Tough new fines loom for safety slip-ups

If you thought a breach of health and safety regulations would just result in a rap over the knuckles, new sentencing guidelines may make you think again, argues David Wilson of accountancy firm Barnett & Turner. From 1^st February 2016, the sentencing guidelines for health and safety regulations became a great deal tougher. Although the advice is issued for courts in England & Wales, it’s likely to be considered within the Scottish legal system too, as most of the relevant laws apply right across the UK.

Under the new regime – which covers health & safety and corporate manslaughter, as well as food and hygiene offences – the larger your organisation and the more serious the offence, the more you can expect to pay in fines.  In this way, the Sentencing Council believes that penalties will become ‘fair and proportionate’.

If you’re looking for a benchmark as to what this might mean, Lincoln Crown Court fined energy multinational ConocoPhillips a cool £3 million on 8^th February for a major gas leak off the Lincolnshire coast. The company was also required to pick up nearly £160k in costs.

Time to assess your own level of risk

The new guidelines provide a much-needed steer for Directors and Senior management across all industries to move risk assessment and the whole issue of health and safety up their corporate agenda.

Where an infringement has been identified and a court is required to determine culpability, deliberate or flagrant disregard for the law clearly argues in favour of a significant level of liability. This will also apply if you who have failed to follow recognised standards in your industry.

This means you will need to have put appropriate risk management protocols in place.  Clearly your strategy should strongly concentrate on ‘prevention rather than cure’ otherwise exposure to breaches may well count against you in any legal case, as will any evidence of repeated breaches or failure to address issues resulting from previous incidents.

Allowing people to speak out

One other question which is important to consider for your business is whether you have any proper whistleblowing arrangements in place to identify health and safety issues.

If members of your staff – or people external to your business – have concerns over your health and safety practices, they must be allowed and encouraged to voice them without fear.    This is yet another factor which will be weighed up by the courts when considering any sentence.

Independent and external whistleblowing specialists such as SeeHearSpeakUp, can provide much needed risk assurance for your business by offering you effective whistleblowing services that will provide you with the protection your business needs.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

Why back-ups should be front of mind

It may be the end of a long day, but the inconvenience of backing up your files is nothing compared to the problems that can result from lost or corrupted data, says Debbie Birkett, office manager at Barnett & Turner. How often do you back up your Sage data? What if I said you really ought to be doing it every time you use the package?

It may sound like overkill but, in the business world, your accounts information is just too important for you to sit back and cross your fingers. Once you get into a routine, you’ll probably find that the back-up process isn’t really that arduous at all.

A common issue is that data can become corrupted over time. Errors creep in. At some point, you’re likely to recognise the problem, but you then need to be able to return to the last ‘clean’ files. Although Sage has a special department which can try to resolve corrupted data, there are no guarantees and the process could cost you significant sums of money.

If you’ve been backing data up, you just need to keep reverting until you reach the point where the files are without errors. At least you then have a starting point for reconstructing your figures and don’t need to begin again from scratch.

Another thing worth bearing in mind is that Sage will prompt you to conduct a data check when you back up. I strongly recommend that you do this, as you get a snapshot of the data integrity and the system will highlight any potential problems. There’s not much point, after all, in backing up data which is already problematic.

So what role should accountants play in all this? It’s certainly true that when there’s a crisis, clients will often go to their professional advisers and ask whether they have kept their own back-up. You may be lucky, but the reality is there’s no obligation for the firm you retain to be doing this kind of work on your behalf.

My advice is therefore to back up to a memory stick, external hard drive or to a server. And once you’ve completed your back up, it’s always worth browsing to the destination and checking the files really are there! You can even try restoring them if you want absolute peace of mind, just to make sure that nothing would go wrong in the event that you needed to re-import them in an emergency.

Increasingly, of course, there are more options to back up in the cloud, via services such as Google Drive and Dropbox. While this is undoubtedly useful, it may be that you’ll feel most comfortable having the data copied locally too. In the world of IT, a belt and braces approach is almost certainly best.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

Could growth vouchers eventually grow on business?

Jonathan Wilson from accountancy firm Barnett & Turner reviews the recent growth voucher programme and wonders what lessons we can learn from its apparent lack of success. Back in January 2014, the government launched a ‘growth voucher’ scheme aimed at supporting small businesses. It was designed to help SMEs gain access to technical and financial advice and offered £2,000 if companies were to match the funding with their own cash.

The idea was that small firms and start-ups would benefit from financial advice, assistance with business planning and marketing consultancy. Just the kind of boost that would allow them to take the next steps towards expansion.

In order to qualify, you needed to be an independent company with fewer than 250 employees and turnover or assets of under £50m.

