Author Archive

Why my small business switched to Xero

Written by admin on . Posted in Business, XERO

Today’s guest author is small business and finance expert, and co-host of Sunrise, David Koch.

David Koch on online accounting for small businessI’m not a huge fan of the Super Bowl, but I love seeing the ads. They’re always the highlight of the whole event for a lot of people. This year there was a great ad by BMW that showed a clip of two TODAY show hosts from 1994 who were reading an email address out loud. It was obviously the first time they’d done so. They didn’t know how to pronounce an ‘@’. This led to the perplexed duo questioning “what is internet anyway?”

Today’s rapid outpouring of technology and innovation often leaves business owners wondering “what is this?” and “do I really need it?” In a lot of cases, perhaps not. Small businesses have enough on their plate without trying to educate themselves on every single new ‘life-changing’ product or service. But when it comes to online accounting, it truly is a revelation. And in the world of online accounting, Xero is at the leading edge.

Making the switch to online accounting

I’ve been a small business owner for over 25 years now and have employed teams from five people right up to 70. Bookkeeping used to mean shelves and shelves of folders and actual books. There were days on end spent reconciling accounts, and using a ruler to scroll down pages of transactions (yes, I’m old). At the time, it was just something we had to do. But now, with the beauty of hindsight, it was a nightmare.

After a lot of research into the market, my family business, Pinstripe Media, made the switch to Xero last year. This was because we’d heard so much hype from other business owners, and our accountants, about how easy and how enjoyable it was. I was sceptical at first. How on earth could anyone make small business accounting and bookkeeping enjoyable? Fortunately, I was convinced to give it a go.

Never looked back

Nine months later, and I can tell you without any embarrassment that I love logging on and checking the accounts. I’m a control freak, and Xero’s platform really is impressive. Everything is simple, intuitive, and easy to navigate. In just a few clicks, I can see how much money is owed to us compared to what we owe. I can get a P&L for any specified time period – and even just for individual jobs – to compare against other jobs. I can see  bank and credit card balances, and reconcile it all straight away. Our bank feeds come straight into the dashboard. I love the dashboard.

The best part about it is that I can do it all while sitting on the balcony at home. Because these days I’m trying to spend as little time in the office as possible. (That’s why you have kids, to take over the family business isn’t it?). With the footy season coming up and, a lot of trips to Adelaide and Melbourne, I can keep checking up on things from the road whenever I like. And that’s the real beauty of Xero – it gives me not just peace of mind, but the freedom to have peace of mind from anywhere at any time.

So if you’re still wondering what all the fuss is about, then give it a go and see for yourself how much it changes your life as a business owner. Because in a few years it won’t be “what is internet” jokes playing on Super Bowl ads, it’ll be “what is online accounting?” And when that day comes, you can sit back and be proud that you knew all about it. And you may even have your Xero dashboard open next to you.

As a side note, in case the sceptics are wondering, I did pay for my Xero accounting package. We made our decision to switch without contacting them.

David Koch is the owner of Pinstripe Media. He also hosts Kochie’s Business Builders, co-hosts Sunrise, and chairs the Port Adelaide Football Club. Connect with him on Twitter @kochie_online.

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Five tips to create sales quotes that get accepted

Written by admin on . Posted in Business, XERO

Small businesses win work by using sales quotes (also known as price quotes). Yet they often don’t realise that how they prepare and create quotes can cost them business. Many lose revenue by not following up on quotes or turning quotes around fast enough.

According to a recent US survey, the number one financial challenge of small businesses is cashflow and getting paid.* Getting on top of the quoting process can reduce the number of days to acceptance, which reduces the number of days to getting paid and improves your cashflow.

So, getting on top of your quotes make a real difference. Xero’s Head of Accounting, James Solomons, offers the following tips to help you prepare and create quotes that get accepted:


1. Ensure your sales quotes are properly constructed

A sales quote is often the first impression of your business that you give to prospective clients. Every quote that you send out should tell the client a little bit about your business. It should detail the prices, costs and services that they’re expected to receive. Include terms and conditions in plain English. Make sure the branding of the quote is consistent with your business’s brand (different looks and experiences will confuse your clients). And, most importantly, use a call to action at the end through an acceptance or modification process. A clear and simple quote increases the chance of a sale the first time and reduces the back and forth effort.

