Tag: Business

TIPS FOR BUYING OUT A COMPETITOR

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TIPS FOR BUYING OUT A COMPETITOR.

As the economy begins to recover, many businesses are finding themselves in a rather enviable position: large cash reserves in the bank and weaker competitors just waiting to be snapped up (for a bargain price!). So you know you want to expand by acquiring another firm, but where to start? comp

Analyse Your Business

Start with a good old-fashioned SWOT analysis. Get a flip chart and a marker and, with your management team, write up the Strengths, Weaknesses, Opportunities and Threats of your business. Now identify the gaps; if for example, a weakness is that you have only 3 large clients, you could fill that gap by buying a competitor who has a further 4 large clients, thereby giving you 7 large clients. Repeat this process for the other areas.

Search for a Business

Now that you have your criteria from SWOT analysis, make sure you know how to look for a business. Don’t just go to one source; really check multiple (and reliable) sources to find the business that is right for you. Talk to your team and establish a list of competitors who are considered to have a good client base, good products or services, a good reputation etc. Get the right team of advisors in place (accountants, lawyers, etc.) and draw up a plan.

Value the Business Properly

Your accountant can help you with this, but you should read up and understand the basic financial techniques to value a business; it’s cash flow and other assets. Know how to prepare a basic business plan in order to make projections into the future. You should conduct research in order to understand how the business is getting its customers. Know how it delivers goods and services. You should try to gain an understanding of the cash flow and think about how you can maintain this flow before thinking about increased profitability.

Structure and Finance

Your advisors should be able to give you a basic understanding of how the business valuation and related cash flow tie together. Make sure you examine a number of possible ways to put a transaction together in order to overcome different risks. Your legal team and accountant should provide guidance on the best way to structure the deal and finance it in order to complete the acquisition.

 

STRATEGIC ALLIANCES

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STRATEGIC ALLIANCES.

Alliances

 In the current economic climate, businesses must look at new ways to win customers. As such, many firms are now looking at strategic alliances which allow them to access new segments of the market.

If properly executed, a strategic alliance can be good for business and good for the consumer. A strategic alliance is similar to a joint venture, in that everyone remains an individual entity but comes together for a single purpose or period of time to create something that could not otherwise be created.

There are challenges that business owners and managers must consider before entering into a strategic alliance with another business. For instance, evaluating each partner’s value and capabilities is mandatory before agreeing to an alliance. The who, what, where, when and why questions all need clarification, with failsafe measures which must be agreed and documented before commencing the strategic alliance.

Here are some considerations for any business considering a strategic alliance:

Agreeing to the Terms

It is necessary to identify the areas of interest that are yours and to also identify the areas of interest that are relevant to the other partners. Strategic interests must be similar, and products or services comparable. The figures must add up – each partner must have enough economic benefit for each to remain committed. There must be an operational agreement in place, and it is advisable to engage the services of a lawyer in order to draft this and other terms.

Assessing Contributions

What do you or each partner bring to the alliance? What is each person’s purpose and goals? Does each partner have something unique to offer which adds value to the business relationship?

Defining and Measuring Progress

Who is going to define or handle sales? What target market will be pursued and when? How will the revenue be generated and distributed? What will occur if the measurements aren’t met? A reporting structure should be agreed and put in place. Regular meetings (perhaps monthly or bi-weekly) should be scheduled and all key stakeholders should attend.

In summary, creating a strategic alliance is not something to be taken lightly.

 

OUTSOURCING HUMAN RESOURCES

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OUTSOURCING HUMAN RESOURCES.

In today’s challenging business environment, many businesses are turning to outsourcing as a way to reduce costs. It is not uncommon for firms to outsource functions such as IT, payroll, back office functions etc. Now, however, firms are beginning to consider the potential of outsourcing human resources (HR).

The benefits to a business are simple: lower operational costs and increased efficiency, as the outsourced provider will generally commit to a service level agreement (SLA). However, is outsourcing HR really a viable business solution?