Although the principle seemed sound, the scheme wasn’t as much of a success as the government had hoped. Out of a pot set aside of some £30m, only £3.6m was actually used. Even more strikingly, only 1,800 of the 7,000 successful recipients spent their vouchers.

So what lessons can be learnt? Well, first of all, the vouchers weren’t very well advertised. And even if you had heard of them, it wasn’t entirely clear what you were able to use them for.

When firms are growing fast, they’re often very focused on the day-to-day challenges of the business and may not be ready to reflect with external consultants. Although marketing support is always valuable, the chances are that most companies would already have created a business plan some time previously.

There’s then, of course, the issue of finding your own £2,000 up front in order to make use of the £2,000 voucher.

The government is putting a positive spin on the programme, arguing that it was effectively a piece of research that we can learn from. It may be that if a new version of the voucher programme is planned, consideration should be given to widening the range of potential consultancy and support that companies can access from approved suppliers.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

Time to invest for the future

If you want your business to operate efficiently in the modern age, you need to embrace change argues Jono Wilson of Barnett & Turner. But how can you plan for the investment needed? Business life changes constantly and new competitive challenges come along all the time.

Take communications, for example. If you’ve been trading for a number of years, you probably have a range of well-established channels with your customers. Often, in the past, we were used to face-to-face meetings, phone calls and so-called ‘snail’ mail. To the millennial generation, however, the world’s a very different place. Chat rooms and social networks tend to be a lot more familiar than postage stamps.

So what if you decide that it’s time to upgrade your infrastructure and move with the times? What exactly are the implications? To be honest, you face many of the same issues whether you’re thinking of upgrading your IT infrastructure, investing in new equipment for a farm or expanding your manufacturing facility.

You’ll obviously need to think about funding, but it’s also essential to have an implementation and training plan in place. There may be a process of change management involved. How exactly do you intend to position your business moving forward? How will this impact on your work and on staff morale? It’s essential to sell any changes internally before communicating them externally.

Your professional advisers can get involved at a variety of levels. There’s number-crunching to be done on the investment figures, of course, but your accountants may also be able to help you with the establishment of KPIs and project management.

Fundamentally, it’s good to get an objective viewpoint on the essential questions. Can we actually afford to do this? What downtime will be involved? And how can we continue to provide the service that clients expect while we make the investment required?

Although change can sometimes seem daunting, the costs of failing to act can often be huge. If a competitor is able to provide a product or service more efficiently and less labour intensively, it stands to reason that you may be left behind. So it’s a question of adapting in order to compete.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

Start planning for the future with your accountant

Accountants do a lot more than simply crunch numbers, writes David Wilson of Barnett & Turner. They can be trusted partners who’ll help you draw up a compelling business plan. When I started out in the accountancy profession, business planning was not an essential part of life. The small businesses we dealt with didn’t recognise the importance of looking forward and planning for the development of their company.

Times have changed and, today, business planning is very much an essential part of corporate life. Why the transition? Well, the most common reason to prepare a plan is to explain your business priorities, capabilities and ambitions to an external lender, such as a bank. In an era of reduced access to finance and the application of rigorous lending criteria, a professional approach is absolutely essential.

A business plan is, however, important at other levels too. It is an essential business management tool which provides a structure and guidelines for the running of your business.

From my own point of view as a professional advisor, assisting clients with the preparation of their plans is an ideal way of developing a close relationship with them and their staff.

The preparation of a business plan naturally involves financial information, but it also enables us as accountants to show that we are business advisors with commercial awareness, rather than simply number crunchers. A well-written plan will get behind the numbers. It will include comments on the aims and objectives of the business, as well as the personal ambitions of the owners. We will make reference to the key people in the organisation, the state of the company’s assets and planned capital expenditure.

A good plan will include observations on marketing strategies and risk management – the latter being an essential part of today’s business life. Working with clients to produce a business plan is therefore a highly rewarding and fulfilling exercise. It is also an excellent way to demonstrate how chartered accountants are trusted business partners for their clients.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

Free up your time with professional, strategic support

Many professional services firms – including accountants – employ a ‘practice manager’ to oversee and co-ordinate their work. Plenty of companies in other sectors could benefit from exactly the same kind of approach, writes Jono Wilson of Barnett & Turner. An increasing number of accountancy and legal firms now employ a Practice Manager to look after the day-to-day running of their own business. It’s a recognition that it’s very difficult to focus on the priorities of clients and to deliver a seamless service, unless you have someone working behind the scenes to make sure that everything is running efficiently internally.

In simple terms, the Practice or Operations Manager makes sure that whatever the business and its clients need, the structures and processes are in place to make it happen. This could involve anything from recruitment of staff through to creation of a robust IT infrastructure, management of front-of-house reception and the preparation of disaster recovery plans.

The sheer importance and variety of the role makes it highly strategic. How do we respond to regulatory requirements, for instance? What is our tolerance level for risk? And how can we make sure we manage our finance, insurance and facilities in the most effective way possible?

If you’re choosing a manager to oversee operations in your own business, my recommendation would be to ensure that they are an inquisitive person. Someone who looks at numbers and is able to see the underlying trends behind them. Perhaps they may come from an accountancy background and will have real attention to detail, along with an almost instinctive ability to spot opportunities to reduce costs.

Remember, if you’re working too much ‘in’ the business, you’re not working enough ‘on’ the business. It’s a scenario which is repeated across many growing firms. Eventually, this is likely to translate into poor profitability and low cashflow. That’s why an investment in an operations manager can make sense for any expanding company.

Is there a magic threshold or size at which you decide to act? Not necessarily. One company with a £2m turnover might be very different from another. I would make your judgement on the basis of the complexity of your business. Once the demands of running the firm efficiently are starting to undermine your ability to focus on your core role, then it might be the ideal moment to find someone who can take a lot of the burden off your hands and help give you real peace of mind.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

A holding company? There may be no reason to hold back.

If you thought the formation of a corporate group structure was just for big multinationals, it’s time to think again, suggests David Wilson of accountancy firm Barnett & Turner. It’s a serious option for much smaller businesses too. When a limited company has built up a significant amount of wealth on its balance sheet – perhaps three quarters of a million pounds or more – and it has a large value of fixed assets, the option of creating a holding company becomes something worth exploring.

Although the formation of a ‘group’ is something you’d more normally associate with large, blue-chip corporations, there’s certainly no reason in principle why smaller companies can’t take advantage of the structure too.

When you create a holding company, you can move ‘spare’ cash and fixed assets into it from your trading company. The holding business can then rent the fixed assets back to the original company, buying any new assets itself.

Each year, dividends can be paid to the holding company, which is allowed to set up its own directors’ payroll scheme and pay your executives, while charging the trading company for its services.

There are a number of potential benefits to this approach.

First of all, the business owner’s wealth, which has been built up over the years, is protected from a potential disaster, such as losses from under-insurance. Creditors can generally only come after the trading company. You may also be able to maintain greater privacy over directors’ remuneration and possibly qualify for a less arduous audit regime.

It’s worth noting too that the creation of the new holding company gives you an opportunity to bring in new shareholders and buy existing ones out.

But do watch out. The new company structure will involve an increased admin burden in relation to year-end accounts, VAT, insurance and so on. And if you end up reducing your trading company’s balance sheet, there may be a short to medium-term hit on your credit rating. But, if you do have spare cash and are paying your creditors on time, this might not be such a big deal.

As with most planning, there are likely to be pros and cons of a new structure, so the best thing is to talk the options through with your professional advisers. They will be able to look at your specific circumstances and give you appropriate guidance.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

How to Create a Marketing Strategy

Jono Wilson, Managing Partner at Barnett & Turner, explains the importance of marketing and how you had better take an active part or risk losing out to your competitors. What was it that drew you into your current profession? I would hazard a guess that marketing, business development or sales were not high on the list of attributes or duties you considered important. However, these key skills are now paramount in the success of your company and will become ever-more critical as time goes by.

This means that if you don’t have a dedicated team or department devoted solely to this important function, then you, as the business owner or leader, usually have to develop the skills and ability to source and bring in work yourself.

Whilst everyone knows you should have a business plan, many business leaders do not put much importance or time into a workable marketing plan which focuses on winning and keeping clients and customers.

A good, workable and flexible marketing and business development strategy highlights all the tools and actions you need to develop and implement to achieve your sales goals. It is your plan of action, outlining what you will sell, who will want to buy it and the tactics you will use to generate leads and to turn prospects into customers.

So what is a Marketing Plan?

In simple terms, marketing plans are detailed documents that summarise the market knowledge you possess and the strategies needed in achieving set objectives over a particular period of time.

Listed below are four essential areas that must be covered in your marketing plan before you proceed with any specific marketing activity.

1. Consolidation – Assess your current situation.

• What resources do you have available?
• Analyse and summarise where you are in your specific market.
• Do a SWOT Analysis – internal strengths and weaknesses; external opportunities and threats.
• Assess your competition – what they are doing and where, along with their prices and exposure.
• Are there other factors that may cause future opportunities or challenges in terms of social, economic, political or technological issues?

