Steven Mugglestone

The more I learn, the less I know

Posts Tagged ‘Entrepreneurs

Young Enterprise Impress Again!!

leave a comment »

……which is why we support Young Enterprise and Young Entrepreneurs

For another year, I had the absolute honour and privilege to join the judging panel for the West Midlands finals of Young Enterprise 2012, held in the Great Hall at Birmingham University, having been included on the judging panel for 2011.  The winners having already sold their innovative laser cut vinyl album clocks to a trade fair in Switzerland.  There is the obvious saying about selling coal to Newcastle, but these young entrepreneurs from the Black Country actually sold clocks to the Swiss.

For those who have never heard of or seen any of the great work they do, check out their website at Young Enterprise and you will see how this charity seeks to inspire young people throughout the UK, to set up and run their own businesses over the course of nearly a year, being mentored and supported by teachers and voluntary business advisers.  From their establishment in 1963, Young Enterprise, have continued to forge relationships between education and the business community and have been responsible for inspiring thousands of young entrepreneurs.  It is also part of the global Junior Achievement Worldwide organisation, helping to reach 9.7million students across 123 countries.

Six young businesses reached the West Midlands finals, having won their respective local regional events.  Their businesses, whilst very much commercial and making profits, also touched upon strong current themes of social enterprise, recycling and the environment, retro designs and multicultural education.  The winners go on to the UK finals in London, where the standard of business ideas and development will be astounding to anyone who has not already been involved in what Young Enterprise does.

All the positives and excitement
The really great thing about the young entrepreneurs who take part in this journey from business novice to budding entrepreneur is that it always reminds me about what is so good about developing businesses.  All of the positive energy, the bright ideas, the sheer enthusiasm, the innovative ways of reaching markets and building contacts, the reward of seeing something develop and a business grow is all there.  What are not there are the egos, the cynicism, the blame culture, the negatives, the traits you see time and time again on the likes of The Apprentice (and unfortunately in the grown up business world as well), which is also the reason that I prefer to watch Young Apprentice as all of these positives are so obviously illustrated in that program as well.  Young entrepreneurs take the challenges as they are, challenges, and deal with them creatively and positively.  This was in abundance with all of the business teams on show at Birmingham University.

It’s a serious competition
It is no doubt that Young Enterprise is a serious competition as well.  The teams are judged on innovation, product development, their overall business report, their financial reporting, questioning from meeting with them at their trade stand, their slick Powerpoint presentations to a large audience and their creative advertising media and branding.  They are supported and mentored by both teachers from their schools and colleges as well as voluntary business advisers helping support and develop Young Enterprise and the young entrepreneurs themselves.

It was also interesting to be made aware of the gritty competitiveness of the advisers and teachers, in a way that is similar to the TV program Glee, in that they all seek to polish their performances and maximise every area of the judging criteria.

Interesting and completely relevant all of this is, what becomes apparent is that the judges actually judge and choose the overall winner as if they are a real business, which in essence they very much are.  My judging panel included fellow judges who were part of HSBC Bank, University product development experts, social media and branding advisers, past winners and representatives of the Federation of Small Business.  Discussions and the overall selection of the winner centred very much on the belief that this was the best credible business, that not only had a real chance of future commercial success, but one that the judges themselves would be willing to invest in, which is how it should be.  It may be a competition for young minds, but the business ideas and potential were very much real.

It always inspires us to help young entrepreneurs further
Young Enterprise serves as a reminder as to how business can inspire and give opportunities to a wide number of young people from all areas of society and not just the privileged few.  It also reminds us that the future of UK Plc very much depends on the young entrepreneurs of today and tomorrow, which is a key reason why we continue to help, support and mentor young entrepreneurs who approach ourselves for support and business advice.  Our own belief that the local, regional and UK economy as a whole, depends on the continued development of young entrepreneurs and we as a business set ourselves very much as a part of that positive approach.  Judging by the standard of young entrepreneurs on display in Birmingham, UK Plc does have a positive future and so do all of them.

As for Young Enterprise, long may it continue to do the great work that it does, but it is a charity and does require financial support as well as the voluntary support of mentors, advisers and even judges.  I would recommend everyone to visit their website, Young Enterprise, and get involved in whatever way you can.

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317      T: 0115 9415193
Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.


Written by Steven Mugglestone

June 25, 2012 at 12:57 pm

McGregors join up with Senior Entrepreneurial Tax Consultants

leave a comment »

McGregors join up with Senior Entrepreneurial Tax Consultants

McGregors Corporate, the independent firm of Chartered Accountants and Business Advisers, have agreed a consultancy contract with The Ironbridge Tax Consultancy Limited and its managing director, Keith Richards, to add to the firms tax support for Nottingham and Leicester.

Mr Richards is formerly a tax director for RSM Tenon and Grant Thornton and is well known amongst the business communities of Nottingham and Leicester.

McGregors Corporate who recently started to operate in Leicester, have already built a senior team with partners from the likes of Grant Thornton and PKF, together with a mix of former finance directors, are looking to establish themselves as an independent alternative to the large accountancy firms in Leicestershire and Nottinghamshire.

