Is it enough to know how your business is doing?

I'm not one of those people who thinks the current recession is just a state of mind. For me as for thousands of others, like Simon Whalley, it's led to starting my own business. And when your business has to bring in enough money to pay your share of a mortgage, you need a pretty firm grasp on how it's doing.

That means keeping up-to-date accounting records so that you can plan what should happen, or what you want to happen, in the future (and that applies even if your business isn't clairvoyancy).

KashFlow has just released a Health Check report that lets its customers see how their business is doing in itself, with indicators such as money received from customers. I'm not going to repeat the discussions I've had with Dennis Howlett about the validity of this report. I think it's a good idea and that the report does have room for improvement.

This report isn't meant to be benchmarking and it says that quite clearly. But FreshBooks believe that:

Industry benchmarks matter because if you don’t have anything to compare yourself to, you are just shadowboxing. Everyone looks good when they are shadow boxing, but when you step in the ring with your peers, it’s another story! You can learn from seeing how you compare to others in your field.

I'm not sure that "everyone looks good when they're shadow boxing". If a business is not making any sales then its KashFlow Health Check report would look pretty awful :-)

But I have to say that I do very much like FreshBooks' benchmarking reports.

FreshBooks invites their users to say which profession they belong to, and if they choose to do this, their statistics are included in the benchmarking reports and they get a quarterly "report card" showing their business benchmarked against others in the same profession.

And the report is written in plain English, too, with useful statistics like "amount invoiced this quarter", "average time to collect payment", "average amount invoiced per client billed" and percentages of revenue from recurring and non-recurring sources of income.

But what really made me sit up and say "that's good that" was the fact that FreshBooks also supply a benchmarking report to people who don't even use their software, including all the statistics I mentioned above.

FreshBooks users get even more useful information, like percentage of invoices paid online, which, when coupled with the statistic of how quickly your customers pay, gives a real handle on whether your credit control is tight enough.

So - whether industry benchmarking is important or not is a matter for debate, but if you do want to benchmark, then FreshBooks is a good place to do it.

Excel or paper = no system?

Reading back through the Xero blog this morning, I found this post from Vivian Morresey, who says;

It’s amazing how many people have joined Xero recently, that actually come from ‘no system’ at all, ie shoebox, Excel or paper, and I’m sure that once people truly see that it can be done better, the better off we will all be.

By "Excel or paper", I'm guessing Vivian means accounting records kept either on an Excel spreadsheet or a manual cashbook. And I'd take issue with his/her statement that these are "no system".

I agree that spreadsheet records or a manual cashbook would probably only suit the very smallest of businesses. Elizabeth Jackson of Great Guns Marketing says in her book "Start Up!" that when she began her business, it was a one-woman band, and she kept her records on spreadsheets, before upgrading to QuickBooks when the business grew bigger.

For micro businesses, a neat well-kept set of records on Excel or a manual cashbook can be more than adequate. They've certainly done just fine for me in the past when it came to preparing year end accounts for those businesses.

And, I keep my own records on an Excel spreadsheet :-)

In the next paragraph of his/her article, Vivian says;

Generally, it’s at the end of the (financial) year when all the real pain comes to the surface, such as collating all your receipts and trying to remember why you spent that money, and what was it for, do I claim the GST or not? Digging up your bank statements, and realising you’ve lost one, it won’t matter how far back, or how efficient the online bank statement export is, you know it will still miss the thing that you need. Finally, sorting through your invoices and realising that you haven’t been paid or worse, that you still have to pay someone. I could go on, but I think you get the point.

Now there I would say that (s)he is spot on.

Trying to go through your "bag of bits" at year end and remember what every receipt was for is a nightmare. And it's even worse when your poor accountant has to do it because they haven't the foggiest idea why you might have bought a train ticket to London. To visit a customer? To go to the theatre? To go to a lap-dance club? (I did know a client who tried to claim "entertaining" for his visits to an address in Soho...)

