accounting Archives - Sanay Ltd
VAT Moss and E-Commerce Business

Disclaimer: Policies discussed are as of the January 8 2016 changes to the HM Revenue and Customs VAT MOSS guidelines for E-Commerce businesses in the United Kingdom. All UK VAT and VAT MOSS guidelines can be found here.

In 2015, as an answer to large companies driving sales through countries with low VAT rates, the European Commission issued changes to VAT laws forcing E-Commerce businesses to apply VAT rates to their digital services based on the consumer’s location in the European Union, as opposed to the business’.

In essence, the same £100 service would now be £120 if sold to a customer in the UK (20% VAT rate), £121 if sold to a customer in Spain (21% VAT rate), and £124 if sold to a customer in Finland (24% VAT rate). This proposed an immediate problem for every E-Commerce business across the EU- there were 28 different countries with 81 different VAT rates, the prospect of accomplishing the admin work alone seemed insurmountable. As opposed to registering for VAT in every country your business sold a product in, the EC offered the highly attractive option of registering instead for a VAT Mini One Stop Shop (VAT MOSS) to E-Commerce businesses. While VAT MOSS did solve a huge problem for e-commerce businesses across the EU, much confusion arose and remains about its exact operation and regulations.

What to Know & When to Register

The main goal of VAT MOSS is to simplify things for the business, and it only applies to business to consumer sales of digital services. If you aren’t sure if your product qualifies as a digital service, HMRC defines them in extensive detail here.

VAT MOSS was introduced as a platform to distribute quarterly VAT returns directly to each country digital services are sold in, as opposed to you submitting VAT reports individually to each country. VAT MOSS requires you to submit one return quarterly that identifies your business’ total VAT accumulation in each country digital services were sold.

In order to register, your business must already be VAT registered in each country you have a fixed establishment. There are no thresholds for the new VAT laws, so even if your business falls under the £82,000 UK VAT threshold, you must still pay VAT on digital services sold in other countries. This means if you own a micro e-commerce business under the threshold, then you must voluntarily register for VAT (don’t worry, you won’t have to pay VAT on services sold in the UK) in order to use VAT MOSS.

Remember, you only need to register for business to consumer sales of digital services. A consumer is any person or business that is not VAT registered, so if you are selling services to a business that is not VAT registered, you must treat it as a business to consumer sale. There are also exemptions if your sales fall under non-business activities, which are explained here.

VAT MOSS Returns

HMRC requests when using the VAT MOSS scheme that your business keeps records of each sale for up to 10 years. These records must include the member state of sale or the member state of consumption, the date, the taxable amount and currency, the VAT rate applied, the VAT due and currency, the payments received, the invoice issued, and the information used to determine the customer’s location. The list seems extensive, but most of the information is required on your service invoice. Apart from the data on your invoice, documentation of the customer’s location is the primary record that must be kept. Most businesses must keep two sources of information, but businesses under the UK VAT threshold only need to keep one. This may be information provided by the payment service provider, an IP address, billing information, etc. Almost any documentation that confirms your customer’s location will suffice.

When filing your VAT MOSS return each quarter, you will require, for each member state services were sold in, the VAT rate type (standard or reduced), the VAT rate percentage, and the total of all taxable digital services sold. You must also submit a separate VAT return for services sold in the UK (micro-businesses who had to voluntarily register for VAT may submit nil returns). If you are leery about filing your first return, the HMRC provides a detailed walkthrough for first-timers using the VAT MOSS scheme.

While VAT MOSS remains imperfect, as evidenced by continual EC gatherings and amendments to the laws, learning to use it has become essential to reporting and paying VAT returns across the EU. It is our hope that some of the trepidation regarding VAT MOSS has been alleviated, and that you now possess an understanding of the benefits VAT MOSS can have for your e-commerce business.

Top 3 Ways to Optimise Your Recruitment Business Profit

Are you looking for tips to augment your income and increase your recruitment business profit? Do you feel your business’ income is high enough yet stagnant and unprogressive? Well, it could be because you have followed every conventional method in the book but not yet tried any novel ideas to make your business grow. Having your own website, a regularly updated blog, marketing your services to target businesses are certainly important to acquire new clients. However, it’s the inventive ideas that could add value to your business operations and bring in more money.

