I was asked to give my point of view on a local radio programme today, regarding the latest government statistics about the increase in the amount of time the average employee spends at work. The argument was that the average worker in the UK works harder than their EU counterparts.

To me, the statistic says we are working longer, not harder. To be working harder, the statistic would be about output, results, even job satisfaction; not about how long we sit at our desks.

As a freelancer, I am always conscious about how I am valued. I have learnt that my value is assessed first and foremost by whether I get the job done. How long I will take, or how much I will charge is a secondary issue. If I do the job well, but take longer to do it than is really necessary just makes me more expensive, not better. Who do you know that would pay for unnecessary hours, or for poor quality?

And yet, that is what many employers do. They pay workers to be at their desks, measuring their contribution in time and cost, not quality. This charade is also played by employees, who are willing to put in extra time at work for free, perhaps hoping that this show of commitment secures their place in the company.

Do you value each employee by their cost, by how much time they spend at work, or by what they do for you?

HMRC really doesn’t mess about:

If you miss the Self Assessment filing deadline you will be immediately liable for a £100 late filing penalty. The penalty will apply even if there is no liability, or if any tax due is paid in full by 31 January 2012.

These new penalties will apply to all Self Assessment tax returns from 2010-11 onwards. The fixed £100 penalty for failing to file a tax return on or before the filing date will therefore apply to:
• paper returns received on or after 1 November 2011.
• online returns received on or after 1 February 2012.
Daily penalties of £10 per day will also take effect if the tax return is still outstanding three months after the filing date. So if you file a paper return after 31 October 2011, you will be liable to a daily penalty on 1 February 2012 – that’s three months earlier than online filers. All the more reason to file your tax return online.

http://www.hmrc.gov.uk/sa/deadlines-penalties.htm#3

It’s not often that there is good news regarding funding for training and development, so this is worth shouting about!

If you have been in business for at least 12 months, have between 2 and 249 employees, and want your business to do better, then read on…

The Skills Funding Agency is offering grants to help leaders of eligible organisations to pay for training and development to help their businesses grow. The grant will pay for 50% of approved training (excluding VAT) up to £1,000. For example, if the training costs £1,000 plus VAT, you can claim back £500. If the solution costs £2,500 plus VAT, you can claim back £1,000.

Solutions need to be linked to one or more of the following:

1. Developing a highly effective personal leadership and management style,
2. Creating an effective business culture,
3. Planning and developing your business and its teams, or
4. Building high performance across your business.

These are quite broad headings, and I would be surprised if you can’t think of something you would like to improve that doesn’t fits into this criteria.

For more information, or a no-obligation chat, call me on 07913 895798 or email me on edhart@yourfbs.co.uk today!

I was weighing up some options for a client over the weekend. They are worried about what might happen if a plan didn’t work.

It got me thinking. What was the worst thing that could happen? If the plan didn’t work, there was still a business, a reputation, and a lot of goodwill. Life might not be easy, but life would carry on.

When starting a business, it is essential to know what your bottom line is. If the idea doesn’t work, when is the right time to walk away, or change the plan?

To some, running a small business is almost a hobby – the impact of financial failure is minimal due to other streams of income (for example a partner’s salary). But if the consequences of failure are more material (no money to pay the rent, buy petrol, or eat), then knowing when enough is enough starts to seem sensible.

Motivation to succeed is often fuelled by an appreciation of the consequences of failure.

In the same way that success can be measured in terms other than pounds in the bank, so can failure. Working out what you want, or what you don’t want to lose, is harder than you think when you start to think beyond the bank balance.

I am not suggesting that businesses should always worry about the worst case scenario, but I would suggest that having the option to quit while still ahead is better than the alternative.

So, having identified the worst case scenario, now it’s time to focus on the positives, aim high, and succeed!

I discovered an interesting economic indicator recently, the Skip Index. I have blogged before about one unusual way of judging how buoyant the local economy is, by counting cranes on the skyline (http://www.yourfbs.co.uk/what-does-economic-recovery-look-like/ ), now there is another method that doesn’t require a strained neck gazing upwards – counting skips on the road in your neighbourhood.

The principle is very simple; skips provide evidence of optimism and investment. A skip represents financial activity. This activity might be a new bathroom, a landscaped garden, a new driveway, or the installation of double glazing. The one thing these all have in common is evidence of disposable income being spent.

So, how many skips make an economic recovery? I guess that depends on the area you are looking at. It might be an area, a long road, or the whole village. Like cranes on the skyline of a city, skips come and go, but there presence is a sign of economic hope.

I wonder how many skips the Bank of England’s Monetary Policy Committee see on their way to work…

I met a prospective client a couple of days ago. He is starting a business based on his many years experience and contacts in his specialist field. We met on the basis that he needed an accountant, and could I help?