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Reduced Costs

A business can save money by outsourcing HR: tax contributions, employee benefits, desk space etc can all be saved as a result of removing the need for direct employees. In the quest to secure the best value for money, some businesses outsource their HR function to offshore firms that have considerably cheaper labour costs than the UK. This saving can then be passed on to the client.

More Efficient Service

Because of the specialisation of these third-party service providers, the quality of service required by a company can be met consistently.

In an outsourcing scenario, front line services would still need to be delivered in the UK (assuming this is where the business is based). However, customer service, back office functions etc can be delivered efficiently from offshore locations using high speed internet connections, phone systems, video conferencing, email etc.

Just like any other aspect of running a business, outsourcing HR has its positives and negatives. The positives, as we have identified, are the cost savings and increases in efficiency. On the negative side, outsourced HR people do not know the business as well as an in-house HR team would. As a consequence, they won’t understand the strengths and weaknesses of the firm’s team and may struggle to deliver real value.

 

MAPPING THE CUSTOMER JOURNEY

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MAPPING THE CUSTOMER JOURNEY

Customers of a business go on a journey that turns an initial enquiries into a sale.  The best businesses really understand the journey they take their customers on. Some businesses call it Customer Experience Mapping, others call it Customer Journey Mapping and some even refer to Customer Touchpoints. The thing to understand is that the companies that use these practices recognise higher levels of customer satisfaction and customer loyalty. The reason for this is relatively simple: it adds structure and encourages the adoption of customer service standards across your business.

Mapping the ideal customer experience sets a clear expectation and consistency for customer interactions with your firm. During the mapping process, many companies also find holes in their systems, outdated or irrelevant processes, or policies that make doing business more difficult, rather than easier, for the customer. This is the perfect opportunity to address those issues or shortcomings, eliminate, improve, or enhance them, and create an even better experience for the customer. The companies that take the time to do this understand that while we all might have a great idea in our heads on what we’d like the customer to experience when they choose to do business with us, unless you have it well planned out, it’s unlikely to happen.

Customer Journey Mapping should be done to identify, as closely as possible, the ideal experience that you would like to be able to deliver to your clients. Consider the journey of the customer through your company as they do business with you. Each time the customer interacts with a person or department, this is a “Waypoint” on your map. Briefly describe (3 or 4 bullet points) the ideal experience at each waypoint. Now keep going through each step of the process until you finish at the point of sale. Then keep going for another 2 or 3 waypoints – we can’t forget about after sale follow-up…

The great customer experiences that people refer to when they talk about companies like Apple, Disney or BMW don’t just “happen”. These experiences are created. They are mapped out step by step and then clearly communicated across the business. Just because your business is smaller than these international giants, doesn’t mean you can’t learn from them. Great customer experiences create great reputations. Great reputations build great businesses.

 

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MANAGING DIFFICULT EMPLOYEES

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MANAGING DIFFICULT EMPLOYEES.

Effectively managing difficult employees can be a challenging prospect. Whether it is the employee who is consistently late, who complains incessantly or who seems to constantly upset their co-workers, every company must deal with difficult employees.

difficult emplyees

These situations drain management’s time and energy, impact on the morale of co-workers and interfere with overall workplace productivity. The key to effectively addressing such situations begins with an understanding of the issues and a clear identification of the actual source of the problem.

Even the best employee can have an off-day (or week, or month). Before deciding if an employee is difficult, managers must first step back and neutrally assess the situation. The first question to ask is whether the behaviour is critical enough to implement a formal HR process. Another important concept to consider is that ‘different’ does not equal ‘difficult’. There will always be employees that a manager does not gel with, understand or even like. However, this is not enough to deem an employee difficult. To constitute a “difficult employee”, behaviour must exceed acceptable standards, policies and procedures or interfere with productivity.

Define the Problem

When addressing the problems created by difficult employees, the focus should always be on job performance. It is management’s duty to clearly explain why the issue is a problem, and how the problem is adversely impacting the company. At this stage it may be useful to refer to the employee’s job description and the company handbook.

Clarify Roles

It is important that both the manager and employee are absolutely clear on individual roles. The manager’s role is to ensure business success by leading, coaching and supporting employees. The employee’s role is to meet predefined performance and behaviour standards, and function as a cooperative team member. A key concept that employees must grasp is that it is not only the level of their performance that is important, but also how their performance affects the functioning of their team, department and the company overall.