2. Develop your marketing strategy, including the development of:

• Your business mission and vision.
• Your business objectives.
• Your marketing objectives.
• A comprehensive description of your target market and customers.

3. Develop your marketing programme. The 4Ps

• Your product messaging.
• Your pricing strategy.
• Your promotion plans.
• The ‘place’ or channels you will communicate across.

4. Determine your controls, benchmarks and measurement process

• Budgets and resources.
• Critical success factors.
• Key performance indicators.

Remember, you don’t create a marketing plan just to put it away, never to see the light of day again. It should be a workable, dynamic, measurable and flexible document to which you refer on a regular basis and which is updated and amended as conditions or situations change.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

Five ways to measure business health

Keep on top of how well your business is performing by monitoring some key indicators, writes Jono Wilson of Barnett & Turner. There’s an old adage in accountancy: turnover is vanity, profit is sanity and cash-flow is reality. It’s a way of saying that there are numerous measures you can apply when measuring the financial health of your business, but it’s often good to have a rounded picture.

Too often, in a lot of smaller businesses, owners see the annual accounts process as a necessity to satisfy HMRC and possibly their bank. For that reason, it can be left to the last minute. In effect, this can often be nine months after the end of a particular accounting period. So by the time they get an insight into how well their company is doing, the information is no longer up to date.

My advice is to talk to your accountant about receiving management accounts on a monthly or quarterly basis. Then, you need to start looking at the following key indicators:

CASH-FLOW

Everyone talks about it, but how many people really understand its importance? The balance of the money flowing in and out of the business needs to be positive and you can help achieve this with accurate, up-to-date forecasting. You can then start to analyse the reasons for any discrepancies between projections and your actual figures.

TURNOVER

Here you should be interested in any differences between your projected turnover and the actual figures. If there are variances, it’s worth having a discussion with your accountant and talking through the likely implications for your business.

GROSS PROFIT

In a nutshell, your gross profit margin is your income, less cost of goods sold. If this figure isn’t high enough, you won’t be able to cover your overheads and ultimately make yourself a profit.

OPERATING PROFIT

Your operating profit figure is the gross profit less your overheads, but will exclude tax and interest. If operating profit is too low and you haven’t yet taken money out of the business, you may have nothing to show for your endeavours.

NET PROFIT

This is your total income, less all expenses including interest and tax.

With cloud accounting now becoming increasingly common, it’s actually possible to monitor all these critical indicators in real time. This means you can make comparisons to the same period last year and see whether any improvements you’ve made to your business practices have achieved results.

As with many things in life, timing is everything so the earlier you can monitor and address any unexpected numbers, the more likely you are to have a positive impact on your business, making sure that your resulting net profit is where you want and need it to be!

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk

Expand in a disadvantaged area and you could receive a tax break

If you’re looking for new premises, it’s worth widening your range of options, writes Jono Wilson of accountancy firm Barnett & Turner. By choosing to renovate a derelict building in a disadvantaged area, you could benefit from a significant tax break. Not many people are aware of the Business Premises Renovation Allowance (BPRA), but it’s certainly worth finding out more if you’re in the market for a new office, factory or business site.

When you buy a derelict building, you’d obviously need to undertake renovations to ensure it’s in a usable state. When you do, it’s not deemed to be a ‘repair’ for tax purposes, but is seen instead as a capital cost. Tax relief against profits are minimal (possibly related to integral features, such as electrics and plumbing).

With BPRA, you can claim upfront tax relief for the costs of renovation if (a) the property is in a disadvantaged area; (b) the building has been unused for at least a year; and (c) the premises were previously used for commercial purposes rather than as residences.

It’s worth making a couple of points of clarification on these criteria. First, it’s possible to discover whether your proposed property is in an area considered to be disadvantaged by using a postcode checker on the Department for Business Innovation & Skills website. Second, the requirement for a property to be unused for a year doesn’t necessarily mean it has to be unused at the time of purchase. Provided a year elapses before any work starts, you can still qualify for BPRA.

As you might expect, the preferential tax arrangements are designed to stimulate business and help to regenerate areas that have previously been struggling. Under EU state aid legislation, costs of renovation are restricted to €20 million, although obviously many businesses will be making investments well within this figure.

It’s important to note that there’s no allowance for the cost of the land or for extending the premises, although you do get a 100% write-off for tax purposes on the other renovations. What’s more, it won’t be clawed back as long as you don’t sell the building within five years from the date it became available for use.

This relief is only available until 2017, so it’s important to think now about how you might take advantage of it in the next couple of years. It’s a specialist area, so ask to speak to a tax expert at your accountancy firm, who’ll be able to advise you.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk