Developing efficient systems to improve your business
Recent studies show less than 50% of new businesses are still trading after five years. Too many businesses fall over because the owner has not established efficient business systems. This typically happens because the business owner is so caught up in the day-to-day running of the business that the fundamentals of good business management get forgotten.
The symptoms are familiar, and their results disastrous:
- Poor or non-existent record-keeping;
- Tax obligations are not met;
- Invoices go out late and debts remain uncollected;
- Cashflow crises;
- Goods and services are incorrectly costed and priced.
Any of these factors can lead the business down the path to failure. Luckily, all are avoidable.
Developing business systems
To be a successful business owner, you must make the effort to become something of an ‘all rounder’, not just a specialist player. You can offer outstanding goods or services, but if you don’t develop good business systems then your business could be in danger of failing.
Good business systems will make your business more efficient, easier to run and stronger in the long term. They will also make your business far more attractive to future buyers because if you have developed clear operating and procedures manuals the business will be seen as an independently viable unit and less dependent on you.
Remember that other stakeholders in your business, such as the building material suppliers who give you credit and the bankers who extend loans and financing terms, are always assessing your business skills. If you consistently pay people late or can’t meet the terms of your debt agreements they will draw the obvious conclusions about your business skills.
How to become a better business
Here are our 5 steps:
- Good record-keeping and bookkeeping will help you keep up to date with HMRC. If you’re able to meet your tax obligations through sensible planning you’ll know how your business is doing. You won’t fear a tax enquiry. You should always know which taxes are due, and when.
- Good business planning will help you set goals for your business, with specific steps on how to achieve these goals. Without goals, how do you know where you’re going?
- Good forecasting will enable you to anticipate a possible cashflow problem (something all growing businesses experience from time to time). This will allow you to take steps before the problem becomes a crisis – and lenders don’t like crises or surprises.
- Good creditor and debtor control will improve your cash flow. Invoicing promptly and collecting debts on time gives you the cash to pay suppliers on time and get more favourable credit terms from them. Sloppiness in this department is one of the most common (and unnecessary) causes of business owners experiencing stress and anxiety.
- Realistic pricing and costing will ensure that you run your business in a competitive but profitable way. Poor skills in this regard could mean that you’re operating at unrealistic levels – or even at a loss. For example, if you let costs get out of hand (such as overhead costs), then your profits will erode. There is no point in increasing sales if you’re not increasing your profits.
Finding the right solutions to ensure your business survival
In business, you don’t have to be an expert at everything. But you can get someone else to do it for you, such as an accountant or bookkeeper.
Are you reliant on spreadsheets? Our cloud team can introduce and train you on cloud products that will save you time by linking with your bank.
Do you have a mountain of unprocessed purchase invoices? This means you have no idea what your real profitability is. There are cost-effective solutions that will process significant numbers of invoices with little need for human intervention. They know the supplier name, the net, the VAT and even the type of expense it is.
Does your software allow you to monitor profitability? We have a solution that will help you monitor by product or department and produce visual reports on a real-time basis.
How are you ensuring you get paid? There are automated tools for monitoring and chasing debtors, which can be personalised for seamless communication from your business.
How we can help
Our award-winning cloud accounting team work with hundreds of businesses to help them grow. We have solutions that will help your business become more efficient, and help improve your profitability.