Start Your Own Business

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Session 7 – WorkbookBookkeeping & Records Management

Regardless of the size of your company, good bookkeeping practices are essential to keeping your business running smoothly. Accurately kept books do more than make it easy to file your annual tax returns. Banks may require you to submit a profit and loss statement or balance sheet so they can determine your credit-worthiness.

A quick review of your books can show where you need to spend more or less money; who gives you the most business and who takes the longest to pay you; how much you're paying out in commissions compared to how much you're selling.

How can SMEs compete with big businesses?Source: Guardian Professional

Competing against the major players is a huge challenge for small independent firms, but how have some succeeded?

Markets dominated by major players with huge promotional budgets and economies of scale can seem impenetrable by small

businesses.

However, mainstream media advertising campaigns and lower prices are not the only factors that influence customer choices, and

as many small firms are discovering. Quality, flexibility, and personal service are proving to be effective tools for carving out a

niche in even the most competitive of markets.

Business coach and author Heather Townsend says: "Small firms will never win on price, but they can compete on value and

service, while the more specialised their product or service, the better. They can be flexible and adaptable to meet customers'

needs, and through the clever use of social media, they can make their brand more 'loveable', which gives them the edge."

In a crowded marketplace the real trick is finding a gap and having the right product to fill it.

That was the challenge facing Andrew Quinlan when he decided to turn his hobby, brewing cider, into the premium brand cider

business Orchard Pig in 2007. At that time, the UK cider market was on an upward growth trajectory. Sales of £1.7bn in 2006 had

reached £2.4bn by 2011, according toMintel, and new cider brands were being launched by Stella Artois and Carlsberg to capitalise

on its popularity.

"The alcohol market is fiercely competitive and it is notoriously hard for smaller, unknown brands to achieve standout. But there

was a gap between the traditional scrumpy products and the mainstream brands and that was where we focused our brand and as

a result we made the cider category more interesting," said Quinlan.

Quinlan sourced funding, including asset-based finance and working capital loan from the bank and a Business Link grant, and

support from the South West Manufacturing Advisory Service (SWMAS). The business is in the government-backed Growth

Accelerator programme, aimed at helping high growth firms. Today Somerset-based Orchard Pig employs 12 people and turns

over £1.1m. He added: "We are making progress in retail, but the pub trade is also important; it's where people can actually get to

taste the cider, and hopefully become ambassadors for the brand, spreading the word. The cider sector is expanding, but Orchard

Pig will remain a niche product, and that is the key; knowing where your brand sits in that market.“

Some SMEs have succeeded by providing services that their much larger competitors are simply unable to do as efficiently or as

cost effectively. In the complex field of logistics and the technology behind the systems applications processes (SAP) that enable a

company's many operations and functions to all run smoothly, the market is being led by huge IT firms such as IBM and Accenture.

But it is their size and the generalist nature of the services they provide that has created opportunities for smaller firms like The

Config Team. Based in Leyland in Lancashire, the company's 20-strong team specialises in bespoke SAP solutions.

Managing director Andrew Moses explained: "A big company can implement the payroll, HR, payments and ledger applications of

SAP on a broad general business basis, but might struggle to come up with a solution for a complex manufacturing plant. And

that's the gap in the market that we have been able to fill; tailoring IT solutions for very specific requirements.“

More than that, he adds, their core team of consultants has remained unchanged for seven years, presenting a consistency and

continuity that fosters a sense of trust and which has helped The Config Team build long-term business relationships; something

that the larger providers struggle to achieve in quite the same way. Significantly, this is attracting growing interest from IT

managers from some large organisations who see the value in a more personalised offering.

"The key to competing as a small player is to stay focused on your market and not be tempted to deviate into areas either side of

it, as you then run the risk of diluting your offering, and undermining what you have established," added Moses.

Alongside retail and logistics, private healthcare is another sector dominated by large companies, many of which are expanding on

a broad scale.

Another growing consumer trend that ought to play right into the hands of the small business is the review website. The likes

of Yelp.co.uk,Trustpilot.co.uk and Bestratedbusinesses.co.uk enable customers to post reviews, good or bad, about a business and

its products or services, which can then influence the purchasing decisions of potential customers.

