Keeping HMRC happy, sleeping soundly and growing your business.

31 Jan
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If you are like most business owners you work hard through the year and then it comes to the time when HMRC appears on your radar. Its time for self assessment or if you run a limited company declaring profits to pay Corporation Tax on.
Trying to find all the receipts, checking your online purchases and printing those receipts as well.The last thing you want is to pay more tax than is absolutely necessary.

If the January panic is familiar territory for you, the real issue is that your accountants life and business activities is run by deadlines, and when you talk to him/her about your accounts this is what they think of first, what deadlines have to be met.
You however, are running a business and although you need to meet deadlines so that you don’t run into fines for missing them you need your financial information every month so you can manage, direct and grow your business.
Are you typical of many business owners who speak to their accountants once a year?
I remember being told by my first accountant not to worry as the deadline for submitting to HMRC was 9 months after the year end.
The big problem with operating  in this fashion is that you do not know how your Company has performed and you are 9 months into the new financial year.
No wonder so many businesses do not survive! and the ones that  do are not fulfilling their owners aspirations.
I hope you are reading this in time!
Getting your business to grow, work and fulfill its promise is not just about working harder and keeping customers happy.
What is it about then?
One of the magic ingredients is to have a financial plan and monthly reporting based against your plan.
If you don’t like preparing reports and the administration of keeping it all up together then get your accountant to produce them for you. Maybe your bookeeper could do your monthly reporting at a better price?
What should you be tracking every month? This is the minimum I recommend.
1. Sales Revenues.
2. Gross Profit.
3. Costs.
4. Net Profit.
The above from a profit and loss statement.
The other critical report is a CashFlow statement. This will anticipate your cash balance in your  current account.
Discuss with your coach what are  the other metrics (as well as financials) you should keep track of each month to ensure you are on track.
The above will allow you to make sense of paying HMRC what they are owed and allow you to transfer enough funds into your tax account on a monthly basis, so there will no nasty surprises.

Steve helps owners of SME’s with profits, teams and dependence on personal input, to learn more click
here
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Make “informed” decisions to deliver solid growth.

5 Jan
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The principle of Measure and Test is one that I imagine you would find difficult to argue against. However, it is one that I believe you may not be taking seriously enough to get the real benefits available for you and your business.

 

When I say seriously..

 

I mean identifying the driving metrics and digging deep into each activity and understanding what each metric could be telling you.

 

At a high level the performance of your business is easy to track, revenues, profits, year on year comparisons, new customers, 
This is useful information but it is all “water under the bridge”

 

What should you be measuring to allow you to drive your business and grow?

 

Almost certainly these metrics should be monthly basics for you…

 

Enquiries
% converted into sales
Average value of sales
Repeat sales
Margin %

 

Most of this will be easy to populate although dependent on your business one or two of these may be tricky to measure, find a way of tracking them that is convenient and provides consistency so comparisons each month make sense.

 

Once you are tracking each of these, apart from being better informed it is usual to recognise that to get meaningful measurements you are likely to have to go to one more level of detail in some of these key measurement areas.

 

What do I mean?

 

Most businesses for example have a number of average sale values, normally by product or service. I have found most businesses have around 3 or 4 averages that are easily identified and make the measurements make sense.
The whole point of creating your Dashboard is to enable the testing. Testing involves the “what if” activity.

 

Ask yourself..if we do this will it increase our key measurements?

 

What if we increase our prices by 5% ?
What if we bundle product “a” with “d” ?
What if we increase our conversion rate by x% ?

 

Then comes the how do we do that?

 

Next step, brainstorming of ideas for strategies you can try.

 

The difference is, now that you are measuring results you can see quickly and clearly what effect the new strategy is having, desired or not.

 

Now you are making Informed decisions.

Steve helps owners of SME’s with profits, teams and dependence on personal input, to learn more click here 

How to create a storming company name, 7 Rules to follow.

20 Dec
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Coming up with your Company Name is always fun to start with and nearly always descends into “this is taking waaaaay too long, let’s just go with xyzabc!” 

