Don’t stop thinking about tomorrow is a line from the Fleetwood Mac song Don’t Stop. This was playing when I was on the cross trainer yesterday morning and planted the seed for this week’s blog. To bring the lyric into the business world, it’s about thinking of the future of our businesses.
- Where are you now?
- Where do you want to go?
- How can we become more profitable to strengthen the business
- Why do we want to be more profitable?
Lots of questions. The purpose of this is to get you thinking. What are we doing well, and where do we need to improve?
“Don’t stop thinking about tomorrow
Don’t stop, it’ll soon be here
It’ll be better than before
Yesterday’s gone, yesterday’s gone
Where are you now?
Where are you now on your business journey? We have a chart on our website that looks at different stages of a business journey, which are
- Sole trader
- Lean company
- Growing business
- Mature business
- Financial controller
We’d see our business as a growing business. The right team is in place, but winning more business and looking to expand. We are also investing in the business. A lean company will have one or two employees, who can be the business owners. A growth company will have more employees, while a mature business will have even more.
Cashflow quadrant
Looking at the cashflow quadrant, being an employee and self-employed is similar. As an employee, you have a job, but as self-employed, you own a job. But as a business owner, you own a system and have other people working for you. Whereas an investor is coming out the other end. They are after selling their mature or growing company. They have money and investments from that sale. Their money and investments are working for them. That is a very small percentage of the population. Some will remain business owners, and very few will become investors.
Right Team
What are the hallmarks of a right team? For me, it’s all down to the attitude of the person. Someone who cares about the business and who works hard when the chips are down. Someone who is a leader in your business. That doesn’t mean they manage staff, although they can do. They lead by example, by their actions, by their willingness to help their work colleagues. Turning up every day and delivering for the business. The quality of their work, problem-solving for clients and taking pride in their work
They take the time to help others improve. It could be a trainee or apprentice who is learning on the job and needs help. Or another work colleague who is under pressure with a deadline to meet. You see them putting their hands up to offer their services. This isn’t out of the ordinary for them. It’s ingrained in what they do, and they see it as part of their work. They still have their own work to do, but helping others is normal. Someone like this is also willing to change and adapt. It could be a new process or a new system to learn. Bring it on. It’s not a problem, and they’ll see the benefit.
If we can get as many of these leaders into our businesses, then we can grow. But we have to foster an environment of growth and make sure we look after them well. We can do that by
- Fair pay for the work they do
- Training on the job, so they are learning and
- Nice work environment
- Good communication
These are not always easy things to do. I know I’ve made mistakes that I’m disappointed with, but all I can do is learn from them and move on.
Winning more business
When it came to winning more business, I was very naive about this in the early days. I thought that by doing a good job for a client, the client would tell everyone, and we’d win lots of business on the back of it. Not so. My view was that marketing was a complete waste of time and money. I was wrong about this, too. Writing this, I am realising that I’ve been wrong lots of times!
Today, doing good work is the essential building block. When it comes to accountancy, tax, and your finances, trust is everything. People check you out before calling or putting in an enquiry. What’s your website like? Do you show up on social media? If so, what are you talking about? Are you the type of business that can help me? Of course, they’ll ask around, too. A good recommendation will seal the deal if you check out in other ways. Price will play a factor. Are we too dear or too cheap for the service you are looking for?
Marketing helps warm up the client. When they call, they are looking to buy. Now it’s down to three main things
- Can you help fix my problem
- What will you charge me for doing it and
- When can you do it
The when piece is more important depending on the urgency of the problem. Think of getting a tradesman in an emergency. There’s water all over the brand new tiles after the husband put in the new washing machine. When becomes more important than the price to get a plumber. After all, it could save your marriage!
Looking to expand
Our plumber guy, who we’ll call Tom, is looking to expand. He’s been working as a sole trader for the last few years, but profits are increasing, and he’s paying too much tax. His son, Tony, is coming into the business and has some good ideas. They’d like to set up a limited company and hire a few apprentices. Tony needs a van as they have to work at different locations. A larger plumber in the area is looking to subcontract them to install heat pumps in a new housing estate.
