A colleague told me yesterday that a mutual client has called him by mistake, when they were trying to get hold of me. As the client launched into a detailed explanation of their challenges and voicing their ideas, he hadn’t been able to explain that they had dialled a wrong number until after a few minutes.

The thought crossed my colleague’s mind that the problem the client was describing might be something he could help them with. But on reflection he knew he had to stop the conversation and direct the call to the right person.

My colleague and I chatted about how important it was that the right person helps at the right time. The “presenting problem” is rarely the real issue. As a business consultant/coach, my role is to find the heart of the real issue, and to help suggest and implement some solutions. Sometimes it’s gut instinct, sometimes it’s noticing particular words, sometimes it’s just about asking the right questions.

Consultants are sometimes accused of borrowing your watch and then charging you to tell you the time. But if your problem is that you don’t know how to tell the time, then asking a consultant for help seems like a good idea to me.

Life is difficult, and there are enough challenges for each of us without having to feel like we must do everything on our own. Asking for help from the right person at the right time can sometimes be the difference between success and failure.

Who is harder to please, trustees or shareholders?

There is a perception that professionals in the public or third sector are not up to the demand of the private sector. The cut and thrust of commercial life, with private equity funding, hard nosed corporate deals, and focus on the bottom line is thought of as a tougher environment than the soft, touchy feely world of charities and public services.

I beg to differ.

Having worked in both sectors, I can happily state the obvious, that they are different. Beyond that, the range of stakeholders in a third sector organisation requires more than attention to profit and shareholder return. Financial sustainability is key to every organisation, but so are the people.

The single minded pursuit of profit in a commercial business is sweetened by the financial rewards that individuals are offered. The third sector has long realised that such incentives can be offset by greater flexibility, offering a quality of life, and recognition of the difference that each person makes.

Those who lead commercial organisations usually do so with a combination of the carrot and the stick. As an employee, this simplifies the relationship. In an organisation that is led by passion, profit is not enough to be deemed a success.

A shareholder’s primary duty of care is their financial return, a board of trustees asks for far more than that. Trustees are quite rightly harder to please. The commercial world could learn a lot from them.

This seems like a simple question. However, particularly at this time of year as they submit their tax return, many people find out that what they thought was a business expenses, isn’t.

The answer to the question is not defined by you, but by the tax office.

Take your telephone bill as an example. The tax office is happy to accept a telephone bill, even a mobile phone bill, as a business expense if you are a limited company, but not if you are self employed. If you are self employed and have a mobile phone, the tax man will assume that the contract is mainly for personal use. To prove your business use you need an itemised phone bill and details of which calls were for business, and which were personal.

Another area that often causes confusion is food and drinks (entertaining). Meals and drinks bought by a limited company can usually be called a business expense, but only very rarely if you are self employed.

If you are unsure about what is or isn’t a business expense, ask a professional, and then make sure that you understand what they tell you. I heard a story recently about someone who thought they knew what was allowed, only to find that their accountant had disallowed some items on their tax return (and not told them).

The logic behind the tax office’s decision on what is (and isn’t) a business expense may be archaic or confusing, but when the tax man knocks on your door and asks to see your accounts, the argument becomes irrelevant, as all that matters is the law.

If you would like to know more, or have questions, please ask.

As you will have seen on the news, the rate of VAT in the UK is to change from 17.5% to 20%.

VAT is an amount added by the supplier of most goods and services to what they sell, and which they must by law pay to the government. As individuals are usually not VAT registered, what we buy includes VAT, and is not reclaimable as it is to most businesses.

Offers by shops to cover the rise in VAT mean that they keep the sale price the same, but reduce the amount they get to keep after deducting the VAT they owe to the government. For example, if you buy a sofa before the increase for £500.00, the VAT due by the seller is £74.47; after the increase, the seller has to pay £83.33 to the government, meaning they are £8.87 worse off.

To most of us, the increase will mean very little, as the impact of adding 2.5% to the cost of a purchase is pretty small. For example, assuming no other changes to its price, an item costing £100.00 in the shop will be re-priced at £102.13. To incur, say, an extra £20.00 per month as a direct result of the extra VAT would mean you were spending £940 per month.

As an individual, it’s doubtful you will feel a financial impact from this change.

So although an increase from 17.5% to 20% sounds a lot, the only real winner will be the government. Some things never change.

I read a report today that said we should have a cash reserve of about 6 months spending, “just in case”.

Money is a resource, a tool that makes things happen. Putting it in the bank is the same as giving it to the bank to let them do with it what they want to do. I am not saying we shouldn’t be putting some money to one side “just in case”, but I would rather the money is working for you, not someone else.

So how do you get money to work for you? There are many ways, depending on how risk averse you are, how quickly you want access to it, and how long you are prepared to invest it. Putting it in the bank represents the lowest risk, and the lowest return, investing it in stocks and shares is high risk, potentially high return. So what is in the middle? As a self employed person, I am always thinking of ways to improve my business and will invest in things that make me better. This might mean training, courses, attending meetings, or simply spending time with those who have wisdom to share.

By being better at what I do, I hope that the chances of needing a cash sum “just in case” are reduced.

It’s nice to know that there is money in the bank, but I can’t take it with me, and I would rather use it wisely while I can.

I was late arriving for a meeting a couple of weeks ago. I needed to park in a metered space, and pay with coins. I hadn’t got enough change to cover the time I needed to pay for. Trying to keep calm, I started to look around for somewhere to get change for a £10 note. The concierge of a local hotel, realising my predicament gave me a £1 coin, enough to enable me to park and make my meeting with seconds to spare.

