What to learn from your Business Mistakes?

Some of the world’s most successful business people have one thing in common, they celebrate failure and learn from it. James Dyson famously said, "Enjoy failure and learn from it. You can never learn from success." James Dyson is no stranger to the power of prototypes and learning from mistakes. He made more than 5,100 prototypes of the Dyson Vacuum Cleaner before getting it right.

Albert Einstein said, “A person who never made a mistake never tried anything new”. Wherever we look in the world of business, the most successful and innovative leaders have been the ones who weren’t afraid to fail and if they did, they learned from it.

In most businesses, even if management encourages experimentation, budgeting and risk management processes tend to promote predictability and efficiency. This leads people to do everything possible to avoid mistakes. Attitude to failure differs considerably from one country to the next.

The best and hardest work is often done in a spirit of adventure and challenge. Mistakes are an inevitable consequence of doing something new. As such, there is a tremendous source of value in determining if your people have the right attitude to failure. Here are a few ways to learn from mistakes in your business. 

Study unsuccessful projects

Document the lessons learned about clients, market trends, your firm, your processes, your team and yourself. This is likely to be a painful exercise until it becomes fully embedded in the culture of your business.

Make an impact

The management team should gather frequently to discuss their own failures, and then share the lessons learned with everyone in the wider firm. This builds trust and goodwill, and encourages future experiments across the business. Parameters should be set and communicated across the team - it is not okay to be reckless, but trying something new should be encouraged.

Identify trends

Conduct a firm-wide review to identify patterns. If failure rates are too high, you may need to tighten up systems and controls across the business. However, if they are too low, consider encouraging your people to be more willing to experiment.

3 Effective Tips for Successful Cross-Selling!

Customer retention and cross-selling is important in any industry, yet it's frequently overlooked. Here are a few tips to help you to cross-sell more products and services to your existing customers.

The cross-sell

Amazon.com attributes up to 35% of its revenue to cross-selling. When purchasing you will see both the “frequently bought together” and “customers who bought this item also bought” sections, promoting related products. The key is to illustrate the value to the client of purchasing a complimentary product or service. For example, an accountant may wish to communicate to clients that in addition to audit and tax services, their clients can also benefit from payroll or business advisory services. There is a “value add” in that the client is buying all of these services from one accounting firm.

Data driven campaigns

The firms that are most successful at cross-selling unite insights driven by data with focused marketing campaigns. There is a fine line between timely offers and annoying spam, and understanding buyer timing is critical. Your marketing content strategy is key to cross selling to existing customers, but you also need to understand how you will measure success. Use a CRM system to record customer data including which clients bought what service. Use this database to identify clients who have not yet been cross sold to and create a campaign which focuses on creating a value proposition in the mind of those clients. Ensure your sales or business development people engage with the target clients at the appropriate time.

Listen to your customers

You can’t sell additional products or services to your customers if you don’t understand what they actually want or need. If for example, you are selling business services, ask your customer about their business plan. Where are they going in the next 3 to 5 years and how do they hope to get there? Consider some of the challenges that they will face and identify where your services will be able to make their life better in some way.

Listen and respond to each client and every interaction. This two-way conversation should extend to your own internal teams, as you ask questions and measure outcomes to continuously improve the customer experience.

Self-Employed or Starting a Micro Business?

Did you know that almost one in seven people in the UK are self-employed?

You might also classify self-employment as “freelance work”. UK research suggests that 30% of those who work in the media call themselves “freelance”.

Research by Skills Development Scotland noted that the creative sector is dominated by sole traders, micro and small businesses. Approximately 13,500 businesses employ 0 to 49 employees and accounted for nearly 98% of the total number of businesses in 2014. This is an increase of 35% in the number of small and micro businesses since 2009.

So why start a micro business or become self-employed?

The Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) conducted a survey in which 27% of people who moved into self-employment within the last 5 years said they did so to escape unemployment.

The Government 2015 Workplace Employment Relations Study reported that micro-businesses accounted for 33% of private sector employment and 19% of total output. Although micro-business employees tend to earn less, receive less training, and have fewer benefits, it found that these employees were also the most satisfied group of workers in the labour market. Factors like job control influence in decision-making, business loyalty and even satisfaction with pay.

The benefits of a micro business or becoming self-employed include:

• Flexible working hours
• Ability to choose your work
• Developing a relationship with customers who you want to work with
• Ability to respond quickly to opportunities
• Making a greater impact

However there are drawbacks which include:

• No sick pay, holiday pay or redundancy pay
• Little or no support, training, no back up if you can’t work
• Not a 9 to 5 job - it’s 24 hours a day
• No company contribution to a pension
• What if I can’t get paid on time?

Micro-businesses and self-employed people need assistance and if you are starting up or feeling the pressure get in touch with us as we will be able to support you.

Benefits In Kind, Shares Issued To Employees and Directors & Company Car Advisory Fuel Rates Updates!

Reporting Benefits In Kind and Shares Issued To Employees and Directors

It’s that time of year again when the annual return of benefits in kind and expenses paid on behalf of directors and employees needs to be made to HMRC.

Unless the employer holds a dispensation, this includes expenses such as travel and subsistence that are reimbursed to employees and directors.

Note however that from 2016/17 the employer will no longer need such a dispensation if the expenses are wholly, exclusively and necessarily incurred in the performance of the individuals’ duties.

Remember also that whenever companies issue shares to employees and directors they need to consider whether or not an entry needs to be made on the end of year HMRC Form 42. This form is used to report events relating to shares and securities obtained by reason of employment and needs to be submitted online by 7 July following the end of the tax year. As usual we can assist you on complying with these reporting requirements.

Trivial Benefits In Kind Now Exempt

Employees are no longer taxable on trivial benefits in kind, provided the cost to the employer is less than £50. This must not be cash or vouchers or a reward for past or future services but is intended to cover gifts of flowers on a birthday or a turkey at Christmas.

Company Car Advisory Fuel Rates

These rates are the suggested reimbursement rates for employees’ private mileage in their company cars and are reviewed each quarter on 1 March, 1 June, 1 September and 1 December.  In line with an increase in fuel prices, the rates that apply from 1 June 2016 are shown below:

Engine Size	Petrol	Diesel	LPG
1,400 cc or less	10p		7p
1,600 cc or less		9p (8p)
1,401cc to 2,000cc	13p (12p)		9p (8p)
1,601cc to 2,000cc		10p
over 2,000cc	20p (19p)	12p (11p)	13p

Where there has been a change, the rates that applied prior to 1 June 2016 are shown in brackets.

You can use the previous rates for up to 1 month from the date the new rates apply.

If you reimburse your employees the tax free amount of 45p a mile (25p after 10,000 miles) for using their own car for business purposes, then 20/120ths of the above amounts can be reclaimed as input VAT by your business.

For example, a diesel-engine car emitting over 2,000cc = 12p x 1/6 = 2p input VAT a mile.

Contact us for all your Tax needs!
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

Incorporating Your Business? 2016 Updates!

Where a sole trader, partnership or LLP has established a significant value for the goodwill of their business, it was possible, up until 3 December 2014, to transfer that goodwill to a limited company and pay just 10% capital gains tax by claiming entrepreneurs’ relief.

The former owner(s) could then draw down on the loan account created with the transferee company over time as future cash was generated by the business. This tax planning strategy became less attractive when entrepreneurs relief was denied where the transferor and transferee were related parties, although the latest Finance Act has relaxed this rule where the former owner receives less than 5% of the acquiring company’s shares.

Now that the top rate of CGT has been reduced to 20% from 6 April 2016 for such transfers, rather than 28%, it may be worth reconsidering this strategy.

For example where an individual’s share of goodwill is worth £500,000 the CGT due would be £100,000 leaving £400,000 net of tax.

Note that for a transfer in June 2016 the CGT would not be due until 31January 2018.

Consider charging interest to the company on the loan account balance as that is now more tax efficient than dividends for higher rate taxpayers.

Note that although the goodwill would generally need to be written off against the company’s profits, there is no longer a tax deduction for the amortisation resulting in higher taxable profits.

Know more about Capital Gains Tax: changes to rules

Contact us if you need help while incorporating your business:

PJ | ☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com