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Business Tips – How Mistakes can turn to Profits

Business Tips – How Mistakes can turn to Profits

Business Tips – How Mistakes can turn to Profits

You’ve botched up on a job or following up a client who is now upset – and you don’t know whether to admit your mistake/klutz, service or forgetfulness. There are solutions when you know how mistakes can turn to profits – here are some tips –

Warren Harmer at Flying Solo writes 

I’d been getting a lot of telemarketers calling the business line, trying to convince me to buy everything from shares to advertising, or to extract donations for a variety of causes. So when I received a call from, (I hate to admit), an Indian chap who kicked things off with “the reason for my call today” I went in automatic not-interested mode and immediately asked “are you trying to sell me something?”

His response caught me off guard: “No I’m looking for help with a business plan”, then our call was cut off.

Feeling embarrassed, I stewed for the next hour, trying to justify why I need not admit my ill-judgement and call back. The self-talk was quite convincing, but I overcame it, swallowed my pride, called back and apologised.

The customer was very appreciative that I had called back and the conversation quickly moved on to his project. At a project meeting a few days later, he said he had no intention of calling me back, but when I made that call and apologised he said to himself “I gotta go with this guy”.

Ian Mills at Magic Dust web design, shares his observations 

So from my own experience and from the common stories I hear from being involved with over 4000 small business clients, I have compiled what I see as the five biggest mistakes people make when running a small business.

1. Underestimating the Amount of Effort InvolvedOne of the biggest frustrations I have in business is how simple and quick it is to have an idea, but how long and how much effort it takes for that idea to actually manifest itself as a living reality. In business,things seldom go exactly to plan, they take longer than expected and almost always require more resources to complete than originally planned. Being aware of this and cooperating with it allows you to plan more effectively and alleviate a lot of surprises and stress. Also when you’re running a small business you are responsible for everything so anything that hasn’t been delegated will always end up on your plate – this can accumulate to be a huge amount of “stuff.” So be realistic, be prepared, keep things as simple as possible and try to delegate or out-source aspects of your business as soon as you can.

2. Not Having a PlanUnless it’s part of an investment pitch I personally don’t think you don’t need a lengthy and highly detailed business plan, but you still must have a plan. Without one you’ll be making reactive decisions without perspective. So you need a focus, strategy and game plan to use as a guide and reference point. Use your plan to pull you out of the endless barrage of daily tasks, remember where you are going, course correct and prioritize if need be, and then get back into it. Have business goals at three months, six months, one year, two years and five years. Keep your plan simple and realistic so it can be easily revised as the needs goals of your business change.

3. Failing to be AgileJust because you have a plan doesn’t mean everything will go to plan. It is important to have a clear focus but it is equally important to be flexible. You need to be very mindful of what is and isn’t working. Quite often the business you start will not be the business that you end up with. It will morph and change. Keep your eyes open for the opportunities and the possible threats. Be willing to shift your focus into what is working. Holding on too tight to your original ideas or plans of how things “should” go and fighting for that plan may not be your best path for success. Be flexible and go where the money is, not where you want it to be. Among the advantages of being small is that you can adapt quickly. Be open to the feedback that you get from staff, customers and competitors, and be willing to course correct.

4. Not Hiring HelpKnow what you are good at and not good at, and be realistic about how much time you have. It can be easier to identify what we are good at but it can take real honesty and vulnerability to look at yourself and assess your own weaknesses. From my experience the greatest momentum I have had in my business was when I let go of what I wasn’t great at and hired people who are great. When running a small business there is a tendency to want to do everything yourself.  It seems logical to save money and keep control, but both of these motivations can be very limiting. When you are in touch and attuned to the reality of what you are good at and bad at you will be placing yourself and the business in the best possible context for success. Do what you do well and look to hire, or out source, in those areas that you are weak.

5. Not Keeping Your Bookkeeping in OrderIf you think this point sounds boring or unimportant you need to pay attention. Without accurate bookkeeping you are flying blind. Imagine driving a car and suddenly closing your eyes — it can be that dangerous. Whether or not you’re a numbers person, you need to make sure your bookkeeping and finances are kept in order, and then pay attention to the figures. Ultimately the success or failure of your business is measured by your financial records. The more accurate your records are the more informed you will be to make intelligent decisions about the business and to course correct when needed — whether that’s avoiding trouble or capitalizing on what’s working. You may have heard that “what you do after you fail determines your ultimate success,” so try and make your failures as small as you can.

Expect to make mistakes, but plan to succeed. Be focused but stay flexible. Be creative but be open to the experience of others.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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MYOB – Beginner – I entered the wrong amount against supplier bills – how do I fix it?

MYOB – Beginner – I entered the wrong amount against supplier bills – how do I fix it?

I entered the wrong amount against supplier bills – how do I fix it?

Caller questioned meI have paid a supplier via online banking for the total on their statement, but when I went to record it in MYOB Account Right, I realised I had not deleted a bill I entered twice and it was included in the allocation of the amount paid – how do it correct this?

AnswerYou can correct it – the payment has to be deleted first – so:

1.     find the payment in bank transactions – easiest way is to use Find Transactions (Ctrl+Y) or from the lower part of any Command Centre;

2.     Open the transaction (white arrow on left);

3.     In the TOP menu click Edit then Delete Payment;

4.     Then go back and delete the un-wanted bill – and check all those remaining bills match the statement (if you agree with the supplier);

5.     Then re-enter the payment you made and CHECK BEFORE you Save that it is what it should be!

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much!

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Business Finance 101 – The Cashflow Statement – Using an example of  how to construct the Statement

Business Finance 101 – The Cashflow Statement – using an example of  how to construct the Statement

Business Finance 101 – The Cashflow Statement – using an example of how to construct the Statement

Last month we explained what the Cash Flow Statement tells us. This month is an example of how to construct the statement so we understand where it comes from.

Three sources are used to gather information for the cash flow statement rather than from the Trail Balance –

1.     Comparative balance sheets provide the amount of the changes in assets, liabilities, and equities from the beginning to the end of the period

2.     Current income statement to determine the amount of cash provided by or used by operations during the period

3.     Selected transaction data from the general ledger provide additional detailed information needed to determine how cash was provided or used during the period – eg asset purchase

Three steps lead to preparing the statement of cash flows from these sources

Step 1. Calculate the change in cash:
This is the difference between the beginning and the ending cash balance from the beginning and end period on the balance sheet.

Step 2. Calculate the net cash flow from operating activities:
This procedure is complex. It involves analysing not only the current year’s income statement but also comparative balance sheets and selected transitions data.

Step 3. Calculate net cash flows from investing and financing activities:
All other changes in the balance sheet accounts must be analysed to determine their effects on cash.

A worked Example – Compiling the Cash Flow Statement

To illustrate a statement of cash flows we will use the first year of operations for Business Pty Ltd.

The company started on July 1, 2014, when it issued 60,000 shares of $1 value common stock for $60,000 cash.

The company rented its office space and furniture and equipment, and it performed services throughout the first half year.

The balance sheets at the beginning and at the end of the 6 months are as follows.

Table1a

The Profit & Loss or Income statement and additional information for Business Pty Ltd are –

Business Pty Ltd
Profit & Loss Statement
For the period ended December 31, 2014

Table 2a

Step 1. Calculate the change in cash:
The company has no cash on hand at the beginning of the period, but $49,000 at the end of 2014. This is an increase of $49,000

Step 2. Calculate the net cash flow from operating activities:
The company has no cash on hand at the beginning of the period, but $49,000 at the end of 2014. This is an increase of $49,000

First the net profit/income must be converted. Under generally accepted accounting principles (GAAP), most companies must use the ACCRUAL basis of accounting, requiring revenues be reported when earned/invoiced and that expenses be recorded when incurred/authorised. Net income can also include credit sales that have not been collected in cash and expenses incurred that have not have been paid in cash. Thus, under the accrual basis of accounting, net income will not indicate the net cash flow from operating activities.

To calculate net cash flow from operating activities, it is necessary to report revenue and expenses on cash basis and can be calculated via either a direct method or an indirect method

1. Direct Method: (also called the income statement method) –

Business Pty Ltd shows sales/revenues of $125,000. However, because the company’s accounts receivable increased during 2003 by $36,000, only $89,000 ($125,000 − $36,000) in ACTUAL cash was collected on these revenues.

The company also shows operating expenses of $85,000, but accounts payable increased during the period by $5,000. Assuming that payables related to operating expenses, the ACTUAL cash operating expenses were $80,000 ($85,000 − $5,000).

Because no taxes payable exist at the end of the year on the Balance Sheet, the $6,000 income tax expense must have been paid in cash during the year. Then the computation of net cash flow from operating activities is as follows:

Table 3a

“Net cash provided by operating activities” is equivalent of cash-basis net income or the CASH Profit & Loss.

2. Indirect Method: (or reconciliation method) –

starts with Net Profit/income and converts it to net cash.

Increase in Accounts Receivable―Indirect Method:
If accounts receivable increase during the year, revenues on an accrual basis are higher than on a cash basis because goods sold on account are reported as revenues. In other words, operations for the period led to increased revenues, but not all of these revenues resulted in actual cash, but appear as an increase in accounts receivable. Therefore the increase of $36,000 in accounts payable must be deducted from net income.

Increase in Accounts Payable―Indirect Method:
If accounts payable increase during the period, expenses on an accrual basis are higher than they are on a cash basis because expenses are incurred for which payment has not taken place yet. Therefore the increase of $5,000 in accounts payable must be added back to net income.

As a result of the accounts receivable and accounts payable adjustments, net cash provided by operating activities is determined to be $3,000 for the year 2003. This calculation is shown as follows.

Table 4a

Observe that net cash provided by operating activities is the same whether the direct or indirect method is used.

Step 3: Calculate Net Cash Flows from Investing and Financing Activities:

Finally, we need to determine whether any other changes in balance sheet accounts caused an increase or decrease in cash.

For example, an examination of the remaining balance sheet accounts shows that both common shares and retained earnings have increased. The common shares increase of $60,000 resulted from the issuing of common shares for cash. This is a receipt of cash from a financing activity and is reported as that in the statement of cash flows. The retained earnings increase of $20,000 is caused by two items:

1.     Net income of $34,000 increased retained earnings, less

2.     Dividend declared of $14,000 decreased retained earnings.

Net income has been converted into net cash flows from operating activities, as explained earlier. The additional data indicates that the dividend was paid. Thus, the dividend payment on common stock is reported as cash outflow, and classified as financing activity.

We are now ready to prepare the statement of cash flows. We start with the operating activities section. Either the direct or indirect method may be used to report net cash flow from operating activates.

The statement of cash flows under indirect method for Tax Consultation Inc. is as follows.

Business Pty Ltd
cash flow statement-Indirect Method
For the period end 31 Dec 2014

Table 5a

As shown, the $60,000 increase in common shares results in a cash inflow from a financing activity. The payment of $14,000 in cash dividends is classified as a use of cash from a financing activity. By coincidence in this example, the $49,000 increase in cash reported in the statement of cash flows agrees with the increase of $49,000 shown as the change in the cash account in the balance sheet.

Need help? Not sure? Call for FREE 30min Advice / Strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Reckon/Quickbooks – How to overcome the warning when changing tax code in general journal – ‘You cannot enter a transaction that contains both Sales and Purchase Tax Items…”

Reckon/Quickbooks – How to overcome the warning when changing tax code in general journal – ‘You cannot enter a transaction that contains both Sales and Purchase Tax Items…”

‘You cannot enter a transaction that contains both Sales and Purchase Tax Items…”

If you created a General Journal but after saving need to change the tax code and avoid the warning you are getting on that General Journal ‘You cannot enter a transaction that contains both Sales and Purchase Tax Items…”

A Solution is –

  • Open the transaction
  • Click on the tax code once to highlight it blue
  • Hit DELETE button on key-board
  • TAB out of the field – OR – arrow up or down to next line
  • Arrow back or click in the field
  • TYPE the code or select from the list
  • TAB to next field
  • Click Save or Alt+A

Need help? Not sure? Call for FREE 30min Advice / Strategy session today!

        Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!


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Business Tips – The Process of Selling and Tips to Improve

Business Tips – The Process of Selling and Tips to Improve

The Process of Selling and Tips to Improve

Selling can either freeze you or excite you – and for many its FREEZE or Repel!

