Minerva Accountants Bristol and Somerset
Fully digital Xero accountants taking the hassle out of your business
This is Gandalf’s response in Tolkien’s ring trilogy when he is asked the way to the evil land of Mordor.
As with any challenge Gandalf has three things
Do you know where your business is going? How will you get there? What and who will you need to overcome obstacles along the way?
No, I’m not talking about sexual harassment but about your admin processes. How often do you open an email or look at a task more than once? How many of those would take less than 2 minutes to complete?
Wherever possible I try to handle small tasks just once.
When I receive an invoice or receipt I scan/forward/upload it to Xero immediately so that my bookkeeping is taken care of with no bother. As we have reasonable cashflow I also make payment immediately so that I don’t need to look at the invoice again, this also ties in with my value of looking after small businesses and their owners by paying promptly.
The same goes for emails. Anything that will take less than 2 minutes is done immediately eg a quick answer or forwarding to the right person to complete the task or creating a task to complete later
How do you minimise your admin?
If you’ve been reading these tips for any length of time you’ll know that I am a great fan of celebrating our successes so that these positive memories remain with us to get us through some of our tougher days.
Well, this year, ICB (The Institute of Certified Bookkeepers) have been celebrating their 25th birthday.
They kicked off the celebrations at their annual dinner where they made me, and a number of other more famous people, Companions of the ICB to recognise our support of the bookkeeping profession (I’m almost as fond of good bookkeepers as I am of a decent cup of tea).
Bookkeepers are the Cinderellas of the accounting world. They do all the hard work that makes us accountants look good. With good bookkeeping acting as a strong foundation we get to do the fancy bits like fairy godmothers producing useful information to help businesses to grow and their owners to achieve their dreams. So it seems only right that they should go to the ball or, in this case, a reception at the palace.
Last week Garry and June Carter, the Founders of ICB invited me to join them at a special reception held at St James’s Palace by kind permission of Her Majesty The Queen, and in the presence of ICB Royal Patron His Royal Highness Price Michael of Kent.
What a splendid way to celebrate their anniversary and here’s to many more.
This week I have been up in Scotland speaking about social media and how small businesses can use it to punch above their weight. It’s also a great way for introverts to network.
Here are some of the actions that I suggested:
Most small businesses fail because they run out of cash. It caught out a lot of people who couldn’t cope while they waited for covid funding came through. Hopefully we’ll never have to manage a global crisis of that magnitude again but there are many things that might go wrong for individuals. I’ll talk about business continuity planning separately as I just want to consider your bank balance today.
I recommend reading the first half of Profit First by Mike Michalowicz and I think I’ve written about it before. There are some good principles and the remaining chapters just go into more detail
I have a Starling account which comes with savings spaces and I do monthly management accounts on Xero so I try to ensure that I have the following saved:
I usually pay my suppliers immediately because, as a small business, it reduces my admin to only deal with each transaction once. You should ensure that you have enough funds to pay your suppliers on or before the due date. A business is insolvent if it can not pay its debts on time.
I also use a Starling account for my personal finances and I use my savings spaces for:
It’s taken a long time to build up this financial security so don’t worry if you’re not there yet but, if you’d like a hand with making your business run more profitably, please give me a shout.
It’s a common fear but your existing clients will be less price sensitive if you are doing a good job.
Have a look at this example (numbers rounded for simplicity) of how many clients you can afford to lose without impacting your profit:
Before
• You have 100 clients paying £1,000 each so turnover of £100,000
• You make 50% margin so profit of £50,000
After
• Della comes along and tells you to increase your prices (see the last two weeks for how and why you should do this) by 10%
• You now have 100 clients paying £1,100 each so turnover of £110,000
• Your margin is now 54.5% so profit of £60,000 ie a gain of £10,000 because all your pricing increase is profit
But
• Some of your clients aren’t happy and 10% decide to leave
• You now have 90 clients paying £1,100 each so turnover has fallen slightly to £99,000
• But your 54.5% margin means that you are still making profit of around £54,000 so you are earning £4,000 more for only 90% of the work. Possible even less work because the price sensitive clients are usually those who are most demanding and often a pain to deal with.