The word Accountant has become a much overused description of someone who provides financial assistance to a business. Calling yourself an Accountant implies expertise in a wide range of disciplines:

• Bookkeeper
• Payroll
• Management Accountant
• Finance Director
• Auditor
• Actuary
• Treasury (Investments)
• Business Tax (Corporation, CGT, VAT)
• Personal Tax (NI, PAYE)
• Pensions

I believe that every business needs all of the above, just not necessarily all at once, or all the time. When choosing someone to be your “Accountant”, are you paying for all the above services “just in case”, or being quite precise about what kind of support you need?

If you manage your business well, you will be able to select when and who provides you with “Bookkeeping” (needed on a regular basis) separately from your “Auditor” (only needed once a year); be able to pay for “Tax” or “Investment” advice only when you need it. You should ask for general support and guidance from a “Finance Director” only as and when you need to.

The various functions of Accountancy can (and often are) outsourced. Accountancy is a big pool with all sorts of fish in it. As a business owner you should dip into the pool only for what you need, when you need it.

Does my prospective client need an Accountant? No. His needs are far more subtle and demanding than a generalist. Are yours?

Ok, so fuel goes down by a penny at 6pm. It’s still expensive. On the plus side, as an employee I will be able to claim 45p per mile from my employer fro the first 10,000 miles I drive. If I own the business, I might not feel so great about parting with up to £500 per employee…

Then again, as a business, I have some good news, the VAT threshold is now at £73k, and corporation tax is reducing (unless you are already an SME, and already only paying 20%, in which case there is no change).

Tax avoidance measures are being ramped up – the government is looking to pull in an extra £1billion more per year in “lost” revenue. If you are avoiding paying tax, make sure its legitimate!

My personal tax allowance is going up by £630 per year, but not until April 2012.

The bigger picture is a mixed bag. Growth is still growth, but only just. To help kick start regions that are really struggling, Enterprise Zones have been established. At first glance they may have some attractive strengths: potentially 100% rate relief if you move into the region, and the promise of super-fast broadband.

As expected, the squeeze on public spending continues, with council taxes frozen, or reduced.

To my mind, and as a small business myself, all the above suggests one thing, opportunity. As a chair of governors of a local school, I have already received the first of what I expect to be many approaches from a private company, this time selling expertise that was previously provided free of charge by the Local Authority.

The world hasn’t stopped, its changing direction. Which way are you pointing?

Ahead of the budget, here is a prediction: in the next 6 months, either inflation will go up, or interest rates will go up, or they both will go up.

The challenge therefore is not to second guess what is going to happen, but what you are going to do about the inevitable increases.

At the start of the recession, interest rates tumbled to their lowest level in living memory. To remind yourself what it was like, work out what the additional cost of an increase of 1% on your borrowings would be. Now multiply that by 4 or 5. That is how much better off you are at the moment, and how much you will need to find again when interest rates go up.

In the mean time, inflation is creeping up. No change there. However, pay awards are being held flat or low. Certainly lower than inflation.

My real prediction is that life could be a lot worse.

I had a conversation today with someone about pensions. Now I am not a personal financial advisor, and I gave no advice, but it did make me think about what I do do.

I have been taught that a good Finance Director knows everything, and that a really good one will get everyone else to do it for him (or her). I am not so sure any more. I think a good Finance Director knows how to find out everything he doesn’t know, and that a really good one will help others to do the best they can. After all, a really good Finance Director knows the financial situation, has a good idea of the aims of the business, and a pretty good idea of what every department is trying to achieve. I agree that generally it is up to others to make things happen.

More than any other department, Finance is judged by a very simple metric, is the business performing as well as it can. It’s existance is not about sales, or marketing, or brand awareness; and yet a good Finance Director is assessed on how well the business as a whole is doing.

So what has this to do with pensions? Well, it reminded me that I don’t know everything about pensions, but I do know the questions to ask to ensure the business is compliant. I also know what to ask to see what plans the business has in place to make the most of its staff and goals to see if it is as successful as it can be.

A good Finance Director is good with numbers; a really good one knows what questions to ask. How good your business is depends on how well you can answer the questions.

In life and business there are three basic tensions, Cost, Time, and Quality. Is it possible to achieve high quality, at low cost, in a short period of time? Probably not, so if you see an opportunity that promises this, it is probably hiding something.

• To reduce cost usually requires a reduction in quality, or a longer timescale.
• To reduce the timescale usually requires an increase in cost, or a reduction in quality.
• To improve quality usually requires an increase in cost, or a longer timescale.

So what is the best way to balance these?

I would suggest that you start with identifying what you can’t change. For example, do you have a fixed budget, a timescale that can’t be changed, or an expected level of quality? And start there. Once you have a starting point, your options become clearer.

You can generally agree on two of the three factors, and have to accept the third. You want it high quality and now? You may have to pay for it… You want it now and cheap? You may need to accept low quality…

If you are challenged on why the cost is so high, the timescale too long, or the quality not up to standard, think about what you can do to one of the other two factors.