Here are some tips from – When ‘No’ means ‘Yes’ – 6 Tips to Make you A Better Salesperson, where there are also great examples of ways to be empathetic and LISTEN when selling!

    1. NEVER HANG-UP ON A PROSPECT – It is not your job to say ‘NO’ on behalf of your prospect. If you’re going to assume anything, assume the sale. (*With the exception of abusive prospects… Hang-up with gusto, my friend!)
    2. LISTEN TO THE FACTS – Example if you get “We’re okay for SEO” mean? …(A)… salesperson should not respond to this information that the prospect gave, and instead translate this to mean “I will never buy from you.”? In actual fact (FACT – I am the one who said this, so I know), “We’re okay for SEO” actually meant “I am not pedestrian enough to buy into your sleazy pick-up lines, Miss Salesperson… But I am in the market for SEO, so please try harder.”
    3. TRANSLATE THE FOB-OFF – If you choose to believe a fob-off “objection” from clients (eg “We’re fine for SEO thanks”), you are wasting your time, and simply won’t get anywhere. If you continue to buy in to the fob-offs you are served, you will have to go through more and more crap calls like this to get anywhere… How will you hit your target? BE REALISTIC and do not give up until you have unearthed a REAL reason – a REAL objection to overcome. If it’s real, you’ve done your job – fine.
  1. DIG,DIG,DIG! – If somebody says “NO” to you, or gives you a fob-off response, there is ALWAYS a reason. It may not be a good one – it may be “I am scared of salespeople and don’t want to be sold” or “I am busting for the toilet, but can’t tell you that!” – but there is ALWAYS a reason. Your job is to A) read between the lines to determine whether or not the objection given is actually realistic and B) Dig up the REAL objection… Rookies shy away from objections, but you WANT the REAL reasons why somebody doesn’t want to buy, so you can overcome it and CLOSE THE DEAL. So how do you dig? Keep asking questions… Questions that have purpose.
  2. NO PERSISTENCE = NO PASSION = IMPERSONALISATION – When a salesperson doesn’t persist, it shows lack of passion… Lack of faith in their product/service, and lack of belief that this product/service can solve a problem for their prospect. Furthermore, when a salesperson gives up on a prospect too quickly, it sends the message to the prospect that they are just another number. Sure, persistence can be naggy and annoying, but lack of persistence can strike a salesperson or brand/business off the prospects list forever. SHOW PASSION!
  3. DON’T ASSUME YOU KNOW WHAT THEY WANT This goes hand-in-hand with digging/probing for objections and client needs. Sometimes prospective clients are just waiting for the salesperson to say the right thing… Sometimes the prospect IS in the market, and they have done a sh*tload of research… They’re just waiting for that one little keyword to make their ears stand up. But heck – they’re not just going to GIVE you the sale… Are you serious?? It is YOUR job to discover what tickles their fancy. Take me for example… Being a passionista of the sales process, I A) Give good salespeople my ear, B) Feel no obligation to make things easier for bad salespeople than I would for a good salesperson and C) Like to flesh out the sales call to see where it goes. I allow salespeople to take me on their own path… If they lead me down the wrong way, that’s their loss… I’m going to give them donuts. If they’re good – if they say all the right things and actually spark my interest, I will consider and take them seriously. That’s what want. That’s weird. So what does the next guy/girl want? Don’t assume you know… Pay attention & go with it.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – no-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right! Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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MYOB – SuperStream and how MYOB Account Right is ready

MYOB – SuperStream and how MYOB Account Right is ready

MYOB – SuperStream and how MYOB Account Right is ready

SuperStream is an improvement in the productivity of the superannuation system and MYOB Account Right is ready. The new SuperStream works by introducing common data items, electronic communications, simpler channels and faster business processes for sending employer contributions.

Under SuperStream, employers must start to make super contributions electronically. The contribution data is sent electronically in a new message format to the fund, and the contribution payment is sent electronically through the banking system.

The data message and payment are linked by a payment reference number, which enables reconciliation by the receiving fund.

Many of the key components required for this change, including e-commerce infrastructure and software solutions, are already in use in the marketplace. Others are currently undergoing development and trials before being implemented.

SuperStream is mandatory for all employers making super contributions, APRA-regulated super funds and self-managed superannuation (SMSFs) fund receiving contributions.

MYOB have a video to explain more Set up Pay Superannuation to make super payments directly from AccountRight, meet your employee super obligations in a flash and always stay on top of government changes, including SuperStream. The best bit? It’s free with your AccountRight subscription. You might like to check out our list of super funds you can currently pay using Pay Superannuation. Note that self-managed super funds aren’t available yet, but we’re working on it.

Here is the video link (https://youtu.be/9_XnE6NWTsg )

If you want to get MYOB Account Right (AR) – call us for a competitive quote and extra bonuses in addition to what normal MYOB bonuses and support are supplied – 0407 361 596.

If you already have AR, or once you are set up on AR, here’s how to get started:

1

Sign up for Pay Superannuation

 2

Check super fund and employee details

3

Make superannuation payments

Need help? Not sure? Call for FREE 30min advice / strategy session today! 0407 361 596 Aust

***BEFORE you BUY Ask us for a competitive software price BELOW retail – No obligation!

You also get FREE 30 min to assist in setting up your company in the software, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE“Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Business Finance 101 – The Cashflow Statement – Explanation for business owners

Business Finance 101 – The Cashflow Statement – explanation for business owners

Business Finance 101 – The Cashflow Statement – explanation for business owners

There are three financial statements that are commonly given for a business―a profit & loss or income statement, a balance sheet or statement of position, and a cashflow statement (or statement of cash flows). The purpose of the cashflow statement is to highlight the major activities that directly and indirectly impact cash flows and hence affect the overall cash for the business.

Business owners should monitor cash for a very good reason―without a sufficient cash balance at the right time, a company can miss golden opportunities or may even fall into bankruptcy.  The cash flow statement answers questions that cannot be answered by the income statement and a balance sheet. For example a statement of cash flows can be used to answer questions like where did the company get the cash to pay dividend of nearly $14,000 in a year in which, according to profit & loss / income statement, it lost more than $10,000?

The cashflow statement is a valuable analytical tool for business managers as well as for investors and creditors, although managers tend to be more concerned with forecasted statements of cash flows that are prepared as a part of the budgeting process. The statement of cash flows can be used to answer crucial questions such as the following:

  1. Is the company generating sufficient positive cash flows from its ongoing operations to remain viable?
  2. Will the company be able to repay its debts?
  3. Will the company be able to pay its usual dividends?
  4. Why is there a difference between net profit/income and net cash flow for the year?
  5. To what extent will the company have to borrow money in order to make needed investments?

For the statement of cash flows to be useful, it is important to use a common definition of cash. It is also important that a statement be constructed using consistent guidelines for identifying activities that are sources of cash and uses of cash. The proper definition of cash is broadly defined to include both cash and cash equivalents.

Cash equivalents (applicable more for large companies) include short term, highly liquid investments such as treasury bills, commercial paper, and money market funds that are made solely for the purpose of generating a return on temporary idle funds. Instead of simply holding cash, most large companies invest their excess cash reserves in these types of interest bearing assets that can be easily converted into cash. These short term liquid investments are usually included in marketable securities on the balance sheet. Since such assets are equivalent to cash, they are included with cash in preparing a statement of cash flows

The 3 sections of cash flow statement (each has an inflow and outflow section):

Operating Activities: (mostly income statement / profit & loss)

Operating activities shows the cash effects of transactions such as –

  • Cash receipts from sales of goods and services and
  • Cash payments to suppliers and employees for acquisition of inventory, taxes, interest on loans

Investing Activities: (mostly long term assets)

Investing activities generally show long term assets (and sometimes debt/equity securities) which include –

  • Sale/disposing of plant, equipment
  • Sale of debt or equity securities
  • Acquiring plant and equipment
  • Acquiring debt or equity securities

Financing Activities: (mostly long term liabilities and equity)

Financing activities involve liability and stock holder’s equity items and include obtaining cash from creditors and repaying the amounts borrowed and obtaining capital from owners and providing them with a return on, and a return of, their investment.

  • Increase in debt / loans taken on
  • Payment/Redemption of debt facilities / loans
  • Dividends paid

Next month we will work through an example

Need help? Not sure? Call for FREE 30min advice / Strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia

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