Director, Steven Mugglestone, said, “I am certainly extremely pleased to be working with Keith and his company in helping us support our clients and building our presence in Leicester and Nottingham.  Keith has significant tax advisory experience within the SME sector, as well as helping individuals with all aspects of their personal tax planning and we see our relationship with his company as providing a huge benefit to both of us, together with both of our respective client bases as well as potential future clients. We are also very keen on building on the success that we are achieving in winning new clients in the Leicestershire area and establishing our practice in the city.”

Keith Richards of Ironbridge continued, “Ironbridge has agreed a working relationship with McGregors, as we see them as a really good fit of pro-active and experienced business advisers and accountants.  All of their directors have worked with the same types of growing owner-managed businesses as we have and our outlook and approach are very similar.  I think that together, we can help support many clients and I am certainly looking forward to working with Steven and his team in the Nottingham and Leicester areas.”

McGregors are a full service firm of Chartered Accountants and business advisers, providing a varied range of services to SME businesses in the Midlands region.

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317    T:0115 9415193

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.


Written by Steven Mugglestone

June 15, 2012 at 10:08 am

Top Tax Tips for 2012, without moving to Switzerland

leave a comment »

Top Tax Tips for 2012, without moving to Switzerland

We often get asked, “How can we save tax, without looking at any complicated stuff, and we do not want to move to Switzerland.”  We have, therefore, put a short but perfectly constructed list together of easy and straightforward things for all SME business to consider before 31 March 2012, and maybe beyond, depending on George Osborne.  It is not easy to say, but these are our top tax tips for 2012.

We, of course, can help you with any of these areas:

 “The tax relief that time forgot”: We have said it before, Click:, Research & Development Tax Credit Relief is potentially available to businesses involved in most technological or scientific advancements. This is a 200% relief, with SMEs getting £2 tax relief for every £1 spent on qualifying R&D spend.  This is, therefore, one of the most valuable tax reliefs available to businesses today.

“The Return of Entrepreneurs Relief”: another valuable tax relief which can save entrepreneurs up to £1.8m of tax as part of the sale of a qualifying business or asset. Business owners should check with their advisers whether they can claim for any of the many reliefs that are available to them.

“How green is your transport”: We have said this before as well: Click:, using ‘green’ company cars with low CO² emissions as well as bikes, can result in a saving on tax. Many car manufacturers are now rising to the challenge of the increased demand for green cars and there are a variety of ‘executive’ and even ‘prestige’ cars which have low emissions.
“Trust the Carbon Trust”; the Carbon Trust oversees a list of ‘green’ equipment for which businesses can claim Enhanced Capital Allowances. This includes low CO² emissions machines, screens for refrigerated cabinets, solar collection systems to heat water, and more recently, washroom hand dryers. The advantage of buying this equipment is that, subject to limits on Capital Allowances, the cost qualifies for full tax deduction against profits.

“The Final Countdown for First Year Allowances”; Buy machinery before April so businesses can claim Capital Allowances when purchasing qualifying items of plant and machinery. Subject to certain conditions, full tax relief can be obtained on purchases up to £100,000. But watch out because from April this year, the allowance is to be reduced to £25,000, so business owners need to consider the timing and may need to buy now or pay more tax later.

Maximise property capital allowance claims: from April, new provisions will be introduced to restrict claiming Capital Allowances on the acquisition of second hand buildings. This means that property owners should consider whether they have claimed everything they can on property acquisitions prior to this date. Those considering purchasing a new property should seek advice regarding the timing of this.

VAT moves from paper to online: from April all businesses will have to submit their VAT returns online and pay their VAT liability electronically. Any businesses not yet filing their VAT returns will need to register for online filing as soon as possible. While we’re on the subject, don’t forget that from this year an automatic penalty of £100 will be automatically issued if a tax return is filed late, and this will apply regardless of whether there is tax to pay or the tax due has been paid on time. Swap salary for benefits and a bike: this is becoming increasingly attractive for the majority of businesses struggling to give their staff a pay rise.  Employees can look to exchange part of their salary in exchange for a benefit which can result in tax and NI savings. This arrangement is available for a wide range of benefits from pensions to cycle to work schemes, again mention at: Click:

The new kid on the block…. Seed Enterprise Investment Scheme – April 2012 sees the relaxation of the conditions for companies to qualify for Enterprise Investment Scheme EIS status as well as the introduction of the Seed Enterprise Investment Scheme (SEIS).  Businesses should find it easier to raise finance in the future. Business owners can speak to us now to review their funding requirements and the qualifying criteria so that they are ready to act in April.

Watch this space as further things develop.  Also, if you do want to look at Switzerland …………

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

Written by Steven Mugglestone

January 23, 2012 at 7:59 pm

Business Turnaround, a Dark Art or Common Sense and a Proper Business Plan

leave a comment »

Business Turnaround, a Dark Art or Common Sense and a Proper Business Plan

More than half of Britain’s small businesses collapse because of cash-flow problems. The UK Insolvency Service sites 65 common reasons why businesses fail.  Many advisers and “experts” publish lists of a number of reasons, seven being a common number, unlucky for the failed business, with clearly a prize and first place going to the Insolvency Service at 65, clearly retired exhausted after then.

We like to keep things simple as this helps us and our clients, but we believe that the success of a business (and therefore the failure of a business) is down to one area (ok, poetic license as it is a related area), cash flow problems due to the lack of a real plan and system of control (i.e. the area that an experienced business orientated FD is good at).

Looking at seven common reasons why businesses fail, it points to the same cause and solution:

  • Business started for the wrong reasons and to try and make money quickly (lack of a real plan and system of control)
  • Poor management and lack of management (lack of a real plan and system of control)
  • Lack of capital (lack of a real plan and system of control)
  • Poor location and marketing (lack of a real plan and system of control)
  • Lack of planning (lack of a real plan and system of control)
  • Over-expansion (lack of a real plan and system of control)
  • No website (lack of a real plan and system of control)

No apologies for labelling the point but all FDs would say the same thing, lack of cash caused by a lack of a real plan and system of control and improvement.  Other recent articles that we have read with interest now refer to zombie businesses and that pretty much sums it up, a re-animated corpse, with no mind of its own; no control of its own; in fact control lies with others; never learning and never changing. In fact a favourite observation of ours is the common lesson for most areas of human behaviour; “If you do the same thing that you have always done, you will always get the same result.”  This is as important to businesses as anything else.  In fact in business, if you do the same thing that you have always done, it is likely that the future results will be worse than before.  We do recognise that many also say; “If it’s not broke then don’t fix it,” but this is also ignoring both normal wear and tear and inevitable depreciation.

Speaking to and working with people who have experienced or been a part of a business failure (and those of us that have seen, have worked with and have been a part of successful turnarounds), there are a range of views and emotions, noting the lack of support from interested parties such as banks, other lenders and major creditors, but in the vast majority of these, there is a common issue, lack of a real plan, lack of innovation and change, lack of a system of control which leads to a cash flow crisis.  In fact the references to lack of support from the bank, when explored further, usually uncover a situation where the business has pretty much lost control to the bank or lender.  There are also a significant and scary number of businesses which only produce annual statutory accounts, find out that they have made a loss, months after the year end; face another issue, such as loss of a major customer or restricted key supply and then tell the bank all the bad news at the same time, asking for funding/overdraft extension, with no solutions being offered by them.  They lack any plan in respect of the relationship, communication and information being given to their bank and are confused and angry when the bank then either refuse the extension or worse still, reduce or remove the overdraft facility completely.  We are not going to comment on the issues surrounding banking over the last two years or so, as this is well documented, but we are aiming to concentrate on how businesses can and should take matters in their own hands and control.

As we are still in what can only be described as challenging and uncertain times for businesses, there are now many who describe themselves as turnaround specialists and look to help to ensure that your business starts on a road to recovery.

I will now make a sweeping generalisation and observation, but in my opinion, there appears to be broadly three types of turnaround specialists;

  • Investors and their advisers who are looking to save the business but also to take advantage of the vulnerable position of the business, to take part or majority ownership of the business for considerably less than normal market value, this is harsh but to be expected;
  • Insolvency experts acting as expert advisers (but usually only looking to support the lending bank).  The reports that they produce and advice that they give can be very biased for not only the lenders positions, but for them to win the future work from the lender, quite a lot of business people recognise this with the analogy of putting Count Dracula in charge of the blood bank and emergency blood supply;
  • There are, however, other experienced advisers who have been there, done that and have the necessary skills and desire to help the business turnaround and be successful.

Going back to the title of the blog, despite the mystery and myth of business turnaround specialists, it is not a dark art.  Businesses are successful because they have a good product; a real plan; a system of control and improvement and control of their cash, businesses fail because they may have a good product but they do not have a real robust plan; have no real system of control and improvement and they do not have control of their cash.  Businesses achieve a successful turnaround because they eventually recognise the position that they find themselves in and take the appropriate action and introduce a real and robust plan; a system of control and improvement, no matter how simple, and control of their cash, before it is too late.

In some overtrading situations, where the businesses are growing rapidly, control can be lost as they did not believe that they needed it.  The sales and money keeps rolling in.  In many situations, we have seen the business hit a wall, when either an unexpected cost arrives (usually the tax bill, but if you do not have a real plan then anything could be unexpected) or when they face a supply problem.  We have seen many situations where a business has one main source of supply for a key component, product or service and when this supplier cannot provide the volume or specification required (or has gone out of business themselves); this has the knock on effect to our business.  This may fall under risk management, but it is common sense management that many businesses fail to address until it comes along to hurt them.  Having one supplier for a key area can prove fatal, indeed one key supplier sometimes can wield too much power over the business anyway.

As any successful and experienced FD would also tell you, a real plan is not only about one area, and it is common-place that the FD is the architect of the plan and its delivery; it is about ensuring that all parts of the business have a plan and the ability to deliver the plan and this has to include;

  • Recognition of where you stand, your strengths and your failings, what are your opportunities and what needs to be protected;
  • A good product/service combined with a marketing plan to deliver the appropriate sales;
  • A good knowledge of key supply and a good supply plan and agreements;
  • An operational and delivery plan, recognising and controlling key drivers in the business;
  • Appropriate recognition of your team development, management and leadership;
  • A budget which includes the key performance indicators relevant to the business;
  • An appropriate financial plan recognising the requirements for long term investment and finance as well as working capital management and short term cash flow;

Recognising the above and how an experienced FD can help and yes that includes the creative marketing stuff as well, when a business is facing financial difficulty it is cash that has to be the key priority and when we start to help this has to be the first area to control.  Sometimes, however, a formal insolvency route of administration or receivership will be required to allow the business to be put back on track, but sometimes a common sense plan will enable a business to right itself without the need for a formal insolvency process.

Some of the areas that a turnaround strategy and plan will include will be:

  • A thirteen week rolling cash-flow dealing with immediate and short term cash flow issues, identifying and managing the pressure points.  It is still remarkable the number of businesses that do not have a short term rolling cash flow plan.
  • A cash plan, breaking down what cash has to be collected weekly from debtors and how; what are the priority of creditor payments and then more formalised revised repayment schedules agreed with key suppliers.
  • A detailed recognition of short and medium term cash requirements and following a draft cash plan, engaging with banks and other sources of credit and lending to bridge the shortfall.
  • Recognition of the break-even position of the business and translation of that into a simple and understandable plan (i.e. the number of sales required a week or the number of conversions needed or jobs needed to be completed every week).
  • Following the break-even review, a plan for staffing requirements with the current and future work.
  • A marketing and sales pipeline made into a simple and realistic plan of hot leads and conversions to sales.  Who are they, where are we with the contract progression (which also recognises the price and profits for the contract) and control of this sales lead flow and reporting.
  • A rolling 13 week marketing and sales plan, what is coming in for the next three months and what marketing initiatives are being put in place for week 13 and onwards.  Having worked in retail this is a very useful, practical and vital plan that addresses every week the initiatives being put in place for week 13.
  • A profit improvement plan, reviewing all key supply and support contracts and where necessary going back out to the market for competitive tenders.  Again the real benefits will be obtained from having a full and detailed understanding of what it is you need and use, volumes, product requirements and when required, to be able to fully specify the tender and obtain realistic tender proposals.
  • A medium and long term plan of what the business needs to develop, following on from recognition of the business strengths, what are the real unique selling points that the business offers and how these areas should be further exploited for the benefit of the business.

We are not saying that business turnarounds are easy or can always be done with a positive outcome in every situation.  Sometimes the business has left the position too long or the market in which they trade has shifted significantly and the business has not changed to reflect that.  In many situations, however, businesses that are failing or are hitting a rough time can be helped and turned around by practical and common sense measures.  The business owner, however, needs to recognise the issue, take a step back and consider what is happening.  Many times the businesses are just doing the same thing over and over again (very zombie like) and with only their fingers crossed expect to see improvements and things change.  This will not happen in the majority of times and a more measured and practical critique and plan will be required.

I think it is fair to say that not all accountants and advisers are the same and some of the areas outlined above do define how a good professional adviser can add real value and support to a business and can help that business to get back on its feet and achieve the success that it first set out to achieve.

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

You Have Nothing to Fear but Fear Itself

leave a comment »

You Have Nothing to Fear but Fear Itself

“The only thing we have to fear, is fear itself!”  (To be precise and the actual famous statement)

These are very famous words, spoken by Franklin D Roosevelt at his inaugural presidential speech and talking about the US depression and the prospect of turning the economy around.   This is looking as relevant today as it was when the words were said back in the 1930s. To succeed and change, to build a business or an economy, to be a successful entrepreneur, we need to be fearless and we need to look to build success.  Successful entrepreneurs, the Steve Jobs’ (he seemed not to even fear death), the Sir Richard Bransons’, The Lord Sugars’ did not fear the task at hand.

Yet fear itself sells; fear underpins many sales strategies; fear is the bedrock of many legal, accountancy and other professional service business sales training.  I was part of a large brand accountancy business and I was trained to sell fear.

How do we sell fear?

It is relatively easy.  Identify and find an issue or problem or something that a person loses sleep at night about.  Discuss this further and make it worse, take the issue to its most extreme conclusion, anything, the lack of growth, lack of cash, no pension, no will, a large tax bill or undeclared income.  Ensure that we can all see and understand what “could” be the result of the continuation of this situation; fines, court action, bankruptcy, failure or even death.  Make them feel really bad about something that they have created themselves.  Then, after a short period of time…… offer the solution, the solution that you knew all along.  Add on to that, the famous approaches of “you can’t do that,” “ that, sounds wrong, you need ours,” “really need to stick with this, use ours, everything else is too small, too big, too risky, wrong, etc, etc.”  Fear sells by the bucket load.

I have never at all agreed with this as a sales strategy, it has never sat well with my own positive outlook on life and the wish for my own success, my business success and success for my clients businesses and any business that I am associated with.  We, as a business, do not adopt this approach, we wish to promote, ensure and share in the success of our clients and we want to do everything we can to help promote and ensure that success.  Yes, we acknowledge problems and pitfalls and look to plan for those, but underpinning this is a positive approach rather than the negative one of fear.