There are some people that hopped on the recruitment bandwagon with a hope to grow their venture into a successful recruitment firm. Some of them made it, some of them didn’t. It’s the way they set their priorities that separated them. Today in this article, we are going to give you some great pointers on how to increase the profitability of your recruitment business and have it aiming for the stars.

Get Someone to Guide You

Recruitment agencies involve a lot of people on all sides. In order to sustain and grow in an industry that deals primarily with so many people, it is necessary that you have both solid knowledge and experience in the industry and also that you consider taking on the services of a non-executive director.

An ideal non-executive director is someone who is able to advise on both operational and strategic aspects of your recruitment business. Since the methods of job hunting are ever evolving, a tech-savvy person, possibly with some financial acumen would be a well-suited runner for the position. It goes without saying that having a non-executive director onboard would be another fee you have to pay. However, it is the returns they can bring your business that matter in the end.

Before you get started, make sure your non-executive director signs a confidentiality agreement. It will prevent them from associating themselves with your competitors while they are working with you.

Niche vs. Diversification

Up until now, owning a niche recruitment business has made sense. It’s simply not feasible to help your clients find potential employees to fill the positions that are out of your specialty. As a manager, you had to say ‘no’. Imagine you are a specialist marketing recruitment agency and your client asked you to find them a finance manager! It would be tough to decline their request, but you have to say no because you do not have a track record in finance. If at all you do oblige, you would have to commit your time and resources, engage in networking, go through a new set of applicants and get them interested in the opportunity etc for filling just one position. Once the position is filled, all your painstaking efforts wouldn’t reap any long term benefits whatsoever.

The current scenario has been changing and it’s only wise for a recruiting business to diversify. We know that diversification could mean a lot of work. It has become incredibly easy to operate across multiple specialties and be a jack of all trades with the advent of the dedicated professional services businesses. For example, you could entertain all kinds of clients and help them fill positions right from housekeeping and cafeteria to sales & marketing, finance and administration. You can simply associate with professional services businesses that specialize in housekeeping, accounting & bookkeeping, engineering, finance, etc. You could broker it out by recommending any of these professional services businesses to your clients depending on the kind of vacancy they want to fill. This strategy would not only help you diversify efficiently and cost-effectively but also earn you twice as much. Your clients will still pay you a recruitment fee and the professional services businesses pay you a referral fee depending on what you agree. a win-win situation for everyone. This concept is fairly new but we are sure it will catch on soon. We have a referral programme set up that can work excellently with recruitment agencies. If you want to know more about how our referral agreement could increase your income, please get in touch by emailing us at Info@sanaybpo.com. You could also call us on +44 1624 616620.

Identify and Eliminate Non-Profitable Clients

In the recruitment industry, the quality of clients matters way more than the number. As a manager of your business, there will be times when you have to deny service to certain clients, i.e., the businesses with a bleak prospect. The probability of filling all the available positions is usually very low. Your consultants would give their best to fill up 15-20 vacancies simultaneously. However, only 2-3 vacancies get filled in the end. You need to concentrate on quality rather than just the number of vacancies. Committing your staff to work on all the proposals would prove futile, that is why you need to sift through all the available live vacancies and pick those having the best change of actually being filled. It’s difficult to turn down customers, but with time, you would know how important it is to have a base of genuine with robust businesses.

Apart from all the other activities such as marketing your services to potential and existing clients, attracting the best talent and consistently training on your own staff to keep up with the changes, the above three ideas would certainly do a lot of good to your recruitment business. It will not only wider your market, but also reduce cost and enhance revenue and profitability to a considerable extent. We hope you found this article helpful. If you need to contact us with any queries please get in touch, we’d love to hear from you.

Business Success

For many business owners who are trying to keep costs down, they try to do their accounting and bookkeeping themselves.  But these areas that can make or break your business success.  They are critical in managing your cash.

Here are some reasons you must not do it all on your own if you wish to be successful in your endeavour.

1.       Challenges in growing business

Starting up your own company will have several challenges.  You will need to come up with the right business plan, budget, and methods to manage cash flow, among other things.  But engaging with a professional bookkeeper or accountant can make life easier.

You may think that doing it on your own can help you save money.  But is it a good idea to use your time doing taxes or other accounting tasks?  Or are you better off spending your time focussed on growing your business?

