We covered looking at your balance sheet some time ago, and wanted to refresh you on why it is so important.

Building up your balance sheet can help you with your future with the business, if you were ever to sell your company on to a potential buyer, this is an important area that the buyer will be looking at.

Its not just about profitability and turnover, the balance sheet is an indication that you are growing your branding, a business that has thought about strengthing and building up the balance sheet is worth considerably more than one that focuses just in the present.  ie turnover and profit.

The example we have below, is fine for a small business and will probably have a good credit score as its positive in both the net current assets (Working Capital) and the overal value.

But if youre talking about a business thats worth selling you are going to need a plan, this could be a 5-10 year plan, its certainly not short term.

Will need to be assets in both the fixed assets sections and current assets, this could be by buying equipment or machinery to make yourself more efficient and do a higher volume, buying a company with skills or equipment that brings Goodwill into the assets section, quite a lot of larger companies do this, they purchase mailing lists, and client lists, from smaller companies, to rapidly increase their net worth, and increase turnover.  

Current assets would be building up your turnover, and therefore your debtors increasing. Keeping an all important eye on the costs, and keeping the creditors to a reasonable level.

Long term liabilities are usually loans that are paid more than one year ahead, and maybe the director loans, if the owner hasnt taken back all of their investment.

The balance sheet value needs to increase tenfold, and self sacrifice for the owner is a must for this kind of exercise.  Its not all about your current year anymore, but your long term future, and future sales opportunity.  Think of it as a potential pension plan?  Investment for the house by the sea, whatever your dream future this is your opportunity to make it a reality.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

Most business owners don’t realise that unless you have secured your name and logo through registering a trademark that you may not actually own your own brand.

Registering at Companies House is not enough to stop somebody else using your logo and claiming it as their own.

Please take a look at the following website.

http://www.ipo.gov.uk/types/tm.htm

The Intellectual Property Office, are spending time informing business owners of the benefits of registering their business logo as a Trademark,. If you get the opportunity to go along to one of their seminars it is highly recommended.

Business Wales have advisors that can also help you with Intellectual property or patents as it was formerly known. http://business.wales.gov.uk/

To register a trademark is quite simple and costs £170 for 10 years, then you renew after that. You don’t need to be Kellogg’s or Tesco to see the Importance of this registration, the trade mark registration will increase the value of your business should you wish to sell it, plus you will definitely need it if you have planned to set up a franchise of your business, again this increases the value of the business.

If you have ever watched Dragons Den, it is one of the first questions the Dragons will ask the owner of the business. There are many options for you to protect but starting with your name should be the first point for increasing your business success, and definitely its value.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

When you are running a business whether a new company or a well established one, getting the costing of your products or services costed correctly is crucial to your success.

Service Companies

Creating the Sales price.

Your main component of cost is going to be heavily on labour. You’re going to have to make sure that not only have you covered your labour cost, ie Cost plus employers NI. Contribution to overheads plus that all important profit.

A service company needs to have a mechanism for keeping track of those labour costs versus quoting for a job, at the fingertips at all times. The easiest and simplest route to finding this out is to keep timesheets, or cost the time of every element of each procedure. You always compare the timesheet for a particular job, ie the project, versus the original sales price. This will give you an average hourly rate of the job as a whole. You very importantly need to know the average hourly cost of your overheads. Basing this on the number of hours you have available as a maximum for every member of staff.

Ie You have two members of staff, each work 40 hours per week for 5 days work. As a yearly average that’s 4,160 hours at your disposal or 347 hours per month. Your overhead for example is £2,000 per month which equates to £5.76 per hour. A cost of this nature would be labour cost per hour, plus £5.76 overhead plus % profit.

Every business and industry is different, and you’re dictated quite a lot of the time by market rates, or competitors. By knowing your average overheads and labour costs, you will know the price you cant go below or face making a loss.

Hotels have this down to a fine art. They are mainly in the services industry again heavily focused on labour costs. When you have booked your room for the night. They will know ahead of time, the number of rooms they have, the cost of an empty room, and the cost of a full room. They will have broken down in their costing mechanism

The length of time to make a bed!

Cost of cleaning the room, length of time for each room!

Cost of washing the bedding/ towels!

Cost of the tea/coffee facilities!

Heating and lighting for each room!

Your breakfast cost!

Plus a contribution to fixed overheads, and % profit

Whether your service business is hourly project based or procedure based, you need to know the cost of each element.

Manufacturing and product based sales

Again as above you are dictated to by market rates, you might be a low volume business that can charge a premium fee for your product ie Apple Iphone.   Or a high volume business that charges sales at lower margins of profit but has to sell a lot of them. Ie Walkers selling crisps

When costing a product you need first know

Cost of the materials for the product!

Labour time to make it!

