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Archive for January, 2013

Tax is becoming more risky

A few days ago the Crown Prosecution Service (CPS) announced that it will dramatically ramp up the number of tax evasion cases it takes on.

Cases will rise from 200 in 2010 to 1,500 in 2014/15. With a conviction rate of 86% many more people will be facing serious consequences to tax planning. This can include tax consultants as well as their clients.

I have always felt it right to advise my clients how to pay the least amount of tax legally. Some strategies are very simple and low cost, like profit extraction from a Limited Company. Others are more complex but they are all legal.

The difference between legal and illegal is avoidance and evasion respectively. I only help clients avoid tax where they can arrange their affairs in a way to pay less tax.

However, it is getting to a point where if you want more cash in your pocket it maybe more risky trying to save tax than growing your business. So, from now on I will ensure all clients have access to tax planning but also business growth advice.

To do this in an affordable way I will use my Website to deliver advice videos. I call this Ontrack Online and it is based my extensive research as well as knowing what works for me and my clients.

If this is something you’d like to know more about then call me and I’ll set you up a free account.

Mindset 5 – Smart marketer or dumb expert

This mindset is challenging for me because accountants are experts and many in my profession have a very negative attitude towards marketing.

They think marketing is unprofessional and selling is just dirty. They even look down of people that do it!

But, if we think about it, without marketing there are no sales and without sales there is no business. So, if we have spent years learning how to be an expert in something, we need to put at least the same time and energy learning how to be a smart marketer.

At the end of the day, marketing is an investment; it brings money into our business, everything else is a cost.

In fact, a business is marketing because marketing is about researching, finding out what the market want and giving it to them.

Experts go at it from the other direction; they design a solution and look to impose it on the market.

Remember, when it comes to growing our businesses and winning new business it doesn’t matter how good we are at what we do because at the point the customer makes the decision to use us they don’t know how good we are.

Even after they have made a decision they may not know!

Take accountancy for an example. Before I work with someone how does a typical small business owner know if I am any good?  Even after I have worked with them they will probably not be able to judge if I am the best at tax planning.

It does not really matter how much we know, or how good we are, what matters is the customer’s perception of how much we know and how good we are. And, marketing is all about perception and communication.

If we are not able to communicate in a way that makes the prospect feel that we understand them then they are not going to perceive we can help them.

That is why a smart marketer listens very carefully to their prospects. They use the words their prospects uses in their sales and marketing communication. And, they focus on demonstrating they understand the problems of their prospect.

A dumb expert has a Website with a homepage that tells you when they were established, what they do and how good they are. A smart marketer’s Website helps their prospect by offering something valuable.

When we combine being an expert with being an expert marketer we become very powerful.

Mindset 4 – Customers don’t care

This may not be what we want to hear but customers don’t care about us, our brand, what we know and what we can do. They just want their problems solved. And, they want them sorted quickly, with minimal hassle and cost to them.

As the saying goes, customers are listening to Radio WI FM.

  • The WI stands for “What’s In it”.
  • FM stands for “For Me?”

 

Yes, clients are selfish. They are looking at the world from their perspective, scanning for what they want and ignoring everything else.

They have a ME filter, so if we are talking about our brand, our company and what we do they will just ignore us. There will literally be no connection. That’s why most marketing doesn’t work and why most businesses don’t survive, let alone flourish.

One of the insights we get from this mindset is the understanding that we (and what we do) is literally in the way of our customers. We are literally in between the customer’s current situation and the outcome they want.

For example, I know people don’t want an accountant. They don’t care about Sackmans and the last thing they really want to hear is how much tax they owe, even if I have managed to keep it to a minimum with some tax planning. What they want is better cashflow, less stress, no debts, a better car and more free time to do the things they enjoy.

So, instead of talking about ourselves and our solutions, we need to join our potential customer with a conversation they are already having in their minds. Go into their reality and explore that with them, before inviting them into our world.

So, what are your potential customers talking to themselves about?

Well, I’d suggest they are talking to themselves about their problems. People are twice as motivated by getting out of a negative situation than having a positive outcome.

The chances are our prospects have some form of fear, anxiety, pain or frustration and if we can connect at this level we will do better than jumping in too high with all the positive things we can do.

Once we have connected on the negative and given them help them solve a problem, we can develop the relationship because we have helped the customer get a positive result.

It will also help us to keep in mind that we need to meet customers where they are mentally.

Mindset 3 – Working ON or IN your business

The concept of working ON and IN your business was introduced by Michael Gerber in his book The E Myth.

In the book Gerber shares his view that most people who go into business are not entrepreneurs but technicians suffering from an entrepreneurial seizure.

A painter opens a decorating firm, a mechanic a garage and an accountant opens an accountancy business. I think it’s fair to say we have all done that but the key is being conscious of it and not getting caught “IN” the business.

