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Did you get a holiday away from your business?

January 25, 2012

As a business owner myself I have just had my first 2 week holiday.

Most small business owners have locked themselves into a situation of never being able to have a holiday or take any time away from their business.  If they do have time away from their business, a lot of holiday time is consumed by phone calls to and from the business, checking on the business and fielding questions from their employees.

It is very hard, especially with today’s technology and the use of smartphones for email, texting and being contactable by telephone virtually anywhere and at anytime.

So did I enjoy my holiday? Yes I did. was I constantly interrupted while I was away? No I wasn’t.

Here are some of my tips for how to have a break from your business without your business breaking down.

  • Systemise your business processes before you go away, and make sure they are working effectively. You can’t achieve this the week before you go away. Some systems can be documented easily, but others may be more complicated and take more time to design, implement and review.
    In simple terms you should have a system or at the very least easily found instructions on what we do, what we use to do it (and where to find it), when it has to be done by, and who does it.
  • Effective delegation – again it is best not to leave this until the last-minute. Let your team know:
    • what they need to do
    • when they can and should do it
    • what level and type of decisions they have authority to make
    • for what types of issues they should contact you
    • what is the best time and method to contact you and what timeframe they can expect a response
    • what kind of information or report you require at the end of the day or week
  • Choose a specific time of day or days when you will check emails (and let your team know that is when you will be checking).Determine in advance what type of emails you will respond to and only respond to those emails. Your customers and clients should know you are away from the office as all email programs should have an automatic ” out of office” reply which you can use to advise people you are away, when you will be back, who they should contact if they need assistance before you get back.Remember not everything your team thinks is urgent will actually be urgent or important!If you tell your team or your customers that you are available all of the time, they will expect that you will be available for them any time.

Keep in mind that the point of a holiday is to have a break. to recharge, spend time with family.

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Many business initiatives fail because of lack of committment

December 9, 2011

“Give it your all”. “I want a 110% of your effort”. These are common instructions given to athletes before a game.

When I was a kid playing rugby league I was told to always make sure that I was committed fully to making a tackle and not to go in half-hearted. If I wasn’t committed, I could guarantee that the guy I was trying to tackle would be fully committed and I the result would be that I got smashed.

A cricket shot that is neither attack nor defence often results in a soft dismissal; a half-hearted tennis shot often results in the ball going into the net or out.

In the same way many business initiatives fail because the owner or team members are not committed to it.  Their effort is half-hearted. In some cases they give merely a token effort so that they can say they tried it but it didn’t work so lets keep going the same way as before.

The outcome of a half-hearted effort is usually a reduction in quality of the product or service being provided and can quite  easily result in a damage to the product or business reputation. In these situations to not try something new may have been a better result. But then if you keep doing what you have always been doing, your competitors will continue to develop and gain advantages over you.

What causes a half-hearted effort? Some factors are:

  • lack of a vision or goal
  • actions not aligned to the goal
  • failure to explain why the action is necessary to achieve the goal
  • failure to get the team on board and supporting the initiative
  • having the wrong team

All of these factors are symptoms of not having a clearly defined goal. Without a clearly defined goal there is no strategic plan. Without a strategic plan, there is no action plan which specifically outlines what is going to be done, by whom and when.

Without specific goals for your business  it is unlikely to reach any great level unless you catch  the crest of the wave for the next big thing. It will just keep plotting along being pushed around by economic and seasonal conditions.  There will be no direction for your effort, and without a focus for your effort, it won’t be your best.

The holiday season is traditionally a time when people reassess their goals. This year, do yourself and your business a favour by writing down 3 specific goals you would like to achieve, or 3 things you would like to be able to do if you were not constrained by your business profits and demands.

Then make an appointment to meet with your business advisor to commit these goals to a strategic plan for you and your business. That way you will able to focus your efforts on the things that are really important in order to achieve your goals. 2012 will be a year of purpose and direction.

With committment to your goals you will achieve far greater results.

Paul Sweeney is a Chartered Accountant with many years of experience advising small and medium business on a broad range of accounting and taxation matters working with clients in many industries.

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You’re only as good as your last effort

August 8, 2011

Everyday I drive past a fitness centre which proudly displays that it won the best small business award for the region in 2003.  It is now 2011. So I wonder what has happened since then? Why aren’t they displaying the 2010 small business award winner? Why haven’t they won the award since 2003?

Is it because their service has deteriorated? Have they had a change of employees? Do they believe they got everything right in 2003 so nothing needs to change? Is there new competition? Or have their competitors improved so much more and are offering a better product or solution to their customers?

It could be all of these reasons.

Recently we cancelled our membership to an organisation that provided software and services. This organisation had an exceptional level of service. Both the product they supplied and the manner in which it was supplier were high quality. Sadly over time the level of service deteriorated.  There were no enhancements to their products. New suppliers entered this market and started to supply more modern and easier to use alternatives. So we have had to end this relationship.

The point is that just because the way you do things used to be the “best practice” or cutting edge, it probably isn’t still the case. Customers expectations change over time particularly with the rapid changes in technology and what you can now do.

“Even if you are on the right track, if you just sit there you will get run over.” Will Rogers

So what do your customers think? Do you know what they expect from you? If you are still running your business and offering the same products as you did in 2003 there is  a very strong chance it won’t be good enough for your customer in 2011.

If a customer is not satisfied, if you have not met their expectations, you might be lucky and get a second chance. But with the level of competition today you probably won’t. Most customers won’t tell you they are dissatisfied. They will just take their business elsewhere.

One way to grow your business and to increase its profitability is to increase the number of customers. If you are losing customers your profits will reduce and your business will reduce. Any trend resulting in a reduction of customers needs to be corrected quickly.

So how good was your last effort? Try and answer this from the customer’s perspective. If there were things that you would not be happy about as the customer you can be sure that your customers would also not be happy.

  • Was the product available when the customer wanted to buy?
  • Was it easy to buy from you?
  • Were there any problems with delivery?
  • Was the transaction a pleasant experience?
  • Was your customers needs met?

One way to find out what your customers really expect to conduct a “customer advisory board”.  This is best done by an independent consultant or your accountant to find out what your customers expect, would like and how well you are meeting their expectations in terms of your product and your service.

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Can you access your financial information anywhere? Anytime?

June 30, 2011

Accurate and timely financial statements are critical for business success because the quality of the decisions you make is totally dependant upon the quality of the information you rely on.

If you can’t access up to date and accurate financial reports from anywhere and at anytime then you have a problem.

As a small business owner you should be able to know exactly the financial health of your business at any point in time. Your ability to make the best decisions for your business is severely reduced if you don’t have access to accurate financial reports when you need them.

Why order more stock when your stock turnover has slowed. Or, why keep extending credit to a customer when they haven’t paid for 90 days?

If you don’t have access to up to date and accurate reports you might just do these things. I’m sure you will agree that this is not good for your business.

I’ve said before that most traditional small business accounting systems prevent the small business owner from gaining access to their financial information.  This is because the information is locked on a desktop computer in the office. This is usually not the small business owners computer, but one of their employees. The small business owner can’t access it because it is not a networked version of the software because you get charged extra for that.  That employee usually doesn’t have the time to keep the accounts up to date because they are too busy doing other things.

By the time the employee prints the monthly reports, they are out of date.

What I love about cloud based accounting packages like Xero is that the data is up to date. Reports can be accessed by the small business owner via secure login from the internet or smart phone, from anywhere in the world and at anytime they please.

This gives you, the owner of your business, control because you know what your business is doing and what its financial health is. When you add that to the skills and advice of a qualified accountant and business advisor you are in a great business to really improve your business financial performance.

I love the dashboard in Xero. When you login you instantly see your business cash position, how much your customers owe you and how quickly you are getting paid, what you owe your suppliers and a snapshot of the key financial accounts for your business. This information is vital for improving your cash flow and profitability.

If your financial information is locked up in old-fashioned desktop accounting software I strongly suggest you consider the cloud alternative.

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What should your small business record keeping system look like

May 5, 2011

It is critical for any business owner to know how their business is performing at any point in time. Effective decisions can’t be made if the information they are based upon is inaccurate or out of date.

Previously I explained some of the reasons why receptionists or untrained employees should not be responsible for the business accounting records.

