Is your business struggling to make a decent profit?

January 11, 2022 in Accounting, App Stack, digital marketing

Is your business struggling to make a decent profit?

Here are six little known profit holes:

With the economy gearing up, inflationary pressure on prices and supply issues pushing up the cost of materials, there has never been a more essential time to take a good look at your overheads and cost of sales. Then, add into the mix the rising cost of labour and transport costs and this exercise to examine your cost base may be the difference between your business having a good year or going under in the next. This article will look at the 6 most common profit holes that many businesses may have.

Pricing: Has it kept up with your costs?

It’s been a difficult year, I hear you say. Are you in your head thinking that your customers and clients can’t swallow an increase? Well, think again – this is often the small voice of doubt in our minds. If Starbucks and Costa Coffee can afford to still charge eye-watering amounts for a slice of cake and a coffee throughout the pandemic, then you can look at your pricing.

Often, the biggest profit hole we see with our clients is around a poor pricing strategy. Such as:

  • Are your sales team discounting too much in order to make the sale? Particularly for wholesale or bulk orders?
  • Have you kept your prices static whilst your costs have increased?
  • Are your prices in line with your cost base now, rather than when you were a smaller business. For example, if your prices have not changed since you ran your business from the kitchen table, then it’s time to relook at your pricing. (And yes, we can help you with this, if needed.)

Do you have a revolving door of employees?

Hiring new staff members is expensive; recruitment agency costs, training costs and senior management time spent hiring and training. Losing good employees is even more expensive – both in terms of opportunity cost and also the hit on morale when a good person leaves. If you do have an employee turnover problem, it’s time to take a good look at how to increase the levels of employee engagement in your business. Being very blunt here, you might like to look into the mirror to see how you may be part of the problem.

Software costs: Have you had a good look to see what you’re really using?

Those £15 a month, per user type subscriptions really do add up over time. How many user licences are you still paying for but don’t actually need? How many of those pieces of software that you decided to try out are you actually using? If you used all the features of your core software, how many other licences or subscriptions could you ditch? You may find that a good look at your software stack could yield a large amount of ‘money down the back of the sofa’ each month.

Suppliers: Are they taking the proverbial?

We’ve seen this in our business too. It is where we’ve worked with a supplier for years. Both we and they have got comfortable and complacency sets in. This cosiness was hiding the fact that we were not getting the service we required. Even worse, the prices we were paying were now out of step with the marketplace. Inertia and a desire to avoid conflict were stopping us from having a ‘state of the nation type’ conversation with the supplier.

In our experience, the first place to look is what you’re spending with marketing suppliers. Then your telephone and internet suppliers. What are they really delivering? Do they need a shakeup? Our advice to you is: if this resonates with you, have that conversation!

Not using automation (particularly in your financial processes)

The cloud revolution, which we keep harping on about, has been a game-changer for not just accountants. The digital tools out there will help your business cut out so much physical paperwork and manual entry. For example, if you are a small cafe or pub you can now get great phone apps that will allow customers to place their orders from the table. Thus, improving the efficiency of your operation and waiting staff.

Using bank rules, email rules and other types of automation in conjunction with software such as Dext (the new name for Receipt Bank) can reduce the time it takes to do your books or manage staff expenses. Why not have a chat with us to see where using apps and cloud-based software can take the grind out of your financial processes and systems? 

Doing it yourself

How long does it take you to do stuff which should be outsourced or done by others in your business? This ‘doing it yourself’, particularly when it comes to things like bookkeeping or VAT returns, is often a false economy. Your time is much more valuable delighting customers and clients and running your business than puzzling over whether you can or can not claim VAT on your company car expenditure or that coffee with a client.

Using the right people and suppliers to free you up to do what you’re best at is often a great way to generate more profit. It goes without saying that we are always happy to talk about whether we are a good home for your bookkeeping and other financial processes.

Changing accountants is easier than you think

November 29, 2021 in Accounting

 A good accountant is worth their weight in gold. But what if you’re not happy with your current one?

It’s understandable that some business owners don’t want to go through the hassle of switching accountants but it can be a huge mistake in the long run. If you’re unhappy with your current level of service, here are four steps to take to switch accountants. it’s not as difficult as you think!

Four steps to changing your accountant:

1. Find an accountant that you like!

To switch accountants, to one that will make a far more positive impact on your business, you first need to find one that you like and who will satisfy your needs. To help you in your search, think about why you want to change accountant in the first place.

* Are you unhappy with the level of service?
* Is your accountant not being proactive enough?
* Have you outgrown your accountant (i.e. they don’t understand or can’t offer all of the services you need)?
* Have they outgrown you (i.e. you never speak to the same person)?
* Do you want more communication and availability?
* Are you questioning whether you’re getting value for money?

Whatever your reasons for wanting to change, keep these front of mind in your search. When comparing accountants, make sure that they provide all the specialist services you require, that they

Understand your goals and needs and that their client testimonials back this up.

2. Inform your current accountant

Once you have found someone more suited to your business and needs, you need to notify your current accountant that you will be leaving. Before you inform them, read through your original letter of engagement to check if there is a notice period before leaving. Once you know this, you can then notify them that you will be leaving and that your new accountant will be in touch to request clearance and organise the transfer of key documents.

**This is all you have to do on your end.** Once You’ve notified them, your new accountant will send a letter of professional clearance and take care of all the formalities of disengaging with minimal input needed from you.

3. Register with your new accountant

You’ve done this part before and it’s exactly the same!

As with any new accountant, at the beginning of a new relationship, a letter of engagement will be drawn up. Here, the expectations of each party will be outlined together with stipulated fees and the level of service. Once this has been signed and returned, your accountant will then request authorisation from HMRC to act on your behalf.

4. Monitor your ongoing relationship

You’ve just taken an important step for the sake of your business and financial future, so make sure you monitor the performance and progress of your new arrangement regularly.

The best relationships are based on communication and trust, so keep in contact with your accountant frequently. Ask questions if you have any concerns or queries and make sure you communicate your goals to them. A great accountant will be proactive in helping you achieve these.

Don’t let fear of effort hold you back!

Hopefully, now you can see that switching accountants really isn’t that hard. Yes, it takes some effort on your part but it can pay you dividends if you find the right accountant for you and your business.

If you’re unhappy with your level of service or you feel like you’re not getting value for your money with your current accountant, do something about it! You could do so much more with your finances and the future of your business if you just have the right person to support you.

MTD ITSA delayed until 2024

September 28, 2021 in Accounting, Small Business, Tax

MTD ITSA delayed until 2024

Making tax digital for income tax self-assessment (MTD ITSA) was due to go live in April 2023.  Last week, the Government announced that, having recognised the challenges faced by UK businesses during the last two years and after listening to stakeholder feedback, MTD ITSA would go live in April 2024, 12 months later than planned.

From April 2024, MTD ITSA will be mandatory for businesses and landlords with an income over £10,000 per annum (That’s turnover or gross rent receipts of £10,000 or more, not profit).  Pilot schemes are already underway and will be gradually expanded in the lead up to tax year 2024-2025.

The full news release is available from HMRC online.

If you think this might effect you and you would like to talk to us, pick up the phone or give us your details and we’ll contact you