How much is 10 hours of your time worth? During this time, you could already be driving new sales, winning a lucrative contract or developing your business in other areas.  It probably doesn’t pay off doing it yourself when you think in these terms.

And what if you make errors?  You are likely to do your accounts all over again, which can double the cost.

Getting an accountant to take care of your finances will actually cost less in the long run.  You will not only have the extra time to think about how to generate revenue but you will also have peace of mind knowing that an dedicated professional is already looking after your accounting needs.

2.       Getting back on track

It is easy to lose track as your business grows.  Outsourcing all accounting jobs can help you avoid losing control of how much is owed and from which customers.

Outsourcing accounting jobs will also help you with measuring key business metrics.

They can also help you manage your payroll and produce great reporting that lets you see periodic comparisons.

If you outsource your accounting jobs to a company that utilises cloud-based accounting software, you can easily and quickly look at your business accounts to better understand your current financial situation at any given time.

Overall, these can help you in monitoring your business and keeping track of your cash flow.

3.       Delegating tasks

It is natural to feel reluctant in allowing others to handle any part of your business.  But your inability, however well intentioned, to handle everything can ultimately damage your business.

Therefore, you have to let go of some responsibilities and allow others to handle some of the support functions of your business.  In that way, you’ll have more time to look after the core functions, support your customers and concentrate on what you do best.

Delegating accounting and financial affairs to others is a good start.  Successful business owners are delegating their work to the right people.

Getting the help of an accountant can help your business every step of the way.  Your job is to run your business.  Leaving the financial details to someone more qualified is a positive step in the right direction to helping your business grow.

Having good financial management is a must for any business. In addition to preparing and understanding your budget, it is also essential that you monitor your cash flow.  If you don’t manage it well, you can run out of cash to pay the bills.  Pan Am Airlines, for instance, was once a high-flying brand.  But it is now gone and whilst the underlying reasons are complex these led to cash flow problems and the company ultimately ran out of cash.

What Could Go Wrong and the Things You Can Do to Manage Cash Flow Better

1. Not Following GAAP

GAAP or the Generally Accepted Accounting Principles is an accounting methodology that, amongst other things, helps keep track of the “money in and money out.”  If you don’t follow this system, your company will be running blind.

What you can do: Implement these standards to ensure your company has reliable accounting information that you can use to base your financial decisions on.

2. Counting Profit Before Collecting Payments

You may have sent the invoice.  But did you receive the payment?  Sometimes, customers tend to stretch pay periods.  As a result, you may see the top line figure, without knowing if they’ve actually paid you and then find out you don’t have the cash you thought you had.

What you can do: Have a system in place that lets you collect payments on time as agreed. In this way, your receivables are in balance with your payments.

3. Disregarding Cash Obligations

One of the most common mistakes by business owners is that they don’t prioritise bills and other liabilities.  These can easily accumulate and become hard to manage, which may ruin your cash flow.

What you can do: Pay bills regularly, take advantage of agreed credit periods and make sure that you are monitoring the money that goes out and tracking the money coming in.  Use the accounts payable module of an accounting system to help track payables and schedule payments.

4. Having Unnecessary Expenses

Many businesses spend money on unnecessary things, such as certain staffing costs.  They often miscalculate their true personnel costs, how many people they need and how much they should pay them.

What you can do: Before you go through hiring an employee for a certain job, look into outsourcing.  For instance, instead of hiring a bookkeeper, why not outsource it to a dedicated provider of these services.  This can significantly reduce your overall expenses.

5. Undercharging for your Products and Services

It’s easy to think that you can charge less to beat your competitors to the sale. But it’s not necessarily realistic, unless you are guaranteed to receive a significantly higher volume of sales.

What you can do: Perform competitive analysis to explore how much you can charge your customer for a particular service/product while still being competitive.

6. Ignoring Where your Money is Going

It’s easy to be blind as to where your money is going if you don’t have a budget or an investment plan.  If you don’t have a clear plan it’s easy to lose sight of what your income is being spent on.

What you can do: Create a solid plan to help you spend more wisely. In this way, you will be better prepared for unexpected expenses and big future purchases.

There are other things that can go wrong that may leave you with no operating cash.  You can enhance your cash flow in a number of ways, like improving debt collections, managing inventory, controlling interest and bank charges etc.  It is critical to ask for help from a business adviser or your accountant as early as possible.  Remember that issues with cash flow can indicate operational problems that require your attention.

