QA System
5 Reasons Small Business Let Their Support Areas Slide
Sally Balwin
Recruitment | HR | Business Development
I spend most of my time working with and talking with small business owners … after all, it is my passion. One thing that never ceases to amaze me is the lack of time and money small business owners invest in their support areas.
What do I mean by “support areas” – things like financial management, IT management, planning and forecasting and human resource management. These are all critical parts of every business however are mostly ignored until crisis requires engagement.
As a small business owner, how many of the following can you say yes to:
- I tend to ignore unsatisfactory performance of staff until it is at a point where it can’t be ignored anymore.
- I generally recruit staff when I really really really need them for a particular job and not before.
- I generally make staffing choices in rushed and stressed situations.
- I generally engage IT, Accounting and other support services providers based on price.
- I rarely take time to plan and undertake forward thinking in relation to my business and its support services.
- I don’t have a business plan.
- I don’t have a cashflow or budget.
- I don’t have an IT plan.
- I really only know the bare minimum in relation to laws around staff.
- I avoid having to use an accountant or solicitor unless I absolutely have to.
- I have experienced significant interruption to my business due to something going wrong in relation to one of my support areas (eg, issues with Tax & BAS, major cashflow issues, major staff issue, major IT issue, major legal issue).
I am hoping as a business owner you don’t have any ticks above. However, in reality I know most will.
So, at the recent meeting of the Albany Creek Business Contacts (ACBC), which is a networking group of local small businesses who get together to support and help each other through referrals, I asked the question – “why do small business owners neglect their support services”. The answers fell into five responses:
- Poor time Management – too much time working on the tools that there isn’t time to work on the business.
- Focus is on Money making activities – the inference here was that the support services do not “make money” from a billable perspective and therefore were not the focus.
- Lack of knowledge – many small business owners are very good in relation to the product or service of the business however do not invest in learning how to run a business and the value add the support services provide.
- Previous bad experiences – it was suggested here that some small business owners have had previous bad experiences with providers of support services so once burned then never to return.
- Ain’t broke don’t do anything with it – the suggestion that if it isn’t broken or creating problems then nothing needs to be done.
The problem with this situation is that when issues do arise in the business it winds up costing many many times more in time, dollars and productivity to deal with the issue and/or fix it than if some investment had been made along the way.
For example:
- rule of thumb it costs businesses 2 ½ times the salary of a position to replace the staff member;
- industry research suggests a business should be investing 2-3% of its net profit on its IT; and
- costs associated with needing to engage an accountant or solicitor to address specialist issues can be ten times plus the cost than had advice and assistance been obtained from the beginning and along the way.
If you want to discuss how to get started in building support for your business without breaking the bank, call me today (3264 4783) – I can help!
Best Business Practices – Internal Controls
CPA | Accountant | Business Advisor
Before discussing why internal controls are important, particularly to small businesses, it’s best to establish what we are talking about? Control points are methods or procedures which a business adopts to safeguard assets, ensure financial information is both accurate and reliable, ensure that the relevant financial and operational obligations are being met and to ensure that at the end of the day the business’s objectives are being met.
Internal controls make the organization and its people accountable for the success or failure of the business. If the business has a poor culture towards internal controls then there is every likelihood that controls are either poor or non existent. HIH and One Tel are examples of the impact that poor culture towards internal controls can have … and they paid the ultimate price.
Internal controls are the procedures that explain the how, why, what, where and when of any set of actions and they should be documented.
The controls not only assist in meeting the business’s objectives but also provide an invaluable training source for new staff and ensure that when experience staff retire or leave their knowledge does not go with them. What appears obvious to someone who has done the same things a thousand times for many years may be very unclear to someone who has never done it before, or has no one to guide them.
How are your business’s internal controls? What quality checks are in place? Do you have documented procedures and forms which underpin the systems of your business?
Pay and be Scammed!
CPA | Accountant | Business Advisor
Busy business owners are a major target for invoice fraud.
Invoice fraud can take a number of forms and scammers are relying on heavy workloads and insufficient procedures and controls within businesses to succeed.
Examples of invoice fraud include fake invoices for advertising in bogus directories and magazines, as well as for subscriptions which were never taken up.