So what are the rules? if there are any, about what and how you should name your new baby, whether it’s a brand new business or a new division or trading entity of an existing one.

Naming a local coffee shop, restaurant, florist that will only ever service the local area allows you to use your own name and geography which can make the job easier, Wokingham Flowers, Janes Tea Rooms or Berkshires Brides describes what is done, by who or where and away you go.

You may of course still decide to be more creative and join the businesses that will trade more widely which will lead you into the maze of company names.

The following rules will help you stay on the right track and suggest ways in which you can arrive at that company name you will live, breath and be married to for a long time.

Rule 1: It is worth investing time to get this right, it will make a difference, persevere. 

 How to start:

Hold brainstorming sessions to arrive at possibilities. Include your team if you have one, remind yourself of the rules of brainstorming if you don’t do this very often. Using mind mapping techniques is a good way of capturing all your random ideas and thoughts. (a good free mind mapping app is Xmind ).

A great question…

ask yourself this “what do I want people to think of when they hear or see my company name for the first time? What image do I want them to get? What do I want them to feel, think and associate? You can see how “Iron Mountain” came up with their name!

Techniques you could use include

inventing your own word (coining), this can be done in a number of ways, take a prestige 2 syllable word and add an A onto the end, many cars have been named this way “Maxima” “Lumina”.

Another one is…

join together the front part of an adjective and the back half of a noun i.e  “AccuBal” as a mixture of accurate and balance for an accountancy practice. They can work but very often they don’t as they nearly always sound contrived and awkward.

This is used quite often…

putting two word together as one, such as MicroSoft,  WordPress and WordPerfect etc’.

Another approach is…

pharmaceutical companies name medicines with words that end with “in” to mirror the end of medicine. (is there a generic term firmly associated with your Industry or business?)

There are a number of computer generated online naming facilities, maybe worth checking out, although, I have yet to find one that has impressed. Just search on the internet for “business name generators” to be spoilt for choice.

Rule 2: Whatever name you come up with needs to be easy to spell, say and remember.

Rule 3: Make sure a domain name is available that is easily recognisable and associated with your company name, however, I would recommend that you do NOT use mis spellings as they become very difficult to remember, using K’s instead of C’s etc’.

Rule 4: If you want to make the name a trade mark, ensure the name is not naturally associated with your industry. (Orange would not have been allowed to trade mark their name if they were a fruit and vegetable business).

Rule 5: Make it as future proof as you can. “Ipod city” is probably improved to “Technology City” if there is a chance you might expand the range of products you sell, also remember the audience you serve and geography for the future.

Rule 6: Check if anyone else is using the name you have come up with (trademarked or just trading as). Check Companies House register and use all the search engines to see what hits you get, your local library will be able to help you search for registered trademarks.

Rule 7: Do some market research with potential clients. Shortlist your names to 3 favourites and get feedback on them. You will want them to consider rule number 2 as well as, what kind of image does the name conjure up, conventional, modern, fashionable, reliable, contemporary, ambitious, established, value for money, exclusive, (create your own list to suit the business image you are seeking)

Important Note…

Only canvass your target audience as they are the ones whose opinions count.

If you want some external help there are a number of Companies that specialise in this field, it could be interesting to check out “Crowdsourcing” facilities of which namingforce.com and pickydomains.com are two. I have not used either but the concept is interesting.

Your next step is Logo design, equally important to get right.

Good luck and good naming.

Steve helps owners of SME’s with profits, teams and dependence on personal input, to learn more click here 

Is it your Fault?

17 Dec

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The truth is probably not, but you need to act as though it is!

If you run your own business then you are responsible for whatever goes on in it.

Is it your fault that you have a team that doesn’t perform as you would like?

Is it your fault that you are not making the profit you want?

Is it your fault that you always seem to be fire fighting?

I think that wherever you are in your life and business is down to you, the choices and decisions that you have made, the way you have reacted to circumstances, opportunities, disasters, whatever has come your way, and whatever you have steered into.

Could it be that it is an inherited trait? Your dad was never any good with figures!

Could it be the school you went to? The teachers never seemed to care much, in fact some of them told you the future looked grim for you!

“Fault and Blame” are very closely linked just as “Responsibility and Accountability” are.

Pointing the finger at something or someone and blaming them may actually be the truth, the danger is that that as soon as you point the finger, you are likely to stop thinking of how you can improve the situation. If it’s not my fault, if I am not to blame then someone else should fix it! Right?

Wrong!

Taking personal responsibility and being accountable for your results is one of the significant traits I think that separates successful achievers from the also rans.

This doesn’t mean you try and fix everything that you come across that needs fixing, just the stuff in your business and your life (that will keep you busy enough).

Just imagine..

If you can get this message and philosophy running through your team and business what impact do you think it would have on performance, customer service, team morale, efficiency, profits, etc’.

Conversely…

If you have a team that are performing just as you would like, your business is delivering the profit you have planned and you are spending more time pro-actively developing ways in which your business can grow and become self sufficient.

Who should take the credit?

You should be very proud of what you have achieved but it is unlikely you will have done this on your own.

What I mean is..

It is difficult to see ourselves with the clarity, perspective and objectivity that someone else can bring to the table.  If you work with someone who is trained to look at you and your business with a professional focus you stand a good chance of understanding what needs your attention.

I recommend you find someone.

 

Steve helps owners of SME’s with profits, teams and dependence on personal input, to learn more click here

 

 

 

Can’t keep up? Here’s the first easy step to getting more done.

10 Dec

Can’t keep up? Here’s the first easy step to getting more done.

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Have you ever said this, “There are not enough hours in the day” or something similar, which loosely interpreted means, “I am not making the progress that would make me happy”

 Getting things done, or more to the point getting the things done that take you and your business nearer your goals, is a challenge that will take change to fix.

 So what can we do?

How do we start to address the situation?

My thinking is that until you understand what you are doing at the moment it is very hard to discover what needs to be changed to deliver an effective solution.

 So this is the plan…

Start filling in a time log, (I have put a template on the resources page to save you time) every day record how you have spent your time, I know it is a pain but it needs to be done. I suggest you do this for at least 2 weeks and naturally it needs to be a typical fortnight for the results to be of any value.

Find a way of completing the log so it gets done, set reminders for yourself, alarms or visual prompts, but get into the habit of completing it every day. I found if I left mine for more than a day I struggled to fill it in fully. The chart is broken down into 30 minute blocks so you can group them or use them individually.

Then what?…

At the end of the week total up the hours devoted to each category and transfer onto the summary sheet (link to template) and hey presto, now you know what you spend your time doing in a typical week.

I found it useful to predefine categories that I knew I would use, as the week wore on I added 2 more categories I hadn’t thought of.

My Categories were:-

Coaching Clients, Workshops, Marketing, Content creation, Administration, Personal Development, Sales Meeting, R & R and Miscellaneous, I then added Travelling and Suppliers.

If my time was connected with any of the above, in meetings, on the phone, in discussions, in preparation for, then it was allocated to that category.

If you find one activity takes so much time it probably makes sense to split it down. If you are spending 15 hours a week “designing”, then “product A design” may need separating from “product B design”.

The real question is….

What are the activities that you are spending time on that can be delegated, how else can it be done?  it might be a team member or a system that could handle it.

I am sure it will not be done as well as if you continued to do it,

 But, on the other hand..

train your team well or design the system efficiently and the task can be done well enough. (remember Pareto’s law, the 80/20 principle?)

This exercise is only the start of your campaign for using your time more effectively, through looking at your results it will highlight what you aren’t spending enough time on.

Once you release time from the activities that are least challenging you can then devote this newly available time and energy to the activities that you have decided need more of your attention.

This could be more family time or business activities that require higher levels of skills and know how.

A great first step, take it now! 

Steve helps owners of SME’s with profits, teams and dependence on personal input, to learn more click here

7 Questions to make sure you don’t regret taking on that new Accountant

5 Dec

7 questions to secure an Accountant who will help your business.

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One of the most important members of your small business team is your Accountant. The financial reports, the tax returns, paye, vat returns, etc’ etc’ need to be produced on time and 100% correct.

Whats more..

Advise on compliance issues and tax efficiencies are two more activities you will rely on your accountant to provide and keep you up to date with.

So, needless to say finding a good accountant is rather important. The answers to the following questions should help you identify someone who can do a good job for you.

 

1.    What accounting qualifications and experience do you have ?   (You can call yourself an Accountant without having any professional qualifications, you may find someone with the right experience even without the qualifications)

2.     Do you have Professional Indemnity Insurance ? (this covers the accountant in the case of claims of loss through negligence)

3.     Examples of tax saving strategies employed for other clients and results achieved.

4.     How do you communicate with clients and how accessible are you to them? (I always like pro- active people to work with and those I can get in touch with quickly, what about you?)

5.     What is your fee structure? (Find out the detail, tax planning advice would require a more experienced person than filling in a tax return, how will they charge for quick requests that may only take 5 minutes to complete?)

6.     What “back up” do you have for the computer data you hold and also for the person who will be dealing with my account?

7. What is your attitude to the production of monthly profit and loss statements and managment data? (I believe that your accountant should be your biggest ally in the production of a monthly dashboard of management information so they need to agree it is vital)

So now you have a good checklist of questions a final thought is to appoint someone whose business is a similar size to your own, and always, always ask for references.

Found this tip useful? Great!  there are more in my “7 Finance Essentials” book to help small business owners make informed decisions to grow profit and stability. Click here to learn more.

Steve Shaw helps owners of SME’s in Berkshire, Surrey and Hampshire to develop themselves and grow their businesses. Your commitment deserves results that make a difference. To find out more, click here.


 

The vital forecast that can save your business going under.

29 Nov

Cashflow Forecast

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You will have heard that cashflow or rather the poor management of cashflow is the number one reason why businesses go out of business.

A cashflow forecast in simple terms is a forecast of your current account balance.

Typically it is updated each month for the next 3 month period, so if you are likely to run out of cash you can anticipate it, and take appropriate action.

Which would be….

Reposition other funds so they are available or to speak to your bank explaining that you will need an overdraft for £x in 2 months time for however many months. Ask your bank manager how he feels when clients phone up with 2 days notice asking for an overdraft facility. Be clear about what this will cost you as overdrafts apart from being flexible are an expensive facility.

The biggest strain on cashflow is when a business is growing healthily. You will have heard of the term “working capital”, this is the money that sits in the business and stays there.

What this means is…

The value of stock you hold is part of this as is the amount of money that is owed to you for products/services delivered.  As your business grows these two values are likely to grow and need careful management.

So how difficult is it?

Producing your cashflow forecast is relatively easy, you will know when you make regular payments, the biggest variable will often be when you receive payments and when they clear into your account. This is why it should be you, the business owner, inputting into this forecast. The difference between when you have to pay for something and when you get paid for the same item (whether it’s identical or part of a service you provide), is called the “cash gap”, your job as the owner is to make this gap as small as possible.

Who should be helping?…

Your accountant/bookkeeper will be the best person to provide you with a draft each month for you to then put your best estimates of when money is expected to arrive into the account.

This naturally leads onto what can you do to improve your Cashflow?

Reduce credit facilities, make sure you have a rigorous payment chasing process. Encourage cash or credit card payments, get deposits paid earlier and provide finance options. Negotiate better credit terms with your suppliers, pay on credit card if it gives you an extra 30 days of interest free credit.

Invoice discounting and factoring may be viable options for you (receiving cash for invoices outstanding within your credit terms from your customers).

This is a strategy that needs very careful thought, discuss in detail with your accountant, and do consider any impact on your relationship with your customers.

Actions TO DO.

1.     Get your accountant/bookkeeper to produce a draft cashflow forecast.

2.     Start populating the template with your best estimates.

3.     Identify the items and the scale of the negative impact on your cashflow.

4.     Introduce strategies that will have the biggest positive impact on your cashflow and work down your list.

Steve Shaw helps owners of SME’s in Berkshire, Surrey and Hampshire to develop themselves and grow their businesses. Your commitment deserves results that make a difference. To find out more, click here.