Tag: business planning

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Be a Joy Seeker 

Marie Condo goes through homes clearing out anything that isn’t essential unless the client can honestly answer the question ‘Does this bring me joy?’ 

My suggestion is that we should do the same with our businesses. Weighing up profit and passion. 

Some work we do because it is highly profitable but, if you’re like most business owners, there’s probably some work that barely breaks even. You can either stop doing it or find a way to do it more profitably, perhaps by automating it? This may be the nature of the work or the particular clients, so it is worth reviewing both each year. 

Some work we do because we love it. Coaching is my passion, and I love seeing the result of my advice in clients reclaiming their work-life balance or taking holidays after making their businesses more profitable. 

Ideally you would only do things that fall into both categories but sometimes they only manage one. Once you’re making enough money to cover your essentials I’d focus on your passion. If we do this, we will generally do a better job and be able to increase our fees.  

If something is neither profitable nor enjoyable then you should stop providing that service or pass on that client. And you should carry out this review each year until you have a profitable business that you love.

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Building a business can be as painful as walking on Lego 

I read this somewhere last week and it is so true. Whilst there are great highs on the roller coaster of business there are also some real lows. 

So what can you do?

When you identify a problem that is likely to recur in some form then it is worth spending time to make changes to prevent it. But sometimes the solution is not really obvious. 

It may help to work through this with a coach, a colleague, or on your own by asking some simple questions 

  1. What exactly is happening? 
  1. When did this issue start? 
  1. What is the impact? 
  1. What changed recently that might have triggered this? 
  1. Have we had a similar problem before? How did we resolve it? 
  1. What outcome do I want to achieve? 
  1. Is this realistic given any current constraints? 

Here’s to using your Lego creatively instead of as an instrument of torture. 

Business confidence monitor 

The Q3 ICAEW Business Confidence Monitor is here and shows the increased tax burden are holding back business and economic growth 

ICAEW Business Confidence Monitor | ICAEW 

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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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Show me the money 

Spring seems to have brought renewed optimism and, in spite of macro economic conditions, many of our clients are looking at expanding their businesses. Business confidence in the Southwest is generally positive. 

Here are some useful links for businesses seeking finance in the Southwest. 

  • Founder Catalyst creates all of the legal paperwork and helps founders to manage investor engagement. 
  • Meet the Funder South West – Engine Shed and British Business Bank collaborate to share conversations with funders. 
  • Considered Capital is a great place to start if you’re not interested in equity funding. 

We are also happy to make introductions amongst our client base and other connections where appropriate so do let us know if you’re seeking finance or fancy investing yourself. 

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How much cash should I keep in my business?

Another question to which the accountants answer is … it depends.

It depends on your cashflow forecast and the likelihood of all the money coming in on time. Next week I’ll give some tips on what to include in your cash flow forecast if you’ve never done one before and also some software recommendations if you need to prepare regular cash flow forecasts.

The general guideline is to keep instant access to a minimum amount that is enough to cover 3 months of costs.

If you’re a pre-revenue startup dependent on funding (common in the tech sector) then you will also want to track your run rate. This is the number of days’ cash that you have in your business. Work out your average daily costs and divide your cash balance by this amount.

If you are holding over £50k on deposit then Allica Bank are currently offering some good deals (they’re not paying me any commission 😉)

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Why do we have an annual price increase?

Once a year we increase our prices across the board. This is in addition to increasing/decreasing prices as clients increase/decrease the services that they need from us. As most of our clients are on annual fixed price agreements that they pay monthly they aren’t affected immediately, others are increased from 1 April.

But why do we have an annual price increase?

We have a fabulous team and I want to make sure that they are rewarded accordingly so we pass on the same increase to them as a pay rise. Our software and other costs increase throughout the year so we need to ensure that we cover these in order to retain our margins and stay in business.

As business advisers we also advise our clients to review their own prices annually.

If costs are tight it can be tempting to cut corners on the necessary work or to take on too many clients in order to cover our fixed costs. The resulting reduction in service would not be in the best interests of our existing clients.

When was the last time you reviewed your prices?

If you’d like more information about how to go about reviewing your prices then have a look at our pricing course.

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How to scale your small business

Scaling a business can only go so far by selling more of the same. Once you have reached capacity you will probably need to look at a new, scalable business model that requires less of you, the business owner. For instance, offering service one to many instead of one to one.

Hudson Business Advice offers courses and group coaching as well as individual coaching so that I can optimise my time and make our services affordable for more people. My books aim to offer this too and we have a range of ‘products’ at different price point but, more importantly, different levels of my (limited) time

To free up more time you can look at using technology. Not just AI but other software too. At Minerva Accountants we use Apron or Hubdoc to speed up bookkeeping. These apps incorporate optical character recognition, machine learning, and other AI technologies to suggest coding, so our bookkeeper spends less time typing data and more time reviewing. With up to date bookkeeping, we can offer our client better advice.

You may also need to start delegating more. Not just to free up my time but I like to find people better than me at specific tasks/roles. You can use written procedures and reviews to ensure that work is carried out to the highest standards.

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How to improve your profit margins

If your profits are lower than you’d like and you’re not taking home enough money to cover your bills, let alone to make up for all the hassle of running your own business, then you probably need to look at your margins. (If you’re happy with your profitability then save 2 mins reading) 

  1. Look at your prices and increase those where possible. I’ve blogged on this several times before and it is a key component in many of our courses or you can purchase our mini-course on the topic
  1. Reduce your costs by simplifying and documenting processes so that you can use more junior staff 
  1. Reduce your costs by using more automation (dare I mention AI or are you sick of hearing about that too?) 
  1. Reduce your costs by negotiating better terms with suppliers 
  1. Improve your efficiency to lower your costs 
  1. Focus on selling more of your high-margin products 

Even doing just one of these things will help to improve your business 

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How to create a budget for your business

How to create a budget for your business

Businesses and individuals with plans are more likely to achieve those results. But how do you go about it?

  1. Personal objectives – the objectives of owner managed businesses are often a subset of the owner’s personal objectives.
  2. Business objectives – what do you need from the business to meet your personal goals?
  3. What products/services do you have to sell?
  4. Who is your ideal customer?
  5. What do you know about your competition and how you can differentiate yourself from them?
  6. Sales plan – what and how much do you need to sell? Is this realistic?
  7. Investment plan – What investment do you need to make in staff, training, marketing, equipment, and technology
  8. Will this achieve the desired results?
  9. What actions do you need to take (and when) in order to stay on track to meet your goals?

You can do this on your own but, if you’d like more help, then we have a budget workbook and accompanying videos.

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Tax tip

Furnished holiday lets 

Back on 6 March the Conservative Spring Budget announced the FHL (Furnished Holiday Lettings) scheme but failed to included it in the Finance Act. 

On 29 July the new Labour government confirmed that they would proceed with this by publishing a policy paper and draft legislation. This is still not law but likely to become so. The key points are: 

  • Withdrawing capital gains tax relief on gains from trading assets 
  • Withdrawing corporation tax capital allowances  and allowing replacement of domestic items relief 
  • Restricting finance charges and interest to basic rate of income tax 
  • No longer including FHL income when calculating relevant earnings for pension relief 

There is anti-forestalling legislation to prevent advance action between 6 March 2024 and the effective date on 2025. This means that it is probably too late to take any action to mitigate the tax impact but please talk to us if you are affected.