Archive for May, 2010
Understanding Accounts Payable – The Benefit of Early Payment for Small Businesses
Most businesses continually play the game of ‘pass the cash’ with a strange juggling act taking place. Money is owed to you as a business and no doubt you owe money to others and it is likely that your creditors also owe money in their turn and so it goes on with everyone owing some and chasing the debts of others. This, in short, is how the business world works. Most of the time you probably don’t even consider it very deeply. A bill comes in and if the money is available you pay it, but learning to understand business creditors is a little more important than dealing with your bills at home.
Creditors all work in different ways and examining their terms is as vital as setting your own carefully when extending credit to your customers. Although creditors such as utility companies will employ very standard terms, where a monthly bill is followed by expected payment, vendors will vary considerably in the terms they offer.
Getting a handle on the area of ‘accounts payable’ is something that you may want to have a chat with your accountant for, but whether you choose to pump a professional for advice or look into it on your own, it is an area that you do need to understand to run your business smoothly.
You may be presented with terms such as ‘within 30 days’, which is pretty self explanatory, more confusing however could be ‘net 30’ or ‘2/10 net 30’. You would probably have a stab at guessing that ‘net 30’ means the same as ‘within 30 days’ and you’d be right, but ‘2/10 net 30’ seems more cryptic. The numbers may vary, but the meaning of the format stays the same; breaking these terms down, the 2/10 part refers to a discount for early payment, put simply, the first number, in this case 2 is the percentage discount you are being offered if you can pay within the second number (here 10); the ‘net 30’ is as before, so that the terms are ‘pay within 30 days, however if you pay within 10 days you will receive a 2% discount’.
In large businesses that run a separate accounts department, it is rarely a single individual who is responsible for paying bills; this is often, quite rightly, the recommendation of the business’ accountant who will suggest that to prevent fraud and/or theft more than one person should be involved, with different stages of the payment process falling to different members of staff; this will inevitably slow the whole bill paying process down considerably and so make it unlikely that they would be able to take-up discount offers for early payment, also with more than one individual involved such discount offers can get lost in the mix. With a small business however, where it is often the business owner themselves who pays the bills, taking advantage of such savings can make a huge difference over the course of a year.
Becoming familiar with the sort of terms offered will not only allow you to take advantage of valuable savings, but it will help you know what terms you can be expected to offer your customers in return.
The Value of the Guarantee in Business: Why it’s Worth More Than the Paper it’s Written on
We are all familiar with the traditional guarantee, our kitchen draws are probably full of them; they made us feel secure when we bought our new kettle or signed-up to pay our council tax by direct debit and were important enough for us to stuff our homes full of them, so why do we feel so differently about them as business owners?
Something makes the average small business owner squirm at the thought of offering a guarantee to their customers and yet the guarantee in all its various forms is an incredibly valuable tool in the fight to win the loyalty of your customer base.
The type of Guarantee one can offer as a business is almost limitless and it is really up to you to decide what sort suits your product or service; it is fine to be creative as long as you can follow through with what you promise. Some common types to consider offering are:
Price Guarantee.
Many businesses opt for this as the easiest way to offer customers a guarantee as it usually involves offering to do something that they would have done naturally anyway and therefore costs little to implement. For instance guaranteeing that your prices will stay the same for a given period of time or that they’ll be fixed for a package of services or a bulk order can make a customer feel assured of your commitment to them.
Service Guarantee.
Beloved of everyone from takeaway pizza companies to utilities firms; promising a customer that they’ll receive some form of compensation if your service takes longer than promised or there is a problem with it is a powerful motivation for customers to choose you. The chances are that you’d offer these things as standard and so wrapping it up in the form of a guarantee makes a lot of sense.
Giveaway Guarantee.
Guaranteeing that you’ll provide freebies of some kind if a customer returns to you, is a great incentive to loyalty. It does not have to be anything of huge value to your business to be of value to the customer; vouchers to spend with you or ‘buy one get one free’ offers all help to increase repeat business.
Gold Guarantee.
When a business owner puts their ‘personal’ guarantee on something it lends a great weight to what is being offered; if a customer knows that they can come back to you personally if anything goes wrong and that the service carries your promise of satisfaction, they are more likely to trust in your business and give you their loyalty.
Of course however potent Guarantees are, offering your assurance of anything should only be done if you know your business can fulfil its promise. A broken guarantee is not merely pointless is can have a hugely detrimental and long lasting effect on the whole of your business.
Checking Out the Competition: How to Learn the Most about Your Competitors
Accountants in Birmingham – Competitor Research
The problem with competitors in the business world is that they don’t stand still. They, like you, are constantly developing and up-dating their business activities and working hard no doubt to beat the competition, which in their case is probably you.
How does one keep-up with competitor research when the information is never static? Just as with everything else in business it is important to have a good solid strategy to apply to the collection and up-date of competitor information.
The very best way to judge just how good a service your competition provides and how well they treat their customers is to become one. It is also a sure-fire way to keep up-to-date with any changes or developments they may have. Of course it may not always be possible for you to engage their services yourself, if for instance they provide a product or service that you cannot use you may have to rely on enlisting the help of a friend or relative. If even this is not an option you should perhaps put yourself forward as a ‘potential’ customer, signing up to newsletters and putting yourself on their mailing lists; this will give an insight into not only their marketing strategy but also provide intelligence into any business changes they may make.
