The Budget is one of those events in the fiscal year where the media and pundits spend a lot of time and energy predicting, second guessing and scare mongering about the contents in advance of publication. The same effort then goes into dissecting, analysing and decrying it after the event. So how should we, the unsuspecting innocents, react to all this and does it really matter?

Well, if you are into all that punditry and analysis there is certainly no downside to taking part and making yourself aware of all the pros and cons from the various viewpoints. But, if you aren’t, you’ll not miss out by disengaging from it. However whatever finally makes it onto the statute book in the coming months does really matter to us all because, for good or ill, whether we like it or not, the enacted budget sets the scene for the economic environment in which we will be working until the next one. Therefore, it is incumbent on us all to at least scan through the main headings to identify those proposals which will affect us and our business directly. Most of the key points will be widely publicised and they are not very difficult to come across, but for the sake of completeness you should spend 10 minutes on your favourite financial website to search out any items specific to your industry which haven’t made front page news. Yes it’s tedious and quite often boring, but it could be very valuable to you. Now for the record, here is a very brief synopsis:

The budget announced by George Osborne on Wednesday 21st March, has been broadly welcomed as ‘pro-business’ and George Osborne reiterated that the private sector’s contribution was essential to economic recovery. The main announcements included :

- UK economy will grow more quickly this year – forecast revised up to 0.8% 2012 – eliminate structural deficit by 2016
- Corporation tax cut to 24% April 2012 and to 22% by April 2014
- Simplified tax system for small firms t/o up to £77,000
- Beneficial changes to R&D Tax credits from 1st April 2012
- Child benefit withdrawn from households with an earner on more than £50k per year
- Top rate of Income tax reduced to 45% from April 2013
- Income tax threshold raised to £9,205 from April 2013

If you want more detail or pointers on where to spend your 10 minutes of personal research time, you can try any of the following: ww.hmrc.gov.uk, www.ft.com (Financial Times) or www.economist.com.

Alternatively you can contact either the Derry office (028 7126 6420) or the Omagh office (028 8224 0924) and speak to our tax people.

Times continue to be very difficult for a lot of businesses – there are fewer customers most of whom have less money to spend and everyone seems to think the only solution is to cut prices. This leads to a race to the bottom which in the long run helps no one.

So what is it all about? In my view there are at least 3 economies to consider. The first one is the one we hear all about in every element of the media – this economy doesn’t exist. It’s only a small part of the story, invariably the bad part. It includes a few facts which are then extrapolated and exaggerated on the downside. It is not a reliable basis for good business planning. The second one is the real economy, which is more complex than the first one, less well defined, not as bad as the one that is portrayed, but still not an easy environment to work in. We tend to have little influence over what happens in it, things happen too slowly for our liking and we often feel frustrated and confused, but if we are honest with ourselves business is like that most of the time anyway.

The third economy is the personal economy which each of us and our businesses have. We all have the ability to influence what happens here. We can control our costs and through our consistent efforts, we can drive our revenues. This is the only economy where we should spend any significant time – it is the management of this economy which will determine whether we end up rich people or poor people. I don’t subscribe to the traditional definitions of rich and poor because their application in today’s climate are not appropriate for most of us.

 To me a poor person is someone who has bills left unpaid at the end of each month after all the income has been allocated and a rich person is someone who has money left over each month. It’s not about how much we earn, but about how much we spend. You could be rich on £25k a year or poor on £100k a year. The quality and speed of your decisions will decide which you are. The length of the downturn is a result of slow decision making processes more than the state of the world economy. You only have to look at what is happening in the Eurozone at the moment to understand that.

 Don’t be guilty of making the same mistake in your personal economy and you will have a happier Christmas!

Claremount clients will be used to hearing the mantra “know your numbers”. This is because one of the key factors behind business failure is that business owners are unable to look after financial obligations in time, due to limited cash resources. One way to avoid unwittingly falling into this trap is to monitor your cash flow on an ongoing basis, and try to hold a reserve in place for unexpected costs and contingencies. Put simply – it doesn’t matter if you have the most fantastic invention, or the best product range, or how wonderful your staff are with your customers, the plain fact of business life is that if your cash stops flowing – you just won’t survive. Many business owners make the mistake of concentrating solely on profit margins to the detriment of their cashflow and only realize the error of their ways when it’s too late and they are under pressure. As Theo Paphitis put it, lack of profit will kill a business slowly but lack of cash will kill it the same way a heart attack kills a person.

