Accounting & Bookkeeping Cash Flow & Forecasting Finance General

How does the recent business rate revaluation affect you?

business rate revaluation up or down?It has been a long time since business rates were last revalued, but finally the Government’s Valuation Office published draft new rates on September 30, 2016.
They will come into effect from April 2017, leaving a window for businesses to challenge or appeal their new assessment.
In some cases, it was anticipated that small businesses would see a reduction in their charges because they have been based on 2008 valuations and in some cases businesses will be eligible for transitional relief.
Changes announced in March 2016 mean that small businesses with a rateable value (RV) of below £12,000 will be exempt from payment.

Check your business rate revaluation

Businesses can check their new draft business rates online, but the following are some examples:
In Ipswich, a street close to the town centre containing a mix of restaurants and small, independent retailers, one small retail unit of 100 square metres was RV £5,100 (2005), £7,200 (2010) and the draft RV for 2017 is £9,600.
In a small retail mall in Harwood Road, Fulham, London a small retail unit of 54.6 square metres was RV £16,750 (2005), £17,500 (2010) and has remained unchanged in the latest valuation.
By contrast, a large retail unit of 12,754 square metres in Oxford Street, Westminster, London, has jumped from RV £3,630,000 (2010) to draft RV £5,850,000 in 2017.
There is some suggestion that the valuations have been adjusted to allow for a fairer system for smaller businesses taking into account some years of over payment since 2008.
The chairman of the Federation of Small Businesses (FSB) Mike Cherry last week welcomed the review, especially the possibility of relief for some small businesses, but has also called for more frequent revaluations because there will have been a “big jump between the old valuation and the new one”.
The Local Government Minister, Marcus Jones, said “as we make the system fairer up and down the country, nearly three quarters of companies will see no change, or even a fall in their bills, including 600,000 who from next April will have their bills cut altogether”.
We would urge all businesses to check their new valuation online and to share your views on the impact it will have on your business.

Accounting & Bookkeeping Cash Flow & Forecasting Finance General Turnaround

Who makes purchasing decisions in your business?

escalating cash pileControlling expenditure should be a fundamental principle for any business and the business plan should contain details of the company’s purchasing policy and costs in relation to its gross margins and overheads.
Too often the ability to place orders is given to too many or insufficiently experienced people within a business without clear purchasing guidelines that define limits and protect margins.
It is important that there should be senior management oversight of purchasing and that those who place orders do so within the set parameters and budgets such that any additional expenditure needs management approval.
Any purchases that are higher than the set parameters such as above a % cost of sale will mean that goods are being sold to customers for less than the stated gross profit margins and sooner or later this may lead to serious financial problems for the business.
It may be that in some instances if directors consider a purchasing decision, for example if the price of raw materials has risen to the point where it reduces the potential profit margins too far on what seems at first to be a lucrative order from a customer, they would be wise to decline the order.
The two key questions therefore are firstly whether a business has a defined system in place for controlling purchasing expenditure and secondly who in the company is given the power to place purchase orders.

Tight control is key

Here’s a lesson from history to illustrate. Over a 40-year period as its managing director Arnold Weinstock built the General Electric Company (GEC) into a highly successful British owned global business.
He was notorious for maintaining tight control over expenditure and would meet managers annually to set the next year’s budget.  If they wanted to spend £500 more than the limit set they would have to get his approval and be able to make a good, detailed case for why it was necessary. Generally, they didn’t.
There is a lesson for smaller businesses about having robust purchasing systems with parameters such as setting the maximum % for variable costs and budgets for fixed costs.
In relation to overheads and investment in assets, these should be fixed in a budget to avoid over spending. All too often small items are overlooked like staff ordering stationery because they can’t find the stapler or pencil sharpener, when in actual fact there are usually several hidden in desk drawers. Even relatively small purchases can quickly mount up.
While a business will want everyone to be able to do their jobs without every single purchasing decision having to be approved by senior management it is important to both set the limits and then to monitor them.
It is also about being very careful about who in the company has the power to make purchases and how orders are placed. Ideally every order should be placed with a purchase order where a copy is matched up to the purchase invoice. Orders by telephone and email are difficult to monitor and can result in unpleasant surprises, especially when they exceed the budget. And, all too often the person concerned has left when a really big problem arises.

