With the current economic market there are a lot of excuses why your business is not making more money than this time last year, HOWEVER, there is no good reason.
We are now over halfway through this financial year and chances are you have only received your accounts back recently from your accountant, if at all. How relevant are they considering they’ve usually only been prepared for tax purposes. Historical information compared with what’s happening now, maybe?
Do you just look at the page that states how much tax we are to pay or do you look at the big picture and take an interest in how the business is doing?
Ask most business people how they are doing, they are likely to tell you that they feel they’ve really put their heart and soul into their business over the last 18 months and have little to show for it.
If we removed the expenses claimed for tax purposes such as use of home depreciation on the family computer etc., things might become disturbingly clear to the trained eye.
So you’ve poured your heart and soul into the business and you’re feeling a bit crook having seen the results. Perhaps it’s time for a check-up for you and the business, just like the human body your business has ailments too. No working capital, poor profitability or a non-existent rate of return on investment etc.
A regular business health check can help highlight the symptoms of an ailing business An experienced accountant can assist in fixing those symptoms
Of course, there’s that old saying “there’s no money in the business to pay for that” and nobody wants to be told their business is sick, is that true? I doubt it. Over the past few years the economy has being down. However, unless you are in the market of selling super yachts to the rich, I believe, that you probably still have just as much business now as you did last year, if not more. So why is your business sick?
Often there is an increase in sales due to your hard work, but direct costs and expenses have also risen too and there’s absolutely no change to the bottom line. You’ve failed to factor in the increase to your prices either unintentional or intentionally for fear of a backlash from your customers. However, by looking at the numbers there is always a win win situation for both you and your customers. For every customer that leaves due to price sensitivity, this gives you more time to explore better customer service and a wider range of goods/services for your remaining customers.
The old 80/20 rule 80% of services to 20% of your clients
By performing regular health checks, of your business the increase in results pay for the results.
Now the medicine has been taken, your business has a spring in it and you’re feeling chipper too Why not have a look at how your business is performing compared to industry standards . Benchmarking is like putting your business in a line-up, until you compare your business with industry averages you may never know whether you’re paying your staff too much or maybe not enough.. Most businesses have never had their accounts compared to industry averages. Have you even asked your accountant how am I doing compared to Jack’s business You don’t ask Jack because you know what pub talk is. Most accountants offer some form of business optimisation, we have to. Most accountants can tell you what the industry standards are for your business.
Most accountants are hopeless at up selling We need to go and work at McD’s for a while, learn how to ask “would you like fries with that”. Do you want your fries? Just ask I doubt it if your Accountant will charge you for asking.
Posted on Sat, 1 October 2011
by Shawn O'Grady