Category: London Accountants

The success of any business, large or small, depends largely on nurturing an efficient, productive workplace. While improving employee productivity should be always be a priority when the ultimate goal is a sustainable and profitable business, the process is easier said than done. Below are some of the most effective methods of managing a productive, happy workplace while increasing output.

Establish Accountability

Productivity depends on every employee understanding that the jobs they do come with specific responsibilities, and that their actions have consequences. Employees that lack accountability are more likely to slack off, procrastinate, or blame others for their shortcomings. Establishing accountability from the beginning results in higher-quality work output and an increased focus on informed, efficient action.

Avoid Excessive Micromanagement

There is no denying that management is absolutely crucial, but too much of a good thing can have adverse effects on productivity. Excessive micromanaging creates employees that feel as if they are not trusted and that their decision-making processes are not valued. Instead of encouraging employees to put forth their best efforts, it results in an eventual dependence on micromanagement that can sink productivity levels.

Recognise Success

Just as employees must be held accountable for their actions, they should also be recognised for their success. Even small efforts, such as verbal recognition or occasional awards, can encourage employees and make them feel like their hard work is being rewarded. For businesses that can afford it, larger rewards, such as holiday parties, improve morale and create camaraderie in the office, all of which leads to happier, more productive employees.

Break Out of Ruts

While it is generally advisable to assign tasks based on an employee’s particular competencies, keep in mind that doing the same tasks repeatedly over an extended period of time can make even a skilled employee feel as if their work has become monotonous. If possible, it may be useful to expose employees to other tasks and even other departments. This renews motivation, offers new skills to learn and apply, and grants the employee a broader understanding of how the company operates.

Cut Down on Meetings

Oftentimes meetings serve as nothing more than temporary breaks from productive work. If a meeting does not have a specific purpose, an organised agenda, and a plan of action, it will probably only function to diminish productivity. Meetings can be a great way to share ideas and establish goals, but don’t let them get in the way of delivering actual results.

Embrace Technology

While many workplaces still see new technology as unnecessary or even distracting, the simple truth is that they can have a significant positive impact on productivity. Updated hardware, software, and machinery ensure that work can be performed in less time and with minimal error. While it may not seem like a big deal, even minor issues such as temporary connectivity problems or hardware breakdowns can quickly add up through the course of a fiscal year.

Think Outside the Box

Studies have revealed several productivity-boosting techniques that may seem counter-intuitive at first glance. While social media has been demonised in workplace settings, data shows that allowing occasional breaks to access such sites can boost workplace productivity by nearly 10%. Likewise, allowing employees to listen to music while working – when it doesn’t interfere with the job, of course – can also improve efficiency. Providing such perks can pay off tremendously if it means happier, more motivated employees.

Balancing the needs of a business is never an easy job, but a focus on increased productivity can have a positive impact on nearly every other facet of the workplace. By using the techniques above, it is possible to eliminate unnecessary pitfalls and ensure that employees are personally invested in efficient, quality work output.

These days, it’s inevitable that a diverse group of older and younger workers cross paths in business.

After all, the young, tech-savvy, socially conscious demographic known as Gen Y are currently the largest living generation, navigating the work force in record numbers. And the boomers may be retirement age, but that doesn’t mean they’re ready to stop working. Many baby boomers are choosing to enjoy “encore careers” – jobs that allow them to continue to apply their skills and experience to personally meaningful projects.

Here are a few ways to help these two groups work together, so your business benefits from their unique and complementary skills.

The best of two worlds

Millennials offer incredible potential to the businesses they work for. Young, tech-savvy and interested in making a difference in the world, Gen Y only lack one key trait: experience.

Boomers, on the other hand, know how the business world works, and many enjoy sharing their knowledge with younger colleagues. However, unlike millennials, they may be “stuck” doing things less efficiently, simply because they don’t adapt easily to new technologies.

With their distinctive skill sets, pairing up a young worker with an older employee can be mutually rewarding – and highly beneficial – if you know how to manage the relationship.

Partners – not protégés

Trust is the foundation of every good working relationship. Building trust among your younger and older workers can mean establishing a very different work dynamic than your older employees may be used to.

To avoid tension, avoid creating hierarchies at work. Even in a mentor-mentee relationship, it’s important that each person see themselves as an equal. That way when someone doesn’t know something, there’s no reason to feel embarrassed. No one is the boss; everyone is there to exchange knowledge and experience.

Communication is key

Being digital natives, Gen Y may prefer communicating with tweets, texts and instant messages; boomers, on the other hand, prefer a phone call, email or face time.

Moreover, older generations may be used to a more formal approach to communicating at work, particularly with management. They may interpret a more casual communication style – common among their Gen Y peers – as a lack of respect.

You can help bridge gaps in communication with weekly staff meetings. You might even consider creating a communication policy: group emails for important matters that affect everyone, and the communicator’s preferred form of communication for other matters.

Final tips

While you can’t necessarily influence how well any two employees work together – after all, there’s more to any working dynamic than generational tendencies – an awareness of how your staff work best and an attitude of flexibility can make a huge difference.

Find ways to support your employees as they nurture each other’s growth. When it comes to problem-solving, encourage your boomer staffers to help younger workers understand their reasons behind their decisions with examples based on their experience. Likewise, millennial staff should think about the best ways to teach their older colleagues, who are less comfortable with technology, how to use a new web tool or software.

With these tips in mind, you’ll be on your way to nurturing the skills and talents of all your workers – and creating a harmonious atmosphere for everyone.

Looking for a Fulham accountant for your business, or a tax advisor in London? Get in touch – we’d love to help.

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

Most small business people would agree that their Profit and Loss account (now more correctly called a Statement of Financial Performance) is among the easier – if not the easiest – financial document to understand. It’s typically presented in two parts.

The top half of the statement reveals the various sources of income the business has received for the period covered, such as a quarter, half year or full financial year. After subtracting the cost of producing your goods or services, it shows your gross profit figure.

The bottom half of the account lists all the relatively fixed running costs (business overheads) such as rent, power and communication costs you need to pay each month regardless of sales levels. When these costs are subtracted from the gross profit the result is a net profit figure (before tax).

So far, so simple, but you can learn more.

How well is the business performing?

These two results enable you to work out two key performance indicators (KPIs) that offer important insights into how your business is performing.

The first, your gross profit margin, is the gross profit expressed as a percentage of sales.

To work this out (if your accounting software doesn’t do this automatically), you divide the gross profit figure by the sales total and multiply by 100 to get the percentage.

Here’s an example:

Gross profit: £80,000

Sales: £400,000

GP %: 80,000 divided by 400,000 = 0.2 x 100 = 20%

Multiplying by 100 allows you to study the gross profit margin as a percentage, so you can easily compare this result with previous margins, irrespective of fluctuating costs or sales levels. Has the margin improved? If not, it’s time to investigate the causes. For instance, has there been an increase in the cost of materials or production labour?

You can now compare your gross margin to similar businesses, because turning the result into a percentage overcomes any differences in size. Regardless of whether they are smaller or much larger businesses, it’s the gross profit percentage (GP %) that tells the performance story.

Depending on which sector you operate in, we can help find the average GP percentage for your industry. Your aim should then be to at least equal the industry average, and preferably do even better. You can also aim to improve on your previous gross margin results.

How profitable is your business?

The net profit margin reveals how profitable your business is when your overhead costs are deducted from the gross profit. It’s worked out using a similar formula. For example:

Net profit: £50,000

Sales: 300,000

NP %: 50,000 divided by 300,000 = 0.166 x 100 = 17%

This KPI empowers you to spot trends before they become disasters. If your net profit margin has fallen, you need to dig for the causes. For example, you may find your marketing costs have blown out with no increase in sales. The lesson here would be to measure your marketing and advertising to see what is actually working, so you can drop any unproductive tactics.

Three tips

1. Use your gross profit and net profit margins as benchmarks to set improvement goals. Try to improve both on internal benchmarks (your current performance against previous results) and external benchmarks (the average for your industry type).
2. Don’t rely on just an annual profit and loss account. You can’t effectively drive your business forward using a rear view mirror that reflects dated data – you need more up-to-date figures. Use your accounting software to generate more frequent profit and loss accounts, such as monthly or quarterly statements. These enable you to take prompt action to fix any negative trends before they do serious damage to the business.
3. Remember to you can always get in touch with us to interpret trends in your results so you can take the right corrective action.

Looking for a Fulham accountant for your business, or a tax advisor in London? Get in touch – we’d love to help.

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

Running a small business is hard work. Entrepreneurs know they have to put in long days and give up personal time in pursuit of success. There’s a line, however, between putting in some extra time and becoming addicted to work, and it’s important to know the difference between them.

Being addicted to work—sometimes referred to as being a “workaholic”—can have serious negative consequences for your personal life and your health. Figuring out when you’ve crossed the line and taking steps to gain control over your work life-balance are vital to maintaining a healthy lifestyle.

Here are three signs you’re addicted to work.

1. You work far more than you intended to

Most people have occasional days where they get caught up in work or a project keeps them at the office hours after they should have been home. That’s part of working. The problem is when those become the norm for you, when you’re frequently working 12- to 16-hour days and only going home long enough to sleep and grab a bite to eat.

Even if you have a bit more time than that at home, if you intended to work 40-50 hours a week and you routinely hit more than that, you may need to take a step back from work and enforce a 40-hour work week.

Ask yourself: How many hours should I reasonably work at this business? Am I frequently working more than that?

2. Your health is suffering

If you are showing physical signs of stress, or if you are generally more unwell than in the past, it’s possible that you’re working too much. It may seem like a good idea to put in all the hours you can to make your business successful, but the consequences of poor health can be devastating for your company.

Your decision-making skills may suffer. You may find yourself unable to complete required job duties. You might miss important details, such as vital payments that are due. All have a negative effect on your organization.

Working to the point of being sick is not a sound business strategy. You need time away from work to rest and recover, and give yourself something else to focus on.

Ask yourself: Do I generally feel healthy and energetic? Am I sleeping well? If not, you might need time away from the job.

3. You constantly cancel on people because of work

Unless your small business involves actual life-and-death scenarios, there’s no need to constantly cancel on your friends and family for “work emergencies.” Sure, they can happen once in a while. You might have an important deadline with a client or an urgent phone call with a supplier that pulls you away from your plans.

If you frequently cancel engagements with your friends and family—and if they’ve started complaining about it—there’s a chance you’ve become addicted to work.

Ask yourself: How many times in the past month have I had to cancel plans for something work-related that wasn’t actually urgent? If it’s more than a couple of times, you might need to rethink your work/life balance.

Final thoughts

Running a small business requires a lot of you, but becoming addicted to work increases the risk of burnout. Burnout can be catastrophic for a small business, especially if there is no one else to take over while you recover.

A better plan is to work only as much as you need to and to protect your personal time as much as possible. Listen to your body and the people around you when they tell you it’s time to stop. Enforce hard stops for workdays, after which you must go home. Hire a team that can handle your business while you’re not there, then trust them to do so.

Your business will be better for it, and so will you.

Got a question about your business? Get in touch with us.

Looking for a Fulham accountant for your business, or a tax advisor in London? Get in touch – we’d love to help.

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

Starting a new business is exciting, but it also comes with its fair share of responsibilities. One of the most critical responsibilities is maintaining accurate records of your business transactions. From saving receipts to processing employee payroll, every money-related detail should be documented. It’s not just about keeping things tidy; it’s about understanding the financial health of your business and meeting all your tax obligations.

Don’t underestimate the basics

Some small businesses continue to rely on traditional systems, like pen, paper, and a trusty shoebox. Although it may seem outdated, this method can work well for businesses with very few transactions. These businesses might not have the latest payment technology, and could be invoicing customers or receiving immediate cash or cheque payments. In such cases, they would need to maintain a record of all receipts, past, present and future jobs, as well as a log of their customers and transactions.

Of course, if you’re serious about your business, you might want to consider using a more accurate system.

The power of spreadsheets

In the digital age, spreadsheets offer a simple and effective way for start-ups to keep track of their financial activities. When you’re just starting or operating a part-time business with a limited budget, a spreadsheet can be a cost-effective alternative. As your business grows and becomes more complex, you can transition to specific accounting software.

With a spreadsheet, you can set up a basic accounting system to track invoicing, perform calculations, and even set up a budget.

Embrace accounting software

For those more serious about their business, subscribing to accounting software might be the best option. Modern accounting software often links directly to your bank account, making it an efficient way to document all necessary transactions. It also reduces the risk of errors and offers features like generating professional invoices, tracking debts, and ensuring everything is entered accurately for your accountant at tax season.

If you opt for a cloud-based solution, you’ll enjoy real-time access to your accounts, increased data security, and the flexibility to access your financial data anytime, anywhere.

Stay on top of your cash flow

Regardless of the accounting system you choose, a good system will enable better decision-making based on real-time financial insights. Identifying cash flow trends can help drive your business growth by revealing your most profitable products and services, your biggest customers, your highest costs, and more. The ability to monitor these trends places you in a better position to improve your profits and spot potential areas of growth.

Wrapping up

As a start-up, your primary task is to evaluate your business needs and choose an accounting system that allows you to track your cash position accurately, keep precise records for tax purposes, and identify cash trends.

Consulting with your accountant can be an invaluable first step. They can offer advice on the best system to use and ensure it’s compatible with their processes. Remember, your financial records are the lifeblood of your business, and keeping them in perfect order is integral to your success.

Want to discuss what system will best suit your needs? Contact us now for advice.

Looking for a Fulham accountant for your business, or a tax advisor in London? Get in touch – we’d love to help.

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants