3 qualities modern accountants need

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In a time where the political landscape is shifting in unexpected ways and Making Tax Digital and auto-enrolment are upon us, the role of the accountant is less predictable than ever.

The days of just preparing the accounts and doing an annual tax return are long gone. The modern accountant is adaptable, innovative and people focused. Clients are looking for advisers who can help their businesses navigate an increasingly uncertain financial world with a knowledge of technology and an empathy for their challenges.

AAT has announced the shortlist of its first Professional Member Awards, recognising excellence in the profession. All the candidates embody the qualities of a modern accountant.

Mark Farrar, Chief Executive of AAT and an Awards judge, felt that the willingness of the shortlist to embrace new technology and prepare for a digital future set them apart.

“The enthusiasm of our membership to embrace cloud software and new technology, while delivering the practical financial skills that most businesses need, was heartening.”

1. Technology savvy

The greatest shake-up to the industry is the move to Making Tax Digital. Savvy accountants see the change as an opportunity to provide quality business guidance rather than remain focused on compliance work.

“The rationale behind MTD is sound. We are, after all, living in a digital age. Yes of course we will lose a lot of compliance work but is that the sort of work we really want to do? Would you not prefer to be harnessing the power of the software of tomorrow and making use of the richer data available through apps and third-party software?” says AAT tax policy adviser Brian Palmer.

Mark Rowland, editor of Accounting Technician and an Awards judge agrees. “The Awards shortlist demonstrated a real drive to be more innovative and inventive, not just in the way they delivered their core services, but also in the way that they ran their businesses and as finance professionals. Office design, being able to sell themselves online and taking responsibility for important modernisation projects for their employers were just some of the ways AAT members are leading from the front when it comes to innovation.”

2. Connected

Working with just the numbers, separate from the business or people you are working for, is an outdated approach to accounting. Relationship building is pivotal to the responsibility and success of a modern accountant who strives to influence the decision-makers of a business. To do this, accountants need to understand the personal impact of the financial data and be able to translate and communicate this across all levels of a business.

Accountant Mark Lee and speaker on helping accountants stand out agrees. “More than ever clients are looking for accountants to provide them with peace of mind. Simply completing the compliance paperwork is not enough.”

With the rise of integrated reporting and a growing emphasis on providing a holistic view of a business’s value that includes more than just financial data, accountants need to be comfortable assessing all the elements that drive business success.

“If there’s one consistent message across the shortlist, it’s that accountants need to go above and beyond in order to deliver real value to their clients and employers,” says Mark Rowland.

“They need to understand more than just the numbers. They need to be able to integrate better with the other core teams within the organisation, and need to understand their clients inside and out. The role is becoming much more advisory, and accountants are well placed to help companies deliver change and innovation in a sensible, sustainable way.”

3. Future-gazing

Fast technological changes and the shifting political landscape are just some of the challenges for accountants that have occurred over the past couple of years. The challenges that accountants in 10 years’ time will experience will no doubt be as unpredictable and challenging. Accountants that can weather the storm will be focused on remaining highly skilled and abreast of the changes.

“Whilst we are often the ballast providing the stability, calm and assurance to SMEs and stakeholders; we must equally be innovative and venture our ideas into dimensions outside our comfort zone. We have to start thinking very differently,” says Dawn Clarkson FMAAT of Dawn Clarkson Associates.

Tracy Allison Chief Customer Services Officer at AAT and an Awards judge feels that the commitment members show to keeping up-to-date with their technical ability as well as anticipating future trends in the market was a key asset.

“The ability to adapt to the changing needs of customers is paramount for accountants in today’s world and the candidates really demonstrated that they are responding to their customer’s demands, by developing their skills, whether that is technologically or by offering a multi-channel approach to customer interactions. The need to keep skills and knowledge up to date is so important and the candidates demonstrated that they go out of their way to develop both themselves and those around them. The desire to help and support others in the accountancy field and to give something back in the community was also commendable.

While change is often challenging, for accountants it heralds an opportunity.

See who has been shortlisted for the AAT Professional Member Awards.

Branding on a budget

Posted by & filed under Run your business.

Whether you’re a business or an individual, branding should be high on your agenda to make a lasting impression on those you want to influence.

Whilst branding traditionally was about creating a visual identity, these days its goes far and beyond colour palettes or logos and is about creating a unique and recognisable presence within a marketplace.

Because branding can be an expensive endeavour, in this expert guide, we take you through the key elements of establishing and creating a brand cost effectively.

Step 1: Your brand values

Every good brand, personal or business, stands for something. These principles are what guide you or your business and are at the core of everything you do. These principles are also known as your brand values.

Fortunately, they don’t cost anything to develop… just some questions and lines of enquiry that will help you distill what it is you stand for.

Answer the simple questions in the table below, designed to help you define your brand values:

  • Begin by brainstorming as many words or phrases as you can for each question on a large sheet of paper.
  • Once you have exhausted all possibilities and have a large list or map of words in front of you, go through and group words and phrases into common themes (e.g aesthetically pleasing, inspirational, eye-candy could all come under the theme of “looks good”)
  • Once you have these themes, choose the one word or phrase to describe it – the word that stands out most to you. List your themes/main group topics on a separate piece of paper.
  • Now, it’s time to distill the answers and choose one to three core themes and values. This can be tricky, so choosing two at a time and selecting the one that’s most important will help you eliminate any that aren’t necessary.
  • You’ll be left with one to three core values that your brand stands for. These words may be simple but they’ll be the driving force behind everything you do – the branding look, experience and how you operate.

Your brand is your promise

“Your brand is your promise.” -Dana DiTomaso

Step 2: Your brand mission

Now you have your core values, it’s time to create a brand mission – a statement that communicates your values but also where your brand is headed or the change you’re making in the world.

Answer the following questions to help determine your brand mission. These are relevant whether you’re building a personal or business brand:

1. What problem are you solving?
2. Who are you solving it for?
3. Where are you headed/what’s your goal?
4. What change do you want to make?

Once you have your answers, it’s time to combine them into a short paragraph that succinctly communicates what your mission is, who it’s for (your audience) and how you’re doing/going to do it (the problem you’re solving and how). You may also wish to weave in your core values.

Everyone’s will be different, so it’s about developing a statement that encapsulates all these things in a way that feels right to you or your business.

To help develop you business brand mission statement, here’s Ikea’s mission statement:

“At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”

To help you develop your personal brand mission statement, here’s Amanda Steinberg’s (founder of dailyworth.com):

“To use my gifts of intelligence, charisma, and serial optimism to cultivate the self-worth and net-worth of women around the world.”

Step 3: Your visual brand

Next you want to develop the visual look of your brand.

If you’re developing a business brand this will include your:
• Brand colours
• Logo
• Fonts
• Any other consistently used visual identities e.g photography

If you’ve got a creative eye, you may wish to use a free design tool such as Canva to select a palette of colours and even design a logo.

Most businesses will outsource this to a designer. You may wish to seek out local designers, design students or use a gig economy website such as Etsy or Fiverr to find someone who can design at a very affordable rate. You can pay anything from £50-1000 for a branding palette, logo and re-usable identities.

If you’re developing a personal brand, the visual look of your brand will include:

  • Your personal appearance and the way you communicate
  • Your business cards
  • Your online presence

Your personal style brand could be that you always dress smartly and wear a suit, or that red lipstick is your consistent feature. Think of Anna Wintour, editor of US Vogue… you can rely on her bob hairstyle and oversized sunglasses to always make an appearance.

Your communication style may be  friendly, warm and honest or professional, reliable and delivering expertise.

Your social media, business cards and website might cool, culturally relevant and forward thinking or sophisticated, established and authoritative.

Whatever approach you take has it’s own benefits. The most important thing is to ensure it’s authentically you or your business.

Step four: Your brand experience

The final step of creating your brand on a budget is to ensure that every touchpoint and experience your customer or audience has with you reflects your brand values, your brand mission and your visual identity.

This step comes down to consistency. Step into the shoes of your customer and imagine the experience that have with you in every interaction from a conversation to using your website to receiving your services.

Whilst it’s simple, it is one of the most challenging aspects of branding. It requires consistent commitment to your brand.

One of the best ways to maintain brand consistency is to keep a visual reminder of your brand on display where you and/or your staff  can see it daily. This will remind you to stay true to your brand and consider it in everything from customer service, purchase experience and the emails you send.

This guide is designed to help you develop a brand on a very limited budget, doing much of the thinking and consideration yourself. You are in a unique position to shape and develop this with true insight into what you’re trying to communicate.

After all, a strong brand will communicate a lot without speaking.

Shared and creative workspaces – not just for hipster freelancers or start-ups

Posted by & filed under Career.

Desk cubicles and strip lighting are becoming a bit passé in the business world.

Traditional offices can be dull and dispiriting places to work. That’s one reason why co-working spaces (membership-based workspaces where freelancers, remote workers, and other professionals work in a shared building or office space) are becoming more popular.

And not just with freelancers. More large businesses, including accounting firms are using co-working spaces with pool tables, yoga classes, and quirky furniture you’d normally expect at a tech start-up.

The hope is that businesses will make more contacts, meet more talented workers, and motivate their own staff.

Happy workers

Workers in co-working spaces, may be happier, research suggests. Research published by Harvard Business Review found that people in co-working spaces were on average happier than those in traditional offices.

One reason for for this may be that there’s less rivalry between people in shared workspaces (workers aren’t competing against each other), which can make them more pleasant to work in, the research suggested.

Hubble is an online market matching freelancers and businesses looking for shared and traditional office space in London with those who have it. It also helps start-ups find business “accelerators” (funding) and “incubators” (helping new businesses grow).

One Hubble customer is iHorizon accounting. It has DJ turntables and graffiti walls in its office, says Varun Bhanot, head of PR and partnerships at Hubble.

“The reasoning for this is that their core customers are tech start-ups in Shoreditch [east London], therefore they have adopted a similar culture and identity to their customers.”

Another accounting customer, EY, wanted a quirky office to start its “enterprise” programme, which helps start-ups, Bhanot says.

Another Big Four accounting firm, KPMG, rents space at another fashionable co-working space, Interchange, in Camden, north London. Facilities include networking events, a gym and yoga.

KPMG says that its business advisers offer advice, practical support and act as mentors to creative new businesses in the London borough.

Companies are putting small “innovation” teams in shared workspaces, Bhanot says.

UK at forefront of co-working

The UK is the world’s largest market for serviced offices, with an estimated £16 billion of space, Hubble says, citing research by Capital Economics.

Large companies including Microsoft and HSBC are moving into co-working spaces to get access to the smartest workers, Juliette Morgan, international partner and head of the global tech group at property advisers Cushman & Wakefield, said in February.

Large salaries and “sterile” working environments are no longer enough to attract the best workers, Morgan said.

Large companies, competing with the technology sector for the brightest workers, have had to “up their game” she said. “This has led to an increased focus on stimulating workspaces that spark creativity and improve employee satisfaction…”

Work.Life also rents co-working space to businesses. It has offices in London and Reading and plans to open ones in Birmingham and Manchester.

It also plans to open another office soon in Clerkenwell, in partnership with Verizon, a large American telecom US telecoms company.

“You won’t find us in giant buildings with thousands of cubicles,” the company says. “We believe in the power of face to face collaboration, intimate spaces and tight-knit communities.”

Prices range from pay-per-use (£3.50 per hour plus VAT), which is suited for freelancers and start-ups, to £250 per month plus VAT for hot-desking and £365 plus VAT per month for your own desk or office.

Customers pay extra for meeting rooms.

Facilities include the business essentials (fast wi-fi, seven-day access to the offices) and start-up type perks (a visiting masseur, “beer and pizza” nights, “local discounts”).

Box: Co-working outside London

A flourishing tech sector, urban regeneration and the popularity of self-employment is boosting demand for co-working space outside London.

Basecamp, in Liverpool’s Baltic Quarter − a fashionable neighbourhood of former factories and warehouses near the city centre, that’s home to a growing number of tech companies and start-ups – rents office space to “like-minded entrepreneurs”.

Prices include £100 per month for a hot desk and £150 per month for your own desk and 24-hour access to the building, every day of the year.

In the city’s business district Ziferblat charges eight pence per minute (£4.80 per hour) to use a shared office. Meeting rooms can be hired. There’s free coffee, cake (and wi-fi, of course), newspapers, a piano and meeting rooms. The interiors are modern, light and quirky.

Spaces – a re-developed warehouse in a lively part of central Liverpool that’s full of bars and restaurants – is part of a co-working business that began in Amsterdam.

Members can also use any of the company’s other city offices, including London, Newcastle and Glasgow in the UK, Madrid, Milan and Geneva in Europe and New York, Singapore and Melbourne.

In Manchester, you can rent your own desk for £199 a month or a private office for about £1000 per month at Headspace Group. Facilities include meeting rooms, private work booths, refreshment bars, shower rooms and workshops, yoga and social events.

In Birmingham’s “creative quarter” in Digby, there’s Impact Hub. Charges for using office space in the listed building range from £15 per day plus VAT to £200 per month plus VAT for unlimited access to it. It has offices in 60 cities − including in Singapore, Amsterdam, New York, San Francisco and Madrid – and describes itself as “innovation lab, part business incubator, and part community centre”.

In Glasgow, RookieOven is aimed at tech start-ups. The office is in Fairfield Shipyard. Prices start at £120 per month plus VAT for a shared desk to £175 plus VAT per month for your own desk. Facilities include “retro” games consoles, kitchen, pool table and a small library.

Why slashie workers really need bookkeepers

Posted by & filed under Bookkeepers, Career.

Around 1.3 million people are now ‘gig economy’ workers, according to a recent report by the CIPD (Chartered Institute of Personnel & Development) and the number of people doing two jobs or more is set to grow in the next decade, as the likes of Uber, City Sprint and Task Rabbit become ever more popular.

We speak with the experts to find out the main benefits to these so-called ‘slashie’ workers in using bookkeepers to keep on top of things.

Paula Rutter, an AAT qualified bookkeeper, finance director’s assistant and restaurant worker, says “slashie” workers (i.e. people that work two jobs or more) should definitely enlist the help of a bookkeeper. “Busy lifestyles and working unsociable hours does not leave much time to spend with family. So why would anyone want to spend their precious spare hours sitting [and] looking at a mound of paperwork that has spiralled out of control with no idea where to start?” she asks. “They might be so busy doing multiple tasks that to them, trying to brain scramble a pile of invoices is not a priority and this is where they then run the risk of late fines.”

Melanie Power, head of bookkeeping at Xerox, says bookkeepers can actually help pass on their skills to slashie workers. “Gig economy workers are often working two jobs to help substantiate their lifestyle so another expense, such as hiring a bookkeeper, can feel like a loss when you’ve managed so long without one,” she notes. “However, the time saved by calling on a bookkeeper is of huge benefit, particularly when holding down multiple jobs. The services of using a bookkeeper is not only to just to do the bookkeeping, but if you wish they can also setup systems that train you to do your own.”

Qualified bookkeepers can also create specially tailored packages for gig economy workers. “With small amounts of hours going to different jobs, slashie workers might not get the best out of an hourly paid bookkeeper. Feeding in data to fit in with the allotted time you have with your bookkeeper simply isn’t an efficient way of working,” Power notes. “Instead, working with them to create a bespoke package will allow a bookkeeper to not only save their own time and provide a better service, but a better business turnover can be made. The more you produce of something the less it costs to produce!”

Having a number of gig economy workers on their books could actually be a great opportunity for newly qualified bookkeepers to gain experience and learn too, Power says. “This way, workers get a cost effective service and new bookkeepers earn experience for when they come onto bigger accounts, so it’s a win-win situation. The only thing worth remembering for new bookkeepers is to have a mentor or a colleague you can work closely with in your beginner months to ensure you’re using best practice.”

Stephen Levine, owner of Elbess bookkeeping, says many self-employed people would probably really appreciate using a bookkeeper but think they probably can’t justify the cost. “It comes down to the perceived value from the customer and depends on how much they value their time,’ he notes. “In a low earning sector, they perceive their time as inexpensive even as their free time diminishes and may never reach the point where the value exceeds to cost.”

Most self-employed people work very hard. “A bookkeeper is an experienced professional who will free up time ensuring work is completed to a high standard in a timely manner on a regular basis.  A good one can also bring insight into the business,” says Levine.

Wayne Doran, director at Humanforce and Time Target workforce planning firms, says the role of the bookkeeper has evolved over the last few years and is set to develop even more with the growth of the gig economy in the next decade. “Many bookkeeping systems now integrate seamlessly, meaning that the bookkeeper can use their specialist knowledge and work on keeping their clients up to date and compliant rather than the traditional data entry types of work,” he notes. “Changing technology will enable the gig economy to balance out the rights of the worker and the flexible labour businesses need. The workforce is changing as well and the idea of a permanent job being required to provide job security is not as desirable to incoming millennials,” says Doran.

So, maybe the question should not be whether you can afford to hire a bookkeeper but whether you can afford not to.

Making tax digital: what bookkeepers need to know

Posted by & filed under Bookkeepers, Making Tax Digital.

HMRC’s move to digital accounting is without doubt the biggest shake-up to the tax industry in a generation – yet many bookkeepers and most people who file tax returns remain unaware of the changes and what their implications are.

So how will making tax digital affect bookkeepers – and what do you need to tell your clients?

‘Making tax digital is effectively HMRC ensuring that tax accounting finally moves into the 21st century,’ says Brian Palmer, Tax Policy Adviser at AAT. ‘The clearest comparison is with online banking; it’s moving tax into an environment where you can see tax information in real time.’

The most significant element of the changes will be the introduction of quarterly reporting. ‘There are two aspects,’ says Palmer; making tax digital for individuals (MTDi) and making tax digital for businesses (MTDfB). ‘Essentially, the idea is for HMRC to be able to collate information from third parties electronically without, in the long run, taxpayers needing to do a tax return.’ HMRC’s aim is that by 2020 ‘people with straightforward incomes will only need to log onto their personal tax account and verify that HMRC have got the information they need.’

Future moves

That goal is still some time away, but for most businesses, the move to quarterly reporting is just around the corner – the rollout begins next April. Despite this timescale, there is still confusion about how extensive the changes will be. ‘Originally HMRC wanted everybody to capture and store all purchase and expense invoices digitally; but they have stepped back from that requirement and now are just asking for transactions to be recorded using the MTD-compliant software,’ Palmer explains. ‘If clients wish they will still be able to handle, issue and store paper documents. HMRC just requires that they do their bookkeeping electronically.’

The second question mark was over whether spreadsheets would still be allowed; ‘in fact they will still be acceptable, and as bookkeeper you will just need to link your spreadsheet data with HMRC’s systems using an MTD-compliant interface.’

Why are HMRC making these changes? The impetus is largely to do with wanting to address the tax gap (the amount of tax HMRC estimates goes uncollected), which is believed to be costing an astonishing £36bn a year. ‘£9.1bn of that is estimated to be due to error,’ Palmer says. Not fraud, he is at pains to point out; ‘simply mistakes by small businesses in their record keeping.’ HMRC believe that moving to quarterly reporting will ensure the data capture has more integrity, and this is hoped to reduce the tax gap by almost £1bn a year over time.

The bookkeeper’s view

For Jo McAllister, a bookkeeper with a range of self-employed clients and small businesses, there is a need for clarity from HMRC about what’s expected – and reassurance that micro-businesses and sole traders won’t be handed additional burdens in order to be compliant. ‘None of my clients do their records electronically; they use paperwork, I do the spreadsheets and we file once a year towards the deadline. I think there will be considerable anxiety around having to file quarterly,’ McAllister says. ‘We need to know if this will affect everyone, because for sole traders – hairdressers, cleaners, child minders – this will be quite a challenge.’ For McAllister, ‘there needs to be specific communication from HMRC, with plenty of warning. If it’s arriving next April, it’s hard for bookkeepers to instil confidence in their clients if they don’t know exactly what is required.’

The changes may present opportunities for bookkeepers, because small businesses who currently file their own accounts might decide that quarterly is too complex and instead will turn to a bookkeeper. But McAllister does not believe the move away from the January spike will especially help spread her work over the year. ‘Currently I’m very busy in December, January and February because people don’t have their records ready. To be doing that four times a year – that means more pressure because there are more deadlines. You have four crisis moments instead of one!’

There’s one final sting in the tail – quarterly reporting will actually mean five filings a year, not four. ‘To ease the need to have records kept up to date, quarterly returns will not have to be 100% accurate,’ Brian Palmer says. ‘Prepayments and accruals for example may not make their way into the data in time – so to take that into account there will be a fifth and final return 10 months after the end of the accounting period, to balance the books.’

Ultimately, will going digital make life harder for bookkeepers, or easier? ‘It will make it different,’ Jo McAllister says. ‘Again, we need clarity from HMRC about what kind of filing system they want us to use. Will I have to buy new software? In which case I’ll have to pass that cost on. If I do need new software, I need to be buying it sooner rather than later so I am familiar with it. But, I don’t want to commit to that if I don’t need to. Bookkeepers need to know for sure – and they need to know soon.’

Factfile: When will the changes come in?

  • For self-employed, partnerships and unincorporated landlords with turnover above £85k: start on-boarding April 2018.
  • For self-employed, partnerships and unincorporated landlords with turnover above £10k and lower than £85k: start on-boarding April 2019.
  • Companies and complex partnerships (i.e. turnover above £10 million): start on-boarding April 2020.
  • Those with turnovers below £10k will not be required to file quarterly tax returns until their year-to-date-turnover exceeds £10k.
  • Clarification for VAT-registered businesses: it’s entirely possible that from April 2019 a VAT-registered business will be required to file MTD-compliant VAT returns, but not file quarterly their income and expenditure reports, as VAT reporting and tax reporting are separate.

Note 1: ‘On-boarding’ means ‘begin filing quarterly returns using MTD software. Your first quarterly filing may be later than these dates depending on your financial year end.

Note 2: The above is designed to be information that bookkeepers need to know, and pass on to their clients, and is accurate at the time of writing. More information from HMRC is likely to be forthcoming over the next few months.

Why and how bookkeepers should market themselves

Posted by & filed under Bookkeepers, Run your business.

For management guru Peter Drucker, only two things make money – innovation and marketing.

If you want to grow your business, marketing can be the key differentiator, especially in an industry like bookkeeping where there is a limit to how much you can innovate the service.

But there are two key mistakes that are sometimes made about marketing. Let’s address these twin myths first – and then we’ll consider how bookkeepers can use the discipline to their best advantage.

The first myth is that marketing just means promotion. In fact, promotion is merely the visible end of your marketing strategy. Marketing is actually about seeing the business from the point of view of the customer. That influences all your activities, from which parts of the market to target, right down to how you design your website, letterheads and emails.

The second myth is that marketing is a cost. It isn’t – it’s an investment. If your marketing costs you more than it earns you, you’re doing it wrong; it’s as simple as that. The key is to invest your marketing budget wisely.

So how can bookkeepers use marketing to their advantage? ‘The challenge for bookkeepers is that the subject does not in itself generate excitement and interest like a new phone or a holiday,’ says Lucy Gill-Simmen, Lecturer in Marketing at Royal Holloway, University of London. ‘One solution is to think about storytelling. What compelling story can you tell about yourself or your company to make you stand out against the competition?’

Think about how Nationwide’s current ‘Voices of the People’ advertising campaign uses poets including Hollie McNish and Jo Bell to focus on experiences of being a mother, or feelings of loneliness in a digital world, or the excitement of owning a home. ‘It has turned an un-differentiated product – banking – into something human and meaningful,’ says Gill-Simmen. ‘Banks and other service industries are finding ways of utilising marketing to make their services more interesting – and bookkeepers can do this too.’

Marketing is strategic, not just tactical

What do we stand for? How do we position ourselves against the competition? What’s our USP (unique selling point)? How can we set ourselves apart? ‘The foundation of budget-effective marketing is segmenting and positioning,’ says Gill-Simmen. ‘Build a relationship with your customer.’ For example, if you’re a small company, you might wonder how you can compete with the ‘Big Four’ accountancy firms like EY or PwC. The answer, it’s vital to emphasise, does not necessarily lie in trying to compete on price – few companies can compete successfully by being the cheapest. Rather, use your smallness to your advantage. You’re more likely to know the customer personally, you’ll understand what their needs are and you’ll know how to get to the root of their problem.

Make sure you plan effectively. ‘If you are starting out, create a formal marketing plan,’ Gill-Simmen advises. ‘This is grounded in STP – segmentation, targeting and positioning.’ Research the market to see where and how you should target your resources. ‘Outline the strategic approach before your tactical, promotional activities. Once you get to the tactical side of things, use the 7Ps: a marketing framework devised by marketing guru Philip Kotler.’

Product, Price, Place and Promotion: What are we selling? How do we price it against the competition? Where are we selling (office or web?) How will we promote it? (Online, direct mail, word of mouth…?)

Kotler’s original 4Ps are augmented by three more for service industries. People – how do we best employ our staff to add extra service for customers? Process – can we make buying from us simpler and more effective than our competitors? Physical evidence – if you are selling a service, how can the customer experience that as a tangible item?

As you can see, promotion is a key part of marketing – but it’s not the only part. ‘Once you have a cohesive and coherent plan – then you can implement it. You’ll have short and long-term goals, and the plan will also be affected by human and financial resources.’

The bookkeeper’s view

With a degree in accountancy and marketing, Lisa Newton has brought her mix of skills to the forefront of her bookkeeping company Boogles. Based in London, Newton uses a range of marketing-led ideas to help bookkeepers build their business – with a focus on generating leads. ‘A lot of bookkeepers don’t want to put themselves out there; they want to stay behind spreadsheets.’ This, for Newton, is not the way forward. ‘You need multiple streams of cashflow. Marketing and promoting yourself is the way to get the business seen by others.’

Having an innovative mindset is key to this – ‘one of the insights of working as a bookkeeper is you get to see other peoples’ finances, and you can quickly see how some companies are doing very well, and others not so well.’ In other words, an unexpected advantage of working as a bookkeeper for other people is that the data you handle on a daily basis can give you ideas about how to improve your own business – and show you what pitfalls to avoid.

The power of brands

A final tip for all professional services is to remember that you are trying to sell an intangible, and that’s what makes effective marketing more of a challenge. If you’re selling a fizzy drink, you’re selling a clearly identifiable product – the customer knows exactly what they are getting. Professional services on the other hand are less visible; ‘but there are ways of making them tangible,’ Gill-Simmen says, ‘and this is where branding comes in.’

There’s a marketing joke that runs something like – ‘what’s the difference between a t-shirt and a t-shirt with a logo?’ The answer is ‘about £12’. (Just like accountants, marketers are noted for their sense of humour). But within the joke lies a truth – by creating a brand, you add more value to your product. You do that by generating awareness of who you are and what you do, building trust and ensuring that when a customer has several choices, there’s a higher chance that they will turn to you.

Marketing for bookkeepers – essential take-outs

  • Can you tell a story based on what you do? It makes you more real to your customers, helps build your brand and makes you more memorable.
  • What problem are you trying to solve? Clayton Christensen, the Kim B. Clark Professor of Business Administration at Harvard Business School, argues that professional services customers are not ‘buying a product’. Rather, they are asking you to solve a problem. Segment your market by ‘jobs to be done’, rather than persuading the audience to buy product X from you.
  • Focus on existing customers as well as acquiring new ones. It can cost five times as much to get a new customer as it can to focus on encouraging your current customers to come back to you. Recognise that your loyal customers offer lifetime customer value – encourage them, by way of promotion or incentive, to return to you.

General Data Protection Regulation is coming – what you need to know

Posted by & filed under GDPR.

No one who lived through the 1990s will ever forget the screeching tones of dial-up internet.

The dawn of the digital age was a strange time: spreadsheets were delivered to accountants on floppy disks and mobile phones, if you could afford one, had foot long antennas. Technology has come an awfully long way in the past three decades, but, unfortunately, the same cannot be said for data protection legislation.

The European Union’s current data protection guidelines were adopted as far back as 1995. Designed to protect an individual’s right to privacy, the Data Protection Directive requires firms which digitally store personal information to follow good handling practices. Now, in the era of smartphones and social media, more companies have access to sensitive data than ever before and the legislation is due for an update.

New rules for the digital world

In April of last year, the European Union adopted the General Data Protection Regulation (GDPR) to give citizens greater control over how their information is used. Businesses in all member states must be compliant with the new framework by 25 May 2018 — and this includes the UK too.

Following the UK’s decision to leave the EU Matt Hancock, the minister responsible for data protection, was asked by the House of Lords committee whether the UK would still adopt GDPR. Hancock reaffirmed that the government intends to fully implement GDPR, and would do so in line with the existing schedule laid out by the EU.

The new rules will apply to two types of actor: data “controllers” and data “processors”. The former are individuals or organisations which determine how and why personal information is processed. The processors themselves are third parties who have access to data.

Don’t let the jargon fool you: GDPR isn’t just going to apply to Internet giants like Facebook and Google. Accountancy firms also store sensitive information on their clients — from National Insurance numbers to bank account information. This means that accountants and bookkeepers must be ready to comply with GDPR. With one year left to prepare, some firms might still be wondering where to begin. Figuring out who in an organisation has access to protected data is a crucial first step.

“Start off by identifying your personal data,” urges Liam McKenna, partner in the Consulting Services practice at global accounting group Mazars. “Understand what the definition of personal data is, get somebody in your organisation to take responsibility for it and engage with different divisions within the accountancy practice, because they’re all going to have different personal data.”

Keeping clients safe

Penalties for non-compliance are high. The EU has proposed fines of €20m or four percent of global turnover if a business fails to adhere to the rules of the GDPR. This is because leaving data unprotected is now a serious threat to economic productivity. Government figures show that two thirds of large businesses in the UK experienced a cyber breach in the year to May 2016.

It’s vital that accountancy firms, both large and small, ensure their computer systems are protected from hackers. In practice, this might mean bringing in IT consultants and investing in new technologies to make sure that client information is secure.

“Accountants and bookkeepers should carry out a risk assessment on current systems, such as a data protection health check, to identify any potential risks of non-compliance or vulnerabilities,” says Farida Rahman-Wright, professional standards manager at AAT. “They should also consider installing encryption software on all PCs and devices in accordance with Information Commissioner’s Office guidelines.”

However, no security system is going to be totally foolproof. This is why the GDPR also includes new reporting guidelines for data breaches. Under the regulations, an organisation will have 72 hours to inform the relevant supervisory authorities of a cyberattack. Accounting firms should establish reporting procedures to ensure they’re ready to spring into action if the worst does happen.

The GDPR sets a more rigorous standard for maintaining customer data and the computer systems that store it. Under the rules, individuals can also request that their data is deleted if there is no good reason for a firm to store it. While the ‘right to be forgotten’ is designed to protect consumers, data processors should be aware that deleting information is not as simple as dragging a file into the trash.

“Data erasure can be difficult due to backups, multiple systems and cloud storage,” warns Rahman-Wright. “If customers request that their data is deleted, a reliable process must be in place, while if data is deleted accidentally it must be reported. Companies in possession of the data must also notify other holders of the data that consent has been withdrawn and data should be erased.”

Accounting firms already have all of the skills a business needs to successfully comply with the GDPR. Being comfortable with data and adhering to strict handling procedures is all in a day’s work for bookkeepers and accountants. Come May 2018, the accounting profession will have another opportunity to show clients that their data is in safe hands.

How to deal with the failure of your new business

Posted by & filed under Run your business.

It’s easy to focus on the superlative-stuffed, edited bio of a successful entrepreneur: the story of how they had a Big Idea in the bath, or during mile 26 of the London Marathon, or whilst scuba diving in Mauritius, and went on to grow it into a multi-million pound business that’s disrupted a whole industry.

But the sad truth is that half of all UK start-ups fail within five years, according to research by insurer RSA. The tax system, a lack of bank lending and the cost and admin of running a business are all stumbling blocks for those starting their own enterprises.

There’s a more optimistic way to look at the depressing start-up statistics, though: many of the truly successful business founders we look up to today have at least one entrepreneurial failure behind them. Sir James Dyson spent 15 years (and all of his savings) working on over 5000 prototypes before coming up with the bagless vacuum cleaner that made his name (and his fortune). Amazon founder Jeff Bezos spent years working on failed ideas including an auction website which didn’t work. He evolved that into a site called zShops, which also flopped. It was his next attempt which became Amazon Marketplace. And no one’s doubting that one’s success.

Likewise, Arianna Huffington received almost 40 rejections for her book proposal, and bagged under 1% of the popular vote when she ran for governor of California. But instead of giving up, she launched a website called The Huffington Post which she later sold to AOL for $315 million.

What you learn from failing can help you flourish second (or third, or fourth) time around, according to entrepreneurs who have done just that. Take Scott Phillips, co-founder of Rise Art, an online marketplace which connects handpicked talented artists with casual art collectors. The company is now five years old, has 15 staff and revenues growing at 20% each month – but Phillips’ first venture, as part of the founding team of online video startup, wasn’t so smooth. He spent two years at the business, raising capital from European VC funds and angels, and managing corporate development with the likes of Myspace and Facebook. “But the company quickly floundered, as stronger competition and the rise of user-generated content video sites including Youtube gained traction.”

But Phillips says: “I now think that the failure of the company was great for me personally – it opened my eyes to how hard it is to create a sustainable business.” He advises other entrepreneurs who are starting out to “focus on validating your idea with customers and really understand the problem you solve before launching. Your customers know their needs better than you do, so focus on what they are telling you and validate your product frequently. Then focus on hiring. Get a great team in place – that’s the one competitive advantage you can build that will define your culture and help you beat the odds.”

Then there’s Tim Bowden, who dreamt of being the next Mark Zuckerberg, but alas his social media app Winebook – “an app where you could find others with similar wine tastes to yours and share recommendations” didn’t quite take off. “At the time I had the idea, I was doing some unrelated consultancy work, so I paid a developer to develop the app for me – and she turned out to be a nightmare. Consistently late, and trying to change the specification from my original ideas to suit herself – which meant delays,” the entrepreneur explains. Then a competitor launched a rival app before Bowden bought his to market, and the idea was dead.

Bowden moved on, and made an investment in a smart gas and electricity metering firm. But difficulties with his co-shareholder ultimately led to a “business divorce” and asset split. He now runs the business by himself.  “I do everything from business development and contract negotiation to raising invoices and paying bills.” His main lesson? “Choice of partner is key – as are the terms of your partnership. Any agreement that you have with a partner must be written down and signed. Never do business on just a handshake – even if people ‘give you their word’, getting them to write it down in a contract will make them think twice about it.”

Working solo is fine, too, with entrepreneur Cheryl Clarke, whose first business was City Calm, which aimed to help stressed executives “to re-connect, destress and enjoy their day-to-day”. Her business encompassed meditation classes, a retreat, lessons in creative work like journaling, mindful colouring and painting, and walking. “I got a small team together working on the project, and had an assistant – I was subsidising the City Calm business with freelance marketing work. But the business model wasn’t clearly defined, nor was the target market – and with no funding, and no clarity, it didn’t make any money.”

Clarke is adamant, however, that “despite City Calm failing as a business, it was an important stepping point. I learnt some key business lessons – focus is one, and I apply that to my current business, Ginger Marketing, which helps SMEs work on blogs and guest posts. I knew to clearly identify our services so we are upfront about what we offer, and we started getting more clients – in the last four, months we’ve gone from three to 15 clients, with some on the waiting list. I’ve learnt that failure is not really failure – it’s just learning.”

Dealing with difficult clients

Posted by & filed under Annual Conference.

Knowing how to deal with all of your clients’ needs, while protecting your own, is essential for a healthy working relationship that benefits you both.

Just as you need to deliver the service that you’ve promised, you need to also set clear expectations upfront to ensure your clients don’t have unreasonable demands about the delivery of that service. This should be established with your rules of engagement letter.

So, what can you do, if things go wrong and the business relationship starts to deteriorate?

Warning signs

These are some of the warning signs that might be indicating a breakdown:

  • The client challenges your fee
  • The client starts to challenge the quality of your work
  • Unreasonable expectations with regards to deadlines
  • A client expects you to answer their call/email, no matter what time of day or night
  • They think that you will be doing some work that you have not agreed to
  • They think you are taking too long to carry out a task/assignment
  • Sometimes there might be a “personality clash”

Remedy the situation

The first stage is to make sure that you have a solid and reliable engagement letter. It is essential that you always issue an engagement letter before you undertake any work. It will establish what is expected and from who, such as:

  • The nature of the work to be performed
  • The amount of your fees and when they are payable
  • Your obligations under the anti-money laundering rules
  • When you can expect to receive information from the client
  • When they can expect you to complete the work
  • How and when they can make a complaint

This is a great starting point and will give both parties clarity, however, don’t just assume that the client has read and understood the letter. Go through it with them and explain anything that might be unclear to them.

In my experience a large proportion of misunderstandings can be resolved with reference to the engagement letter. In fact if things go badly wrong and a claim is made on your professional indemnity insurance, the engagement letter is the first thing that the insurer will want to see. In this worst-case scenario, where the client does want to make a claim, the insurer will work with you to help to guide you through the dispute process.

So what are some of the most common challenges you’ll experience with a difficult client?

The client challenges your fee

First, refer them to your engagement letter. Often, this alone will do the trick as there might be a delay in agreeing the fees and the actual work being performed. Also, sometimes the client will simply have forgotten what had been agreed to. If the disagreement is about how long you have taken and you are charging a higher fee, you need to explain why it took longer than usual.

The client thinks you’re taking too long

There may be times when something takes longer than usual, for reasons outside of your control, such as added complications, additional queries to solve, or maybe a seasonal increase in transactions. This will be a case of tactfully explaining to the client the reason why it is taking longer and making sure that you keep them updated at all times. Let the client know in advance if the work will take longer due to these complications and make them aware of what the additional costs will be.

The client challenges the quality of your work

A client will sometimes use this as an excuse to try to avoid paying your fee. You will need to question the client as to why they are dissatisfied, ask them for specific examples and try to work with them to rectify the dispute. It may be a case of them not understanding the nature of the task. In this case try to clarify as much as possible.

The client has unreasonable deadlines

This will sometimes happen with disorganised clients. They will habitually leave things to the last minute and still expect you to get the work done on time. In this case, again you should refer them to the engagement letter.

You should then tactfully point out that you might not be able to get the work done in time due to other work that preceded theirs.

Alternatively your client may be late because they have had some problems with their business, which meant they couldn’t access the required information in time. You will need to manage their expectations in this situation. If you can get it done, without affecting other clients, then you can try to do this. If not, be honest and tell them when you will get it completed.

The client expects 24/7 service

This is a bit of a judgement call. Some bookkeepers and accountants don’t mind this, however if you have specific hours of business, make sure that this is clear on your documentation and discussions with the client. You will also need to consider how you want to approach any “emergency” calls. Stipulate this in your initial conversation with the client and be clear about your business hours and emergency call procedure.

You have  a “personality clash”

There will be occasions when you just don’t get on with each other for various reasons. Hopefully, this will be rare, however, if it does occur, it might be that you could try to modify your approach or behaviour, to make the business relationship work. If this is unsuccessful, you may need to consider not working together.

So, what do you do if we try some of the above, but to no avail and you really can’t agree a way forward?

Parting ways

On some occasions, when all else fails, the only alternative is to agree to part ways and walk away from the client/assignment. This should be done in a systematic and professional way. Here are some pointers:

Be professional

At all times, you should avoid losing your temper or getting too emotional. Avoid trying to find someone to blame. Calmly explain why you have come to this decision and what any implications might be.

If possible try to suggest some alternative means of the client achieving what they need

Issue a dis-engagement letter

Similar to the engagement letter, a dis-engagement letter details the terms for parting company and it should include the following:

  • Purpose
  • Summary of the service(s) that will be terminated
  • Current status – shows what is still outstanding and when
  • Respective responsibilities
  • Retention of records
  • Any outstanding fees
  • Confirmation that you have informed HMRC that you are no longer acting for the client (if applicable)

Agree to work with your successor

It is important and professional to work with your successor, for a smooth handover of information. Make sure you let them have any necessary information in as timely a manner as possible, to ensure that there is as little break of service as possible.

Whilst it is always unfortunate when a breakdown of a business relationship takes place, it is important to remember that this is all part of business life – these things happen.  Don’t take it personally, be professional at all times and move on – concentrate on keeping all of your remaining clients happy.

And now for the economic forecast with Oliver Kamm

Posted by & filed under Annual Conference.

The global economy hasn’t faced this much uncertainty since the Second World War, according to Times columnist Oliver Kamm; the economic model that has driven growth for more than 60 years is coming close to breaking up.

“Trade has been tremendously important for the global economy, particularly for the UK, as we are such an open economy,” he says. “All of this has been put into doubt by seismic political developments in the past year.”

Despite this uncertainty, Kamm sees some clear possibilities for what might happen over the next couple of years.

The UK may follow the Swiss model

Having left the single market, the UK will probably follow the Swiss model, which is based on bilateral deals with the EU for different business sectors. But, while this system might work for tangible goods, says Kamm, it might not for financial services. “They’ve got plenty of bilateral deals in trading goods, but they haven’t got deals in trading services, and this is something that’s also going to hit the UK if we don’t manage to negotiate a favourable deal with the EU. And not just financial services, but also creative, digital, biotech – things we’re very good at that will ideally power the UK economy in years to come. We need access to sell our expertise.”

Expect inflation to start biting

Britain, Europe and Japan are all feeling the effects of currency depreciation against the dollar, which will push inflation in the UK. “Inflation is going to be picking up well above the Bank of England’s targets at the same time as nominal wages are going to be very restricted,” says Kamm. “We’ve had a couple of years when nominal wages outstripped prices but that’s going to be reversed quite sharply over the medium term, and people are going to get poorer.”

Businesses will innovate

As in the US and the UK that emerged out of the Great Depression, rising inflation and stagnant growth could encourage companies to think more creatively about how to improve productivity. “An imaginative approach of trying to boost margins at a time of weak sales volumes is going to take a lot of thought and expertise in British industry. They’ll need specialised professional services to help them along the way,” says Kamm.

SME-sector growth is unlikely to slow

“I don’t want to imply it’s too rosy a picture, because, while the labour market is very close to full employment, some of these jobs can’t be paying very well,” explains Kamm. “But my interpretation is that there are a lot of entrepreneurs and self-employed people who are taking risks and trying to establish themselves.”

Big businesses are likely to sit it out

There are signs that larger companies are stockpiling cash, which suggests many will stop investing for the foreseeable future, because demand is currently difficult to predict. “It’s very difficult to scale back investment once you’ve started,” says Kamm. “That, I think, is going to be a prominent theme in the economy next year. But, for smaller companies, which can define their market more precisely, I think there’s an opportunity for them to take market share just by doing what they’re doing [now] and doing it well.”

The UK won’t become a tax haven

“I think it’s impossible to foresee the 27 EU negotiating partners looking kindly on the UK if we cut corporation tax. It seems to me to be very unlikely to work as a strategy outside the EU, because the companies that we’d be seeking to attract – big, international companies – are not really driven by the corporate tax rate. They’re driven by the ease of doing business, access to markets, and so on,” says Kamm. “The big thing that will matter for most international companies is: can they sell into Europe?”

This article first appeared in the March/April issue of Accounting Technician.