Tag Archives: NZ Business

RETAILING – IT’S NOT DEAD YET!

Posted on May 24, 2012 | Leave a comment

I was reading a newsletter this morning about the massive growth in on-line retailing. Some traditional retailers have seen their sales decline by 40% whilst on-line sales are booming with an increase of 29% in 2011 just for traditional retailers with an on-line option. Currently New Zealanders spend $2.68 billion shopping online annually and this figure will increase to $4.22 billion by 2015 (according to AMP).

This together with the news of the demise of yet another local retailer I use (or used to!) made me think, once again, about the future of traditional retailing. The problem, in many cases, is the attitude shown by many retailers, who just sit back waiting for something to happen and blaming everything and everyone for what has happened. This is not just my view – this was a comment made by a retailer client to me today. So what should retailers be doing?

  • Find a niche. Some traditional retailers are still really successful and often it’s because they have found themselves a niche, perhaps the over-50’s, these looking for quality, or fashion conscious ladies. Study independent retailers who are successful and copy them.

  • Get some decent systems in place. Only a half of the retailers in my local town have a computer in their shop. Many have absolutely no idea whether they are making or losing money or what stock they are carrying, let alone what it cost them. If someone asks you for a deal, wouldn’t it be so much easier if you knew exactly what your margin on that item was so you could drop the price or decide not to, or perhaps meet them halfway but still make a profit?

  • Get out and do some marketing. Build your database, send out newsletters, get on Facebook, hand out some referral vouchers or hold some closed door sales – it’s all very easy and if you’re quiet you’ll have plenty of time on your hands to do this.

  • Concentrate on the overall customer experience. Many retailers and especially their staff are shockingly poor at showing interest, customer service, adding value, and after-sales care.

  • Very importantly, focus and capitalise on the advantages that traditional retailers have over on-line retailing e.g. you can take the old model and all that annoying packaging away, give advice on the best options, visit homes and businesses to see what suits or up-sell.

  • Teach your staff how to sell or fire them they’re no good. Use scripts, role play, develop some tricks – it can be done!

  • Join them! Get yourself an on-line shopping cart. These don’t have to be super expensive, but choose you web-developer with care.

  • Go on the attack. It’s a bit like what’s happening with pubs (such a shame!), when less people go, they have less money to spend, so it looks shabby so even less people go and there’s an ongoing cycle of decline! Keep up with the times, refurbish your premises and keep your stock levels up. A tired-looking shop with no stock is not going to attract anyone.

  • Face facts. If you’re in a marginal location, faced by really stiff competition or in sector which is just history and have no resources left to move or reinvent yourself, perhaps it really is time to throw in the towel.

There will always be a demand for traditional retailers, at least in our lifetimes, so come on retailers, modernise and take affirmative action. There are so many things you’re still better off buying off-line! Your future is in your hands and your hands alone.

If you need help with your business why not join the A+BAC community on Facebook. This is the place where you can get all your business questions answered free, in real time and in a practical way. You can also add your own experience to the pool and start helping fellow business captains.

You can also contact Nick by email.

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LTC’s

Posted on May 3, 2012 | Leave a comment

It feels like Look Through Companies (LTC’s) have been around for a while now but of course they only started to operate a year or so ago. So are they useful and an entity to embrace or a nightmare of complexity as some commentators have been saying?

There are a number of issues with Look Through Companies:

  1. Unlike LAQC’s, profits as well as losses MUST be allocated to shareholders. This may not suit, especially as the personal tax rate could be higher than that for a company.

  2. The allocation of the profits to a shareholder will be treated as the payment of a dividend, which means that the allocation will have to pass the Solvency Test. What happens if it doesn’t?

  3. If there a change in shareholding of the company the shareholder is deemed to have disposed of their underlying share of assets in the LTC at market value (subject to some exceptions) which means that there will be a recovery of depreciation and possibly notional profits on loans or investments.

  4. Again unlike with LAQC’s, the losses that can be offset against shareholder’s income is finite, limited to the amount that the shareholder has at risk. Unfortunately, this is not as simple as it seems and there are a number of complications that arise necessitating the maintenance of an ongoing record of losses utilised on the one hand and on the other, adding together borrowing facilities guaranteed with the shareholder’s advance account to determine the amount at risk.

