What is a “zero hours” contract?

Posted on February 8, 2011 by Martin Bown

This is a guest blog article from Neil Coombes, Solicitor.  Neil and his team can be contacted on 01484 303585, via mail@ncoombes.co.uk or at their website www.ncoombes.co.uk.

You feel that extra manpower is needed for your business but you are not quite ready or able to commit to hiring someone on a permanent basis. In this sort of situation a flexible zero hours contract sounds like the perfect solution. But is it as simple as it sounds or are there hidden pitfalls?

A zero-or nil-hours contract is an arrangement whereby an individual agrees to work for you on an “as and when” basis. That is, there are no set times or number of hours specified.
Furthermore you are under no obligation to provide that individual with work if you have none available.

The benefits of this sort of contract are as follows:

  • You can bring in extra labour only when it is needed.
  • You don’t have to pay for staff who are not on your premises or not carrying out work on your behalf.
  • You can also have a number of individuals on zero hours contracts, and so build a bank of workers who are able to cover for others or provide extra labour at short notice.

There are possible pitfalls, however, and it is vital that employers are aware of these.

Workers on zero hours contracts have the right to be paid the National Minimum Wage.
It is possible for people working under such contracts to qualify for other statutory employment rights. If the worker is working similar hours on a regular basis, it is
possible that they can claim they have a fixed term contract and insist that you continue with these hours.

To avoid such claims it is important that you do not offer regular hours and keep  timesheets that show clearly any patterns emerging so that you can vary hours if necessary.

Also make it clear that if no work is undertaken for a given period, e.g. six months, the contract will be considered to be terminated.

If you would like further advice on the use of zero hours contracts, please contact us on                     01484 303585 or at www.ncoombes.co.uk

Posted in Guest blog, Law | Tagged , | 14 Comments

Start-Up Business? A few tips.

Posted on January 18, 2011 by Martin Bown

So, you’ve just started your new business (or are about to), and you’re quickly discovering that there’s  so much to think about and deal with.

Where to start?

Well, in my opinion, start by acting as though you’re a big business right from day one – after all, that’s where you’d like to be one day, right?

What do I mean by that?

Set up excellent systems for the “back office” functions of your business.

And by “back office” functions, of course what I really mean is those tasks a business really needs for survival but nobody wants to do because they’re not understood, or more honestly, not glamorous enough!

So, these are my tips:

  • Implement a world class credit control system that kicks into action the minute a sales order is signed and ends with money being paid before it’s overdue. It’s not an understatement to say cash really is king in your business (regardless of your industry or profession).
  • Staying on the cash theme (because it’s “the King“), have a system for paying your suppliers.  Get into the habit of paying all your suppliers at a set time in the month, and let your suppliers know when that is.  If you don’t, you’ll spend more time dealing with supplier phone calls than with more important cash generating tasks, like selling!  Trust me, I’ve seen it happen so many times.
  • Understand the actual cost of the product or service you’re selling, and make sure you sell at a higher price.  It sounds like simple common sense, but the opposite does happen (a lot).
  • Finally, keep on top of your financial records from the start – at the very least with bookkeeping.  Preferably start producing management accounts and other key information as soon as possible, however brief they may be in the early days.  The sooner you have key information about business performance, the quicker you can react to change, or implement changes, by making informed decisions.

As far as I’m concerned, putting these systems in place at the start of your business means you’ll be able to dedicate more time to important (& fun) stuff like winning new business, and developing customer relationships.

So what do you think?

Is there anything that you’d really like help with that your current advisor hasn’t discussed?

Posted in Business, Management information, Start Ups | 2 Comments

Call to action!

Posted on December 7, 2010 by Martin Bown

With the exceptions of the Retail or Food & Drink sectors, it appears that businesses are slowly writing off more of December each year due to the ever increasing influence of the Christmas holidays.

Add in the recent bad weather, and it feels like most businesses have already stopped trading until the New Year.

However, if you’re a business owner, now is the perfect time to sit back and reflect on your company’s performance during 2010, and more importantly plan the year ahead.

So, here’s a quick call to action:

  1. How was 2010?  Were sales & profit behind or ahead of your expectations?
  2. What did you learn in 2010? What would you do differently? What was a success?
  3. What do you want your business to “look like” in December 2011?
  4. What do you need to do, and how will you achieve that goal?

Successful business owners consistently set targets for their businesses to achieve.  Use the December slowdown to join them .

Giving your business a head start into 2011 can’t be a bad thing can it?

Martin

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Management Accounts receive government support

Posted on November 29, 2010 by Martin Bown

I was pleased to read this morning that Vince Cable, the Business Secretary, has provided support to a newly formed group called Doing Business Together.

Doing Business Together has been set up with the aim of  helping “SMEs manage their own businesses better and obtain the finance and credit they require”.

As you can imagine, I think this is great!  The only issue I have is with a quote on the second page of the DBT website ….

