The tax rules for employed for claiming working from home expenses are different. Though you can claim for gas, electricity and water expenses, it would not be in the same way as a self employed person. Your bills, insurance and mortgage repayments are seen to be fixed anyway as they are your usual household bills regardless of whether you work from home or not. You can therefore only claim for the extra energy that you have used and not a percentage of the overall costs. You cannot claim relief for the cost of your telephone line rental or internet access as you would have them for personal use anyway. You can however, ask for a deduction for the cost of the calls made on behalf of the business. A reasonable and acceptable amount to ask for would be about £3 per week plus the cost of business calls on top. If you did want to claim more than this then you will be asked to prove that your household bills have increased (by the figure you have asked for) due your work. You can potentially claim these expenses dating back several years depending on what you have stated on previous (if any) Self Assessment Tax Returns.

The HMRC tends to like these expenses to be paid by the employer as opposed to them, as it is a mutual agreement between yourself and your employer that you work from home. If however your employer refuses to pay then there are other certain criteria that must be met, and if any of these requirements are not met then no relief at all will be given.

• First and foremost that you must show that you have no alternative choice but to work from home. As stated in the HMRC Tax Bulletin Number 79,

“there is an objective requirement that those duties should be carried out at the employee’s home and nowhere else.”

• There is a very fine line with this rule and if the employee has even the slightest choice, they will not be given any form of relief. For example it is acceptable if your employer’s premises are too far away for you to be reasonably expected to travel there on a daily basis providing that you did not have a choice in this, i.e. by moving further afield, excepting a job too far away or turning down an offer to relocate you.

•  The work you carry out from home must be “all or part of the central duties of employment”.

•  You require certain hardware/software or other facilities that are not available at your employer’s premises.

So to summarise, tax deductable expenses for working from home can be claimed providing that they are realistic, that you meet certain strict criteria and that your employer does not already pay you for these additional costs you incur due to your job. Please ask a trained accountant if you require additional information or clarification as to what you can claim.

Written by Becky Drummer-Jones

Simply enter your annual profits and calculator below will inform whether or not you will save more money by staying as a sole trader or registering a limited company.

Always seek professional advice before making a final decision.

Powered by Companies Made Simple – The simplest

HMRC can at any time request to visit your business premises to inspect your “VAT, customs and excise duties records”. And if you claim expenses for working from home then they may well request to visit you there. However, you do have the option to arrange the appointment at alternative venue and it is normally recommended that this takes place at your accountants office. If they are adamant that your home or business premises is the place they want to visit you at then they must have a specific reason for this and there are certain rules they must abide by:

• They can only “inspect” the areas of your home that are used for business.
• You can request they leave at any time but they will want to know your reasons for wanting this and also to arrange another visit. If you refuse this then it could lead to further questions and possible penalties ranging from £60 per day up to £3000.
• They have the right to “inspect” your premises, not “search”. Meaning that they can not specifically hunt for things to go against you. They can only look at the records they have requested, to check that all is in order.
• They have the right to look at business records but not to question/interview employees to find out more information.
• They can request information on the personal financial position of the proprietor/director of the business to check that their position is in line with the taxes being paid, but once again they cannot go “fishing” for extra information.
• As a general rule, they cannot remove documents from the premises without your agreement, they can only make copies or take extracts. But there are some documents that they do have the right to remove such as “legally privileged papers, tax advisors papers and appeal material”.  If they do remove anything from your property then you must make sure you get a full and detailed receipt of exactly what has been taken.

Though the HMRC can make unannounced visits, they usually provide you with either a phone call or letter seven days prior to their visit. In that notification they will state exactly when and where they will be visiting you, the name of the visiting officers and what documents they are coming to look at.

Once at your premises, they cannot demand to see extra documents that were not stated in the original notification. They would have to arrange another appointment for these. However if they find anything useful or unusual relating to another area in the documents they already have permission to view, then they can pass this information for further investigation.