As well as selling fear, we sometimes see fear as a solution to our behaviour ……

Have you heard about the man who owned a parrot ……… that swore like a sailor? This parrot was so terrible, it could swear for five minutes straight without repeating itself. One day the man finally got tired of this parrot’s horrible speech, and decided to do something about it.

He grabbed the parrot by the throat, shook it really hard, and yelled, “QUIT IT!” every time the parrot said something ungodly. But this just made the parrot mad, and it swore more than ever. Next, the man tried locking the bird in a kitchen cabinet. This really aggravated the parrot, and it clawed and scratched furiously until the man finally let him out (upon which the bird released it’s fury in a torrent of language so horrible it could never be repeated).

At that point, the man was so frustrated that he threw the parrot into the freezer. For the first few seconds the parrot made a terrible amount of noise in protest to this treatment, kicking, clawing, and thrashing about. But after a few moments it suddenly went very quiet. As the silence grew longer the man started to think that the parrot may be hurt. After a couple more minutes of silence, he became so worried that he opened up the freezer door. The parrot calmly climbed onto the man’s outstretched arm and said, “Awfully sorry about the trouble I gave you. I’ll do my best to improve my vocabulary from now on.”

Of course, the man was astounded. He could not understand the transformation that had come over his unruly parrot. Then the parrot asked, “By the way, what did the chicken do?”

Growth, the solution

Easy to say, and what do accountants know about this anyway.  Well some accountants think that they do, because they offer an associated marketing support system, but this really is only part of it.

Growth Strategy

Marketing and sales support is vital, and we have access to material and support, together with the creative expertise to help most businesses in this area, but that is really only part of the solution and a business needs to assess what it has to offer and what is its business strategy well before engage the creative juices.

Form our own business background and from working within businesses at board level, we ensure that our clients are equipped to grow their business successfully, and as our strategy we will also look to include this as a formal product and service area of our own.

Start with the sales strategy

This is addressed by identifying, promoting and assisting with the following:

  • An understanding of leadership with the vision and missions of the business, in order to effectively lead growth
  • An understand of the business theory (McKinsey) to effectively lead and evaluate growth
  • An understand of the key aspects of organic growth, the market, the business proposition, the people, the tools and the systems and processes, together with appropriate funding
  • An understanding of the key skills of account management, key client management and how to retain and expand existing relationships and value
  • An understanding of key marketing techniques and how to win new work and new clients and how to lead a sales strategy
  • An full understanding of how to create and fully utilise a business plan to set the agenda for a business and to use that plan as a road map and driver for success
  • After all of this we can then look at the creative marketing, sales and support services available through our associates to promote and accelerate this area

Build on to this, skills and approach of the Finance Director

I have touched up this before in detail as a former Finance Director, who will look to set areas for improvement covering support, operational and strategic areas and will look to structure the improvements in these areas, to be able to drive the business, with an article called “How an FD Drives a Business when sometimes Accountants are just catching up,” on

The key points to this, in my opinion can be seen as funding, operational improvements and controlled delegation.

Funding is vital to any business, but the funding needs to be appropriate to the business and for appropriate uses.  One key area that we see time and time again is a business losing control of their working capital and short term cash flow.  This is in essence the life blood of any business.  We always ensure that our client consider and implement appropriate strategies for the control of working capital, be it stock, purchases, creditors, taxation and cash flow.  A key tool is a 13 week rolling cash flow, which seeks to ensure that a business has a full understanding of the peeks and troughs of cash requirements to ensure that it is able to deal with this area.  Another key positive outcome of this tool is that for many businesses, it also allows the business to look to channel cash to appropriate growth areas and growth strategies in the shorter term.

Without including another chapter, then there is the external funding and the growth by acquisition or sale, the banks, the grants, the business angels and the private equity investors.  As being part of a number of organisations supporting these areas in the midlands, as well as helping fund new start-up businesses, buying and selling private SME businesses and floating and managing public company share issues, as both finance directors and as advisers, we have access and a little bit of expertise in this area as well.

Operational improvements can be assisted with both key performance indicators, KPIS and benchmarking with other businesses.  This allows an understanding of what are the key areas of business performance that have the most significant impact on its success.  Benchmarking is not about either complacency or fear and worry that your business is either doing any better or worse than others, it is an understanding that if your performance ranks as low compare to many similar businesses operating within your industry, then it points to something that you doing wrong and helps to start to correct that performance.

Aligned to this is controlled delegation or internal controls.  These are not considered for the sake of it.  Controlled delegation is about identifying the skills and attributes of a business team and allowing individuals with the most appropriate skills to work in areas most suited for those skills, whilst doing this under a documented structure and system that everyone understands.  An example of this is a business that engaged a new part time finance director, adopting the same approach to business that we encourage and utilise.  That finance director looked at some numbers and KPIs etc and this included monthly sales patterns.  The patterns showed two months of good sales and one month of poor sales and this was consistent for quite a long period of time.  When looked into and queries further, the reason was that the main owner/director, who was also the key person for sales, re-wrote the company catalogue every three months and so was not engages in selling.  A relatively simple solution, with appropriate controls and checking ensure that another member of staff was engaged in this role and the business increased sales by 20% in the following year and profits and cash accordingly.

