Category: Business

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Cyber security tips for small businesses 

When we do a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for our business cyber security is pretty high up our list of risks. As accountants we hold a lot of confidential data of a personal and/or commercial nature so it is important that we do everything that we practically can to protect that data.

Having worked in the Disaster Recovery team during my stint in IT here are my top tips on cyber security:

  • Use strong, unique passwords for all accounts.
  • Use a password keeper such as Onepass to store these so that they can be used on your different devices.
  • Implement 2 factor authentication
  • Don’t share accounts/software licences!
  • Always use the latest version of your software and instal updates asap as these will include security updates
  • Train your team on best practice
  • Do not display your router password to casual visitors or on the router itself – this is a particular weakness for those of us who use cloud software
  • Backup regularly and hold the data securely. Cloud software can help with this.
  • Take extra care to look out for phishing attacks. Hover over senders’ email addresses and any links. Any HMRC/government links should end .gov.uk
  • Delete access for former employees as soon as they leave.

I recommend getting CyberEssentials certified. Find out more here: https://www.gov.uk/government/publications/cyber-essentials-scheme-overview

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When can you afford to retire? 

At some point we all want to retire from our business so it’s important to understand how that will impact on our future income. For me, this starts with a personal balance sheet.  

Whilst there’s no financial reporting standard for this here are the sort of things that I include: 

  • Sale value of your business less any costs of sale and capital gains tax 
  • Property less outstanding mortgages, costs of sale and capital gains tax 
  • Pension funds 
  • Other investments 
  • Long term savings 
  • I exclude short terms savings and current accounts as these are usually less substantial and they probably need to be maintained into retirement. 

I then look at a forecast of personal income and outgoings.  

Income might include 

  • Salary and dividends from your own business 
  • Pension income 
  • Rental income 
  • Other investment income 
  • Sale of assets (which might reduce income that those assets generate) 
  • Gifts and inheritances 

And outgoings would be your household bills, hobbies, holidays, etc 

When doing a long terms forecast these will change over time as you plan in major life events such as buying property, weddings, children, school fees, sale of property, cashing in some of the investments above, retirement homes, crises and even nursing homes.  

As with any long range forecast there are huge assumptions to be made, your date of death being one of them, but it is a good start on when you can afford to retire and what sort of lifestyle you will be able to achieve. 

Also worth mentioning that you should ensure that you have a valid will, and power of attorney for your finances, health and business. 

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Plan your business like a marathon 

Building your business isn’t a sprint but a marathon. It takes a bit of planning. 

  • Plan – find a plan that is right for you. Right for where you are now, where you want to be, and how much time you have available 
  • Track performance – what KPIs will show that you are on track? These should be things that you can control such as how often you train each week, rather than how fast you will be by a certain date. How many times do you need to show up on line each week? How many networking events? How long do you need to write for each day (and do you take weekends off?) to complete that book? 
  • Track your progress – each time you run a longer distance or a faster time record this PB (personal best). In business this might be tracking your GRI (gross recurring income), your record month of sales, number of clients, average fee etc. 
  • Invest in the right equipment – a good pair of trainers (and the right sports bra) can make your training so much more comfortable. Have the right people and technology to maximise your chances of success. 
  • Running partner/group – these will provide moral support, accountability, and they will run alongside you as you each focus on your personal goals 
  • Coach – as an athletics coach as well as a business coach I can’t recommend this highly enough. Somebody with technical expertise, moral support, and accountability will help you get to your destination faster. 
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Limitations of AI 

At risk of sounding like a luddite: AI is not the answer to everything. 

AI has the potential for so much good but people really don’t understand the limitations.  

  • The main one for accountants is that information put into the free version of ChatGPT is not confidential. For this reason we use Copilot as our default sand other Ais as needed so that client information is never accidentally compromised. 
  • The free version of ChatGPT is only based on information available up to a certain point in time so it excludes more recent updates and data.  
  • AI is the answer to all the problems that you never knew you had! Originally AI was developed as a solution to certain problems but now developers are busy creating solutions to problems that don’t really exist … until their product team tell you that they do. 
  • AI is only as good as the user. As with all technology, garbage in = garbage out. You need to train your AI in exactly the same way that you would train a new apprentice in your organisation. 

The biggest problem is that LLMs (large language models) like ChatGPT are prone to ‘hallucination’. They extrapolate the known data in order to fill in any gaps. Like the accountant’s nightmare ‘Dave at the pub’, who tries to help everybody with doubtful tax advice, hallucinating AI is about as reliable as a toddler with a face full of chocolate denying that they’ve been stealing Easter eggs. 

One AI quoted from my talk at an accounting conference earlier this year. It was probably a great talk but … I didn’t speak at that event! If a journalist was to report this badly they would be out of a job and probably laughed out of their industry.  

I love AI and use it regularly in my businesses but please remember to approach with caution. 

PS If the conference in question would like me to do a talk on this topic I’d be happy to oblige 😉 

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Which CRM? 

After last week’s post I was asked which CRM we use.

As I run three businesses (Minerva Accountants, Hudson Business Advice, and Minerva Technology) we use two different systems.

You can start off with a free CRM or even set up your own spreadsheets of contacts and actions but at some point you will (hopefully) grow to a point where you need something with a bit more oomph and functionality so you will need to invest a bit of money. Fortunately most CRMs have the ability to import a spreadsheet of contacts and data so it’s easy to migrate. What takes more time is setting up your workflows and funnels.

