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Archive for January, 2014

Responsive Websites

If you haven’t already done so then 2014 could be time to start thinking about making sure your Website is mobile friendly.

The technical term is having a “responsive” Website because it responds differently depending to what device the visitor is using. Mobile use has been growing rapidly and my research indicates that now up to 60% of Website visits are now via a mobile device.

The work to turn a standard Website into a responsive depends on the complexity of the Website. Mine for Sackmans Accountants North London took two days including testing.

The key differences are the way the navigation works, page layout and image sizing. If you are reading this on a tablet or smart phone and have any suggestions please let me know.

The Sackman Website is built on WordPress, which is a free Content Management System (CMS). This enables me to add and change content myself without paying a Website company.

As part of our On-Track programme we recommend that a business has a CMS so they can add and change content themselves. This means you save time and money keeping your Website accurate and up to date. For example, it is important you have a blog so you have add fresh content to your Website.

This is important for Search Engine Optimisation and also means you can use email marketing and track response from your database.

Just so you know, my open rate is 35%. According to Silverpop, who analyzed email of all types sent by 2,787 of client companies in 40 countries, mine is well above the average for financial services of 22%.

Website visits, conversion rates and email open rates are marketing numbers you should know, do you? If not then book an On-Track review and we can explore what numbers your business should be focussed on.

Claiming private expenses

This post explores a common issue of claiming private expenses when you operate as a limited company and work from home. This applies for running your business on a full or part-time basis.

The first thing to mention is that the rules are significantly different if you operate as a sole-trader. This is because a limited company is a separate legal entity in law.

This means that invoices in your name (such as broadband if you work at home) cannot be claimed as a company expense because the invoice in not in the business’ name. Your company is NOT liable for your personal contracts and vice versa.

However, your company can pay you personal expenses although you will be taxed on these payments unless you can prove they are wholly, exclusively and necessarily incurred in your work.

The key word is “necessarily” because you NEED to be forced to incur the expenses. The best way to demonstrate this is to have a contract of employment with your company and has a clause that requires you to have a home office with Internet.

If you are being paid expenses from your company without a contract with this clause you are leaving yourself open to an attack from the taxman.

However, there are two issues you need to be aware of by having a contract and the company paying expenses.

The first is that your company (as an employer) will need to complete a form P11D (return of expenses and benefits) at the end of every tax year. You will also need to make a claim for these expenses in your tax return.

This can be avoided by your company applying for a dispensation. This means the company will not need to complete the P11D. And, you will not need to make a claim in your tax return.

The second issue is that if you have a contract of employment you need to pay yourself the national minimum wage. Depending on how many hours you work this maybe higher than the optimal wage for tax planning.

However, there is a simpler strategy that we recommend. This is to have a rental agreement between you and your company.

This agreement is for your company to use your home as an office. Rent is paid from your company to you and there is a deduction in the company accounts, provided the level is commercial. One way to do this is to look at what local business centres are charging.

You will declare rental income on your tax return, but will be able to claim expenses such as a percentage of mortgage interest, house insurance, utilities, council tax and broadband.

This avoids the need for a contract of employment and completing a P11D. It also means you do not need to pay yourself National Minimum Wages for your hours as an employee because you do not have a contract of employment.

Business Reviews

This post gives some idea on what a business owner could be exploring, discussing and reviewing each month with their accountant or business coach. It’s what I used to help structure On-track reviews.

Business owner
Most small businesses are run for the benefit of the business owner. This includes financial and non-financial issues such as:

  • Take home pay
  • Net worth
  • Number of hours worked
  • Time working ON the business
  • Amount of stress
  • Happiness index

 

It is important to make sure there is a good lifestyle balance and I recommend reviewing these at least once a year, preferably quarterly.

Business strategy
It is important to keep focussed on the big picture issues such as:

  • Positioning
  • Brand awareness
  • Pricing
  • Competitive theory review of drivers
  • Product development

 

If you score each item each month you may be able to track positive and negative trends. You could think about:

  • Discounts given
  • Referrals received
  • Testimonials
  • Social Media contacts
  • PR

 

Financial Review
For most small businesses (below £1m of annual sales) I don’t think it is necessary to produce monthly management accounts. However, accounts should be prepared every quarter so the financial results can be reviewed.

Before the financial results are analysed it is important to make an adjustment for owner’s salary. This is because most accounts do not show a fair expense for the business owner’s time. This is because of profits being taken as dividends for tax planning or because the business is operated as a sole-trader or partnership.

From the management accounts these you should review:

  • Profitability
  • Liquidity
  • Return on investment

 

You should also review the budget variances including:

  • Total sales
  • Types of sales
  • Debtor days
  • Stock turnover (if relevant)
  • Wages to sales ratio

 

Marketing
The business’ marketing should be reviewed:

  • Key account reviews
  • Portfolio mix review
  • Referrals made
  • Net promoter score
  • Size of email database
  • Open rate on emails
  • Number of new leads
  • Website review (e.g. visitors and conversations)
  • Social Media review (e.g. Twitter followers and Facebook fans)
  • Campaign review to make sure each tactic is working
  • Test reviews to see improvements to campaigns

 

Sales
The sales review could include:

  • Number of customers
  • Average order
  • 80:20 review
  • Sales cycle
  • Pipeline review
  • Close won ratio
  • Reasons for losses

 

Operations
The monthly review could include a review of operations:

  • Customer service scores
  • Scope changes
  • Resource review
  • Compliant reviews
  • Problem customers

 

Management
A business is ultimately a collection of resources and they should be reviewed:

  • Team happiness
  • IT
  • Premises
  • New insights and learning

 

These are not the only things that could be review and I am not suggesting you review them all every time you have a meeting. But, it is vital you have:

  • Defined a competitive strategy and validate it
  • Long-term goals that are broken down into milestones
  • Create a financial budget linked to marketing indicators
  • Challenge your sales, marketing and operational performance