2. Send a quote within 24 hours

It’s a good idea to use cloud software to quickly prepare and send quotes on the spot or immediately after an initial meeting. This efficiency helps you to respond to an opportunity anytime, anywhere – without the need to return to the office to construct a quote.

3. Embed a quoting engine on your website

You may not always be able to meet your client in person. But a quoting engine on your site speeds up the process and allows customers to do business with you 24/7.

4. Follow up within two to three days of sending

Sometimes, business or industry protocol dictates when you should follow up. However, it is always best that you strike while the iron’s hot. Once you’ve quoted, follow up between 24 to 48 hours after to ensure that the client has received and understood the quote. This is a good way to get in front of your client and give the quote every chance of being accepted.

5. Ask the questions and learn from mistakes

Always remember to ask potential customers why they didn’t accept your quote. You may learn that you need to improve the sales or quote process, or perhaps clarify the content within the quote. Regardless, there’s a lesson to be learned from every quote.

Xero makes it easy

If you’re managing your finances through spreadsheets, you probably aren’t always aware of your workflow and where quotes are sitting in the sales process. It’s important to have this information at your fingertips at all times. With accounting software like Xero, you can see a summary of your quotes in progress including draft, sent, accepted and expired quotes. This makes it easy to track the status of a quote, follow up on quotes that have been sent but not accepted – and generally keep your business moving.

Want to know more about quotes? Check out our Small Business Guide: How to make price quotes work for you.

 

*The results of this study were taken from a random US sample of over 500 small business owners. The research was commissioned by Xero and independently conducted by market research company, Zogby Analytics.

 

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Kitchen table entrepreneurs – turning your hobby into a business

Written by admin on . Posted in Business, Cloud Accounting

From cupcake-crazy home bakers to fitness addicts and artistic dreamers, more and more entrepreneurial Britons are turning passions and pastimes into money-making enterprises. In fact, latest studies show there are 600,000 more micro businesses in the UK today than there were during the onset of the financial crisis in 2008*.

emma lomax

A separate report by the Office for National Statistics also found that self-employment in the UK is at its highest level since records began 40 years ago. However, one of the big differences between being self-employed and turning your hobby into a business, where you’ve had no formal training, is that you’ll have to work even harder to get a grip on market and customer demand.

Do your homework

Before taking the plunge, homework and research are key to deciding whether or not it’s just a pipe dream. This needn’t break the bank – depending on the business and what you want to find out, you could try face-to-face focus groups in your local community, as well as free online polling tools such as surveymonkey.com.

Social networks give fast feedback and are a good place to find other people in your industry – and discover what your customers are saying about you. Or why not delve into big data? Google Trends and Google consumer surveys show the types of terms people are looking for online, which can assist in optimising your website copy using SEO (search engine optimisation).

Create a business plan

As with any new venture, creating a business plan and working out costs is also hugely important, especially when it comes to figuring out prices, profit and securing investment. That’s not to say it’ll be easy – many small businesses fail in their early years because owners make mistakes, misread the market, or fall victim to other external factors.

Get it right and you’ll end up wishing you’d done it sooner: “I used to teach textiles and was always sewing between classes,” says SewLomax founder and creative director, Emma Lomax. “Starting my own business meant moving to the next step. It was no longer about embroidery; it was about making something people wanted.”

* Data from Royal Society for the encouragement of Arts, Manufacturers and Commerce/Etsy.

 

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Adopting cloud technology: eat or be eaten

Written by admin on . Posted in Business, Cloud Accounting

 

Cloud technology adoption

Over the past couple of decades, The Chasm Model has been the centrepiece of nearly every conversation I’ve had about launching new technology.

While its merits are many, lately I’ve been wondering how applicable it is in business-to-business markets. Sure there are early adopters. Perhaps even an early majority. It’s the late majority that seems to be in trouble.

