Family business are a big part of NZ business. With MBIE stating they make up around 75% of entities and employing a ‘good chunk’ of the workforce. I’ve worked with my fair share over the past 20+ years as a CA.
There is a uniqueness of family business to survive where a typical business commercial model may not. It’s that strength to help out and pitch in during the hard times that make FOMB’s quite special. Dedication from family members can be hard to replace.
Long drawn out debates about business decisions can at times become heated, however the family bond creates a connection that usually brings the family back together. Once heads cool that ongoing discussion is again a strength for FOMB’s. At the end of the day, while the family may not all agree on a particular business aspect, everyone will still want to clear the air and sit down for family Christmas dinner together.
One of my key takeaways for the FOMB is to have clear expectations about who does what, who makes the calls and who is responsible. A business plan for any business is a good tool but having a clearly defined one for a FOMB is a good way to head off difficulties.
Working with FOMB
I like to keep a good understanding of what’s going in my clients business, we use Xero so we have good up to date reports, I check and file my clients GST to ‘Keep my head in the game” and charge a fixed price fee so they don’t worry about calling me with a question. Regular development meetings lets me play a part in keeping their business moving in the right direction.
Like any business things are always changing. Effecting the hand over from one generation to the next is a big decision. From experience this takes quiet some time and generally if you start early enough there should not be any panic. Start with identifying everyone’s key strengths and weaknesses. What are each family members views? How would they like to be included? Then it’s a matter of trying to fit the jigsaw together. Not everyone is going to get what they want and that’s part of managing the family dynamics.
Family owned managed business can be hard work, but also a lot of fun, plus you get to share it all with those you love.
- Batch Payments – Duplication of tasks is a real pain, having to enter accounts for payment into an accounting package then again into your online banking takes time and creates opportunity for errors. Xero’s batch payments allow you to pick a group of bills to pay, create a batch payment and download those details to your online banking. The nice thing is Xero knows you paid all those accounts with one go, so when the payment comes through the bank feed it should automatically match up in Xero.
- Expense Claims – When you’re out and about and end up paying for minor items either with cash or from personal funds, you can use the Xero phone app to snap a quick photo of the receipt, enter a few basic details and the expense is then recorded in the system. This can then be either reimbursement or recorded as owners funds introduced to the business. Never miss claiming on those minor items again.
- Attaching Documents to transactions – Every transaction in Xero has the ability to attach a document or file. You can use the phone app to take an image, enter a few details and let it match up with the bank feed or scan documents and attach them to entries in Xero. Helpful for anyone in the future looking at a transaction and needing further information. There are Xero add-ons that extract data and import into Xero. This can be either from bulk scanned invoices or invoices sent direct from suppliers.
- Tracking – In the past accountants used to set up complicated charts of accounts to try and identify performance of various parts of the business. Messy charts are no longer required as tracking allows all transactions to be tagged with up to two categories and 100 options for each category. Reports can then be run for any manor of options. This is handy when you have two or more different operations in one business or want to track trading by regional locations.
See my blog post on the 30th of August for my first 5 Xero Features
Happy to give a demo and see how Xero might fit for your business.
I enjoy working with tradies and their businesses. Maybe it’s their can do attitude, the way they put together creative solutions or maybe because Dad was an electronics technician and I wonder where I would be if I had followed a similar path.
As any good tradie will know, having the right tools for the job will make things go a whole lot smoother. Here are some tools us accountants think of when working with trades to help make their business perform and profitable.
Job Tracking – Keeping track of your work is important, making sure you deliver a great service, meet client expectations, where all your jobs are at and who is going to get them finished. With the rise of cloud systems there are a number of options out there that allow you and your team to be on the same page as to who is doing what by when.
Back costing – So as business advisors we really like this one and it takes a bit of work to get the system right but knowing how each of your jobs is contribution to your profit is a critical part of running a business. Knowing which jobs went well and most importantly which ones didn’t go so great. What were the key learning experiences from the not so good jobs so you don’t repeat the same next time.
Quoting and pricing – Get the pricing too high and you wont win the work, price too low and you may not make any money. Feed back from back costing, number or wins/losses and charge out rate calculators help find the right point in the market. The market is constantly moving so be prepared to change and review your pricing model frequently.
