With the start of the new tax year nearly upon us, it’s the perfect time to think about how you can boost your business over the next 12 months. But which areas should you be working on? Emily Coltman FCA, Chief Accountant to FreeAgent, highlights five changes to make that could help you run your business more effectively in the year ahead.
Improve your bookkeeping
Few people enjoy managing their business books – but while it might not be the most exciting part of your working week, it’s certainly one of the most important! Without well-managed accounts, you’ll struggle to know how much money you’re making or how much tax you need to pay. The trick is to do a little bit of work on your books on a regular basis. By dedicating just one hour a week to your business finances, you’ll not only save time on the admin, but you’ll also have a chance to review the bigger-picture financial issues affecting your business. These might include looking at which projects are earning you money and what your up-to-date profit & loss account looks like.
Use that hour a week to stay on top of your invoices and chase up those clients who haven’t paid you, as well as managing your bills and reconciling all the unclassified bank transactions in your accounts. You might also want to consider whether you could take advantage of any other tools – such as specialist invoicing or online accounting software – to help you save time and make your bookkeeping easier.
Once you’re managing your books as efficiently as possible, you’ll have access to accurate, timely information about your business. You’ll then be able to use this knowledge to make informed decisions about which direction to take next.
Open your business to wider markets
The start of a new tax year is a great time to consider taking your business down a new avenue, such as making a new product or offering a new service to complement your current operation. Provided you’ve got a good business case and have reviewed all of the potential costs and found that you can afford to branch out, this could be the best way to increase your turnover, attract new customers and improve your profitability.
Alternatively, could you join the growing number of small businesses who are selling to different countries? Online businesses, in particular, can easily sell to anyone, anywhere – so why not check out sites such as Alibaba (for goods) and Elance (for services) to share what you can offer worldwide and broaden your horizons. Just remember that if your business provides certain digital services to consumers in the EU, you’ll need to register for the VAT Mini One-Stop Shop (MOSS).
Review your customer list
It’s important to keep your customers happy, but remember that not every customer will necessarily be beneficial for your business. For example, you may work with someone who insists on holding unnecessary meetings or spends ages nitpicking over the most minor details. Or perhaps you have a customer who routinely takes ages to pay you, or argues over the price that you’ve charged.
If you do work with these types of customer, you may want to think about whether you should continue to work with them. Provided your business can afford to do so, it might be best to point them to another supplier and then use the time you’ve saved to look for new customers to work with.
Meanwhile, don’t neglect those customers who are good for your business! If you have great customers who love working with you, you could ask them to refer you to their friends. You could even introduce a dedicated referral scheme so that they receive a reward for every person they successfully introduce to your business. Remember, personal recommendations can often be the most powerful form of advertising that your business can receive.
Pay your taxes on time to avoid penalties
If you’re running a small business, it’s likely that you’re going to have to pay tax on the money you earn. But unless you’re well organised, it’s easy to lose track of your what tax you owe and when you have to pay it, which means you could end up missing your deadlines and be fined by HMRC.
It’s good practice to make a note of your key tax deadlines for the year ahead and to try to put money aside each month so that you can pay your taxes on time. Putting the money aside in a different bank account can even be a good idea.
Don’t be afraid to ask for help
Remember that you don’t need to do everything on your own when it comes to running your business! People generally like to be asked for help and you’ll be surprised how much assistance you’ll get if you look in the right places. Use your network, ask your contacts for help, and build more relationships so that you’ll always be able to ask an expert for advice – or at least get some useful insights for other places to look. And don’t forget to share your expertise in return. If you want people to help you, you may want to return the favour and offer some of your own skills to those who need a helping hand!
Emily Coltman FCA is Chief Accountant to FreeAgent, who provide a multi award-winning online accounting system specifically designed for small businesses and freelancers. Find out why now is the easiest time of the year to get started with a new accounting system.