The Business Clinic – April 2016

Expert advice on the business of running a garment decoration company

Budget highlights

• Personal tax allowance to be increased to £11,500 and the higher rate threshold to be raised to £45,000 in 2017-18
• Corporation tax, currently 20%, to be cut to 17% in 2020
• Business rates to be reduced on all properties in England, with 600,000 small firms paying no business rates at all
• The higher rate of Capital Gains Tax to drop from 28% to 20% and the basic rate from 18% to 10% from April 2016, and entrepreneurs’ relief extended to long term investors in unlisted companies
• Class 2 National Insurance Contributions to be abolished for self-employed people from April 2018
• Stamp Duty Land Tax on non-residential property transactions to be reformed, with more than 90% of non-residential transactions paying the same or less under the new regime
• Insurance premium tax to increase from 9.5% to 10%

Q&A

A customer has returned a box of T-shirts they ordered for a big family party saying the print is not the agreed Pantone shade. They are right, it is very slightly off, but they have had them for nearly two months and have not said anything until now – do I have to give them a refund?

The Consumer Rights Act 2015 came into force in October 2015 and replaced the sales of Goods Act 1979 which was unnecessarily complex and had become outdated.

The Act reforms the rights and remedies available in contracts between businesses and consumers. It will therefore apply in these circumstances if the buyer is an individual and did not purchase the goods as part of their business.

The goods purchased must be of satisfactory quality, fit for purpose, as described and matching a sample. As you have said that the purchaser is right, the T-shirts do not quite match the colour requested, the buyer is entitled to a remedy under the Act.

Under the Act the buyer is only automatically entitled to a refund within the first 30 days after they purchased the goods. Retailers often vary this, however 30 days is the minimum amount of time in which a consumer must be provided with a refund for faulty goods. Retailers often set out their returns policy on receipts, in their stores or on their website. Some retailers extend the returns period around Christmas as a gesture of goodwill.

After the initial 30 day period the customer cannot demand a full refund but has the right to request a repair or replacement. In these circumstances a replacement would be most suitable, but the customer has the right to decide which remedy they would prefer. If the repair or replacement is unsuccessful the customer then has a further opportunity to claim a refund, or a price reduction if they wish to keep the product.

As the customer has not returned the T-shirts within the 30 day period they are not entitled to a refund. They are, however, entitled to request that you replace the faulty goods.

If the retailer is unable to resolve the dispute directly with the customer they must refer the customer to alternative dispute resolution.

It is up to the retailer to consider what would be the most commercially sensible way to resolve this matter taking into account the value of the faulty goods and how much it would cost to provide a replacement. The retailer should also consider how much they value the particular customer and how much damage could be caused to their reputation if they do not resolve the issue with the customer.

Get down to business on Instagram

Over the last five years Instagram has gone from a great app offering ‘hipster’ filters to the social network for image-based content. Today its users follow accounts as though they were blogs. People gain visual inspiration from tattoo artists in Denmark through to fashion boutiques in Australia.

For businesses, Instagram is becoming the best way to engage with existing and potential customers because profiles are more personal. Instagram’s per-follower engagement rate for top brands is 58 times higher than on Facebook and 120 times higher than on Twitter. Building stronger relationships with customers is what is driving 85% of big brands to adopt the network. However, the roots of Instagram mean that businesses can’t copy-paste their content strategies onto the platform.

Image, and thus lifestyle, is everything. But on Instagram lifestyle means mixing beautiful imagery of models wearing new garments with a fun snap of the office dog to even sharing how your products are made via video. Instagram allows you to add narrative to your product so when someone buys it, they’ll be able to share your story with others.

We recommend quality over quantity. Train your eye to shoot striking, provocative images. With people scrolling to infinity, what will make them stop, go back and give you a ? Visually brand your page by sticking to a filter type, or a colour scheme. And don’t feel pressured to post five times a day.

For the 300 million monthly active users on Instagram, taking photos is the easy part. It’s cultivating followers that takes the time and effort. Connect your Facebook account to share cross-platform and leverage Facebook’s paid advertising, and use relevant, industry-related and trending hashtags to insert yourself into conversations with large audiences. Instagram is an ecosystem, so don’t restrict yourself to marketing your own products; share items and brands that inspire and are relevant to your audience. Follow other enterprises to build your own brand visibility and network strength.

Unsurprisingly, Instagram works on our natural belief in reciprocity. Liking and following users who have similar interests will increase engagement and don’t forget to follow back those who follow you. Creating competitions – using a unique hashtag – to reward your followers will generate some social media buzz and hopefully increase followers!