Heather Townsend said: "Regardless of the product, people are doing more research before they buy. This provides a great

opportunity for smaller firms to make a good impression and build up advocates; people who will spread good feedback about

them, not just through review sites, but through social media channels. These online resources not only level the playing field for

businesses, but used in the right way, they can give the smallest firms a real competitive advantage."

Five Bad Accountancy habits to give up in 2015Ref: Business Matters Magazine 6th January 2015

Emily Coltman ACA, Chief Accountant to FreeAgent gives her tips on five common bad accounting habits

to consider quitting in 2015:

1) Not charging your customers enough

When you’re starting out in business – or if you run a small company – it’s very easy to set your prices

too low. Many small business owners worry that they won’t win customers if they charge too much –

and sometimes they may even decide to charge such a low price that they don’t make any profit.

It’s important to make sure that you charge what your service or product is worth.

Think of the time and energy you’re saving your customers, as well as what they’d pay to a competitor.

If you use an online accounting system to manage your accounts, you may be able to get a real-time

view of how profitable each of your projects are – so you can make sure that you’re charging enough to

cover your costs and make a profit.

2) Not claiming all your expenses

In the hustle and bustle of daily business life, “doing the books” can often slip further and further down

the priority list. After all, for most people it’s not the most enjoyable part of running a business.

However, putting off your bookkeeping can mean receipts for business costs that you’ve paid for

personally get mislaid and never find their way into your business accounts.

Not only does that leave you out of pocket because your business won’t then pay you back for those

costs, it also means your business will pay too much tax because you won’t be able to claim relief on

those expenses – two very good reasons to make sure you stay on top of all of your expenses.

If you struggle to manage your expenses, remember that you can also make use of a tool such as

ReceiptBank or MobileAgent to help you record your expenses quickly using your mobile phone – or

remember that you can also use FreeAgent on the go. This is far better than stuffing your receipts into a

shoebox and running the risk of forgetting about them!

3) Not collecting your cash fast enough

Many small business owners are far too nice to customers in this area. They don’t chase late payments

up quickly (perhaps because they’re worried about offending their clients) – but it’s important to

remember that you need to get the cash if you’ve done the work! Without enough money coming in to

pay your bills, your business can’t survive.

Try setting clear payment terms and make sure your customers know when they have to pay you – then

keep to them. Of course, you can give your customers more time to pay if they’re in genuine difficulty,

but if you have clients who repeatedly fail to pay you on time you may need to raise this issue with

them.

If you’re worried about managing or chasing your invoices, you could also invest in specialist invoicing or

accounting software that will send out automatic reminder emails to customers when they don’t meet

your payment deadlines. You may find this is easier and quicker than chasing them manually.

(Contd next page)

Five Bad Accountancy habits to give up in 2015Ref: Business Matters Magazine 6th January 2015

4) Not meeting your deadlines

The life of a small business owner is incredibly busy and sometimes you can lose track of what you

need to be doing. So while you can start off with the best of intentions that all your tax and VAT forms

will go in on time and fully paid up, this may not end up happening. Before you know it you could be a

month late with your VAT return and HM Revenue & Customs are sending you yellow surcharge forms

and threatening to charge you more money if you’re late again.

Don’t fall into this trap. Make sure you know exactly when all your deadlines are and make sure you

file all your tax returns and VAT returns and pay your tax on time. If you can’t pay – ensure you tell

HMRC before the deadline.

Not filing and paying on time can cost you interest, surcharges and penalties. It also means that you’re

more likely to be selected for an inspection by an HMRC officer – which not only takes time but can be

very frustrating.

Remember, it’s best for your business to keep on the right side of the taxman!

5) Making your bookkeeping too complicated

It’s easy to be confused into taking too many steps in your bookkeeping and this can cost you valuable

time. So are there any ways you could make things simpler?

For example, did you know that in FreeAgent you don’t have to post bills for every cost the business

pays for? If the cost has been paid straight away, for example using a debit card, then you can just

explain that transaction in your bank account, without entering a bill.

And, did you know that many online accounting applications can “talk” to other systems that you use?

