All Posts by Renae Pitargue

How much should you pay yourself?

Being the boss means you get to make all the big decisions about your business – including how much to pay yourself in wages, salary or drawings.

As the owner, you might need to underpay yourself in the early stages of building your business, so you can reinvest the profits. But your time is valuable – and you need enough money to pay the bills.

So how can you find the right level of pay? It has to be enough to keep the mortgage paid, while also building a thriving business.

If you’re trying to decide how much to pay yourself, here are a few questions to ask yourself:

What can the business afford?

You need to leave enough cash in the business to keep it ticking along, pay your basic costs, and meet your tax obligations.

Once you’ve considered all those outgoings, how much does that leave you as a potential salary?

We can help you work out what that number is, so you can establish a sustainable rate of pay.

What’s the market rate for your role?

What would you have to pay someone to do the work you’re undertaking in this business?

Maybe you wouldn’t actually be able to find anyone to work the same long hours, but if you were hiring someone with your experience, to do the same sort of work for 40 hours a week, what would they expect to be paid?

That number is a good starting point for thinking about your own salary or drawings.

If you’re being underpaid, it’s time to think about ways to grow your profits. If you’re being overpaid, congratulations on building a highly profitable business.

Could reinvesting profits grow your income faster?

You can take all the profits out of your business, which should give you a strong and sustainable income.

Or, could you reinvest your profits and grow the business faster, leading to a higher income in the long-term? You might choose to spend some of your profits on advertising, a better website, or developing a new offering, for example.

Or you could pay for assistance in some area of the business. If the investment leads to higher growth, it might be well worthwhile.

We’ll help you run the numbers.

We can help you figure out how much your business can afford to pay you, analyse the potential gains of a business investment, or weigh up the pros and cons of hiring someone to help you.

Get in touch, we’d love to hear from you.

5 ways to tackle economic uncertainty

Economic uncertainty is an ongoing worry for any business owner.

While you can manage your finances, the broader macro-economy is beyond your direct control. And in the first few years of the 2020s, there have certainly been plenty of tricky ups and downs for your business to navigate.

Current economic uncertainty stems from a number of factors, including:

• Fluctuating markets
• Geopolitical tensions
• Pandemic recovery
• The impact of climate change.

This unpredictability poses significant challenges for sustained growth and stability – but there are simple steps you can take to tackle these challenges.

Simple strategies for tackling the challenges of economic uncertainty

Good financial management is the key to tackling any period of economic uncertainty. When sales, revenues, supplier prices and operational costs are all highly dynamic, it’s good to know that your business has cash in the bank and a solid financial strategy to stick to.

But how do you get tighter control over your business finances? And what are the main areas to focus on, track and manage as a business owner or financial director (FD)?

Here are five ways to tackle economic uncertainty:

Manage your cashflow effectively

Cashflow management is the process of tracking your cash inflows and outflows, identifying potential problems and being proactive about taking action. It’s helped by running regular cashflow forecasts and sticking to budgets.

Cashflow forecasting applications, such as Futrli, seamlessly connect with your Xero accounts. They provide a detailed perspective on how your cash will flow in and out in the upcoming months. This crucial information empowers you to make well-informed decisions.

Carry out spend management

Spend management involves tracking your expenses and identifying areas where you can cut costs. You do this by switching to more cost effective suppliers, cutting back unnecessary expenses and having tighter approval processes. Talk to us about implementing expense management apps into your business.

Negotiate better terms and prices with suppliers

Negotiation can help you save money on your raw materials, labour and other important costs. You can also negotiate better payment and credit terms by building trusted relationships with your suppliers.

Embrace AI automation to cut costs

Artificial intelligence (AI) tools are a great way to automate tasks, such as customer service, billing and inventory management. This frees up time for strategic activities and saves you money on labour costs.

Diversify into new products or markets

Diversification helps you reduce your dependence on a single product or market, making your business more resilient to economic downturns. It’s important to choose products or markets that are complementary to your existing business, and that have good growth potential.

Talk to us about strengthening your financial management. We'll look after your books so you can look after your business. 

With the world in such an unstable state, it’s always difficult to know exactly what lies around the corner for your business. But it’s safe to say that with a robust and agile financial strategy, you’re in a better position to flex your revenue streams and overcome any cashflow pitfalls.