Do you want to learn more about how Sanay can help you manage your cash flow to facilitate growth in your business? Schedule a free consultation today!

Cloud Accounting

Cloud accounting is fast becoming a necessary tool for small businesses. With the help of mobile phones and tablets, accessing your financial documents on the go can be achieved with cloud technology.

Despite the availability of these tools, only relatively few small business owners are using them.  If you’re one of those owners who are resistant to the concept of this technology, it’s probably the right time for you to overcome your fears.

Here are the most important reasons your small business should embrace cloud accounting technology:

1.   Easy collaboration with staff

With the advent of cloud accounting, accessing your financial data in a fixed location is becoming a thing of the past.  Cloud accounting lets you and other authorised users delve into the financial data of your company regardless of their location.

Since it’s not in a centralised location anymore, viewing your financial data is no longer restricted to the office.  If there are things that require your attention, you don’t have to go to your office to update them. You can take your business wherever you go.

2.   Better Cash Flow

It has been suggested that business owners who embrace cloud accounting and accept online payments get paid faster. The reason for this is that automating invoicing can improve cash flow; thereby, saving time in following up overdue invoices.  Some cloud accounting providers also offer simple financial management tools to reach customers wherever they are.  By doing this, payments are easily received.

3.   More accurate picture of overall financial

With cloud accounting you can easily review your numbers whenever and wherever you want to, you can quickly respond to any type of challenge.  With easy access to all the information, you have better decision-making capabilities.  As a result, you can conveniently keep track of your bottom line.

4.   More flexible

As the business evolves and grows, cloud accounting can grow along with it. This type of technology also allows you to utilise other relevant apps so that you can efficiently compete with other companies.

5.   Better backup

With cloud accounting, backing up your financial data is easy.  In case of a system crash, you can retrieve the data from the cloud storage client.  This ensures that you will not lose all your important financial info.

Since you can upload your financial documents, you can share them with your employees and co-workers, so they can have appropriate access to these relevant files.

6.   Better compete

Cloud accounting is cheap but efficient.  You can start to keep up with some big corporations. It gives you a voice in your niche allowing you to take your business to the next level. By using a remote bookkeeper, it can lower your business’ overall costs and it makes accounting and bookkeeping a lot simpler.

Cloud accounting gives any type of small business an effective way of competing with larger companies.  It is true that there is still a lot to learn about cloud technology, however, once you use it, you will realise the benefits in simplifying and securing your accounting processes.  Not only that, it allows you to remain competitive without having to pay more.

One challenging aspect of business is keeping the books up to date and getting it right.  A simple accounting mistake can seriously damage your business.

Many business owners rely on their accountants in helping their business comply with taxes, payroll, bookkeeping and other accounting issues.

Listed below are some of the accounting mistakes that you must avoid, if you do the accounts yourself, to prevent significant damage to your business.

1.       Not prioritising receivables

Undoubtedly, cash flow is the lifeblood of any business.  If you are not enough money coming in, you will find yourself going backwards or worse going under.

When an invoice is issued, a receivable is recorded, when the customer pays, the payment is applied and the invoice marked as paid.

Not monitoring who has paid will leave you in a situation where you’re unsure who truly owes you money.  After all, making the sale means nothing if you’re not being paid for it.

You need to regularly and systematically monitor who has debts and how old they are.  You also then need to regularly request payment when payment is late.

As a result of not properly managing receivables, you may ultimately suffer from high bad debts.

To help avoid this, you may consider investing in a cloud accounting and online payment system. They can automate processing receivables to help you get paid faster.

2.       Not keeping track of expenses

Expenses are a necessary part of any business, be it small, medium or large.  Unfortunately, many business owners find themselves overwhelmed when it comes to tracking down receipts and other accounting documents.

If you don’t keep supporting expense receipts properly, it can result in cash flow problems, accounting and tax issues.

But saving a receipt for every expense can be cumbersome.  This is one of the reasons many business owners today are using cloud accounting and remote bookkeeping organisations to help them in organising business expenses and recording them properly.

3.       Not keeping personal and business finances separate

Combining the two can put your business at extraordinary risk.  It’s a common mistake that can be easily avoided but there are many small business owners who are still using one account for both their personal and business finances.

