Your accounts give you basic information upon which you make decisions, such as "What are my sales?", "How much money is in the bank?",  "How much money am I owed?" or "Am I making a profit?". If your accounts are not giving you the right answers to these questions, you will make the wrong decisions or simply not earn the return from your business that you should have.

# 1. Balancing your bank accounts

Most people use software for their accounts. This leads them to believe, mistakenly, that their books will be "balanced" and correct. This is simply not the case. You have to actively reconcile your bank accounts to ensure that all the transactions you have entered are complete and accurate. This applies whether or not you use software, spreadsheets or even manual books.

Let's suppose that you paid your insurance company $700, but you entered this in your books as $7,000 without noticing it. Your bank statement would show a payment of $700, but your books would show a charge of $7,000, which is an overstatement of $6,300. If you don't routinely check your bank statement against the transactions that you actually entered, it is highly unlikely that your accounts will be right. Even experienced bookkeepers make occasional mistakes.

# 2. Your customers

Many businesses issue sales invoices to their customers. Customers normally take one or two months to pay invoices, and when they do pay you, they pay you for one or more invoices at once. You need to pay careful attention to late payers, for a variety of reasons. It can indicate that:

• your customer is in financial difficulty if they have become slow payers, or
• your customer may be disputing your invoices. This can signal that you have a problem with the quality of your goods and services, or that your invoicing procedures just simply aren't up to the mark and you aren't invoicing your customers accurately. Either way, disputed invoices often don't get paid. The longer a dispute goes on, the less likely you are to get your money.

You need to check your customer statements at a minimum every month, before you send them out, to make sure that they are accurate. If customers aren't paying up, you need to know why.

# 3. Your purchase invoices

Every single purchase invoice that you put into your books should be checked first of all. Did you actually receive the goods or services invoiced? Is the data correct? Are the prices right? If there is tax on the invoice, such as VAT or Sales Tax, is that correctly shown? Does the invoice add up?

Related Post: Help Prevent VAT Fraud – Get Your Invoices Right

You might think it's crazy to check these things, because everybody's computerised right? Well, computers do what humans programme them to do and humans are often wrong. I once saw a supplier overcharge by about £100,000 on one single invoice. There was no malice intended, but the supplier had a bespoke invoicing system written especially for their business. Unfortunately, they did a poor job of checking their new system. The total on the invoice actually included the value of the invoice reference number. These are the types of errors that you are unlikely to find, unless you actually check. Laziness and complacency carry a high price.

# 4. Your suppliers

You need to check your supplier accounts every month against the statements that they issue to you.You may find that you've left invoices out of your books. It could be as simple as a paper invoice falling down behind a radiator or being misfiled, so you haven't entered it into your books yet.

The list of potential accounting mistakes is endless. You could have marked a payment off against the wrong supplier, be due a credit note, or have entered an invoice twice. The truth is, unless you have a system of checking your supplier accounts, you will have mistakes. You will end up paying for goods and services that you never received or overpaying for something.

# 5. Your sales

The sales in your accounts is not always simply:

• the value of your sales invoices, or
• what went through your cash register,
• or the total in your online sales cart.

When you set up your business, you actually need to define what your sales are and how they are to be accounted for. Here are a few examples of what you have to consider when you are accounting for your sales:

a) You have to consider whether or not you are acting as a collection or booking agent in which case your income is commission, and not the full value of a sale. Let's say you take holiday bookings for holiday homes over the internet. The holiday home owners are small businesses, who don't have online processing facilities, so you collect all of the money on their behalf. The customer might pay $500 and you pay $450 to the holiday home owner, and keep $50 in commission for yourself. In this case, your sale is $50, and not $500. In the off-line world a similar situation arises in relation to the vending machines that you might have on your premises. Here, you simply provide a venue and customers, someone else provides the goods. If you don't get this right you will end up overstating your sales, and it will probably have negative implications for your sales taxes as well.

b) If you are a bakery, your sales are baked goods. If you sell a delivery van, that's not part of your sales, that is a sale of one of your assets, and it needs to be treated differently. This is a common occurrence in business.

c) Some services are sold on a time basis, and so sales must be taken into the accounts over the time to which those services relate, and not simply all at once. This applies to SaaS, (Software as a Service), companies as well as to subscription-based organisations.

Related Post: Why SaaS Revenue is Different

Sales are easy to record once you have established the basics of what you are selling, to whom and when. Once you have this right at the outset, it is easy to set up a system to record sales correctly. Every business is different, yet it takes no more than a few hours to sort these matters out at the outset.

# 6. Foreign currencies

If you have a bank account denominated in a currency other than your own currency, or if you buy or sell goods in another currency, then you need to to know how to account for foreign currencies. In reality, this is best done by having accounting software that will do this automatically for you. Ignoring foreign currencies is simply not an option if your business deals in multiple currencies.

For example, if you are an Irish business, and you have a sterling bank account, you can't simply post the transactions that go through the Sterling bank account into your accounts as if they were in Euro. If you pay for something that costs £1,000 sterling, then it's going to cost you somewhere in the order of of €1,200.You can't simply record that as being 1,000 and let it be added into your accounts as €1,000. You would be massively understating the value of your expenditure if you did so. Your accounts would be quite meaningless.