As your bookkeeper, we can help you get tighter control over your cashflow, budgeting and financial forecasting.  

How automation streamlines your business

How can business automation streamline your business? Business automation uses technology to streamline and simplify all the repetitive manual tasks, processes and workflows that are part of the everyday running of your business.

Instead of spending hours of business time doing everything manually, automated systems can take on most of the heavy lifting.

You can automate the data-entry of your bookkeeping, the sending of recurring invoices or the coding of transactions when doing your bank reconciliation – basically, any task that’s repetitive, rule-based and taking up your time.

Automation makes your processes faster, more accurate and more efficient. This frees up your time to focus on other important strategic and customer-facing tasks. It also means you can get more work done in less time, making the business more productive and profitable.

How does business automation affect your business?

Smart use of automation can give your small business a major boost.

Instead of having to hire more people, you can grow the business and significantly reduce the admin workload for your existing human team. It’s the easiest way to set the foundations for scaling up the company.

By automating key areas of your operation, you can:

• Streamline your workflows – business automation optimises your processes by automating tasks like data entry, payment collection and approval workflows. This reduces the manual effort that’s involved and boosts your operational efficiency.
  
  Online bookkeeping applications, such as Xero, can take on the time-consuming task of data entry for your financial records. They allow for the seamless organisation and tracking of income, expenses, and other financial transactions.
• Improve your process accuracy – automation cuts down on human errors by applying rules consistently and precisely. This means your financial calculations are more accurate, data is of a higher quality and the company has better compliance standards.
• Save time and resources – all those tedious, repetitive manual tasks are now automated. This frees up valuable time for you and your team to focus on strategic activities, innovation and working more closely with your customers.
• Become more cost-efficient – automation cuts back the labour costs that usually go hand-in-hand with manual tasks. You’re more productive, your operational costs are reduced and you don’t need any additional staff to grow the business.
• Scale your business with ease – as your small business expands, automated systems are the special sauce that helps you scale up as quickly as possible. You can effortlessly meet the increased workload, grow your systems and stay agile and adaptable – two of the key skills for any ambitious business that’s looking for fast growth.

How can our firm help you with business automation?

Working automation into your business strategy is the fastest way to achieve your key goals.

With your main tasks and processes automated, you have a sleek, systemised business to drive your growth. And we’re always here to help you maximise this use of automation. We’ll help you review your operations to look for the automation opportunities – and can implement the most effective apps to add into your tech stack.

If you’d like to know more about the benefits of automation, we’ll be happy to explain.

Plain English guide to cashflow

Why is cashflow so central to good financial management? Here's our plain English guide.

What is cashflow?

Cashflow refers to the movement of money into and out of your business over a specific period.

In the most basic terms, cashflow is the process of cash moving out of the business (cash outflows), and cash coming into the business (cash inflows). The ideal scenario is to be in a ‘positive cashflow position’. This means that your inflows outweigh your outflows – i.e. that more cash is coming into the business than is going out.

When you’re cashflow positive, the main benefit is that you have the liquid cash available to fund your daily operations and debt payments etc.

On the flip side, if you’re in a negative cashflow position, this can be a red flag that the business is facing some financial challenges – and that some serious cost-cutting and/or revenue generation is needed.

How does cashflow affect your business?

Not having enough liquid cash is one of the biggest reasons for companies failing. So it’s absolutely vital that you keep on top of your company’s cashflow position.

Five key cashflow areas to focus on will include:

1. Monitoring your cash inflows and outflows – this means regularly tracking your cash inflows from sales, loans and investments, as well as managing your cash outflows from expenses, purchases and debt repayments.
2. Managing your account receivables and payables – efficiently managing your customer receipts and supplier payments helps smooth out your inflows and outflows – and delivers stable cashflow that’s easier to predict and manage.
3. Getting proactive with your budgeting and forecasting – creating realistic cashflow budgets and forecasts helps you predict your future cash position. By anticipating your future cash needs, you can actively plan for potential shortfalls or surpluses.
4. Being in control of your stock inventory – having excess stock in your warehouse ties up cash. So, it’s a good idea to optimise your inventory levels and to only manufacture/order the items you need on a day-to-day basis.
5. Investing in your cash reserves – with emergency cash reserves in the bank, you know you have the funds to handle unforeseen cashflow issues or sustain your operations during lean periods. This makes your whole cashflow position more stable.

