Why small businesses that do not plan often fail

Small business planning is very important as SMEs that fail to plan are certainly planning to fail. You’ve probably heard that phrase many times but don’t dismiss it as a cliché, learn to live by its rules. Small businesses are often so busy treading water, they spend all their energy and attention on staying afloat. Learning how to write or make a business plan is quite essential and it’s a key step for most SMEs.  But if you want to do better than ‘just about managing’, you really need to plan for the future – after all, if you don’t know where you’re heading, how do you know which direction you need to go in?

There is a myth that a huge percentage of new start-ups don’t survive the first year, but this has recently been debunked – in fact, it appears that in the UK, more than 8 out of 10 companies succeed in the first 12 months, and between a third and a half are still trading after five years.

Plan to succeed

These success rates could be down to the support that’s now available for new entrepreneurs. There are a lot of organisations that help start-ups and small businesses succeed. In Hertfordshire, the organisation Wenta has been providing advice and support – a lot of which is free of charge – for entrepreneurs across the county for over 30 years.

Writing your business plan isn’t just a good idea when it comes to applying for loans and support, it will also help you focus your ideas about your company and clarify the direction you need to take it in. Online, the government has published advice about writing a good business plan, along with links to templates and examples to help you draw up your own plans.

Planning the accounts

Our director Keith Grover pointed out that when it comes to planning your accounts, it’s always useful to have a discussion with a qualified accountant as early as possible.

“If you’re borrowing a start-up loan from the bank, for instance, you will need to plan ahead to make sure your accounts system is in place to provide them with the documentation they’ll need in the future, e.g. Profit & Loss accounts, balance sheets, quarterly accounts etc.

“You will also benefit from advice about your business structure – limited company, sole trader etc – and the tax implications that might arise.

Some business people also find it useful to put in place a business agreements at this point, detailing the arrangements to extricate themselves from any trouble that might happen in the future.”

So, failing to plan could have disastrous implications for your new business – planning to succeed will put your company on the right road.

 

Keeping your accounts in order will help you make better business decisions. We can help you plan for the future when it comes to account management and your tax returns. If you would like to talk to us to see how we can help you, call us on 01992 444466.

The business case for outsourcing your payroll

It doesn’t matter how many members of staff you have working for you, getting the payroll right is crucial to your business.

The main reasons companies outsource payroll services are to save time and to make sure they’re fully compliant with legislation. If you’re not a payroll specialist, then you’ll have to spend time trying to get to grips with the process when you could be more productively working on your core business instead. Payroll can be straightforward to implement if your employee/s have no issues. But most of the time there are other things to be taken into account such as statutory sick pay, maternity pay, student loans, deductions earnings orders etc.

Keeping in line with legislation is hugely important, so if you’re not outsourcing, you will need to be pro-active to make sure you don’t risk having to pay fines for not getting it right. Legislation about tax, NI and pensions is changing all the time and you could be spending precious time away from your core business researching changes in the rules.

At the moment, companies are getting to grips with the new rules about workplace pensions. Your payroll company can help you implement this and will assist with enrolment of team members and uploading the correct data direct to the pension provider, saving you a lot of time in the process.

Cost-effectiveness

If you weigh up the amount of time you would need to spend every month making sure you complete the payroll correctly and on time, at the same time as continually researching the legislation to make sure you are up-to-date with the laws, it becomes obvious that outsourcing payroll is a cost-effective exercise. And there’s always the worry that if you are not concentrating your time and energy on your core business, you could actually be losing business as a result. And if you make mistakes in the payroll, your business could be subject to fines.

Also, if you run a smaller company, outsourcing will be much more cost-effective than having dedicated team members to run your payroll. Outsourcing also solves the potential problems caused by staff sickness and holidays.

HB Accountants have a dedicated department of payroll professionals who will take care of all your payroll needs. We use HMRC-compliant software and deal with companies of all sizes, from sole traders to limited companies with over 100 employees. If you would like to find out how we can help your company payroll, contact us for more information.

The dreaded self-assessment tax return

With the self-assessment tax return deadline looming, this is the time many freelancers and ‘solopreneurs’ start panicking!

Many find filling in their tax return an onerous prospect and, as a result, it’s traditionally a task which gets left until January, with some only just getting it in on time: in 2016, 385,000 people filed their returns on 31 January, narrowly avoiding the £100 penalty – even so, an anticipated 870,000 returns were still to be filed, which also suggests that hundreds of thousands of people are struggling to do their own returns.

In fact, recent research shows that 63% of sole traders manage their own submission, with an unsurprising 55% saying they don’t like the process! 45% of people spend 5 hours or more on doing their tax return, with 22% spending more than 10 hours on the task. That’s a lot of time which could have been better spent on their core business.

Digital changes

As if the yearly bind of tax returns isn’t enough, by 2020 the Government will completely change the way they collect taxes, saying that: “By 2020, businesses and individual taxpayers will be able to register, file, pay and update their information at any time of the day or night, and at any point in the year, to suit them. For the vast majority, there will be no need to fill in an annual tax return.” Instead, from April 2018, all businesses will be required to update HMRC on a quarterly basis. However, if your self-employment income is a secondary source or you are a landlord, you will only need to do this if your income is more than £10,000 a year.

Currently, 78% of small businesses are compiling their costs and expenses without the use of specialised software, despite the plethora of apps available to make the process easier.

What to do if you are panicking

See an accountant! If you are struggling to get your self-assessment tax return in by 31 January, or are worried about how you will be affected by the Government’s new ‘Making tax digital’ policy, it’s time to seek professional advice and help.

If you would like help with all aspects of your business accounting, management and advice, contact us for further details.

Posted in Tax

Thinking of investing in 2017

There has been a lot of uncertainty in the world this year, with political events sending the stock marketing yo-yo-ing and the continued drawing out of Brexit making the markets increasingly nervous. What’s going to happen to investments in 2017 is almost anyone’s guess, and in some quarters appears to be more influenced by psychics rather than solid facts. One woman in America, for instance, is predicting a stock market crash because there have been crashes in and 1987, 1997 and 2007.

What to consider when deciding on investments

You don’t have to have a lot of money to make an investment. A simple savings account with a bank or building society counts as an investment. Other types of investment are:

  • Fixed interest securities, which are also known as bonds, in which you invest in a government scheme or a company
  • Shares, when you buy a stake in a company
  • Property, such as buying a residential or commercial building
  • Commodities, such as oil, steel, gold etc
  • Foreign currency
  • Contract For Difference, which are a kind of financial derivative
  • Collectibles, such as art, antiques or even wine

Taking risks

You will always be taking a risk on any investment you make, even if you’re just putting your money into a savings account because the interest rate doesn’t always keep up with inflation.

If you’re investing in the stock market, although the rewards could be high, the risk is that you end up selling at a lower price than you bought them for, giving you poor returns.

How much you invest, how many risks you’re willing to take, and how long you’re willing to wait for a return on your investment is very much up to you. The perceived wisdom is that you never invest more than you can afford to lose, and to spread your investment over a number of companies – diversifying.

Getting the right advice

What you do need to do is talk to a good financial or investment adviser who will find out more about your circumstances and wishes, and then discuss the options to consider. Whoever you choose, make sure they are regulated by the Financial Conduct Authority (and not Mystic Meg!).

If you would like impartial advice on investment and wealth management, contact us to make an appointment with one of our experienced advisers.

How will Hoddesdon business be affected by Brexit?

Brexit hasn’t been out of the news since the vote to leave took place in June, and although the majority of the news stories concentrate on the effects of Brexit on larger companies, not many have looked at the SME in a local context.

The overall picture is still confused. At the end of September, the CBI reported business confidence worsened, but a GfK survey showed consumer confidence had risen slightly and are now back at pre-Brexit levels.

Smaller companies are less exposed to the global markets – the government estimates that out of the 5.4 million UK SMEs, only 110,400 traded with other EU countries. One poll discovered around half of businesses outside London think Brexit won’t disrupt their activities and nearly 70% are feeling more confident than they were last year, but inside London, that confidence drops to less than 50%.

Sarah Smits is the Finance Director of Hoddesdon business Ashbourne Insurance. Her biggest concern is the impact of regulation and compliance on the business. “We are only licensed to trade in the UK with UK domiciled insurers and customers, so there has been no impact to our client base or supply chain. We are mostly concerned about how Brexit will affect will affect regulations – until now regulation for financial services was dictated by EU laws, so we’re not sure if post-brexit regulation will mean more rules, regulation and red-tape or less?”

The chair of Hertfordshire FSB, Pam Charman, isn’t optimistic about how things could go for local SMEs in Hoddesdon. “Recent FSB research showed small business confidence to be at its lowest levels since 2012. FSB members are the backbone of the UK economy and it is crucial that their concerns are put front and centre in the Brexit negotiations, and that we work harder to get start-ups and other businesses to export to new markets. Now, more than ever, UK economic growth rests on the future success of our small businesses, and smaller businesses want access to the European markets, the ability to hire the right people, reassurance on key EU-funded schemes and a new approach to both regulation and de-regulation.”

Keith Grover, MD of HB Accountants advises to keep records to assess how Brexit might be affecting your business. “The feedback from their clients and local contacts is that it is still largely ‘business as usual’ at present, though there is a certain degree of caution about the future. What SMEs need to do is monitor how the business is doing by preparing regular management accounts. We already do this for a number of companies as well as budgeting and acting as a virtual finance director.”

If you would like to explore this area further, please do not hesitate to contact HB Accountants for help with management accounts as well as a range of accounting services, including advice on your growth strategy.

Five common business mistakes that first-time entrepreneurs make

Running your own business is a pipe dream for many, but those who are brave enough to stick their toe in the water are often rewarded when they’re their own boss. A recent survey discovered that 90% of the self-employed are happier than they were when they were in a traditional job. If you’re setting up your own business for the first time, it can be quite scary and many first-time entrepreneurs do make business mistakes. We’ve put together a list of the five most common pitfalls so you can do what you can to avoid them.

1) Not asking for help
Don’t be proud; you’ll need all the help you can get. Look for organisations, such as Wenta, that offer advice and training for people setting up their own business. You might know everything there is to know about your product or service, but running a business also involves doing the accounts, finding clients and customers, hiring suppliers, selling, marketing… you name it! And it’s your responsibility now!

2) Doing absolutely everything
According to new research, the thing that keeps most small business owners up at night is worrying about how to get new customers – if you’re concentrating on doing other things rather than selling, then it’s time to think about hiring other professionals, e.g. a casual worker or part-timer to help out with the day-to-day tasks, or get a bookkeeper or accountant to help you with your finances, leaving you free to concentrate on the things only you can do.

3) Not realising you are your own brand
You are not only the face of your new business, you are your new business. People will think of you and your brand as the same entity, so make sure they always have a good impression of both.

4) Ignoring networking groups
Business networking is a huge part of business for the sole trader. The famous adage is that ‘people buy people’, and the only way people will get to like you well enough to support your business is to get out there and meet them! Remember that all networking groups are different so give each one a go and stick to the ones most suited to your personality and budget. All networking groups are run by local business people, so if you’re unsure about working the room to start with, ask the organiser to introduce you to everyone.
Don’t expect to do business immediately. Networking is about building up your profile, so once you’ve found one, two or a few groups you really like, make sure you go to them as often as you can to give people a chance to get to know you. That’s when they’ll start buying from you themselves or recommending you to friends and family.

5) Not being open to ideas
Sometimes the idea behind your dream of having your own business turns out not to be the way forward. Don’t be stubborn about sticking to it just because it was your original ‘baby’. You’re in business to make money, so go with what works, not what you hope is going to work. Post-it® notes came about after a scientist tried to develop a super-strong adhesive. If he and his employer had simply dismissed it as a failure because it wasn’t sticky enough, it wouldn’t have ended up as a worldwide phenomenon.

Don’t make business mistakes – contact us for an appointment with one of our accountants for expert solutions and independent advice.

Importance of including a budget for digital marketing when writing your business plan

Unless you’re a professional marketer, you may not appreciate how important digital marketing can be for your business. You can take small steps on your own, but if you want to concentrate on making money for your own business, you really do need to put a budget aside to outsource digital marketing to an expert. And this is something you need to discuss with your accountant when drawing up your business plan.

Digital marketing is something that big businesses take very seriously – on average, have increased their spend on search engine optimisation (SEO) and email marketing by over 50% over the past year. Whilst the large corporations are putting aside around 35% of their marketing budget to concentrate on digital marketing, smaller companies and technology concerns are more likely to use 100% of their marketing spend on digital, which is a much more cost-effective way of raising their profile and targeting customers.

So if you are drawing up a business plan, you will need to add a budget for digital marketing – the good news is that a digital strategy will be a lot cheaper than a traditional print marketing strategy, and it also has the potential to reach target customers anywhere in the world.

Why you need to factor in a budget for your digital marketing

There are a number very good reasons why you need to discuss a budget for digital marketing with your accountant when you’re writing your business plan.

According to the latest figures from the Office for National Statistics (ONS), in 2016, 89% of UK households have an internet connection, with 82% of adults using the internet every day, or nearly every day – that’s 41.8 million potential customers.

Social networking shows no sign of slowing down either. It’s probably unsurprising that 91% of 16 to 24-year-olds are active on social networks (Facebook, Twitter, Instagram etc) but even the older age groups are using social media platforms more and more, with 51% of the 55-64s, and even 23% of the over 65s.

Three-quarters of UK adults regularly use their smartphones to access the internet. After emailing, the most popular usage was researching for information about goods and services. When so many people are interested in buying something you’re offering, you need to make sure your offering is one of the first they read about.

What a digital marketing agency can do for your business

A digital marketing agency will ensure that your products or services will be seen online by customers in your target groups. They will ‘optimise’ all the content you post on your website or social media platforms to  help increase the chances that when someone searches for a product or service you offer, your brand will at the top of the search results.

If you want to reach more potential customers, a digital marketing strategy is an absolutely vital part of your business. By including a budget for digital marketing when you’re writing your business plan, you’ll increase your chances of being noticed above the ‘noise’.

Your accountant will be able to help you work out a realistic monthly marketing budget for your company. Contact us if you would like help drawing up your business budgeting plan or an introduction to our own digital marketing agency.

 

Looking ahead to the Ambition Broxbourne Enterprise Centre in Hoddesdon

Ambition Broxbourne was only launched in April 2014, but it’s already making a significant difference to the area which has fast become an enterprise zone in its own right. It offers free advice to small businesses, has drawn up a business charter to establish working relationships between businesses and the Council, and has a number of short and long-term targets to encourage and support business start ups. In March this year, it organised a Dragon’s Apprentice Challenge for school students who’ll be the business owners of the future.
But its greatest achievement so far is undoubtedly the Broxbourne Enterprise Centre which is due to open this autumn. At a cost of nearly £4million, the centre is a collaboration between Broxbourne Borough Council and Hertfordshire Local Enterprise Partnership. When it’s finished, it’ll offer 25,00 sq ft of high quality, managed workspaces for small businesses and start-ups.

Flexible office space

Companies will be able to rent office and studio accommodation between 150 sq ft and 500 sq ft, which are complemented by meeting room space, virtual offices, informal breakout areas as well as free parking. To make things easier for small businesses, they will be offered ‘Easy In, Easy Out’ terms which will enable them to move offices within the building quickly and easily, and even leave with as little as two week’s notice, which could mean entrepreneurs staying in business when, under other circumstances, they would have to fold. The Centre will be run by an experienced, specialist company – Basepoint, which already runs similar centres around the south of England.
Rebecca Powell, Regional Manager for Basepoint, said: “The Ambition Broxbourne Business Centre will be an exceptional new facility and will provide sustainable working space for local businesses and entrepreneurs. As well as the outstanding facilities at the centre, we will be hosting networking events for licensees and the wider business community to encourage growth and prosperity in the area.”

