Archive for the ‘Small Business Advice’ Category
What Contractors Should Look For In an Accountant
Accountants in Sheffield – Contractor Accountant
All businesses need to make sure that they have someone looking after their financial affairs, small businesses especially tend to depend on the help and advice of their accountant quite heavily, often using him as a sort of unofficial Finance Director, but when it comes, to the sole contractor, often trading as a Limited Company without the support of a team of colleagues to turn to, the role of their accountant becomes even more vital.
It is not simply as an extra person to shoulder some of the responsibilities of business that an accountant is important for the average contractor, there are very specific issues that come with a contractor’s territory, and advice pertinent to their style of working that only an accountant is qualified to give.
Tax questions such as how to approach IR35, can be very complicated and worrying for the average contractor, and as every contractor’s situation is different, these sorts of questions cannot simply be answered by a discussion with a colleague.
Although it is not necessary to choose an accountant that deals solely with contractors, it would certainly be helpful if the accountant you pick has a good deal of experience in this field; ask any accountants you are considering, if they have other contractors on their client list; they should be able to show an understanding of contract work by the language they use.
Ask how any potential accountant you have in your sights will deal with the IR35 question for you; they should give you an indication that they have something specific in place, a list of questions perhaps, and ask them to tell you a little about the legislation, they should leave you comfortable that it is a subject they have dealt with a lot and that they have a firm grasp of how it works. If you meet an accountant who suggests that IR35 is not something they get involved with or worse still that they can in someway make it so that it does not affect you, run in the opposite direction; IR35 cannot be manipulated, you are either affected by it or you are not.
Many contractors will have been asked to trade as a limited company by those they are contracting to; an accountant who is able to handle the set-up of your Limited company if you need them to, quickly and with a minimum of fuss is a safe bet, as they will probably deal with most things in a similar way.
The life of a contractor tends to be a very busy one, with little time to spare for extraneous accountancy meetings that do little other than add to your bill; if your prospective accountant is using state-of-the-art technology to look after clients, it is going to save you a lot of time and effort; ask how paperless their offices are, they may not have moved completely away from paper files, but if they seem to tend towards electronic communications and remote systems this is an indication that they probably prefer to streamline, a useful attitude for the busy contractor.
How to create referrals for your small business?
Accountants in Sheffield – Referral Marketing
Referrals are one of the easiest and fastest ways to grow a small business. Getting new clients through sales can be tedious, time consuming and a costly affair sometimes. Referral marketing can turn out to be the best marketing strategy for a business which wishes to build on its good reputation. Therefore, with the mind, how and where can you get referrals? Well the answer is pretty simple- from your past and present customers or clients.
Now, not every client can be a good referral candidate. You need to choose your best clients to do this job for you. So the first task should be to go through your customer list and choose your potential referrers wisely.
The reason why getting referrals from your past and present customers is so valuable and important, is because “Customers are not paid to Praise” most of the time. This means they will only recommend you to someone if they were really satisfied and happy with your product or service. The person they are referring will probably be aware of this fact as well and thus this will hopefully make you more credible to them.
So how do you generate referrals? After all, you can’t just sit and wait for your clients to recommend you. Well, here are a few of the many situations where you can promptly ask your client to refer you to someone they know who they think may be interested in your products or services:
- When the client is really happy with your work.
- When your current transaction is completed with the client.
- When the client comes back to you for repeat business.
Another way to get referrals is to keep in touch with your past and present clients. Just giving a friendly phone call once in a while should do the trick. This will also help the client to remember you and thus increases the chance of getting repeat business. Also when you pro-actively call them there is no harm in asking them for any referrals when the time feels right.
Another important point that would come in handy when dealing with referrals is to make sure that you show your appreciation to anyone that sends a referral your away. This form of thank you or appreciation can come in the form of something small like a thank you note/card or flowers. By making sure that you do this, it may mean that these customers who have already recommended you might do the same in the future. Lastly, as regards this point, you may even choose to pay a commission to any customers who give you a referral. However, this strategy needs to be weighed up to make sure that you do not undermine the positive effects of customers not being paid to praise.
In conclusion, referrals from past and current customers are often a great way to grow your business. However, even when you have been given referrals, the bigger challenge is to turn these referrals into actual paying customers. The best way to do this is gaining their trust and making them believe and understand that you can deliver the kind product or service which they are looking for. Growing your business through referral marketing not only saves you a lot of money, but it also boosts the reputation of your business. Remember word of mouth can sometimes spread like wildfire.
Accountant Advice – Pricing Strategies for Your Business
Accountants in Sheffield – Pricing Your Products
Pricing is one of the major strategic challenges faced by any business, whether they are big or small. Ultimately, setting the right price for your product is one of the most important factors that will determine whether your business makes a profit or loss. The different pricing strategies available to a business can be divided in to two major categories. Those categories are:
- High Pricing Strategies
- Low Pricing Strategies
We can have a look at these strategies in more detail below.
High Pricing strategies
The following types of pricing strategies fall under this heading:
Creaming or skimming: This type of strategy involves selling a product at a high price and gaining maximum profit before any of the competitors make an entry into the market. This strategy is often used for new products which are innovative and have patent protection on them for a period of time.
Premium pricing: This strategy takes advantage of the general customer tendency to view low priced products in your chosen market place as being lower quality. It involves the practice of setting the price of your product higher than your competitors but offering a higher quality product. This strategy is used to boost the market reputation of the product you offer to customers. It is a strategy that is commonly used in the fashion and perfume industries where people are prepared to pay far higher prices for what they perceive as greater quality products. In this sense it tends to be well suited to products which have a strong brand name behind them.
Low Pricing Strategies
Low pricing strategies that are used are as follows:
Promotional Pricing: This tends to be a short-term pricing strategy adopted by a business where the price of the product is reduced for a certain period of time until the product gains popularity. One of the main aims when using this strategy is to gain increased market share.
Penetration Pricing: This is an entry level pricing strategy where the price of a product or service is set very low in order to undercut all the competitors and gain a foothold in the market.
Loss Leader: This is one of the smartest, yet very notorious, pricing strategies used by businesses. It involves selling a popular product at a very low price, usually at a nominal value below what it cost to produce. Once customers have acquired this ‘loss leader product’ they are then offered other products from the same business that will make a good profit, thereby negating the original loss. Offering a loss leader product is really a platform to acquire more customers quickly and then attempt to up-sell to them.
A few other factors that should be considered before deciding how to price your product or service are:
- Performing a market analysis and establishing what sort of demand there will be for your product or service.
- Performing a thorough costing of the product or service you are offering and looking at the breakeven point.
- Considering other external factors like legal constraints.
- Deciding on your main pricing objective e.g. more market share or exclusivity etc…
It is the intention of most businesses to make a good profit by adopting the correct pricing strategy, which suits their products and services and the demands of the customers. Deciding whether to choose a high or low pricing strategy needs careful consideration as they are very different and once you ‘plump for one’ it may be difficult to switch to the other type
Keep your Stock in Check – 4 Things to be Mindful of When Managing Your Stock
Winning a battle does not only depend of the bravery of the soldiers and attacking strategy, but on a very important factor which many tend to overlook. That factor is, how well you move your supplies and reinforcements during the battle.
Running a business is nothing less than a battle. The only difference being, here the logistics are not soldiers and weaponries but the product your business supplies to its customers. As stocks sometimes consume a majority of a company’s investment, it is essential that they be properly managed in order to help increase the profits of a business. Here are four ‘rules of thumb’ that can be used in any business when it comes to inventory management.
- Quantity: Buying goods in the correct quantity and keeping a regular check on your current stock is essential. The quantity of stock can be increased or decreased according to the market and customer demand. Also ensure you have enough quantity of stock for items that are in high demand and minimal, yet adequate, quantity of perishable inventories; for example milk products which have a very small shelf life.
- Storage: Make sure the place where you store your goods has got adequate capacity to hold your entire stock and also proper security measures in place in order to avoid theft. Ensuring the use of cameras and alarms also reduces the chance of theft by internal staff. Always make sure the storage space is used efficiently, as wastage of space can have direct impact on the holding or ordering costs of your business.
- Managing the Inventory: Maintaining a regular check on your stock is very important. This way you can keep tabs on old and obsolete stock. By also keeping thorough stock records you can calculate your inventory turnover ratio and this in turn can help you set future targets for your business. Start making use of the technology to manage your inventory, by computerizing your inventory management system. This will make stock movements far easier to track and increase the forecasting accuracy of your budgets.
- Managing the Funds: Continually negotiate prices with the suppliers and always keep more than one option open when it comes to buying goods in a large quantity. Being loyal to only one supplier can prove to be a costly affair at times, especially if they refuse to offer discounts or choose to increase their prices with no prior warning. Plan your purchase orders carefully and ‘haggle’ for suitable prices based on your market conditions and the number of suppliers vying for your business.
How to Bring Money Owed Back into Your Business – Managing Your Debtors
In the modern business world we do not expect to deal purely in cash transactions, nor do we expect to be paid in advance for services or products. It is of course usual practice to provide your services, deliver your products and then to invoice your customer.
Invoicing a customer in simple term means that until they settle the invoice there is a debt outstanding. For the majority of your business transactions, there will be no difficulty with this system; you will issue an invoice and your customer will pay within the given time. Sometimes however this system fails.
For a variety of reasons a section of your customer base will fail to settle their invoices on time. When this happens they become debtors and how you handle them can make the difference between a well run enterprise and a complex mess.
It is important firstly never to lose sight of the fact that as well as being debtors, those owing money to your business are also customers. There are often very good reasons why a customer may fail to settle an invoice on time; on occasion it may be something that you have done yourself to exacerbate the problem, other times in maybe a problem that you can help solve. It is too simplistic and unrealistic in today’s business world to set yourself up in a position against your debtors; the modern business owner approaches debtors intelligently, with a mind to recovering as much of the debt as simply as possible.
Staying strong and being firm with debtors, whilst remembering that they could be good, regular customers who are experiencing temporary difficulties is a delicate balancing act. If you can, have a dedicated credit control department to your business, even if this is simply a member of staff with the right skill set who consistently looks after this area of the business, this will help form intelligence as to which customers are simply bad payers and so could perhaps be culled from your client base and which are usually good payers who need genuine understanding of their situation.
Having rules about the payment terms that you offer and sticking to them, ironically allows you more freedom to be flexible when you need to be. If you accept that extensions to payment terms should not be offered, it will keep your cash flow strong enough to allow you to help genuine customers who may need temporary good will.
Being realist about the sort of payment terms that your business can support will help prevent the debtor situation arising in the first place. If you know that your business will have major cash flow problems if it has to wait for 90 days for payment, offer your customers less time to pay.
Above all try to see debtors as more than just a set of figures in an accounting column; there will always be bad payers with whom you may choose not to do business in the long run, but not all debtors are bad payers, some are simply good customers who need a nudge, or who need your help or who have perhaps a grievance that they need to discuss with you, so talk to your debtors as soon as the debt arises and continue to talk to them until the debt is settled.