So regular record-keeping - yes please. But it depends on the size and complexity of your business whether that should be on Xero or similar, on Excel, or written out by hand. If one of these methods suits you and your accountant - stick with it.


[P.S. My apologies for the use of "his/her" and "(s)he" in this article, but "Vivian" can be either a man's name or a woman's and I don't know whether Vivian at Xero is a man or a woman.]

The trials of year-end payroll

End of March = time to run year end payroll before the world and his wife and their dog start filing theirs online and the HMRC system crashes in a shower of sparks.

I had a brief wrestling match with the HMRC CD before deciding it was far too difficult to find my way around. It doesn't even appear to let you print a payslip. Boo hiss.

So, acting on recommendations from users over at AccountingWeb, I downloaded Moneysoft Payroll Manager.

Brilliant. Very reasonably priced (including a month's free trial), quick, easy, no messing about, and each employee's pay is laid out on a spreadsheet-like grid so that you can see how much (s)he has earnt each month. You can even recalculate pay on this spreadsheet.

End of year forms were generated and filed online with HMRC, through Moneysoft, before I could say "Jack Robinson".

I'll be buying that when my month's trial is up.

Two corkers from Xero: no. 2

Here's the second quote from Philip Fierlinger's post on the Xero blog:

Show it, don't tell it.

Philip is talking about why the Xero development team use screenflows and storyboards, rather than written instructions, to build each process within the software.

So I imagine that when they build, for example, the process of issuing an invoice to a customer within Xero, they have a series of pictures of each stage of what the process is going to look like.

If you've ever seen the bonus features of a DVD like "Wallace and Gromit in The Curse of the Were-Rabbit" (brilliant film - look out for the jar of middle-age spread!), and seen "The Making Of", there's usually a glimpse of the storyboards they use, the pictures of what the film will look like.

That tells the design team far more than a written description would. A written description might be confusing and vital bits might get missed out. With a picture, you can see it all.

And this is why screencast tutorial videos, for me, score way over written instructions. You can actually see what's happening on screen. You can see where the pointer is going for each menu. You don't have to muddle through wondering where the instructions meant.

But then I would say that, wouldn't I :-)

Two corkers from Xero: no. 1

Philip Fierlinger at Xero has written a great post about their design and development ethos, called "One secret to our success".

Two quotes from that jumped off the page at me.

Here's the first.

Too many people define “working software” in purely technical terms. That’s like making food and judging it by whether it’s cooked, not whether it’s edible or delicious. If nobody wants it, it’s useless.

Spot on. That's why thorough market research isn't optional. If nobody wants your product, don't waste your money making it. Make something that people actually want to buy.

I was a bit surprised a week or so back when the firm I subcontract for asked me to prepare an Excel cashbook that could be given to clients as an Excel file - or printed out and given to them to fill in manually.

A firm giving clients a manual cashbook? In this day and age?

"It's what a lot of our clients want" said the manager who had given me this project. "Computers scare them."

And she has a fair point. Short of investing a lot of time teaching the client basic computer skills, or sending them on a basic computer skills course, what else could the firm do? If a client wants a manual cashbook, why not give them a manual cashbook? I've seen plenty of manual cashbooks that made my job at year end far easier than a Sage muddle!

See my next post for the second corker from Xero.

What's in a name?

Over on Enterprise Nation, I spotted (and commented on) this forum thread which was a question from a lady who's looking to find a name for her new cupcake business.

What to call your new business is a challenge that all new start-ups encounter. Some opt for their own name (which I like because it identifies your passion with the business brand).

Others go for something that tells potential customers something about the business. My sister-in-law runs a business catering for children's parties, and she called her business "Tots Teas", which I think is a great name because it says straight away what the business does and gives her a really clear target market to aim at. And it's a memorable name, too.