Identify Expectations

This is where the manager should clarify four things – the employee’s performance, responsibilities, impact of their behaviour and the consequences if it doesn’t change. A follow up and ongoing review should be scheduled and regular updates between the manager and the employee will help to move things forward and get the employee back on track.

 

EFFECTIVE BUSINESS DEVELOPMENT MEETINGS

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EFFECTIVE BUSINESS DEVELOPMENT MEETINGS.

meeting-

No matter what type of business you run, you need to network in order to build your business. Effective networking involves a lot more than simply handing out business cards.  Here are a few tips to help your business development meetings produce the business relationships that you want:

Sort your contacts

Try to get a copy of the attendee list prior to the event. Cross check the list against your contacts and targets to identify individuals.  Aim to meet each one and to get a follow up meeting in the diary.

Prepare

Prepare an agenda. You’ll want to find out what their goals are for their business, what special skills they have, and what they’re especially proud of (both business-wise and personally). What organisations do they belong to that may be a good fit for your business networking?

Post meeting

If your contact is unlikely to turn into a prospect, mark them off your list of potential business development leads (but keep them as a business contact). As you go through this process, you’ll find your goals and interests match better with some people than others. This means that your meetings are producing the results you’re looking for. For those that have similar goals and interests, you should schedule times in the future to continue to build on what you’ve learned. For those that may not closely match your goals, stay in touch more generally through email marketing, etc.

Stay in touch

There is no bigger failing for your networking activities than to let those that you’ve met fall by the wayside. Never forget that while they may not be an ideal match for you now, their businesses and lives will have changes that you may be able to complement. They’ll also meet others that may be a better fit for you and will remember you when someone looks for your services and products.

 

SETTING EFFECTIVE KPIs

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SETTING EFFECTIVE KPIs.

 Setting goals and a strategy for your business is important. However you then need to measure how the business is performing in order to understand if the firm is moving forward and is on track to achieve its goals. As such it is necessary to set Key Performance Indicators (KPIs). However many business owners and managers find this difficult to do and see the establishment of KPIs as a pen-pushing exercise and don’t dedicate time to do this.

KPIs however, form a vital element of the business’s sales strategy, both for individuals and for the team itself. In order to create a shared vision, commitment and firm-wide motivation, it is vital that the KPIs are discussed with and agreed by each member of the team from the outset. KPIs should cover:

KPIs

 

  • Team targets (i.e. convert 75% of all leads during the first quarter of 2015)
  • Individual targets (i.e. 80% of chargeable time billed each month in 2015)
  • Key tasks

 

 

The nature and specific tasks of your KPIs will depend very much on variations including the market sector and geographical area in which you operate. However, managers must ensure that they follow the SMART principal – that is, ensuring that objectives are Specific, Measurable, Attainable, Realistic and Timely.

Depending on your business, it can be useful to adopt a traffic light approach for each client account, so areas of strength and weakness can be easily and quickly identified. This data can be fed into charts which can also be very useful when preparing KPIs, giving specific objectives and demonstrating how the results have a direct impact on the overall sales and business objectives.

Once set, KPIs should then be reviewed on a regular basis, both with the team as a whole and with individual team members. Any variance in performance can then be identified and flagged appropriately, with remedial actions put in place before any aspect of the traffic light chart turns to amber. Bear in mind that KPIs should always be dynamic. For example, even if a KPI target hasn’t been met, the individual or team performance may still be on course to achieve the overall sales objective, and the KPI target may need to be lowered. Similarly, if a target has been met, then it may need to be increased at intervals, to maintain drive and motivation.

 

Expences – Getting it right.

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In light of the taxation issues, the most prevalent method in respect of payment of employee expenses is by the re-imbursement of vouched expenses i.e. repayment to the employee of expences actually incurred for which they have appropriate receipts for. When such payments are made to the employee and the payment is no more than reimbursement of a receipted expense, it is not treated as pay for tax purposes.
Other methods of dealing with employee expenses include:-

Flat rate employment expenses.

