How Chartered Accountants help Businesses Grow
Seminar at Business Start-up Exhibition - Excel
Seminar at Business Start-up Exhibition - Excel
Welcome; I’m David Adams; I’m not a chartered accountant in practice but a business coach with Vistage International, whose SME clients do work with many who are.
Who here has started a business? Who here is thinking of starting a business?
People start businesses for two reasons:
That’s all very well but as we’ll see later, ‘stuff’ often gets in the way.
(Zopa [social networking banking zopa.com] is the fastest growing financial institution in
Trust has declined in big brands – even Coca Cola – incidentally did you know that whilst Coke is No 2 on Facebook after Barak Obama, [Anybody know #3?] No.3 is Nutella – some women apparently think Nutella is better than sex (because you can think about Nutella whilst you’re having sex!)
Web 2.0 social networking is taking over in terms of business. Will it Blend? A series of spoof adverts for BlendTEC on YouTube has quadrupled sales.
Now, I’m not suggesting that your chartered accountant will be able to act as your Web 2.0 advisor but he or she will certainly help you with many of the support services you will need to ensure that your business grows in an environment, first of uncertainty due to recession and secondly of uncertainty due to technological change.
Remember, some of the greatest businesses have been born in a recession:
GE in 1886; HP in 1929; Microsoft in 1975; MTV in 1981; Wikipedia in 2001.
Many chartered accountants are using international web-based services in order to ensure that costs are kept manageable but you also want to be able to build a face to face relationship with your advisor. There are some 130,000 members of the
Anyone can call themselves an accountant but what is a Chartered Accountant? Suffice it to say that it’s someone whose studied for many years to become qualified to help people like you and is required to keep up the knowledge in an annual assessment of themselves in what is called CPD – continual professional development. Added to this is a strict code of ethics – they won’t rip you off and try to get you to do unnecessary stuff.
Your CA will help you decide the best format for your business, be it sole trader, partnership, limited company, LLP, franchise or even co-operative.
Your CA will help you to think like your customer:
If I ask you what your business is can you express it like Starbucks not selling coffee but pleasing people with coffee? Business has to be about building relationships. Think too about your customer’s customer – will that person also be delighted with your product/service?
You don’t want to create average products for average people; you want to ensure that your customers tell their friends. Can you get your customers to tattoo themselves with your brand like Harley Davidson? Incidentally, did you know that the boss of Harley Davidson claims that their product enables 43 year old accountants to dress in leather and be aggressive?
The thing is that your CA can help you with your market research. Not just focus groups but un-focus groups. Sometimes it pays to think like a bat – upside down.
To help you become outstanding in your business, the top ten rules are:
On that last point remember it’s not turnover, its profit that produces cash. [Turnover: Vanity; Profit: Sanity; Cash is King] Of the world’s leading motor manufacturers, General Motors, the top revenue earner has the biggest loss whilst Porche has the lowest turnover and the highest profitability.
Remember to that you don’t have a real business until you, the owner/proprietor, can go away for two months and everything carries on without you.
The CA, as business advisor, will act as:
The CA will also help you look after all the stuff that isn’t really the business at all; it’s:
If you see yourself as an entrepreneur, you are typically, a scientist, engineer, inventor, technologist, an expert in your own field – the chances are you know very little about running a business, business planning, raising funds, negotiating deals. You must do what you’re good at and as I said earlier what you’re passionate about. You need an expert to help with the business side of things.
A slight word of caution: the above lists are not exhaustive and indeed, whilst some CAs will be able to cover all aspects, you will need to ask questions before appointing one. The chances are that you will need to be aware of their capabilities and almost certainly, as your business grows, you will need to graduate to a larger (though not necessarily large) firm so that you obtain the help of specialists within the firm.
You will notice that I’ve not talked about Audit. [Threshold £5.6m] – a separate service, though you might need audited accounts to satisfy bankers/investors.
Another word of caution, if you’ve recently escaped from the corporate world and are looking to set up your own business, don’t forget that you won’t be able to call a help desk when the PC goes wrong or HR, when there is a problem with a employee. All the more reason to outsource as much of the administration as possible and to have serious help from a professional in these areas as well as in those areas where you are not the expert. Even if you are, remember that your role is to grow your business; you are the company’s chief sales person creating and building relationships. Don’t get bogged down in the bureaucracy. Whatever it costs will be a great investment, helping you generate value with your business. What you like doing will always be better done than what you don’t like doing. You can earn much more than you’ll have to spend if you get this balance right.
For example, it’s rarely possible for a new or newish business to employ a full time, fully qualified finance director there are however, many CAs who can fulfil such a role on a very part-time basis (a few hours a month) to ensure that whoever does your book-keeping is not only doing it accurately but is also ensuring that your customers pay on time and the cash comes in and you’re paying the right amounts to your suppliers and building up a good credit rating by paying on the nail.
It is vitally important to have helpful and timely management accounts with cash flow forecasts; budgets that take cash flows into account and a system that enables the future flows of business to be readily acknowledged so that the business owner knows when to stop supplying a particular type of service or product or to a specific client or customer.
The CA will help the aspiring business owner to acquire and install the right accounting systems be they online or offline. Will help you ensure you don’t pay too much for either the software or the support.
The CA will guide the business owner through the regulatory minefield particularly when it comes to the fear and apprehension that you’re getting your Vat, Corporation Tax, PAYE, and NIC correct. That your statutory accounts are prepared correctly, even if an audit isn’t required, and filed on time to avoid the ever increasing fines being imposed these days. And I haven’t even mentioned , the Data Protection Act and the Money Laundering Regulations. Not to mention the Criminal Records Bureau or the Financial Services Authority for some activities. And then there’s Intellectual property (IP) protection and that’s another story.
When you’ve recognised that good systems are essential for compliance purposes, it’s great to know that they’re there to help you actually run your business, knowing where it’s going and how successful you’re becoming. Your CA should be able to help you select and install those systems.
So, in summary, your Chartered Accountant will not only help you set up your business, he or she will guide you along the regulatory path and ensure that you have the right information to map out, build and succeed in your chosen field.
For more on Chartered Accountants come along to Stand 552. We look forward to seeing more of you.
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