If you are an Irish business, and you export and invoice in foreign currencies, again your software package needs to be able to handle this. Let's say you invoice a customer for £1,000 sterling. On the date of the invoice, you should convert the invoice value to Euro in your accounting system, yet your customer account needs to be held in sterling. The exchange rate on the date of the invoice, might value your sales invoice at €1,180. If, when your customer pays you, you actually receive €1,200 the €20 difference is recorded as a foreign currency exchange difference in your accounts. It's as simple as that.

# 7. Stock

If your business has a stock of trading goods, you have to count and value your stock at the end of every accounting period. The reason that you do this, is that you don't sell everything you buy straight-away. You must reduce your cost of sales by the amount of stock that you have left over to sell in the next accounting period.

Here are some of the common accounting mistakes made in relation to stock:

• the stock count isn't right. Goods are either not counted at all, counted twice or quantities are just recorded wrongly.
• the goods aren't valued properly.
• the goods are obsolete, and your customers don't want them. If this is the case, you should write your stock down to zero, because it has no value to your business.

If for example, you are a shoe retailer, obsolete stock is a fact of life. No shoe retailer ever sells all of the styles that they stock, because they are a fashion item. Therefore shoe retailers routinely write off obsolete stock. If you know that your customers aren't even going to pay cost price for your goods, then you have to write your stock value down below cost straight away.

# 8. Research and development expenditure

Companies are allowed to show Research and Development expenditure on their Balance Sheet as an asset,(i.e. to capitalise this expenditure), instead of charging it as an expense account against profits, if that Research and Development expenditure will yield value into the future.

Software companies often classify the cost of their development staff as Research and Development, (R & D). They may have have a choice to either capitalise it (in the Balance Sheet), or write off this expenditure immediately against profits. It is usually better, in the long run, to take the hit for this type of expenditure immediately against your profits. Then, when your company starts to sell goods or services on foot of this research, you can show profitability then, because you have taken account of the R & D already.

It's worth noting that the tax treatment for R & D expenditure, can be separate and different to the accounting treatment. As with all matters accounting don't let the tail wag the dog. Do the right thing for the accounts first of all, and work out the tax afterwards.

# 9. Cash

Cash needs to be controlled very tightly in the business. It's very easy to accidentally give too much change, miscount or lose cash. Obviously, it's also very tempting for thieves. If you have cash, it should all be put through the tills on every shift, and tills should be balanced every shift without exception. Some businesses like to place cameras over the tills, which discourages theft and can be used to settle disputes in the event of the wrong change being given.

Not all businesses have tills, but if you handle cash, you need to have an independent way of recording and controlling it. You should set up control procedures in conjunction with your accountant from the outset. Otherwise, you risk losing money, literally.

# 10. Entering transactions twice

It's easy to enter a transaction twice. You will probably never notice this, unless you reconcile your accounts each month. The outcome of entering a transaction twice is that you either overstate your sales or your purchases and your accounts don't reflect what actually happened. This can lead you to pay a supplier too much money, to hassle a customer for the wrong amount, or for you to overpay taxes. None of these outcomes is a good one for your business.

Let's take the example of the bank reconciliation again. For those that do prepare bank reconciliations, your bank account can in fact be balanced, but still be wrong. Every time you enter a payment into your books, the bank account balance in your books is reduced. However, there is often a timing difference between the date of issue of a payment and when it clears through your bank account. These are known as "outstanding items", which need to be reconciled.

You could for example, put a payment into your books for a new telephone system for $5,000. You go to lunch, come back, lose your place, and put the same $5,000 into your books for a second time. At the end of the month you reconcile the bank account in your books to the bank statement, you see one payment for $5,000 going through on your bank account, and you 'tick' or mark that off as being right. However, the second $5,000 is shown as an outstanding item on your bank reconciliation, because it's a payment that never actually happened. It's never cleared through your bank account, and it never will. Now your books will show that your telephone system cost you $10,000 because you put the payment of $5,000 through twice. Your bank accounts are reconciled yet your books are wrong.

You need to review bank reconciliations at the end of every month to make sure that there are no old outstanding items that need to be corrected or written off. In this case, you would simply delete the second payment, because it never happened.

# 11. Closing your accounts

Your accounts are for a defined period. That could be a month, a quarter or a year. You have to ensure that all the transactions relating to the period are recorded accurately once and once only. Accountants call this process 'cut off'.

Imagine if you had outsourced some web development. Your supplier sends you an invoice for $10,000 by email. However, the email goes into your junk box and you don't see it, so you don't put it into your accounts.   Just because you haven't seen an invoice, doesn't mean that your business is not liable for that expense. In this case your accounts would obviously be wrong, because they would not include the cost of the €10,000 worth of web development.

Every time you do do a set of accounts, you have to look for missing items. If you don't actively look for goods and services received but not invoiced, your accounts will be incomplete. That is why it is important to reconcile your bank accounts, your customer accounts and your supplier accounts every accounting period.

# 12. Spreadsheets

Spreadsheets were not designed to replace accounting software. Lots of people use spreadsheets to save money on accounting software. It is a false economy. People commonly put expenses in the wrong columns, and get the formula wrong in a variety of ways so that the spreadsheet simply doesn't add up. Accountants often mask these accounting errors because they redo their clients books, unbeknownst to the client. However, sometimes the mistakes go unnoticed.

For example, if you are using a spreadsheet to calculate your VAT liability and your formula doesn't include the VAT on all your invoices, you'll simply underpay the VAT. People often don't have the accounting and spreadsheet skills to find their own errors. Even if you are are a whizz at spreadsheets, they are highly inefficient for keeping your books. It's a bit like using a thimble to empty a wheelbarrow.