Tom has gone from a sole trader to a lean company and then jumped to a growing business. This is unfamiliar territory. It used to be simple. Do a job for a lady in the neighbourhood and get paid €50 cash. Now, it’s trying to cover a lot more bases. Look after the small stuff with your loyal customers, but be able to do larger, more profitable work, too. Tom needs help now with
- Payroll
- VAT and RCT
- Bookkeeping
- Company accounts and
- CRO filings
The monthly outgoings are a lot higher. Having enough cash to grow and pay all the bills is vital. His pricing needs to be right. Premium pricing for out-of-hours calls. Higher pricing for longer paying clients. A couple of larger companies won’t pay until after 60 days of receiving the invoice. Can he support that, or is he better off steering clear? Invoicing becomes key. Agree the price up front, agree on any extras and invoice as soon as the job is over. Business is growing fast, but can they afford to take on a new qualified plumber? More equipment and another van. Can the banks help?
Where do we want to get to?
Where do we want to get to is not a question business owners ask themselves very often. We never think we want to become a mature business. In most cases, we want to grow. Why? For me, it’s to become more profitable. Because more profit protects the business. It gives us the funds to grow. To invest in our team so that they can earn more. They deserve to earn more if they continue to lead the business. They are managing more clients or customers and are earning more for the business.
I am part of the team and want to earn more, too. For me, that’s not greed. It’s the same as other team members. You want your earnings to go up. You want the business to pay into a pension for you. You’re dreaming of a nice holiday in Croatia or getting the kids through third level. Even clearing off a mortgage. All the important things that you need money to pay for.
Not long ago, before we hired our talented office manager, we didn’t always have money to pay ourselves. We’d pay the team, pay the taxes and pay ourselves what we could and then pay the rest when more money came in. Owed loads of money, but it was sitting in our client’s bank accounts. By changing our invoicing and collection systems, that doesn’t happen anymore. This stuff is new to most of us trying to grow businesses. It can be super at times, tough at times and other times you’d be better off staying in the bed! It’s not something I ever imagined I’d be doing when I started as a tax trainee in Ernst & Young all those years ago.
Stronger businesses survive
Stronger businesses survive the difficult times. For me, companies are stronger when that have lots of cash. Cash is king when it comes to survival. Say Tom’s company has €100k in the bank and he spots a beautiful new Ford Ranger for €60k. He doesn’t need it as he bought a new van two years ago that does the job. He could buy it, but he’d be using it more for vanity than practicality. If the business suffers a major shock. A large customer goes bust, an economic shock that cuts spending dead like an oil crisis or whatever. The business only has €40k to get through this crisis. Tom may have to cut his workforce as they won’t have enough cash to pay them all. That makes his company weaker when the upturn comes. They are not as ready to benefit from the next boom.
Contrast that with the most well-known company in the world. Apple. Billions in cash on their balance sheet. It could even be trillions. There isn’t any danger that they wouldn’t survive an economic downturn. It would impact their business, of course, but they won’t close. They are one of the most innovative companies in the world with the most cash. This makes them stronger. They make life-changing and life-enhancing products. They spend billions on wages. Invest in their employees and office environment. Free food, table tennis tables, bean bags, and nice coffee to keep the employees happy and working hard.
Accountants and plumbers can improve people’s lives, too. A plumber who installs heat pumps and solar panels can knock thousands off your electricity bill. A quality accountant who reviews your numbers can add thousands to the bottom line. More profits and tax savings mean a stronger company and more money for you. You can take a higher salary, a bonus or make greater pension contributions. Plus, reward your team to keep them motivated.
Part two
I’ll do a part two follow-up to finish this out. There’s still a lot to talk about improving your businesses and rewarding you and your teams. Someday, one of the team that you nurtured could take over your business. We have experienced this with one of our clients. One of the reasons we set up our business was to help businesses grow and expand. To make sure they have quality numbers that help them make good business decisions.
Being in business can be difficult and lonely sometimes. It brings us great enjoyment to help clients move the dial in the right direction. Small steps and hard work over time moves you along your business journey. Even if that’s from self-employed to business owner, that’s still a big leap and one we love helping with.
For now, don’t stop thinking about tomorrow to make things better than before.
Do you need help to make things better than before? If so, start here
