Introduction

If you are running your business, you have a fundamental responsibility to yourself, if no one else, to make it work.  Let’s face it, unless you are limitlessly wealthy; you need to make money.  So that is one reason you are doing it.  There could be others, but for now let’s just focus on the fundamental primary purpose of all businesses…

That’s right…

To make money!

So from a purely tactical perspective, you have to “make a number”.  So the first step is figuring out what is your goal; what’s the target.  So lets get tactical.  But lets stsart sat the begoinning of the Profit Through Control Process. That is to say, lets start with Sales.

In sales there is an old adage … Calls + Demos = Sales

Think of it like you are training to get fit. How many leads sare you getting? Are you turning them into meetings? What is your tatget for meetings each week? For example, do you hsve a goal of meeting 3 to 5 new people per weekl? How are you doing against that target?

Now follow the Key Contyrol Steps we discussed before.

Step 1

Statring with sales; when you look at your business, think in a process orientation starting with the customer through your organisation to the point where you deliver your product and service to the customer and get paid.

Now map that out.  No need to get fancy, use post it pads or something and get a “rough cut” of your key steps.

Step 2

Now think about each step in the process.  Let me use a simple example process.

1. Lead Generation
2. Sales or Closing Deals
3. Invoicing or Billing or Collecting Cash
4. Purchasing or Buying Stuff
5. Doing Things or Building Things or Holding Stock
6. Delivering Things

Step 3

Now that you have your key steps outlined ask yourself two questions:

1. What in these steps could I do better to enable me to get more customers?
2. What “clogs up” my money and keeps my money from getting into my pocket?

So for the first question it could be more leads or a better conversion rate in sales or spending less on overheads.  But don’t boil the ocean here! pick one!

Similarly for the second question it could be getting paid quicker.  The root cause of that problem could be getting your invoices out quicker or better credit control or different terms or better pricing.  Again only pick one!

Step 4

Limit yourself to 3 to 5 key areas to improve.  Measure them and be relentless at your pursuit of improvement!

When you’re done, circle back and do it again!                   

The post The Profit Equation appeared first on Pathway to Profit.

What is an in solvent Business?

In accounting, insolvency is the state of being unable to pay the debts, by a person or company (debtor), at maturity; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.

Cash-flow or Trading insolvency is when a person or company has enough assets to pay what is owed, but does not have the appropriate form of payment. For example, a person may own a large house and a valuable car, but not have enough liquid assets to pay a debt when it falls due. Cash-flow insolvency can usually be resolved by negotiation. For example, the bill collector may wait until the car is sold and the debtor agrees to pay a penalty.

Balance-sheet insolvency is when a person or company does not have enough assets to pay all of their debts. The person or company might enter bankruptcy, but not necessarily. Once a loss is accepted by all parties, negotiation is often able to resolve the situation without bankruptcy. A company that is balance-sheet insolvent may still have enough cash to pay its next bill on time. However, most laws will not let the company pay that bill unless it will directly help all their creditors. For example, an insolvent farmer may be allowed to hire people to help harvest the crop, because not harvesting and selling the crop would be even worse for his creditors.

What Does It Mean to Perform Insolvent Trading?

Insolvent trading means trading while your company is suffering insolvency. Specifically, this refers to incurring new debt while your company is insolvent. As a director of a company, one of your main director duties is for your company not to engage in this practice. A director engages in insolvent trading if the following conditions occur:

• The person is a director while the company is insolvent.
• That when the debt is incurred the company is insolvent or would become insolvent.
• There are reasonable grounds for suspecting that the company is insolvent, or will become insolvent as a result of the debt.

If a director engages in insolvent trading then they become personally liable for the new debts that are incurred by the company. That means they are not protected by limited liability. Therefore, the director’s personal assets are used to pay the new debt obligations. This is particularly relevant if your company goes into liquidation or bankruptcy, after being insolvent.

What are my responsibilities as a Director?

It is always advisable to see an Insolvency Practitioner if you have any concerns, to ensure that you have specific advice on your specific situation.   These Guidance Notes are not designed to be all encompassing, but rather a general guide.

Given that the company is below the threshold, it is the Directors responsibility to assess “going-concern” questions. 

Specifically, THE DIRECTORS RESPONSIBILITIES OR QUESTIONS TO ASK ARE: –

When conducting their going concern assessment, the directors will have to evaluate which of three potential conclusions is appropriate to the circumstances of the company:

1. there are no material uncertainties that may cast significant doubt about the company’s ability to continue as a going concern
2. there are material uncertainties related to events or conditions that may cast significant doubt about the company’s ability to continue as a going concern but the going concern basis remains appropriate
3. the use of the going concern is not appropriate

The accounting standards require directors to make disclosures about the existence and the nature of material uncertainties that lead to significant doubts about going concern.

Final Though

If you are struggling or you have questions always seek help.  Speak to your accountant, solicitor and Insolvency Practitioner and people who are close to you.

The post Am I a Going Concern? appeared first on Pathway to Profit.

In the UK a lot of business owners have been looking to ways to efficiently extract cash from the business.

One thing many business owners have gravitated towards is buying an electric car through the company and then using it as a benefit in kind.

So no matter if you are looking for the most expensive electric car or the cheapest electric car for sale … if you want a Kia Electric car, a BMW Electric car, a Tesla Model 3 or a Tesla Model S; the question is the same…

Does it make sense for me to purchase my Electric car through my business?

At the point of writing this, it is a good way to extract cash from the business. This is because the government has put in place tax incentives to encourage people to buy electric cars in their bid to reduce emissions by 80% by 2050.

However, there are a number of caveats to look out for…

Now of the technical bit…To receive the benefit of 100% First Year Allowance you need a new car that is either electrically powered or has a CO2 emission below 50g/km. In addition to this, it must also comply with section 7 of the 2001 capital allowances act and be considered to be owned by the company.

Let’s face it… there are many ways to purchase a car and depending on the method, you choose you may or may not be able to claim capital allowances.

The key measure is the optics of ownership.

Let me say that again! The key measure is the “optics of ownership”! So, even if you do not legally own the vehicle, you can treat as such if the economic substance of the agreement suggests you do.

What I mean by this is … if you have an agreement that includes a lump payment at the end of the deal to acquire the vehicle … THE QUESTION is … is this above or below the expected future market value of when the agreement ends?

If the lump payment at the end of the deal is below the expected future market value then there is a better than even chance you will buy at the end of the agreement so treat as purchase.

If, however, the lump payment at the end of the deal is above the expected future market value then it is unlikely you will buy at the end of the agreement so treat as rental.

So in general, finance leases like HP agreements are treated as purchases whereas operating leases are treated as rental.

PCP agreements are a grey area where you need to look at the lump sum at the end and compare it to the expected future market value.

To make things more confusing, car dealerships will often put HP agreement at the top but then below in smaller text say ‘Personal Contact Purchase’ elsewhere in the agreement so look out for this.

Lets face it; this can be tough to navigate, as often car sales representatives will not know the exact rules and neither will you and you are unlikely to bring your accountant along with you to the showroom!

So find out the detail before you go to see the car dealer.

Remember, if you are buying an electric car through your business and are unsure if the agreement will comply, it is always best to seek advice before signing.

Any questions, I would love to connect!

The post Electric Dreams appeared first on Pathway to Profit.

That’s right…

To make money!

So from a purely tactical perspective, you have to “make a number”.  So the first step is figuring out what is your goal; what’s the target.  So lets get tactical. 

Step 1

When you look at your business, think in a process orientation starting with the customer through your organisation to the point where you deliver your product and service to the customer and get paid.

Now map that out.  No need to get fancy, use post it pads or something and get a “rough cut” of your key steps.

Step 2

Now think about each step in the process.  Let me use a simple example process.

1. Lead Generation
2. Sales or Closing Deals
3. Invoicing or Billing or Collecting Cash
4. Purchasing or Buying Stuff
5. Doing Things or Building Things or Holding Stock
6. Delivering Things

Step 3

Now that you have your key steps outlined ask yourself two questions:

1. What in these steps could I do better to enable me to get more customers?
2. What “clogs up” my money and keeps my money from getting into my pocket?

So for the first question it could be more leads or a better conversion rate in sales or spending less on overheads.  But don’t boil the ocean here! pick one!

Similarly for the second question it could be getting paid quicker.  The root cause of that problem could be getting your invoices out quicker or better credit control or different terms or better pricing.  Again only pick one!

Step 4

Limit yourself to 3 to 5 key areas to improve.  Measure them and be relentless at your pursuit of improvement!

When you’re done, circle back and do it again!

Keep going you can do this!

The post Your outta control man! appeared first on Pathway to Profit.