Related Post: Lies, Damn Lies And Spreadsheets: How To Prevent Spreadsheets Ruining Your Business

# 13.  Read your accounts

When your transactions are put into your books, you should go through every account to make sure that they make sense to you. For example, if you were a cloud computing provider, you might find that a bookkeeper would put Amazon storage costs into computer expenses, when in fact it's a cost of sale, because you are providing a service involving cloud storage. If you were just archiving records onto Amazon, it would be would be correct to analyse that cost as a computer expense.

# 14. Legal requirements

You are obliged to keep proper books of account for legal reasons. This applies the world over. At a very minimum, businesses are expected to keep good accounting records so that they can correctly calculate and pay their taxes to the government. It is a sad fact of business that you are an unpaid tax collector. Such is life. If you operate through a company, the company is obliged to keep books and records that show a true and fair view of the state of affairs of the company. There are fines and penalties levied against companies who do not comply. Proper accounting is a requirement of being in business.

# 15. Consistency

You should analyse your expenses on a consistent basis, or else your accounts will become meaningless and have no managerial value to you. You shouldn't analyse licenses under "legal expenses" in one year, and under "subscriptions and licenses" in another. This would make it impossible to draw comparisons between one year and another. Many accounting packages provide assistance for standardising the analysis of your accounts, and you should learn the functionality of your accounting package to make consistency an easy task.

Make accounting mistakes history

The issues outlined above are all solved by using a systematic approach to your accounting records. This post doesn't cover every error that is possible, but it should give you an idea of how easy it is to make accounting mistakes, but yet how easy it is to prevent them from happening in the first place.

Every business needs to have a systematic approach to the to their accounting, so that little accounting errors don't add up to big losses. Once the system is set up, the routine of maintaining it is quite easy. You should always consult with your accountant when setting up your accounting system, to make sure that your system is tailored to best suit your needs.

What accounting problems have you encountered in your business?

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Tell me a bit about Atlanta International

Atlanta International Ltd is an International Mergers and Acquisitions (M & A) House focussed totally on the technology sector. Atlanta has successfully sold a large number of technology companies both in Ireland and elsewhere. Atlanta is different to other Mergers and Acquisitions advisers because all our staff are technology people. We have all successfully built technology businesses ourselves so we understand the challenges of building a technology company.

Do you just sell Irish companies?

Absolutely not. We sell companies around the world. For example, at this moment we are acting for an Indian Client who is conducting a transaction in China. Because I am based in Ireland and spend a lot of time in the Irish Technology Industry, I tend to have mainly Irish Clients but I can, (and do), act for clients anywhere.

How do companies approach you to act on their behalf in an exit sale?

Quite often they are referred to me by other intermediaries, (such as lawyers), or previous clients who are happy to recommend me. However sometimes they simply pick up my name from our website and send me an introductory email. I will respond to any introduction very quickly but I would encourage prospective clients to contact me earlier rather than later. I am in touch with a number of prospective clients right now, who I know will not be ready to sell for at least two years. However by giving them a few pointers now, I can make their eventual sale a lot easier and hopefully get them a higher price.

You specialise in selling technology companies. What types of business does this encompass?

When we say Technology I guess we really mean the whole ICT area and in particular Software. Within software everyone in Atlanta has a particular niche. My personal strengths tend to be around the areas of SaaS, Hosting/ Cloud, Telco and IT Services. I am a huge believer in the future of the Cloud and the benefits it can bring. In Ireland we are still in the early days of the Cloud revolution. In this regard we are, (as usual), a number of years behind our US cousins!

How do you decide if a company is fit for sale?

When a potential client approaches me I will do a quick evaluation of the company to try and ascertain if the company is fit for sale and, most especially, what sort of price they can expect. This evaluation is based on a number of factors, mainly general industry knowledge and knowledge of other transactions. I will then advise the client of what price they can expect and a decision to proceed, (or not), can then be taken. Sometimes this quick evaluation leads a client to delay the sale while they implement changes I might recommend.

How do you source buyers?

Because we track deals in the ICT sector we tend to either know, or know of, most of the major acquirers in this sector. We also quite often will know exactly what type of company a particular acquirer is looking for and we try to get some knowledge of how they will value a company so that we can position our clients to maximise the price they get. We are quite unusual in that we have a very active Indian office so we can source Indian buyers.

Selling a company involves making detailed disclosures of a commercially sensitive nature to potential buyers. Often, a company may not even wish it to be widely known that it is looking for a buyer. How do you establish the bona fides of a potential buyer and what say does a company have over what information you disclose on its behalf?

This is quite a complex area and often quite an issue for our Clients. In general we know most of the acquirers and we find that serious acquirers are very unlikely to abuse any Confidential Information which we supply. This is partially because we will ensure they sign a Confidentiality Agreement first and partially because they know that if they once abused any information we supplied to them, we would never again show them a client. At all stages in the process the Client has absolute control over the Information we supply on its behalf.

How are companies valued and who performs the valuation?

They say that “beauty is in the eye of the beholder” and this certainly applies in the case of the sale of a technology company. It is our job to present the company in such a fashion as to maximise the valuation of the company for an acquirer. We will sometimes give an “indicative valuation” based on suitable comparatives but quite often the valuer will just do their own valuation. The valuation is usually based on either a multiple of profits or, more likely, a multiple of revenues. While there are norms out there the actual price paid will usually come down to how badly the acquirer wants a company.

What types of companies are ‘hot’ at the moment in terms of Mergers and Acquisitions?

At the moment the “hot” areas include enabling Cloud, SaaS, PaaS, Security and Infrastructure. Some of the prices being paid in these areas are off the wall. For example consider Heroku’s acquisition by Salesforce.com. Salesforce paid about $1bn for Heroku even though it had minimal revenues. But it was a platform which could potentially open up a whole new line of business for Salesforce. So companies in the enabling space, especially in the Cloud, with recurring revenues, are hot.

What happens in the due diligence part of a sale?

We notice an increasing trend for large acquirers to spend more and more time and resources on Due Diligence. The attitude seems to be “lets spend the time and money beforehand ensuring that we are getting what we think we are getting” So this means they will do due diligence not just on the financials but pretty much on all aspects of the business and most especially around the technology, the IP (if any) and ownership of the IP. Expect every aspect of your business to be examined in detail. This can be a very difficult time for clients but we stay heavily involved in the process and we can usually mitigate the pain for a client.

Why would a technology company choose Atlanta to sell them?

Many advisers, especially in a small company are “generalists” who will do a range of Corporate transactions across a number of industries. They will claim to know and understand technology but they don’t. Atlanta only work in technology and only on M & A. This means we know the industry, we know the Acquirers and we know how to get the best price. If an adviser does not really understand the drivers of an industry they are unlikely to get the best price. In addition we work largely on a “success fee” basis. This means that we work with a client all the way through the whole process up to and including completion of legal contracts.

Thanks to Ian for his insight into how a technology company is sold. If you have any questions for Ian on exit sales, please feel free to ask in the comments below.

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The post How To Plan A Successful Exit Sale; An Interview With Ian Shearer, Atlanta International appeared first on Tweak Your Biz.

Vanishing Sales Syndrome

When a SaaS company is in start-up phase, every sale is gratefully accepted. The founders self-fund, bootstrap and get investment from friends and family. It’s tough going, and they lurch from quarter to quarter until, hey presto, they’ve made it through a whole year. They’ve been keeping track of sales revenue on a spreadsheet and the bank balance too.

One day, they hire an accountant to do the numbers and file taxes. The founders get a surprise to discover that the sales revenue figure in the Profit and Loss Account is much less than what is on their spreadsheet. Assuming that both the founder and accountant have included all the invoices, how can this be?

Revenue: It’s About Time

Sales revenue, indeed all components in your accounts, is about time. If you say “Sales are $1 million”, in respect of a start-up, that sounds impressive. However, if you say “Sales are $1 million for the first 10 years” that’s not so impressive, running at an average of $100,000 per annum. Financial accounts are all about time. Accounts are prepared for specific time periods; monthly, quarterly and annually. A unit of time is what is used to compare and evaluate every company. Companies the world over produce accounts at least annually; it’s a basic reporting convention.

It follows that the accounts only contain income and expenses for the period of time to which the accounts relate. You wouldn't put next year’s sales into this year’s accounts, would you? Yet it is a mistake easily made in a SaaS subscription model, if you are not clear about what you are selling and when.

SaaS – It’s About Subscriptions

SaaS companies commonly offer multiple pricing options. They might offer a monthly subscription fee, as well as options for an annual subscription and perhaps a two year price as well. These offers are based on a “the more you buy, the less you pay” premise. So, for example, if a SaaS company offers a monthly subscription of $25, they might offer an annual subscription at $250. This means that you get a year for the price of 10 months, or to look at it another way, you get two free months if you subscribe for a year.

When it comes to your accounts, it’s simple:

• All monthly subscriptions are for one month and can go straight into that month’s accounts.
• Annual subscriptions are for 12 months. Remember, it’s about time. So if a customer signs up for an annual subscription at $250, then that’s $20.83 per month for 12 months, (i.e. $250 divided by 12). So for each month, over the next year, you include one twelfth of that annual subscription in each month’s accounts.

Sales Revenue that is related to a future accounting period is "stored" in the balance sheet as "Deferred Revenue". It is shown as a liability, because you have invoiced for a service you have not yet delivered. In effect, you "owe" that service to your customers. In future periods, this "Deferred Revenue" will be released to the Profit and Loss Account as you deliver the service. In other words, it's "drip fed" in. It is only recognised as income over the lifetime of the subscription, not up front.

What About the Cash?

Some founders get confused about the SaaS subscription model. As they see it, they have raised a sales invoice and have been paid by the customer, (i.e. they have received the cash). They see this as an immediate sale. They think the invoice should be fully recognised immediately in the Profit and Loss Account. But this isn’t the case. Here’s why:-

• Invoices need to be allocated to specific time periods. If an invoice covers subscription services for more than one month, split the income between those months. This is the principle of revenue recognition for a SaaS – i.e. how you calculate when revenue, (sales), is recognised or allocated in your accounts. In the case above, that’s $20.83 per month for 12 months.
• The receipt of the cash is a separate transaction. It reduces the amount that your company is owed by your customers and increases your bank balance. It does not affect profit.

Why Should You Care?

SaaS founders care about increasing shareholder value. A higher company valuation will result in more money for shareholders on an exit sale. SaaS companies are valued as a multiple of Sales Revenue. If you record Revenues correctly from the outset, you will have a credible history to show investors, and have data upon which to build forecasts. Investors are interested in the future, not the past. But you need the past to present and forecast the future.

If you understand the basics of revenue recognition, you will find it easy to understand the other concepts that you need to master to effectively manage the value of your company.

Remember that for SaaS subscription revenue - it’s all about time.

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Professional service firms such as lawyers or accountancy practices often find it challenging to market their services. Some even find it distasteful. This interview with lawyer, Flor McCarty, managing partner of McCarty and Co, looks at some of the marketing strategies employed by their legal firm, which could also be successfully adapted to many other business sectors.

Why Is Marketing “Dirty” for the Professions?

Before we get to the interview, here is a little background information on why marketing is viewed as “dirty” by some professionals. Accountants and lawyers, (or solicitors as we in Ireland call them), need new sources of work to remain in business. Professionals are often not comfortable with traditional marketing strategies because:

1. Marketing conflicts with professional culture. Our training is to provide proof; we would not naturally say “we are one of the best firms in …”, because that is a subjective statement. In order to warrant laying claim to being the best, at the very least, we would have to define “best” very exactly within a scoring system and then have all firms ranked independently. Accountant and lawyers deal in verifiable facts, that is the nature of our job. Yet cold facts are not ideal marketing material, as marketing messages are more emotionally driven.
2. We have codes of ethical practice which govern, amongst other things, confidentiality and marketing professional services. This code brings restrictions that other business sectors do not have to deal with. For example, we do not generally provide client lists nor even disclose clients’’ names. Here is an extract from” The Principle of Confidentiality” in the Code of Ethics for Chartered Accountants Ireland:
   "Some clients or employers may regard the mere fact of their relationship with a professional accountant- as being confidential"

Accountants wouldn't tweet, “Our client, Muppet International, won the coveted ‘Best Small Town Business Award’, thereby revealing our client's name and trying to cover ourselves in our clients’ glory. No siree. Small wonder therefore, that when professionals are running their own business in the form of a professional practice, that they struggle with marketing.

What Kind of Muppet are you?

This brings us to the whole question of Muppets, and what is a professional to do to tout their wares? I’ve been an avid reader of McCarthy and Co’s legal blog for a couple of years.

One day on twitter, I followed a link to their post; “What kind of Muppet are You?” and found myself reading an amusing blog post by Flor McCarthy, which was loosely about marketing. It concluded by inviting the reader to join their email list, so I did. I soon discovered, to my horror, that these emails were sent daily.

(This 'horror' was entirely my own fault, as email frequency was pointed out before I subscribed, but I missed that point). I say 'horror', because like many people I am trying to cut down on the amount of email I receive. But I’m now delighted that I didn’t unsubscribe straight away, because pretty soon I was looking forward to Flor’s daily email.

I find his daily observations to be thought provoking, informative and entertaining. There is usually, though not always, a subtle reminder about why you sometimes need the services of a professional lawyer, to deal with what life, death and business throws at you in equal measure.

Daily email titles are diverse and eye catching, such as:

• Argos and the Baby Wipe
• What the Mother Superior doesn't want to you see...
• Norah Ephron and the Senior Counsel

Related: 100 Guerilla Marketing Ideas: Grow Sales With Zero Budget

Interview with Flor McCarthy, McCarthy and Co Solicitors, (Lawyers)

In this interview with Flor McCarthy, Managing Partner of McCarthy and Co, Solicitors, we focus on the marketing methods employed by his firm.

Tell me a little bit about your practice, Flor.

We’re a four solicitor, (lawyer), firm based in West Cork, Ireland. We come from a general practice background but have been developing specialisms in personal injury and medical negligence litigation over the last number of years which now has us acting for clients all over Ireland.

What made you decide to send out daily emails?

I have been receiving daily e-mails from a marketing expert with whom I work for a number of years and I found them addictive.  It made me think that we spend far too long without any contact with our clients in our business.  After someone finishes dealing with a solicitor / lawyer, in many cases, they may not have any reason to make contact with the solicitor again for years and can often drift away.  The daily e-mail keeps us in regular contact.  It is far easier to generate new business from an existing client than find a new one.  Existing client referral is an extremely important part of how we find new clients.

When and how do you find the time to write the email?

I write the e-mails early in the morning, the whole process takes between 20 minutes and half an hour by the time you have everything set.  If you can’t spend half an hour a day on business development, how can you expect business to develop?

How do you pick topics?

It’s an eclectic mix.  When I first started a great client said “don’t send them every day, you’ll run out of things to say!”  But I find the opposite, the more I write the more one idea leads to another.  It can be topical news items, things that happen in the practice, things that get on my nerves!

What is your overall strategy with the emails?

To keep in contact with existing clients and to allow people who may be considering doing business with us to get a feel for what we’re about and to convince them to take the next step.

Apart from my original “eek, it’s daily!” response, do you receive any negative feedback to the frequency of your emails?

Not really.  You can’t please everyone, so I took the view that the start that I would please one person, myself.   I encourage people to unsubscribe if they don’t like it.  Not everyone is going to like you and if they don’t they are unlikely to do business with you.  You are far better dealing with people who do like you and who want to hear what you have to say.  After that you’ve got to make it interesting for them.  Most people’s inboxes are full of boring e-mails many of which involve work for them.  If you give them something interesting that makes them smile or think each day, you’re pushing an open door.

Related: Accountants In The Cloud – Interview With Anne Brady Of Anne Brady McQuillans DFK

Do you use proprietary software to manage your daily emails?

Yes, I use Campaign Monitor but that is mainly an accident of history rather than as a result of any comparative research.  I find it fine for what I do.  I have also heard good things about Mail Chimp and Send Pepper.

Do you recycle the emails on your blog?