So how with today’s technology can we achieve a better record keeping system which is:

  • complete,
  • accurate,
  • efficient,
  • accessible,
  • timely,
  • meaningful, and
  • gives the small business owner control and certainty over their financial records.

To obtain a complete and accurate system we need to avoid data entry errors. Most accounting errors come from data being entered incorrectly, entered to the wrong account, or not entered at all. Whenever data is manually entered there is a high chance that an error will be made. We can reduce this risk by eliminating as much manual data entry as possible.

The first way to achieve this is to use an accounting system that manually imports bank statement data direct from the bank. By doing this we can ensure that all bank transactions are recorded accurately. The dates and amounts are correct as well as descriptions. Because the descriptions are also imported much of the data entry time can be saved because you don’t need to manually enter the details. This time saving is a bonus for any small business.

Some modern accounting systems will let you set up data entry rules to automatically code bank statement data. This is particularly helpful where you have the same types of transactions regularly, such as telephone, light & power, motor vehicle, and any kind of weekly or monthly payment.

By setting effective coding rules, you can ensure that transactions are recorded against the correct revenue, expenses or balance sheet item. These rules can reduce the risk that transactions are recorded against the wrong expenses item. Again by using rules to automatically code transactions time is saved because the need for data entry is reduced.

A second area where data entry errors or omissions occur is where information from another system needs to be recorded. An example would be a retailers point of sales system. Many small business don’t use a point of sale system that integrates effectively with their accounting system. This means data has to be manually recorded. And whenever you have to manually record information you increase both the time required and the risk of transposing some of the data incorrectly.

A business point of sale, payroll, inventory or job costing system should be able to integrate seamlessly with your accounting system. Transactions from your other business systems should be easily matched to bank statement transactions. Remember, whenever you use a manual process to enter data you increase the risk that the information will not be accurate or complete.

Does your current accounting system:

  • Enable you to have your bank statement transaction data automatically entered?
  • Allow you to set up rules to automatically record recurring transactions?
  • Import seamlessly with other business systems?

 
If not why not?

In part 2 of this discussion I will talk about accessibility.

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Should your receptionist be your bookkeeper?

April 7, 2011

In the majority of cases the answer will be a resounding no! Your receptionist should not be your bookkeper.

Unfortunately the role of bookkeeper in small business is often thrust upon the receptionist or office assistant or the business owners spouse.

This results in an unsatisfactory outcome for many of these reasons:

  • They often don’t want to do it – it’s not in the job description that they signed up for.
  • They have no training in accounting or bookkeeping.
  • They do not have enough time to do all their normal tasks plus do the bookkeeping – so the bookkeeping usually gets put off until the external accountant starts bugging them and the tax returns are finally due.
  • They are not allowed to ask the accountant for help (because it costs too much) and the support plan for the software was also pricey.
  • Most accounting packages used by small business only provide 1 licence and it is normally installed on the receptionists computer.
  • When the business owner wants reports they can’t get them because the receptionist went home hours ago and they don’t know how to open or use the software.
  • The files have to be exported and sent to the accountant who makes adjustments and either sends the updated file back or sends adjusting journals. But because invoices had to be done while the accountant works on the file the adjustments made by the accountant don’t always make it into the working copy.
  • The computers hard drive gets corrupted and no backup has been taken.
  • Everything has to be manually entered.

As a result small businesses often have incomplete, incorrect, inaccessible and meaningless financial records.

Surely with today’s technology there has got to be a better way which is complete, accurate, efficient, accessible, timely and meaningful giving the small business owner control and certainty over their financial records.

Thankfully there is. In my next post I’ll discuss my “ideal small business record keeping system”.

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How much profit do you want to make?

March 7, 2011

Surprisingly this is one of the questions that small business owners find hardest to answer.

Yes we all want to make more profit. But just how much profit do you want or need?

A vague goal of how much profit isn’t helpful when trying to formulate your profit improvement strategies for your business. How do you know if you have been successful? Could you have achieved more?

When you set a specific profit goal it is far easier to determine the steps you need to take to achieve that goal. Knowing what your target is will enable you to set milestones for each month or quarter of the year so that you can determine if you are on the right track.

So how much profit do you want to make?

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