How can our firm help you with cashflow management?

Positive cashflow is the beating heart of your business. Working with a good bookkeeper and adviser helps you keep that cashflow healthy, stable and driving your key goals as a company.

We’ll help you keep accurate records, track your inflows and outflows and deliver the best possible cashflow position for the business.

Get in touch to chat about improving your cashflow.

Have You Got a Plan for Growth in Your Business?

Growth doesn't have to be a daunting prospect. It can be a straightforward process if you approach it strategically and methodically.

Rather than seeing growth as synonymous with increased risk, longer hours, and more headaches, consider it as an opportunity to maximize your business's potential within your industry.

Let's explore some practical tips and insights on how to plan for growth, all while keeping it simple and straightforward.

1. Take a Look Back to Move Forward

Before you start charting the path for growth, it's crucial to understand where your business stands today. Begin by conducting a growth audit. This involves analysing all available data and information to gain insights into how your business has evolved.

By documenting your past growth patterns and identifying the factors that contributed to your current position, you can make more informed decisions for the future.

Embracing modern technology, such as cloud accounting software like Xero, can significantly streamline your business growth journey. Xero provides you with real-time access to your financial data, anytime, anywhere. This accessibility ensures you have up-to-date insights into your financial health, enabling you to make swift, data-driven decisions. Integrating cloud accounting software into your operations is not just a step towards modernisation, but also a strategic move towards informed business growth.

2. Create a One-Page Growth Plan

Once you have a clear understanding of your business's history and current standing, it's time to plan for future growth. This doesn't have to be a complex, multi-page document filled with jargon and buzzwords. Instead, aim for simplicity. Create a one-page growth plan that outlines your big objectives and the practical steps needed to achieve them.

Consider what specific tasks need to be accomplished and which team members will be responsible for them. By breaking down your growth objectives into manageable tasks, you can make progress more efficiently.

3. Monitor Key Performance Indicators (KPIs)

A successful plan for growth isn't just about setting goals; it's also about tracking your progress. Establish key performance indicators (KPIs) that align with your growth objectives. These KPIs could include metrics such as revenue growth, customer acquisition rates, or operational efficiency improvements.

Regularly review these KPIs to ensure you're staying on track. By monitoring your performance, you can make necessary adjustments and keep your momentum going in the right direction.

4. Gain Perspective by Taking a Step Back

As a business owner, it's easy to get caught up in the day-to-day operations of your company. However, taking time to step back and gain perspective is essential for effective growth planning.

Consider seeking expert assistance to help you build a comprehensive business plan. We can provide valuable insights and expertise to assist you in charting the path for growth. We can work with you to identify the necessary steps to achieve your growth objectives, offering a fresh perspective that goes beyond the daily grind.

Embrace Growth as an Opportunity

Planning for growth doesn't have to be complicated or overwhelming. By conducting a growth audit, creating a one-page growth plan, monitoring KPIs, and seeking expert advice, you can set your business on the path to sustainable and rewarding expansion.

At our First Class Accounts Ovens and Murray, we're here to help. Talk to us about understanding your numbers and assisting you in developing a clear and actionable growth plan.

Remember, growth is not about taking unnecessary risks or working longer hours—it's about making informed decisions and seizing opportunities. With the right approach, your business can achieve the growth you're aiming for.

Streamline Your Business with Online Timesheets

Messy, inflexible schedules, inaccurate timesheets, time-consuming data entry – paper-based time management is slowing your business down. We can help speed things up.

Thanks to the availability of affordable and accessible cloud-based options, like Xero Timesheets or Deputy, businesses can now bid farewell to archaic paper-based systems and unlock a world of efficiency and accuracy.

The Pitfalls of Paper

Paper-based time tracking and scheduling systems, while once the norm, have significant limitations that hinder business productivity. These limitations include inflexibility, time wastage, and vulnerability to time theft.

Inflexibility

Traditional paper schedules are rigid and static. They don't easily accommodate changes in work shifts or time-off requests, leading to frustration among employees and administrative headaches for businesses.