As for my own business name - the "M" is short for Emily (thanks to Doug, my ex-boss, who started heading up e-mails to me with a letter M) and the "Ask" comes from the two chaps I used to share an office with, Michael and Jim. They always used to get me to look up information on the web for them - so instead of "Ask Jeeves", they would "Ask M"!

I know that doesn't say anything about what my business does - but if you can come up with a quirky name that covers both videos and accounting - please let me know and if I decide I like it better than "Ask M", I'll send you a voucher for a bottle of bubbly :-)

Voiceovers - love 'em or loathe 'em?

One discussion I remember reading on Tom Kuhlmann's great blog over at Articulate was about whether video-makers and screencasters like myself tend to voice their own videos or hire professional voice talent.

The responses were about 50:50, with people who did occasional video-making or screencasting as part of a wider job being more likely to hire a pro.

I've just read a tweet from Niall Harbison who doesn't seem very keen on recording his own voiceovers, but mind you, recording 60 voiceovers at once must be very draining :-)

When I shoot a screencast, I record the voiceover at the same time, so that I can get it perfectly in sync with what's happening on screen.

And yes, I do my own voiceovers. That's thanks to having a highly accomplished amateur actress for a mum. She saw that I had speech and drama lessons as a child. So I'm not afraid of speaking in public, which in essence is what voiceovers are - there may be nobody there when you're recording them, but you know your voice will eventually be heard by more people. I know plenty of people don't like public speaking. I do :-)

Problem or opportunity?

Dennis Howlett talks about the "problem" that Software as a Service (SaaS) vendors have in providing excellent technical support.

Because SaaS is a relatively new field, and because there's no long-term contracts or heavy capital investment to tie customers in, the technical support for an SaaS product must be even better than a desktop-based package.

Me, I'd call that an opportunity, not a problem.

Let's face it, times is hard. Paying customers are to be taken care of, not taken for granted.

And excellent support is one of the best ways to do that. No matter how good your sales team, no matter how good your initial training, there will always be on-going queries with the product, if not problems. Computers have got minds of their own.

But a good support team will be talked about on blogs like this and on Twitter, and potential customers will be interested.

So hats off to those vendors who are investing in their support team and support facilities now - and boo to those who are reducing their support team because they don't bring any money in :-)

A site for sore eyes

The accounting profession is blessed - or cursed - with many websites that all look very much like each other. I can spot a generic job at 20 paces. They have the same layout, the same text patterns, and very similar content. Grrr. No wonder people think accountants are boring.

A dislike of hackneyed websites is one reason why I'd like to put in a good word for my friend and former colleague Simon Whalley who has started up his own web design company.

He's called it "Another Web Design Company", which is a bit tongue in cheek - because his business is not just another bog-standard website business. His own website is fresh, original, and reads like he talks. No "Our vision" for Simon, his heading is "What we can do for you". As a lifelong hater of business guff, that's a breath of fresh air as far as I'm concerned.

Simon is very conscientious as well as being friendly and fun. And he builds great websites.

So if you need a new site - head over and see what Simon says!

2 days in 2 words

I was reading an article on AccountingWeb earlier and happened to catch sight of an advertisement that offered a 2-day course at the London Business School on "Managing the Board of Directors".

The tag line was "Doing the right thing to keep the Board doing the right thing".

Now I always thought that "doing the right thing" could be summed up in two words: Be Honest. That's honest with your staff, your customers, and your shareholders, in fact, with everyone.

I would say it's impossible to train people to be honest in 2 days.

It'll either take no time at all (for someone who already follows this way of doing business) or it'll take a whole lifetime to learn.

Home and away

It's now been almost a month (albeit a short one because it was February) since I started working 2-3 days a week as a subcontractor for a local firm of accountants.

That does mean more time spent at their offices and less time at my own.

In a lot of ways, that's good. I get to meet and chat to lots of new people, and I have been welcomed warmly there by everyone, they're really friendly. There's plenty of backup if I have a query, and I'm learning to use new programs, too. It also means cups of hot coffee arrive on my desk as if by magic without me needing to do anything about it :-)

But when I've been used to working from home and managing my own time, it's a bit of a shock to my system to have to switch my mobile off in office hours, take my lunch break exactly between 12 and 1, and only check the internet (including my business e-mail) at lunchtime.

That's not an indictment. The firm is a tight ship, well-organised and well-systematised, and I respect that. And I feel that, even though I'm a subcontractor, it's only right I should do exactly as the employees do vis-a-vis timekeeping etc. Otherwise I can wave goodbye to any chance of being part of the team. I've seen what happens when subcontractors abuse their status and I'm not going to do it.

Working from home does have the advantage that nobody minds if I wear a sweater and jeans, text Matt regularly, and pop outside to hang the washing up while a video is producing.

I'm enjoying having a mixture of office work and homework at the moment. Let's see how that goes.

No hot air marketing please

While reading comments posted to Dennis Howlett's blog, I came across this absolute beauty from Timo Elliott.

Anybody who thinks that marketing involves spitting streams of positive adjectives at people (e.g. “let me tell you about our brand-new, innovative, reliable, scalable, easy-to-use super-duper platform!”) should be shot — or at least made to take support calls from customers.

Spot on.

Far too much marketing consists of nothing more than hot air.

In my book, the best marketing is word of mouth, generated by having a good product or service.

Anything else has a nasty habit of being just guff.

And as someone who has taken support calls from customers in a previous incarnation, I can safely say that no matter how good the product itself is, customers need to learn how to use it. If you can't train them and help them, you'd better watch out, because they won't stay long.

Some Friday fun

A Friday afternoon chuckle courtesy of Vaughan Blake's comment on AccountingWeb.

HMRC have apparently boobed again and sent out some CD's of German fairy tales in place of employers' 2009/10 CD-ROMs.

Vaughan has come up with several fairy tale twists with a tax flavour, including my favourite - a taxable benefit for Cinderella, her wicked tax inspector said it was a carriage, not a pumpkin.

Now, how about childcare vouchers for the Pied Piper of Hamelin being ineligible because he was a rat-catcher, not a registered childminder?!

M

Duane, I challenge you

KashFlow are offering their software for free till the end of April to anyone who can send in a boxed, unused copy of Sage, QuickBooks or MYOB accounting software. For more info click here.

That's a great marketing wheeze - BUT the big snag is that it may not catch those who bought desktop software packages through their accountants.

Sage's Accountants Club is, so far as I know, one of their main channels to market. Accountants love Sage as I've said before. And often their clients are given Sage by them.

So the accountant will appear at the client's premises with a boxed copy of Sage, load it on to their computer, if the client is lucky set it up for them, and go back to their own office.

The client no longer has a boxed copy of Sage to send in to Duane and get a free copy of KashFlow.

I'd like to bat a challenge at Duane. How are you going to get hold of these guys, the clients of the Sage accountants?

M

Does it have to be that complicated?

Last week I was filling out my company's PAYE booklet for February's payroll run.

It didn't take very long.

But I was astonished by just how many columns of figures there potentially were to fill in and add up.

By the time you've got through maternity/paternity/adoption pay, sick pay, student loan deductions, etc. there were 14 columns!

Admittedly some of those were subtotals.

But wouldn't the complications of running a payroll be a factor that scares people away from starting a small business and employing people?

And surely that's what the UK economy needs at the moment. There are hundreds of credit crunch redundancy casualties who are starting their own businesses. And hundreds more who are looking for other jobs.

Wouldn't it be possible to make the payroll simpler, say by streamlining statutory pay for parents? Any ideas anyone?

BTW, an interesting trivia fact (with a hat tip to my first mentor, Michael). Did you know it's possible for a woman to receive statutory paternity pay, but it's not possible for a man to receive statutory maternity pay?