Having sat around harvesting revenue from their customer base, the late majority wake up one day to face a revenue precipice. In short, the early adopters and majority reach a tipping point and start acquiring their customer base en-masse. Powered by the economics of the cloud (not just technology but also business) these new players scale at speed – achieving continuous growth rates in the high double and even triple digits.

We see a couple of shifts driving the acceleration of the new players. For instance, cloud technology and business models on the supply side, and then mobile on the demand side. Entrepreneurs emerge from both sides presenting the late majority with an impossible force to counter – and their brand advantage and customer relationships are quickly weakened.

Look at what happened to booksellers, record stores, and others. We are seeing the same in accounting where new disruptive value propositions are being built on cloud platforms like ours. What’s important is that these new players aren’t just using new technology – they are reshaping their brands, service offerings, price points and more.

The message is clear. Rather than wait for the late majority, fuel the high-growth early adopters and watch them grow. Who would you rather be (or be backing)? The eater or the eaten?

 

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Guest post: How to perfect your pitch to gain customers

Written by admin on . Posted in Business

Today’s guest author is international motivational business speaker Debbie Mayo-Smith.

You know how important it is to have a small elevator pitch or few word summary of what you do. Not only to have it – but to get it right.

This is something that I have had great difficulty with. No, more than difficulty. It has painfully eluded me. Even though I am a marketer and normally have a way with words and know how to talk in benefits. Well, you would think – that is until it came to describing succinctly what I do. Having that wee pitch that generates interest and ‘tell me more’

Oh the struggle! Every time someone would ask ‘so, what do you talk about’? A feeling of pain would have to be carefully hidden from showing in my facial expression (because I knew I hadn’t found the perfect description) as I would stammer out an answer.

This past week I was in Melbourne, invited to speak at a very important event – AIME. Asia-Pacific Incentives & Meetings Expo. This event is populated with my prime target market – professional conference organisers and event/meeting planners.

I thought I was creative in picking this title for my presentation:

Tiny Tweaks – Great Gains. Fabulous smartphone, software, Internet, cloud tips from the queen of productivity Debbie Mayo-Smith.

Yeah, I agree now in retrospect. Toooooo verbose.

Keep your elevator pitch simple

The day before my keynote session, we had several networking events. Seeing simply my company name SuccessIS, which I never use anyway, people would ask, as they do, “So what do you do?” and “What do you speak about?”.

“I show how to use your everyday business tools better for more time and more income.”

“I talk about using everyday technology better.”

“I show how to make small changes for great gains in using everyday business tools.”

The response has always been bland – not that “ohhhhh, tell me more” that you are supposed to get (according to the people that teach you how to get the elevator pitch right). Yet, the subject matter – email overload, smartphones, software, the Internet, is something everyone uses and struggles with.

That is until I blurted out an offhand, but business changing, remark. Yet again someone asked in the expo “What do you train on, Debbie?” and without thinking I replied:

“I show people how to get more done in less time”.

But this occasion, for the VERY FIRST TIME, I got a brand new response. The person smiled broadly, their eyes shined in interest and engagement, and they said “wow, everyone needs that. We sure need you at our company”. I couldn’t believe what I was hearing. So I tried it again with the next person. Their response: “Oh my goodness. I need you! Can you come sit with me for a week?”.

Again and again I tried my new one liner. I got two speaking engagements from it that afternoon – both derived on the expo floor chatting with people as I wandered around.

Find your differentiator

Okay, so you want advice on how to make your perfect pitch? Should I be giving advice? For ages I couldn’t see the woods for the trees myself. So who am I to talk? The problem is that even when you know what you need to do:

  • It’s about their pain point.
  • It’s about their benefit, not feature.
  • You need to think about what will they gain.

It is hard to see past your how or what. By this I mean, I kept putting the word technology, and/or business tools in my phrase. I thought that it was important. A differentiator. Yet from the results described it clearly was not.

Let’s try this out now.

No: I’m an accountant, and I work at x company.
Yes: I help my clients get paid faster and grow their business

No: I’m a virtual bookkeeper
Yes: I help companies save significantly on administration

No: I’m a florist
Yes: I help add emotion to any occasion

Please comment with your thoughts – or how you came up with your perfect business description. We’d love to read about it.