Working ON the business includes strategy, business planning, growing the business, developing and refining the systems as well as training and coaching employees.

Working IN the business is doing the work of the business.

Working ON and IN are two very different activities. When we work ON the business we zoom out and see the business as a whole. We may be working IN the business but we understand we are not the business.

According to Gerber, the role of a business owner is to create a picture of the finished business and to then go to work to build the business.

This includes know what type of customers you want and how many you need, how much you charge each client on average, what it costs to deliver and the resulting profit.

With this mindset you can now see your role as a business builder. When you get up and go to work you are not going to do the work, you are going to work to build a business that one day will be £500,000, £1m, £10 or £100m.

You may have to start doing the work but while you do this you can be developing systems so later someone else can do the work and do it like you do.

It is important to understand that being good at doing the work of the business is very different from being good and doing the work ON the business.

Being a good accountant has very little to do with building and managing an accountancy business. Sometimes the skills are in conflict.

Take me as an example, growing a business involves risk, doing the accounting work is about being prudent. And, building a business we need to be good at sales and marketing – most accountants admit they are not these activities.

Gerber suggests you think about your business as though you were about to write a book. What would that book of yours say? What would you, as the author of your book, wish to impart to your reader that would hopefully transform the way they think about their life, about their success, about their future?

It’s why causes are important to entrepreneurs. Causes add dimensionality to your business. Causes add meaning to your business, beyond simply making money.

As we go to work on our business, we must think beyond what the day-to-day reality of our business calls you to do. As an entrepreneur, we must rise above the stuff of doing it, doing it, doing it.

It means we must ask meaningful questions about our role in the world, our community, and how we can ingrain our new-found perspective into the DNA of our business, so that it lives, speaks, and demonstrates it in every action our business takes.

When we have the mindset of working “ON” the business we understand who our important customer is.

Is it your first? Is it your biggest or most profitable? Is it the one who is most connected and refers the most?

No. Our most important customer is the one that buys our business!

That could be someone who buys it from you or it could be YOU – because we buy our business every day by going to work IN it. Is it enjoyable? Is it profitable?

With this mindset we can think of our business as a product. Our job is to develop a product so great that people want to buy it.

Learning from your customers

Most businesses fail and  most new products fail to sell or make a profit.

When it comes to small businesses the main reason for the failure is a lack of understanding of EXACTLY what the customer wants and how much they are prepared to pay.

The key cause of this lack of understanding is the mindset of the business owner. They maintain the employee mentality of if they put the time and effort in they will get paid.

The typical approach is to launch a business or product that the business owner wants, or believes is good for the target market. They may be right but that approach doesn’t guarantee the market will find the offer interesting, let alone compelling.

But, it doesn’t need to be that way; you can test before you bet the business. And, the fastest way to test is to talk with prospective customers.  Nothing will get you up to speed as quick as talking to real people who have real needs.

The truth is that most of us sit in our Ivory Towers behind our computers and telephones thinking. However, as it turns out our prospective customers will tell us for free what they want and how much they are willing to pay.

The key is asking questions like:

  • What is your biggest fear or frustration?
  • What effect is that having on the business and you?
  • What is your dream result?
  • What would you be prepared to pay to get the result you want?

 

The key is to listen carefully and make lots of notes. The words used by the market are the words you should use to market.

The problem is this requires two things:

First, we need to acceptance that we do not have all the answers, our customers do.

Second, we need to face our internal fears of rejection and shyness.

Everyone of us has deep seated fears and apprehensions. We have fear of confrontation and do not want to annoy or upset anyone. We think it is best to sit on our own and figure things out ourselves because we are not brought up to go and ask people these types of questions.

That may be good social behaviour but that is not going to get anyone motivated enough to pay you money.

So, the first thing to do is to get over our internal issues and we can do this by reading books, listening to audio programmes and attending networking events.  We need to be comfortable outside our comfort zone.

The trick is to understand that our long-term success depends on this. And, understand that doing this now is much easier than waiting because the fear will grow.

We absolutely must understand exactly what is driving our customers and what they want. When we know this “word for word” our marketing will be very powerful.

The answers we get from the questions we ask may not be what we expect and are likely to be irrational. But, you will start to see things more clearly.

For example, a lawyer can say “I help people with divorce” or they can say “I help women who are going through a divorce get their husband back and save their marriage”.

I do not say “I help people with their accounts”, instead I say that “I help business owners gain financial independence”.

Keep in mind that our negative feelings of asking questions are because we have been taught it is rude. That is great in the sense you are playing the role of a good member of society but you are robbing yourself of the knowledge you need to help people.

If people think they will get what they want they will answer questions and be very open. However, they won’t talk about their biggest fears and frustrations if they don’t think talking with you will get them closer to what they want.

People will do anything to get what they really want. They will be glad to answer your questions. They will be pleased that someone is listening to them.

So, talk to at least one person a day, preferably three.