Month: November 2008

Categories
Human Resource

Where Have All The Leaders Gone?

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Article Contributed by: Karen S. Sieczka
Your most knowledgeable employees may be retiring soon. How do you replace those years of know-how? By grooming and developing other employees…
Many baby boomers are heading toward retirement and a wealth of experience and knowledge is heading out the door with them. According to The Conference Board’s report #1369, Managing the Mature Workforce, over 40 percent of the US labor force, some 64 million baby boomers, will be nearing retirement age by the end of this decade.
For organizations to stay profitable, they need to starting recruiting, retaining, and developing new talent while exploring flexible or phased retirement plans for those retiring. These valuable workers, who are wrapping up their careers, have skills that are difficult to replace. Since most of their transitions are planned in advance, there is time to institute plans for succession.
So, what can organizations do to anticipate these transitions and start grooming tomorrow’s leaders? Where will these leaders come from? How does a organization start succession planning?
Who? Where?
Where should organizations look for talent? Ideally, the place to look first for future leaders is within the organization. Current employees have a track record. They have already had a training investment made in them. They are familiar faces from participation in high visibility or high profit projects. But don’t just limit the search to these high profile staff. Other strong and steady performers may be hiding in the ranks. Start an internal search for rising stars with recommendations from several levels and departments. Include those retiring as a part of the review of potential succession candidates.
When choosing potential candidates here are some questions to ponder:
* Is this person “invested” in the organization?
* Is he or she worth the investment of time, training, and money?
* Is he or she willing to put forth the effort required?
* Is he or she suited for the position and responsibility?
* What type of personality does this person have? Does he or she have the aptitude but just lack experience?
* Does this person fit into the corporate culture?
* If tapped, would he or she be a willing and eager participant?
* What types of projects has he or she been involved with at work or perhaps as a volunteer?
Most importantly, the program should be voluntary for the folks being groomed as well as those who are retiring. A forced program generally will not have good results.
What?
After potential candidates have been identified, interviewed, screened and have been accepted to the succession program, they need to be trained. The best way is to have them experience interactions in several different departments to have a complete picture of how the organization operates but most importantly spend most of the time with the person they are replacing.
How?
Job shadowing: Shadowing provides a real insight into what a job is like day-to-day as the candidate literally shadows and observes interactions and projects on a typical day. The candidate should feel free to ask questions such as why things are done a certain way or the specifics of how a certain task is done. At the end of the shadowing, both should compare notes about what has been learned and what needs clarification.
Job rotation: This is a version of job shadowing where the employee rotates through a series of different departments, functions, and levels spending the day with each observing the daily routine of the person being shadowed.
Mentoring: Mentoring is a different sort of working relationship and should be going on at the same time as other activities are being used for training. This pairs an “up and coming” employee with someone who has “been there done that” having specific learning goals in mind. Mentor and mentee meet at certain intervals to discuss progress, problems and make plans for action. Often this is carried out through email or telephone interactions with an occasional face to face meeting.
About the Author:
Karen S. Sieczka is a training consultant and founder of Growing Great Ideas.com. Her latest training program is Growing Great Ideas: Unleashing Creativity at Work. The program generates ideas, enthusiasm, and teamwork and can be customized to address particular organizational issues or challenges. Her new book is Growing Great Ideas: Unleashing Creativity at Work now available at LULU.com for download or print version.