Debbie works with companies that want more effective staff. For more tips and business ideas, sign up for her free monthly newsletter.

 

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Online payroll is a smart business decision

Written by admin on . Posted in XERO

If your business has employees, one of the most important tasks is to ensure they are paid in a timely and accurate fashion. Maintaining accurate payroll information is critical for small businesses. However, meeting the compliance obligations can be a huge administrative burden. Online payroll reduces the risks involved in paying employees and keeps you on the right side of government requirements.

Online Payroll Benefits

Some of the main advantages of using online payroll include:

Speed. You can access information or perform calculations quickly. Once setup, you can process payroll from anywhere, at anytime, with a few simple clicks.

Accuracy. If you’re managing payroll tasks manually, you’re opening your business to human error. Online payroll does the calculating automatically for you, which keeps mistakes to a minimum and makes sure you’re paying your employees and taxes correctly.

Flexibility. You can manage payroll yourself without the need to hire a third-party service. This cuts down costs and gives you more time to run your business.

Collaboration. Online payroll allows you to easily collaborate with employees and your accountant. If you don’t want to manage payroll yourself as a business owner, you can invite your accountant, bookkeeper or payroll specialist to access payroll and process on your behalf. Online payroll also allows employees to self-service their information and submit requests for time off without seeing the rest of the business financials or payroll information.

Convenience. Now you can break away from your desk and manage payroll anywhere, anytime on any web-enabled device. You can also access information and view history whenever you need it.

Compliance. A major risk for business owners is keeping up with ever-changing government regulations. With online payroll, you don’t need to worry about missing any tax or reporting changes. Updates are automatically applied to ensure you’re compliant without downloading and installing updates.

Payroll in Xero

We’re committed to making the lives of business owners easier by providing beautiful, flexible, smart and connected online accounting and payroll software.

online payroll

Payroll in Xero currently processes billions of dollars of payroll every year in Australia and the United States. We’re committed to bringing this nationwide across the US as quickly as we can. We’re also really excited to make this available to businesses in New Zealand and the United Kingdom in time for the upcoming new financial year.

Over the next few weeks, you’ll see lots of information about New Zealand and UK Payroll in Xero. And if you’re joining us for Xerocon in London next week, you’ll be the first to see this in action.

We can’t wait to show you what we’ve been building.

 

 

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You made the tax deadline. Phew! So now what?

Written by admin on . Posted in XERO

It’s the beginning of February and there are three good reasons for UK small business owners to celebrate: Dry January has come to an end, payday has finally arrived, and the tax deadline has passed.

If you were one of the many self-employed small business owners, freelancers, investors or landlords obliged to file a return this month, you’ll have had to spend time crunching the numbers – unless you were super organised and did it early.

According to our recent research, 8% of UK small businesses waited to compile their self-assessment tax return the day before or on deadline day! Seems stressful.

But as Xero users will no doubt testify, when you’re getting your head down and getting to work on this annual task, having all your figures in one place can go a long way to easing the time burden.

So now that you’ve filed your return, there’s no point getting too bogged down with the finances, is there? Well actually, if you’re a small business owner or trader, the answer is definitely yes. Remember: no matter how well your business is doing, financially and strategically, you can’t afford not to keep one eye on the numbers at all times. In fact, our research also showed tax and accounting inefficiencies are amongst the biggest worries to UK small business in 2015, with 16 per cent saying they would like to make their accountancy and payment systems more efficient.

Inefficiencies

In the Xero small business guide, we’ve put together some top accounting resolutions for 2015 with the aim of helping you get into good habits. There are also a few suggestions designed to identify areas where working smarter could help improve your bottom line.

Here are a few of tips not to miss:

Reconcile your accounts

The self-assessment deadline has passed, but the financial end of year for your business may still be a few months away. Get ahead now by going through sales receipts and invoices, and check your bank account to make sure the figures add up. Already a Xero user? Even better! Online accounting will make this process much easier – in fact it will do most of the work automatically.

Review your business year

If you haven’t already, take time out to reflect on the past year’s performance. Did your business grow? How did your revenues and profits compare with the previous year? Plot sales graphs in your accounting software. Is the trend going up? Look into expenditure over the past 12 months. Any concerns? Are you where you expected to be when you first launched?

Get expert advice

If your business hasn’t grown or you have some ambitious targets you want to achieve, now might be a good time to hire an accountant or business advisor. Already use one? If you leave it to the end of the financial year to speak with them, you could be missing out on some important financial advice. Keep them up-to-date with your growth plans and ambitions or, if you’re struggling, see if they have any recommendations that could help get you back on the right track.

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We’re putting on a real show for our first event of 2015

Written by admin on . Posted in XERO

Welcome to another year of doing Evolve_Twitter_Card_DH_v1beautiful business in the cloud. The new year is still young, but it’s already shaping up to be a massive one. We’ve got lots of exciting developments to share with you, and plenty of ideas to help you get inspired about smarter and more efficient ways to run your practice.

And there’s really no better way to keep you informed, and kickstart your thinking, than by coming along to a roadshow. So I’m really looking forward to hitting the road, meeting partners and doing my bit to inspire all of you.

This February we’ll be visiting 20 cities across the county to present, network, demo and chat all things cloud accounting and business evolution.

Evolve is the theme for this year’s February Roadshow. What does this mean for you as a partner?

Whether you’re starting out with cloud accounting, or are well on the way to growing your client base, this roadshow is about evolving your thinking, ideas and business processes and really taking what you do to the next level.

To help you get there, we’ll be showcasing our latest tools, a new demo stream and hands on sessions to create clear action points for the evolution of your practice. And yes, we’ll be sharing a sneak peek of upcoming Xero product features.

We’ll also be showing you how to automate processes to really get your workflow humming, freeing up your time to focus on providing extra services to clients. Plus, you’ll get to hear about life as a connected advisor and learn how to enhance the way you interact with client data and other advisors.

As always, we’ll have plenty of Xeros at each event to answer your questions (including tax and partner specialists). A selection of Add-on Partners will be joining us on the road, so you’ll be able to explore the Xero ecosystem while you grab a cuppa and a bite to eat. To see the full schedule and list of locations, head to the Xero Roadshow webpage.

So, my bags are packed and I’m ready to hit the road for our first major rollout of events this year. Stay tuned for more updates from myself, Chris Ridd and Laura Cardinal (Product Manager) as we travel from Launceston to Darwin, and every state in between, meeting with as many partners and people as we can!

I look forward to seeing you on the road this February!

Trent

Check out our wrap up of last year’s roadshows

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Matthew Strawbridge: using dyslexia for inspiration

Written by admin on . Posted in XERO

Matthew Strawbridge is a 15-year-old Wellingtonian who attends Scots College. He’s used his dyslexia to make a positive difference in his own life and the lives of others. Our CEO Rod Drury was so impressed by Matthew that he invited him to spend two weeks at Xero to get some new work experience.

Today, Matthew has kindly agreed to share his story with us.

It’s an amazing feeling being able to help kids reach their potential, provide workshops for fellow dyslexics, and have the opportunity to travel overseas to attend Global Youth Leadership Summits.

Sharing a stage with Richard Branson and meeting famous motivational speaker Les Brown have also been life changing experiences for me. Being interviewed for both magazine articles and TV has been pretty memorable too.

It’s also a fantastic feeling to be successful in NCEA, strive towards receiving a level one endorsement, and receive top marks for business studies. However, my life has not always been like this…

Growing up with dyslexia

Kindy was awesome, and I loved every bit of it. However, once I started school I started to realise that I couldn’t do what my friends could do, but I didn’t know why.

One day, in about Year 3, the teacher asked the class to do a piece of writing about our break. I was sitting next to a kid who wrote three or four pages on his holiday. Other kids in my class wrote papers of similar length. I was able to think of so many things to say, but all I could write was the date – Wednesday 5th of September. Every five to ten minutes the teacher would come over and tell me off for being lazy. I had just returned home from a holiday in Australia and had the burning desire to write about the amazing time that I just had, but I just couldn’t. It was an incredibly frustrating experience, I didn’t talk to anyone, and I was trying so hard to focus, but I just couldn’t get the words down.

In my first few years of school, I would often have rushes of anxiety, stress and confusion while I was in the classroom. To the point where my parents had to drag me kicking and screaming out of bed each day. I was completely unmotivated and every day I woke with a pain in my stomach. It got so bad I went to the doctor who suggested anti-depressants, but I never took them.

Making positive changes

Finally, in Year 5, things began to fall into place. I began to realize that if things were going to change in my life, it had to come from me. I was officially diagnosed with dyslexia, so the meaning behind my struggle changed, I was no longer ‘lazy’ or ‘unintelligent’, I was dyslexic. I was also lucky enough to have a really awesome teacher, Ms. Kidman. She looked beyond my struggle to read and write. She gave me the confidence to make mistakes, she told me that if you aren’t making mistakes then you aren’t learning – it was the first time I realised it was ok to make mistakes.

After year 5, my confidence inside and outside the classroom started to grow. I started looking at dyslexia in a positive light. I realised that if I didn’t, then no one else would. I always think of the ‘blind person’ example – a visually impaired person can’t see, but their other senses become heightened, smelling, hearing, taste or touch. This is kind of like dyslexia. With our weaknesses come great strengths, we just need to find them.

‘Dyslexia Potential’

When I was 13 years old, I decided to set up a website for fellow dyslexic kids called Dyslexia Potential. I never wanted any other kid to feel the same way that I did. I knew that using the internet was the easiest way to help others with similar challenges to those that I had faced. The website explains the different stages of the dyslexia journey. It has self esteem videos and includes everything that I have done or look back on and wish I had done in regards to my dyslexia.

Ultimately, I try and share my journey with as many people as I can. Once the website was established, I was interviewed on Breakfast TV. At first I wasn’t keen to go on the show at all – I was so nervous! But I knew that this was the best way for me to spread the word about my website, and help other kids by doing so.

After my interview I received lots of emails from dyslexic kids, and my website was being used by many kids who were experiencing what I had experienced.

Global Youth Leadership Summit

When I attended a Global Youth Leadership Summit in San Diego I was so inspired by the impact the presenters had on people’s lives. I connected with so many incredible people while I was there. This impacted my life in such a positive way. I knew that I wanted to do something similar, as I have always wanted to help and serve others.

At first I decided that I would wait until I was older before I started to organise my own workshops, until I met Les Brown. Les is a famous American motivational speaker, and I was lucky enough to have lunch with him at one of the courses I attended. He told me that there was no point in waiting and that I should just get out there and go for it.

Workshops for kids with dyslexia

So, in 2013, I held my first workshop for dyslexic kids. I was so nervous. I went in there questioning whether these kids would even want to listen to me – it was scary! But the kids were amazing. That’s when I realized it was about us all coming together and learning from each other. If we each know a little bit, we can come together and know it all. I think I learnt as much from these amazing kids as they learnt from me. After my first workshop, I had a lot more confidence and drive because the kids enjoyed it, and I received a lot of great feedback.

But realistically, it was these kids being surrounded by other amazing kids who shared the same gift of dyslexia, and enjoying each other’s company, that made the workshop successful.

Since then, I’ve held about six workshops. They have been popular and always sell out quickly, which shows how many kids are feeling terrible as a dyslexic within the school environment. In my workshops, I try to change thoughts about dyslexia and empower kids to use their strengths (or as I call them, “dyslexic superpowers”), in order to overcome the challenges that their dyslexia presents.

I also get these kids to find a role model to follow; often these role models are fellow dyslexics who have had an impact on the world, from Richard Branson to Richie McCaw. I motivate these kids to have achievable dreams, but also to dream big for the things that they believe to be impossible.

When they get up on stage and share their dreams, I’m always surprised and in awe of the kids that I get to work with. Their dreams range from being actors to inventors, to highland farmers. These kids reinforce that it is diversity that the world needs, not just people who can learn by rote (we now have Google, after all!)

