Reckon your limited company is run with efficiency? You’ll be across these 12 areas, then
Running a small company presents its own unique challenges, from managing finances to ensuring cyber security. As a company owner where the ‘staff’ is just you, you're not only an entrepreneur -- you're a multi-tasking maestro. Or at least you need to be if success is on your to-do list.
So here, exclusively for ContractorUK, I want to outline how to streamline your operations, reduce risks, and set your business on a path to prosperity with some quick-wins on efficiency, writes chartered accountant Anthony Mellor of Mellor & Co.
1. Converge tax compliance and cyber security
A smart move on tax and HMRC compliance isn't just about numbers; it's about safeguarding your business. Integrate your tax and payment strategies with robust cyber security measures. Protect your data; financial information, and customer records from cyber threats by adopting encryption, ransomware defences, and data compliance practices.
2. Simplify email and domain management
Efficient email and domain management are crucial when the going gets busy. And inboxes are notoriously difficult for top professionals to stay on top of, as a director posted about only yesterday.
So shift to instant messaging (IM), to bypass spam, and enhance communication so as to avoid that key decision day when your vital email doesn’t get through. Then centralise domain management to keep track of renewals and avoid potential disruptions.
3. Leverage borrowing wisely
Borrowing can be a lifeline for growth, particularly when your back is falling the wall in this cost-of-living crisis.
But truly understand your borrowing options; interest rates, and repayment terms. Borrow wisely to fuel expansion, but ensure it aligns with your cashflow projections. I’ve advised too many business-owners who in a rush to expand, overlooked this important alignment.
4. Embrace automation for efficiency
Time is money, and automation is your ally. Automate routine tasks such as invoicing, payroll, and social media scheduling. This not only saves time but minimises errors and boosts efficiency. It’ll also subtly make you more au fait with the tech of the future, if it’s not already part of your wheelhouse.
5. Cashflow is king
I mentioned it earlier, but cashflow – and more precisely cashflow management is the heartbeat of your business.
Monitor cashflow extremely closely, and regularly project future inflows and outflows. The preppers of the limited company contractor world (and there is of course an Autumn Statement incoming on Nov 22nd), maintain a cash reserve to navigate unexpected challenges. And it’s good to have that warchest or buffer for other reasons. Who wants to be a few bob short waving farewell to a once-in-a lifetime growth opportunity?
6. Embrace data accuracy and efficiency
As an excel specialist I may be a bit bias, but spreadsheets should still be the backbone of your company’s financial analysis. Make your spreadsheets error-free, accurate, and efficient. Invest in spreadsheet software or templates to save time and ensure precise calculations. If in doubt, consult someone like me.
7. Know your deadlines and keep them in check
Agencies were only the other day waxing lyrical on ContractorUK about knowing both your timetable and theirs. And I agree -- missing deadlines can lead to penalties and reputational damage, massively so in the compliance space.
So maintain a calendar of key dates for tax filings, reporting, and renewals. Stay ahead of deadlines to maintain your business's credibility. There’s little that’ll sink your prospects more immediately than ‘I forgot.’
8. Risk management -- your shield against uncertainty
Understand the risks your business faces and develop a comprehensive risk management plan. Prepare for contingencies like sudden market changes or disruptions in supply chains.
9. Balancing solvency and insolvency
Cashflow issues can tip the balance between solvency and insolvency. Monitor your financial health consistently. If you foresee trouble, take action to restructure, renegotiate, or seek professional advice.
10. Learn to pivot and restart
Businesses evolve, and sometimes a fresh start is necessary. If your business model isn't working, don't hesitate to pivot. Restarting legally (check the anti-phoenixing provisions), and realigning strategically can breathe new life into both you and your business.
11. Embrace the law to your advantage
Legal knowledge is a powerful tool. Understand laws related to contracts, employment, and liabilities. Protect your interests while staying compliant. Subscribe to unbiased sources of information and ask bonafide, trusted, qualified experts in the field. That case law 'expert’ with a 2:2 in Business Studies? Maybe don’t ask him anymore.
12. Manage debts actively
Outstanding debt can choke your company’s cashflow.
Implement a proactive debt management strategy, should arrears accrue. Offer payment plans, follow up on overdue invoices, and consider legal avenues if needed.
Wrap-up for limited companies too time-efficient to read the above...
In conclusion, success in the small business and contractor company world demands a multi-faceted approach.
Converge your tax compliance efforts with smart cyber security practices, harness automation, and keep a close eye on cashflow. Navigate the complexities of legal compliance while actively managing risks and debts. By integrating these strategies, you'll position your business for growth and resilience, ensuring that your risks are managed and your profits optimised.