A leading Manchester accountant is issuing a 10-Point plan for small businesses to help ensure they enjoy a happy and prosperous 2008.Umar Memon a partner at Jack Ross chartered accountants, one of the oldest established firms in Manchester has spent almost two decades working with small firms. During that time he has come across a number of common problems that can hold businesses back.“I’ve seen lots of businesses struggle and though each case is very different there are common themes which we come across all the time. There are simple issues that when addressed can make a massive difference.”
Here Umar looks at each issue and suggests solutions for troubled bosses.
1. Cash flow: Not working out what your overheads are properly, pricing wrong and bad credit control can all lead to cash flow problems and a lack of profit. Take payments up front and chase money before it is due.
2. Admin: In small businesses the admin work often gets pushed to the side, which means invoices are not sent out quickly enough and VAT returns are not done on time which can lead to heavy penalties. These are basics. They need to be kept on top of so you can spend more of your time making sales rather than dealing with a backlog of unopened mail!
3. Pricing: Few small businesses can compete with the big guns on price — so don’t try to. You can still offer good value for money by providing a great service. Ask yourself if a customer is only with you because you are the cheapest do you really want that type of customer?
4. Marketing: Marketing is a skill in itself. Networking events, PR, direct mail all help but businesses often need to employ the services of a professional or study the area themselves. A well thought-out marketing strategy will lead to more customers and a higher profitability.
5. Finance: Not having enough funding or not having the right type of funding are the biggest mistakes made here. For example, you wouldn’t buy your house on a credit card or re-mortgage your home to go on holiday. The same applies in business but many get it wrong. An accountant can advise you on funding options and help you to ensure you have enough capital.
6. Tax: Small businesses often do not take into consideration tax payments – both personal tax, corporate tax and VAT. This can lead to difficulties, as tax payments are not allowed for. A good accountant should be able to minimise tax payments by setting the right structure and VAT scheme and advising of tax liabilities as soon as possible.
7. Support and mentoring: Having a mentor who has been there and done it before can be invaluable for small businesses, as can having someone to talk to about concerns. Seeking advice from your accountant, solicitor, and business support groups can make running your own business a less lonely place.
8. Great technician – poor businessman: It can take many years to learn a craft or profession. But does that teach you how to run a business? No. Seeking advice is very important to help you avoid making mistakes that can hold you back.
9. Get the legal side right: Going into business with family members can seem like a good idea, especially if you have known each other for a long time. However, if it is a non-immediate family member, you should have a written document stating what happens if it all goes wrong. Without it your business could be destroyed when you fall out.
10. No plan: The biggest failing of most small businesses is they don’t have a plan. If you don’t know where you are going, how will you get there? There is a theory that says the only reason you are in business is to sell the business. If that’s the case it’s all about maximising your business’ sale value.