Reaping the Benefits of Management Accounts

Loughborough University’s Deputy Director of its Centre for Global Sourcing and Services, together with the Chartered Institute of Management Accountants and SKS Business Services, recently published a report entitled Accounting for Growth. The report explains that many SMEs think of their accounting function as just performing a ‘bean counting’ exercise, instead of encouraging management accounting techniques to support the business objectives. 
 

Knowing About the Significance of the Numbers 
 

When you are familiar with your accounting history, you should find it easier to look forward, meet challenges, and recognise opportunities that can be managed to your advantage. When you know what all the figures mean, they can help you make plans and set budgets, understand your risks and make more informed decisions. 
 

Of course, all this takes skills and time that you may not have personally or within your own team. If you outsource your bookkeeping to an experienced and committed provider, you can focus your own efforts on your core business activities – as long as you get regular, accurate management reports and recommendations from the bookkeepers. 
 

Just as we all know that the cost of living is rising for households, so it is obvious that general and administrative costs for businesses are going sky high. It has never been more important to find ways to drive revenue up and manage costs.  
 

Catching up with the Major Players 
 

Ian Herbert said that in recent years major companies have managed to reduce “back-office costs dramatically through the use of shared service centres and outsourcing …. (now) new solutions are now becoming available for smaller companies to mimic the more flexible sourcing strategies of the large companies.” For example, if you have more than one location, or partners or staff out and about, you should be considering using the likes of Skype, join.me or Dropbox for communications and file sharing.  
 

Whether you can take advantage of these and other more costly technological solutions depends to some extent on your finances. If you need to raise funds for acquiring new technology or investing in growth, having an accurate record of your business finances will help you put a good case to potential lenders or investors.  
 

Peter Simons of CIMA said “The UK’s economic recovery is dependent on the SME sector, but many smaller companies could be performing below their potential because they are not making full use of their finance professionals”. So be sure you are making full use of your outsourced bookkeepers. The time taken to discuss the reports you need and how to use them could bring huge rewards.
 

Tips on Developing Your Business

Do you have a plan for business growth? It really helps to have a long term vision, and a plan to make each of the small steps you can take to bring closer to that final goal. First though, you need to be aware of your strengths and weaknesses.

A Business Review 

Take a good look at how your business has been performing. Ask Office Assistants to help you identify peaks and dips in profits and work out why. Where and how have you been most successful? Have you made mistakes in the past? Did you learn from them and make changes to turn things around? Are there still areas for concern? So what are your strengths and what are your weaknesses? 

Overcoming the Weaknesses 

If your weaknesses will hamper your chances of success, you must find a way to address them. Perhaps you need to recruit new skills or approach potential partners. But where will the money come from to attract and reward them? 

Now you must look at your strengths. They are there to be exploited, so you can aim to build on what you are really good at. What makes your customers choose to buy from you and return for more? If you don’t know, why not ask them? Issue feedback forms and offer rewards for those who return them. Better still, make a few phone calls to the really loyal ones. 

When you know what they think you are best at, find a way to do more of it and grow your revenue that way. Then you will have more profit to invest in overcoming your weaknesses and allowing even more growth. 

Identifying and Setting up the Small Steps  

Always remember that your best marketing tool is a good base of loyal customers, and whatever you plan to do must keep them interested, satisfied and coming back for more. They can help you find more customers by enthusing about your products and services among their family, friends and social media networks. One of your small steps could be to run a campaign in which you ask them for referrals in return for a discount voucher.

 

Your loyal customers can also let you know if they want more of the same and offer ideas about what else they would like from you. Another small step could be to decide whether to focus on developing what you already do, or whether to diversify into new products and services. 

Should you invest in more advertising? Should you target new customer groups? Should you stay local or expand geographically? What kind of internet presence do you need? Don’t forget to keep tabs on your competition and how you can be different. 

Phase in the various small steps over time. You can’t do everything all at once. The plan should remain dynamic, so make a point of reviewing it at regular intervals to judge the rate of progress and make changes where appropriate. Taking full advantage of Office Assistants by involving us means you will always stay on top of your financial situation and will gain the benefit of our ideas and experience as well.

Regulation Reforms for the Small Business

October 1^st 2013 was one of the Red Tape Freedom Days, on which the government introduced a number of reforms in the regulatory requirements of small businesses. They were in response to the Red Tape Challenge which looked at how to minimise the effects of, or do away with altogether, some 3,000 regulations. The government believes this will make life easier for small businesses and encourage more start-ups.

Employer Liability Reduced

 

Among the reforms now in place are changes to harassment legislation so employers will not be automatically liable for staff being harassed by third parties. If this is by your customers or members of the public, it is not really in your control, so the regulation is now much fairer. Of course, you must still try to protect staff wherever possible, by removing them from situations where this is likely to happen, for example. Similarly, if you are an employer, you will no longer be liable for workplace accidents, as long as you have assessed all risks and taken preventative measures.  

Freedom from Some of the Red Tape 

Office Assistants will join you in welcoming another measure, which is that unnecessary statutory forms have now been replaced with more flexible methods of submitting company reports. Introducing the reforms, Business Minister Michael Fallon said, “For small firms, less time spent filling in forms means more time planning the next project, winning the next contract or looking for the next young recruit.” 

Local Growth Minister Mark Prisk said, “The government is setting business free from red tape to the tune of over £212 million a year so local traders can generate the kind of enterprise that is vital to our economic growth," He also referred to the total amount of business rate relief for small shops, which has been increased from £300 million to £900 million. 

A Word of Warning 

The exemption for micro businesses from the EU requirements to produce profit and loss accounts and detailed balance sheets is not yet in force, but will be implemented later this year. This has prompted a warning from Experian, the major information services provider. If you don’t submit information to Companies House, you need to check your credit rating regularly and make sure the credit reference agencies have enough information about your financial situation to give accurate credit references. Office Assistants agree this is vitally important if you need to finance your business plans.