These articles contain both up to date information that we think is important to every business together with some of our observations about running and managing businesses gleaned over more than 30 years of running many successful small businesses.

We hope you enjoy them and that they may raise new thoughts for you to ponder upon and perhaps improve your business and it's processes. 

Can using KPIs help your business?

posted 3 May 2012, 17:15 by Leighton Hill   [ updated 9 May 2012, 00:00 ]

The buzzword "KPI" has been around for some time but I hear it more and more on the lips of young business managers these days. I suspect that as with many concepts that obtain the buzzword status, the original concept behind the buzzword has been lost and the word takes on a special context all of its own: people use the word but don't know how to utilise the concept.

This may be the case with KPIs. Many businesses are not employing the concept correctly and are trying to manage too many KPIs at any one time. As a result the management become more focused on the process than outcome they are trying too achieve.

KPI stands for key performance indicator. In this context the word key is used to mean a crucial step or requirement. That suggests that the performance measure is crucial not "nice to have", just "important" or a "guideline". I have seen job descriptions that contain a multitude of KPIs. I doubt very much that all of them referred to a performance measure that was crucial or that the employee was able to meet all of their KPIs all of the time.

I think it far better that there are only a very small number of KPIs set. It may be more productive to focus only on one KPI at a time rather than many KPIs. Only when the performance being measured reaches a satisfactory level and has become part of the business DNA should the focus move to another KPI. 

To be effective the KPI needs to be measured frequently, hourly, daily or weekly depending on the rhythm or nature of the business. This would prove difficult or impossible if too many KPIs are being monitored at any one time.

The KPI needs to be acted upon by someone with the appropriate authority, the CEO or a senior manager. Without the appropriate authority taking action it is a waste of time making the measurement and again, this would be difficult with too many KPIs.

Each KPI must have a significant impact on the organisation and affect more than one Balanced Scorecard perspective. It must encourage appropriate action that has a positive impact on performance.

So, yes, using KPIs can help your business but use them carefully. Don't over do it: don't focus on too many at any one time. Remember that what is being measured has to be a key feature of your business at that stage in it's development.  

To find out more contact us for a no-obligation free one hour consultation.

Is your company paying its superannuation guarantee liabilities on time?

posted 25 Apr 2012, 22:08 by Leighton Hill   [ updated 25 Apr 2012, 23:05 ]

Legal issues
Many SMEs do not pay sufficient attention to the need to carefully manage their superannuation liabilities.

Every time an employee is paid, unless their gross pay falls below the superannuation threshold (currently $ per week) the company must put aside an amount equivalent of 9% of the employee's gross pay as the company's contribution to their superannuation.

Depending on the size of the company's payroll, these contributions must be paid over to the employee's chosen superannuation fund from time to time. It may be monthly or quarterly.

If the company has tight cashflow they may be tempted to put off paying over the contributions, opting to use what cash is available to by stock or pay other creditors.

For many years companies that do this have got away with little or no penalty. But now things are about to change.

The Government has released draft legislation which affects all company directors and intend to introduce the amendments in the winter 2012 sittings of Parliament.

The changes are to the penalty regime in the tax law and the proposed amendments involve:

  1. Making directors personally liable for their company's unpaid superannuation guarantee amounts;

  2. Stopping directors attempting to discharge their director penalties by placing their company into administration or liquidation when unpaid Pay-As-You-Go (PAYG) withholding or superannuation guarantee remains unpaid three months after its due date; and

  3. In some instances, making directors and their associates liable to PAYG withholding non-compliance tax where the company has failed to pay amounts withheld to the Tax Commissioner.

To avoid getting caught each business should have procedures in place to ensure that superannuation liabilities are properly accrued and that their will be sufficient cash available when payment is due.

To find out more contact us for a no-obligation free one hour consultation.

Save money in your business with cloud technology.

posted 2 Feb 2012, 08:27 by Leighton Hill   [ updated 3 May 2012, 17:46 ]

Cloud computing
Using cloud techology can save your business money and make it more efficient.

You've probably seen articles about this latest development in computing technology "cloud computing" and may be wondered how it may be of use in your business.