Add on appropriate tax planning support and additional cash

As a business grows and becomes more complex, bigger and with more profits, so can the complexity of its tax planning and more complicated and expensive areas are available to support that business and its owners.

There are, however, still simple and legal ways to ensure that new and growing businesses do not give away profits or incur large tax bills.  We work with our clients to ensure that these areas are all considered and adopted accordingly.  Without going into detail, these are few:

  • Consider the need to incorporate at an early stage or the valuable tax breaks later if you choose not to,
  • The use of unincorporated businesses, such as partnerships and limited liability partnerships to grow a new area of a business, a new market, a new product a new geographical area etc, to share in the tax breaks of incorporation of these areas at a later stage,
  • A review of tax breaks available including the still over looked capital allowances within properties, as well as a business costs of research and development where even more tax incentives are available, including tax credits against other tax areas
  • The use of pensions such as SIPPS, SSAS and ORBS to increase wealth, lower a tax charge, finance and acquire properties and even provide cash for the business to utilised to grow further.

Our own view is that businesses need to be fearless to be successful and we embrace that approach.  We as a business always aim to be positive to ensure that our clients succeed and grow, which we adopt for ourselves.  This does not mean that we do not plan for the problems, the downsides, the tax issues, the cash shortages, the plan Bs, the risk registers.  It is just that share in our clients’ vision to want to aim for the stars.  I really like the saying that if you aim for the moon and miss, you will at least end up in the stars, and that it the philosophy that we encourage and promote.

Going forward, our own business is in its own way looking to help ensure that businesses can grow in the midlands region.  In the new-year we are aiming to create cost effective business groups in the Birmingham, Nottingham and Leicester area to share in the skills that we have touched upon in this article as well as introducing even more cost effective monthly accounting support to smaller businesses by use of new cloud technologies, after recently introducing our 33% reduction in audit and accounts costs to established businesses.

As Roosevelt famously said himself and we are embracing, “The only thing we have to fear, is fear itself!”

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659                T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

Written by Steven Mugglestone

November 9, 2011 at 1:54 pm

Location, Location, Location, Cost, Cost, Cost, Service, Service, Service

leave a comment »

Location, Location, Location, Cost, Cost, Cost, Service, Service, Service

As any business should, we are constantly reviewing what is important to our current and future customers (yes, we are a business and yes, we have customers; we sell services and products; and yes they are also our clients as we have a professional responsibility to do what is best for them and to represent them to the professional standards that we have been trained to meet).  Customers and clients are not mutually exclusive, you ensure the best possible service to your customers and you will do the same for your clients.  Many accountants shy away from this, constantly referring to their clients, trying to disguise the simple fact that we are also in a business, our clients are also our customers.

From our research and understanding we have simplified the key issues facing our customers, when they look to choose an accountant and adviser down to three, location, cost and service.

Location, location, location

Some businesses only sell to their local market.  Most businesses look to sell to their local market and beyond.  Many businesses look to sell throughout this country and beyond, and in respect of Virgin Galactic well, it starts to go further than that.

Whilst most businesses look for customers across a wider geographical spread and are happy to travel themselves, they will look to choose an accountant within a mile or so of their offices.  Why, when the accountant and their staff can travel and we live in a world where communication is almost instant.  I remember a time, not so long ago, when documents and plans being drafted were sent by post and returned with manual mark-up changes.  This is now instant, technology has moved on.  We are moving to the provision of monthly online accounting for clients as well as keeping up with the online filing with HMRC and Companies House.

A business does not have to walk around to their accountants office to discuss a problem, depending on an accountant’s approach to email, you are likely to get better value from your accountant by emailing your query and getting a written response, rather than exchanging niceties face to face or over the phone which, unless you have a fixed fee arrangement, you would be paying for under the traditional/old fashioned hourly charging basis of many practices.

An accountant who is available via email can give a more considered answer to your question and provide links to useful resources. There are also very few queries which need an instant response.

You may also consider whether your accountant needs to be local at all. Do you really need to have a regular face to face meeting? Do you value having a local accountant over the distant, competent/specialist, cost effective accountant? Perhaps there is a middle ground, literally as we generally help clients within the Midlands region of the larger West Midlands/Birmingham area, Nottinghamshire, Leicestershire and Lincolnshire.  All of this is achieved within an hour’s drive from one of our offices.

In over 20 years in practice, I find that a client/customer face to face meeting is becoming less and less necessary, although we very much have appropriate meetings with clients directly as part of our key planning process to ensure that we are still providing our client with the most appropriate advice and service. Correspondence is generally via email and telephone. Queries/advice are usually emailed and read/answered at each other’s convenience which is more efficient than leaving messages for each other to call back and also the questions/answers are more focussed.  Meetings are still held to discuss key issues and for periodic updates, but these should be focussed to achieve an appropriate outcome for both parties.

Some accountants will “sell” location, but just because they have an office on your doorstep does not mean that they will provide you with the most appropriate service and advice and at the most appropriate cost to you.