Cashflow Tracker System

At Claremount, we encourage all our clients to have an ade-quate cash flow monitoring mechanism in place. We pro-vide a bespoke tracker system that lets you know your num-bers at any given time, rather than just a once a year exercise for tax, banking or accounting purposes. This system allows you to analyse, plan ahead, manage and prepare for any potential pitfalls. The thing you NEED to be doing now, is the SAME thing you should have been doing all year long .

You need to know your numbers. If you are one of these business owners who doesn’t know their numbers inside out ask yourself why this is the case. Let us help make it easy for you with our tracker system. Take immediate action now and book a consultation regarding a bespoke cashflow system for your business. Contact Pol on 028 7126 6420 for a free consultation during the months of October and November or email pol.barwise@claremount.net.

What is the key reason that your most successful competitors are doing better than you? You might be tempted to think that it must be down to the quality of their product offering. Or maybe you think it’s the standard of their service or even their prices. In reality it all comes down to their marketing.  You need to be better at marketing than everyone else to become a leader in your industry.

 It’s your marketing that brings in new customers and gets previous customers back to buy again. So how do you go about mastering your marketing? It all hinges on two numbers. Know these numbers and you can control your destiny. You may think I’m being over the top but don’t underestimate the power of these numbers.

1. The Lifetime Value of Your Customer
How much is an average customer worth to you over their lifetime? You might think the purpose of your marketing is to bring in a sale but what it is hopefully doing is bringing in a customer who will buy from you again and again. To be able to know how much you should spend on your marketing you need to know how much an average customer will be worth to you in the long term.

 2. How Much You Can Spend To Buy A Customer
If you know how much an average customer will spend with you then you can figure out how much of that is profit. You can then decide how much you are willing to spend to get that amount of profit in return.

 This all sounds like simple stuff, but if you know these numbers in your business the effects can be profound. There is no more guesswork on marketing spend and no such thing as advertising ‘seeming’ or ‘feeling’ too expensive. Your decisions become a lot easier when you know your marketing numbers.

We can help you:

- Calculate the average lifetime value of your customer
- Decide how much you should be willing to spend to buy

a customer

- Measure the effectiveness of your marketing to see what is working and what isn’t.

              Gerry.heaney@claremount.net
              Shaun@cmaoamgh.com

There’s a very bad smell in the air – I think it’s the economy! But Subway continues to grow and has now passed McDonald’s as the world’s largest fast food chain; iPads are selling so fast they are on back order and people are still queuing up for all sorts of things they really want. This means that in the midst of all this bad economy there are substantial pockets of good economy. The IMF and the government are both predicting growth for this year – they just can’t agree on the figure.

 When I talk to clients, who are finding it tough out there, they are quite often only too willing to explore how to get out of the business they are in and into something else which can only be better and certainly no worse that what they are doing at the moment. The problems are:

1. It’s not easy to get out of a business that hasn’t
completely failed

2.        It’s not easy to identify the next sure bet.

When I dig deeper they all happily agree that if their business was doing just a little bit better they would be content to hang in there until the general economy improves. If this is the bind you find yourself in, there are some things you can do to improve your personal economy while you’re waiting for the world to catch up. This is what you need to do:

•  Decide who your ideal customers are. Draw up a detailed profile.
• Work out the best way to get in front of them, whether it is online, offline, through referrals or direct mail etc.
• Develop a multi step approach to get them to make their first purchase.
• Once you have made the initial sale you must stay in contact with them to create ongoing sales.

 If what you’re doing now isn’t working, you need to improve it, tweak it or change it. Remember that “No” usually means “Not now” -  this is why you need a multi step approach. And it’s always easier to sell to someone you’ve already sold to.

Go change your economy!

Many of you may be wondering how the latest changes to the Tax Credit system will affect you. Gary from our Omagh office outlines the key points:

April 6th is the start of the new Tax Year and for many self-employed this will coincide with the start of a new accounting year. Whilst there have been some minor tweaking of the Working Families Tax Credit entitlement elements, the major changes are as follows:

1. Reduction in percentage of eligible child care costs covered from 80% to 70%, (i.e. only 70% of childcare costs repaid via tax credits).
2. Withdrawal of baby addition element of £545, paid in year of birth.
3. Reduction of 2nd income threshold from £50k to £40k.
4. Increase in first withdrawal rate from 39% to 41%. (i.e. reduction of Tax Credit entitlement by 41p for every £ of income over £6,420).
5. Reduction in income disregard from £25,000 to £10,000.