This problem can easily get out of hand.  Plus, this issue can cause problems with the tax authorities.  To avoid it, you should unquestionably have separate bank accounts for your business and personal needs.  Keeping things separate ensures that you don’t confuse what belongs to the business and what belongs to you.

4.       Not seeking help from a professional

At first, it’s tempting to handle all accounting tasks on your own to try to save money.  But, when your business starts growing, not hiring a professional can be a very bad idea.

You may think that you’re saving money by doing your taxes on your own, but, the truth is that this mistake can cost you a lot, further down the road. You might be overpaying tax, which is as good as throwing money away or underpaying your tax bill, which can lead to penalties.

Having a qualified professional taking care of your accounts can save time and money. You can concentrate on your core business and it will take the stress out of accounting.

Finance Function Outsourcing UK

Many businesses these days are looking to outsourcing as part of a successful long-term competitive strategy – one that cuts administrative costs and increases administrative efficiencies.  With the increase of cloud-based services and the increase in business-over-web communications, pretty much any business function can be outsourced.  In fact, the worldwide outsourced market was estimated to be $309 billion in 2013 and is growing at a rate of 25% per year[i]!

The reason for this is because the outsourcing model is one that has been tried and tested for many years.  To be successful in any outsourcing venture, it’s important to first pick the right function that will be migrated to a vendor company.  Finance is the perfect function to outsource because in most cases, this is an administrative function – one that does not provide income for a business.  Because it’s not a primary income generator, there are very real benefits that include decreased cost, increased expertise, flexibility and focus.

DECREASED COSTS

There are many companies that benchmark their administrative costs against similar industries to make sure that they are working as efficiently as possible.  The reality is that costs tend to run much higher for companies with internal administrative departments in comparison with those who outsource these types of functions.  Outsourcing, when done correctly, almost always decreases costs.  The reasons include:

  1. There are no benefits to pay. When outsourcing finance functions, such as bookkeeping and payroll, you pay for the outcome based upon the work being done.  You don’t have to pay for sick days, holiday pay, medical insurance, or retirement benefits.  Simply reducing these types of benefit payments can contribute to an immediate bottom-line impact.
  2. You only pay for what you need. When structuring your agreement with the outsourcing vendor, you define the types of services you will need.  Whether these services require 20 hours per week or 50 hours per week, your payment terms will be based upon your specific and unique needs.
  3. You reduce overhead costs. When you use an outsourcing firm, the vendor is now responsible for turning on telephones, paying the energy bills, setting up the cubicle space, purchasing office equipment, and paying rent.  While it’s true that these costs are passed on to the client, they are also shared amongst all the vendor’s clients so your portion remains much lower than it would providing those items in your own place.

 

EXPERTISE

When it comes to running a finance company, the name of the game is risk mitigation. Everyone has to pay taxes, everyone has to report company earnings and everybody has to make payroll.  However, one mistake or miscalculation could lead to years of litigation and severe penalties. Using an outsourced company for finance functions makes sense because:

  1. You have access to the experts you need. A finance company providing outsourcing specialises on one thing:  FINANCE! Whether you’re facing a thorny accounting issue or have specialised bookkeeping requirements, you can find whatever expertise you need to help meet your specific requirements.
  2. Best practices are put to work for you. A financial company must stay up to date on the latest financial trends, business practices and governmental requirements.  Vendors understand exactly what types of practices work best in order to better serve their clients. This takes the onus off the client to have to figure it out.
  3. The best technology and software is available to you. A finance company invests in the best technology and software available in order to be the most competitive in the marketplace.  This type of investment makes sense for the finance company because finance is the core business.  For companies where finance is not the primary function, making this type of infrastructure investment simply doesn’t make sense.

FLEXIBILITY

Businesses are not static.  The demand ebbs and flows.  In order to be successful, your business functions need to meet the demand as it changes.  By using an outsourced finance company, you can rely on the vendor to ramp up or dial down availability to meet your need.