Some accountants and auditors actually seek to perpetuate the myth that location is vital by seeking to send their staff to a client’s premises to spend longer than is actually necessary.  For those out of the audit profession, most audits can be split into equal thirds of time; a third planning, whereby information is gathered and key issues are identified; a third fieldwork, whereby the audit testing is carried out; and a third completion, when reports of key issues and treatment and checklists are completed.  Only the fieldwork requires staff to actually be at a client’s premises, and then not for all of that time either.  Some accountants actually encourage their staff to spend longer at the client’s (customers’) premises than is necessary to make it look as if significant time is being spent, when mostly the client’s staff could do without the auditors being there for longer than is necessary.  We are honest enough to explain that to our client’s the process and will only spend the appropriate time at the client’s premises.  If the managing director wants us to be there longer as they see the visibility of the auditors as important then we will, but this will done as part of an honest discussion around what is actually required.

Cost, Cost, Cost

Interesting one, and a key issue that many accountants really do shy away from, when many other businesses have to transparent and open.

The key issue is that many accountants continue to use an outdated (Victorian) business model for their own business.  They charge by the hour (usually by 6 minute units) and continue to do so for whatever they do, and some firms 6 minute rates can be quite high (let alone an hour).

There is a different model and certainly one that we adhere to.  General compliance work (i.e. the stuff that has to be done for legal/tax reasons, the accounts, audit and tax returns) is a commodity product and can be set at a fixed price and this price does not need to use high charge out rates with partners charging even higher rates for their minimal input.  The majority of this work is process driven and costs can be kept low.  Many SME businesses pay far too much for this work.

A separate area of service is where you can actually make a different to a business; save them tax; reduce their costs; increase their profits; grow their business or find them finance.  Again, is an hourly rate appropriate?  We do not think so and will always look for the fee/cost to the customer to reflect the VALUE of the work done and SAVINGS or IMPROVEMENTS that we have achieved.  Surely this is WIN/WIN in the game theory rules of business.  A dark art, I do not think so, but honest and open business.

Service, Service, Service

“You pays your money and you takes your choice,” well, sometimes.  Service covers a multitude of areas, including, but not exclusively being polite and acting quickly for your customers.  Most clients/customers use the term Pro-active, when asked what it is they are looking for from a client.  To be pro-active, you have to offer a wide range of services to a client and understand where the client is going, where they are now and what are their aspirations and goals.  You also have to care; none of this is about completing accounts that are six months or more out of date.

We believe that to provide great service for all SME businesses there are number of key factors:

  • A partner lead service from an experienced, approachable and positive business professional
    (many accountants can either sit in ivory towers or just do not have the drive or experience)
  • The ability to grow and drive a business with the skills of a commercial Finance Director,
    (most accountants have never worked within a business or part of a business at all, yet claim to be business advisers and specialists)
  • The provision of strategic marketing and sales opportunities to grow a business organically
    (most accountants do not understand marketing and shy away from this crucial support)
  • The control and reporting skills for a business with the skills of experienced auditors
    (most small and mid-tier accountants, have never been part of large complex auditing or accounts assignments, and larger firms can cost…..a lot!)
  • Obtain finance to ensure your business continues to grow
    (corporate finance is still a crucial part of a business success and requires experienced and “well-connected” professionals to deliver appropriate funding)
  • Provision of innovative tax saving structures with the support of imaginative tax specialists
    (large firms sell their own “products” under the heading of advice, small firms tend to hide under a rock, but tax planning is still very crucial and strategies and planning opportunities change as often as tax laws do….. tax laws change as the tax planning proves to be effective and legal.  Some people claim that these are loopholes, when actually it is the law)
  • Control and reduce your costs with utility, insurance and other key supplies associates
    (in today’s climate cost control is vital, and this includes your audit, accounts and tax compliance costs as well, but find an accountant who can source other cost reduction reviews, as part of my first FD position, we reviewed, re-modelled and re-tendered out all main costs, having fully understood what usage we faced .… and this included the audit)
  • Innovative structures to protect and grow your wealth
    (never have an IFA/wealth management specialist provide support without being part of an accountant team, they need to work together)
  • To maximise your wealth and value of your business when the right times comes for you to sell or retire or pass on your business to your family
    (experience, experience, experience and the skills of an FD to really groom your business for sale)
  • Pass the barbecue test.  I spent some time with a UK wide group of FDs and after all the experience and qualifications part of the recruitment process, the final part of the recruitment procedure was whether you were a person who you actually wanted to spend time with, have a drink with at a bar or barbecue, someone interesting and with personality.
    (ACCOUNTANTS/AUDITORS …… enough said!)
  • All of this should be provided with a smile on their face and with real positive attitude and energy.  Their aim is to improve your business and personal situation and their attitude and drive to do this should shine through.

Get yourself the right accountant today and you will not be repeating this process for years at a time, but also do not be afraid to get a check-up and re-tender a service proposal to find out what else is out there.  Accountancy firms change; some get better; some get lazy; some get more expensive and some never had it in the first place.  Better yet, you will save yourself tons of time and money in the long run, and you will have a new trusted partner to bounce ideas off of down the road.