At the moment we use Active Campaign (AC) across all three businesses because it has good email campaign functionality and we can set up different tags and funnels for each business. This includes sending out these weekly Top Tips to two different mailing lists. It connects with Outlook and we can set up sales funnels and keep notes. We use this primarily for prospects and running the coaching and tech business which have simple workflows.

To run the more complex business of Minerva Accountants we use Bright Manager (BM). Running an accountancy (or bookkeeping) business comes with all sorts of deadlines and checklists which BM can handle. The software comes with predefined workflows but you can tweak these or create your own. There are many competitors at the moment, all with their own strengths and weaknesses, and the market is changing rapidly. For us the downside of BM is the reporting and, with no API available, we have to pull out reports into Excel and manipulate them there. I have spoken to their product team about this so watch this space. Having a separate workflow system means that personal, essential emails and reminders are separate from the general ones. Clients are enrolled on both systems so they still receive the Top Tips and any bonus offers through AC.

Specialist software for accountants includes Engager, Karbon, FYI and others but, in my opinion, there is plenty of room for somebody to sweep the market at the small business end.

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Implementing a CRM system in your business 

Once your business outgrows you and a few contacts on your phone it is worth implementing a proper CRM (customer relationship management) system. 

  • Register with ICO (Information Commissioners Office) and pay the necessary fee. This will vary with the size of your business but starts at £40 per year. Ensure that you record all the ways that you will use personal data. 
  • Choose a CRM system that suits your business needs. Do you want to track prospects or to hold more detailed information for existing customers. DO you need to include tasks and workflows? Do you want it to integrate to your emails or a a bulk mailing system? 
  • Give all your team access to add, update, and generally use the system. This will ensure that they are informed before all client contact. 
  • Regularly update and maintain customer data. This is one of your responsibilities under GDPR but it also makes sense for the business to hold the lates information 
  • Use CRM analytics to improve customer relationships and to track which marketing campaigns are most effective 
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Tax Tip – Recharging expenses vs disbursements 

If you pay for something on behalf of your customer and then invoice it to your customer you may be able to treat it as a disbursement. This will be an advantage if the supplier doesn’t charge VAT or if the customer can’t reclaim VAT.  

When invoicing disbursements to your customers you don’t add VAT and you can’t claim VAT on the purchase because you are acting as an agent. 

A disbursement must meet 8 conditions. VAT: costs or disbursements passed to customers – GOV.UK 

Most business purchases are expenses, not disbursements, and you should add VAT to the amount that you invoice to your customer. You can also reclaim any VAT that you pay your supplier. The amount you charge your customer is a commercial decision so it may be the cost, or the cost plus a mark up, or any other amount that you agree. 

Some examples of costs that are usually recharges and not disbursements: 

  • Train ticket to visit your client or to travel as part of their job. You should add VAT to any recharge because the flight is for you and not the client. 
  • If recharging postage to your customers you should add VAT even though postage is usually exempt. 

The most common recharge we see is mileage. You can claim the standard mileage allowance (usually 45p but see mileage rates: https://minervaaccountants.co.uk/tax-tip/tax-tip-38/) and reclaim any VAT on the fuel element. When recharging this to the client you would add VAT to the rate (which may be 45p or something else) that you have agree with them 

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How to get funding for small businesses

A compelling business plan – we’ll cover this in a separate article

Track record of success – if you have a successful business it is much easier to find investment. Showcase your achievements and get third party evidence in the form of profitability, awards, and testimonials. The lack of a track record is why it is harder for startups to get investment. Success of your founders in other fields will help.

Highlight your unique selling proposition (USP) – what makes you unique? How are you different from your competitors; preferably in ways that they can’t easily replicate.

Growth and profitability prospects – have a viable plan and, preferably, a pipeline.

Build a strong online presence and network – this is becoming more and more important as people seek validation online or from their network before purchasing or investing.

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Till systems with stock control 

Gone are the days of huge cash register full of … cash. These days most banks charge to bank cash (if you can find a branch) and HMRC definitely prefer electronic payments and traceability which leaves cash based businesses mainly desirable for money laundering. 

These days businesses are moving towards a simple tablet loaded with software like Clover that tracks stock as well as sales and card receipts. No more cashing up at the end of a long day. No more counting pennies and trying to agree everything to the z-listings. Instead the bookkeeping for sales, receipts, and stock is automatically linked to your accounting software with Xero effort. 

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Why bookkeeping software will help with MTD 

MTD (Making Tax Digital) will require businesses to keep digital records and to make quarterly submissions to HMRC. Clearly using bookkeeping software will help businesses to comply with these requirements but there are all sorts of other benefits that will help to offset the cost. 

  • Professional looking invoices (and quotes) emailed to your clients 
  • Recurring invoices emailed to your regular clients automatically 
  • Link to your till system to save you keeping scraps of paper and Z readings 
  • Links to your bank statements to save you typing in the information manually. Linked with AI to suggest the bookkeeping 
  • Link to card payment system so that you can get paid before leaving site and no need to chase invoices 
  • Link to DD collection system so no more debt collections calls 
  • Scan your bills and expense receipts and use AI to suggest the bookkeeping 
  • Remote access for client, accountant, and bookkeeper to keep everything up to date and to access that information 
  • Up to date information at your fingertips for management decisions, dividends, and loan applications 
  • Up to date information for cheaper/faster year end accounts preparation for shareholders, investors and loan/mortgage applications 
  • Link directly to loan application systems for faster finance 

Exactly what is available will depend on the cloud software that you choose but these are all fairly common features so why would you spend more time trying to work around the requirements? 

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