Cost of energy to make the product!

The more volume you make the cheaper it should be per product as you will become more automated in your processes plus you are likely to have more negotiation power with supplier costs. You need to build in a little slack as no-one or machine can work at 100% capacity all of the time. You do need to track efficiencies and always look at how you can make things better and demonstrate you are always trying to reduce inefficiencies. This is usually where profit can go down, if a business does not look to always improve its offering.

Supermarkets have just done this in the last 18 months, by offering the self checkout facility, they’ve saved both wages cost, time and rates bills.

The main thing to realise that this is not a static job to do, as you grow and develop or change your product offering you will need to keep monitoring these costs, or you could end up working twice as hard, for a lower gain.

Always be one step ahead.

This blog is intended for information only, you may have other suggestions of your own.  Please treat this as a guide only.

For anyone who is looking at taking on a an employee in the next 12 months, then this article is just for you.

There is a good budget at the moment with assistance with wages for both apprenticeships and graduate schemes.

ACT Training is providing training and assistance to young people aged 16 - 24 years.  Take a look at their website on /www.acttraining.org.uk/apprenticeships-2

Paying £100 towards wages on a full time placement for the first six months, followed by £50 per week for the next six months.  There is also funding for training available.  Take a look at this website its got some useful information the helpline is good too.

Jobs Growth Wales again is offering placements for six months, paying the national minimum wages for the first six months.

website is wales.gov.uk/topics/educationandskills/skillsandtraining/jobsgrowthwales/?lang=en

Lastly the graduate scheme at Go Wales.  I recently attended their 10 year anniversary event, this organisation is actively seeking employment for students.  There are two schemes in place the placement scheme where the student stays with you for a six month placement and Go Wales supports the wages bill.  

Or you can have the taster sessions where the student get a small taster of your business which is great for if you have a project in mind to be finished, or are unsure whether you can employ a person.   The taster sessions are normally free of payment.

www.gowales.co.uk/en/employer

Think of this article as taking a look into the future and growing your business, you are also giving a young person the opportunity that you once had.  So go on what are you waiting for?

Thanks Nicola

The Business Plan

9 April 2014

This blog is intended to explain the full potential of your business plan.

We have just updated our Business Plan and wanted to share some insights as to why these are important for the growth and success of your business.

You may have put one together when you started your business and it is now collecting dust in the drawer, next to the filing cabinet.

How about if we told you it can be adapted to be used as a positive tool to be developed as your business develops.

You maybe three years into your business, you have changed both as a person, and as a business in that timeframe. What was important three years ago, may not be so important, you may have other ideas, now you’ve dipped your toes into the world of entrepreneurship.

Why Do This In The First Place?

To focus on specific goals you wish to achieve, have something to aim for.

To take on a planned approach to your daily routine. The successful companies plan everything.

To know your customer better 

To know your competitors better 

To work on your threats and weaknesses . Stand out from the crowd.

Lets break it down.

Your Mission Statement

What do you want to be?

What do you want your business to be?

What is your Unique Selling Point, what is your business goal all about?

Why are you doing what you are doing?

Update the business plan with these new inspirational ideas.

SWOT Analysis

You have now been in business for while. You now have experience with what you are doing. You may have made some mistakes along the way, but have learnt from them using that knowledge to better use.

The SWOT analysis is all about where you are today, and how you compare with your expectations and more importantly against the competition.

Strengths - you have first-hand experience of running a business. What have you gained from your time doing it.

Weaknesses – you listed these in your first business plan, did you manage to eliminate some. Have you gained new ones?

Opportunities – No matter how big or small your business is there are always opportunities to promote and sell your product. Use your contacts you have now built up. They may be able to put some work your way. Give you access to that contract you’ve been chasing. Its not necessarily what you know, its who you know.

Threats – Whether you own the local shop down the road, or run a large corporation.

Three main threats to your business survival. The economic environment, cashflow and the competition. Embrace and learn all you can about them, be one step ahead.

The Products Or Services You Offer

What services or products do you offer ?

What is your Unique Selling Point ?

How saturated is the market place ?

How big is your market, what is your potential piece of the pie?

Is it local area or a global market ?

Can you make a profit from what you are doing?

The Marketing Strategy

How am I visible to the market place 

Website development 

Online presence 

Advertising in the local press 

The Directories 

Word of mouth 

Business contacts 

Referrals 

Looking at the competition and your customer base, the target market. This should be taking up the main part of your business plan Your strengths and weaknesses against the competition Your target market

How your marketing campaign has been working so far, track what works and what doesn’t. Some Number Work Set yourself a detailed budget and compare to actual figures Put together a cashflow statement.

Whatever youre doing always keep an eye on the cash and profitability.

Check and triple check your costings.

Nicola Cross 9 April 2014

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.