Tag: Bookkeeping

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4 ways to grow your margins through automation

Staying ahead of the curve for trade companies is notoriously tricky. The number of moving pieces involved in carrying out a job means that from the initial job request through to invoicing there are thousands of points where a job can go south.

The sheer scale of staying across every single facet of two or three jobs, let alone 20 or 30, is a task that nobody can or should be expected to complete flawlessly. In a lot of cases, there’s a sense that trade businesses are too much trouble past a certain point.

Over the past five years, however, we’ve seen trade companies start to emerge from piles of paperwork and mountains of debt by automating repetitive tasks and adopting smarter organisational tactics.

To spread the good word and help our tradie mates out, we’ve put together a list of tactics we’ve seen take trade companies from ditches to riches.

1. Accounting software

In the early days of running a trades business, there can be a tendency to want to learn how to do everything yourself. It, however, often a much better use of your time to hire a bookkeeper to look after your accounts for you.

To support this, it’s invariably in your best interests to move your books onto accounting software like Xero. Xero is a simple way of staying across all of your financials in a straightforward interface that both you and your bookkeeper can access remotely. Among other smarts, Xero can read photos of all your rogue receipts and turn them into expenses in your dashboard, easily create financial reports, and track inventory.

2. Online Price Books

Flicking through 20kg supplier price books all day is enough exercise to cripple the heftiest of footy players let alone a wee office manager. So put down the deep heat and pick up a job management software solution that does the heavy lifting for you with online price books. Online price books are the new kid on the trade block: they allow you to significantly reduce time spent on manual data entry by saving supplier price book files and auto-populating materials with their respective costs when you’re building quotes and estimates.

3. Just in time stock control

It’s often the little expenses that eat away at trade and service business profits, so it’s pivotal to make sure as little falls through the cracks as possible. Just in time stock control is a framework employed by some of the world’s most successful manufacturers to help with loss mitigation and cash forecasting. This is a methodology for managing materials costs. It requires you only to buy the materials that you need when you need them so that you’re never left with expenses that won’t ultimately be covered by the customer. Here’s how to do it:

  • Quote exclusively what you purchase: Quote with surgical precision and make sure that all the materials you’ll need will be accounted for.
  • Order what you quote: Only purchase the materials required to complete a job.
  • Charge what you buy: If you’ve purchased materials for a job that you know you need to complete the job, make sure you charge them to the job.
  • Control what you buy: Be disciplined in buying (or instructing your team to buy) the correct amounts of materials that have been included in quotes. An easy way to do this is to use the quote as a shopping list.

For many companies, it’s not as easy as going to the supplier a few times a day for materials specific to a job (and moreover, that would be inefficient). If you’re miles away from the nearest supplier, plan and buy all the materials you need for several jobs at once.

4. Digital job card apps

If you run a trade business and you’re just hearing about job card apps now, it’d pay to take a seat as you might get a little light headed when you realise how much time, money and stress you could save by adopting this system. Within job card apps office managers, project managers and tradespeople alike can make real-time updates to job briefs. Whether you’re rescheduling a job, adding hazards, changing an address, scheduling a second job or adding photos/notes – the job card is your oyster. The benefits here speak for themselves; it’s a game changer.

All things considered

Trade and service businesses aren’t an easy game, and things will always go wrong, but it’s on business owners to create a business structure that eases the pressures on their employees and minimises room for error and ultimately grows their margin. There are plenty of ways to do this, but they won’t come knocking at your door, so it’s best to think creatively and be resourceful to find solutions to suit your business.

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Finance

5 common small business myths

When you start your own business, it can be easy to fall into the trap of believing in myths. From bookkeeping to customer service, there are plenty out there – and some of them seem true enough to take seriously. The problem with this? They can steer your business in the wrong direction.

Put simply, it’s about time SMEs stopped spinning so many plates – especially when some plates aren’t worth the time. Here are five small business myths you need to stop believing.

Myth 1: Bookkeeping is just about the numbers

It’s a common myth that bookkeeping is a numbers game. While it’s true that numbers do have a big part to play, it’s actually much more than this. Essentially, a bookeeper is responsible for organising and storing accounting and financial documents such as statements, income tax records, ledgers and journals.

Source: Conveyancing.com.au NSW

In fact, there are many skills that a good bookkeeper needs to help keep a business afloat that goes beyond being savvy with numbers. Discipline, good communication and a high level of organisation are required. They also need to have a solid understanding of the bigger picture, which means, knowing how expenses or new staff hires will impact the business six or 12 months down the track.

Proper bookkeeping makes it easier to fulfill tax obligations, analyse and manage finances, make plans for the business, and abide by the law. Consult with a local bookkeeper for some professional advice.

Myth 2: Be active on all social media platforms

For small businesses, it’s important to be active on social media. However, it’s equally as important to be active on the right platforms in the right way.

The truth is, being present on every single platform can be overkill. While it might seem easy to use software tools to publish your content automatically across several channels, what works on Facebook doesn’t necessarily work on Twitter or LinkedIn.

Take extra time to optimise your content for each platform. Think about the tone, angle and word length of each post, making sure it’s appropriate for your different audiences. Do your research and find out where your customers are having promising conversations and narrow your presence to where this is happening.

Myth 3: You should be working all the time

Running a small business will certainly keep you busy. It often feels like there is so much to do and so little time to do it. So we overwork ourselves to keep on top of things. However, everyone is human – and everyone needs a break.

Need proof? It’s actually scientifically proven that prioritising your breaks at work will make you happier, more focused and more productive. Taking breaks gives our brains a much-needed rest, allowing us to get back to our tasks with renewed energy and focus. They also relax our brains, helping us retain information and make valuable connections, as well as reevaluate our goals.

Simply put, making time for breaks equals making time for your business.

Myth 4: Voluntary administration is the end of your business

While some people might see it as an extreme action, voluntary administration can be a smart move. The truth is, when your business is in a sticky situation where debts can’t be paid, restructuring your operations, creditors and assets is a way of potentially improving your financial position.

The aim of voluntary administration (VA) is always to get a business back to financial health if possible, or to make sure that creditors get a better return than if the business was liquidated.

If you’re up against the wall, going into VA can give your business breathing space, as an external administrator takes control of your business while its finances can be reviewed. It’s a simple process, and contrary to what some people believe, can help your business get back on track.

Contact local bookkeepers

Myth 5: The customer is always right

There’s no denying that customers are crucial to your business. However, it’s important to balance their needs with yours and your employees’ needs too. Here are three instances when the customer is actually wrong:

  • When they make you or your staff unhappy
    Nobody deserves abuse. Sometimes customers get angry and expect people to be held accountable. However, if you know you or your employee to be right, it’s best to hold your ground. 
  • When they’re bad for business
    If a customer is disrespectful for absolutely no reason – it’s better to let them go. It shouldn’t be a matter of finances, especially if it’s causing you or your staff unnecessary trouble.
  • When they’re not worth it
    Some customers simply aren’t valuable to your business, particularly if they’re giving your staff trouble time and time again. Instead, it’s better to focus on customers that deserve your services and are willing to work with you.

Be a small business myth buster

Sometimes it can be tricky to figure out myth from reality. While busting myths is something you’ll naturally do when running a SME, it’s always helpful to know what to believe and what to dismiss before going in.

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Finance

What’s best for a small business to outsource?

Small businesses have a limited budget and can’t always afford to have full-time employees on their payroll to handle different tasks. This doesn’t mean you need to handle all essential business tasks on your own. Small business owners should focus most of their energy on business tasks and processes that require their particular skill and attention.

They can delegate ordinary business processes to a third party through outsourcing. You can maintain a lean organisation, stay within your operations budget and still get work done.

What can you outsource?

Different businesses have different requirements so it’s important to study your business processes, understand your budget and look at your employees’ skills and abilities before you determine what you should and shouldn’t outsource. Mentioned below is a list of services you can easily outsource. You can study the pros and cons of every option and make your decision.