The things they will usually be looking to review are things like your receipts, expenses of the business, sales and purchase records as well as possibly your PAYE and VAT files. They may also check equipment, raw materials and products produced. This is to make sure that all of these areas are relative to each other and that you are not claiming fraudulently. These inspections can take anywhere from a few hours to several days depending on the size of your business.

It is always a good idea to cooperate with the HMRC when they want to visit as though you can negotiate when and where the meeting will take place, you can never actually stop them from coming at all. And it is best to be prepared for them, than to have them make an unannounced visit which they would inevitably do if they are constantly turned away. You do have the right to refuse them entry but this could result in deeper investigations and if you have nothing to hide, then you have little to worry about.

Written by Becky Drummer-Jones

You can only claim for “allowable expenses”. The HMRC describes these as the expenses you have incurred for the,

“travelling you had to do whilst doing your job”

 or the

“expenses you had to pay whilst doing your job and which related ONLY to doing your job”

There are also a few other factors that determine how much you can claim. Whether you are self employed or employed is one. How often you work from home is the second. And the third is whether or not you have a choice in working from home.

Self Employed

If you are self employed and work solely from home then you can claim back part of the costs for household bills such as water rates, gas and electricity as you are effectively using more energy in order to carry out your work. You could potentially even claim for a relief against your council tax, rent, home insurance and mortgage payments as these are also things that need to be paid in order for you to not only live in your home, but also work there. However, it is not beneficial for you to have a room dedicated solely to work, such as a home office that is private or out of bounds to the rest of the family. This is because it could cause problems further down the line regarding Capital Gains as your Only/Main Residence is now being used for work too. This usually reduces any gain to zero. It could also impact on your home insurance. It is therefore much better to simply have certain times that it is a “work zone” and other times for more recreational or family use.

If you are working mainly from home then the method to work out roughly what you should attempt to claim follows this simple formula:

 Total bills (water, electric, gas etc) ÷ number of rooms in the house = Amount A

Amount A x number of rooms used for work = Amount B

Amount B should be relative and in keeping with the type of business you run. As if you try to claim a little extra than normal, this will often be noticed by HMRC and in turn cause them to investigate. This is also the same situation if the second method of estimation is used. This option would be used if you work rarely or inconsistently from home. Common sense says that if you are only doing small amounts of paper work from home then far less energy will be used as opposed to if you were running the business solely from home. However this does not stop people slightly exaggerating their claims. There are no set limits or levels for particular trades but the main objective is to stay consistent and in line with your normal household bills and type of work.

The other way that you should be able to claim working from home is through fixed HMRC allowance. In the main the taxman will not ask questions if you claim these allowances. You will get a flat rate deduction of £3.00 per week (from 2008-09) for each week that you’ve got to work at home, this doesn’t include the cost of business telephone calls

Written by Becky Drummer-Jones

The general rule of thumb is that you cannot claim for the cost of clothing that is “ordinary clothing worn by a trader during the course of their trade”. For example you cannot claim for business suits or smart office attire. Although these items are the general standard most companies require, they have an “intrinsic duality of purpose”. This means clothing can be used for work and non-work purposes.

Tax relief is available for certain types of clothing. These include:

• Uniforms.
• Items of clothing with the company logo.
• Safety wears such as boots, gloves, overalls and helmets that you cannot do your job without.
• This is also extended to tools you have to buy/repair yourself in order to continue working.

The reason for this is that there is no real opportunity for you to wear these clothes in a casual setting, outside of work. This is then considered the sole use of the items involved and therefore a business expense. The tax relief also covers the cost of cleaning, repairing and replacing the items concerned.

The amount of tax relief you will receive depends on the nature of your work. You can either claim tax relief on the full amount that you have spent over the year (you would therefore need to collect all receipts that relate to purchases or up keep/cleaning of your work clothes). Another option is to claim a flat rate relief. You will receive a “flat rate deduction” that is decided by HMRC which varies from trade to trade. For example a carpenter may receive up to £140 per tax year due to the fact their clothes/uniform will have more wear and tear than say a security guard who could potentially claim up to £60 in tax deductions per year in order to purely cover the laundry/repair costs.

