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Chartered Accountants &
Business Advisors

Working with you to design a business you love so you can reach your definition of success.

Chartered Accountants &
Business Advisors

PHONEICONS-02+ 04 910 3340
WELLINGTON

PHONEICONS-02+ 04 910 3340
WELLINGTON

The One Thing That Drives Your Business Forward

2 Oct 2020 | Biz Strategy

Every minute you spend in your business must be an investment.

How many times have you been super-busy, but at the end of the day you’re wondering what you have done with your time; what you really achieved that day? That means your time was not an investment.

And you’re not alone in this. We’re all guilty of spending our time on the wrong things – sometimes knowingly, other times not.

 

Not All Tasks Are Equal

The biggest mistake we tend to make is treating every task as if they all matter equally. Instead, if you want to achieve extraordinary results and want every minute to count, you need to find out what is the one, most important thing you need to do that would make the biggest impact to drive you and the business to your desired goal. 

And you need to spend 80% of your time on that, and only once that’s done can you focus on other things.

For instance, if you’re in sales, the most important thing you need to do is picking up the phone and calling people, or meeting with potential clients.

 

Finding Your One Thing

So, how do you find out what your core focus should be?

It’s not just about choosing things you enjoy doing. Rather, it’s about finding the things that you’re innately good at.

Ask yourself these questions:

  • What comes easy to me? What am I naturally good at?
  • What do I really enjoy doing?
  • What, if I only did that every day, would move the business forward?

And this is not only for you – every person on the team needs to find that core thing for them. Imagine if everybody in the business spends 80% of their time on their one thing? How quickly would that drive the business forward? How quickly would you achieve your goals?

It’s often difficult to look at yourself critically and see what you’re really good at. You may be brilliant at something, but because it comes easy to you, you don’t realise how unique and valuable that skill is.  Or you may know what your one thing is, but you’re not sure how it would benefit the business.

We’d love to be your sounding board. Let’s get together for a brainstorm and we’ll help you test your ideas.

Your business, your dream is worth it.

What Does Success Look Like for You?

11 Sep 2020 | Biz Strategy

‘Success’ is such a fuzzy word. Does it mean buckets full of money, fancy titles, public recognition? For most people, their definition of success is quite different. 

 

When it comes to business, we’ve found that for most people, the typical “growing your business” is not an accurate goal or means by which they want to measure their success. Not every business owner wants their business to grow exponentially and make loads of money. 

For some, lifestyle is more important than anything else. Instead of a rapidly-increasing bank account, they’d prefer a well-oiled machine that allows them to have more time to spend with their family, especially those with young kids. Or maybe they want to have more time to travel and just need a business that can sustain that type of lifestyle. 

The more entrepreneurial types may want their business to grow aggressively – from idea-stage to taking the world by storm in a couple of years – before they move on to the next thing. They may want to sell the business after they’ve created a money-making machine, or just live off the dividends while they’re working on their next big idea. 

Others want to create a legacy. Maybe that means creating a product that becomes a household name, or a steady business that their kids can take over one day, or they want to become known as one of the best places to work for. These businesses may want to grow steadily, but not too aggressively. 

For others, impact is their measuring stick: The difference they make in the community, their industry, the environment, or in the lives of others, that’s what drives them. This may be through their involvement in charities, i.e. using their profits to invest in good causes, or through building a social enterprise where impact is ingrained into everything they do. 

There are broadly four success-categories most businesses fall into: 

  • Income
  • Lifestyle
  • Impact
  • Personal achievement

So, to get back to our initial question, what does success look like for you?

Get Clarity on What Success Means to You

To help you avoid cookie-cutter statements that sound good when someone else says it, here are a few questions to ask yourself to figure out what success means to you. 

1. How much money do I want to take home?

2. How much time do I want to spend at work?

3. What do I want to spend my time on?

4. How flexible do I want to be with both my time and the tasks I perform in the business?

5. Do I want to be involved in every day-to-day decision, or do I want to let other (maybe more qualified) people take over the reins?

6. What excites me? Is it…

  • Inventing new products or services?
  • Talking to clients?
  • Negotiating and making deals?
  • Improving systems and getting the best out of employees?
  • Making a difference in others’ lives?
  • Something else?

7. What causes do I feel strongly about?

8. What is the legacy I want to leave behind?

 

Set Your Business on the Right Path

Defining success and personalising it to fit you like a glove is the first – very crucial – step in building a business you love. It becomes easy to not only set goals but also to reach them.

Once you’ve clarified your success-parameters, come chat to us about the next steps and how we can help you to set your business on the right path. And, if you’re torn between different ideals and you need someone to bounce your ideas off, we’d love to be your sounding board.

Provisional Tax 101

28 Aug 2020 | Tax Updates

Imagine making loads of money during the year, but you never thought about keeping something aside for the tax man. Imagine the surprise you’d get at the end of the year when you get a huge bill from IRD.  

That’s why provisional tax was implemented. To avoid nasty surprises like that. 

Provisional tax is a ‘peace of mind’ tax. A ‘risk-reducing’ tax. 

Allow us to explain.

 

What Is Provisional Tax?

In simple terms, when you pay provisional tax, you are paying tax for the year you are currently in, even though you don’t know what your earnings will be yet. For instance, let’s say you estimated that your tax bill for 2021 will be $6,000. You will then pay three instalments of $2,000 each during the year. 

When you do your annual accounts at the end of the year, you’ll calculate tax on the actual profit. If you paid too little, you’ll have to make an additional payment, called terminal tax. If your actual profit is less than what you estimated, and you paid too much provisional tax, the IRD will refund the difference. 

Let’s say your tax bill for 2021 is $7,000 and you paid $6,000 in provisional tax throughout the year, you’d need to pay an additional $1,000. Similarly, if your final tax bill is only $5,000, and you paid $6,000 during the year, the IRD will refund $1,000 back to you.

Who Needs to Pay Provisional Tax?

You only need to pay provisional tax if your total tax bill (residual income tax) for the previous year was more than $5,000 (previously it was $2,500). You can still volunteer to pay provisional tax if your prior year’s tax was less than $5,000.

How Are Provisional Taxes Estimated? 

There are a few different options available to calculate provisional tax, but most businesses use the standard (safe harbour) option. 

On the standard option, the provisional tax payable is calculated as follows:

Residual income tax payable from prior year + 5% 

On this option, those with a balance date of 31 March will pay three instalments with the following deadlines: 

#1: 28 August

# 2: 15 January

#3: 7 May 

 

Payments May Overlap 

Something that often confuses our clients is that they’d need to make payments for both the current and the following year in the same year. For instance, your final bill for 2020 is due on 7 April 2021 (if you work through a tax agent like us). By this time, you would have already made two provisional payments towards the 2021 year. 

 

In Conclusion 

Provisional tax was put in place to help you avoid a huge tax bill at the end of the year. It’s designed to work similarly to Pay As You Earn (PAYE) that wage-earners pay on their monthly wages monthly. 

If you need any help or if you have more questions, get in touch with your account manager.

How to Stay on Top Of Your Business Finances

3 Jul 2020 | Biz Finances

Finances aren’t sexy. But ignoring that part of your business can have a detrimental impact on your business.

Does this sound familiar? 

“If I work hard, my finances will sort itself out.”

“I’m too busy to worry about the numbers now.”

“I don’t understand accounting; my accountant can sort it out for me when my tax bill is due.” 

Simply put, these beliefs are wrong. Here’s why:

  • If you work hard you may be successful. But that’s not a guarantee. You may work on things that aren’t profitable or that don’t move your business forward in any way. The key is to work hard on the right things. And you’ll only know what the right things are when you delve into the numbers.
  • You may be too busy because you don’t have a handle on your finances. You may spend time on unproductive, non-profitable tasks without even knowing it.
  • You can’t wait until the end of the year to analyse your numbers. It would be too late. If you want to succeed, especially in such an uncertain time as now, you should plan ahead, measure your performance regularly, and make strategic decisions as and when they’re needed.  

So, what should you do instead?

 

Turn Your Vision into Measurable Numbers

It all starts with developing a vision and a plan for your business. 

Once you’re clear on what you want to achieve, you should put numbers around your vision. For instance, develop a cashflow forecast and other performance metrics that would help track how you’re doing against your goals. 

You should also measure your metrics on an ongoing basis and use the numbers to make the right business decisions. For instance, if you’re finding that one of your services is unprofitable, you may want to drop it like a hot potato, and channel your marketing bucks towards a more successful product. Or you may decide to work on improving productivity in your production team. 

 

Which Financial Metrics Should You Measure?

There are many financial metrics to track. Trying to cover them all may be overwhelming. Instead, focus on a few ones at the start, and add more as you begin to understand your finances better.

Here are the most important financial metrics to start with:

 

Your Cash Flow 

Staying on top of how much money is flowing in and out of the business is crucial. If you don’t plan ahead you may run out of cash just before a pay run, or you may have to say no to a marketing opportunity that can bring in thousands of dollars in the long run.

 

Debtors/Debtors Days 

Keep on top of your outstanding debts and how fast people pay you. If you don’t follow up frequently, you may not be able to recover the debts at all. There’s a saying that people pay those who scream the loudest. 

Everybody is feeling the pinch right now and many businesses are holding on to their money in fear of running out. That is flawed thinking because if everybody stops paying each other, the economy would halt. But if we keep on paying each other, the economy can keep on turning and recover over time. 

As much as we would like to help others out, we need to think about ourselves as well.

 

Profitability

We often put too much of a focus on increasing sales, but forget about profitability. For instance, if you’re in the service industry and things aren’t as busy as usual, you may spread out the work to fit the time you have available. That would increase your labour bill, making the business unprofitable. Instead, look for ways to be more productive and rather spend your extra time on bringing in more clients.

 

Take Control of Your Business Finances

Planning your finances doesn’t come naturally to everybody. Just like we may need your help with a haircut or drawing up a plan for a new house, so do you need our help to make sense of your finances. Get in touch with us so we can help you to stay on top of your finances and take control of your business’ destiny. 

Is It Time to Pivot Your Business?

12 Jun 2020 | Biz Strategy

The pandemic made it difficult, or even impossible, to deliver on your promise to your customer. Whether your promise is quality, consistency, the type of service or product you deliver, or how you deliver it, chances are you were forced to break your promise.

And that’s okay. But no-one needs to tell you that it’s not a sustainable way to do business.

If your business model is not working for you or your customers anymore, it may be time to pivot and find new ways to do business. This can be a short term shift just to get through the worst, or you may find a new model that would suit you better in the long run.

We’ve decided to look at some examples of how other businesses handled the changes and came up with a few ideas that may help you if your business is in need of a pivot.

 

Example 1: Going Online

If you provide in-person lessons, you can turn your lessons into online classes. Similarly, if you provide services, you can turn your skills into online courses to teach others how to perform those services themselves. 

Think creative arts, like music, painting, pottery making, dancing, but also other types of services, like dog grooming, language teaching, and how to colour your own hair. The opportunities are endless. 

One of our clients operating a gym launched an online website within a week and started running their normal classes online. They also have a library of training sessions available to their members.

The face-to-face aspect of these types of service are often very personal and the very reason why people pay for them. But online classes don’t need to be impersonal. For instance, if you provide online tutoring, you can still do your classes one-on-one for a personal touch, you can chat before or after the lesson as you’d normally do, and the feedback you give can still be catered specifically to that person.

If presenting classes online is new to you, it may be difficult to adapt and to get your head around the technology, but it will pay off. It doesn’t need to be complicated either – video calls made with WhatsApp works perfectly – and videos you record don’t need to be Hollywood-quality. It is the content that matters. If your lesson plans are top-notch and students get results, that is what will make you successful, not how well you package the course.

Going online is a huge opportunity for those who are willing to take the plunge because many of your competitors won’t. And as an added bonus, you can reach more people – across the globe. 

 

Example 2: Going Postal

It’s no secret that shops with an online ordering system, especially supermarkets, did well during the lockdown period. But what about other products and services?

For instance, a service like clothing alterations usually happens in-person. But what if you can still alter people’s clothes without meeting them in person?

Picture this: You get onto a WhatsApp call with your client where you guide them through taking their own measurements. They can also wear the clothing item and record a little video showing you where the problem areas are. They then courier the clothing item to you. You work your magic, altering the item, and then post it back to them. Yes, it would take longer and cost a little more, but it’s very convenient.

Another example is picture framing. You can have your consulting meeting with your clients over Zoom, they can choose a frame from your online catalogue, and send the item in through the post. After you framed the picture or painting, you can send it back again. If the client has photos they want to frame, they can even send the digital file to you which you can then print.

Other businesses that had great success using the postal service are Dollar Shave Club and Stitch Fix. For a monthly subscription, the Dollar Shave Club sends, you guessed it, razors to their subscribers. Stitch Fix puts together a box of clothes they think you’d like based on your style preferences; you keep what you like, and send the rest back.

The selling points of these companies are price and convenience. Another selling point you can add now, is necessity. 

A recent example of a similar business that was in the news is that of a Wellington-based couple who usually keep vending machines stocked with candy. Because they couldn’t get to their vending machines and the stock they had at home was nearing expiry date, they started to sell and deliver boxes of candy during lockdown. Many people used this service to send care packages to loved ones or medical personnel working in hospitals during lockdown. 

Can you turn your products into care packages? For instance, imagine if you could send care packages to your loved ones filled with Marino scarfs or beanies to keep them warm for the winter?

 

Example 3: Exploring Different Markets and Uses 

Another way, which needs a bit more thinking out of the box, is targeting different markets or looking at different ways to make money from your products or equipment.

For instance, if you own trucks that are used as pop-up shops at events, music festivals, or fairs, you can rent out your trucks to use as pop-up COVID-19 testing clinics.

If you’re a hotel owner, and you’re concerned about when international travel would pick up again, you may want to consider turning some, or all, of your units into rental apartments. (Note that the change-of-use rules for GST may apply.) With the housing shortage in Wellington, this may be a more secure way of making money at the moment.

Other examples we’ve seen are gyms renting out their equipment, like treadmills, to their clients during the lockdown period. Many clothing designers started making face masks and cosmetics manufacturers turned their focus on making hand sanitisers.

Most of these ideas are more of a short term solution to help through the crisis, and many would go back to their core focus once things are back to ‘normal’. 

 

Example 4: Developing New Products

For some businesses, what you’ve done before may never be in demand again. Or there may be a gap that opened up which was never serviced before.

One of our clients in the supermarket industry found that people were buying more chicken nuggets and oven fries than before. This was most likely to satisfy their craving for takeout, but also people who aren’t that comfortable with cooking. Meal kit companies, like Hello Fresh, have become very popular over the past few years. While these companies focus mostly on healthier food, people still want to eat junk food from time to time. So a focus on creating pizza kits, for instance, where you provide the raw dough for the base plus the fresh ingredients and instructions of how to bake it may be popular.

On the Edx online learning platform, a host of new courses were introduced related to COVID-19, most of them in the medical science fields. But one that caught our attention was a course by The University of British Columbia called “Re-imagine work: Strategies during COVID-19 and beyond. This course teaches students how to adapt to working from home and how to set up your office or shop to meet social distancing requirements.

 

Are You Considering a Pivot?

Whether you are forced to pivot in your business due to changes in the market, or you’re seeing new opportunities that you want to pursue, pivoting can be a scary but exciting venture. It’s also important to plan ahead while still being flexible. 

Get in touch with BWMD to help you to create a business plan and the necessary forecasts from the start so that you can be prepared for what’s to come. We can also help you on an ongoing basis to review your performance and adjust your plan as needed.