I did at the start and the only reason I stopped was it took me too long each morning to write the e-mail, post it on the e-mail software and then post it on the blog and the social media sites as well.  This is something I plan to return to but I need to look at streamlining the process.

How important is blogging to your practice development?

It has been very important, particular in targeted specialist areas.  Objectives need to be clear.

What other marketing methods do you use?

Personal networking, public speaking and seminars as well as occasional print articles.

What is your best marketing tip?

Sell.  Nothing in the business happens unless you sell.  Get used to it.  Timid salesmen have skinny kids.  Professionals look down their noses at selling, but without it there’s no business.

Thanks very much Flor for sharing your marketing tips with us. We’re all Muppets in the end, we just need to decide what kind! Have you experience of marketing professional services or any questions for Flor? If, so we’d love to hear from you in the comments below.

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The post Why Marketing Is For Muppets; Interview with Lawyer, Flor McCarthy appeared first on Tweak Your Biz.

What Can Possibly Go Wrong?

It’s a sad fact that a great presentation of no substance can fool a lot of people. This applies to spreadsheets too. If a spreadsheet looks good, people are more inclined to believe it. All those lovely sums lend an air of scientific fact to what can in fact be error laden, made-up drivel.

There are many types of possible spreadsheet error, and to give you an idea of the diversity of these errors and their consequences, here's some real-life examples:

• Drinks manufacturer C & C, lost 15% off of its share price  in 2009, due to errors in its published results, when data was incorrectly transferred from an accounting system used for internal guidance to a spreadsheet used to produce the trading statement.
• A sole trader made significant errors in his VAT, (sales taxes), returns because an error in a simple formula meant that his spreadsheet omitted a portion of his sales.
• A company’s investor forecasts were overstated to the point of ridiculous because, due to an error in the formula, it added in the year, (e.g. 2012), to the sales quantities.
• Company accountants, working late into the night on figures for a company take-over, made a catastrophic mistake in the final formula, and put the currency exchange rate in the wrong way around.
• The London 2012 organising committee, (Locog), confirmed that an error in its ticketing process had led to four synchronised swimming sessions being oversold by 10,000 tickets. Locog said the error occurred when a member of staff made a single keystroke mistake and entered ‘20,000’ into a spreadsheet rather than the correct figure of 10,000 remaining tickets.  The error was discovered when Locog reconciled the number of tickets sold against the final layouts and seating configurations for venues, and began contacting ticket holders before Christmas.

Related: Top Ten Tips For Managing Your Books

What’s to be done?

There are lots of things you can do to manage your risk. The most important thing you can do is to accept that spreadsheets are a source of risk if your business uses them. Here are some risk management suggestions:

1. Establish if a spreadsheet is desirable at all
   Quite often, spreadsheets are used to overcome shortcomings in another system, when the focus should be on either fixing the problems or switching to a more appropriate system. Importing data from another system to a spreadsheet opens up the possibility of error, as in the case of the Olympics. Yet a lot of event organisers end up importing data into spreadsheets because the ticketing system doesn’t provide the reports they need to actually run the event. Neither should spreadsheets be used for your accounts, it’s too easy to make an error, as in the case of the sales tax omission outlined above. Spreadsheets should not be used when there is proprietary software designed to do the job better and faster.
2. Train Your Staff
   If your staff, (or you), are using spreadsheets to prepare important business information, make sure they are trained. Self taught spreadsheet authors are often highly inefficient in the way that they structure their sheets as well as being oblivious to the errors that they create.
3. Build in Control Totals
   Build in as many ways of checking the numbers as possible. For example, the Olympics Committee discovered their overbooking of events, albeit belatedly, when they reconciled the number of tickets sold against the size of the venues. If you are moving data from a software system to a spreadsheet, that is a risk straight away, and you need to build in controls to manage that.
4. The Sunset Rule
   This is a rule I have developed over almost thirty years of spreadsheet use. The authors and testers of important spreadsheets should have a night’s sleep prior to final review of their work, no matter how much pressure employers or clients put on them. The fall-out from big errors isn't pretty and often leads to resignations and sackings as well as financial loss for the company.
5. Lock Down
   If a spreadsheet is to routinely have data input into it, it should have the data entry cells protected, once it has been tested. That way, users can’t accidentally over-type the formulas.
6. Audit and Test
   Spreadsheet programmes, such as Microsoft Excel, have audit functions built in. You should learn how to audit your formulas and you should be able to devise tests to verify the results generated.
7. Authors and Auditors
   Important spreadsheets should be audited and debugged by someone other than the author. You’re unlikely to find all your own mistakes.
8. Common Sense
   It’s easy to be so enamoured with your spreadsheet that you forget to look at the results with a critical eye. Look over every row and column; do the figures seem possible in the context of your business? For example if there are 300 booked in for a conference, it wouldn't make sense if 600 delegates had ordered a vegetarian lunch. This might seem madly obvious, but these are the types of errors that routinely get overlooked by the authors and users of "beautiful" spreadsheets.

I love spreadsheets. I really do. I use them for everything, even in my personal life. But I know that if you are relying on the data for an important decision, you’d better test that sheet and not be blinded by the beauty of the numbers.

Related: DIY Management Accounting And Business Performance Review

Have you any spreadsheet horror stories you’d like to share or any tips on reducing spreadsheet risk?

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Image: “lot of numbers on a spreadsheet /Shutterstock“

The post Lies, Damn Lies And Spreadsheets: How To Prevent Spreadsheets Ruining Your Business appeared first on Tweak Your Biz.