  1. Their entire team is at your service. By using a vendor company, you don’t just have one or two employees – you have a team working to meet your needs.  If someone goes on holiday, your personalised service doesn’t have to stop for the week until she returns.  Instead, you will have people available to you when you need them.
  2. You have scalability. Suppose you’ve got some temporary projects coming up that will require a short-term increase in staff.  You simply let your vendor know your requirements ahead of time and the vendor can make sure you have the number of people you need to meet this temporary demand.  In addition, as your company grows, there’s no need for you to have to take the time and effort to go through the hiring process.  You let your outsourced vendor know that your needs have changed and let them quickly and easily adjust to fit your new workload.
  3. You have flexible availability. Not all business is conducted from 8 am to 5 pm.  Sometimes your business requires someone available on a second or third shift.  Instead of worrying hiring extra staff and worrying about hiring extra supervisors to manage the staff, your outsourced vendor will make sure you have staff at the hours that you need them.

FOCUS

Let’s face it; you are in business to perform your business function.  Unfortunately, as an owner, executive or high-level manager, you probably spend a good bit of your time on all the other things that have to get done.  Payroll needs approved, audits need reviewed, expenditures need initialled and issues need addressed.  Administrative functions often are huge time and resource consumers.  So, the final, but most important benefit to your business is that you can:

  1. Spend your time on your core business! Outsourcing means that you negotiate your financial requirements, figure out a plan to manage the day-to-day tasks and then step back and let your trusted vendor take care of the administrative section of your business.  This means that you get to allocate your time and energy on building your business, selling your product and planning for your future!

Although outsourcing has proven to be beneficial for many companies, there have been a few published stories that describe how outsourcing can sometimes go bad.  Good outsourcing vendors study up on these stories in order to better understand what type of relationship works best for both the client and the vendor.  Several themes seem to come up and it’s important to address these potential pitfalls, especially if you are a business owner and are considering some type of outsourcing partnership. Understanding what to avoid can help you better build the right relationship!

Managerial control is not well defined.  In most client-outsourced relationships, the single point of failure often comes about because the transfer of managerial control is not well defined.  The vendor may believe they should make managerial decisions while the client believes these decisions should remain with them.   Unfortunately, without a good discussion prior to creating the contract that delineates a clear description of duties and responsibilities, the relationship could devolve into arguing over who is supposed to do what!

Combat this by selecting an experienced outsourcing partner, understanding the terms of the agreement, defining your service level requirements and fully defining the relationship terms prior to signing the contract. 

Lack of customer focus.  Unfortunately, there are some outsourcing vendors that enter the market only to get as much money as possible without providing a quality product.  Luckily, these companies don’t stay in business long, but for the clients they sign up, they can leave a lasting negative impression.

Combat this issue by doing your research on possible vendors, asking lots of questions about their practices and policies so you fully understand the specifics of what the vendor company provides.  Vendor companies that overstate their results are easy to spot as their practices won’t match their sales pitch. 

Risk of data loss.  This is certainly a biggie!  With the increase of hacking activity and the need to keep personal data as safe as possible, outsourcing vendors have a responsibility to their clients to make sure that the client’s data is kept safe and secure. Some vendor relationships break apart simply because there has been a data breach or confidential information is not kept confidential.

Combat this issue by asking questions about how data is kept secure and how the client’s need for confidentiality is handled. Although the vendor must keep certain details a secret, the vendor should be able to describe their overall security strategy and offer reassurances as to how they address the issue.

Hidden costs. There seems to be a misconception that outsourcing companies hook you in with initial low prices and then spring hidden costs on you later.  While it’s true that a few un-reputable companies may do this, most vendor companies will clearly outline the costs for their services and will publish their prices for your review.  This helps you to better find the company that suits your needs.

Combat this issue by asking to see a list of costs associated with the services.  Hidden fees are also hidden in the contract details, so read through those details carefully.  Great outsourcing vendors will always be up front with you about costs and will be willing to negotiate in order to build a long-term mutually beneficial relationship

If you are a company that is seriously considering outsourcing some of your business functions, we hope that this list helps you get more information related to why outsourcing can be a great idea for your company.  We also hope that you have a better idea of what to ask of potential vendor partners and what questions you should ask.

[i] Lacity, M. C., & Willcocks, L. P. (2013). Outsourcing business processes for innovation. MIT Sloan Management Review, 54(3), 63-69

Are you a small business struggling to get to the next level and deliver sustainable growth? Here are 10 keys to unlock your growth phase.