The process of claiming tax relief depends on whether you are self -employed or you are an employee. It is fairly straight forward.

Employees – Employees on PAYE can request a P87 form (for claims under £1000) from HMRC.  Tax relief is given will be given through adjusting your tax code (not a direct refund) to allow for the expense. You cannot claim tax relief on your clothing where your employer reimburses you for this expense..

Self Employed – As a self- employed person you can claim tax relief on when filling out your self assessment tax return. But the best way would always be to use a good accountant as they have a much better insight as to what and how much can be claimed.

Written by Becky Drummer-Jones

We are like any other business. We are looking for cost effective ways to increase our exposure to potential clients. One area we think will generate  good return on investment is on car branding.   Most accountants are traditionalist through their training as a result they have not exploited this lucrative area.

We are different. We would like to brand our cars with tasteful designs that is in keeping with the profession but at the same time are not boring and stuffy. Here is where you come in.

We would be grateful for your views (feedback) on the  car branding design links below. Please indicate which one you like. The one with the highest number of votes will be our chosen design.

Thank you in advance for your time.

Here are the links:

beetle_rosette This file has 6 pages

lines This file has 2 pages

A big thank you to Bison Bison (one of our clients)  for the designs.

They should reflect what you are trying to portray with your décor and choice of furnishings. This doesn’t always mean you want them to look expensive, as you may not want people to think they are paying for your luxury premises.

Use posters and blow-ups of adverts and press articles about you inside the building.

Your premises need to be tidy both inside and out. An untidy premises infers an untidy disorganised business. How often do you see the team at McDonalds tidying up outside – they know it matters.  Tax Inspectors are trained to interview people in rooms without any other files. What this does is create an impression they have all the time in the world to look into your affairs. Take a look at how tidy your premises look and whether it conveys the impression you want.

Not all businesses need special premises, and many self-employed people can work from home, creating convenience and cost savings. You may need to notify your house insurers as working from home can change the risk and your mortgage company. However, they are not normally a major obstacle. You could also look at using a shed in your garden and there are many suppliers of garden offices and workshops. Insurance for these will be a bit higher because of there being less security.

Serviced offices are also a very flexible way to take premises without any long-term commitment, often taking a licence for just one month at a time. They also offer services such as typing, reception, furniture, phone lines, etc.

If renting, get a solicitor with commercial experience to look at the lease. Areas to consider include…

• Length of the lease.
• Rent level.
• How often and the terms of rent reviews.
• Restrictions on use of the property.
• Can it be sub-let?
• Can you sell the lease on?
• Who is responsible for repairs and renewals?
• Who is responsible for internal decorating?
• Who pays the legal fees in connection with the lease?
• Consider the need for a survey, especially if it is a full repairing lease.
• What are the rates?

Please visit our Home page. We are accountants in Mitcham, accountants in Wimbledon, accountants in Wandsworth, accountants in Southfields, accountants in Putney, accountants in Balham and accountants in Tooting

If your prospects don’t believe you, you won’t make the sale.

This is where the power of testimonials and case studies comes in. It’s praise from your existing customers, the media, other experts or even a celebrity. They are extremely powerful.

You must have systems to collect them and then leverage the power of them by using them in all your marketing materials.

Please visit our Home page. We are accountants in Mitcham, accountants in Wimbledon, accountants in Wandsworth, accountants in Southfields, accountants in Putney, accountants in Balham and accountants in Tooting

The customer is the most important person in the world, right? If there were two people left in the world and one has to die, you or the customer, who would it be?

Now, we’re agreed you are the most important person in the world.

The problem is that the customer thinks they are and that’s why you have to treat them that way if your business is to be successful.