  5. Supposing the plan was to use a LTC when you were making losses but revoke LTC status when the company turned around and started to make a profit? Unfortunately this is not as straightforward as it used to be since when LTC status is revoked, again the shareholders are deemed to have disposed of their underlying assets in the LTC at market value (and the company is then deemed to have immediately reacquired those assets at market value).

  6. If you want to receive wages or a salary under PAYE from the LTC you will need a written contract of service, which is unwelcome cost and hassle and cuts down on flexibility.

  7. From the ACC point of view, the LTC is tricky, since it depends on whether the shareholder is a “working” or “non-working” owner or a passive investor. A working owner (not one who necessarily works but who is under PAYE) is treated as an employee whilst a non-working owner (no not someone who is lazy but someone who works in the business of the LTC but not under PAYE) is treated as self-employed for ACC purposes. A passive investor who plays no active part in the LTC’s business is not subject to ACC levies. What would you rather be?

Confused and lost already? You’re not alone. Even professionals are complaining about how difficult the LTC rules have been set and think that it’s unrealistic that clients are going to want to pay their advisers to work through all these tricky issues!

If you need down-to-earth and sound practical help with your LTC (or your ex-LAQC) why not join the A+BAC community on Facebook. You’ll be able to get real-time, practical answers to all your questions as well as let others benefit from your experience. A;ternatively, you can contact Nick by email.

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Posted in Accounting, Business

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REDUCING YOUR ACCOUNTING FEES

Posted on March 8, 2012 | Leave a comment

One of the best ways to reduce your accountancy fees is to get some decent accounting software and use it properly. It doesn’t matter that much what brand of software (we accountants are happy with MYOB, Quickbooks, Xero or any other software with a full general ledger) you use, as long as you use it properly. This means:

  • Making sure you reconcile the balance on the bank register to the balance on the bank statement at each month end, NOT the last statement date which is often part-way through the month. If you don’t know how to use the bank reconciliation routine don’t worry, just make sure all the transactions on the bank statements are accurately reflected on the software.
  • Ensure the amounts showing for Accounts Receivable and Payable agree to the balances showing on the general ledger/trial balance for these accounts or at least any difference is very small.
  • Clear out any accounts like undeposited funds or the electronic payment clearing account and reconcile the amounts in accounts for supplier or customer deposits or similar.
  • If you can BEFORE you prepare your GST returns reconcile the amounts recoverable or payable in GST ledger accounts.
  • Your accountant should be adjusting the balances on your accounting software for the balances showing on the Annual Financial statements as otherwise you cannot prepare any interim or regular management accounts which are so useful for managing your business and telling you on a timely basis whether you’re making or losing money.
  • MOST IMPORTANTLY of all you must LOCK the period after you’ve prepared each GST return to the date of the last GST return. It’s so easy to enter transactions in prior periods which makes a mess of the GST and probably means income or expenditure will be omitted from your Annual Financial statements.

Now many accountants more interested in feathering their own nests will tell you that you can’t use accounting software because it’s far too complex and that you’ll never get to grips with it. Well, in rare cases yes, but I find the great majority can if they invest the necessary time and effort. And the outcome? It’s wonderful – a one-stop shop for invoicing, your customer & supplier database, tracking your Accounts Receivables and Payables, time billing, job costing (the list goes on and on here) as well as reducing your accountancy fees!

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Posted in Accounting, Systems

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EFFECTIVE BLOGGING

Posted on January 12, 2012 | Leave a comment

Blogging is one of the most effective yet free – yes FREE – ways of marketing yet few venture into this area. It can position you an expert in your field, build your profile and brand, and draw prospects to your website. Here are a few tips to get started:

  • If you don’t know what to write, don’t worry unduly, just pick on an area you know well, the sort of thing you’re probably discussing regularly with customers or staff. This could be the key frustrations customers suffer when dealing with suppliers in your industry, tips on how to get the best out of your product or service or how the customers can reduce costs or save time etc. Google is a great source of ideas and inspiration.

