Running your own business can be stressful, complicated and overwhelming but it can also be exhilarating, rewarding and fulfilling. The key is to focus on the basics and build a strong foundation to grow your business from. If running your business seems too complicated, then you might just be looking at it the wrong way, so why not try keeping it simple?
The world is a complicated place and we can often get lost in the chaos. This is true for all of us, but it is especially true for small business owners. We often get so caught up in running our businesses we forget the basics; we overlook the obvious and we focus on the wrong things.
When I started my first business, I focused on three key areas, who I was a business, what I was selling and how people could buy it from me. Now you might think this over simplistic but look at most small business websites and you will find these elements are often nowhere to be found.
You need to make sure your brand tells your story when people look at your website or your social media. Tell people why you do what you do, and it will help them to understand why you are the right fit for them. Your story is an important part of your marketing mix so make sure you are telling it right.
If you are in business this means you are selling something. The issue is that people don't want to buy something. They want to buy a solution to their problems, and they want to feel that you know what that is. If you have a product-based business, then I am sure you get this. If you run a service-based business, you might be wondering if this even applies to you. Well I can tell you that it does. Whatever you are selling you need to look at productizing it.
People want to buy things that have a measurable impact so, for example, telling a business you can help their sales team be better won't cut it. Offering a series of 6 1-hour workshops what will help increase the conversion rate of their sales team by 100% over a 6-week period is an entirely different matter. If you can't articulate what you sell in a way that people can see it as product, then it is really hard for people to buy it from you.
If you are selling something you know what you need to sell it for to stay in business. If we were to sit down over a coffee and talk about our businesses, could you tell me what you sell and what it will cost me to use your services? If your website tells people about what you offer and what it costs, people will know this information without having to meet you. This means there are no surprises. Your customer won't look at you like you are a crazy person when you tell them what your services will cost because they knew that as soon as they looked at your website. They won't be surprised when you outline what you can do for them as it is the same as the services offered on your website and by clearly stating all of this it is clear how people can buy from you.
Many businesses feel a need to keep their prices secret in case competitors see what they are planning, or they don't want to disclose full details of what they do just in case a client wants something else. The key here is to remember that as a small business you don't do everything, you are a specialist. Be proud of what you do and shout it from the rooftops. You also know what your services are worth, so tell people. If you are only selling on price, you are not going to last long. Deliver a service you are proud of at a price you know is fair, it is that simple.
Still not convinced? Next time you pop out for a coffee take a closer look at the café you choose. As a business it is surrounded by competitors, you probably passed one or two on your way there. A full list of what they sell, the main ingredients involved, and their prices are more than likely listed on a menu out the front or on a board behind the counter. Specials are promoted on blackboards and all of this can be seen by anyone, customer or competitor, as they walk past.
The reason that this approach is so good is that people know what they can order and how much it will cost before they sit down. This might mean some people walk past but pretty much anyone who sits down becomes a customer.
Imagine if everyone who sat down with you became a customer? If you get the basics right, there is no reason that this can't be the case. If we all focused on the basics a little more, the more complicated stuff wouldn't seem so scary.
by Andy Sephton
Tel: 0481 863 523
We record information for our businesses to determine many things, assets, liabilities, cash flow, details of employees, bank details, digital passwords.
And of course to determine the profit at the end of each trading period
This action is sometimes referred to as bookkeeping
One could consider that the methodology used in bookkeeping has changed to dramatically over time however it is still based on double entry bookkeeping
Double-entry bookkeeping, in accounting, is a system of bookkeeping so named because every entry to an account requires a corresponding and opposite entry to a different account. The double entry has two equal and corresponding sides known as debit and credit. The left-hand side is debit and right-hand side is credit. For instance, recording a sale of $100 might require two entries: a debit of $100 to an account named "Cash" and a credit of $100 to an account named "Revenue."
The accounting equation
is an error detection tool; if at any point the sum of debits for all accounts does not equal the corresponding sum of credits for all accounts, an error has occurred. However, satisfying the equation does not guarantee that there are no errors; the ledger may still "balance" even if the wrong ledger accounts have been debited or credited.
Double-entry bookkeeping was pioneered in the Jewish community of the early-medieval Middle East. Jewish bankers in Old Cairo, for example, used a double-entry bookkeeping system which predated the known usage of such a form in Italy, and whose records remain from the 11th century AD. It has been hypothesized that Italian merchants likely learned the method from their interaction with ancient Indian merchants from the sea trade, the double-entry system was founded on a "Jama - Nama" system which had debits and credits in a reverse order. The oldest European record of a complete double-entry system is the Messari (Italian: Treasurer's) accounts of the Republic of Genoa in 1340. The Messari accounts contain debits and credits journalised in a bilateral form, and include balances carried forward from the preceding year, and therefore enjoy general recognition as a double-entry system. By the end of the 15th century, the bankers and merchants of Florence, Genoa, Venice and Lübeck used this system widely.