Time Wastage

Creating and managing paper schedules consumes valuable employee time that could be better spent on more productive tasks. Additionally, the manual nature of paper-based systems increases the likelihood of errors, leading to even more wasted time in rectifying mistakes.

Vulnerability to Time Theft

Perhaps one of the most significant drawbacks of paper-based systems is their susceptibility to time theft. Misreporting working hours, whether intentional or accidental, can result in inaccurate payroll calculations and disputes, creating a strain on both finances and employee trust.

Embracing the Benefits of Online Tools

Online timesheets and rostering tools offer a modern and efficient solution to the shortcomings of paper-based systems. Let's delve into the numerous advantages they bring to the table.

Practical, Flexible Scheduling

Online scheduling empowers employees to take control of their work schedules. Through user-friendly mobile applications, they can access their upcoming shifts, request time off, and even pick up additional shifts on the go. This flexibility not only enhances employee satisfaction but also streamlines the scheduling process for managers.

Up-to-the-Minute Time Tracking

With online timesheets, time tracking becomes precise and effortless. Employees can clock in and out with their mobile devices, eliminating the need for time-consuming paperwork. This real-time tracking ensures that working hours are recorded down to the minute, preventing any rounding-up discrepancies.

Seamless Communication

Effective communication is at the heart of any successful business operation. Online systems come equipped with features that simplify communication. Managers can send out notifications about schedule changes, set up instant overtime alerts, and notify staff about open shifts with ease.

Enhanced Visibility

Time equals money. Efficient time tracking provides businesses with invaluable insights into how their resources are being allocated. Employees can track their time against specific jobs or projects, enabling businesses to itemise bills, quote accurately, and justify invoices with precision.

Integration for Efficiency

Integration capabilities are a game-changer when it comes to online timesheets. By seamlessly connecting time tracking and scheduling software with other management systems, businesses can streamline their operations further. For example, linking tracking software with your payroll system eliminates the need for manual data entry and simplifies tax calculations for each team member.

Making life easier

When in comes to implementing the 

The shift from traditional paper-based time tracking and scheduling to online systems is a step towards enhanced accessibility, accuracy, and efficiency. It's about making life easier for both businesses and their employees.

Are you ready to embrace the advantages of online timesheets? Reach out to us for support in implementing the appropriate apps for your business.

What to consider when buying a business

Purchasing an existing company is a great way to expand your business empire. You can buy out a close competitor, or dip a toe into a new industry and expand your reach as a business group. But whatever the reason for the acquisition, you need to ensure you’re not buying a lemon!

Doing your research is a crucial part of the purchase process. As is asking some probing and insightful questions to help you determine if this acquisition is a good (or bad) idea.

Questions to ask before you make an offer

Buying another company is a major business decision. It’s a large outlay of capital and a big responsibility to take on. If you’re going to take the leap, it’s important to make sure the company in question is stable, well-managed and has a good future ahead of it.

So, how do you know what to consider when buying a business?

Here are five vital questions to ask before entering into a purchase:

Why is the business for sale? 

There are many reasons why an owner might want to offload a company, not all of them good. Their sales may be dropping, they may have rising debts, there may be internal problems with staff or the market for their product/services may be coming to an end. Find out why, so you don't buy a clanger.

Is this a good industry to step into? 

Do your research on the industry, competitors, and marketplace that the business currently trades in. It's important that you step into an industry sector that has potential for sales, growth, stable revenues and potential profits. With volatile markets post-pandemic, looking at predictions and forecasts for your chosen industry niche makes good sense and helps you make an informed decision.

Have you done your due diligence into the business? 

Do your due diligence to make sure there are no financial, legal or HR skeletons in the cupboard that may jump out to surprise you. Is there an unpaid tax bill? Are there loans that are being defaulted on? Are there any legal cases being brought against the company? Has the business filed all its returns and accounts? As the new owner, any of these issues become your responsibility, so you want to check out the company’s records and history in as much detail as possible. This will prevent some major headaches further down the line.

Does it have an existing business plan? 

You'll need a business plan that takes the company forwards and gives you a pathway for your next steps as the owner. Is there a business plan you can use? When was the plan last updated? How well are they tracking against the milestones in that original plan? No business plan is written in stone, so you’ll almost certainly need to review, update and refine this strategy post-acquisition.

Are your management team and staff up to scratch? 

When you buy the business, you'll usually also be inheriting the team behind that company. Do you have a management team with the skills, experience and motivation that's needed? Are your employees engaged and do you have a big enough team to meet your own goals for the business? This team will be vital to your future success, so you want the best possible people and talent behind you as you steer a new course for the company.

These questions are not the only thing you need to consider when buying a business. It's vitally important to have a detailed understanding of the financial situation of the business you are looking to purchase. 

Assessing the Financial Situation of the Business

Understanding the financial situation of the business is a critical step in your due diligence process. Here are some specific questions to ask and aspects to consider when assessing the financial stability of the company:

Review Financial Statements

Request access to the company's financial statements, including balance sheets, income statements, and cash flow statements for the past few years. Analyse these documents to assess the company's revenue trends, profitability, and overall financial performance. Look for any red flags such as declining revenues or consistent losses.

Verify Assets and Liabilities

Examine the company's assets and liabilities. Are there any outstanding loans or debts that will become your responsibility as the new owner? Ensure that all assets, including equipment, inventory, and real estate, are accurately represented and in good condition.

Check Cash Flow

Cash flow is the lifeblood of any business. Review the company's cash flow history to determine if it has consistently generated positive cash flow. Negative cash flow or irregularities can indicate potential financial challenges.

Assess Accounts Receivable and Payable

Examine the accounts receivable to see if there are unpaid invoices from customers. On the flip side, analyse the accounts payable to ensure there are no outstanding bills that could create financial strain upon acquisition.

Tax Compliance

Verify that the business is up-to-date with its tax obligations. Unresolved tax issues can lead to legal and financial complications for the new owner.

Employee Compensation and Benefits

Understand the company's obligations regarding employee compensation, benefits, and retirement plans. Ensure that all contracts and agreements are in compliance with labour laws and industry standards.

Profit Margins

Calculate the company's profit margins to gauge its profitability. Are the margins healthy, or is there room for improvement? This information can help you plan for future growth and profitability.

Sales and Revenue Sources

Investigate the company's customer base and revenue sources. Are there any over-reliances on a single customer or a specific product or service? Diversification can reduce risk.

Future Projections

Request a detailed business plan or financial projections from the current owner. Assess the validity and achievability of these projections, keeping in mind that post-acquisition adjustments may be necessary.

Industry Comparisons

Compare the company's financial performance to industry benchmarks. This will help you determine if it is performing above or below industry standards.

Asking these financial questions and conducting a thorough financial analysis will provide you with valuable insights into the financial stability of the business you're considering acquiring.

At First Class Accounts Ovens & Murray and Busy01 Consulting, we understand the significance of a comprehensive financial assessment when acquiring a company. We can assist you in what to consider when buying a business, including conducting a thorough financial due diligence process, analysing financial statements, and creating a strategic plan for your future ownership.

Contact us today to discuss your acquisition plans.

10 steps to Business Continuity Planning

Digital communication and cloud technology have given us the ability to access company information, applications and communication channels. For many businesses this will allow you to keep at least some of your usual day-to-day operations ticking over.

However, there are a host of important business areas that you need to consider when developing your company strategy to deal with an emergency situation.

Here are 10 steps to business continuity planning

1. Location and workspace

Does everyone in the business have a good internet connection for remote working? Make sure you agree on the guidelines for maintaining workflow. Schedule regular online catch ups to check in and agree on the priorities.

2. Key products or services

Which products and/or services will you be able to offer? For the business to continue trading, you need to identify a core set of products/services. Review which product/services will bring in the required revenue and cashflow, and which activities in the business should therefore be classed as essential.

3. Key staff and resources

Who are the core people you need for the company to operate? Based on your decisions regarding essential activities, identify who your key management and staff members are. Think about how much resource is needed to trade, how you’ll get approvals and sign-off and what critical knowledge needs to be shared within the team.

4. Key contacts and connections

Who are your main stakeholders outside the business? And which of these are vital to the running of your business? Make a list of your key suppliers, service providers, property contacts and customers and ensure you can have open communication with all these connections. Also, look at alternative suppliers so you can minimise any disruption to your operations.