Since then, I have given away £1 coins three times to complete strangers in a similar situation to myself. I have also found myself thinking more about giving more away than I might usually do while talking to potential clients.

Something in the actions of the concierge has encouraged me to become more generous. At the same time, I have seen an increase in the amount of goodwill I have received. By being more open and giving, I have received more. More information, more support, and, ultimately more business.

In today’s cut and thrust world, it is easy to become focussed on ourselves and our own interests. It is harder to collaborate than act unilaterally, harder to give than receive, and harder to be open than keep your own counsel.

The evidence I have seen in the last couple of weeks suggests that the effort is well worth while. At worst, you might be out of pocket by £1, is that so bad considering the potential benefit?

Most businesses operate with very little money in the bank. Some just operate perpetually on an overdraft, or with just enough to keep the bank manager happy.

To some, this is “situation normal”, and many organisations exist in this financially precarious state for months and even years. Having very little money is not a crime, nor is it always a sign of instability. Money in the bank is only working for the bank, think about what you could be doing with your cash to further your own business goals.

But when it happens to you for the first time, or if you walk into a role, or organisation, in a position of responsibility for the first time it can seem a frightening situation. Questions like “Will we be able to pay our staff”, “How can I please the screaming creditors”, or “The bank manager might pull the plug”, can keep even the strongest of us awake at night.

The first thing to do is not panic. Knee jerk reactions might further de-stabilise the organisation and, at worst, tip you over the edge.
Work out who owes you money. Chase it, hard.
Work out who you owe money to. I suggest you are open and honest with them. I would rather be thought of as a “slow payer”, than a “no payer”.
Take control – write down your realistic financial goals. Then write down what you need to do to achieve them. Then start doing those things.

Perhaps the best advice is to talk with someone who has been in that situation themselves (and survived!). It might not immediately solve your problem, but you might gain some strength, insight, and develop some tactics to help you pull through.

Sitting as a board member recently, I was struck by a report I was reading. It was detailed and accurate, telling me (at length) what had been going on, what the various activities undertaken had been, and who had been involved. As I read it, a single question emerged in my mind, “So what?”.

It wasn’t a criticism of what had happened, clearly it had all been a great success, but it told me nothing about what it all meant about the future. As a board member, I am expected to discuss policy and strategy. I often describe the ideal place for a board to be as 1 mile above the organisation, and 5 miles out in front. This enables a board to set an appropriate strategic direction for the organisation to travel.

The report I read was telling me that where the organisation had been was spot on. But it gave me little indication of what that meant about the future. Had we been too pessimistic about our goals perhaps? Was there anything to learn from what had happened that should suggest we move in a different direction, or to new fields of work? I felt like we were being asked to drive a car using the rear view mirror to help us navigate.

When composing a report, I apply the 20:80 rule. The first 20% of a report should be about the past, telling the reader about what happened, the good, the bad, and the ugly facts. The remaining 80% should be future focussed, answering the question “So what?”. This is not as easy as it sounds, but makes for a far more informative and useful document on which to base strategic decisions.

I am often asked this question, usually by people who have a natural scepticism about the subject, or who believe that “social media” is something their teenage children do in their bedroom.

I firmly believe that social media does work for business. However, like most things in life, it really depends on how you use it, and for what purpose.

There are many definitions of what Social Media is, one of my favourites is that it is “a fusion of sociology and technology; transforming monologues into dialogues, and is the democratization of information, transforming people from content readers into publishers.”

I believe that Social Media works when the medium is used to reach out to individuals, and encourages them to engage with the message. Telling people what you had for lunch doesn’t usually do this, but passing on a link to some interesting and informative nugget of news or information probably will.

Using Social Media doesn’t have to take long – this blog has taken me about 15 minutes to write. Sharing your experience and information via Twitter or Facebook can take even less time. The possibilities of what might happen to your message, and how that might benefit your business is what makes Social Media so potentially powerful.

Social Media is rapidly replacing newspapers as a means of communication, and shares many of its characteristics. Some people read newspapers for the sport, some for the coffee break puzzles, some for the gossip; some cut coupons and look for adverts about local shop sales. Social Media does all this and more.

The question isn’t “Can Social Media be of any use to business”, but how.

Many years ago I read a story, in which a traveller asks for help finding Dave’s Bar. The local man replies after some thought, “Well, I wouldn’t start from here”.

I have had a number of meetings recently in which the subject of how best to report on financial and business performance has been debated. Traditionally, detailed reports are presented giving chapter and verse on past activity, explaining why the results are what they were, and how the variance between budget and actual is accounted for.

All this is fine, but it leaves me asking the same question, “So what?” You know (I hope) where you want to go, so given where you are now (and it may not be where you wanted or expected to be), how are you going to get to Dave’s Bar?

I suggest that reports should spend no more than 20% on historical analysis, noting key events and any exceptional activities, and the remaining 80% on what you will be doing differently as a result of what has been learned, and what impact these changes will have on your forecast.

By reporting more on the future than the past, and incorporating lessons learnt as you go, you dramatically reduce the chances of being caught out.

This should spell the end of the traditional annual budget, and the start of regular reforecasting. Yes, it’s interesting to know how we got here, but of paramount importance is to know how we are going get from where we are now, to where we want to go, even if it’s only to Dave’s Bar.