To avoid being scammed, it is suggested that business owners:
· be suspicious of unsolicited emails, letters and phone calls;
· keep good accounting records;
· always approve purchases in writing;
· do not pay any invoices unless you have the paper work;
· ensure accounting staff operate under controlled procedures; and
· check for scam alerts through relevant government agencies
If you use a bookkeeper, ensure proper controls over data processing and the bank account. It is suggested that the roles should be separated with different people doing each task. Also ensure, as much as possible that your bookkeeper is qualified and experienced in looking after your accounts. Don’t be shy to ask for references and contact those referees!
Recruiting to the Job or the Process
Recruitment | HR | Business Development
I am all for documented procedures and processes being used by business owners. Knowledge, consistency and compliance equals efficiency, productivity, less errors and reduced rework. However, like Erika’s job interview, procedures and lack of training can have the opposite effect.
In relation to Job interviews, why have a process? Well, the answer lies in why do an interview in the first place?
Most interviewing processes include a job interview. Selectors have read the written application and matched it to the Job Description requirements – this is where a good Job Description comes in handy. But job applications cannot always reflect the candidate accurately.
Candidates are encouraged to present a Resume or CV to get noticed. Many invest in Professional Resume and CV Writers or seek other help to ensure the best advantage (can’t blame them). However, as the recruiter, you need to test and validate what is being claimed in the written application to ensure they are the right person for the job and your business.
And this is where the interview comes in. The interview process needs to be structured sufficiently to ensure you find out everything you want to know and that you comply with laws and regulations, but not so structured that the only ticks are that you followed the process but don’t really know anything further about the candidate.
Face to face, the recruiter can hear the language the candidate uses, see how they respond to questions and begin to build rapport (or otherwise) with the prospect. Make sure when you are interviewing you use open questions (not closed questions) to ensure the candidate can talk (remember – you want to know what they know not what you already know).
Examples of Open Questions are:
- Tell me a time when …
- Have you ever experienced …. And if so, how did you handle it?
- You mention in your application you worked on … project. Could you expand on this for me?
- When you worked in …. Team, what role specifically did you have and what contributions did you make?
These questions allow the candidate to talk thereby opening up opportunities for the recruiter to explore information further with follow-up questions.
Closed questions are ones that can be answered Yes or No and don’t give the opportunity to really obtain much information. Examples of these types of questions are:
- You indicted in your application you have experience in … is that right?
- You mention in your application you worked on … project. Did you do things like …… in this project?
- When you worked in …. Team was the team successful in its work?
The right questions and the right process can get from the candidates exactly what they know, what their experience is, how they fit with the culture of your business and what type of employee they will be.
www.balanixsolutions.com.au/recruitment
FAQ – Debt Management Solutions
CPA | Accountant | Business Advisor
Q: My Receivables are blowing out with more customers taking longer to pay and the timeframe for payment extending. I am experiencing quite a hit on my cashflow so what can I do to improve the situation?
A: The first thing you need to do is make sure you have terms of trade established with all your customers. What do I mean by terms of trade? Terms of Trade should set out on what basis you are selling your goods/services (eg cash on sale, payable within seven days of invoice date, 30 days after end of month) and whether there are discounts for early payment or penalties for late payment. They should also set out whether the customer will be liable for any costs incurred in attempting to recover amounts owing.
Once you have a policy in place make sure you enforce the terms of trade policy. Remember it is your money and unless you are a financial institution which lends money it is not your business to fund customers’ Cashflow. What you educate customers to do is the way they will respond. That is, if your terms are seven days and you allow clients twenty-one days before you chase them for payment what are you saying to them about your terms of trade? Is it seven or fourteen or twenty-one days? If your customers are educated by your actions (rather than your Terms of Trade) you will have trouble re-educating them as to what you real terms of trade are (but, if you are in this situation, you are going to need to try and change things).
So the day after monies are due (and not paid) send a reminder statement or make a friendly phone call reminding the customer the account is overdue and that you require payment. If reminding by phone, get a commitment from them and record the commitment in your system. If this fails follow up with a letter reminding them of their commitment and what the consequences of non-payment is, as per your Terms of Trade. Unless your client can show some extreme reason why you shouldn’t follow through with the stated consequences – then follow through. You may end up losing a couple of customers but are they reallythe customers you want in the first place?
Also encourage customers to speak to you in advance if they are having problems with cashflow and payment of accounts. Remember we all have problems from time to time and most times we can work through them if there is early communication between the parties involved. Offer a payment plan if this suits your buisness (any money coming in is better than none being chased).
If you need any further help with Debt Management and Cashflow, call me 07 3264 4783 (ask for David Balwin) or drop me an email ( info@balanixsolutions.com.au ) – I’d love to help!