Depending on a family’s individual circumstances this may or may not have a significant effect on Tax Credits awarded after 6th April. However, beware the change in income disregard as listed at 5 above, as it has the potential to create a substantial overpayment of Tax Credits. This arises as current Tax Credit entitlements are paid on estimated income figures. For the self-employed the best estimate is usually the last years accounts prepared. Going into the 2011/12 tax year it is possible that tax credits are being paid based on income figures for 2009/10 (which could be nearly 2 years ago). If your actual income for 2011/12 is more than £10,000 greater than estimated income, then the Tax Credits office will recalculate your Tax Credit entitlement based on actual income and demand repayment of the difference. To avoid this you need to ensure that your accounts are completed as soon after your year end as possible and the updated figures sent to Tax Credits.

In this article I’m going to talk about what a business plan can do for you, I’ve broken this down into 7 key results of designing a business plan. If you haven’t read the first article in this business planning series I suggest you do so here.

1. It creates focus and direction

Planning ensures that priorities are set in every area of your business, from marketing and operations to management, administration and finance.

It focuses your attention on the long term objectives of the business rather than just putting out the daily fires. Then, the plan defines the specific short term objectives that will lead the business to that long term future, allowing you to grow and improve the business while still managing it.

2. It is a guide to your future

A business plan will be a step by step guide to follow for getting from where you are now to where you want to be. In creating a plan you will detail specific activities in each area of your business that need to be completed to achieve your goals. These tasks will be timetabled and allocated (not just to you!), ensuring everyone has clear targets and deadlines.

3. Turns your staff into a team

A business plan will make sure everyone in the business is working together towards the one direction. Each member of your staff knows where you’re going, what you’re aiming to do, how and why. This motivates team members by giving them a ‘brightness of the future’ and an opportunity to affect the outcome for the better.

Without a sense of belonging and an understanding of their position in the business and the future possibilities most employees will treat their jobs as ‘just a job’. If you give people the bigger picture, they’ll be able to contribute more.

4. Identifies a SWOT analysis

If you reviewed every single aspect of your business, do you think you’d find opportunities or coming challenges that you otherwise might have missed? Of course!

Completing a business plan ensures that you research the total available market and consider all your strengths, weaknesses, opportunities and threats (SWOT analysis).

The planning process helps you search for the ‘best way’ to do what you do and allows you to plan in advance for any contingencies that might come up.

5. Impresses key people of influence

Presenting a business plan is an effective way to communicate your ‘story’, the story of your business and the potential within your business to attract important people. People who can influence or affect your business, such as bank managers, accountants, lawyers, new and existing team members, suppliers, important customers, creditors and more.

It can be particularly useful to share with your spouse and family who aren’t involved in the business. You see, a business plan will help your family understand why you put in the long hours and the energy. They’ll support you more readily because they know why you do what you do, and what it is you’ve set out to achieve.

6. Combines all the elements of your business

A business plan takes all the major areas of your business and moves them in the one direction. Think about all the elements of your business, e.g. your business profile, products and/or services, market analysis, marketing, daily operations, management, personnel, legal considerations, contingencies, and finance.

Now imagine juggling all these separate areas along with other day-to-day tasks you manage, keeping it all up can be difficult! If you bring all of these elements together you only have to juggle one ball at a time, making the running of your business a much easier task.

7. Increases your income

By planning the future of your business, you can plan your future income. A plan helps simply because you’ll know exactly what your goals are and you’ll know exactly how and when you’re going to achieve those goals. Better yet, your team will know too, which directly affects your success, cash flow, and profits.

And by tracking your results at any given moment you can just get on with the job of growing your business with a new sense of security, rather than worrying about the future.

Remember, it is a lot easier to get to where you’re going if first you know where that is! In the next article I’ll give you 10 pivotal steps to creating your business plan.

Business planning is designed to minimize the negatives and maximise the positives of the reasons you went into business.

A business plan will help give back to you an experience of all the positive reasons you went into business in the first place – a better lifesytle, financial reward, more freedom, that sense of confidence that comes from being your own boss.