Would you believe that if your customers are satisfied, you’re in trouble? That’s right, you read it correctly…

Let’s say you have a 95% customer satisfaction rating. Sounds great, but what it means is that you have 5% going round telling everyone how awful you are. The other 95% felt ok about you so they may shop with you but they could shop anywhere – they don’t have any special loyalty to you.

What’s more, a dissatisfied customer is 20 times more likely to tell someone. So if 95% of your customers are happy, you’ll have more negative than positive message out in the market place.

It’s loyalty you should be after, not just satisfaction. For example, the typical customer satisfaction question may ask “did you enjoy your stay?” or  “were we friendly?” The only answers these give are ones of satisfaction, not designed to find out if the customer felt great and had a memorable experience that creates loyalty. You must use questions designed to find out how loyal your customers are.

Here are typical examples of how most businesses treat their customers and why their customers will never be anything more than just satisfied…

“We’ve done all we can…”

“You’ll have to…”

“That’s not my job…”

“The person who deals with that is on holiday”

“Our policy says…”

“We’re out of stock, I don’t know when we’ll have some more”

“What seems to be the problem”

“Let me transfer you”

“I’ll have to check if that’s OK”

“Sorry, that offer ended yesterday”

“Why didn’t you…”

An insincere “Sorry about that”

“You don’t have to be rude about it”

“I’m just doing my job”

And aren’t those computerised phone systems great for customer service, not!

The list is endless. So many people seem to act like they’re doing the customer a favour.

The best rule to follow is…

If you wouldn’t like it done to you, don’t do it to someone else.

Please visit our Home page. We are accountants in Mitcham, accountants in Wimbledon, accountants in Wandsworth, accountants in Southfields, accountants in Putney, accountants in Balham and accountants in Tooting

Using the right fonts in your marketing materials will dramatically increase results. You need to select the fonts you are going to use and use them consistently in everything you do. You must understand where to use serif fonts and where to use sans serif fonts and all the formatting tricks you can use in marketing materials. You don’t need an ad agency to do any of this.

Please visit our Home page. We are accountants in Mitcham, accountants in Wimbledon, accountants in Wandsworth, accountants in Southfields, accountants in Putney, accountants in Balham and accountants in Tooting

There are only 2 ways to increase profits. Either you increase sales or you reduce costs. It’s that simple!

However, the amount you can reduce costs by is limited but the amount you can increase sales by is unlimited. So there is far more potential in increasing sales.

There are only 3 ways to generate more sales…

• Increase the number of customers.
• Increase the value of each transaction.
• Increase the frequency of sale to each customer.

More importantly, if you do all 3 together, you can achieve far higher growth.

For example, lets look at the following scenario…

• You presently have 100 customers.

• The average transaction value is £100 for a product that costs you £30 to produce.

• The average frequency of purchase by a customer is 10 times a year.

• Fixed overheads are £20,000

Therefore the annual profit is presently as follows:

Sales 100 x £100 x 10                         100,000

Cost of Sales 100 x £30 x 10              30,000

Gross Profit                                           70,000

Fixed Overheads                                 20,000

Net Profit                                            50,000

If we now increase all three sales generators by 10%, we get the following results.

Sales 110 x £110 x 11                         133,100

Cost of Sales 110 x £30 x 11              36,300

Gross Profit                                           96,800

Fixed Overheads                                 20,000

Net Profit                                            76,800

So profits have now risen by £26,800, a 53.6% increase as result of improving all 3 generators by just 10%.  This shows the power of working on all 3 areas at the same time to achieve maximum results.

The marketing tools you can use to get growth in all three of these areas can be categorised in the following areas.

• Lead Generation – of quality leads.

• Lead Conversion into sales.

• Re-selling to existing customers.

An overriding factor in all these is outstanding customer service, particularly in re-selling to existing customers. Increasing your number of customers is a factor of both how many you gain and how many you don’t lose.

Remember never to sacrifice profit for growth. There is the saying “turnover is for vanity, profit is for sanity”.