Charge out rate calculators – Knowing what each hour of labour is costing you is another KPI. A combination of available hours, pay rates and overheads tally to end up with a real cost per hour worked. As pay rates and overheads shift you should rework your calculations and consider the effect on your charge out rates when quoting or billing work.
Regular reporting – getting a once a year report from your accountant is about as useful as a flat battery pack. With systems like Xero and it’s various job tracking/costing add-on’s you can get good monthly figures in close to real time. Combine this with regular catch up’s with your business advisor and your onto a winner.
Greg Verhoef – Chartered Accountant
021 242 8690
There are heaps of great Xero features. I couldn’t fit them all into the space of this column so here are my first 5.
- Cloud Based – This was the game changer Xero introduced to the market. Placing the records in a cloud based server allows multiple parties to access the same information in real time. This makes working with clients to fix minor accounting mishaps and checking their GST returns nice and easy. While most of my clients can do their own GST a quick check over every couple of months keeps my ‘head in the game’. We keep the records nice and straight for management reports and the yearend accounts. This also puts me in a better position to offer advice, help my clients make better business decisions and head off difficult issues.
- Repeating Invoices – Invoices for regular services can be set to repeat when required. There are settings to send automatically or just draft awaiting your approval. Either way this is a great time saving feature and reduces the risk of forgetting to send out your invoices on time.
- Invoice Reminders – We all seem to have a few clients that forget to pay us on time or misplace the invoice. Xero’s invoice reminders let you automate a reminder to be sent either before the due date, after the date, or both, with multiple follow ups. You can include a link to the original invoice and exclude reminders for minor amounts.
- Phone App Reconciling – Got a few minutes to kill. With a swipe to the left to scroll down or a swipe to the right to scroll up, it’s a little like tinder for business. OK to accept the match, Xero’s suggested coding or creating the correct new entry can all be done from the phone. Keeping the reconciliations up to date is a breeze and keeps your accounts receivable and payables current.
- Apps Marketplace – With over 500+ add on applications that integrate with Xero, there are plenty of opportunities to bolt on time saving or feature rich applications. While you could build you own software to integrate with Xero, why reinvent the wheel when it is quite likely someone has already done it for you.
Happy to give a demo and see how Xero might fit for your business.
Hospitality industry is not for the faint hearted, it can mean long hours, hard work and require thinking quickly on your feet. If you get it right the reward can be the smiles on your customers faces and a good financial return.
- Top of the list – This is what the industry is all about. Just meeting your customers expectations and they will likely come back. Provide exceptional service and they may tell someone else (this is how you grow your customer base). Provide poor or bad experiences and they will tell a whole bunch of others. The latter is even more prominent today with social media and rating sites.
- Staffing Critical to creating that great customer experience will be your team. Getting your rostering right is equally important, wage costs are often the biggest variable cost. Having too many staff will cost your bottom line, being short staffed and the customer service will suffer. Keeping an eye on your figures will help make good decisions. You should be reviewing your wages as a % of sales at least weekly or even daily. When working out rosters start with your prediction of daily income for the week then roster team members to meet the expected demand. Keep an eye that the overall cost % is in line with your target.
- Food & Beverage costs Know your cost of sales on each item you sell and overall average based on your sales mix. For beverages simply divide cost by the selling price (make sure to exclude GST). Plate out meals, measuring and pricing the ingredients. The same goes for baked items. Divide the cost by your sale price to get the cost of sales %. Knowing what your cost of sales are will help with setting your pricing. This is also where you can get creative, work on putting together fantastic food that looks, smells and tastes great but doesn’t rely on expensive ingredients.
- Breakeven and overheads Review overheads systematically to trim out any unnecessary cost creep. If you know your wage and food % costs are it’s relatively easy to work back to your break even sales point to cover your fixed overheads. Remember to build in some return for your hard work too.
I started my career working in the Hospo industry. I enjoy working with passionate hospitality business owners and helping them make good business decisions. Give me a call sometime for a chat and coffee.
Greg Verhoef Chartered Accountant