  1. Get a growth mind-set

It might sound obvious but you can only grow if you want to. Get a growth mind-set and change the status quo.  To grow, small businesses need to challenge their processes, look for opportunities to exploit existing resources and learn from mistakes. The growth mind-set comes from the top and the vision of the successful business needs to be shared by all. Make a conscious decision to grow, and sell your vision with its benefits to your staff. Go ahead have that first staff meeting. It is just the beginning, to quote Lao Tzu, “A journey of a thousand miles begins with a single step”.

  1. Have courage

In a recent TED talk in Vancouver, Simon Sinek stated that the only common trait amongst great leaders is courage. Growing a small business takes significant time commitment and financial resources, but above all it will certainly take courage. Courage to make that bold decision, lead from the front or implement a new key process, whichever it may be.

The key is to have conviction in your decisions, and stand by them. If it works out then great, if not then learn and move on without dwelling on it.

  1. Take advice, listen and lead

Ok, so this is 3 rolled into 1 but the point is that they’re interlinked. People don’t expect everyone to know everything, not even the Managing Director or the CEO. The important thing is to know who to ask when you don’t know the answer, to trust their judgement and lead people in such a way that they are inspired and driven by your vision.

“Working with an external finance partner, an expert in bookkeeping and accounting enables improvements in many areas of the business.”

You’re really only as good as your team. If you work on your own you may need to look to others for guidance or outsource just to lighten the workload but we’ll look at this a little further on.

  1. Be open to opportunity

This is important because the key is the skill to recognise opportunities and act on them quickly before they disappear. These opportunities could be income producing like a new potential customer, a new market segment or taking a loss leader for a new future source of income. Cost reduction opportunities could be a new low cost supplier, new more efficient premises or outsourcing services. Collaborating with outside parties to assist with your marketing or managing your bookkeeping and accounting can not only reduce your staffing costs but result in resources being redirected to income producing activities – these are also opportunities.

“The really great thing about outsourcing bookkeeping and accounting during periods of growth is that an outside company can easily flex its service provision to meet your business needs as and when needed; it can quickly scale up in such a way that you won’t notice the additional workload.”

  1. Know your customers

Being in tune with your customers and what they want is crucial for business growth.  Knowing what they want or what they might want means that you can adapt to their needs.

Good relationships with customers are vital.  This value to enhance the customer experience needs to be shared top down in the business.

Customer knowledge is also about knowing how profitable your customer is to your business. You should not be afraid of increasing profitability, if necessary, by reducing service offering, finding more efficient ways of managing the current workload or increasing the prices.  If you can’t make a customer profitable you should consider letting them go.  Yes that’s right – letting a customer go if they are not profitable.  Don’t forget to consider other business they may bring.  If they are an unprofitable customer but still provide a number of good referrals or complimentary business they may not be that unprofitable.

  1. Focus spending

Realistic cost budgets are critical to financial planning and focusing expenditure.  Often during start-up or in times of rapid growth, a business can become a victim of its own success, struggling to pay bills before revenue has been collected.  Cash flow can become a very real problem and so it becomes especially important to control your limited resources and review spending in terms of return on investment.

Decisions should be framed by “will this spending improve/ increase revenue or reduce costs?” Consider the purchase of new capital equipment, will this save production costs?  Will it open up new markets?  Will it increase capacity without increasing floor space?  These are all valid questions when making decisions, for instance you may have to choose between buying new equipment or re-painting your building. I can imagine which of these options are likely to have the greatest return.  Bear in mind of course that some costs are necessary…insurances, taxes, certifications etc.

Sometimes these decisions are difficult especially with a limited budget. For example, deciding between customer satisfaction/retention or marketing to attract new customers; ideally you should be doing both. For a cash strapped business a short-term compromise would be developing sales and up-selling to existing customers.

HR costs also need to be budgeted. Should you hire, manage and motivate an in-house bookkeeper at a higher cost or outsource to a dedicated virtual bookkeeping organisation at a lower cost requiring less time commitment?  Both have benefits but which has the greater return on investment?  Which makes your bookkeeping simpler?

  1. Monitor cash flow…very carefully

This seems almost too obvious to include, but it can be the critical success factor for a business as it struggles to balance payments out with payments in.  Let’s look in more detail at some areas where gains can be made.