However, the double-entry accounting method was said to be developed independently earlier in Korea during the Goryeo dynasty (918–1392) when Kaesong was a center of trade and industry at that time.
Every debit must have an equal and equivalent credit
Where do you use an (beaded implement) abacus or (cloud accounting) xero or pen and pencil to determine and maintain your accounting records, the action and result and the purpose is the same
At all times you, as a business proprietor, must be able to understand what the balance sheet shows and what it means – what is it trying to tell you?
The balance sheet shows in the future cash flow requirements of your business, together with the assets being items owned by the business and liabilities being amounts owed by the business
Be careful as to the value of your assets - is a car worth $30,000 that you paid for it or is it /should it be shown at its market value which is really $5,000. i.e. the amount that can be converted to cash.
If you have a service industry i.e. a consultancy then your profit, should, after some adjustments equal the cash that is recorded as being in the bank
If you are running a shop then your profit plus your stock should equal the amount that is in your bank
It gets a bit more complicated when you’re in manufacturing and therefore creating stock
However at all times you must understand what the accounts are showing you
Cloud technology is an incredible development – it has made bookkeeping and maintenance of the accounting system a lot easier and streamlined - however it is only a glorified pen and pencil. Garbage in = garbage out. If the figures/details that go into the cloud accounting are incorrect then the result will be incorrect.
You as a business proprietor must understand on the weekly basis what your accounts are showing and use these at all times to plan for cash flow deficiencies and other upcoming payments
At all times you should be working with your accountant and business advisor to ensure you are both on top of and understand what the figures are telling you
Chartered Accountant FCA
Diploma of Financial Planning DipFP
How many times have we heard this phrase?
How many times have our new years resolutions been to stay on top of cash flow, to pay all credit cards on time, to pay the credit cards in full, to get on top of our savings?
And now another distraction of Easter running into Anzac Day - are our New Years resolutions being met - Or are we still feeling frustrated and sometimes we might feel angry.
Seriously, cash flow is the most important asset that you can have, either in running your business or from a personal situation.
Positive cash flow is always important. How many times have you been frustrated or fretting because you cannot pay their bills particularly at this time of year.
How many sleepless nights?
I recently read in a small business survey that 54% of businesses are cash flow positive. That means, which is very worrying, that 46% are cash flow negative.
At the beginning of the year it is a perfect storm of expenses (school fees, Christmas costs paid on the credit cards, holiday costs paid on the credit cards,) and for those self employed cash is not coming in as no work has been done whilst everybody is on holidays and no one paying any bills.
And now another hiatus of 10 days as Easter runs into Anzac Day.
And yet…… So few people actually have a budget for both personal expenses and business expenses. They might have an idea but no formal actual budget
Whilst you have an accountant or financial adviser it is very easy to discuss the business expenses. It is very easy to compare these expenses against predetermined budgets, if they exist. They are recorded on an accounting platform and then in the financial statements. They are recorded every month, every year, and every comparative period.
But how about personal or private expenses.
Are these recorded?
How are these recorded?
Do you know where the cash goes every week or every month?
And more importantly do you have A Budget?
A recent study published by Intuit, the largest retail of accounting systems in the US, concluded that the reason most businesses got into trouble was a total lack of financial records and monitoring activities.
As an accountant and business adviser who is in regular contact with clients I find this unbelievable. Cloud accounting applications have made recordkeeping relatively simple and inexpensive and not difficult to have this discipline imposed.
A cloud based accounting application can allow a recording of all expenditure, business or personal, on a daily basis. At the press of a button you can see what has been spent on telephone, electricity, staff costs and for private expenses groceries, alcohol, entertainment, clothing. This can be seen daily weekly monthly or for whatever period is determined
Armed with this information you can then compare actual to budget
And make the necessary decisions and changes to ensure you remain cash flow positive
So make some revised new years or Easter resolutions and do the tasks required to get budgets and cash flow under control
This article is kindly written for ACL Business Network
by Catriona Rogers - Chartered Accountant FCA
Diploma of Financial Planning DipFP
If you would like to contact Catriona you will find her at:
The Rogers Group LP, Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation
Office: 02 9267-7655
Fax: 02 9266 0243
Mobile: 0408 291 254
10/133 Castlereagh Street,
Sydney N.S.W 2000
P O Box A308, Sydney South, N.S.W., 1235.
Catriona Rogers is Limited Authorised Representative 1234188of Merit Wealth Pty Ltd, Australian Financial Services Licence 409361, ABN 89 125 557 002