  • Blog regularly by getting into the habit. I’ve conditioned myself to blog in the same as I’ve conditioned myself to keep fit – if I don’t do it I start to worry and actually feel guilty! The more you do, the easier it becomes.

  • Keep them as short as possible. This isn’t easy and takes practice, but the less you write the easier it will be to read and keeping them short doesn’t mean you are short-changing your readers as writing concisely and to the point will be far more effective and informative.

  • Make your blogs as easy to read as possible without excessive technicalities or jargon as these will just confuse your readers. Youngsters are useful here as they will be able to pick out words they don’t understand. No children or nieces or nephews of 10 -14? Email them to me, I’ll get my younger two to read them through.

  • Write your blog as though you were speaking to a down-to-earth client or customer, not as you would have done whilst you were at school trying to please your English teacher. Not as far as text language maybe, but short easy-to-read sentences, bullets and “chunking”, breaking it down into small easily digestible parts.

  • Try and focus on areas of interest to your readers which may not be the same as yours. Initially, you may have to suck it and see, or look at other blog sites but when you’ve done a few blogs you’ll find that some topics or areas are much more popular than others, so write more on these.

Starting to blog is like going to the gym or for a run on a winter’s night – it’s a scary thought but once you get out there you enjoy it, so don’t delay or prevaricate, just do it! If you need help with your blogging contact Nick on 0800 ASK NICK or email nick@abac.co.nz.

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Posted in Marketing

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MISSION STATEMENTS

Posted on December 15, 2011 | 2 Comments

Does your business have a mission statement? A ‘mission statement’ is a brief statement of the purpose of a business or organisation. Sometimes the mission statement is used as an advertising slogan, but the intention of a genuine mission statement is to keep employees and customers aware of the organisation’s purpose. It can be restricted to goals and objectives, but can also include some or all of the following:

  • Purpose and values of the business

  • Which business the organisation wants to be in (products or services or market) or who are the organisation’s primary customers (stakeholders).

  • What are the responsibilities of the business towards these customers?

  • What are the main objectives that support the business in accomplishing its mission?

As an example, here is the mission statement of the Accountancy + Business Advice Centre:

Our goal is to help as many business owners as we can to improve their businesses, maximise their profit and get the lifestyle they want.

The best way to write your mission statement is to take it bit by bit and break it down into its component parts. Answering these questions will get you started:

  • What does you business do i.e. what is its function, what need does it fulfil?

  • For whom does your business perform that function i.e. who are the stakeholders in the business? (Think about customers, team, owners, suppliers & your social responsibilities)

  • For whom does your business perform that function i.e. who are the stakeholders in the business?

  • How do perform that function in a way that sets you apart from your competitors? (Think about your fundamental guiding principles).

If you need help to write your Mission Statement contact Nick on 0800 ASK NICK or email nick@abac.co.nz.

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BECAUSE OF THE CUSTOMER

Posted on December 8, 2011 | 2 Comments

I was searching through my extensive collection of business and marketing material the other day when I rediscovered this useful ditty about the importance of the customer:

Because of the Customer

Because the customer has a need we have a job to do
Because the customer has a choice we must be the better choice
Because the customer has sensibilities we must be considerate
Because the customer is unique we must be flexible
Because the customer has an urgency we must be quick
Because the customer has high expectations we must excel
Because the customer has influence we have the hope of more customers
Because of the customer we exist!

No idea who came up with this, and Google was no help, but isn’t it true?

Nowadays of course, great customer service is no longer enough, and we must look to add value in as many ways as possible, and work out ways to help our customers help their customers, but given the poor service that’s still so common in so many businesses (despite the recession) perhaps many more business owners & their teams should learn this off by heart!

If you need help with your customer care strategy contact Nick on 0800 ASK NICK or email nick@abac.co.nz. The first thing we’ll get you to complete is our 30 question Customer Care questionnaire and then work with you to discover your customer’s key frustrations. We then design a fully customised customer care strategy for your business, typically incorporating key aspects such as performance standards, focused staff training and customer advisory boards to ensure your business begins to display the characteristics observed in the most successful customer driven companies.

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Posted in Business, Marketing

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RISK REVERSAL

Posted on December 1, 2011 | 1 Comment

When you’re asking a new customer or client to do business with you for the first time they are taking a big risk by placing their trust in you. Now of course, from your perspective they are not, but it’s necessary to put yourself in their shoes and see things from their point of view. Yes, they may be unhappy with their current supplier but often it’s a case of better the devil they know!

Now to increase the chances of getting that new customer or client on board you need to help them by reducing the risk as far as you are able to or by eliminating the risk by you taking it on the chin, by “reversing” the risk onto yourself. After all, you want the business, so why should the customer or client go out on a limb?

One risk-free way for you to achieve this is by third party endorsement as it always helps if someone else can reassure the prospective customer or client that you are reliable and can be trusted. The easiest way here is testimonials from named individuals, as anonymous testimonials can be fabricated. Another good way is some case studies that talk about specific results and clearly demonstrate how you’ve gone beyond the norm to help your customers and clients.

Now since it can also be difficult to prove the bona fides of case studies an even better (but riskier for you) way is to tee up some referees who are prepared to speak to the prospective customer or client and answer their questions about you, your reliability and how you’ve performed in practice. If you’re new in business this could be difficult but otherwise, there’s normally a customer or client or two that you’ve done that special favour for who’ll be prepared to help.

A potentially even riskier but very effective technique is to offer an unconditional money-back guarantee if the customer or client is unhappy with your product or service. This will only work if you’re good at what you do so take care or you could be in difficulty very soon! Yes, you may get the odd time waster with nothing better to do but on the whole I find this works well, both for me and for clients.

Feeling very brave? Some take this a step further, by offering an even larger cash refund if they get it wrong. That may be over the top for you, but if you need help coming up with your risk reversal strategy contact Nick on 0800 ASK NICK or email nick@abac.co.nz.

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Posted in Business, Marketing

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FREE WEBSITE ANYONE?

Posted on November 17, 2011 | 3 Comments

They say only a third of businesses in Hawkes Bay have a website. Given the world we live in today and the importance of the internet and the part it now plays in our lives this is something which amazes me. I’ve heard loads of excuses but come on now, in 10 year’s time those businesses without a website are going to be increasingly marginalised. It doesn’t have to be flash, just a basic one will do to start off with and nowadays, who doesn’t want to check out a business on-line before you use them?

These are the more common excuses and why they don’t stand up:

  • It’s too expensive. Not so, I can introduce you to a web-designer who can do you a basic website for $500 + GST!

  • It’s too technical for me. You don’t need any technical knowledge to get a website up and running, nor even to keep the content updated. Yes, it’s important to choose a website that’s easy to keep up to date but having done so, if you can type (slowly!) you can update your own website.

  • I don’t know what to write on there. What? You can’t say what you do, write about you and your team and quote 6 – 10 reasons why customers should use you and include a Contact Us section? Or include some testimonials, your FAQ or your Point of Difference? If you really can’t do this if you’re a client or become a client of the Accountancy + Business Advice Centre I’ll do it for you!

  • The hosting fees are expensive. Anything but as you can now host websites completely for free! We at the Accountancy + Business Advice Centre have 10 subsidiary web-sites we set up to use all our domain names and these haven’t cost us a cent in hosting fees! One US provider lets you set-up 100, yes, 100 web-sites all for free!

  • All my business walks in the door or comes from referrals. Yes they may do but a website is best way to provide useful information on your business 24/7 in a very cost-effective way accessible to all. You can also provide tips and useful information to position yourself as an expert in your field.

  • I have a Facebook page instead. Well done but a Facebook page will never replace a web-site. Firstly, you’re under the control of Facebook, secondly, it’s likely the popularity of Facebook will wane, thirdly Facebook is akin to renting rather than buying and lastly, Social Media sites should just be one weapon in your marketing armoury.

  • My business is too small. So what? Have a small website!