As with all new technological developments, the technology starts with and idea, becomes a reality by being adopted by "early adopters" and eventually becomes mainstream.

The most recent phenomena, "social networking technology" has now become mainstream and conventional wisdom suggests that, unless they want to be left behind, businesses need to understand, develop a policy for and employ "social networking techology".

The next phenomena that I think will become mainstream is the use of cloud technology.

The idea is not really that new but over recent times with the rapid increase in computing power and the decrease in cost the technology is available to all.

So, how can this help save money for your business?

Here are some suggested opportunities:

  1. the business will no longer have to buy software and pay expensive licence fees of be forced to pay annual "upgrade" fees for features that you don't need but you have to take if you want to continue to use the software.

  2. the business can have information available to anyone, anywhere who has a device, PC, tablet, smart phone or anything with a browser without the business having to maintain it's own network of servers.

  3. the business will be able to cut the cost of technical support for computing.

  4. the business will be able to cut the cost of hardware.

  5. the business will be able to use simpler computing devices which are more user friendly.

  6. for businesses that service clients at their home or office, they will be able to easily produce on the spot invoices and receipts, increasing cash flow and reducing administration.

Obviously a business cannot move to this new technology without careful planning and assessment but the development is not something that can be ignored and those businesses that do will be in danger of being left behind by more nimble businesses that have reduced their costs and increased their efficiency. Just look at what is happening to those reatailers who have ignored internet shopping.

To find out more contact us for a no-obligation free one hour consultation.

A business without a system is not a business

posted 31 Dec 2011, 17:00 by Leighton Hill   [ updated 3 May 2012, 17:47 ]

Where would McDonald's be without a system?

Where would Specsavers be?

Two very successful business with finely tuned systems.

These business models can be applied to any business no matter what it's size.

In fact if you develop your system while your business is small you give it a better chance of growing without pain or failure.

To find out more contact us for a no-obligation free one hour consultation.

Are you getting the most out of your company's accounts?

posted 31 Dec 2011, 16:50 by Leighton Hill   [ updated 3 May 2012, 17:51 ]

In my experience owners of small businesses regard the annual "year end" accounting exercise as a necessary evil. Something the government makes them do so that the business can be assessed for income tax.

In recent years Australian business's have also been obliged to make BAS returns declaring, amongst other things, how much GST the business has paid and how much it has collected.

Both exercises appear to benefit the government's more than the business and the only person making any money is their accountant.

This is understandable, but it doesn't have to be this way.

A business's accounts can serve many purposes in addition to the obvious compliance.

  • they can provide vital information to management;

  • they can form the basis of ongoing planning;

  • they are the basis of any business analysis.

To achieve this the business's accounting system needs careful planning and must be maintained diligently and accurately.

The accounting software available for small business does not automatically serve these purposes.

Each business is unique so it would be difficult for the designers to provide software specific to each business. As a result the standard way in which the accounting software works is such that it complies with what the government want since this is known.

However, with careful planning and some additional applications it is possible to utilise current accounting/bookkeeping software to deliver on time decision-making information to managers and business owners.

To find out more contact us for a no-obligation free one hour consultation.

Wealth is never destroyed, it is only transferred

posted 28 Nov 2011, 23:29 by Leighton Hill   [ updated 3 May 2012, 17:53 ]

Transferring weath

The Great Depression produced more millionaires than the world had ever seen.

With the recent Global Financial Crisis and the current Euro crisis and the doom and gloom surrounding them whilst there is no official depression it may seem that we are in one nonetheless. So does that mean that there are opportunities out there?

You would think from the news that it is disaster everywhere – spending is down, the traditional banking model is no longer working, governments are going broke and confidence is at an all time low.

You may well have seen your business suffer too, particularly if you have been in business for some years.

But it is not all bad news. A friend of mine started a business less than two years ago and it is going gang-busters. Why?

Despite all the doom and gloom that pervades the airways, internet and newspapers, everything has not suddenly come to a halt.

