Have you ever wondered how some businesses seem to fly along increasing in size and revenue and other businesses struggle to just maintain the same profitability, even though they are in the same market? The businesses can look the same to the casual observer but what happens on the inside is a different story. There’s no single thing that makes them different but there are usually a number of distinct things, some of which can be just small things, but combined they make a huge difference.
Peter Vickers has an accounting practice employing 15 people with a turnover of $2.5 million. I asked him: what are five lesser known things that have made a significant impact on the profit of your business?
1. Become a paperless office
Peter estimates this saves 5% of all employees time. It may seem like a bewildering task to do but it’s actually easier than most people think. Just pick a start date, scan all constitution, deed and trust files then lock up your filing room. From that point on any work done will be with paperless files. Just work normally but scan documents as you go. Don’t scan old files.
2. File using a client-centric system
An effective filing system is necessary to gain the most benefits to a paperless office and perhaps this is one of the reasons it can seem like such a challenge to go paperless.
The solution is to organise documents in a client-centric manner:
- Have one folder per client
- Have sub-folders for each year
- Within each client folder have a sub-folder dedicated to signed copies of tax returns, ASIC documents, deeds, constitution and minutes.
- Within each client folder have sub-folders that mirror your current filing system e.g. tax, land tax, working papers, general ledger etc.
- Name documents using the clients’ name e.g. BOSS Bank Statement July 2010
A system that simplifies the paperless / filing system still further is How Now by business fitnessTM (details and a special offer at the end of this article).
4. Standardised procedures
Training staff and having people do things the way you need it done is so important to the smooth running of any business. But this can be a real challenge with having new staff join, rotated or promoted to other jobs.
Having everyone do what you want, when and how you want it done is no mean feat. What you need is a set of procedures that details the “what, when and how” but also improves and gets better over time. For a small business especially, this task can be a challenge but Peter believes the time and trouble is well worth it. He estimates efficiency can be increased by a further 5-10%.
Peter’s staff all use HowNow which has a myriad of standard accounting procedures and templates. It is a source of reference for anyone needing help. The other great benefit of HowNow when it comes to procedures is that new procedures and information pertinent to the running of your business can be added to one easily accessible reference library.
5. What to charge for superfunds
If you struggle to budget for how much time will be spent on a job and therefore how much to charge, then you are not alone. But over the years Peter has evaluated jobs done and has a rule of thumb for superfunds that he thinks invariably works:
Charge 1% of the value of the superfund to your client (with a minimum fee of $2,500)
This will ensure your client is not surprised by your bill and you do not under estimate the time taken to do it.
Using the above rule of thumb, you could save yourself thousands by never having to absorb the cost of under budgeting again. However if you use BOSS to do your superfunds you will reduce your costs by a further 40%. That’s 40% that can go straight to the bottom line.
So let’s add up the (conservative) estimates for increased time and therefore profit.
Just to demonstrate the value of the above five little known secrets, assuming you had a practice with a turnover of $900k. You handle 20 small superfunds and typically charge $2,500 to do them.
Profit last year $300k
Increase of 15% (implementing points 1 – 4) = $45k
Increase of 40% per superfund (20 x 1,000) = $20K
Total increase in profit = $65k
You have just increased your profit by over 21%!
No extra clients required, no additional services need to be offered. In fact less effort is required.
Businessfitness and Your BOSS SPECIAL OFFER!
The team at Businessfitness are Paperless Office Specialists and have the software and standard procedures and templates to achieve the benefits that Peter has discussed. For more details on HowNow go to www.businessfitness.net or contact Margaret George on 1300 333 424.
A FREE Email Management system is available to all firms who mention this article and BOSS.