The reality is that you cannot afford not to have a website! If you need help to set-up a low-cost but effective website contact Nick on 0800 ASK NICK or email nick@abac.co.nz

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Posted in Business, Marketing

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KEEPING YOUR SALES FUNNEL TOPPED UP

Posted on November 10, 2011 | 1 Comment

Whilst many businesses enjoy regular recurring income, many need to be proactively seeking new orders and new customers at all times. In good times you can just sit back and wait for the business to flood in, but not when economic conditions are difficult.

Unfortunately, many business owners had gotten used to the good times and forgotten how to proactively drum up more sales. This year, more and more business owners seem to be acting sooner to ensure the funnel which is their sales pipeline is kept topped up. It’s a funnel because only a small proportion of the prospective customers you have contact with will turn into actual customers and only so many quotes or proposals you give out will be accepted. Here’s a good illustration of a sales funnel:

A Sales funnel is, at the widest, highest point, the collection of hot leads, of which a certain amount will turn into opportunities, then an even smaller amount of quotes and some of those will convert into an actual sale.

The best way to keep your sales funnel topped up is to divide your sales between recurring work and non-recurring work. Then calculate the average non-recurring sale by dividing the total non-recurring sales by the number of non-recurring sales made. Having done that, work out firstly what percentage of quotes or proposals turn into sales and secondly, what percentage of prospective or existing customer contacts (depending how you prospect for sales e.g. by telephone or in person or both) end up giving you the opportunity to quote or make a proposal. Add a margin for error and hey presto, you now know how many prospective or existing customer contacts you need to make in any given period. If you build this into your regular routine your sales funnel will runneth over!

If you need help keeping your sales funnel topped up contact Nick on 0800 ASK NICK or email nick@abac.co.nz.

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CASH COLLECTION

Posted on November 3, 2011 | Leave a comment

A large part of keeping cash flow under control is managing your debtors. In these challenging times businesses will generally take as much time as possible to pay their accounts, after all, why pay interest on an overdraft facility when they can use your cash for free?

Good debtor management starts with a very simple calculation to measure ‘debtor days’. By dividing the month end balance of your debtors by your average daily trading, you get a simple measure that you can monitor on an on-going basis. If the number of days goes up, you know that people are taking longer to pay you, prompting to you to investigate why. If the number of days goes down, you know that you’re becoming more efficient at collecting your debtors.

As a simple example, let’s say a business is turning over $10,000 per day and has a month end debtors balance of $600,000. This would equate to having 60 days trading revenue tied up in receivables. If, over time, you could get this down to say 45 days, the business would have another $150,000 in the bank account rather than tied up in debtors.

So how do businesses get people to pay on time? Here are a few practical points that may help:

• Make payment expectations clear on all your invoices and Terms of
Trade.
• In your Terms of Trade include a time frame within which any queries
relating to your invoice must be raised. It is always frustrating for a
query with your account to only be raised when payment is already
several months overdue!
• Reserve the right to charge interest on all overdue accounts and
specify the rate that will be charged. You should also advise that any
other costs incurred in the collection process will be passed on.
• Send invoices out promptly, preferably at the time of supplying the
goods or services or if invoicing monthly, very shortly after month end.
• Make it as easy to pay you as possible. Many businesses no longer
have chequebooks, so providing your bank details on invoices and
statements is essential. Allowing payment by credit card is also a valid
option, which can have great results, although take into account the
fees that you will incur.
• Make sure that you have a documented collections system and follow
it. A standard process will include a time line of follow-up letters, emails
and phone calls that ultimately lead to interest and collection costs
being added and the account being handed to a collections agency.
• Get tough! If you give someone a final date on which the account will
be handed to a collections agency, actually hand the debt over for
collection if it remains unpaid. Many businesses talk tough but will then
not actually follow through.

As with all things in business, a bit of common sense and compassion also goes a long way and while not ideal sometimes you may have to bend your own rules on collections when a good client or customer is struggling and needs a bit more time than usual to pay. As long as your customers are communicating with you, being honest and making the payments that they have committed to, then be prepared to cut them some slack occasionally to preserve good relationships. However, the moment those commitments are broken or communication stops, it’s time to move quickly to secure payment.

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Posted in Accounting, Business, Finance, Systems

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