“Where financial information is needed quickly, management accounts may be appropriate“

I’d change “may be appropriate” to “are essential“, and to clarify, not just when information is needed quickly!

Business owners need high level, key performance indicators to help them make informed decisions about their business, to take advantage of opportunities and more importantly, to minimise threats and weaknesses.

Of course, depending upon sector you’re working in, the detail contained within the management accounts will vary.

For example, a home-based IT consultant will need minimal monthly information compared to a small business in the construction industry working on a number of sites during the month, or a retail business with a high monthly stock turnover.

Too often management accounts are produced as a one off, rushed exercise, presented in a “statutory accounts” format simply to satisfy a bank manager, rather than help the business owner.

I welcome the support of the DBT Group and Vince Cable in helping Management Accounting Services continue to educate business owners of the value that ongoing, management information can add to their business.

What do you think?  What information do you use to measure business performance?  Could you do more?

Martin

Posted in Business, Construction, Management Accounts, Management information, Retail | Tagged , , | 2 Comments

Why football isn’t normal business

Posted on October 8, 2010 by Martin Bown

I’ve posted a number of links onto our facebook page recently to articles about the ongoing saga at Liverpool Football Club.

Going back 20+ years, by the late 80′s and early 90′s Liverpool were not only far and away the most successful team in Britain, the club management were also some of the most vocal exponents of a breakaway “elite” premier league.

Whilst the clubs supporters were bemoaning John Barnes demands for a £10k per week salary (hard to imagine now), the management were sending the club and it’s rivals down a commercial path that would generate much greater riches (and hopefully, success).

It has to be said that in most other areas of business a substantial increases in revenue, continued loyal customers, world class assets and worldwide brand adoration would be a massive target to aim for.  These are truly world renowned businesses (Apple?).

I’ve always thought football is different though.

The revenues stay as long as the business remains successful, the business remains successful as long as it can continue to attract world class assets, and the assets can continue to perform at world class levels.

Brand loyalty is a little harder to diminish, especially for a team such as Liverpool who have huge numbers of followers across the world.  However, with competition fierce for worldwide support, it only takes two or three seasons of mediocrity for all the previous goodwill to be undone.

And that leaves the supporters of the club – and by supporters I mean the ones that either regularly, or infrequently, go to the matches.  The paying customer if you like, where paying means being counted through the turnstile.

These “customers” remain loyal to the “brand” however badly it performs – there’s no question any of them would consider switching brands and moving to a new supplier.

They essentially have two options (1) Put up with the inferior product, pay less for it, and hope that with good management one day a better product will be produced; or (2) Stop buying that product altogether – walk away.

It’s difficult to understand why the current management of Liverpool FC now want to take legal action to maintain control.  The sale of the club is never going to be higher than the offer currently on the table.  This sale essentially allows the current owners to minimise their losses.

If they’re successful in the legal action, what will they have left in their business?

  • a decrease in asset performance
  • decrease in the standard of asset purchases
  • an eroding brand
  • reducing revenues

Oh, and more than likely, lots of supporters who decide to walk away.

That’s why I think football isn’t like a normal business.

You can probably tell where I spend some of my spare time, but this situation isn’t unique to Liverpool Football Club.

What do you think?

UPDATE: As I was publishing this blog on Friday, news broke about Manchester United’s £80m loss.  I subsequently saw a former colleague, and MU season ticket holder, yesterday and he told me that MU stated one of the reasons for their lower revenues/profit this year is due to reduced transfer fees (no more large Ronaldo type sales).

It seems selling the very best assets (to competitors) is a key driver in the MU business plan.  Where else in business would this happen?

As my friend and ex-colleague plainly said, it’s not just the shirt colour that our two teams now have in common.

Martin

www.mymanagementaccountant.co.uk

Posted in Business | Tagged | 4 Comments

Growing pains

Posted on August 25, 2010 by Martin Bown

I warned companies earlier this year not to be come a victim of the expanding economy, but after a recent conversation with a client it’s worth revisiting again.

Business owners are often under the impression times are tough and cash is tight initially in the early days of their new venture, but once the sales start flowing the pressure will ease considerably.

This may be true for some lucky business, but there are many more examples where expanding companies have been a victim of their own success.

Take note of the following and you will certainly ease the growing pains in your business:

  • Don’t forget to invoice your customers. A basic, but very real, issue as people become so busy dealing with orders they actually forget to send the customer an invoice.  If possible, incorporate invoice generation somewhere into your order delivery system.
  • Once you’ve sent the invoice, make sure you chase the debt. It’s a fact of life that most customers don’t pay you without being asked, so get used to the fact that you need to have those conversations.  If you don’t like chasing debts, then outsource the task to a specialist.
  • Manage your suppliers. As much as you’re chasing your customers, you’ll also be receiving numerous phone calls from your suppliers all asking for the money you owe them.
  1. Don’t pay before the debt becomes due.  Why else would the supplier give you credit terms?
  2. Ask all suppliers for extended terms of credit.  This is likely to be more successful where you repeat order and have a good payment record and relationship with the supplier.
  3. If cash is particularly tight communicate and be honest.  Suppliers don’t like being ignored, and don’t like being told something that it isn’t true when you owe them money.
  • Manage your stock. If you’re a retailer, or someone involved in manufacturing or construction, you’ll be buying more stock to meet demand of your increasing sales.  It’s easy to lose control of the stock.
  1. Don’t order too much stock.  You’ll still be holding it when the supplier needs paying for it.
  2. Likewise, don’t order to little.  You may need to buy quickly at a higher price in order to meet customer demand.
  3. Manage stock loss and damages.  This can potentially devastating to the long-term health of your business, so make sure you implement systems to eradicate losses and damaged stock.
  • Manage your staff. For now it may be just you, but as your business grows, then the number of staff you employ will increase.  Make sure you’re new team are as keen as you when it comes to cash flow.
  • Do an investment appraisal before buying new assets. Before you’re business signs the loan agreement and purchases the new asset, make sure you’ve worked out exactly what the total cost of the purchase is, and how (if) sales and profit improve as a result of the new asset.
  • Produce a cash flow report on as part of your management information. Daily, weekly, monthly… whatever works best for your business, you need one.  Logging on to your online bank account whilst holding your breath is no way to manage the cash of your business!

If any of the above sounds familiar, please get in touch.

Martin

www.mymanagementaccountant.co.uk

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Our new website

Posted on August 2, 2010 by Martin Bown

UPDATE 27-10-2010

We’re still very happy with the content of the website we launched in August, but we really wanted to make the site much more interactive.  So we recently took the decision to have an integrated blog, and move all of the content of the website across to a wordpress platform.  We think this is a really positive move.  Hopefully you agree!

Original blog:

I’m pleased to announce that our new website has launched.

We wanted a website that highlights understanding that as CIMA management accountants, we understand running a business is much more than just about the numbers.

There will be more added to the website over the next days & weeks, including plenty of news and resources as well as access to Xero, the world’s easiest accounting system.

In the meantime, please do visit it and let us know what you think.  We appreciate all (constructive!) feedback.

Martin Bown

www.mymanagementaccountant.co.uk

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“Value Added Services” or “Essential to Business Success Services”

Posted on July 27, 2010 by Martin Bown

I don’t mind the term “compliance” accounting, and I certainly don’t have a problem with ensuring my clients are fully compliant (they are, and in good time).

What I do find difficult is informing potential clients I focus on the “value added” services.

Qualifying with CIMA as a management accountant, and having almost 20 years industry experience prior to running my own business, I don’t view the core services I offer as “value added” but as “essential”.

Whilst “strategic business reviews”, “cash flow forecasts” and “balance scorecards” may seem like a mystical world to some, to the management accountant they’re the standard output.

Of course, I understand the reasoning behind the term “value added”   “….. Let us take care of the compliance work, and we can also add value to your business by doing xyz….”

Sadly too many businesses are led to believe compliance work alone is an entirely satisfactory way of generating information required for key business decisions.

My alternative explanation is “I’ll work with you and deliver information essential to helping you manage your business more successfully, and as a by-product, the compliance work pretty much takes care of itself”.

When I put it like that, I suppose it is easier to say I’m adding value!

Martin Bown ACMA

www.mymanagementaccountant.co.uk

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High Street Dreams

Posted on May 18, 2010 by Martin Bown

After finishing work yesterday evening, I turned on the TV for half an hour, and in the event caught the second half of  the BBC’s High Street Dreams, a program based around two successful business people mentoring start ups.

Jo Malone made an excellent comment to two business partners before their pitch to the MD of a national toy retailer.

Immediately before their meeting she told them that retailers are interested in the long term future of their suppliers (and products) rather than keen to chase a one off sale.

How true is this for so many different businesses, in so many different sectors?

It’s short & simple, which is probably why this a great piece of sales advice to remember as head into your next sales meeting.


Martin

Visit our website

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Don’t be a victim of the expanding economy

Posted on April 12, 2010 by Martin Bown

After a tough 18/24 months all the signs are pointing to an improving economy.

Now is the time to be very cautious.

Businesses often need to meet the demands of an increasing order book with increases in stock, additional staff or other resources.  Only the lucky few businesss will increase sales with little or no increase in costs.  So as the business generates higher sales & more cash, it also needs more cash to pay for the resources.

A simple and highly effective tool for any business owner is a cash flow forecast.  Simply explained, the cash flow will record cash coming into the business and costs due to be paid out by a business.  At the very least, the cash flow needs to look a month ahead.  In certain business, such as manufacturers or builders daily or weekly cash flow forecasts will certainly be a better solution.

We have plenty of experience of managing cash and implenting cash flow reports, so if you don’t currently actively manage your company’s cash and you’re unsure where to start, please get in touch.

Don’t let your company be a victim of the expanding economy.

Martin Bown ACMA

info@mymanagementaccountant.co.uk

www.mymanagementaccountant.co.uk

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