For example, you can often link your CRM system to your accounting system, so that when you create

a new customer in your CRM system, that person appears automatically as a contact in your books,

ready for you to send them an invoice. This saves you setting up the same customer twice, meaning

you don’t spend so long on admin and the risk of errors is reduced.

It’s not only CRM you can do this with, either. E-mail marketing systems, expense management

applications, online banking, they can all talk to your online accounting system.

It’s very easy to get into bad accounting habits because “the numbers” are a frightening part of running

your business, or because you don’t have enough time to do them properly.

So make sure your New Year’s resolution in 2015 is to quit these habits and put yourself back in control

your accounts.

It’ll be hugely beneficial for your business in the long run.

In association with

This workbook is for your personal use as part of this training programme. This book contains a summary of

the slides used in this session. Please retain each of your workbooks for each session as they will help you

assemble and research the information necessary for you to build your business plan towards the

completion of this Programme.

Further resources are available at the resource website: www.moodle.mccormackassociates.org.uk

Username: cleo15*@syob Password: CLEO15*@tr Remember this is case sensitive

The Revenue’s Commitment to Quality ServiceRevenue devotes a great deal of time and effort to providing a top quality service to customers. We have a responsibility

to provide clear information and to make dealing with us as easy as possible.

By providing even better customer service and more taxpayer education and help, we aim to help all of our customers

pay the right amount of tax and duty at the right time. We want to ensure that our customers know about their

entitlements and to make claiming them simple and straightforward.

Service Standards

These are Revenues Customer Service Standards. They tell you about the standard of service delivery you can expect

from us. We want to make it easy for you to do business with us. We aim to provide the service you need quickly and

without fuss. To help us to help you, we ask that you have your tax reference number and necessary details ready when

contacting us. We aim to provide a high quality service. To test the quality of our telephone service, we record calls. We

also test how easy it is to use our electronic services to make sure they are as simple as possible. Letters from customers

are carefully managed to give replies quickly. We use customer surveys, customer panels and focus groups to hear

directly from the public about their experience of dealing with us. We will carefully protect information you give us.

Taxpayers' details are treated confidentially. We have a secure email system for use by business taxpayers and tax

advisors. This means we can securely send and receive e-mail messages that contain sensitive business information. Our

service delivery can vary between peak and off-peak periods. The nature of our business means that demand for services

can be very high from December to March and during October each year. We very much appreciate your patience and

understanding during these peak periods. To avoid being caught up in peak period delays you can use our online services,

PAYE anytime and ROS.

Main Commitments

We will make it as easy as possible to get general information on Revenue matters. The Revenue website will contain up-

to-date information on all Taxes and Duties for business customers, tax advisors and individual taxpayers. The website

also provides relevant contact information including a contact locator which you can use to find your local tax office. Our

public offices provide an information service to callers. A wide range of information leaflets is also available in each

public office.

Online Services/Website

You can now carry out much of your business with Revenue online. Our online services include PAYE anytime for PAYE

taxpayers and ROS for business taxpayers. These services are free, fast and easy to use.

We will process returns, declarations and applications filed through ROS within 5 working days.

We will deal with claims for tax credits or tax refunds or offsets made through ROS within 5 working days (except where a

claim is selected for routine checking). Customs import/export declarations lodged through the Automated Entry

Processing (AEP) system will be dealt with immediately.

Tax Clearance Certificates applied for on the Revenue website will be processed within 5 working days.

REMINDER - Website – If you plan to set up a website for your business, now would be a good time to

register your domain name (even if you do not intend to use it immediately). Many commercial

organisations register a .com address, whereas non-profit organisations register a name with the suffix .org.

Most Irish businesses register an .ie address. This tells visitors to your site that you are registered in Ireland.

The name of your site should be as close as possible to the name of your business. You can check the

availability of a .ie website name at the IE Domain Registry or see www.blacknight.ie to check other .com,

.org, .net etc

Starting Your Own Business - Tosnú do Ghnó Fhéin

3 An Ghlasaigh, Doirí Beaga, Leitir Ceanainn, Co Dun na nGall TrainingPeople.Biz