People still need things, there are things that have to be bought. Food and other everyday needs are a prime example. Businesses supplying staples are still active. They may face ever increasing competition of course from other businesses and buyers being more discerning and spending as little as possible. But those, and this is the key, that are innovative are doing well. Those businesses that fail to change, well, fail. Those businesses that are prepared to change may do well, very well in fact, specially if they remain in business whilst there competition gives up.

So why is my friend doing so well?

His business is not in a new up and coming industry and he has thousands of competitors but his business is organised and managed in a different way from his competitors. He uses modern marketing techniques to sell his product, he has a superior business system that ensures he keeps his customers happy and staff busy (and it's not computer based! room here for efficiencies in the future). Where he lacks particular skills he employs the best people he can find with those skills to help him. He pays his bills on time and only supplies people who are going to pay him on time. He keeps his finger on the pulse with daily activity and financial reports.

So there is money to be made in today's tough economic climate but you must be proactive and innovative.

People will spend but they are looking more than ever for good value.

Match those needs and you will be on to a winner and perhaps transfer some your competitor's wealth to you.

To find out more contact us for a no-obligation free one hour consultation.

Starting a business

posted 17 Oct 2011, 15:58 by Leighton Hill   [ updated 29 Nov 2011, 01:29 ]

New business

So you are taking the plunge – you're starting your own business. You've tested the market, you know it's going to work. You've gots lots of energy and you're not afraid of hard work. You've even saved up the money you need to get started. You're keen to get going.

But where to from here? You've research has revelled that business has lot's of challenges. It's not just a matter of selling your products or services:

You need to keep accounts;

You need to account for GST;

You need to ensure you pay your staff the correct wages, and deal with penalty rates and on top of that collect and remit superannuation;

You need insurance – contents, public liability, workcover, professional indemnity and other risks specific to your business;

You need to work out what IT services you're going to need;

You need to register a domain name and get a web presence, not just a web site but social media too;

You need to manage stock, debtors, cash flows ...

And so it goes on.

Too much to contemplate? May be starting a business was not such a good idea after all. Perhaps you should spend the money you have saved and a good holiday. Maybe you'll just keep your day job after all.

DON'T LET ALL THESE "CHALLENGES" OVERWHELM YOU we can help, we have 35 years experience in starting and running businesses and can help you wend your way through all of them.

If you have a challenge in your business and don't know who to turn to, why not contact us for a chat. It won't cost you anything but it might help.

Outsourcing accounting, administration and IT for SMEs

posted 17 Oct 2011, 15:10 by Leighton Hill   [ updated 29 Nov 2011, 01:30 ]

There are countless reason why people want their own business: to be their "own boss"; to have an opportunity to earn more than they would as an employee; to develop a long-term retirement plan; for the prestige etc.

Such people are hard working and very motivated. They are usually very good at what they do and highly skilled but, unfortunately may not have any experience in financial management nor any formal training in financial management. At the very best if these skills are not available to the business, the business will be held back, at worst it will fail.

The business may deliver a first class service or product, have excellent customer service, may even appear to be profitable, but, without good financial management may still fail.

As rules and regulations grow, the risk of failure grows both financially and compliance wise.

Good financial management will help ensure that the resources available to a business are used efficiently and effectively making business survival more likely and the risk of failing to comply less likely.

Well designed systems are required to support the financial management process. Well trained staff are an absolute must to run those system.

That's all very well, you say, but I can't afford such "big business" luxuries.

In truth, unless you want to risk your business, you can't afford not to have good financial management. It's not a luxury and it doesn't have to cost anything. Good systems and management will pay for themselves.

Wouldn't it be comforting to know exactly where your business stands financially any time you care to ask? To know that it can meet it's liabilities without you stressing about where the money is coming from? To know how much you can afford to spend on new equipment and what that new equipment will contribute?

I'm sure the answer to these questions is a resounding "Yes". So what will you do about it? Not sure? Too busy?

Don't delay, stop taking the risk, look forward to lowering the stress levels -
TAKE ACTION NOW - try outsourcing -  contact us and see how we can help you.

If you fail to plan you plan to fail

posted 14 Dec 2010, 15:32 by Leighton Hill   [ updated 4 Mar 2011, 09:31 ]

I'm sure you have heard this comment before but how many people really take notice. Planning may be regarded as trying to see into the future and which is daunting. After all we don't possess a "crystal ball" and seeing into the future is impossible.