Please visit our Home page. We are accountants in Mitcham, accountants in Wimbledon, accountants in Wandsworth, accountants in Southfields, accountants in Putney, accountants in Balham and accountants in Tooting

Marketing is often the difference between success and failure of a start up business…

Customer Dedication

Successful businesses all have an understanding of their customers needs or rather perceived needs and a total dedication to their customers.

Their marketing strategy is built around the customer – “what must the business be for the customer to choose us?”

Everything they do is focused on the customer and they are continuously improving how they do it.

In order to do this they need to understand the demographics (who they are) and the psychographics (why they buy) of their customers. Only then can you build your business to serve them.

Adding Value

Customers buy perceived value, which is the difference between the perceived benefits and the price. The more you increase the difference the more value that is added to the customer. The benefits are unlimited but there’s only so low the price can go which is why it’s often better not to work on the basis of price-cutting.

Explaining that a pair of shoes are made of leather, why they are more comfortable, shock absorbing, will last, etc will make their perceived value higher than the same shoes that are not so described.

Please visit our Home page. We are accountants in Mitcham, accountants in Wimbledon, accountants in Wandsworth, accountants in Southfields, accountants in Putney, accountants in Balham and accountants in Tooting

When you take on your first employee, you move into an area of additional obligations and a lot of red tape. You have to make sure you have the money to pay the wages, perhaps before your customers pay you.

You have to operate a PAYE scheme to deal with the tax and national insurance on their wages.

The national insurance includes the employees national insurance which is deducted from their wages but the additional cost to you is employers national insurance which you have to bear.

You will also find you have other obligations…

• To adhere to the minimum wage legislation.

• To adhere to the Working Time Regulations that control how many hours a worker can work. Generally, most employees cannot work more than 48 hours per week and must have one whole day off, although the employee (not the employer) has the option to opt out of this. Employees are entitled to 28 days annual paid holiday.

• Redundancy pay if you have to lay off any of your employees.

• The employee has a right to a written statement of the terms and conditions of their employment.

• To provide itemised pay statements.

• To take out compulsory employers liability insurance.

• You must not dismiss the employee unfairly.

• The employee has the right to join a trade union.

• The employee must be given time off for certain public duties.

• You must operate a PAYE system to collect tax and national insurance from the employee and pay it over to the Inland Revenue.

• You must also deal with statutory sick pay and statutory maternity pay.

• You have to administer the repayment of student loans and stakeholder pensions as well as payment of Tax Credits through the PAYE system.

With all this you may be tempted to do away with employees and just use self-employed contractors to work for you. However, you need to ensure they are properly self-employed. Just because you say they are does not make them self-employed and the Revenue are wise to this. There are ways of improving your chances but if you get it wrong, the consequences can be substantial including the Revenue demanding from you all the tax and national insurance that you should have deducted and your chance of now reclaiming it from your employee may be minimal.

You can create a system that your employees are capable of following but only if the employees are motivated to do so, will they actually do so. You can lead a horse to water but you can’t make it drink.

You must create an environment in which the employees want to follow the rules and are motivated to achieve their full potential. People work harder when they are motivated. Just imagine the impact you can make if you change the attitude of your employees from “I have to go to work “ to “I get to go to work”. You don’t want people whose spirit dies as they enter the office door.

People’s basic needs have to be met first which comes from the cash you pay them. However after that, it’s all down to motivation.

Please visit our Home page. We are accountants in Mitcham, accountants in Wimbledon, accountants in Wandsworth, accountants in Southfields, accountants in Putney, accountants in Balham and accountants in Tooting

VAT PAIN RELIEF – Remedy

VAT for most entrepreneurs is a real time consuming administrative burden they rather do without and get on with their business. We understand this.  We can help you ease this burden.  As part of Global Enterprise Week we are pleased to support entrepreneurs with their VAT obligations.

To help you we have teamed up with Southside Accountants to support and guide you on VAT. Southside Accountants are based in our Generator Business Centre in Mitcham.

Southside Accountants will help you answer the following key questions on you VAT responsibilities:

• Do you need to register for VAT?

• When do you have to register for VAT?
  

• When is it worthwhile for you to register for VAT voluntarily? What will you gain?

• How do you register for  VAT?

• How will VAT affect your selling price?

• Which products and services  can you claim VAT on?

• How to avoid the dread of the VAT return arriving at your doormat?

• How to prepare  your VAT  figures?

• What is a Flat rate scheme? Would a Flat rate Scheme might be good for  your business?

• How should you avoid VAT penalties?

• What are the penalties for late submission?

FREE ONE HOUR  CONSULTATION WITH NO STRINGS ATTACHED

Southside Accountants will provide  free one hour consultation on your VAT affairs. This is in line with the ethos of The Generator Business Centre -nurture new and existing businesses..

Please make your request through The Generator Business Centre Mitcham -020 8408 1501.

Southside Accountants have agreed  to provide this consultation without any commitment on your part. The aim of this  consultation is to support you with your VAT obligations. They  promise not to sell their services or ask you to become their client. This would not be the purpose of the meeting. All they will  ask is in your own time leave them an honest testimonial.

WHO WILL YOU SEE?

You will meet the Aziz Sattar founder of Southside Accountants. He has vast experience in advising start-ups and small businesses on their VAT obligations.

Aziz earned a Bachelors of Honours in Accountancy from University College Cardiff. He then went on to become a Chartered Certified Accountant. He further sharpened his business skills and gained a Masters in Business Administration from the Open University.

Please visit our Home page. We are accountants in Mitcham, accountants in Wimbledon, accountants in Wandsworth, accountants in Southfields, accountants in Putney, accountants in Balham and accountants in Tooting.

At McDonald’s…

Wouldn’t it be great if your small business…

• Worked without you. Only if your business can work without you will it have any great capital or sale value.

• Delivered its product or service consistently time and time again to the customer.

• The employees did it the same way every time, the best way.

If we’re going to learn from the small businesses that successfully do this, let’s take a look at the most successful small business in the world, McDonalds. Even if you don’t like what McDonald’s sell, there is no denying it is a hugely successful business.

At McDonald’s…

• The owners don’t work in the business flipping burgers.

• You know when you go you’re going to get the same consistent burger every time, with the same customer experience every single time, which is why people go there. They give the customer exactly what they are expecting every single time, there is no disappointment and so the customers return.

Similarly, if you went to a printer and got a great print job done the first time but the next time there were a few mistakes, you’d be far less inclined to return again. How comes it was perfect one time and not another? That doesn’t happen at McDonalds. What’s more, they manage to do it at thousands of their restaurants all over the planet.

• The burgers are the best tasting burgers made the same way every single time. They’ve found their best formula and they use it consistently, only changing it when they find an even better formula. And that is true for every part of the McDonalds experience from the food, to the greeting, to the cleanliness, to the kids packs, etc. Everything works and is done the same way until they find a better way to do it.

It doesn’t matter who does a task, they always follow a system, so that it’s then done the same way every single time and the customer gets the same experience every time they go back.

When one-person leaves and another joins, how comes it still gets done exactly the same way.

Although McDonald’s is a seemingly low quality product, it is an extremely high quality business which customers value and have great loyalty to.

McDonald’s has the entrepreneurs with the vision to move the business forward, the managers who manage the units and the technicians who work in the units and they all work together in harmony.

Of course, it’s because they have an organisational strategy, a management strategy and a system for everything they do. It is the ultimate systematized business that runs just like clockwork.

Just because your business isn’t McDonalds doesn’t mean you can’t learn from them. It is what is known as a Business Format Franchise.  This is the type of franchise operated throughout the world by many other businesses and it’s no surprise that franchises are far more likely to succeed than any other start up business.

When a McDonalds franchise is taken, the franchisee gets far more than a brand name. They get a whole way of doing things that work and not until they have learnt the way things are done, do they get the keys to the door.

Just because you are not going to franchise your business doesn’t mean you can’t learn from how they make everything inside the business consistently happen. If that happened just inside your one business unit, without you working in it, wouldn’t your business be a great place to go to work, or not work if you so chose.

When Ray Croc took the McDonald brothers burger business in 1954 and set about figuring out how he could make it work, he set about working on the business and not in the business. The business became the product to him, not the burgers and it was the business he worked on.

The key is to work ON, not IN the business. If you are a one-man business, not wanting to grow, this perhaps isn’t true to the same extent, although certain things can still be learnt from it about ensuring you deliver consistency to your customers. A one-man operation may not really have a business; they have a job, possibly a well paid one, with customers as their boss. This doesn’t mean there is anything wrong with the one-man operation. The world is reliant on many one-man operations, it’s just that some of these principles apply less to them.

For every other small business that wants to develop, you’ll only do so if you get to work on your business and stop working in it. As an extreme, you can imagine that you are going to make another 1000 just like it. What would you have to do to achieve this? You would have to completely systematize your business.

An analogy that can help with the understanding of working on, rather than in your business, is a game of monopoly. If you are the hat in the game, you are simply a piece in the game and you don’t make the decisions, you can’t influence the game at all. However, by being a player in the game and being able to see the whole board, you can start to put strategies into place that will have far more of an influence. You are now working on the game rather than being in it. It’s exactly the same for your business, you can have far more effect by working on it.

Before we get carried away, a word of warning. Some small businesses have tried to systematize their business and got so carried away with it that they spent all their time doing just that and failed almost before they got going. Some people believe the E-Myth book sets a standard that most people cannot hope to meet. Common sense is the operative word and the E-Myth is a must read book for every entrepreneur.

You have to operate and generate enough income to put food on the table, pay the mortgage, etc. This has to be the first priority. After that, look to work on the systems for your business that will …

• Give consistency to everyone – your customers, suppliers, and employees.

• Be operated by people with the lowest possible skill level. This enables you to find staff when you need them at the lowest possible price. You don’t want systems that can be operated by only high quality people, because when that person leaves, you will have trouble getting a replacement.

Sure, you say McDonalds is not like your business. So let’s take a far more complicated business such as a firm of solicitors. If a firm of solicitors was to employ only the brightest legal brains it would be extremely difficult to consistently offer their level of legal knowledge, as it becomes very difficult to find a replacement should they leave, be ill, etc.  However, if they were to develop services that could be provided by anyone with an average legal brain, they would be able to grow and leverage the business far more.

• Enable you to eventually not work in the business at all.

Even if you just focus on the most critical things you do in your business and systematize these, your business will be far better for it.

So what you need is a systems dependant rather than a people dependant business. The systems run the business and the people run the systems. You can’t do without people, but the more you systematize, the less dependant you become on people.

Organisational Strategy

If you are going to develop a business that is not people dependant, you need to have an organisational chart that starts not with peoples names on it but with the positions that need filling.

It helps to draw an organisation chart based on what you want your business to look like rather than how it is at present.

The positions on the chart should relate to employee functions (managing director, sales director, accounts, etc) rather than named people. This ensures it’s the system that you’re concentrating on.

Once you’ve decided the functions you need in each box, then you can allocate people to fit those functions.

Let’s say there are three owners of the business but there is only one position for managing director. Instead of having 3 people all trying to be the managing director that creates conflict, duplication of resources and nobody knowing what their responsibilities are, you agree who is likely to be best suited to that position and put them into it. The other two, take other positions. They still all own the business equally but now they are starting to organise the business far more effectively.

To start with, you may be the only one in the business. That doesn’t matter – just put your name in each box. As the business grows you move out of some boxes and get other people to move into the box. However, in the box will be a system for them to follow so that they do it the same as you. Now you’re starting to build a business that works.

Look at each position in the chart and outline what is expected of each position. In the most profitable businesses, people know what is expected of them.

Please view our Bookkeeping system video