Happy with the accounts department?

Thinking of changing your Accounting Software?

Thinking of changing your Accounting Software?

 

Just some thoughts on this topic

There are many reasons to change your accounting software, and they include:

  • business has grown, need something better
  • a friend or acquaintance suggested a “better” solution
  • the current system just isn’t coping
  • staff do not like it
  • business has taken a different direction & existing systems do not cope
  • change of business ownership/management

There are a lot more reasons why you may feel that changing is appropriate, or even necessary.

Just a thought – You are in business to make money by providing a service or product to your customers at a profit, so your new systems must enable you to do some of the following:

  • produce or provide more …………..
    • at a better price
    • at better quality
  • Sell more
  • Purchase better
  • Warehouse less
  • Improve the effectiveness of staff & also equipment
  • Improve management
  • Allow for expansion (at a profit)

(Think about marketing, lean manufacturing, Six Sigma and other concepts)

Based on the above, ask yourself:

How will my business benefit by changing systems?

When the change is being forced on you, you have to toe the corporate line and use a common program. Sometimes the “new” program is not appropriate – too bad. But use the change-over to your advantage – use the new software to drive the business more effectively – if unsure of what I mean, contact me.

If the choice is an internal one, you have a fantastic opportunity to give your business a vast shake-up. But it will cause headaches, frustration and even staff unrest.

So what is involved?

  • Planning – Preliminary
    • What is needed?
      • Functions
      • Desired Benefits over old system
      • IT systems & infrastructure
      • Potential timetable
    • What software packages are “suitable”
  • Draw up Project Specifications to include:
    • Staffing levels – do we need more or less staff
      • For the actual changeover
      • For future data entry
    • Training of (almost all) staff
    • What functions are critical, highly desired, good to have, optional to the various stake-holders
    • A Budget for the project
    • If additional reports or functions are needed,
      • what is involved?
      • at what cost?
      • can your internal staff manage this?
      • Are they really needed – don’t spend a lot of money on a new system when a new report may cost only $2,000.00
    • When you have a short list of programs and vendors, check out their references. (An industry that is totally different from yours may have solved your “unique” problem/application.) The vendor’s consultants/staff working with your own team have got to know what you are planning to achieve – listen to them & tell them your issues.

Don’t forget to ask your staff for input, they know what works, what doesn’t and will have some brilliant ideas on how to fix the problems – Don’t forget, they are the people who have make the new system work, and keep asking – How will my business benefit by changing systems?

In many cases, your existing systems are doing 80% of what you want.

Investigate how you can pick up that missing 20% without throwing away your investment in what you have been using. This may be additional reports, purchasing an “add-on” to improve the usefulness of the systems, or activating an unused or forgotten function within the system. A new system is a major project and often only the Vendor enjoys it.

Again, ask yourself:

How will my business benefit by changing systems?

If there is no real justification for changing, DON’T

If you are going ahead, be prepared to spend the money, the time for planning, training and proper implementation, and do not rush the Project.

Great Planning is the only way to get Great Results

(I have not mentioned the styles of implementation – another time)

 

 

Business Jump Start

Business Plans

Business Plans – Are they a waste of time?

For many business owners, unfortunately the answer is YES. They are a complete waste of time and effort.

Many plans are put together to satisfy the requirements of the bank manager with no intention to be kept up-to-date.

A business plan normally covers such areas as:

  • Management summary
  • Plans for the future
  • Goal posts for achieving those plans
  • Market analysis (current & future)
  • SWOT analysis (Strengths, Weaknesses, Opportunities and Threats)
  • Existing Product Situation
  • Planned new products or services
  • Financial projections

Revisiting those plans and updating them can be the best and more rewarding business activity for management.

Yes, it does take time.

The benefits:

  • Focus on the direction of the business
  • Documented goals to achieve
  • By using dollar values within the Business Plan as your Budget, you have a basis of comparison for every aspect of your operations

Don’t forget :-

“Prior Planning Prevents Poor Performance”.

And

‘Fail to plan and you plan to fail’.

For those of you who believe that you attend your place of work to keep the customers, suppliers, financiers and staff happy and are unable to “work on your business”, a business plan will never be of value – you will be piloting a rudderless ship, responding to others needs and not planning for your business.

For the rest of you, I urge you sincerely to get a business plan put together (and keep working it and keep working on it.

How do you start?

Do it yourself or find someone to assist you in putting the plan together.

Using outsiders will obviously cost you money, but don’t forget, anything of value has a price. In this case, the price should be seen as an investment.

Talk to accountants, business coaches, industry associations about the price & complexity of putting together your plan. Just like a footballer uses a “ghost writer” to put his autobiography together, the consultant has to interpret your business goals and directions into YOUR business plan.

If you plan to sell your products or services to a specific niche of the market (which you should be doing), a business plan will focus your planning of Marketing, Sales, Production/Delivery, Staffing, and much more.

When you put your financial details into the plan, you have just created your budget, and if the temptation is to change direction or to buy something that is not aimed at achieving your Business Plan – say No!

One last thought……..

A Business Plan will achieve absolutely nothing for you …………………

…………. Unless you make action plans to carry out the changes that you plan has mapped out. Then perform all of the little tasks involved in completing those action plans.

People spend more time in planning for a holiday or moving house than they do planning and growing their business.

Work on your business and let your business work for you

—————————————————————————

If you have any questions or comments, please contact us by email or phone.

Our Website is http://www.bizjumpstart.biz

 

Calculations

Discounting – Good or Bad?

Discounting – Should you or not?

Unless done with great care, discounting can weaken your business dramically.

If you have a choice (and you have), add value to the deal rather than lose cashflow.

I have listed the effect of various discounts below

Discount % Gross Profit Margin
10% 20% 30% 40%
Additional Sales Required to produce the same Gross Profit
5 100 33.3 20 14.3
7 233.3 53.8 30.4 21.2
10 100 50 33.3
15 300 100 60
20 200 100
25 500 166.7

In other words, if your product has a 30% markup and you discount it by 10%, you will have to sell 50% more to produce the same profit (after sales return) and have to work 50% harder.

Hardly seems worth it, does it?

So what do you do?

Remember, you are selling and your customer is buying. If you are both bargaining, you will make a compromise somewhere between the two starting points.

You must realize that not every factor in the transaction is $$’s. Others include: Quantity, Delivery, Lead times, holding of stock, trading terms. All these are negotiable.

Do not give a concession without receiving one in return.

If you are advertising a discount on a product, be aware of the financial and emotional strains involved and have a finish date in your computer system so that on the day that the sale finishes, the price reverts back to the proper level.

If possible, give added value that does not affect the invoice value.

Look after your “A” class clients by giving “non-cash” rewards and incentives.

Communication with your Accountant - Often

Is your accountant working for you?

Is your accountant working for you?

Everybody in business has an accountant.

If you are business, you do, don’t you?

The question is what do you use this fully trained professional for?

I don’t know the exact figure, but I estimate that 95% of businesses use their accountant for “compliance” work. That is Tax & superannuation. Yes, it is very important work, but it is basically work that is controlled and commissioned by the Government authorities.

You see the accountant when some paperwork is required by the tax department.

Usually this work is done when it is too late. Too late to organize your business and personal affairs so as to minimize your tax commitments.

Today’s society requires government to extract tax from the public. To business and business owners we have an obligation to pay the taxes, and also to reduce this expense as much as legally possible.

A good “tax accountant” can do this for you and generate you considerable savings.

To achieve the best results for you, the accountant must know how your business is going around 10 months into the financial year. Then he/she can recommend measures that will optimize your affairs so as to minimize tax expenses and maximize your business profits.

But there is another side to the accounting profession.

Some accountants like to work with their clients on a more regular basis and in doing so become more involved with the client’s business. This is called Management Accounting.

Management accountants are a different breed to the normal tax accountant. They can spot potential problems before your business can be derailed. They are also hard to locate and can charge a considerable amount in fees.

Often the accountant works with other professionals to assist you, eg with your solicitor with regard to trading entity and also succession planning (which can also involve insurance advisors).

In summary, your accountant is a potential resource that many business owners ignore. Make better use of that resource and you will make more profits.