Business Development & Marketing Cash Flow & Forecasting Finance General Turnaround

Time to try some creative and memorable marketing

marketing and its role in businessThere is a considerable temptation when the economic times are uncertain to cut back on any overheads a business considers “non-essential”.
Often this will include scaling back on the marketing budget. Keeping tight control of costs as part of being prepared for any eventuality may be sensible, but a business needs to consider carefully in which areas to economise.
It is actually during uncertain economic times when marketing becomes more important than ever.  If a company’s name disappears off the radar there is always a risk that clients will buy elsewhere, whether due to competitor marketing or your simply not being ‘top of mind’.
So in addition to putting extra effort into taking care of existing customers, a wise business will also put more thought and effort into its marketing and pick up customers who aren’t being looked after by their competitors.
When the atmosphere is grim and people are worried, there is also a perfect opportunity to do something innovative, perhaps introduce some humour or something that will lift the spirits if only for a moment.

Here’s an example

Most of us can relate to the irritation of being stuck in a static traffic queue especially when in a hurry. Recently I was in this situation behind a large removals van.  The company’s name was the name of its founder, let’s call him Ron Smith (not the real company name).
I was a captive audience for the quiz-style question on the back of the van:
“Who said:  “I haven’t reported my stolen credit card because whoever stole it is spending less than my wife” followed by a choice of three names, 1) Ron Smith; 2) Ilie Nastase; or 3) Joe Bloggs? Visit for the answer.”
Not only did it provide a moment’s  light relief from the tedium of being stuck in a traffic queue I remembered the name and the website and looked it up when I got to my destination, even though I am not planning a home move.
While, sadly, the second part of the web link proved to be a piece of fiction, as creative and memorable marketing it worked.
Of course, having got potential clients to your website there needs to be a reason for them to buy your products or services or at least making sure they remember you. This particular website did that by being informative and interesting, as well as being written in a friendly, welcoming and humorous manner.
Marketing does not have to be costly but it does need to be creative and memorable if you want to attract attention in the first place and get clients to remember you and come back when they are ready to buy.
Do you have any similar examples of innovative marketing?
Image courtesy of renjith krishnan at

Cash Flow & Forecasting General Rescue, Restructuring & Recovery Turnaround

The shifting sands of retail


There are signs of a re-balancing between online retail and physical stores as Asos posts its second profit warning in three months.

The rise of e-commerce was regarded by many as a nail in the coffin of the High Street because it was spared the costs of expensive rents and business rates, in-store staff and high energy costs.

However, in their enthusiasm, it seems that the champions of e-commerce may not have paid enough attention to some of the additional costs involved.

While prices may be cheaper online, there are some additional costs which are turning out to be significant.

Online retailers certainly reap some benefits from centralised warehousing as opposed to a High Street presence. However they have significant packaging and shipping costs, which are proving a burden when dealing with the issue of returns and who pays for them. The additional staff handling costs can also prove significant, especially when administering returns.

This is becoming a big concern for a volatile sector like fashion and clothing, where, for example Asos  in the UK returns amount to 39% and in Germany 58%.

A major issue is the size labels used on women’s clothes. Another relates to the difference between the item on a screen and the one that is received. I know several women who order many items at a time expecting to return most of them. They choose retailers with pre-paid return policies and often return as many as 90%.

There are two examples of retail outlets that have had consistently good performance even over the last few uncertain years: Next and John Lewis.

Both combine e-commerce and a High Street presence, but crucially, both have introduced a hybrid system, click and collect, where customers can order online but pick up their order in a store.

It will be interesting to see how the online retailers overcome the issue of returns.

Plainly High Street retail is not dead yet.