Choose carefully ...

I've spent several weeks now working with a company whose books are in a mess.

So what, I hear you say. Their tax return isn't due, so what does it matter?

Well, they don't know how much their customers owe them so can't chase the debt effectively, causing cash flow problems. They are unable to pay their suppliers because they don't know how much they owe and so are being put on stop, affecting their ability to complete the jobs they're currently working on without the supplies they need.

So quite serious stuff, really. In fact, the sort of stuff that causes businesses to fail.

But how could they possibly have got into such a mess? They knew that they didn't have the accounting skills that they needed in house and so took on an accountancy firm to keep their books and manage their accounting affairs. Isn't outsourcing the way forward?

It turns out, the accountants were out of their depth and the company had no grasp of what the accounting firm were doing.

So while I'm a definite proponent of outsourcing (see last week's blog), there are clearly pitfalls to watch out for and avoid.

The first thing you need to do is to make sure that you are engaging the right expert to work with you. Anyone can claim to be an expert, but before you trust anyone with your business you need to make sure that they are going to take good care of it. The internet is great for this, have a look at websites and on social media, and it's always worth running a google search. Check out whether your chosen expert has any qualifications, look at their experience and what other people have to say about them. Arrange to meet them face to face and see if you can speak with some of their other clients. Get a feel for who they are and whether they are right for you.

Once you have identified the right expert, chat through with them what they are going to do for your business and why. Please don't ever try to relinquish responsibility for any part of your business because, if this goes wrong, it is you that will need to pick up the pieces so you will need an idea of how they fit together. Listen to what your expert says and be open to advice, but don't be afraid to ask questions or make suggestions – this is your business.

And at the end of the project, or even mid way through, ask more questions – make sure you understand what you are getting for your money. Don't be afraid to ask for an explanation of the numbers in your tax return, of the clauses being put into contracts being drawn up, of the direction of your marketing plan or the design of your website. While you don't want to be drawn into the details (you don't need to know how to build the website), you do need to have an understanding of each area of your business so that you can make it work better as a whole.

So, in summary, when you are choosing who to have in your support team, choose carefully and always make sure that, when it comes to your business, you are in control.

To find out how Pringle Accountants can help you, visit our website www.pringleaccountants.co.uk

The problem with DIY

Pringle Towers has benefited from a bit more TLC this week at the hands of a local handyman who has done some of those jobs, you know the ones, that just need doing but never seem to get done. A bit of painting, plastering and general maintenance.

I could have done these jobs myself, and probably should have done … quite some time ago, but I didn't. And so it was decided to get a man in.

It turns out this is a decision that should have been made a long time ago. Although I could have done the jobs myself, it would have taken me a lot longer and I probably wouldn't have done as good a job. But what about the job satisfaction I hear you cry? Well it turns out I can live without that too.

In fact, the time that I haven't spent doing DIY I have spent working in my business, earning more than enough to pay the handyman and therefore leaving me in profit. And this is why outsourcing is a good idea.

As a small business owner, you probably can't afford an IT, HR, marketing or finance department, but that doesn't mean that you need to fulfill all these roles yourself.

Let's take finance for example (because that's the area I understand the best). How long would it take you to complete your tax return (assuming your not an accountant of course)? Two days? Three? I would hope a competent accountant would be able to do it in a fraction of that time, maybe just a matter of hours, depending on the quality of your book keeping of course.

So in the three days that you no longer need to spend completing your tax return, could you generate enough profit to cover a few hours of an accountants time by doing what you're good at? I suspect probably significantly more, making you better off by outsourcing. In most cases your accountant may also be able to identify additional tax deductions available to you, therefore reducing your tax bill and making this an even more profitable exercise.

Of course accountants do more than just tax returns, but you get the idea.

The principal also holds true for many other business functions. Professionals who are offering their services to other businesses should have expertise that will save you hours of research and experience resulting in higher efficiency levels so that the same task will be completed better and faster leaving you to run your business.

As a small business owner myself, I know how important it is to keep tight control over your costs, especially in the early days. But instead of worrying whether you can afford to get some experts on board, maybe you should be considering whether you can afford not to.

To find out how Pringle Accountants can help you, visit our website www.pringleaccountants.co.uk

Cash is King

Here at Pringle Towers, we recently had some work undertaken by a local firm of electricians.  Their work was good, they were tidy enough and I believe they represented good value for money.  So yes, I would recommend this particular firm of sparkies.  Upon completion of the work, they weren't able to tell me immediately how much I owed them as the job had evolved as it had gone on, however I did receive an invoice just a couple of days later along with details of how to pay.

Now because I didn't receive the invoice straight away, some of the urgency to make the payment had gone and I did procrastinate logging on to my internet banking. That said, within less than two weeks I had been contacted twice chasing payment...

and so I paid...

which is the point of the story.

Cash is so important to any business. It is true that “Cash is King”. Businesses fail because of a lack of cash, not because of a lack of profits. A loss making business with a limitless source of funding will be able to continue indefinitely (this is the injustice of the football premiership), while highly profitable businesses can become vulnerable if cashflow isn't properly managed. For this reason, the collection of customer receipts is the key element of the sales process. After all, until your customer pays, you are just a charity.

Now undoubtedly there can be cultural issues which make us uncomfortable asking for money and I have spoken to many new business owners who prefer to avoid chasing debts. However, if your livelihood depends upon your business then you need to overcome your nerves and have a clear strategy when it comes to debt collection, from friendly reminders all the way to legal proceedings.

The key is to strike while the iron is hot.

The length of time it takes you to issue an invoice sends a clear signal to your customer, rightly or wrongly, on how keen you are to receive their payment. This message is further reinforced by your method of credit control. At the most basic level people will pay whoever shouts the loudest and, as long as they perceive you have given them value for money, the customers that you want to keep won't think any less of you for chasing what you're owed.

So make a plan today to man up and get tough with those slow paying customers.

To find out how Pringle Accountants can help you, visit our website www.pringleaccountants.co.uk

A problem shared is a problem halved?

Setting up your own business can be one of the most rewarding things you can do.  To be your own boss, make your own decisions around work / life balance and, hopefully, to experience the satisfaction of building something from nothing.

That said, in my experience it is also harder work than any job that I’ve ever had as I suddenly have to become a jack of all trades.  And while languishing around in a sea of business skills that I do not have, it’s very easy to start to feel somewhat isolated.

So what’s the solution?

The truth is that while I may be feeling all alone there are plenty of other people who are in the same boat.  Well, not exactly the same boat because they’re struggling with a lack of the skills that I have and, of course, they have skills that I don’t.  So if we were to work together, we would have a significantly smaller skills gap than we do alone. 

So this is the value of networking for the owner of a new business.  To get together with like minded business people who are in a similar boat and support each other, benefiting from both the skills and the experiences of the group as a whole. 

Of course, meeting other people and talking about your business is also a great marketing strategy.  You can convey face to face the benefits of buying from your business which, although small scale, is a very powerful method of getting your message out.  After all, people prefer to buy from (and recommend) people they like and it’s difficult to like someone you’ve never met.  From my own experience, the best source of clients by far has been people I’ve networked with, either directly or by referral.

That said, it’s not just about connecting with potential customers.  I have also made the effort to connect with other people in my profession.  In some ways we are competitors, but they are the people who know my market and the challenges specific to my chosen field.  If properly managed, these relationships are so valuable as these are the people who have experienced and overcome the very issues I’m facing and who can offer the solutions I need to help me do the same.

I love networking.  I really enjoy meeting with other people and hearing about their businesses as well as having the opportunity to bounce around ideas for my own.  I have met some great people who have supported me tremendously, sometimes without even knowing just how much.

So my advice for anyone starting out in business is to get involved in some networking groups, build some relationships and realise that you are far from alone.

To find out more about how Pringle Accountants can help you, visit our website www.pringleaccountants.co.uk

Happy New Year

Here it is, 2014, and we’re already over a week in. So, did you make any New Year’s resolutions this year?  After the excesses of Christmas it is the obvious time to take a look at your life and resolve to do something different in order to make life better, a new start I suppose.  So what was it? Healthier diet?  Drink less? Exercise more?  And how are you doing?  Still going strong? Or fallen at the first hurdle?

Now whether you’re doing well or whether you only managed to stick to your resolution for 3 days, that’s still 3 days more than you would have managed had you not resolved to make the change in the first place.  It’s always good to have aims and targets as, even if you don’t achieve them, you will do better than if you’re not aiming for anything.

This isn’t just true in your personal life, it’s also true in your business.  It is good practice to take time out on a regular basis to objectively look at your business.  What are you doing that is working well?  Could you do it more?  Or better?  What isn’t working so well?  Is this something you could stop doing?  Or something you could improve?  It’s when you take a step back from your business, away from the hectic day to day running, that you can see clearly where the business is going and whether it’s going where you want to go.

When I worked as part of the management team for a medium sized company, as a team we would annually take the time to meet together, away from the business, and look strategically at how to move the business forward.  The best question, in my opinion, is, “If we were starting again today, what would this business look like?”.   Now, in order to answer this question properly, you will need some information from your business. For example, do you know which is the most profitable area of your business?  Do different areas of your business carry different levels of risk?  Are there any costs which could be easily eliminated?  Are you wasting money on any of your overheads?  Although don’t forget to consider what you do and don’t like doing.

Once you know what your business would ideally look like, the next question is, “How do we make get there?”.  This is your opportunity to make a plan.  It needs to be clear, achievable and measureable.  Do you remember that business plan you wrote when you first started your business?  Well, why not dust it off and give it a read?  How have you performed compared to your original plan?  You may even find there are some pearls of wisdom in there that you had forgotten all about, maybe something you could implement in 2014.  Could you update your business plan?  What do want your business to look like in 12 months, 5 years or even 10 years?  As an accountant I always find the numbers really easy to work with, but it’s also important to set out how you will achieve the numbers you’re aiming for.

But this isn’t the end of the exercise.  The next step is to block some time out in your diary, maybe in 3 months, 6 months or 12 months, so that you can review your plan and make sure that you’re still on track.  You may or may not achieve your business goals, but by making a plan you will have achieved more than if you hadn’t.

The saying is true, if you fail to plan, you plan to fail!


To find out more about how Pringle Accountants can help you, visit our website www.pringleaccountants.co.uk

Where are you going?

I love Facebook.  I love how it enables me to stay up to date with my friends on a day to day basis even though some live too far away for me to see them as much as I would like.  I also think it is a great tool for small businesses, allowing easy networking opportunities for promotion, morale and advice – really important to alleviate the isolation of working alone.

I love how Facebook has enabled me to reconnect with old friends and colleagues with whom I had lost touch.  It’s great to see how people have moved on, what they’ve achieved and what they are doing now.  For some people, I could have predicted where they would be, but less so for others.

So the question is, are they happy with where they are?   Are they where they wanted to be?  I have one friend who has had her life planned out in her head for as long as I’ve known her – probably 15 years or so.  And her life has followed her plan. She’s qualified in the profession she sought after, has a lovely husband and the four children she wanted – it’s amazing really.  But to be fair to her, she has worked hard to achieve her goals and never lost sight of them.

Now I don’t know anyone else quite like her.  Certainly my life looks very differently than I imagined it would do 10 or 20 years ago.  But my aspirations have changed and my priorities with them, and my life reflects the choices I have made.  For the most part, I am happy with them.

So what about your business?  What will that look like in 5, 10 or 20 years time?  Do you have a clear long term plan that you  are working to achieve?  Or are you just drifting along hoping that success decides to land on your doorstep?  To be honest, with very few exceptions, success is something that you work at and you need a plan to get there.

Most businesses start out with a business plan.  A clear roadmap of what they hope to achieve and how they will go about it.  But how many business plans get shoved in a drawer and forgotten about?  And yet, how can anyone hope to achieve their goals without proper planning that is followed through?

The business plan is so often undervalued by businesses.  What it is, in fact, is a living document that can develop with your plans and ambitions.  Very few people can write a plan at the inception of their business which will see them through for the long term, but a good business plan will be adjusted as a business develops, changing with the benefit of hindsight and helping  you achieve your, possibly changing, long term goals. 

So why not get out your business plan today?  Have you achieved what you initially set out to do, or has your business taken a different direction?  Take some time now to plan how you can move your business forward and make sure that your long term goals always feature in your decision making process so that success, whatever that looks like to you, is where your business is going.


To find out more about how Pringle Accountants can help you, visit our website www.pringleaccountants.co.uk

Anything for an easy life?

I know it’s an annual thing, but a bit like Christmas my insurance renewal seems to sneak up on me every year.  So with less than a week until my current policy expired I decided it was time to stop procrastinating and shop around for a new quote.  I had been informed by my current insurer that they no longer offer the product that I had last year and so it was with a sigh of foreboding that I started trawling insurance websites looking for what I needed at a good price.

One website that I visited asked me a few straightforward questions before returning a reasonable quote.  To be honest, this particular site was a welcome relief to their competitors, some of whom asked incomprehensible questions, some of whom had websites which took so long to load that they “timed out due to inactivity” and one even required a phone call to a call centre where I was very helpfully informed that “the computer says no”.  I don’t think I need to tell you which policy I bought!!

 

So how easy do you make it for your customers?  Is it easy to buy from your business, or are there unnecessary hurdles to overcome?  Now don’t get me wrong, there are businesses that need some hurdles to ensure that customers are being sold the right product for them or for the protection of both parties.  After all, I would feel a little suspicious of an insurance provider who didn’t ask any questions at all.  But even when the sales process isn’t straightforward, is there anything you could do to make it easier for your potential customers?

 

Another thing to consider is whether it is just the complexity of your sales process that prevents people from buying from you?  I would say not, even with the most customer friendly sales process no business will achieve a 100% conversion rate of enquiries into customers.  But if someone has taken the time to enquire about your business, walk into your shop or check out your website, they must have an interest in the product or service you sell.

 

Increasing this conversion rate is a great way of increasing the number of customers and growing your business.  Of course, some of the reasons potential customers don’t buy will be out of your control but if you can identify as many objections as you can, find sensible solutions and communicate these effectively to potential customers you may well see an increase in your conversion rate and real growth in your business.

 

So try walking through the process yourself and seeing what frustrations you find, it may even be a good question to ask on social media to get a conversation started with those who have previously enquired but not purchased – and maybe even convert them!