Empower Your Business

Accounting is Just the Beginning

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8 Vital Things You Need To Know about Your Business – Each and Every Month

Just how much do you know about your business? No, not about what you sell, or how you make or deliver your products and services, I mean the really important things that determine whether you’re going to make it through to retirement or maybe even successfully selling your business.

These are my top eight favourite things each and every one of us business owners should know about our businesses: Read More

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Simple Business Systems

I’ve said this before (and no doubt I’ll say it again) but I’m always surprised at the lack of simple systems utilised in owner-managed businesses. Using the word “systems” can be off-putting because people immediately think it’s going to be too complex, too costly or too time consuming but a system can be very, very simple. For example, it could be a referral system whereby: Read More

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Tax Pooling – Improve Your Cash Flow by Paying Your Tax Bill

Now you’re probably thinking that the title of this article is a typing error but yes, you most certainly can improve your cash flow by paying your tax, even before it falls due, by using Tax Pooling.  Read More

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7 Tips To Organize Your Small Business Finances

organize_financeBeing organised with your finances is a sure path to success and profitability in business, so here are 7 tips to help you get there:

1. Maintain Adequate Working Capital

One of the problems I see time and time again in business is the lack of adequate working capital. Even a small business can soak up money like a sponge when buying equipment, investing in inventory or funding work-in-progress or Accounts Receivable. If you lack the necessary cash yourself to plough into your business, there are only two other ways to get it: external borrowings or by leaving profits in the business to build up cash reserves, which means keeping your drawings to a manageable level. Don’t struggle on month after month — get your working capital sorted now!

See Full Story Here

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Employer Changes From 1 April 2013

photo credit: http://www.sxc.hu/browse.phtml?f=view&id=253947

If you’re an employer watch out, there are important changes which took place on 1 April 2013.

KiwiSaver Contribution Rate Increase

The minimum contribution rate for employers and employees will increase from 2% to 3% of gross salary or wages from the first pay period starting on or after 1 April 2013. The changes will affect your payroll calculations and the details you enter on your Employer monthly schedule (EMS).

Primary and Secondary Schoolchildren

As part of the Government 2012 Budget, the tax credit for children was repealed from 1 April 2012. This tax credit covered the tax on the first $2,340 of income from employment for employees under 18. If you pay salary/wages or schedular payments to schoolchildren, you must now deduct tax and record their details on your EMS. If your employee or Inland Revenue request you to, you will also need to deduct KiwiSaver employee contributions for existing KiwiSaver members under 18 years of age. You don’t need to make employer contributions.

Employees under 18 are not subject to automatic enrolment.

ML And ML SL Tax Codes Can No Longer Be Used
PAYE should be deducted using the M or M SL rates from 1 April, unless the employee provides a new Tax code declaration (IR 330).

Tax Code Declaration (IR 330).

These have all changed, so throw all the old ones away and order some new ones from the IRD.

Student Loan Repayment Rate Change

The repayment rate for standard student loan deductions will increase from 10 cents to 12 cents.

What This Means for You.

Your old PAYE tables are of no use, so if you’re still in the Dark Ages get some new ones. If you’re using payroll software, this needs updating.
Perhaps it’s time you used an expert to process your payroll, it’s cheaper than you think!

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Is Your Accounting Package Still A Good Fit?

dreamstimefree_40306For the past few years many businesses have “put off” investing in their accounting system in favour of improving other areas such as sales and production efficiency, i.e. areas that ultimately have an impact on their bottom line. Good old Kiwi ingenuity has seen many businesses “tack on” and “patch up” their system to enable them to keep operating without having to go through the expense of an upgrade.

At a basic level upgrades are released to make our lives easier, improve the customer experience or both. So why would you continually turn your back on them?

Without realising it, businesses have increased their administration tasks and become reliant on this “additional work” to function on a day to day basis. Many companies extract their data into Excel to calculate and/or manipulate the figures into a usable form. In some cases this has been simply to undertake essential functions such as allowing for GST at 15% and accounting for foreign currency transactions.

Believe it or not these types of inefficiencies are not only holding you back, they also add up to a hefty dollar amount.

While some businesses still have a hangover from the recession, low interest rates and a more positive business outlook appear to be encouraging others to review their systems and invest in this area. Businesses have also come to realise that their choice is no longer restricted to choosing between an off the shelf accounting package (that may not totally meet their needs) or an expensive custom built accounting system. Systems have evolved over the past five years and can now be tailored to meet a business’ specific needs and it won’t break the bank.

Today business functions are intertwined and reliant on similar information. Most businesses whether big or small realise the efficiencies that can be achieved from a consistent data source. A good operating system should, where possible, integrate data to avoid duplication, inconsistencies and to minimise input errors.

So what are the signs that your business is ready for an upgrade? Here are a few key questions to get the ball rolling:

How easy is it for you to generate your financial reports today?

Are your monthly reports always pushing your reporting deadlines? Are you reliant on a team to combine/manipulate data to enable your reports to be produced? While you may think you are saving money on the upgrade and/or system review, you need to consider the extra resources that you devote to the accounting and finance function.

How much double/triple handing of data is there?

Does your month end process involve pulling data from one system and re-entering it into another? Do you rely on Excel spreadsheets for job-costing/work in progress calculations? You need to consider how much time you or your team is wasting that could be better utilised elsewhere in the business.

Has your business recently gone through an expansion phase?

This may be a growing customer base, expanding into new markets and/or projects or simply an increase in your staff numbers. A small business can get by with a more basic accounting system. However, as your customer base/number of locations and/or projects and employee base grows, there is a greater need for access and sharing of key data.

How do you assess sales, finances, and other business functions to evaluate your performance?

If you rely on information pulled from all different sources your data is bound to be plagued by errors caused by manual entry. Tying up your resources and timeliness is also likely to be an issue.

Is your financial data difficult to audit or unreliable?

You may rely on a few key team members simply because they are the only ones who know how the system works. This leaves you exposed if they go on extended leave or leave the business completely. There may also be the risk of incomplete records or discrepancies as it is unlikely their work has been reviewed before.

It is important to remember that a new and improved accounting system is not much use on its own. You need to ensure that your accounting team has the right level of experience for the role, and that you provide them with training as required.

You may recognise the above signs or have your own growing pains that simply need to be dealt with. If you have identified the symptoms, you can contact us to discuss your options.

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30 Minutes Marketing a Day Keeps the Liquidator Away

Regular readers of this blog know that effective marketing doesn’t have to be expensive, and indeed can be free (click here or here for free marketing techniques) but the other important thing to stress is that marketing can be quick and doesn’t have to be time consuming.

Take, for example:

  • A 30 minute coffee-meeting with a potential referral source. Is this difficult? Who doesn’t like coffee and a chat?

  • Handing out your business cards and telling the recipient why you’re different to the competition

  • Sending out a hand-written thank you card to a customer or a referral source

  • Make a sales follow-up call to a customer who has bought something recently

  • Ask for a referral by handing them a referral voucher – no stress, not being pushy, a piece of cake! Here’s one of mine:

So, either a coffee meeting or at least two of the other marketing activities above please, each and every day. I don’t want to hear any excuses – marketing is quick, easy, fun, and also ensures that the more unpleasant branch of the accountant profession -liquidators- will be making someone else’s life a misery!

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It’s Easy to Buy a Business but not so Easy to Sell One

I still meet far too many business owners who acquired an existing business and paid far too much for it. Carried away by hope and enthusiasm, they typically don’t investigate the business properly beforehand and fail to seek proper and honest professional advice.

After a while they often find themselves struggling in a very competitive environment without sufficient sales to support their financing costs or ever-increasing overheads and more often than not, lacking business experience or finance skills, gradually lose heart and enthusiasm to the point where they just spiral into decline or try and sell on in turn to a new hopeful, always optimistic business buyer.

Now this doesn’t have to be the case.

  • For a start, getting a good honest, accountant to look at the business before it’s bought will sieve out the worst businesses for sale. Don’t take things at face value and never rely on any accounts or figures prepared especially for selling the business.
  • Negotiate some vendor assistance. I’ve seen people buy businesses with no experience in that line of activity and get just a 30 minute hand-over. Come on now, be realistic!
  • Next, prepare some projections as to whether the business will support you and your level of costs. What is the break-even point and is there any leeway between that and existing turnover?
  • Then, way before you go into business, make sure you get some experience in that line of business. If necessary, work for someone else first and learn the ropes.
  • Get to grips with marketing. Read some books, look at what others who are successful are doing and maybe do some training in or get some coaching in marketing. Prepare a marketing plan, a practical plan not all theory. Nowadays, being in business means doing a lot of marketing.
  • And then finally, do some research on, take advice on and get some decent financial systems in place. It’s essential that you can keep track of your performance and know what’s going on in your business.
  • Then, and only then, if it all stacks up, and you are fully prepared and ready to go, should you proceed and buy the business. Once you’ve moved in, borrowed the money from the bank and personally guaranteed the lease it’ll be too late to back out!

One great place to ask questions about business acquisitions and hear about others’ experience is the A+BAC community on Facebook. You’ll et real time, practical answers to all your queries.

If you’re thinking of buying a business, you can also contact Nick for expert advice. Call 0800 ASK NICK or email nick@abac.co.nz.

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Boring Old T&C’s… Or a powerful Marketing Tool?

The other day I was waiting for a prospective client to finish a ‘phone call and as I looked around, I noticed his terms and conditions that he handed out to his customers. Now terms and conditions are pretty negative things and enough to put anyone off, and this client’s was no exception, with a full page of tiny print. On the back of the terms and conditions was just their business name (in big letters), contact details, and a short list of the services provided.

In short, they had made the same mistake that so many make when designing a flyer or an advert:

  • Thinking that their business name is of interest to others
  • Listing out what they do which is always so obvious anyhow – e.g. a plumber who fixes leaks – well I never!
  • No USP (Unique Selling Proposition), no benefits of dealing with them, no third party endorsement, no offers, no inducement to take action
  • No guarantee to reduce the risk of doing business with a new untried supplier
  • No encouragement to refer

Why not turn your tedious terms and conditions into a powerful marketing tool by spelling out your point of difference, the key benefits of doing business with you, confirming you a solution/problem solver (after all, isn’t this what we all want, our problems taken away from us so we can do something we enjoy?) and including some testimonials, an offer or two, a referral voucher and a truly convincing guarantee?

Cost-effective marketing is all about using what you have already to it’s very best advantage, called  leveraging,

or as Jay Abraham (that fabulous US marketing guru) would say “getting everything you can out of all you’ve got” (fantastic book by the way!). So, don’t waste any opportunities and as a bonus, divert attention away from your long, boring and frightening terms and conditions!

If you need help with your T&C’s, why not contact Nick on 0800 ASK NICK or get in touch by email.

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Testimonials

When you ask someone to do business with you they have to take a risk, and sometimes that risk is a bridge too far – better the devil they know, they think. Now one very effective way of lessening that perception of risk is through a third part endorsement. It’s much easier for a prospective customer to believe you are good at what you do if someone else tells them.

There are several ways you can get third party endorsements for your business but one easy way is to get some customer testimonials. Here’s how:

  • Make sure they are named, not anonymous which just aren’t plausible. Ideally, they should be locals with their address or identified by their business.

  • Don’t just make them short one-liners, build a story of how you’ve helped the customer and gone beyond the norm, maybe to solve a particularly tricky problem.

  • They must be enthusiastic, not just matter-of-fact.

  • Think about what your prospective customer is looking for and what problems they have and then look for ways you’ve helped existing customers in those areas.

  • Build a collection of testimonials in a variety of situations and circumstances.

  • Wait until the time is right before you ask. The time to strike is when they are delighted with what you’ve done for them, when they say thank you for doing a great job. You don’t say “Oh it was nothing, it’s all part of the job”, you say “Thank you, I’m so glad you’re pleased, can I have a testimonial and oh yes, by the way, do you know anyone who would also benefit from my services?”.

But how do get your customers to write the type of testimonials you need? Well a minority of customers will be very capable of writing a decent testimonial for you, and will actually do so, but the majority need a bit of help, so what you do is to draft the testimonial for them and then get their approval and permission to use it and mention their name, address or business name. That way, you can stress the important things and the benefits to other customers. So, no more lame excuses, start building your collection of customer testimonials today!

If you need help with your customer testimonials contact Nick on 0800 ASK NICK or email nick@abac.co.nz.