Carolyn Howe opened her children's shoe shop, Piggy's, in Stamford, Lincolnshire in 2001. Careful financial planning helped to get the business off the ground and paved the way for expansion into larger premises, the employment of six staff and the sale of a full range of children's clothing. Here Carolyn explains how she coped in the early days.

"I put together a financial plan with help from my accountant, including budgets and sales forecasts. The plan was really useful in the first year for monitoring sales targets and estimating stock demand.

"It's important to estimate personal financial needs too, so you can forecast what you'll need to take out of the business. In practice the amount varied from month to month according to what the business could bear, but at least I knew what the limits were.

"It was quite difficult estimating monthly sales, but it helped that I'd researched the local market, finding out things like the number of school-age children in the area. The best rules for forecasting are not to be over-optimistic and to put something aside for emergencies."

"Looking at the financial plan, it was obvious that I was going to need additional funding.

"I secured a bank loan to cover start-up costs like initial stock and refurbishing the premises. I negotiated a long repayment term, which helped keep monthly outgoings to a minimum.

"In addition, my bank put me in touch with Business Link and I got a start-up grant towards IT costs. It wasn't a huge sum, but every little helps!"

"Cutting costs included simple things like finding the best deals on energy bills for the shop. I also rented the smallest premises I could get away with, expanding only once the business could afford it.

"Shop fitting was a major start-up cost. I wanted an upmarket look, but by shopping around, I found cheaper ways to achieve the same effect.

"Keeping costs down at home was important too, just simple things like cutting back on luxuries. The less you take out of the business, the better the chances of surviving the first year."

"In the first couple of months, sales were good and it was easy to watch the money coming in and assume the business was making a profit when it wasn't. I now monitor cash-flow each week and wait until the end of the year to calculate profit."

"On early stock buying trips, I sometimes spent more than I'd intended. Nowadays I always go in with a budget and stick to it, no matter how persuasive the sales rep."

When Peter Spivack and his three partners opened their restaurant, Rendezvous, in WallaseyVillage, Merseyside in 2004, they knew sound cash-flow management would be a key to success during that crucial first year. As managing director, Peter assumed responsibility for cash-flow management.

"I prepared my first year's cash-flow forecast as part of my business plan, which helped me secure a start-up loan. I decided early on that I would review the forecast monthly, although I update the figures on a weekly basis to keep on top of things.

"I started off using Excel spreadsheets, but now I also use Sage accounting software. The software incorporates a range of reporting tools that let me present the information in whatever format I need. For example, I can see average spend per head at the touch of a button. 

"I also had a marketing plan and budget from day one. That may not sound like managing cashflow, but it's actually crucial for keeping the cash flowing in."

"We arranged with key suppliers to be billed quarterly for the biggest costs. That makes budgeting and planning easier. We also negotiate 30-day accounts with suppliers wherever we can, which definitely helps cashflow. 

"We're fortunate that our customers pay for goods and services at the time of purchase, but we still need to control outgoings. I'm always looking for ways to cut costs without affecting quality, such as switching suppliers if necessary and negotiating discounts on one-off purchases."

"It's no good having the figures if you don't actively use them. For example, we used to open at lunchtime seven days a week, as well as evenings. As business picked up, I was considering employing another chef to help us cope.

"I analysed the figures to see how much extra cash we were likely to collect, compared to the increased staff expenditure. I concluded that we would actually be better off keeping staffing levels the same, but only opening Tuesday to Saturday evenings.

"The forecast has also enabled me to spot looming cash imbalances on three occasions. I didn't panic because I could see the problem was only temporary. I used a pre-arranged overdraft facility to tide us over, confident that the money could be paid back the following month."

"Incorporating all the financial information in one place with accounting software has been a great help in managing cash-flow and I wish I'd had it right from the start. It also makes it easier to prepare our end-of-year accounts and means I have up-to-date figures whenever I need them."

Founded in 1991, D&D London Ltd is one of the UK's most dynamic restaurant groups, owning and managing some of London's most popular restaurants, such as Quaglino's and Bluebird. More than three quarters of the company's employees are non-UK nationals, a choice that reflects the company's policy to employ an ethnically and culturally diverse workforce. Here, human resources manager Holly Lowes-Bond explains the processes the company has developed to ensure employees are eligible to work in the UK.

"We regularly receive and encourage job applications from non-UK nationals, partly because it's a cultural tradition in the restaurant industry, but also because our mission to employ the best staff means we cast our recruitment net as wide as possible. However, D&D London has a zero tolerance policy on illegal working, so it's vital to have appropriate procedures in place.

"As an employer, you have to be completely clear about your responsibilities. Our policy and guidelines have evolved over several years, but in principle we follow Home Office guidance to ensure that we comply with the law. The Home Office Border and Immigration Agency website provides plenty of information and advice to help you to get started."

"Our checking process begins at the point of application. We require every applicant to fill in and sign our application form, acknowledging that they have answered all questions honestly.

"When an employee attends an interview, we work through a comprehensive checklist we've developed. The first thing we ask for is visual ID, usually a passport, and any work permits held. We will occasionally conduct an interview without seeing the documents - for example when someone walks in off the street - but we always insist on the documents being produced before the employee starts work.

"We also satisfy ourselves as far as possible that the documents are genuine and belong to the holder. For example, we use a UV light - similar to those used for checking banknotes - to scan passports. We also use a website, documentchecker.com, which provides clear visuals and instructions on what to look for in passports and permits from various countries. Other measures include checking expiry dates and signatures, checking that the photo matches the person, checking that the date of birth on documents is consistent with the person's appearance and checking that the plastic seal around the photo doesn't appear to have been tampered with.

"Once the interviewer has completed the checklist and made a decision to employ, they sign the checklist to acknowledge that they are satisfied with the person's eligibility to work."

"We make a copy of all the relevant pages of each document for our files. We also make a note of whether an employee needs to join the Home Office Workers Registration Scheme and we ask the employee to sign a document stating that they understand their requirement to register and the possible consequences of failing to do so. It's important to provide clear explanations before they sign.

"We also make use of the reminders in Outlook to note key dates, such as visa expiration, so that we can remind employees of any action they need to take in order to remain employed by us. It's helpful for them and helps us avoid disruptions.

"We conduct a basic document check every six months and a full ID audit once a year, when employees are required to bring in their ID, which managers check against our records. It's a useful discipline for keeping records up to date, and gives us an opportunity to review procedures and incorporate key lessons."

"While it's important to make all staff aware of employment policies, in the early days we were sometimes guilty of delegating too far down the line. These days we make sure that ultimate responsibility remains with the general manager of each business, even though other staff may contribute to the checking process."

"We've found that using a checklist is an invaluable tool, ensuring that nothing gets overlooked during the employment process. With the benefit of hindsight, we should have introduced them right from the start."

Bladonmore is a financial training and media business, based in London. A customized service and a gritty, real-world approach to training has enabled the company to grow rapidly during its first two years. Director Richard Rivlin explains how effective use of market research has contributed to Bladonmore's development.

"Like most companies starting out, we needed to research our target market but didn't have limitless cash to pay someone to do it for us. Doing it yourself is cheap in money terms - but you have to invest your time if you expect to get anything useful out of it.

"Over a period of three months, I went on a virtual fact-finding mission using the Internet. If you persevere, you can find an incredible amount of quality information for free, including market reports and expert analysis. Business consultants' websites, industry bodies and sector-leading companies are a good place to start."

"Throughout my research, I was careful to avoid analysis paralysis. There's no point hiding behind piles of market data and thinking you've done something constructive. You have to use the information to develop your business. Having clear objectives helps. I wanted to know the size of the market, to learn from competitors' successes and mistakes and to understand what potential clients want.

"I focused on data from reputable sources and used it to help formulate a business plan. At a later stage, I also used research facts in Bladonmore's marketing material - but always bearing in mind that I didn't want to give away too much to competitors."

"Research isn't just about reading the occasional market report. It should be an on-going process that keeps you up to date with your market, your rivals and your clients. I find newspapers one of the best research sources. There's something relevant to our business in the press almost every day. For example an article about increased activity in venture capital (VC) markets is useful, because companies looking for VC finance often need financial presentation training."

"I didn't wake up to the wonders of free expert research soon enough. If I had my time again, I'd head straight for the websites of top consultants like Ernst & Young and McKinsey. You may not be able to afford their research fees, but they publish enough in the public domain to meet the needs of many smaller businesses."

"I now make it part of my daily routine to clip useful research out of newspapers. I even carry around a small pair of scissors for the purpose. It's yielded several business development ideas and I wish I'd got into the habit sooner."

Ronnie Lennon is the director of Vivomed, based in Downpatrick, CountyDown. The company sells sports medicine and first aid supplies to sports teams, schools and businesses. Vivomed uses telesales, web sales and direct marketing to build its client base.

"Within our product range we were exclusive distributors of a selection of Dutch sports braces in the UK and Ireland. In both countries we had quite strong web sales. We knew the Dutch manufacturer was launching a new collection of medical braces, and because we had researched the American market we proposed selling them online to the USA.

"The Dutch manufacturer was impressed with our web expertise and we agreed to develop a website exclusively for the sale of their braces in the USA."

"The sports braces were relatively light to post and were ideally positioned for an overseas, web-based, sales strategy. This meant we could calculate the costs of door-to-door delivery to USA customers."

"We created a brand new website for the exclusive sale of the Dutch sports braces to the USA. Having invested in the website it's fundamental to have a strong visual presence on the main search engine listings. We found advertising on well-recognised search engines as the quickest and easiest way of doing this.  When someone in the USA was searching for medical and sports braces, Vivomed's new website was the first name on the list of suppliers.

"We have also worked on our own site to ensure we continue to be recognised and have a high presence on the free search engine listings.

"An American magazine also gave the sports brace a great review which generated additional interest in the website."

"In our haste to go to market we may have overlooked the importance of investing in additional promotional material to include with mailed orders. This could have helped us generate even more repeat business."

The Aroma Company Ltd is the UK's leading "sensory marketing" company, helping retailers and brands to promote products using the sense of smell. Established in 1993 inWallingford, Oxfordshire, the company has ten employees. Owner Simon Harrop describes how a designer helped him to realise the commercial potential of a good idea.

"Three years ago I was looking for ways to expand. Customer behaviour studies led me to believe that retailers would welcome a device that would allow consumers to sample the smell of a product, such as shampoo, without having to tamper with the packaging.

"Research studies also showed that 75 per cent of supermarket purchasing decisions are made at the point of sale - so I was confident such a device could be used to attract customers in-store and influence their buying decisions.

"I talked to existing retailers to get feedback on how and where they might use such a device, plus any health and safety issues we might have to overcome."

"For the concept to work, consumers had to grasp immediately what the device did. There were also commercial considerations, such as how it would attach to shelves in-store and whether it could be produced cheaply. It became clear that design was the key to solving these problems.

"Business Link introduced me to a number of designers and helped me select David Goodwin from a shortlist of three. We were impressed by his experience and his understanding of what we wanted to achieve.

"David advised on costing, planning, manufacturing, pricing and intellectual property issues, as well as the look and function of the device, which we christened Poparoma."

"David suggested that we build in an innovative step during design, since that would make it easier to establish intellectual property rights in the product. We decided on a "mini-bellows" mechanism that would release the aroma when the customer pressed it. The solution was original, practical and would also give customers a clear visual signal as to Poparoma's purpose.

"We worked closely with potential customers, getting feedback at every stage. The product development process took around nine months, during which we had over 30 meetings with retailers. Our designers were closely involved throughout.

"Once the first Poparomas were in-store, our research showed we were onto a winner. In-store testing showed that Poparoma boosted sales of shampoos and soap powder by an average 30 per cent and encouraged switching of brand allegiance."

"I was always convinced Poparoma was a great idea, but initially I was a bit possessive about it. I should have realised at the start that I didn't have the expertise to turn it into a successful product without help and enlisted a design specialist earlier."

Sheactive specialises exclusively in sportswear and activewear for women. The company has an online shop plus stores in Brighton and Covent Garden. Marketing director Johanna Fawcett describes how Sheactive worked with its advertising agency to produce a campaign that's raised brand awareness and increased sales.

"Our aim has always been to create a brand, so our first advertising campaign had to do more than just show our products. To ensure we could brief agencies properly we assessed competitors' ads and went through magazines pulling out images that captured what Sheactive is about.

"We took these to three agencies we shortlisted through contacts and research. We presented to them and asked them to propose ideas for a print campaign to attract customers to our website. We also asked for proof of their experience in producing campaigns on a tight budget.

"The time spent preparing for and briefing the agencies proved invaluable. It ensured we were dealt with professionally and gave us a basis upon which to judge responses."

"The agency we chose, The Think Tank, had some great case studies and the rapport was good from the start. We began brainstorming immediately to decide key visuals that would translate into future ads and support materials.

"As agreed they then came back with visuals for us to respond to. It pays to be really specific with your feedback. For example, if you feel a colour isn't right, don't be vague - state that you want it changed, why, and to what."

"We didn't have a huge budget, but we still wanted quality, so we were open with The Think Tank and asked them to look beyond the short-term fees, which they did.

"Another important point was that we negotiated doing the media buying ourselves. Agencies usually do the buying and take a cut, but you can get it cheaper by going direct. Our agency was also prepared to help us cut costs in other ways - we used friends as models and didn't pay for locations.

"Ultimately, their creativity and execution made it look like we'd spent a lot more than we actually had. Customer research in the month after the first ad appeared showed that sales rose by nearly 20 per cent and a third of visitors to the website had seen Sheactive in a magazine."

"We got excellent value for money, but we should have been clearer about exactly what we could afford from the start. An agreed monthly retainer would have helped us control costs."

"Our deadlines were tight, so we didn't have the luxury of getting to know the agency first. In an ideal world, we would have held more brainstorming sessions to get us working as a team."