“With a staffing footprint of only a few attorneys why do I need a bookkeeper?” It’s a question I’ve heard a lot over the course of my career. Many lawyers who work in small firms don’t see the benefit of relying on external expertise to keep their books organized. Unfortunately, many of those same lawyers eventually come around to a different way of thinking only after something bad, or even catastrophic, happens with their accounts.
No business owner looks forward to a letter from the taxman requesting a closer look at the books.
If you’ve received an audit letter – an official request by the tax authority to review your
accounts and confirm your taxes have been paid to date – don’t panic. Prepare.
These four steps will help you get through the process with minimal stress and the best
possible outcome.
Most times, the line between personal and business expenses is clear. Any expense that is
directly linked to your business earning an income is a business expense. If you buy
something to be used for your business, it's a deductible business expense. If you buy
something to use privately, that's a personal expense.
If something is mixed between business and personal, such as a laptop that you use partially
for business and partially for personal use, you can only claim a deduction for the amount
that you use for business. So if you use the laptop for business 75 percent of the time and
for personal use 25 percent of the time, you can only deduct 75 percent of the laptop.
You probably didn't factor a global pandemic and national lockdown into your business plan! So now is definitely a good time to revisit your business plan for the next year. We know that writing a plan can feel like a big effort so we have created a template to make it easier. Please get in touch if you’d like to talk about your plan – especially the financial parts like cash flow.
For many small businesses, the best way to improve profitability is to increase turnover, as there’s no limit to sales but there is a limit to how much you can reduce your costs.
Let’s look at how you can focus on each of the five ways in our profit increase calculator to achieve your goal of improving profits.
By interacting with greater numbers of people, you’ll increase your chances of turning more consumers into customers – or at the very least, having them lead you to potential customers.
For example, if you own a convenience store and you can come up with some attractive signage out front to get more people into your store, you’ll increase your leads.
So what can you do to increase leads or make more people aware of your business? A few tactics you might consider using to increase your leads include:
Advertising -set a budget and increase how much your business is promoted.
Direct marketing – work out your target audience and market directly to them via email.
Network – attend industry events and conferences to meet potential customers. These may be moved online for the meantime.
Create a website – to open online and international opportunities.
Develop new distribution channels – think about using agents, licensing your goods, or using new distributors.
How many potential customers walk out of your store, leave your website, or inquire about your services without making a purchase?
Just imagine if you could convert 10% of those people into customers. How many extra sales per day would that be?
A few tactics you might consider using to convert more leads into customers include:
Arrange training for employees – on sales conversion and sales closing methods.
Personally attending a sales training course.
Running demonstrations – for potential customers to see what you have to offer and how they could benefit.
Highlighting the benefits of your goods or services – through promotional material, your website, blog advice, social media platforms, and free trial offers.
Preparing incentives – for your staff to offer to potential customers, hopefully encouraging them to purchase.
If you can entice your customers to buy just one more item from your business each year, your sales (and hopefully your profits) will increase.
A few tactics you might think about using to increase the number of items you sell to each customer include:
Widening your product range – by asking customers what else they would be interested in buying from you.
Bundling products and services together – like adding after-sales help to certain products.
Increasing capacity and capability – for example, purchasing extra equipment to increase your capacity while hiring additional staff to enhance your capability.
Researching your competitors’ offerings – to find product or service opportunities.
Can you come up with some ways of increasing the average value of each sale you make? Rather than hiking up prices, see if you can increase prices by small margins (like 1-3%) or find ways to sell higher-priced items more often.
A few tactics you might think about using to increase your average sale include:
Training your staff – so they’re confident offering complementary items and up selling more expensive goods.
Increasing prices across the board – would your customers notice a small price increase? Consider informing them and trying it, as the extra money will go towards your bottom line.
Advertising your higher-valued products or services more often.
Developing a premium product or service – and encouraging your regulars to go for it.
An easy way to increase your net profit is by lowering your fixed costs (business overheads). Identify your top five expense items and track any changes before taking steps to reduce them.
A few tactics you might try to increase your net profit percentage include:
Identifying and monitoring your top five expenses in your budget reports.
Finding out where you can make savings and reduce costs.
Concentrating on higher-margin services or products.
Looking into alternative suppliers with cheaper supplies.
Review these five ways of increasing your profits at least every year. In the meantime, plug some figures into our profit increase calculator to test what you could change and the effects of those changes on your profit.
By using simple, practical steps, you can improve your business’s profitability. Chat to us to find out more.
We’ve spent this month talking about the things you should be doing to win and increase repeat business. Namely, we’ve been talking about the benefits of communicating regularly and meaningfully with your former clients to create a welcoming environment for them to re-engage with your firm.
Which brings us to this week’s topic. What not to do when you’re communicating with your clients. Continue reading below to find out what your clients hate to receive or, at the very least, ignore when it shows up in their inbox.
All clients aren’t created equal. Some are businesses, some are individuals. Some are 65-year-old insurance executives with real estate conveyancing needs while others are medium-sized firms with bill collection issues. You wouldn’t provide the same service to each of your unique clients, so why would you use the same marketing material?
Instead of sending all of your former clients the same communications that can’t possibly apply to all of them, segment your email list into groups that make sense. How exactly you do that will depend on the nature of your firm, but at the very least you want to create groups with common pain points and needs.
Once you’ve segmented your email list, send each segment a communication that actually matters to them. Send your small business clients emails about how to find a good bookkeeper. Send your real estate clients information about how to reduce their property taxes. Each segment should receive communication that is relevant and personal to them.
Some firms make the mistake of confusing what’s important to themselves with what’s important to their clients. Did your firm just celebrate an anniversary? Well, that’s all well and good, but why should your clients care? Unless you can find a way to make that anniversary matter to your clients, don’t even bother to inform them of it. Your marketing needs to speak to your clients, not to you.
Similar to our first point, communications meant for everyone are emails and letters that are so bland they could, theoretically, be sent to anyone. The problem with these sorts of communications is that they don’t engage anyone.
In order to speak to someone, communications must give them something of value. And different kinds of clients find very different things valuable. So if you find yourself sending communications, like emails and letters, that contain identical content to all of your clients, take a closer look at how you could personalize and segment your client list into smaller groups.
There are wrong ways to reach out to your clients. Failing to treat them as individuals with their own unique business and legal needs is one of those wrong ways. Look for ways that you can increase the specificity of your emails and letters in order to increase the effectiveness of your communications.