Accounts Payable.  Pay your suppliers as close to their due date as possible, negotiate extended credit terms with established suppliers, request electronic invoices to improve budget planning and control – these are all actions to improve your cash flow.  Occasionally suppliers offer discount incentives for early payment, you should weigh up the benefit of the reduced cost against the benefit of extended payment terms at a higher amount.

A word of caution, regularly not paying suppliers on time can lead to suppliers putting your account on credit hold or stop supplying you altogether.  This opens up many wider issues around your supply chain and can affect your reputation.

Accounts Receivable.  The starting point for managing accounts receivable (otherwise known as debtors), for credit sales, is to reduce the risk of default on invoice payment and check the credit history of the prospective customer.  If there is a history of non-payment then consider whether you need the sale more than the money in the bank.

Contrary to accounts payable, the aim is to expedite the payment of invoices, reduce payment terms if possible and minimise overdue payments.  Making it as easy as possible for customers to actually pay your invoices helps and there are a number of practical things that you can do to achieve this.  Contact us if you wish to discuss this further.

Inventory.  Try not to tie money up in too much stock, after all money sitting in a warehouse in the form of stock can’t be spent on things which will move the business forward.  Only enough inventory/stock necessary for firm orders (unless it’s standard and can be used across various product lines) should be kept on hand. This requires effective supply chain management. Investing large amounts of cash in holding large inventory increases the risk of obsolescence and theft. Moreover it can increase the costs associated with storing, managing and securing the inventory.

Managing cash flow can make or break a business.  An experienced bookkeeper should be able to assist with cash flow management.

  1. Outsource your support functions

Identify your core business.  Maybe you are in engineering, manufacturing, online retail, recruitment or medicine, the list is endless, the point is that your core business is what you provide your customers and it earns the revenue. Therefore all other functions are support functions.  Many small to mid-sized business owners keep all support functions in-house which can be time consuming to plan, learn and execute. Ultimately this detracts from the energy used to drive the core business forward and hinders growth.

Indeed managing these support functions in-house can save money but is this a false economy?  If in fact your customers get less attention, sales either don’t grow or are lost and the real cost to the business is the lost revenue. You could outsource to a service provider who would do the job quicker and more effectively because your support function is their core business.  This may be Customer Service, Graphic Design, Recruitment, Legal support, Marketing, IT, or Bookkeeping and Accounting.  Any of these areas are prime candidates for outsourcing.

Take Bookkeeping and Accounting as an example. The really great thing about outsourcing bookkeeping and accounting during periods of growth is that an outside company can easily flex its service provision to meet your business needs as and when needed; it can quickly scale up in such a way that you won’t notice the additional workload.  It is not the same for an in-house bookkeeping system where increasing resources takes time and money.  Outsourced accounting not only gives a simpler bookkeeping system, it saves time and best, it presents valuable information and reporting in a manner that you may not previously have considered. Indeed working with an external finance partner, an expert in bookkeeping and accounting enables improvements in many areas of the business. Ultimately, it will take the headache of accounting away and give you more time to focus on growing your business.

  1. Embrace new technology

It was only the early 1990s when the World Wide Web found its way into wide stream usage, by 1995 there were an estimated 45 million users, just 0.8% of the world population. Today there are approximately 3 billion internet users, around 41% of the world population. Potential for further significant growth remains on the cards as the types of devices used to access the internet increase as users look for more convenience and mobility, moving from laptops to tablets and smartphones and now to smart watches. Cloud based technology, as a result, is gaining more users daily. The market is estimated to grow from around $58bn in 2013 to $191bn in 2020.  These are the high technological advances that have changed the way the world works and does business; not adopting this could leave you behind.

Advances in other areas are also more than noteworthy; consider nanotechnology, RFID’s, CNC machinery, robotics, automated production lines, predictive analytics.  More than enough for an entirely separate post.

It is fairly likely that most businesses have embraced some change in technology, with the more successful companies being either early adopters or in the early majority.  There are few businesses today that don’t have a PC or phones, have manual accounts or use steam to power machinery.

Identifying and adopting new and useful technology can help give your business a competitive advantage. It can reduce costs, production time and improve service delivery and the customer experience – all leading to a healthier business.

  1. Tie it all together

Do all of the above as part of a defined and deliberate strategy and give your business the best chance to grow to its true potential.

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