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Is your photocopier secure?
So you have a list of procedures in place to ensure that your electronic data is fully secure? But have you ever considered hardware other than your computers? How about your trusty photocopier which sits innocently in the corner of the office? Did you know that since 2002 many contain hard drives which store items that were printed, copied or faxed?
A recent study was conducted in the US on second hand photocopiers. In the study 3 were purchased from a warehouse which deals in second hand office equipment. The hard drives were then checked using software found free on the web.
The machines contained tens of thousands of images from a sex offenders database, detailed design plans of a new development, & 300 pages of medical records. All of this information was highly confidential & potentially very damaging.
So what do you do? Check that your printer includes software which automatically clears the images. If not take this up with your supplier. They should be able to advice on how your hard drive can be cleared. Whatever you do, ensure your hard drive is clear before you sell or dispose of your printer. You never know – your business may depend on it!
What’s your plan?
Well, the new year is just around the corner, but do you have a robust plan for the year ahead?
Unfortunately for many small business owners the answer is a resounding “No” – or, “yes, it’s in my head”, which is actually the same as no!
If you don’t have a proper plan for your business the chances of it moving in the direction you want are drastically reduced. Your business is more likely to grow by luck, rather than design, and luck is often in short supply in times of economic difficulty.
For many the very thought of putting a plan down on paper leaves them in a cold sweat – but it doesn’t have to be this way!
Firstly, remember that the person for whom you are preparing the plan – and the most important person in your business – is YOU. So, think about planning in terms that you can relate to rather than trying to plan with someone else in mind.
If you like mind maps plan using them. If you are a picture person try to build lots of pictures into the plan so you can engage with it.
Secondly, if you really don’t know how to plan – ask for help. You may have a friend or family member who can help you. Alternatively, there are lots of professionals who can help you with specific areas of your plan.
If you struggle to put together a marketing or sales plan engage a marketing or sales expert to help with that particular section. If you struggle with the figures your accountant should be able to help.
The key thing is that once the plan is finished it properly represents your business and your ideas for the coming year.
Your plan then becomes the foundations against you can measure the performance of your business going forward. You will be able to see whether or not your business will help you to meet your personal goals, or not, and you can use it to get finance if you need to.
Fiona 🙂
Are your prices correct? 5 Simple steps to evidence based pricing
It’s all good news and cheers into the New Year with the UK downturn finally expected to be left behind and as the size of the UK economy surpasses its pre-recession peak. With expected GDP growth rate of 2.7% the clear message of these indicators are that against the backdrop of a difficult economic climate, there are still pockets of strong demand for top quality services and products at an affordable price across different sectors which would continue to fuel the stimulus for growth in the economy. The challenge is for businesses to plug into these golden nuggets of opportunities with a winning price offering.
Access to top notch real time information about comparable products and services by consumers is so much easier with price comparison websites such as Money Supermarket, Go Compare, Martin Lewis’ Money Saving Expert, Google search engine, to mention just a few providing an invaluable service. The dilemma to success in this competitive market is getting the right balance between quality and price. The consumer’s buying decision for most products and services with elastic demand always come down to price. Understanding your product/service demand curve and elasticity is the key to maximising your corporate profits and bottom line, because it’s only when you know how much your consumers are willing to pay for your service or how indifferent they would be to a price change that you can confidently put out a winning price.
In a nutshell the markets are not perfect and a good price creates sales transactions that benefit the consumers, the business, and the economy. It is very clear that there are disparities and mismatches between prices offered for goods and services by businesses in the UK and the amount hard up consumers are willing to pay.
Gone are the days of setting prices based on “gut” or “experience”. I often hear clients say my plan for 2014/15 is to sell 20,000 widgets @ £30/each because I managed the same feat last year. Evidence should always be the key in setting prices, understanding the variables that affect pricing is a key insight into the competitive environment. This article takes you through the steps of achieving a profit maximizing price for your products or services and then puts into context of how growth in the economy could be stimulated.
Step 1
Build a two table column that shows all your prices (including discounts) and the associated demand over a period of one year. You can get this information from your general ledger.
| Step 1 | |
| Jab Ltd | |
| Price | Quantity Demanded (Units) |
| £21.00 | 200 |
| £26.00 | 196 |
| £24.00 | 190 |
| £12.55 | 280 |
| £13.00 | 240 |
Step 2
| Step 2 | ||
| Price | Demand | |
| Low Price | =MIN(B6:B10) | =VLOOKUP(F6,$B$6:$C$10,2,FALSE) |
| Medium Price | =MEDIAN(B6:B10) | =VLOOKUP(F7,$B$6:$C$10,2,FALSE) |
| High Price | =MAX(B6:B10) | =VLOOKUP(F8,$B$6:$C$10,2,FALSE) |
| Step 2 | ||
| Price | Demand | |
| Low Price | £12.55 | 280 |
| Medium Price | £21.00 | 200 |
| High Price | £26.00 | 196 |
Use excel function min, median, and max to find out the minimum, maximum, and average price
Step 3
Plot the points in a scatter graph from the tabled data, select the polynomial function for the trend line to display the formulae coefficient, where x represents price and y equals quantity demanded
Step 4
Put any trial price and Input your polynomial coefficients into the demand equation;
| Step 4 | |
| y = 0.6444x2 – 31.088x + 568.65 | |
| y = quatity demaded | |
| x = price | |
| Price | 20 |
| Cost | 11 |
| Demand | =(0.6444*G17^2)-(31.088*G17)+568.65 |
| Profit | =(Price-Cost)*Demand |
| Step 4 | |
| y = 0.6444x2 – 31.088x + 568.65 | |
| y = quatity demaded | |
| x = price | |
| Price | £20.00 |
| Cost | £11.00 |
| Demand | 204.65 |
| Profit | £1,841.85 |
Step 5
Use the solver function in Microsoft Excel to calculate the profit maximising price. Check to see the solver function is enabled in your excel version – For excel 1993 click on Tools => AddIn => Tick Solver and For excel 2010 click on File => Addin => Tick solver
Solution after solver
| Step 5 | |
| y = 0.6444x2 – 31.088x + 568.65 | |
| y = quatity demaded | |
| x = price | |
| Price | £26.00 |
| Cost | £11.00 |
| Demand | 195.9764 |
| Profit | £2,939.65 |
Based on the above evidence from solver we can deduce that the £26 price would maximize the organization’s profit, although this shouldn’t be taken in isolation as other factors affect demand and price
The importance of having a winning price for your products and services cannot be over emphasized as it could spell the difference between real competitive advantages and being priced out of the market.
We would love to hear your thoughts and comments
A time to pay – part 2
This post is a follow on from ‘A time to pay’ so if you haven’t read that you might like to do so before reading this one!
Once you have decided on your payment terms, ensured that both you and your client understand what is to be delivered, and paid for your services, there is still the possibility that a client will let you down and not pay.
The most likely scenario is that the client is strapped for cash and you are not seen as the first payment priority for them. This is a difficult position to be placed in for any service provider. My advice is that you must stand firm and by doing so you may well move yourself up the payment list – especially if the client is looking for further work from you.
Just as an aside, I generally provide an ongoing service to clients and so agree with them a fixed price service, so they can set up monthly standing orders. This has proved to be a win/win strategy. Clients like it because payments are broken down into monthly bite sized payments and I like it because I don’t have to do monthly invoices and then chase for payment.
However, what I did not appreciate until a client pointed it out to me was that, for them, my payments had moved up into the ‘unavoidable’ category – along with rent, rates, electricity etc. Unlike other professional service bills which are paid as and when money is available, my payment is made as one of the first.
Now, many service providers get lulled into doing more work for a client who is not paying, because they believe that they will not be given further work if they insist on being paid. As in my previous blog I would most strongly urge you not to get into this way of thinking. Firstly, the surest way of getting paid for work done is to stop working until payment is made. Secondly, if the client is bad at paying why would you want further work from them – rather than using your limited time to work for a client who will pay!
If a client is unlikely to use your services again, you are in a psychologically stronger position. You may well not be so reticent in sending tough letters demanding payment. Or, in fact, starting legal proceedings. If you want to go down this route it is very important that you understand what your rights are and how best to proceed. My advice would be to use a payment collection service such as that provided by companies like Credebt. They take the hassle away and enable you to concentrate on more positive areas in your business.
Finally, as I said in my earlier blog, don’t be coy about collecting money owed to you. As long as you have done the job required, and to the standard agreed, you are entitled to be paid!
Fiona 🙂
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A time to pay!
Recently I have come across several service providers who are finding it difficult to get paid. This got me thinking about the psychology of payment.
There are clearly two sides to this particular coin – us and the client. We can be as much, or more, to blame as our customers for not getting paid, because of the way we think and act.
Firstly, as Brits we are sometimes embarrassed to talk to clients about fees and payment. Some business owners hide behind hourly rates, which means there is no upfront agreement about exactly what the client will be expected to pay. This means it is highly likely there will be disagreement and therefore delay in payment. Not only that, but disagreement about fees can leave a bad taste in everyones mouth.
Secondly, many service providers are slow to invoice, which means clients receive bills quite a long time after they have had the service. This sends a message to the client that the supplier is probably pretty well off and so doesn’t need the cash quickly (or the invoice would have been sent more promptly). Consequently it is more likely that payment will need to be chased.
Other suppliers do not make it clear what their payment terms are. Now, it is in clients interests to delay payment as long as they can (especially at the moment when many businesses are finding cash flow difficult) so if you are not clear on payment terms you cannot be surprised when payments don’t come through. Make sure your letter of engagement clearly states what your payment terms are and re-iterate these terms on your invoice.
Further to payment terms ask yourself the question ‘Am I a bank?’ If the answer is no (as I expect it is for anyone reading this blog) only give credit if it is absolutely necessary – and then ensure there is some allowance for interest in the price you are quoting! Otherwise, make your payment terms ‘payment on receipt of invoice’. You probably won’t get paid immediately but at least you can chase earlier.
I know business owners who don’t like chasing for payment, even if they have agreed a fixed price, invoiced promptly and have clear payment terms, because they think their good clients will think badly of them. This, in my opinion, is the worst ‘sin’ of all. Firstly, GOOD clients pay as agreed in the contract – a good client is not one who bitches about the agreed price and then fails to pay promptly. Secondly, we are business people who should expect to be paid for a good job done, so there is nothing to be coy about when it comes to asking for what you are legally and morally entitled to!
So, to recap:
1. Agree clearly with your client the exact terms of the engagement both in terms of job to be done and fee to be paid.
2. Bill as soon as the job is complete.
3. Be clear on your payment terms and give as little credit as possible.
4. Be professional! If money is owed to you do not be coy about chasing for it.
Fiona 🙂
Book Billy!
Are you a business owner who works on their own or with just one other person?
Do you miss the traditional office Christmas party, where everyone let’s their hair down and has a fantastic laugh?
If so the Billy No Mates Christmas bash is for you – so if you haven’t already booked now is the time to do so!
The ‘Bash’ is on 20th December (so the Friday before Christmas) from 12pm onwards at Beah, Union Street, Wells, Somerset.
For just £22 for a three course meal with wine the ‘Bash’ is great value – and great fun.
But don’t just take my word for it:
Kim Robinson who is a Billy No Mates stallwart said: “The only thing missing is the photocopier!”
To book your place or simply to find out more go to:
http://billynomates.info/events/wells-christmas-bash-2/
Fiona 🙂
Time for a new payroll process?
A recent experience of a client being selected for a National Minimum Wage review by HMRC led me to recommend some changes to their payroll process.
Like many businesses this one paid its staff by the day and adjusted for absences such as unpaid sick. Some of the staff were at or just above the minimum wage for their age, so increasing the risk of an error pushing them below the minimum. HMRC conducted a check which spanned several months, with much to-ing and fro-ing over detail and found some errors which had resulted in a few staff being underpaid small amounts.
Having gone through the results with the client I suggested some changes to the payroll process:
- Stop basing pay on a daily rate, pay by the hour instead.
- Implement a simple timesheet process, where hours per day are recorded and the employee signs it at the end of the pay period as a correct record of hours worked.
- Where staff are on piece work, ensure the equivalent hourly rate is calculated to check it is above the minimum wage.
- Check each month for staff birthdays or other changes in circumstances that might change their minimum wage level.
So if you pay by the day, it is worth checking you can easily produce records of the actual hours worked. My client has only a few employees, so can manage with a paper record, if you have enough staff to warrant a computerised time recording system, this may be worth considering.
Chris Dixon, Eightoaks
chris.dixon@eightoaks.ltd.uk
The price is right!
The new year is looming and now is the perfect time to review your pricing.
Many business owners struggle with putting their prices up, particularly during times of economic downturns, even though their costs are increasing. They leave their prices the same for several years and then have to put their prices up significantly in one go to stay profitable.
However, reviewing prices on a regular basis (say, once a year) is a much better way. Customers are much happier to accept rising prices if increases are regular but small, than they are with irregular, large price increases.
So, make sure you review your prices regularly.
The key to doing this successfully is to make sure that your customers know that you have a particular time when you review prices – the new year is perfect for this. Preparing your customers properly for price increases means that the change does not come out of the blue, and they are more likely to accept it.
Remember, pricing is all about asking for a fair value for the product or service you provide. So, it is important that you are clear on what the fair value is.
Make sure you know what your competitors charge, but more importantly, talk to your customers regularly so you know what they particularly value about what you provide.This will make it easier for you to assess what price is appropriate.
If you are in the service sector the new year is also an ideal time to review the service you are giving your clients, to check if there is any additional work they need.
So, if it has been a while since you reviewed your prices bite the bullet and start planning for one now.
Fiona 🙂
10 expenses that will trip up PAYE workers
- Mobile telephone – if the contract is in your personal name you can only claim business related call costs.
- The £8,500 trap – if an employee earns below this amount but receives benefits in kind taking them over the limit, A P9D has to be submitted.
- A director has to submit a P11D no matter what they earn and complete a self-assessment.
- Pensions – pension contributions are limited to a maximum of £50,000. This will reduce to £40,000 next year subject to an employee’s pay exceeding this amount.Watch out for the 3 year rule.
- Pension pots – the fund will be reduced by £250,000 to £1,250,000 from the 6th April 2014
- All expenses claims must be wholly and exclusively incurred in the performance of their duties, otherwise not allowable.
- Working lunches – are only allowable if all the company get fed.
- Watch out for the Christmas party – an employer is only allowed to claim £150 per annum for entertaining staff and their families.
- Tax free mileage allowances – most people know the limits and allowances. Don’t forget to keep records of journeys made.
- If your employer buys clothing for work it must display the company logo, even if it’s an Armani suit
Business Accountant 