The next best thing to actually being one of their customers is to talk to the ones they have. Obviously approach them with caution and do not fall fowl of any laws, but networking at professional shows and conferences attended by potential customers may give you a chance to talk to people who are currently using the services of your competition and of course who may be interested in your services as an alternative. Virtual conferences by way of professional forums online can perform a similar function. Sign-up and chat to relevant people; this option has the added benefit of being somewhat anonymous with people operating behind usernames.
The internet is a great place to start gathering intelligence on your competitors as it is constantly up-dating itself with people adding content and reviewing services regularly. You will also have access to your competitors’ websites here and this above all else should show you what they are about as it is their shop window. It will give you an insight into their marketing strategy as well as how they see their business image and of course who their customers are; it will also give you access to anonymous contact options in the form of information requests by email.
However you decide to go about it, one thing is certain, you must keep on top of your competitor analysis, because only by knowing what they are up to can you make sensible decisions about what direction to take your own business in.
Good Luck.
How and Why to Fix Your Fees: A Guide for Professionals
Accountants in Birmingham – Professionals Advice
Traditionally professionals in the UK have the freedom to charge in any way they choose; it is a freedom earned by the years spent training to become a part of their chosen profession. The majority cling fast to this freedom and most still opt for the hourly charge so beloved of their first boss or mentor. Hourly charging does have a certain whiff of status and speaks of the esteem that most professionals still believe they should be held in. The problem is that, tradition aside, there is no real reason why this form of charging should be the only option available and it’s arguably not in a client’s best interest to work with a form of billing that does not allow them to know in advance what they’ll be charged.
So, what is the alternative for the modern, forward thinking professional? Many UK accountants, solicitors etc. are moving into the world of the ‘fixed fee’.
The fixed fee is simply a way of offering a ‘package’ of services that are required by a client for a set price quoted at the start of business. In this way a professional can offer a ‘menu’ of different services to customers and they can know exactly what they are being charged for as well as being able to budget for the cost of the service.
Because this way of charging is very new to most professionals, it does take a little practice to get the fees right; of course you need to cover your own costs as a professional, this goes without saying, but outside of this there is a lot of room for movement. The difficulty is where to pitch; too high and you’ll frighten off your prospective clients, too low and you run the risk of down-grading your firm’s image too much.
The very best way to go about setting a fixed fee is to break it into its various components; firstly calculate how much work each service will require and then price it out as you would with a standard hourly rate bill; this way you will have an idea of your fee if you were to charge in a standard way.
Secondly ask to see the potential client’s most recent accounts, these could provide clues to their previous fees which will tell you their expectations. Asking them what they expect to pay may also provide an idea of their understanding of fees.
When it comes to setting out the quote make it very clear what will be included and what will not in the fixed fee; being vague will only result in your firm doing a lot of extra fee ‘bits and pieces’ that were not mentioned as being outside of your fee.
The advantages of a fixed fee are seen not only by your clients who will be secure in the knowledge of what they are paying for, but it provides clarity for you as a professional as to your remit. It is also a way to do away with bill disputes which is far less likely to occur.
Unfortunately setting the best fixed fee is as much a case of feeling your way as anything else and there is a certain amount of trial and error involved, but once you have hit on the right fixed fee to quote you’ll reap the benefits in a contented client base.
Why Being in Business Means That Copyright Concerns You – A Simple Guide
Copyright is a topic that many business owners try to avoid if possible, they know that it affects them, but as the world of copyright law is often a contentious one, many run for the hills as soon as the subject is mentioned in fear of becoming entangled it its complex web.
Copyright protects “original works of authorship”, this usually means the written word, music and artwork, but can also include some ‘intellectual property’ although this is a more complex area. Copyright protects more than just ‘published’ work, it also applies to things put into the public domain, i.e. performed, exhibited, or made available through the Internet. It is worth noting however that every country has its own copyright law to protect work created there and so one must always look to the copyright protection of the source country.
If you feel that your business has little to do with the creative arts and therefore will not have to deal with the complex world of copyright you will probably be surprised to realize just how much copyright protected material you handle on a day to day basis; the ‘copy’ or words on your business website for instance, the text in your brochures and on your flyers are all affected by copyright. You can’t use material written for another business and they can’t use yours without falling fowl of copyright laws. If one business pilfers copy from the website of another without its knowledge, permission or giving proper credit it is a serious breach of copyright law and can and often does result in costly lawsuits.
Interestingly, regardless of whether or not you wrote your business’s marketing material and/or website yourself, there is a pretty good chance that you will still own the copyrights. If someone under contract to you created the material solely for your use, an employee or someone hired for the job, generally you will hold the copyright under ‘work-for-hire’ a section of copyright law that protects businesses who may have paid to have copy written for them.
Copyright may often seem like someone else’s problem, but if you want to protect your business from copy theft on the one hand and litigation on the other it is important to make the effort to learn how the law affects your business.