There are two key elements to business planning:

1. Where you are now
2. Where you are going

A business plan maps out where you are now, where you want to be, and the strategies to get you there.

Establishing where you’re going involves identifying what you want your business to be like in say 3 or 5 years’ time. What kind of sales, profits, number of staff, location, resources, levels of debt, and so on your business will be doing by that time.

A very important question you can’t forget is, what will you be doing? Will you still be involved within the day-to-day running of the business, or will you have replaced yourself with a manager? You might plan to sell the business by that time and be lying on a yacht off the coast of the French Riviera.

Take this a step futher and think what level of income and lifestyle would you like from your business? When you have those issues clear in your mind, then it is time to turn back and review the business.

Now consider what sales and profits the business needs to be doing to deliver that desired lifestyle. At what level does your business need to be at to fulfil your goals? So rather than you, the business owner, giving the business all your energy and resources, decide what returns would you like from the business?

And from this point, the business plan will detail how to achieve those goals. It will talk about the strategies and ideas to be used in every area to take your business from where it is now to where you want it to be in a certain period of time.

A good business plan can provide clarity about your future and the future of your business. Most business owners lack this, so get ahead of the competition and start or refresh your business plan. The next article in this series on business planning, talks specifically about what a business plan can do for you.

Have you ever read a “how to” business book or heard –“ you should do this and that” to improve your business, learned about an entrepreneur’s success story and thought – but MY business is different. Let me tell you, your business is NO different from any other business you care to mention. I know you may be selling different products or services in different locations from other businesses but trust me – your business is fundamentally NO different.

The craft of business is an ancient one and the fundamentals have not changed since man first bartered his sheep for some grain. Each satisfied each other’s need and had a SYSTEM in which to do so. A system is basically a way of doing things the same way all the time. All successful business use successful systems CONSISTENTLY.

The innovator who makes breakthroughs in business looks outside his or her industry for best practices of others, and then thinks, “I wonder how I can adapt this to make my business more successful.” Never do they think…but my business is different. Customers or clients of any business do not buy products or services – they buy the benefits of the product/service, whether you provide financial advice or sell fish and chips. Suffice to say I don’t pay my dentist to inflict pain on me when I visit, I pay him to have pain free healthy teeth!

All businesses, are SELLING the BENEFITS of their products or services to people either operating a business, running an organisation, involved in a non-profit agency or individuals who have a need or wish for the benefits which we are selling. When you last purchased a television was it because you really wanted a big glass screen sitting in your home or was it because you enjoy (the benefit of) relaxing and watching your favourite programmes? Once you realise that all businesses are fundamentally similar then you can learn from those who are successful because success leaves clues.

FALSE: My business is different.

TRUE: Successful business practices work for any business.

Those who are “successful” already know this. Be different but in a similar way and enjoy the benefits!

Business success checklist

1. Model successful people
2. Adopt a can do attitude
3. Implement proven systems
4. Add value to your clients
5. Create a balanced work/life ethic
6. Consistently repeat what works
7. Seek creative advice

One of the greatest challenges facing every business owner, as well as most employees, is finding the time to do everything that turns up on their desk or on their “things to do” list. When you’re running your own business it is so easy to find yourself reacting to events on a daily basis, this is often called the tyranny of the ongoing. We’ve all done it. You come into work in the morning and do whatever meets you first. Before you know it the day has gone and your to do list has increased and so too have your stress levels.

Where do you start? How can you get more time?

A technique we use to quickly decide which things we must do is to use the diagram above.

Create the habit of asking yourself if a particular task is:

• important but not urgent?
• urgent and important?
• not important but urgent?
• not important and not urgent?

The object of the exercise is to fit every task you have into one of the four categories. This process will allow you to prioritise your work and reduce your stress levels.

Spend most of your time in the Decision Quadrant.

Spending most of your time in the Decision quadrant is the least stressful time to accomplish a task. For example, getting your books in shortly after your year end is an important task which should not be delayed until it becomes urgent and essential. Delegate the tasks that do not require your attention. Your time is too valuable. Remember that when you delegate the task it is still your responsibility so check in regularly to see how the task is progressing. The key to planning and achieving sustained growth in your business is managing your time wisely. The good news is that you are totally in control of your time. Use it wisely in your business and personal life and success will follow.