November 22, 2019

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 Flexible is your Business?

With changing times and circumstances, how flexible is your business? Over the last ten years my business has changed its focus due to both customer demand and what I want from my business. To me, this is one of the benefits of being the business owner. The future of the business is my decision.

Book coverWhy are you in business? Are they the same reasons now as they were when you started? I am sure you are wiser and have built up a tremendous knowledge of things you didn’t know, you didn’t know when you started. What else is there for you to learn?

For many business owners, there are some topics that you would rather delegate and positively avoid, what are yours? Even if you don’t do the hands work, you need to have enough knowledge to delegate. If numbers are your monster then I can help you fight it and win. Like David and Goliath, a few well-chosen tools can give you the upper hand. The story of the hare and the tortoise is much the same. A careful and controlled approach means you do not need to go to extremes to win.

gravatarIf you find that your market place is changing, that the technology is moving on at a rate of knots, that you want to fit extra activities into your life in addition to your work, it is down to you to decide how to deal with this.

My business is leaping into its next phase which includes supporting many more businesses succeed and grow. In what area do you need help? Are your customers moving into a direction that you need to catch up with? Or do you need to educate your customers? This will demonstrate you want to do the best for them, to help them keep up with the times. They will then start to respect you as the expert, hang on your every word while you steer them in the direction you want them to go.

Remember, if you monster is numbers, I can show you the tactics to win.

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

Do you enjoy working online ?

The government is trying to encourage greater use of computers. This may be a move to efficiency, but is it what you like to do?

This might sound a bit rich, as you are reading this on line, but do you do it by choice? What happened to the old days of piles of papers?

As an accountant, I still deal with piles of paper. Most departments at HM Revenue and Customs cannot communicate by e-mail. They are improving, but having tried to deal with things over the telephone, including call backs to then be told to write in can be a little frustrating. What compounded the issue for me was the first chap I spoke with didn’t know the answer so I suggested writing in. I was told not to do that, as it would not be looked at for at least three weeks. This is much better than some departments a couple of years ago, where they had a three month backlog of post. So things are improving.
Can we help ?
If you have an outstanding issue, by all means ask your accountant to chase it, but the more information you can give them, the more they can give HMRC, the more likely you are to get an answer. If you have an outstanding tax return for 2011/12, get it moving now so you know how much tax you will have to pay by 31st January 2013. If you are due a refund, there is still a chance you could get it by Christmas – if you act now and let them simply put the money in your account. If only one could just get all customers and client to ‘simply put the money in your account’, life would be wonderful!

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

When should you outsource?

The four reasons why you might outsource are:

Lack of skill
Lack of equipment
Lack of capacity
Cheaper than doing it yourself
The one thing you cannot outsource is the responsibility for completion and quality. That is down to you.

The reasons I have chosen this topic are twofold. Firstly I am writing a book ‘Understanding Your Accounts for the UK Business Owner’. I have outsourced the publication and PR as I do not have the capacity (or the skill) to find appropriate individuals to work with. I know that this may not be the cheapest option, but if my time is available to charge to clients, I can make the money to pay for those with appropriate skills, knowledge and contacts.

The second reason for my choice is I have recently been passed a client who thought they could manage without an external accountant to compile their company accounts and corporation tax returns. Basically they had a go and then buried their head in the sand. It didn’t go away and they ended up with a £20,000 tax bill. Having done the work, the bill should be nearer £2,000 including interest for late paid tax. What they will have to pay are the penalties to Companies House and HMRC. These will be nearly £1,500 in total and could have been avoided. Recognising that you need help or advice and acting can save you money – or at least stop you wasting it.

When considering outsourcing, make sure you are happy with the quality and ability to deliver from your chosen supplier. Having clearly specified your requirements and time frame don’t forget to get progress reports to ensure they are on track. In the meantime make the most of what you can do that you are not outsourcing as you have decided you can do that better and/or more cheaply without compromising the core work.

What if the unexpected happens?

Contingency planning is not just for large firms. Over the last week I have been working with several clients who had exactly this.

For one I am working with the loss adjustor for loss of earnings following a fire. Another client currently has a compensation claim progressing for loss of business following their road being closed for new water pipes to be laid. The third is a breakup of a partnership. Could any of these happen to you?

Disaster recovery I can helpThe easiest and cheapest one to guard against is the partnership breakup. A simple partnership agreement which sets out how the profits are to be split during the partnership, what should happen if one partner is ill and unable to fully contribute, how the business is to be valued if a partner wants to leave – or a new one join, how a partner leaving is to be paid out to list a few points. All these can be covered and agreed at the start. It makes any breakup much less painful. My client did have the good grace to admit I had suggested it when they started and they now wish they had spent the time creating one.

If you are a limited company, the same applies. If there is another director, or you choose to take one on, what are there powers, are they to have a contract of employment? If you are looking for investors, have you got a shareholders agreement? This can cover the same things as the partnership agreement mentioned above.

If you are a sole trader or sole director you may feel this doesn’t apply to you. If something did happen, who is going to wind up your business affairs? Just because you are not able to continue does not mean that your suppliers and customers will go away. These matters would all need sorting out.

When you next have five minutes, have a review of what would happen if … put something in place and with luck it will never happen!

Like some help with planning your unthinkable contact me