Ireland ranks number 10 globally in terms of “Ease of Doing Business” according to a recent survey supported by the World Bank Group, which reviewed 183 economies in total.  There are a number of Irish government agencies which provide financial and operational supports to ensure that it continues to be easy to do business here. In this interview with Eibhlin Curley of Dublin City Enterprise Board, we look at the supports provided by the thirty-five Enterprise Boards in general and by the Dublin City Enterprise Board in particular.

The Irish County and City Enterprise Boards, (CEBS), were established in 1993 to provide support for small businesses, (‘micro-enterprises’), with 10 employees or less, at local level. CEBS provide advice, grant aid, mentoring and training support to qualifying businesses.  The qualifying criteria for CEB support will vary from one area to another, taking local needs and other available supports into account. This interview contains some information that is specific to Dublin City, but all CEBS operate in broadly the same fashion.  You can find out more from your local Enterprise Board.

Eiblin Curley, Assistant CEO of Dublin City Enterprise Board, explains what supports are available and how to access them in this interview.

A small business owner might find it a bit daunting to contact a government agency for support. How do businesses get in touch with you and do they need a referral to get in touch?

If you are starting a small business with less than 10 employees contact your local Enterprise Board. The County & City Enterprise Board have 3-5 staff, so we are small, friendly and very approachable organizations.

Click here to view the embedded video.

If your business is a High Potential Start Up, (see definition in next question below), or is export oriented and employs over 10 staff then contact Enterprise Ireland. They have 800 staff and 39 overseas offices and 11 regional offices. You can start with you local Enterprise Board and then be handed over to Enterprise Ireland as your business grows. You don’t need a referral you can contact us directly.

Business Access to State Information and Services, (Basis),  is a guide to all agencies and government services that you may require.

Related: What You Need To Know Before You Export To The US

What businesses are eligible for support and how do you find out if your business is eligible?

County & City Enterprise Board’s priority is job creation and exports for micro businesses. We provide financial assistance to certain types of businesses only.

The types of businesses that are eligible varies from county to county. In Dublin, Irish businesses that are eligible for support include businesses that export a service, for example, selling technology outside Ireland, Irish businesses that manufacture an innovative product in Ireland for example a bakery or tourism businesses that attract foreign tourists to Ireland are also eligible for financial support. County & City Enterprise Boards can help small businesses with 10 employees or less. We can help, owner managers of established businesses, start up businesses and Entrepreneurs thinking of starting a business. Other business supports such as Training, Business Networks, Mentoring and Business Advice is available to all sectors of business.

Enterprise Ireland can help businesses with over 10 employees. They also fast track certain businesses that will achieve high growth businesses that will rapidly grow to 10 employees and a turnover over €1 million within 3 years, (High Potential Start Ups, usually in the technology sector).

Both agencies are funded through the Department of Jobs, Enterprise and Innovation and EU Structural Funds, so there can be no duplication of funding.

What kinds of grants are available and what are the terms and conditions?

Business Development funding is available for established businesses. Funds can be used for new employee salaries, marketing and manufacturing equipment and fit-out costs, for example if you are setting up a food manufacturing unit.

Priming funding are for new businesses and help fund salaries, marketing and equipment costs. They are for businesses that are trading less than 18 months.

Feasibility/ Innovation grants which help towards prototype development, market research and patent costs.

The Priming grants and Business Development funds are partly refundable. The average grants in Dublin City Enterprise Board are Business Development €20,000, Priming €12,000 and Feasibility €7,500 depending on the number of new jobs created.

Related: 5 Considerations Before You Launch That Online Start-Up

All grant applicants have to have a business plan. Do business owners have to hire a consultant to prepare the business plan and is that not expensive, especially if the application is unsuccessful?

You don’t need to pay a consultant to apply for funding. Enterprise Boards will help you prepare your own Business Plan and financial projections. There are many templates available and ‘Start Your Own Business’ courses are run nationwide that help you prepare a business plan and set up a business. Once you have a draft Business Plan and financial projections you could apply for a County & City Enterprise Board Mentor to review your Business Plan if you need further assistance.

Staff of the Enterprise Board will read your grant application and meet you before the information is sent to the Evaluation Committee. They will give you feedback and identify any gaps in your application or areas that need to further explained, for example sufficient market research. The County & City Enterprise Boards work on behalf of Ireland Inc. Commercial viability of the grantees is key so that there is value for tax payer’s money.

Grants from government departments usually mean lots of paperwork. Why is this so and how much paperwork is there?

An application form and the promoter’s CV is required for feasibility study/ innovation grant applications. In the case of Priming and Business Development funding a Business Plan, C.Vs, 12 month projected cashflow and 3 years of projected Profit & Loss accounts are required. For existing business the applicant must submit their recent accounts.

The applicant must make a strong case and provide as much evidence as possible of commercial viability, job creation and exports. In order to assess the business, the promoter and capacity to repay this information is required. This is the information that any investor, bank, Business Angel or Venture Capitalist would require.

How long does it take for a grant application to be evaluated and paid?

The applicant meets an Enterprise Board executive who explains the process, pre-empt any queries that the Evaluation Committee might have and ensures that there is comprehensive information for the assessment. The written grant applications and supporting documentation (Business Plan and financial information) are circulated to the Evaluation Committee in advance of the meeting and decision making.   There are five members an Accountant, Bank Manager, Business person, Enterprise Ireland Manager and Local Authority Manager.

The Evaluation Committee makes recommendations about whether the application should be rejected, deferred (if they need clarification on particular issues) or approved. In the case of an approval, they will specify the level of funding and which costs in particular should be funded. They might also include some terms and conditions that apply to the funding. Their recommendations are circulated to the Board of Directors along with a summary of the application. The Board makes the final decision, but the decision can be appealed if the applicant can address the concerns raised, for example, commercial viability. The process takes approximately 4-6 weeks.

A business Tax Clearance Certificate is required for all payments. Payments towards salary costs are based on pay slips of full-time employees. The payment is paid in two instalments. The first month’s pay slip of the new employee and the second instalment is paid on the 6 month’s pay slip. All other approved expenses are paid on a receipts basis (excluding VAT), between the Board approval date and the expiry date of the grant offering. No retrospective expenses are paid for costs incurred before the Board approval date. When all of the required paperwork is submitted and everything is in order then it is processed within 1-2 weeks.

Related: TweakYourBiz TV Talks With Mike McGrath Of Supply.ie

What rates of grant aid are offered and are the grants repayable?

The Priming grants are repayable at 33% and Business Development funds are 50% refundable. There may be variations on these rates depending on the applicants and the Board policy.
The average grants in Dublin City Enterprise Board are Business Development €20,000, Priming €12,000 and Feasibility €7,500 depending on the number of new jobs created.

CEBs offer mentoring to businesses. Is this popular and what does a mentor actually do for a business?

Mentoring is a very popular service, it is heavily subsidised. Sometimes the business advice is more important than financial support. In 2011 Dublin City Enterprise Board mentored 246 Entrepreneurs.

The mentor's role is:

• To listen
• To advise and counsel
• To help identify problems and areas for improvement assist the Entrepreneurs in the preparations plan
• Or he/she contributes independent, informed observations to aid a company in its decision making process.

The Mentor will outline guidelines to follow, point out strengths and weaknesses in proposed projects, act as a confidential sounding board and assist the entrepreneur in the preparation of business plans.However, the Mentor is not a professional consultant and under the terms of the programme, may not become actively involved in the day-to-day management or assume the role of executive in the company. If assistance is needed in more than one field of expertise, one or more additional mentors may be assigned to the individual Entrepreneur.

There is an old Chinese Proverb that extols the virtue of training; “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”  What kinds of training courses are offered and how do these courses tie in with having to take time out of the business?

There is a broad range of training available for every stage of business. We seek constant feedback from our clients and give them what they want which is good value, delivered by professional trainers with small business experience in half day workshops. The content is ‘How to’ practical advice that they can implement straight away in their business.

Half day workshops are geared at owner managers of small businesses with topics ranging from ‘Tax for Beginners’ to ‘Sales & Selling’. We also offer a broad range of social media workshops including ‘Maximizing Your Business Profile through Twitter’.  For early stage Entrepreneurs we run ‘Ideas Generation Workshops’ and ‘Mompreneurs Workshops’ and briefing sessions for people who are ‘Unemployed and Thinking of Starting a Business’. Start Your Own Business Courses are held over 10 evenings, twice per week for 5 weeks or 4 Saturdays.

Other County & City Enterprise Board programmes includes PLATO,  a unique partnership with large "parent" companies and enterprise development agencies. PLATO provides SMEs with a confidential support service, facilitated group learning, specialist expertise and advice, networking opportunities and business development training. The Accelerate Programme is for more established businesses and runs over several months and includes mentoring.

Related: #SMEcommunity Story Inspires Irish SMEs

What are the main reasons for a business to be declined for support?

The reason why grant applications are rejected is because of sector, deadweight*, displacement** and lack of commercial viability.

* Deadweight means that the project could proceed in any event without state support and **displacement means that a project could only prosper by diverting sales or employment away from an existing and similar local business.

What do you find SMEs are most concerned about in 2012?

Cash flow is the critical issue for businesses in 2012 and always! I would advise businesses to review their invoicing processes and try to get stage payments based on delivering the product or service to avoid bad debts. If you’re a small business, sole trader who has had difficulty getting credit or loan facilities of up to €500,000 or you have had an unfavorable change to your existing credit terms, get in touch with the Credit Review Office for an independent review. Call them on 1850 211 789 or visit their site for advice on how to approach your bank. The government is proposing a partial loan guarantee scheme but there are no details yet.

Another issue that I think should be addressed is that Irish Entrepreneurs don’t think enough about how to scale their business. We have a small island population with a depressed economy. There are much bigger business opportunities outside of Ireland, I would encourage more Entrepreneurs to think big and start selling as soon as possible, outside of Ireland. Fail fast, learn quick. There is a new Potential Exporters Division within Enterprise Ireland to help businesses investigate, prepare and execute an international strategy. Call them on (01) 7272829 or visit Potential Exporters Division of the website.

Apart from direct financial aid, what would you say is the main benefit to be gained by a business from getting in touch with their local CEB?

County & City Enterprise Boards are a first-stop-shop. We have built up an extensive network of contacts and local knowledge, so no matter what you are looking for if we don’t provide it we will try to put you in touch with someone who can help you.

Many thanks  to Eibhlin Curley, Dublin City Enterprise Board for explaining the business supports on offer in this interview. For further information, you can contact Eibhlin at ecurley@dceb.ie or Tel: 01 6351144. Remember, fail fast, learn quick!

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The post Supporting Your Business: An Interview With Eibhlin Curley Of Dublin City Enterprise Board appeared first on Tweak Your Biz.