Meeting Richard Branson

Then my dream of meeting Richard Branson came true. This experience really taught me to aim big. I went to a workshop that he was speaking at, and both my parents and I hoped that I would just be able to see him. However, my ultimate dream was that I would actually have the chance to talk to him (and maybe he would invite me to his island!). Not only did I get to meet him, but I was fortunate to share the stage with him in front of hundreds of people.

When I arrived at the workshop I recognised one of the people directing people into the room, so I told him  that I would love to talk to Richard Branson. He told me Richard was coming through one particular door, and soon after, Richard walked right in. I handed Richard my business card (he put it in his back pocket), and he kept walking to the stage. After Richard’s talk he asked if anyone had any questions – my hand went straight up. He said “you, the young fella”, (I stuck out as I was the only teenager). I started talking to him about what I was doing with dyslexic kids, and he then invited me on stage! He said, “this man deserves a round of applause”, and grabbed my hand and lifted it up. It was the most unbelievable experience to meet my role model – I was buzzing for ages!

Next stop: becoming a life coach

Since then, I have been to many youth leadership events and workshops in Australia and America. Ultimately, I would love to be a life coach who speaks to thousands of people on how to live to their full potential. I believe that everyone has the potential to do and achieve anything they want in life – it’s just whether they understand or know that, and how they get there.

Dyslexia is very close to my heart, but I now want to help and serve anyone and everyone. I aim to extend my talks so that they aren’t limited to those with dyslexia – but are for everyone to attend.

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All about deflation

Written by admin on . Posted in XERO

What is deflation?

You may have noticed some news articles recently talking about deflation with some economists telling us that deflation is really bad for the economy, but others saying “Meh… it’s not so bad”. Put simply, deflation is the opposite of inflation. Deflation occurs when prices go down. Your money buys more tomorrow than it buys today.

How will deflation affect me and my business?

Most economists think that NZ will have a short period of deflation lasting from six months to a year. This is good news for kiwi small businesses as it adds some spending power to consumers in the short term, and should not be long enough to delay business investment decisions.

  • Interest rates should remain unchanged during the rest of 2015.
  • Lower oil prices will keep fuel costs down leading to lower freight and delivery charges. SMBs could achieve some windfall profits on the back of this as long as they can keep their prices up.
  • Turnover should remain stable. Households should continue to spend, although purse strings may tighten if the NZ economy seems to be heading into a prolonged period of deflation.
  • Cost management should get a little easier. Most of the overhead costs for small businesses should decline slightly over 2015, easing some cashflow pressure. However, there is unlikely to be any decline in wage costs over this year as employees will resist wage cuts, even with deflation.

Five questions to ask yourself

The main thing a business owner can do is plan. Having a plan in place before something happens will always ensure you have a better response.

Questions you should ask yourself, and plan for, include:

1. Is there opportunity for me to expand my business while households have more spending power?

  • Have some promotional ideas ready to try, such as special deals.
  • Think about new markets/locations or products/services that you may want to add to your business.

2. Are there costs in my business that I can eliminate, decrease or defer?

  • Good cost management is always beneficial. Review each cost line in your profit and loss report.

3. Can I free up cash?

  • Chase up overdue debtors’ invoices.
  • Review your inventory to ensure your holding levels are appropriate. Sell off surplus inventory and get rid of obsolete items.
  • Review your fixed assets. Are there fixed assets that are under-utilised or no longer needed? Now might be the time to sell them off too.

4. How can I be more efficient?

  • Is there a better way to do things?
  • Can I re-invent my business to stay ahead of the competition.

5. What did I learn from the last global financial crisis?

  • Have a plan in place, based on your experiences from the last global financial crisis. That way you can be prepared, and respond quickly.

Conclusion

Deflation is not necessarily a bad thing. In small doses, it brings extra spending power to households and small businesses. NZ looks set to have a short period of deflation of only six to twelve months.

There are a number of prudent measures that small business owners can take to minimise any impact of deflation. These include freeing up cash by selling off surplus assets, reviewing expense management and reflecting on learnings from the recent global financial crisis.

By planning and preparing in advance NZ businesses can minimise any negative effects of deflation and maximise the opportunities it presents.

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Source: Xero Blog