In fact
• In this example you can afford to lose up to 16% of your clients and still make slightly more profit
• 84 clients paying £1,100 gives turnover of £92,400 and profit of £50,400 ie £400 more than at the start but for 84% of the work
Last week I talked about WHY you need to increase your prices but, less talked about is HOW you go about doing it.
It’s a lot easier to talk about in theory than it is to do in practice.
“Our new prices are …”
“We do not offer discounts”
Also prepare responses to any other potential objections so that you don’t need to think on your feet quite so much.
A lot of business owners avoid increasing their prices, either because they’re worried about losing clients or because they don’t know how to go about it. Even when they know that they need to increase their prices it is too easy to procrastinate (I’m the queen of procrastination, I have all the excuses)
I’ll cover the ‘how’ in separate tips but today I want to talk about why.
We all started our business for a reason which broadly come into one of three areas:
• Profitability
• Build something valuable to sell at retirement
• Better work – life balance
All of these will benefit from having better prices allowing you to earn more money, increase the value of your business, or to earn more in limited time.
But the real benefit to our clients is that we will have time to provide a quality service. To do things properly and not cut corners. And to run a business that will still be around to help them in future years.
When we provide a quality service our clients benefit, they stay with us, and they refer other people to us. It’s a virtuous circle because everybody wins.
To create the business you want you need to charge the right prices.
I’m the first person to remind you that you need to work ON your business as well as IN it and I will only take on coaching clients who agree to commit half a day per week to working on their business, but I’m a business owner too and I know how hard that can be to make the time.
We’re always torn between things that earn money now and things that will earn money later such as marketing and business improvements. Not to mention that we’d like to spend some time on the things we enjoy.
I’ve written before about my default diary which includes time for marketing and my own business and personal development. I then allocate particular tasks to those slots. But if you truly want to improve your business then you need to learn to delegate and think systematically.
I love lazy marketing when I use one piece of content in different ways. I also know that my strength is in writing/recording the content and then my wonderful VA tidies it up and distributes it across multiple channels. Whether you’re reading this in our Top Tips e-news or a blog or on social media then she is the one who has put it there (with the help of some software).
My job is to prioritise getting the content out each and every week. When I tried to do the whole job myself it took four times as long so I only got around to it about once a month, maybe less.
Look at everything you do, maybe keep a rough timesheet for a week or month, then go through the list with a highlighter to see what could be delegated to the right person. Then find that right person.
Your priority should be the things that only YOU can do.
If you’re an accountant, you can find somebody else to do the accounts themselves and some of the marketing (I write a monthly content pack for accountants who don’t want to do it themselves) so that you can focus on being the face of your business. If you’d rather be the one doing the accounts, then find somebody else to manage your business. Don’t think that you have to be the MD just because you’re the majority shareholder.
To create the business you want you need to be clear on your priorities.
I don’t know about you but I use social media for networking rather than selling. Like face to face networking I like to take my time to get to know somebody and find out what interests we have in common, exchange a little bit of information about our respective businesses, and to see whether we actually like each other. I’ll then arrange to meet for a coffee if they’re nearby or if we’re going to be at the same business event.
The other form of networking I’ve been doing recently is internet dating and, rightly or wrongly, I follow the same sort of format. I get to know somebody online before meeting up to see whether we get along in real life.
But both forms of networking have pushy people.
Linked In has the annoying people who connect with you only to try and sell you something, or to persuade you to give up your valuable time for a “free” software demo (hint: my time is a limited resource so it has a value). The online dating arena is full of people wanting to promote their “assets” by sending photos or wanting sex before you’ve even met for that first coffee.
Whether in business or dating, timing is everything. Please take your time to get to know people and don’t assume that people want to see the whole package before they have got to know you. A good relationship is worth investing a bit of time up front.