HR outsourcing

When you have employees, you need to manage their needs and requirement though a Human Resource system. The HR department of a company maintains employee records, keeps track of their insurance cover, performance reports, leaves and absences, complaints and requests and other such information. All of these records need to be properly managed and maintained.

HR is also responsible for employee development and helps organise training. If your employees don’t have proper support from HR, they might not be inclined to remain in your company and seek employment elsewhere.

As a business owner you need to provide this support system and you can do it by outsourcing the task to an external HR company. They will handle all aspects of HR support and development, so your employees will be satisfied and perform well.

Payroll outsourcing

Business owners often underestimate how complex payroll management can be. It goes beyond keeping a record of employee payments and salaries. You need to keep track of their working hours, record leaves, bonuses and make sure all the employee information is up-to-date. Mistakes can lead to penalties, fines and sanctions, so it’s important to keep a good payroll record and ensure all the information in it is accurate.

One of the best ways to achieve this is to hire a professional bookkeeper and use a software program to manage the data. If you outsource payroll, you don’t need to worry about the details involved. You can trust the outsourcing professionals to keep all the information up-to-date and ensure there are no mistakes in the records

IT outsourcing

Modern businesses, especially small businesses, rely heavily on their IT systems. They use IT to get work done, store information, manage business processes, handle marketing and provide customer support. Unfortunately, IT systems aren’t infallible and can develop problems like viruses, data loss, software glitches, hardware issues, etc. Big companies have IT departments that can handle these problems and provide essential maintenance.

Smaller businesses can get the same security by outsourcing IT support and maintenance. IT support companies have expert technicians on their staff that can handle all kinds of computer and IT problems. They offer both remote and on-site maintenance and repairs.

IT support and maintenance companies also provide additional services like cloud system, processing power from their server, hosting services, etc. You don’t need to invest in data banks and servers to store your information; you can simply purchase one of the many cloud plans offered by IT support companies

Small business bookkeeping

All businesses need to keep track of their expenses and income through bookkeeping and accountancy. If you don’t keep track of your financial information, your business will suffer and eventually fail. You also need to maintain accurate financial data in order to file your taxes with the government at the year end. If you make mistakes and don’t pay as much tax as you’re supposed to, you’ll face penalties, fines and may even lose your business license.

Unfortunately, bookkeeping isn’t easy, even for small businesses. You need to keep track of all expenses, look at your cash flow, maintain a record of your income, determine what expenses are tax deductable and perform other related tasks. While accounting software can help you maintain the records, it’s not easy to consolidate all the information at the end of the financial year.

How to hire an accountant that meets your business requirements? A well-trained and experienced accountant can help you consolidate information, determine your tax burden, look for tax deductable expenses and provide other financial advice. This can be easily outsourced as well.

Contact local bookkeepers

Legal process outsourcing

Businesses need to handle a number of legal processes like registering trademarks for their brand, developing terms and conditions, creating contracts for customers, employees and business associates, etc. You need advice from a legal professional with experience in the industry to ensure there are no mistakes. Errors in legal process management can lead to law suits and other legal difficulties, so it’s a good idea to hire a company to keep track of all legal aspects of your business.

There are a number of third-party companies with excellent legal experts and lawyers on their team. They can advise you on all aspects of your business and ensure you stay on the right side of the law.

Business process outsourcing

A business is a complex machine with several moving parts. All of these parts must function well and without interruption for the business to move forward. Every business has a number of background processes like customer service, sales, marketing, internal maintenance and repair, etc. A business owner must keep track of these processes and ensure that they’re on track.

Thankfully, you can outsource a large number of these processes as well. For example, you can hire a company to clean and maintain your commercial property instead of creating a permanent cleanup crew.

Wrap up

Outsourcing is easy and affordable, so all you need to do is find a reliable service provider to handle all your processes. Outsourcing allows your business to grow at a reasonable pace and minimises the initial investment. You can direct your resources to areas of your business that truly need it.