Categories
Operations

Can You Afford to Overlook Bookkeeping and Accounting

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Article Contributed by Satish Patel
As an ex-CPA and now an entrepreneur managing several small to mid-sized business, I am still amazed at how small business owners from a non-accounting background get duped and fall into crisis due to improper bookkeeping and accounting practices. In a worst case scenario you can get embezzled by someone you trusted to handle your books, if you are not careful or your business might fall into dire straits due to improper management of business records.
Some of the most common mistakes which can bleed your business dry and should be avoided at all costs are:
1) Failing to seek professional help and trying to do it all yourself or worse seeking unqualified help from family or friends:
It can be understood that as a small business owner you are short on funds and might chaff under the idea of seeking professional help. You are probably thinking “my business is too small to hire professional help; I am sure I can manage this on my own” or “my wife/son/relative/friend has some experience in bookkeeping and can manage this for me”.
A big mistake you might not realize immediately! If you are trying to do everything for your business from taking care of day to day operations, to selling and marketing and also handling your own books despite not being qualified to do so, will create serious consequences. Multi-tasking in this manner takes you away your focus from core business. Eventually as you become more and more busy, the company hits rock bottom. How can you sincerely justify the amount of time you spend on doing tasks such as bookkeeping which can be outsourced at much cheaper rates? Your time is precious and should be spent on direct revenue generation activities. Moreover if you are not qualified to handle book in proper consistent manner, you are doing more harm than good for your business. The same rule applies when hiring a friend, neighbor or relative. Before you financial record gets too sloppy and messed up, you need to get professional help in place. Bookkeeping and accounting is too important to experiment and play around with.
2) Failing to use logical accounting structure and systems in place:
Use a proper accounting system to keep track of your payments and receipts. Issue all your checks in the correct sequence and do the same with sales receipts. This will make it easy for you – and the IRS, if necessary, to track all your accounting data.
Do not maintain your accounts in such a way that the IRS will have doubts about your business. The IRS will be much happier if you have maintained your accounts in such a way that your entries can be traced right to the source.
This is easier said than done. You need to become aware of the proper accounting chart/structure for your business type. For example don’t classify expenses basis vendor names, the list might get overly long and exhaustive, instead use types of expenses like telephone charges, electricity charges, fuel costs, employee costs etc. You cannot store all bills in disarray in a shoe box and pray for divine intervention. If you are not familiar with your industry specific chart of accounts, your best bet is to contact an accounting or bookkeeping professional who can help you out. They will help you answer the following questions: Is your chart of accounts structured to your business? Do you know your breakeven point? Can you distinguish between your direct variable costs and fixed overhead costs? Developing a well-structured chart of accounts is the first step toward providing you with such answers to elemental business questions.
3) Failure to use separate credit cards for business and personal expenses.
Use one set of credit cards for business-related expenses, such as those related to travel and purchases – and another set to make personal purchases such as eating out with your family. That way, you can check your credit card statements easily and file those related to your business in your office files.
Set up separate bank accounts in the same way. Issue checks related to your business only from your business account and make all personal payments from your personal account. Follow this system strictly to avoid any confusion come tax time. Also do not forget to prepare a bank reconciliation statement and cross check all your entries.
4) Failure to maintain consistent and regular filing system:
Another major mistake indulged by small business owners is not maintaining regular and systematic filing system. A proper filing system should be broken by receivables, payables, bank statements and tax records. Depending upon your business needs, you might also want to keep a set of file folders by job. A good file system works in tandem with your written policies and procedures. Your policies should state where records are filed, how many copies there are and for how long they are stored.
At year-end closing, the year’s non-permanent files should be bound together and archived in a safe location (usually a metal fire-proof cabinet or stored off-site). Keeping multiple years’ worth of receipts together in one file drawer leads to wasted time filing and retrieving records.
In addition annual archiving helps tremendously in the event of an audit or even a lawsuit.
5) Failing to use proper technological help:
There is an old saying “Time is Money”. Bearing this in mind small business owners need to get techno savvy and study the various software packages available that can do loads of tedious bookkeeping and accounting tasks in a jiffy. The benefits from selecting a right accounting software for you business includes:
· Generate reports and bank reconciliation statement saving overdraw expenses
· Get on demand customized reports
· Simple to prepare year-end tax note
· Automatic reminders on payments and receipts
· Automatic downloads on payroll, credit card and bank statements
Still it is shocking how many businesses do not enjoy the benefits of such software and still try to do bookkeeping manually in a disorganized manner. If you are unsure of which software will help you most, seek help from professionals. They will definitely council you to make the right choice.
6) Failing to have regular back-up systems in place:
Next costly mistake to avoid is not having a back-up system in place. Honestly there is no excuse for not having proper and regularized back-up of your online bookkeeping and accounting systems.
7) Failing to prepare proper bookkeeping procedures and accounting guidelines to be followed:
This is perhaps the most important task a small business owner MUST undertake but usually avoid. They feel they don’t have the time to frame written bookkeeping and accounting procedures and there business set up is too informal for such rules and regulations to be established. Trust me; this can really land your business in hot waters. How can there be accountability and responsibilities if the correct wireframe of policies and procedures are not in place? Proper accounting policies and procedures ensure consistency and eliminate confusion when processing transactions especially when in future you have more employees handling the same tasks and sharing jobs and responsibilities. This eliminates mistakes and fraud. Take time to draft well thought out procedures which help maintain checks and balances. Your policies should cover all future possibilities to make it effective with room for modifications and improvement as per increasing complexity of growing and evolving business.
If you use these tips, you will avoid the pitfalls that many small business owners fall into in the maintenance of their records. When it comes to bookkeeping and accounting, an ounce of prevention is worth a pound of cure!
About Author:
Satish Patel is the President of Analtyix Solutions (www.analytixsolutions.com) which is a fast growing back-office service company providing web-based bookkeeping and accounting, tax preparation and part-time CFO services. Patel has a degree in International Management from MS University in Baroda, India and a degree in Accounting from California State University at Fullerton, USA. He has 20 years practical experience as an entrepreneur, managing several small to mid-sized businesses has made him an expert in day to day operations, human resource, technology, marketing, financial and strategic management.

Categories
Finance & Capital

UK Tax Codes Explained

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UK tax codes are determined by HMRC, notified to employees and used by employers to calculate tax to be deducted from employee income. Inland Revenue tax codes explained as being made up of numbers or letters and usually both. When multiplied by 10 the number indicates the amount of tax free personal allowance the person is entitled to and the letter indicates the conditions which might be applicable to the UK tax code to enusre the correct Tax is calculated.
Virtually everyone in the UK is entitled to a personal allowance if they are resident in the UK which entitles them to tax free income, the amount of that tax free income being dependent on the size of the personal allowance according to the specific circumstances. Earnings above the tax free allowance are subject to the basic rate tax. The basic tax rate personal allowance was £5435 from 6 April 2008 and increased by £600 to £6,035 which effect from the first pay date after 7 September 2008. The original personal allowance tax code 543L being increased to new tax code 603L reflecting these changes to calculate tax at the new rate from 7 September 2008..
Basic rate tax for 2008 is 20 percent. For earnings above the higher income threshold which is £34.800 the basic rate tax increases to 40 per cent.
The personal allowance of people over 65 and up to 74 is £9,030 which is reduced if income exceeds £21,800 and people over 75 receive a personal allowance of £9,180 also reduced when income exceeds the £21,800 income threshold. The rate of tax allowance reduction is £1 for every £2 above the income threshold until the basic personal allowance is reached.
The number in the UK tax code is known as the prefix while the letter following that number is known as the suffix. Each suffix letter in the tax codes explained as a different meaning.
Letter L means eligible for the basic personal allowance and is also used for the emergency tax codes. Letter P is for people aged 65 to 74 and letter V for people aged 75 and over, while letter Y is also for people over 75 but who are eligible for the full personal allowance. A tax code with a suffix letter T indicates there may be issues that HMRC still need to review regarding the tax code and letter K indicates that the value of taxable benefits exceeds the personal allowance.
Where untaxed incomes, such as benefits, are received by the employee exceed the personal allowance a K code is issued by HMRC. The number following the letter K indicates the amount of benefits multiplied by 10 that are to be taxed in addition to the gross earnings received. This is achieved by adding the K code number multiplied by 10 to the gross earnings of the employee for income tax purposes.
Some Inland Revenue tax coding consists of just letters allowing the tax codes explained simply. The BR tax code means basic rate where the employee entire earnings are taxed at the basic tax rate. The BR tax code is often used when an employee has a second job and should also be applied by an employer who has not received a P45 or P46 for a new employee. The NT tax codes explained is that no tax is deducted from the employee so the basic rate tax does not apply..
HMRC are responsible for issuing tax codes and determine the Inland Revenue tax code by giving everyone the personal allowance, deducting any earnings where tax remains unpaid from the previous year and dividing the result by 10. Variations to this calculation are when other factors affect the tax code.
An emergency tax code is issued to calculate tax when the new tax code is not immediately available. That can occur when the employee does not have a P45 or completes a P46. The emergency tax code 543L is replaced with the new tax code 603L from 7 September 2008 which is the basic tax allowance but is also applied on a week one or month one basis. A week one or month one basis means the employer will calculate tax to be deducted for each pay period and not on a cumulative basis which in effect prevents tax refunds until a confirmed tax code is received to replace the emergency tax code..
It is important for employers to use the correct UK tax code in the PAYE system which is stated on the P45 an employee presents to the new employer when starting employment to deduct the correct rate of tax. If the new employee does not have a P45 for the current financial year then the employer should request the employee complete a P46. The P46 is sent to HMRC who then review the tax coding and issue an appropriate tax code for the employer to use.
The personal allowance usually changes each new tax year and the old Inland Revenue tax codes from the previous year can be used for the first few weeks of the year and replaced with the new tax code in week 7. The rate of tax deducted if the previous year personal tax allowance has been increased is common and the employee receives a tax refund when the new tax code is applied. When the new tax code is known from the start of the new tax year the tax coding can be applied from week one and as the correct tax has been deducted no refund is due.
TerryCartwrightPhoto.JPGTerry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.

Categories
Starting Up

10 Tips to a Well-Funded Business

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Article Contributed by Stan Spector
This may absolutely, positively be the best time to start a well-funded business if you can take advantage of these 10 factors.
1. Equipment
In many business sectors, large numbers of business are going out of business, declaring bankruptcy or downsizing. Much of the equipment from these businesses is available for pennies on the dollar if you look to purchase used equipment.
2. Customers
Many businesses are going out of business and their customer will need a new supplier. These customers are up for grabs if you can find them quickly. Hiring a sales representative from one of those companies that are closing can help you find their clients and get them to your business.
3. No Financing
Most of the companies in financial distress may rely on short-term borrowing to stock their business for the peak season, such as Christmas sales. Many will not get the credit they did in past years. So a well-funded, new business with a business model that doesn’t require borrowing every year will get a boost in these tough times.
4. Rent
Many commercial landlords are having problems keeping their property filled. You can negotiate better rents now than you have been able in many years and you can lock up long-term leases that are less expensive than your competitions. This will reduce your fixed expenses. Negotiate, negotiate, negotiate.
5. Staffing
Existing competitors have too many employees for the reduced business they have now. It is hard for them to cut loyal staff and they keep the staff on long after they can financially justify their pay. You are starting your company so are probably understaffed for the work you have. Keep it understaffed until the business grows.
6. Employees
It is hard for an existing company to reduce pay to workers that they have employ for many years. You can hire new employees that have been laid off from your competition for many months that are now desperate for a job at less than they were making before.
7. Credit
Clients now expect to be scrutinized and expect to provide a lot of private information, and possibly personal guarantees, to get new credit from suppliers. Every businessperson knows the “no doc(ument)” credit is done. Your existing competitors can’t recheck their customers credit or tighten their terms without upsetting the client. You can do this as a new supplier and possibly charge a higher price (or offer less of a discount) for clients who are desperate for credit.
8. Sector
Focus Most business have sectors of customers that are still doing fine while other customer sectors are failing. You can focus on the good sector with your products or services and avoid the deadbeat sectors that will stick you with bad debt.
9. Low
Overhead Low pricing will dominate the customer’s decisions when they consider buying from you. If you can cut the overhead by the preceding ideas, you can offer lower pricing under similar terms as your competitors and get the sales.
10. Attitude
Negative employee attitudes go hand-in-hand with struggling companies. The customers sense this and look for suppliers that have good attitudes and more pleasant customer service representatives. Even if you hire ex-employees of these failing companies, their attitude can change overnight if they are now working for a well-funded company.

StanSpectorPhoto.jpgStan Spector is the author of “Baby Boomers’ Official Guide to Retirement Income – Over 100 Part-time or Seasonal Businesses for the New Retiree”. The book’s website can be found at StanSpector.com.

Categories
People & Relationships

It’s All About Building Relationships


People buy from those they know and trust. Nowhere is this more true than on the Internet, where you may never even meet anyone in person. Establishing a trust relationship with your potential online clients takes time, but it is well worth the effort!
Think about the last time you bought a product or service online, that had a substantial positive impact on your work or life in some way. If you were spending a good chunk of change (and perhaps investing a good bit of your time) on that purchase, chances are you did some research first: reading online forums and reviews to see what others had to say about them; contacting them directly with questions and observing how quick and helpful (and polite) their response was; maybe even buying a smaller product or service from them first. All to determine if you could trust this online business to deliver what they promise.
Your potential online clients are no different! They are going to want to know if they can trust you to deliver, too. Here are three specific ways you can work on building trust relationships online, and how each will help your business:
1. Get to know your customers. This helps you more deeply understand what it is they need — making it a lot easier to tell them how what you are selling is going to meet their needs. Find out where they “hang” out, on discussion forums, social networks, etc., and get involved. Don’t just schmooze or try to sell your product right then and there — instead, add value to the conversation. If you are doing it right, you’ll be doing a whole lot more listening than talking.
2. Connect with your customer on a personal level. Let them see you as a person, one who has some things in common with them. People will trust you, and ultimately buy from you, if they feel you are like them. This means being sincere and transparent — not pretending or making something up. If you can’t make that trust connection with one particular person, don’t force it — move on to someone else.
3. Keep up the trust relationship. The relationship doesn’t stop after the sale! Clients who know and like you, and have benefitted from what you have sold them, will tell others about you! It will be easy for them to recommend you because they are recommending a trusted vendor, not an impersonal business or product. If you’ve done a good job of providing them with something that makes their job or life easier, they won’t be able to wait to tell someone else!

TerriZwierzynskiPhoto.jpgTerri Zwierzynski is a self-employed business strategist and marketing consultant to solo entrepreneurs, and a grassroots promoter of the solo entrepreneur lifestyle. She runs Solo-E.com, the resource website for the self-employed which attracts thousands of solo home business owners monthly from over 100 countries on six continents (and was recently named a finalist for “Website of the Year” in the 4th Annual Stevie® Awards for Women in Business). Terri is also the co-author of 136 Ways To Market Your Small or Solo Business.