Marlow Associates Blog
http://www.marlow-assoc.com/blog/index.php
Getting the right people
http://www.marlow-assoc.com/blog/index.php?entry=entry080808-165502
Building a good team to support you as you grow a business is an art rather than a science. Once you have run a business for a few years, it is easy to forget what it is like to be an employee. There is no one answer but there are some helpful tips for anyone employing staff:
• Ensure you have a structured way of interviewing people. There is no point finding out that someone can’t do the job once they have been with you for a month. Build up a list of questions that you use in interviews and continually develop and improve it
• Promote from within whenever you can. As long as someone has the ability to do the job, give them the chance. You know what you are getting and it sends out a message to everyone else that those that work hard will be rewarded. Besides, almost two-thirds of appointments to jobs paying over £20,000 do not work.
• Spread your net as wide as possible when looking for employees. An advert at the local job centre will not result in a flood of applications and the ideal employee may be someone with a job already but looking for a better one. Do a deal with a chain of local newspapers to put an advert in the jobs section of all their publications. Employ people you like and who your team will like. You are going to spend a lot of time together and a good atmosphere will help productivity
• Don’t employ your best friend. Good friendships rarely translate into good working relationships and friendships can often be ruined
• Get the legal side right. Use a good solicitor or a cheaper web-based solution like “BeProfessional” to ensure that all your appointment (and dismissal) procedures do not involve you in an appearance at an Industrial Tribunal.
• Keep people informed of successes. Nothing is more de-motivating than not knowing what is going on.
We all know that its hard to get good people but they won’t come and knock your door asking for the job you are looking to fill so you just have to get out there are start looking otherwise you will never build a self sustainable business that relies on other people running it for you and this is the key to success.
Just get in touch if you want discuss this further.
Adam 01509 502141 adam@marlow-assoc.com ]]>Financial wealth check – do you know where you are?
http://www.marlow-assoc.com/blog/index.php?entry=entry080624-141523
Preparing accounts is the most traditional role of a Chartered Accountant. It is also the most misunderstood work we do.
For those clients wanting more from their annual accounts process, we have within our membership of A4G have a range of improve and grow sessions without the accounting jargon that often prevents you from getting a true understanding of your finances.
For example as part of our advisory services we have the financial wealth check module which helps us assess what you and your business are worth and when you will be able to afford to retire.
For the full range of such non accounting advisory services check out the website and follow the A4G logo’s or emai me at adam@marlow-assoc.com
]]>Setting targets
http://www.marlow-assoc.com/blog/index.php?entry=entry080530-121622
Management accounts should not just be about assessing how well you have done. They should also include some form of budgeting facility.
Budgets have had a bad press in recent years. We all know about government bodies desperately throwing money at projects because they have to spend their budgets. They are examples of how budgets can have a detrimental effect but if used properly they can have several positive benefits:
1. They can act as a target for the owners and managers. On this basis they should be achievable so that do not have the effect of de-motivating everyone. 2. They can be used as the basis for profit-sharing bonuses e.g. a percentage of all profits over a certain amount are shared between staff. This can even be done on a departmental basis 3. The act of preparing a budget will force the management team to consider what situations may arise in the year and plan accordingly e.g. staffing issues, capital purchases, cash flow etc.
Costs should be an investment
Many businesses focus too much on cost. Their aim is to get costs as low as possible. This can be counter-productive and leads to decisions that damage the long-term health of a business. Think of costs as an investment. Do they enable the business to earn more than they cost? Many businesses ignore small costs that add nothing to the business and cut back on larger costs that might enable the business to grow.
Key Performance indicators
In preparing budgets you will need to consider certain key performance indicators even though you might not call them that. Examples could be the average profit margin you make on good that you sell or the amount of productive labour against unproductive labour.
If you don’t achieve the overall results that you had hoped for it is important to see where you have failed and sometimes to see it in microscopic detail. Having techniques for measuring your key performance indicators is crucial, remember if you can measure it, you can manage it.
If you feel its now time to take your management accounts a step further then get in touch with us to explore this issue further.
]]>Spotting Trends
http://www.marlow-assoc.com/blog/index.php?entry=entry080509-124822
In the first two stages, each set of annual accounts might be barely recognisable from the previous years. Turnover is increasing as are overheads and new products and services can have dramatic effects not to mention the effects of the occasional bad decision.
Sooner or later though your business will reach stage three – maturity. This is where the real money is to be made. Your customers hopefully trust you and you do not have the costs of an expensive learning curve to go through. Once there, it is up to its managers to keep it there as long as possible. If change is on the horizon and alterations need to be made, it is better to go back to the growth stage than go into decline.
But how do you recognise the warning signs of decline? You might be aware of changes in your industry but within your own business it is possible to be too close and not see problems that have built up over a number of years.
One way is to complete a trend analysis. A trend analysis will look at a set of accounting information over a long period. The trend analysis not only compares statistics from one year against the others but also compares the relationship between certain statistics e.g. growth against margins. Results can be produced in graphical form so that key personnel within the business can understand the issues involved.
This all sounds very nice but what will it tell us? On their own, graphs will sometimes tell you of problem areas such as margins falling or bad debts increasing. It is the consultation process that goes with it that will help you determine the true causes of some of the statistics. Have stock losses arisen in the same period that staff turnover is high?
Analysis does not have to just inward looking, either. For a small extra cost there are a variety of benchmarking reports available in any industry. Benchmarking involves comparing your business against other similar companies. You could compare yourself against the industry generally or just against one particular competitor. Most medium-sized and large companies use benchmarking as one of the main tools in their armour to ensure they stay competitive.
Of course we can provide a 5 or 2 year trend analysis as part of your accounting package – so if this sounds helpful just get in touch with us.
]]>Cash is reality
http://www.marlow-assoc.com/blog/index.php?entry=entry080411-124717
Once again this week I have been reminded of how little planning businesses undertake to ensure success and avoid problems and I am not talking about business plans or strategic plans I am always amazed at how few cashflow forecasts are prepared!
There are better and more accurate ways of producing cash flow forecasts than the back of an envelope with a line drawn down the middle and in one side and out on the other!
We can help you manage your growth and navigate your cash flow problems by undertaking our A4G advice session “cash is reality”. This contains a range of face to face improve and grow sessions to help you identify the real causes of your cash flow problems and the solutions for you.
Every business is different and it is important to recognise that the right answer for someone else might not be the right answer for you
Included in our advice session we focus on cash flow generally, managing debtors, managing stock and work in progress and finding appropriate sources of finance. What’s more if you feel that any particular session is a waste of your time, then you pay us nothing!
For more details of how our advice sessions in our membership of A4G improve and grow sessions can help your business, email me at adam@marlow-assoc.com
]]>What if?
http://www.marlow-assoc.com/blog/index.php?entry=entry080324-111142
I had a couple of clients ask me ‘what if’ questions this week similar to these 2 below.
What if we were to increase our prices by 10%? How much business could we afford to lose before we actually had less profit than before?
What if we gave ourselves a marketing budget of £10,000? How many extra sales would we have to achieve to recoup the extra cost?
There are plenty of “What ifs” in business but how often do you sit back and calculate in detail the financial effects of certain decisions. Most small businesses are run on gut feelings and instinct, all very well with the experience that you have built up over a number of years running a business but yet another example of how the business is completely dependent on you.
What if the business is in trouble and you can’t see how to get yourself out of it? At the end of the day, every solution falls into one of four categories. Make more sales, improve your margins, reduce your overheads or take less money for yourself. We’ll assume for the purposes of this debate that you don’t want to do the last one and you have probably considered the third one so that leaves the first two. Measuring our performance and perhaps benchmarking ourselves against others in the industry are just some of the ways of helping find out what you are doing wrong.
But what if you are doing everything right for the industry you are in but you are just in the wrong industry? Sometimes it takes an outsider to see what those involved in the day to day running of the business are too close to see. A well-known pen manufacturer thought it was in the stationery business until someone pointed out that they were actually in the gift industry. Once they realised that, re-marketing themselves and increasing all their prices was easy.
At the end of the day there is no one that knows more about your business than you. You probably know more about your industry, employees and products than anyone else ever will, so you are the only person that can come up with the answers.
But what if we helped you ask the right questions and include our ideas as part of a structured advice session? Surely this would increase the chances of making this time spent more productive.
Just get in touch if you want to chat about this further.
]]>The Client Care Programme
http://www.marlow-assoc.com/blog/index.php?entry=entry080222-140220
What a week! Once again I have seen that our best source of new clients comes from other accountancy firms themselves, because they are not giving these clients the attention they need and in many cases not even providing the basic services expected.
So what can you expect from us? There are a number of things that we believe in strongly. We believe that the test of a professional adviser is not what they know but how they apply that knowledge to it. To this end we have developed a client care programme that starts from the day you join us and includes the following features:
• Obtaining as much relevant information about your business and tax affairs as possible to ensure we are able to provide you with the best service we can. • If you wish, speaking to other adviser such as your financial adviser, bookkeeper, computer consultant, bank manager or solicitor in order that you do not receive conflicting advice. • Assessing the risk of you and your business getting a tax enquiry. • Assessing the adequacy of your accounting records to enable us to give you a fixed price for the services you need. • Considering the areas of your business that require the most help from outside advisors.
Clients that change to us are likely to be our clients for many years to come. We believe that the client care programme is just the start.
Just get in touch if this sounds good to you.
]]>Force for good or a necessary evil?
http://www.marlow-assoc.com/blog/index.php?entry=entry080204-151753
Traditionally accountants have supplied what we call compliance services. This is the work that you have to have done, the necessary evil bit. For most businesses this will include preparation of accounts and tax returns. It might include an annual audit or end of year PAYE returns.
The role of the accountant is changing
Undoubtedly, in your business you feel that it is tougher than it was ten years ago. This is known as progress!
In any industry, one company finds themselves a competitive edge, something that makes them stand out from the rest. They then exploit that edge to get new customers and sell new services and products. Eventually, others in their industry are forced to follow suit. Someone else in the industry then comes along with a competitive advantage of their own.
The accountancy industry is no different in that respect. Many businesses want someone that provides advice that helps their business improve and grow. The accountant of the future will provide fewer compliance services and will be helping to give their clients the edge that they need.
Good communication is crucial
Whatever services the accountant is providing, good communication is vital. We believe that the true test of any professional adviser is not what they know but how they use that knowledge. Knowledge that cannot be communicated in the right way to our clients is useless. You have enough to worry about with all the other problems running a business involves without wasting time trying to interpret what we are telling you.
So how do we deliver these benefits to you? A big help is having a structured way of providing this help. In this way, tried and tested business practices can be applied to clients old and new. Later in these blog entries, we will show how our membership of the A4G Solutions and RAN ONE systems can help in this area. ]]>Fixed monthly fees – no more blank cheques for accountancy
http://www.marlow-assoc.com/blog/index.php?entry=entry080119-145635
We have made a decision to abolish that kind of billing where you have a good quality bookkeeping system that has bank reconciliations and has control accounts that are balanced monthly. That’s why we have now introduced the Fixed Price Agreement. Here’s how it works:
• At our first meeting, the main thing we will do is listen. We need to know what keeps you awake at night and what you want from the business. • One we have listened we will have a good idea about what we can do for you. We will prepare a proposal for a range of services (including unlimited telephone calls) for a fixed monthly fee • We will listen again to make sure we have got it right and change it if necessary
If you subsequently need other services, we will provide you with costs in advance and if appropriate adjust your monthly standing order to cover the cost.
However this pricing technique is not possible where your records are kept manually and are not reconciled or balanced monthly as we can’t be sure what can of worms will crawl out of your records. Therefore if you want to get your bookkeeping in order we have several options for you to systemise this task.
Just get in touch with us to discuss this and to tailor a solution to your individual requirements including the chance to use MORE - our own software which we supply free of charge whilst you are a client of ours.
]]>Turnover is vanity, profit is sanity but cash is reality
http://www.marlow-assoc.com/blog/index.php?entry=entry080103-180715
No matter how successful your latest sales push has been or how much profit you have made, nothing brings you down as effectively as a cash flow crisis. To avoid having one, cash flow forecasts are crucial but once you have identified an impending cash flow problem, what do you do next?
Well, the important thing is to consider the sources of finance available to you. Most businesses immediately go to their bank seeking an increased overdraft. Like the man who will only lend you an umbrella when the sun is shining the bank may well refuse the facility based on credit scoring criteria assessed centrally. So what next? Change banks? Unfortunately, this is unlikely to work unless you have been saddled with a manager that did not understand your requirements. There are good managers out there but unfortunately, they might not have any discretion in lending (especially to new customers) and then you will find you are back to the credit-scoring approach again.
There are better alternatives though and you need to consider which is best for you. First of all, consider what assets the increased finance will actually be financing. If it is debtors then you should consider invoice finance. Effectively, the a factoring company is lending money secured on your debtors and if you go bust they will get paid from the collection of those debtors. Factoring sometimes has a poor reputation but perhaps this is because some of those that go into factoring do so as a last resort. With factoring, your customers pay their money to the factoring company. An alternative to this is invoice discounting, which works on the same principal but allows you to keep control of your sales ledger.
Asset purchases should be financed by one of a variety of lease or hire purchase contracts. Shop around though to find a lender that understands the nature of the asset you are buying. The more they understand your industry the more competitive they will be on interest rates. Even stock can be financed separately with a number of specialist lenders springing up.
There are now even more alternative ways to access more working capital and we can assist you with identifying your options and indeed approaching these finance providers on your behalf.
Just get in touch if you need to discuss this matter further.