5. IT equipment, data and infrastructure

What equipment, tools and software do you need to continue working? Essential hardware and software will include laptops, tablets or smartphones for your staff, paired with cloud services, video conferencing, communication apps and effective, secure access to your customer and business data.

6. Plant and manufacturing equipment for essential businesses

If you’re a bricks and mortar business, or a product-based manufacturing business, what equipment do you need to carry on your operations? This will include any machinery, hardware equipment and vehicles needed to manage the essential operations you’ve identified for the business.

7. Financial management

How will you access your key financial numbers during any outage? It’s sensible to move to a cloud-based accounting system NOW, so you have continuous, uninterrupted access to your financials. A platform like Xero online accounting allows you and your advisers to see those all-important figures.

8. Cashflow management

How are you going to ensure you maintain a positive cashflow position? We can help put a process in place to run regular cashflow statements. Use forecasting to project your cashflow position forward in time – so you can take proactive action to avoid any cash gaps in the near future.

9. Insurance

Does your current business insurance policy cover you for all emergency situations? Review all your existing insurance policies so you understand what your policy covers. Securing the business in all scenarios should be your focus here.

10. Leadership 

Who could take over if you (the owner/MD/CEO), is left unable to run the business? Having a nominated deputy, with a clearly defined chain of command, means you can be confident that the company will be in safe hands, even if you’re indisposed.

In times of crisis, maintaining business continuity becomes paramount. While digital communication and cloud technology can enable remote work for many aspects of your operations, certain critical functions require specialized attention. This is where outsourcing services, such as bookkeeping and payroll, can play a pivotal role in ensuring your business stays afloat, especially during times of crises.

Benefits of outsourcing

Expertise

Professional bookkeeping and payroll service providers, like First Class Accounts Ovens & Murray, bring specialised knowledge and expertise to the table. We can efficiently handle complex financial transactions, ensuring compliance.

Time Savings

Outsourcing allows you to focus on core business activities. You can redirect your time and energy toward dealing with the emergency situation at hand, knowing that your financial and payroll processes are in capable hands.

Cost-Efficiency

Business Continuity

Go walking: keep you and your business healthy

Being able to run a business from a laptop is an amazing thing. But it does mean that you spend a LOT of time sitting in front of a screen not being very active.

Research shows that office workers spend 75% of their waking hours sitting down – and that’s not great for your health.

A good walk may well be the answer to this issue, with walking being a great way to get yourself fit and to add some energy to your business thinking too.

Get active and become a more effective leader

Sitting down for long periods is not healthy. That’s the undeniable truth of being a sedentary entrepreneur that spends hours each day looking at a computer screen or mobile device. Sitting down slows your metabolism, burns no calories and leaves our muscles to waste.

To make your working day more healthy:

Go for a walk every day

Whether it’s walking to your office space, or scheduling a lunchtime walk around the block, it’s important to be active. A 30-minute walk ups your step count, raises your heart rate and can burn off between 100 to 300 calories – all good things to include as part of a healthy lifestyle for the modern entrepreneur.

Arrange 'walking meetings' with staff and clients

Meetings and 1-2-1s don’t have to happen sitting on a chair. Instead, take a stroll and chat with your clients, employees or suppliers as you walk. It helps keep the conversation flowing and gets you and your attendees breathing in some fresh air and interesting scenery.

Take time to walk and think

The best ideas can appear during a walk, without the pressures of a formal office setting. Sometimes a change of location can work wonders for your thought process, especially if you turn off your devices and don’t have the distractions of the office.

Walk between meetings

Taking your car to meetings may be quicker, but why not walk between your client meetings and get yourself fitter. By walking, you're more sustainable, healthier and don't waste so much money on fuel or transport costs.

The benefits of being an active entrepreneur

Time spent walking isn’t wasted. It’s a way to keep active, to refresh your business ideas and to place a better focus on your health, wellbeing and stress levels.

If you fancy having a ‘walking meeting’ for your next catchup, we’d be delighted to stroll with you while we talk through your plans for the business. Fresh air and business advice could well be the best way to get the support and strategic tips you need.

Get in touch to book a walking meeting.