A Final Joke

A newly qualified chartered accountant applies for a job advertised in the Times.  He is interviewed by the owner of a small business who has built it up from scratch.

“I need a qualified accountant,” says the man, “but mainly I’m looking for someone to do my worrying for me.”  “How do you mean?” says the accountant.  “I have lots of things to worry about, but I want someone else to worry about money matters.”

“OK,” says the accountant. “How much are you offering?” “You can start on sixty thousand,” says the owner. “Sixty thousand pounds?” exclaims the accountant, “How can a business like this afford
to pay so much?”

“That,” says the man “is your first worry.”

Steven Mugglestone BA FCA,
West Midlands Area Director and Finance Director Services

McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business
McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659
T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

When sources of finance remain tight, consider the power of the ORBS

leave a comment »

When sources of finance remain tight, consider the power of the ORBS

It is fair to say that business remains tough for all and we are still are not seeing a glimmer of light at the end of the tunnel that is this current recession, down-turn, economic slow-down or whatever you wish to call it.  In fact it is difficult to see where and how the UK economy will re-build itself and return to significant growth.

Having many years ago studied Economics as a degree, I returned to some research on the economy and found only the following.  “The Economy is so bad that . . .

  • I got a pre-declined credit card in the mail.
  • I ordered a burger at McDonald’s and the person behind the counter asked, “Can you afford fries with that?”
  • Chief Executives are now playing miniature golf.
  • If the bank bounces your cheque or direct debit because of “Insufficient Funds,” you can call them and ask if they meant you or them.

It is no doubt that things remain challenging.  From our experience, the availability of cash and funding remains to be tight and businesses looking to either start up new areas or expand are still find sourcing finance as a real challenge with lenders and investors remaining extremely cautious.  Many businesses cannot find either longer term investment or working capital to build or re-build their businesses.

As a principal in a firm of Chartered Accountants and Business Advisers and working closely with FSA regulated colleagues and associates, one area, however, that we have seen to be proving as a possible solution is through the power of the ORBS, or an Occupational Retirement Benefit Scheme.

ORBS, what are they or what is it?
ORBS is basically a pension scheme that has been designed to provide shareholding directors of a company with the maximum amount of flexibility in their pension planning at the same time generating tax incentives either for the company or the individual and still providing valuable pension benefits for retirement.

Current UK legislation
The UK Government has recently introduced changes to current pension legislation, which has important consequences, in particular for entrepreneurs.

As of April 2011, the maximum contribution that may be made either corporately or personally is £50,000, but with the option to carry back up to 3 tax years.  This means that up to £200,000 could be contributed to a pension plan for each director, all of which should be deductible against corporation tax in the 2011/12 tax year (Corporation tax currently at 29.75%).  As from April 2012 it has also been announced that the maximum an individual can hold in pension funds is £1.5m.

So why consider ORBS for a pension?
In the past, most company directors and entrepreneurs have used either Self Invested Personal Pensions (SIPP) or a Small Self-Administered Scheme (SSAS) for their pension contributions.  Both of these structures, however, are restrictive.

A key restriction is in terms of re-investing back into either their own or a new business venture.  As a consequence, any pension contributions tend to be small as often company cash flow does not permit larger contributions as capital is effectively tied up.

ORBS help to resolve this problem in a number of unique ways, which allows for the larger contributions without necessarily affecting cash flow, while providing an effective low risk tax planning strategy.  We have found that many entrepreneurs and businesses are using and considering using ORBS to help provide the necessary cash for their business to help them with both longer term investment and working capital requirements.

A real help is the use of existing pensions in your business
The ORBS is a fully registered scheme with HMRC.  This means that ORBS can receive transfers from existing pension schemes that may be held.  These monies can then be used within the structure, to help the business grow or help with business acquisition and even commercial property purchase.  The ORBS pension structure has been designed to provide maximum flexibility whilst still adhering to current pension rules.

The ability to deal with business disposal and retirement
All of the funds in the ORBS belong to the members and will have been allocated according to members direction.  All members are free to make their own investment decisions and take retirement benefits when they wish to do so, subject of course to the minimum retirement age of 55 in the UK.

Tax incentives and cash on retirement
A member can access up to 25% of their fund, held through ORBS as tax free cash, whilst also providing access to, “income drawdown” or “scheme pension facility” to provide maximum flexibility for retirement planning.

We are now seeing the use of ORBS in many businesses and we are seeing that they are providing crucial funds to really help businesses expand and invest.  We work with FSA regulated and ORBS specialists providing real solutions to our clients in these most challenging times.

Maybe ORBS will provide the light or at least the spark at the end of the tunnel after all.

In summary the key features for ORBS are:
•    They are fully registered pension with HMRC
•    They are a highly flexible business planning opportunity
•    They provide tax relief on contributions
•    They accept transfers from existing pension plans
•    They provide total flexibility in retirement

Steven Mugglestone BA FCA,
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

T: 0845 519 5659
T: 0121 236 3317

Connect, call, talk, email, contact us, send a messenger pigeon and arrange a discussion, review and free meeting.

Written by Steven Mugglestone

August 30, 2011 at 9:35 am