A standard flat rate expenses deduction is set for various classes of employee’s. The amount of the deduction is agreed between Revenue and representatives of groups or classes of employees in advance (usually the employees are represented by trade union officials). Such groups of employees that are entitled to this flat rate expense include nurses, teachers, firemen, journalists, certain professions/trades employed by the civil service and local authorities, shop assistants to name a few. A detailed list is available on the revenue website.
Round Sum expenses.

This is where the employer agrees to pay an employee an agreed amount each pay period in addition to normal salary to cover expenses. The expense amount agreed is treated as “Pay” and is taxable in the same way as if it were part of the normal salary payment.
Meal allowances: In the same way as agreed flat rate expenses, where employers pay a sum towards the costs of employee’s meals, it is treated as taxable pay.

Meal Vouchers.

Where an employer provides luncheon or meal vouchers to employees, the value of the voucher (excluding the first 19 c per voucher) must be treated as pay and appropriate PAYE/PRSI deducted in the normal manner.

Canteen Meals.

Where an employer provides free or subsidised meals in a staff canteen for staff generally, the value of the meals provided to employees are not treated as pay for tax purposes. However, the facility must be available to all employees in the company. If the facility is only available for certain employees, then the exemption will not apply and tax will need to be deducted on the value of the meals to the employees entitled to the facility.

Can I claim for my lunch expense?

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We are all familiar with the expenses that we are allowed to claim a tax deduction for in our accounts. They typically include items like rent, insurances, print and advertising costs, wages and salaries, to name but a few.  However, there are items that often cause much debate as to whether they are tax deductible or not. The main culprits I have found that can cause confusion are food and meal expenses and entitlement to claim mileage and subsistence allowances.

For self employed individuals, the rules relating to food and meals are actually quite clear – the cost of meals taken at the place of business are not allowable for tax purposes. Meals consumed away from the place of business are, in general, not regarded as being for the purposes of the business. This may seem a bit unfair – after all we’re not necessarily talking about expensive lunches in fine dining establishments on a daily basis. Who has the time, budget and metabolism for that anyhow? Most of us are more likely to opt for a quick take away sandwich from the shop/cafe closest the office, so why is it not a business expense? Well, Revenue’s view point on food and meals is that everyone must eat in order to live, so whether you are working or not, you still have to eat. If you think about it, for anyone that is a PAYE employee, you have to pay for your own lunch/food costs and cannot claim any tax credit/relief for having to do so, so why as self employed individual would this same cost now be regarded as a business expense? The Revenue do recognise that obviously, where the fundamental nature of a business involves travelling  – an example they give is that of a long distance lorry driver, or where occasional business journeys outside the normal pattern are made, then the cost of meals maybe allowed as an expense.

 So, what about civil service mileage rates and subsistence allowances? Well that’s for the next blog post.

Protecting your business

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Business owners, more than ever, need to have a proactive approach in managing their business. We need to be able to detect and identify warning signs of potential problems and know what steps to take as soon as problems become apparent. Problems rarely arise suddenly. It is more usually a gradual process, as a result of a variety of circumstances either external or internal. External causes cannot always be predicted with accuracy in advance. Internal factors however, may, in many cases be capable of being foreseen.
Businesses will usually have expert skills and experience in the area of activity the business operates.

No matter how good a product or service is, skills and experience in areas such as business planning, financial reporting, marketing, customer relations and financial management cannot be taken for granted.  Running a successful business requires not only good creative and operational skills but good business skills too. If these skills are not available in-house, then the business will need to source these skills from specialist advisors.
 
Advice from professionally qualified financial accountants should be sought regularly, at all the stages of business life. Some of the many benefits of this include being able to take advantage of any opportunities of growth and to anticipate any threats to the survival of the business and reacting to them promptly. The key areas that a professionally qualified accountant usually provide expert advice is in regards to accounting, financial planning and credit management. Advice in areas such as bookkeeping and financial reporting practices and sound business practice should also be utilised in order to produce high quality financial information, which sets the ground for the efficient and effective growth and the survival of the business.