We’re looking forward to the boost to local businesses that the opening of the Centre will bring to Hoddesdon and are fully behind the efforts of Ambition Broxbourne. If you are interested in renting office space in the new Broxbourne Enterprise Centre, contact Basepoint direct on 01992 877310 or email broxbourne@basepoint.co.uk.
If you would like advice on any aspect of accountancy, tax and wealth management especially for business start-ups, contact us to arrange an appointment.

Business Start-ups

Small businesses play an important role in creating jobs, delivering innovation and helping to drive economic growth. Starting a business may be a major achievement but running it and surviving is an even bigger challenge. For every 10 businesses that are created, the life cycle of 6 businesses is less than 5 years. This can be for any number of reasons, some predictable, and by adapting their behaviour, business owners can increase their chances of success.

The four areas that have the potential to improve the success and survival of start-ups and micro businesses are as follows: Firstly, all small businesses should have a well written business plan to explain why people should buy their products or services, and then monitor progress to ensure that sales not on target are picked up quickly and corrective action taken.

The second area is use of IT. Most small businesses need to embrace the digital opportunities that the internet offers. The website is a window into the products and services they offer, but it should be a low-cost investment.

The third area is good cash flow management. Small businesses should be aware of late payers and build it into their financial planning as well as strengthening relationships with key customers.

Fourthly, SME owners need to adapt to the pressures of running their own business. The key is to accept these pressures as inevitable and to develop the mental agility to respond positively.

The rise of business networking, Hoddesdon

According to the Merriam-Webster dictionary, the term “networking” was first used in 1967, but has only recently increased in popularity. In 1975, 8.7% of the UK workforce was self-employed; a number which grew steadily to 12% by 2008. Then the world’s economies crashed and, as a result of redundancies, many took the opportunity to set up their own business – currently more than 16% of the UK workforce is self-employed and that figure is rising. There will soon be more people working for themselves than there are working for the public sector.

With such large numbers of entrepreneurs and small business people running their own companies, it’s hardly surprising that business networking groups are springing up across the country. Many self-employed people have started them up or taken over networking franchises as a business in their own right. They not only provide a great opportunity to make contacts with small business owners, they also provide much needed social contact for people working for themselves.

With the advent of Ambition Broxbourne, Hoddesdon has thrived as a place to not only do business, but also to start your own enterprise. For entrepreneurs and owners of SMEs, networking is an excellent way of making contacts and building up a great network of clients and suppliers.

A few of the local groups we support and attend:

Hoddesdon Networking Breakfast

Run by us, the Hoddesdon Networking Breakfast group meets once a month on alternate Tuesdays and Thursdays. Tuesday meetings are held at Stanborough’s Conservative Club and Thursday meetings are held at Your Town in Hoddesdon. The meetings are priced at £8 per person with breakfast and hot drinks included. If you would like to attend, please contact Charlotte on 01992 444466 or email charlotte@hbaccountants.co.uk.

Athena

Athena Ware is a networking group for women entrepreneurs and executives. Women-only networking groups are popular because they provide an environment which helps foster confidence and passes on information about technology and new ways of working in a supportive environment.

Ambition Broxbourne 2016

Networking groups often team up with charities to help raise funds and awareness at the same time as building relationships between businesses. Ambition Broxbourne 2016 is a conference where experts in sales and marketing pass on their knowledge at the same time as raising money for local charities.

If you see us at any of the business networking meetings in Hoddesdon, feel free to come over and say hello.

If you would like advice on any aspect of accountancy and tax, contact us to arrange an appointment