2. Advertise your service as a lost leader in order to tempt potential clients to overcome their initial reluctance. When the
author first started he offered surveys of 30 foot yachts for £50 all in. At the time the local market average was £250. As
you can imagine established surveyors did not like this at all, however, it only lasted a short while until I had begun to
build a small portfolio of work and once this was achieved my prices went up to match the local market average
Use your contacts

The next method is to use your contacts to let it be known that you are a start-up surveyor and that you wish to build
your experience. To do this you are prepared to carry out surveys on people’s boats (whether they actually need them or
not) for no charge and on the understanding that there is no liability either way other than for any damage that you might
do to the yacht as part of the survey. On completion of the survey give the report to the yacht owner and discuss it with
them. Receive their feedback willingly.
If you have reasonable contacts in the local yacht club this can be a very popular offer and it can rapidly build both your
experience and reputation.
Find a mentor
The final suggestion is to pursue an actual mentor. As part of your initial research you should have looked at the local
competition. In doing this you should be able to identify one or two individuals who are approaching retirement age and
who perhaps might welcome assistance in finding an exit strategy from their business.
Having identified such an individual you will need to approach them with a proposal whereby you become their ‘student’
and they in effect give you practical training. In return, you will, for a given period of time, effectively work for them (either
as a sub contractor or employee) so that they receive a return on the time invested in your training. On the assumption
that you and your mentor establish a mutually respectful working relationship, the scene is then set for you to gradually
take over your mentors business with his blessing as he retires.
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Competition
Once you have gained some experience you now join the group of local surveyors who are competing on a routine basis
for work. Indeed you are now in the group who will take exception to new entrants who come into the market and use
the technique of undercutting prices to gain experience discussed above.
At this time what you really need to concentrate on is getting to know your existing clients well and keeping them very
happy with the services you have provided in the past so that when you are competing for a job, you can use them as
referrals to attest to how good you are at your job. As with most people when looking for a tradesman, the first thing that
you tend to do is ask around for recommendations. You need to be the person your clients recommend and that comes
from developing a relationship with them, one that goes a long way beyond the fee paid for the time it took to do the
survey. Whilst this does not guarantee that you will convert every job you quote for, it will go a long way in helping to
maintain your fees at a sensible level.
Avoiding Complacency
Once up and running, and particularly if you find the work of being a yacht and small craft surveyor fascinating, the next
major challenge will be in keeping up to date. As discussed previously, the pressures on your time will be great. In such
circumstances it is all too easy to ignore the little things that do not appear to add anything directly to your income.
In this group I would include such things as reading some yachting magazines, taking part in the activities of professional
associations and maintaining a portfolio of continuous professional development (CPD). Sometime you may well hear
a time served surveyor making the statement “why do I need to do CPD, I have over 30 years experience!” What the
individual does not understand is that there is a significant difference between one year of experience repeated 30 times
and 30 years of different experience. If you ignore your professional development, one day you will find that competitors
are both charging more than you and securing more jobs than you. The reason will be because they are better than you,
and the only thing you have left to compete with is price.
Finding New Clients

As discussed previously finding new clients is much harder than keeping old ones. Therefore, as discussed earlier, make
sure you put adequate effort into keeping existing clients happy.
However, any business that does not consistently grow is a business that is progressively failing. To grow you need new
clients. Again, as previously discussed, advertising alone is probably not sufficient so you need to develop a strategy to
help constantly promote your service.
In the author’s experience the best possible way to do this is to talk to people and pretty much anybody. However, in
having these conversations you need to be aware of what you are trying to achieve. You are not selling widgets and,
therefore, hard selling techniques are of limited use. You are selling confidence and you need to learn how to instil
confidence in others that you are the one who can deliver technical excellence every time.
Take time to put in the leg work. Walk around the local marinas and boat yards taking time to stop and chat to people.
Offer help and advice free of charge and willingly (up to a point) so that people recognise you as a person who is both
knowledgeable and willing to help. If you make a statement that you will ‘do’ something, make certain that you do. Always
follow up.
In markets such as insurance make certain that you attend all the main events and boat shows where the insurers gather
(primarily the London and Southampton Boat Shows). Learn to network and be engaging, but not pushy. Do not expect
things to happen quickly (unless you are lucky). If you have done an insurance survey for a client, make certain that you
remember the insurer and broker. When you meet them, drop in to the conversation that they have actually seen one of
your reports on “Such and Such”. If you did a good report the chances are they will have noticed; now they have put a face
to the name. Once they know you are going to be around, i.e. you do not disappear as a surveyor after one or two years,
then possibly, just possibly, when a job comes up in your areas they might give you a try.
Finally, one of the best ways of finding new clients is to open your business in an area where there is little competition.
However, you might not wish to live on the Orkney Islands!
43
Conclusion
Despite the length of this module it is considered reasonable to state that it only just begins to touch on the many
and varied subject areas that any business will need to consider and undertake if it is to survive and grow in today’s
marketplace.
The subject of business management is a subject in its own right and for those students who have sufficient interest there
are courses and qualifications available from the most basic (like this module) to Master Level Degrees or MBAs.
Despite this, starting a yacht and small craft surveying business is not as difficult as it might seem at first. There are very few
barriers to entry for a surveyor wanting to make a living from small craft surveying. However, nowhere in this module do I
suggest that it is easy or straightforward. If you choose to go down the route of staring and operating your own business,
you can be assured of many hours of hard, and sometime frustrating, work.
Surveying is a rewarding profession, but in today’s litigious and complex world, in order to protect yourself, it is essential
to have a solid grasp of business basics if you are to succeed.
44
10. STUDENT ASSIGNMENT
Question 1
Prepare a Business Plan (on no more than 10 pages of A4 paper) identifying all the key areas described in the module.
• For the avoidance of doubt the 10 pages includes any appendices or supporting material
45
Maritime Training Academy
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5828 Yacht and Small Craft Surveying 18/19 Module 4

Yacht and Small Craft Surveying: Diploma in

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Maritime Training Academy

© Maritime Training Academy 2019

After successfully completing this module you will:

1. RUNNING A SUCCESSFUL YACHT AND SMALL CRAFT SURVEYING BUSINESS

Defining What a Business Does

Defining What the Surveyor Wants To Do

2. THE BUSINESS PLAN

On completion of this chapter you will:

Your Personal Objectives

Business Description and Purpose

Business Vision and Long Term Objectives

Current Market Situation

Current Target Customers

Sales Targets and Objectives

Current Financial Requirements and Financial Forecasts

3. THE VALUE OF YOUR TIME

On completion of this chapter you will:

What Do You Charge?

The Effect of Competition

4. MARKETING YOUR BUSINESS

On completion of this chapter you will:

The Main Factors Involved

You and Your Competition

Building the Marketing Plan

Common Mistakes to Avoid

Continuously Review Your Marketing Plan

Keep Ahead of the Competition

Publicity and Public Relations

5. PREPARATION – THE SWOT ANALYSIS

On completion of this chapter you will:

The Stages of Conducting a SWOT Analysis

Brainstorm the issues

Evaluate the significance of the issues identified

Create a simple, clear action plan

The Results of SWOT Analysis and the Action Needed

Address your weaknesses

Protect yourself against threats

Outcome of the SWOT analysis

On completion of this chapter you will:

Profit and Loss Accounts

The statement usually follows a relatively simple format.

The choices made will also affect your balance sheet.

Managing your Cash Flow

Paying Cash Out of Your Own Pocket

Other Accounting Variations

Help and Assistance

7. CHOOSING YOUR OFFICE

On completion of this chapter you will:

Look for a Location that Fits Your Business Needs

What Does the Business Need?

Disadvantages are less obvious but may include:

What Services and Facilities Do You Need?

How much flexibility will your business need?

How Much Cash is Available for the Office Space?

On completion of this chapter you will:

Important and urgent

Important but not urgent

Urgent but not important

Neither important or urgent

Develop Routines and Systems

9. CHALLENGES AND SOLUTIONS