November 21, 2017

Business Advice from Berkshire – I’ve got round to it – when will you?

There are some things that sit towards the bottom of my ‘to do’ list as I know I ought to do them so won’t actually remove them. They won’t make me instant money nor will they, on the surface, cost me money by not doing them, so why don’t I choose to do them?

IntuitSometimes it just takes will power to go ahead. I have been training QuickBooks since 2004 and been listed as QuickBooks Advisor for many years. Last year they bought out an accreditation scheme so you could take an exam, and become a ‘certified’ version. I downloaded the course material, read it through, decided it was fine as I knew and taught most of it, but never did the exam. This year they have also bought out an accreditation for their On-Line QuickBooks so, as I am on the stand next to Intuit – authors of QuickBooks at The Business Show at Olympia, I thought perhaps I ought to go for it. I am glad to say I passed both exams to a high level so can now be one of their elite team. The only question now is why didn’t I get round to it before?

I have done my personal tax return, I have done my VAT return, how about you? Are there jobs that you don’t fancy that are not time critical yet but you will feel so much better when they are done. It may be they were part of this year’s New Year Resolution. There is still time to complete it before the end of this year.

Go on, take the plunge and share with me what you have or will achieve over the next month.

Business Advice from Berkshire Partnership Agreements

If ever I am asked about partnerships, one thing I feel strongly about is that a partnership agreement should be drawn up. Everyone knows how much upset and anger can happen when a couple get divorced, well the same can arise when a partnership has a change in partners. This can be dramatically reduced if something is put in place at the start.

Book coverAlso, it is not just about splits to, or extra partners joining the partnership, if one partner is unwell, or even worse dies, what will happen to the business then? If the partner was married does the remaining spouse want to continue with, and contribute to, the business at the same level as their late spouse? Are they technically able? If inheritance tax has to be paid, how will the business be valued? How will the tax be paid?

On a more positive note, a simple point is how the profits are going to be shared. Does each partner contribute capital and actively work in the business equally? I had a recent call where I was asked what could be done. A client wanted to invest some capital so that her friend could carry out a project to enhance the value of the investment and then share the proceeds. One would get a share of the sale proceeds over the investment as reimbursement for risk and interest on the ‘loan’ plus the return of the original investment. The other would receive the remaining share of the sale proceeds over initial investment in recognition of their efforts for the increase in value. I suggested they sat down together to consider all aspects such as running costs, anticipated date of sale, what if something happened to one of them and then draw up a simple agreement and both sign it and keep a copy. My feeling was that at least they had documented their original intention as a starting point for discussions in the future.

I have another client who, if they had done this when they entered a joint venture some years ago would not now be dealing with solicitor’s letters. It could have all been resolved four years ago rather than dragging on taking time and money to resolve.

Even if all you are doing is asking someone to do some freelance sales work for you, it is worth writing out the expectations of both sides which should, of course, include confidentiality so you start with a full understanding of who is responsible for what and how the rewards are going to be shared.

bill view pennyIf you are already working with someone but have no agreement in place, it is not too late to create one. If you choose to involve a solicitor, save yourself money by preparing your joint list of things you feel need to be included before making the appointment. A solicitor may have a template but it will not include clauses specific to your business.

Two or more people working together are usually stronger than the sum of the individuals. Two or more people fighting does not get the job done.

If you feel it would be useful to have a facilitator to prepare the list of items to be covered, contact Wellington Consulting who would be happy to help.

How NOT to make a loss

This week has not been the most productive for me with issues of expected deliveries not happening, computers not playing and tax offices asking for what they already have – and me spending over an hour on the telephone (mostly on hold) to read HMRC what they had been given two months ago. I am sure you have had weeks like this. You get to Friday and wonder how much money the business has made as a direct result of your efforts.

Blank view pennyOther weeks the opposite happens, I get through to the tax office within a couple of minutes, speak to a nice helpful person at HMRC who suggests they can do something for the benefit of the client before I even ask it. Clients turn up to an appointment with their cheque book in hand and request to settle their account at the end of the meeting and then agree the date of the next meeting – so it is not they want to dispense with my services! Others send an email the same day as I send them the invoice, saying they have transferred the money into the company bank account.

Which sort of week would you rather have? What has this got to do with making a loss? The fact of the matter is that life is not perfect and by accepting this, you can build in ‘slack’ to cover the cost of repairs, the lost time, the extra staff salaries. When some new business owners come to me, they have worked out their expected revenue without appreciating the time needed to do marketing, administration, documentation and other roles that may have been done for them in a corporate environment. Even in larger firms, senior staff seem to think that preparing for an exhibition and attending it can just be done in addition to the usual work. Staff cannot be making sales calls while driving to and assembling a stand. When looking at costs, the set up day needs to be taken into account as well as fuel, accommodation etc.

forecastAs with much of business success it is all down to planning. Plan for the unproductive time and associated costs and base the sales required on having to cover these costs as well as those of the ‘good’ sales. If you do this, you will avoid a loss and if the worst doesn’t happen, you can make an even bigger profit.

If you need help in identifying costs you need to include in your plans, get in touch. If you want to share some of the hidden costs you have discovered, please reveal all below.

How Can you afford it ?

Do you sometimes find yourself wanting something for the business, but thinking you can’t afford it? Like any purchase, you should first ask yourself the questions ‘why do I want it? What benefit will I get once I have purchased it?’

miniDepending on the answer to these two questions, you can then decide whether to even think about how to fund it. A very simple and small example was a purchase I made at the weekend. I am a latecomer to iPhone’s and have historically logged my mileage in my diary so I could make a claim at the end of each month. Sounds good as I always have my diary with me so can easily enter the mileage. Trouble is, you run out of space against the day; although I keep my diaries, it would be hassle for the taxman to go through and agree my monthly claims even though I do circle the numbers for easy reading. However, one of my clients has been using FYI Mileage and sending me the sheets each month. I splashed out £1.99. I can now tell you I have done 12 trips amounting to 143 miles since 1st July. By recording 27 more miles than I would otherwise have remembered to claim for, I have covered the cost by the reduction in Corporation Tax I will have to pay. I am sure I will manage this by the end of July. So, return on investment one month maximum.

 I know this is a minute example, but I also placed an order for a stand at The Business Show at Olympia. This is costing nearer £3,000. Same rules apply. What do I need to ‘sell’ at the show to recover the cost and cover my, and my staff’s, attendance and travel and accommodation? I have done the maths and happy that we will bring in revenue that will exceed the costs.

 So the next question is cash flow. How do I pay for the show before I get the money from the sales? The answer is I agree a payment plan to spread the payments. The salesperson was amused that when I had said that my business is training clients in the area of understanding their finances, that I was demonstrating exactly the same to him regarding my own. Justifying why I was not prepared to pay it all today, or even all within 30 days when the show was not until November. That I could use much of the cash not paid up front to generate the income that would allow me to pay the balance prior to the show. A mutually beneficial timing was agreed with the condition that I would be included in all marketing even if they had not received full payment. I have got caught out by that one before. So watch out for Wellington Consulting links in The Business Show marketing. I also hope to see you at stand 160!

So what have you bought recently that you first thought you could not afford until you worked out the benefits? How did you finance it? Please share your ideas so that others can enjoy accounts and grow their business.

Is your sales forecast achievable ?

They say anything is possible, but at what cost? I have been working on my forecasts for the coming year and having designed my ideal position, I then re-visited the figures to make sure they were practical.

 The good news is that they are, but only after they had been tweaked and I accepted that, in order to be as productive as I want to be, I will be getting extra help in certain areas. As part of this plan, we have compared this year to last to see where we need to do things differently. We have prioritised our efforts and pencilled in dates for the next twelve months.

forecastWhen I say we, I mean my team and I. We did spot that I appeared to be taking extra holiday during one month – I wondered why I was getting so much in the coming year! We also worked together on where to focus and decided on actions to get certain things moving as we knew there would be some quick wins as well as certain areas that would take longer to set up.

So much for my plans, how are yours going? Will you need an investor to fund the next stage of growth? Are you looking to stay the same size but work more efficiently? Do you know where you want to/expect to be by Christmas? Will you have sufficient funds available to finance your tax bill? It is all very well starting with sales revenue, but you also need to focus on the costs and the cash flow.

 Having decided on your ideal revenue, work out what the related costs are, when bills will need to be paid, and when you expect receipts from your revenue. Then add in the VAT and tax bills and if you are a sole trader or partnership, the cash you want to draw from the business. If you are a shareholder in a limited company, consider what dividends it will be able to pay during the year. You are well on your way to having your complete financial plan.

The final stage is to decide how and how often you are going to monitor it. There is little point in putting lots of effort into a detailed plan that sits inside your computer till the end of the year. Don’t put the time in if you are not going to use it. If you are happy to rely on good luck, may I wish you all the best.

 Book coverIf you need help with your planning, Wellington Consulting are happy to work with you to create a plan. You can even come over to our offices to avoid the distractions in yours.

 Let me know whether you use luck or judgement for your plans.

How you can increase your productivity

We all wish we had more hours in the day, the question is where can we find them?

If someone said that it had been decided that the world would now operate on a 25 hour day, what would you do with the extra hour? It might only be an hour per day, but that equates to 7 hours in a week, which is actually nearly another ‘working’ day.

Birmingham-20121029-00114Would you use it to sleep, to work or to spend more time with your family? The answer may give you a view on how well balanced your life is. I know because I recently did the same exercise – the difference was that I was not being given an extra hour, I just wanted to fit more into my day without impacting on sleep or family.

The answer – review what you do each day by considering the outcomes, If you tend to lie in, does it leave you refreshed and inspired, or do you lie there because you are trying to avoid the inevitable? What could you outsource to free up time for the things you enjoy, and that bring in money. Whether this is meeting prospects or delivering your product/service. The chances are if you don’t like doing something it will take you twice as long – procrastination plus production!

Over the last three months I have outsourced two tasks and I am really grateful to those who have taken them on. The tasks are not yet concluded but nearing completion. Watching others progress them reminds me of how big a task they were and how much better it has been to outsource to somebody who enjoys doing it. To be given text to approve rather than write from scratch is quicker, more satisfying and I know it is moving off my to do list

gravatarSo, could you start work an hour earlier? Spend an hour less on Facebook or at the coffee shop? Could you set up standard templates for replying to emails, or could they even be automated?

Let me know below where you are going to find extra time and what you intend to do with it – even if it is only half an hour a day.

Your Books Under the Microscope

Last week saw a letter from HMRC asking for all the information that had gone in to the accounts for the tax return to 5th April 2012. I wrote and asked what format, as the letter said they had technical people that could help with computer system.

I had a pleasant phone call from HMRC to say could we print everything out and bundle it up for him. I explained the invoices were Word documents filed per month, the payments were in a spreadsheet per month so would he like a CD with the information. No, we needed to print out each sheet and send everything in a single package. Everything includes my year end adjustments for own use and disallowed items, bank statements for the period as well as the signed accounts.

I have spoken with the client and I think they are going off to Tesco to get some more reams of paper. We have agreed to meet up in a fortnight to make sure we have everything required and box it all up. HMRC have given us a month to get all the information to them and the member of staff at HMRC admitted he was in no rush to receive it as he had a plenty there already. I didn’t ask what the turnaround time would be!

How well would your records stand up to such scrutiny? When the accountant returns your books and says you need to hold onto them for current year plus six, do you know exactly where you have stored them? I have previously had a client who’s garage was flooded some years ago so he binned the soggy papers. He ended up with a large tax bill as he couldn’t produce proof of some payments. Do make sure your storage facility is waterproof and mouse free.

It is possible to get insurance against such investigations. This will cover the extra time your accountant has to spend in talking to/writing to HMRC. It does not cover lost papers or invented figures so make sure you can justify your payments out and be able to demonstrate the completeness of your sales.

It is not just HMRC who may want these figures, I had to produce 3 years sales invoices to an insurance company to justify my claim for loss of earnings against the other party after a road accident some years ago.

Need guidence on your record and data keeping ? Contact me for more information.

What are you planning for next year ?

Many people start a year with New Year’s resolutions, but they often do not achieve them. Are you going to be one of those?

I would suggest the main reason for failing to achieve is that you can see the goal you want to achieve, but don’t plan a route to get there. If you want to travel to any destination, you wouldn’t just expect to arrive without the journey. How you choose to travel is a matter of for you. The decision will be based on research, preferences and practicality – and possibly budget.

One question I have long asked myself is why do many business owners put more effort into choosing a car than the decisions that affect their business? So, my simple request to you is decide where you want your business to be this time next year and then put the effort in to planning the route including check points to ensure you are on track. If you do this you will get there.

Happy Christmas and a Successful 2013

How has the weather affected your business ?

The one thing we can be sure of is change. What was drought earlier in the year, is now replaced by floods. Although these are extremes, they are not entirely unexpected. From a business perspective, the question is how much will they impact on your business?

Some years ago, I had a client near Gloucester lose his earlier year records when his garage was flooded. As he could not then prove payments made in cash to HMRC, he had to pay up £2,500 again. He did once have the payments book but he had binned it with the other soggy papers.

That was costly, but what have you in place if your computers gets water damaged? How quickly can you get replacements with the right programmes? How quickly can you restore your data up to the previous working day? How many sales and customers could you lose if this happened? It doesn’t have to be just floods that cause wet computers!

If you don’t currently have off site copies of your data, I would urge you to do so. If you are a small business, it may simply be a manager taking an external hard drive home every week. Better than this is web hosting. Even better is automatic backups so it is not reliant on someone remembering to do it – even when they are on holiday.

We haven’t yet had much snow, but put plans in place now so your business doesn’t take a dip as staff can’t get to work, customers don’t know if you are open or not and delivery times are extended/suspended due to the weather and the holiday period. Have a good one.

Happy to speak to you about how I might help

Why is your car like your accounts?

If you have a car, you pay for the insurance and tax each year, because you have to. If you have a limited company you prepare accounts each year and submit them to Companies House and HM Revenue and Customs because you have to. Even if you are not involved with a limited company, you still need to send your accounts to HMRC.

That’s the compliance bit out of the way. Now to the practical side. When did you last fill the car with fuel? When did you last check the oil and top up the washer bottle? You may well get someone else to do the service and, if it needs it the MOT, but you will do or delegate the lesser activities, and you know you must make sure that the major ones get done.

So, why am I comparing your car, to your accounts? You expect your car to be there as a tool of your trade. To get you to appointments, to carry your equipment and to get you to the bank, Post Office and other locations you need to reach as part of your business. As a result, you make sure you have the fuel and that it is in full working order. Your accounts are the same. If you do not take care of them and check them regularly you may find yourself with a problem.

Tax return sooner rather than laterWhen did you last check who owed you money – and then chased them. As long as the money is in their bank account and not in yours, the more it will cost you. Particularly if you work with an overdraft, you are paying interest because your customer chooses not to pay you. If you are an organisation that have staff that do the chasing for you, do you know how much time they are having to spend, and on whom. What could you do to help?

Accounts receivables (amounts your customers/clients owe you) is just one area to check. Have your suppliers put their prices up and you are not aware of it? Are your staff working more hours but actually getting less done?

Your accounts are a tool, if you learn how to use them fully, your life with be easier and safer and your business will grow.

I love helping business use their accounts to the full – contact me for a chat