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Archive for July, 2011

Married without a Will?

If you do not have a Will there are rules for deciding who inherits your assets, depending on your personal circumstances.

If you’re married or in a civil partnership and there are no children then your husband, wife or civil partner won’t automatically get everything.

They will receive:

  • Personal items, such as household articles and cars, but nothing used for business purposes
  • Up to £450,000 of your estate tax free
  • Half of the rest of the estate


The other half of the rest of the estate will be shared by the following:

  • Surviving parents
  • If there are no surviving parents, any brothers and sisters will get a share or their children if they died.


If you’re married or in a civil partnership and there were children then your husband, wife or civil partner won’t automatically get everything. They will receive:

  • Personal items, such as household articles and cars, but nothing used for business purposes
  • Up to £250,000 of the estate tax free
  • A life interest in half of the rest of the estate


The rest of the estate will be shared by the children.Are you happy with that? If not then it’s time to get a Will in place and to consider some Inheritance tax planning.

Financial goals

Goals are important to ensure you don’t invest too little or too much, what is the point in over investing in your pension or dying and paying lots of Inheritance Tax?

Your personal financial goals can be broken down into short term, medium term and long term. And, you can work the numbers to ensure what you are doing now will give you what you want in the long term.

There is only one thing worse than finding out that you do not have enough money to live the rest of your life with the security and comfort you want and that is finding out too late to do anything about it.

This is why I will be urging all of my clients to review their financial plans. The recent Credit Crunch and Recession has changed the landscape and everyone needs to review their plans to make sure they are solid.

The Credit Card trap

Let’s say you buy a new ultra thin television for £2,500 and you use a credit card with annual percentage rate (APR) of 18%. Your minimum monthly payment could be as low as £50; however, to calculate your total costs you will need to know how your minimum payment was calculated.

A minimal payment is typically determined by using a percentage of your entire balance. This is usually 2%. Keep in mind that the minimum payment first goes towards the interest charge and then the balance to the original amount that you borrowed.

The monthly payment would be £38 in interest leaving £13 towards your £2,500 debt. After the first payment, you would still owe £2,487.

If you paid only 2% of your total balance due every month, it would take 334 months to pay off your debt. In other words, it would require 28 years to pay off the £2,500 liability. The interest paid on this would be £5,897 so your true cost of the TV would end up being £8,397.

But, that is not the opportunity cost, what could you have made in your business with £8,397?

What is your number?

We all need a certain amount of money built up to see us through to the end of our lives in the comfort and security we want.

Most people in business are in the accumulation period where you build net worth. Later you move into your distribution phase because there is less coming in that you are spending. Have you worked out how much you need to cover the shortfall?

If you own a business you have the opportunity to make improvements to the business to ensure your wealth plan works for you. If you are interested in finding out more about this call me because I have teamed up with an Independent Financial Adviser and together we can create and co ordinate tax and financial planning strategy.


Is cash an asset?

Assets go up in value over the long term, they may go down in the short term but overall an asset will rise in value but cash is always falling in value.

Money falls in value because of inflation. It is not that prices are going up as such; it’s more that money is worthless each year. This is why it makes sense to convert cash to assets as quickly as you can.

For me, assets include knowledge, relationships and things like property and shares in businesses. Be careful not to have too much cash available because it is human nature to consume. If you have cash easily available your mind will play games getting you to buy things you don’t need. Instead of paying other people who make money from your purchases pay yourself first by investing in an asset.

As a business owner there is lots to learn in the area of pricing, marketing, selling, management, leadership all of which can repay your investment many times over. Read books, go to seminars and work with others which is why I am developing the OnTrack Business Development Programme.

What do you guarantee?

Guarantees make it easy for people to buy from you and enable you to control the deal.

For example, I guarantee your accounts will be done within 45 days and I will never charge you more than the agreed fixed price. The 45 day guarantee is better that 99% of most other accountants because most do not have a guarantee.

But, there are a few practical and fair conditions. The deal is on the basis you have booked the work in as part of your Fixed Price Agreement and get the bookkeeping to me what you said you would and in the agreed format. That’s fair, good for you and good for me because I can schedule work and plan more effectively.

What can you guarantee to make it easy for people to buy from you?


Are you a little arrogant?

Over the years I have looked at many ways to grow my profits and my clients. Time and again I come back to pricing as the number one strategy.

I was listening to Reed Holden co-author of “Pricing With Confidence” talk about the importance of being a little arrogant. Not arrogant enough to put anyone off but confident enough in your value so you don’t offer discounts. Reed explained that it is important that you and your sales team feel good about your company and products because buyers often try and get lower prices by positioning you as a commodity.

It’s the same in my business. I get enquires where the person is looking for a lower accountancy fee than their current accountant. I am happy to talk because there are always way to work smarter using systems like Xero but I more the conversation quickly to value so the client sees my fee as an investment. It could be in a lower tax bill, time savings or greater security.

With business development services like On Track it will be higher profits, enhanced business value and/or the business being less dependant on them.

Confidence in your value = confidence in your price and that means higher profitability, so the question is “are you really confident in your value proposition when you are compared to a cheaper competitor?”


Are you a happy hedgehog?

The hedgehog principle is from Jim Collins book Good to Great, he tells a story of the fox trying to catch a hedgehog.

The fox has many different strategies and tries all sorts of tricks. The hedgehog has one defence; he rolls up in a ball.

Translating this lesson to business Jim’s research showed that good firms who become great focus on one thing. In your business focus on what you love and you will be a happy hedgehog.

Me, I love the numbers of business. Not just the profit or the tax I help save but the really important numbers that drive the business.


The law of the few

The idea is that roughly 80% of the effects come from 20% of the causes.

This is backed up in all areas of life but in your business, the chances are that:

  • 80% of your profit comes from 20% of customers
  • 80% of your complaints come from 20% of your customers
  • 80% of your sales come from 20% of your products
  • 80% of your sales are made by 20% of your sales staff


You can improve your business by focussing on what makes the difference.

The question is how much of your day do you spend on dealing with the 80% that only return you 20%? With this mindset outsourcing your bookkeeping or using new technology like Xero which can do most of the work for you makes sense.

For a free demo of Xero give me a call and I’ll send you a video.


Inbound marketing

There is a new form of marketing called “Inbound Marketing”; this is where you get people coming to you.

The idea is that you use the Internet to win new business. This includes your Website with Search Engine Optimisation (SEO) and Pay-Per-Click (PPC) advertising as well as Social Media. You can even link your Website to offline marketing. A good example is QR codes.

Now, most of my new business comes from recommendations which I actively stimulate with advance tax planning, high levels of customer service and proactive accounting. But, I do not want to just rely on one marketing tactics, so I am starting to embrace Inbound Marketing.

If all goes well I will be rolling Inbound Marketing into the Growth Pillar of the OnTrack Business Development Programme.