So, is planning really seeing into the future? I don't think it is. Planning is gathering as much information as possible for doing or achieving something. Think about setting out on a journey by car. Do we get into the car without any idea of where we are going? No we plan - at the very least which way we will turn when we get to the end of our drive or the street we live in. If we are a little more organised and haven't made the journey before we probably consult a map or program the destination into our GPS.

This is planning. We have looked into the future to a degree because we have reviewed our map or set up our GPS. We still don't know what the future holds but we know which direction we're heading and if nothing untoward occurs we will arrive at our destination as hoped, or planned.

If we have taken our planning exercise a little further we may have sought out what might be trouble spots on our planned route and worked alternative routes should the potential trouble eventuate. We may estimate the time our journey will take and, if it is a long one, plan some rests. If the reason for our journey is to attend an appointment then if we are to make the appointment on time it is essential that we take such steps. We should also check out where we will be able park within easy reach of the appointment.

We should take the same care when planning our business.

1 - Do you have a plan for your business?
2 - How old is your plan?
3 - How often do you review your plan?
4 - Do you have a system that compares your business's actual result with it's plan?
5 - If so how often do you make this comparison?
6 - Is your plan sufficiently flexible so that you can react to changed circumstances?

The answers to these questions should be:
1 - Yes
2-  Less than 6 months
3 - At least every 6 months
4 - Yes
5 - Weekly and monthly, and
6 - Yes

You may think this is all too hard. After all it's hard enough keeping track of sales and paying suppliers bills without having to make plans and carry out comparisons. If you think this way though it's like driving with your eyes closed and hoping that you won't hit anything! But with the right systems and discipline it's not hard at all and the weekly review of results becomes a great focal point for all staff. Once the systems are set up it becomes easy.

If you don't have a plan, don't have systems that allow you to make valid comparisons or didn't have the correct answers to the questions posed about your planning process then you need to TAKE ACTION NOW - do not wait -  contact us and see how we can help you build the best business planning system to suit your business.

Why are you in business?

posted 2 Dec 2010, 15:15 by Leighton Hill   [ updated 3 May 2012, 18:06 ]

Have you ever asked yourself “Why am I in business?”

Every business owner has their own reason: they want to be independent; they want to make as much money as possible; they are carrying on a family business in the family tradition.

Very often the reason is an emotional one and, particularly for men, ego driven. I’m not saying there is anything wrong with this and these are powerful driving forces in keeping the business going. How often have you heard of a business failing after the original owner has sold it because the new owner didn’t have the same emotional drive. So this drive is probably a very important factor is ensuring the survival of a small business.

My question, however, is does this emotional drive sometimes blind the business owner to the truth about his business?

  • Is their business as efficient as it could be?
    They would not consider changing the way they operate because: “We’ve always done it this way.”
  • Does their business consume their life and not allow them time to enjoy the money they have made?
    “I can’t leave the business to be run by the staff – they don’t understand” would be their retort if you suggest they take a holiday.

As a business owner, whether you started the business yourself or have inherited it from the family, it is your baby and you will protect it like any parent. Like a good parent you should nurture your child, help it mature and grow and then when it is ready let it out into the big wide world. Unfortunately this requires letting go, letting the child find it’s own way, make it’s own decisions and it’s own mistakes. This is not easy and takes a lot of courage, but this is the best course in the long run.

When all is considered the fundamental reason for being in business is to hopefully provide a life style that could not be achieved otherwise. Irrespective of the reason you are in business there will be a time when you have to let it go. This is inevitable. Owners who hang on to their business too long often damage the business, sometimes irreparably.

Every owner should have an exit plan and should organise their business affairs so that the plan can be activated when required. If you do not have an exit plan then you are not looking after your business and may not be able to achieve that life style goal. Finding the time and being able to view your business dispassionately in order to make an exit plan may be difficult without external help. We have relevant experience in this area and may be able to help you with this very important step.

To find out more contact us for a no-obligation free one hour consultation.

1-10 of 12