When it comes to small businesses, motivation is key – but we’re not talking about your motivation as the owner. You need discipline and consistency to grow your business, but keeping your employees motivated is also vital to your profits, innovation and customer service. Let’s take a closer look at the importance of employee motivation and dive into some top tips on how to keep your team inspired.

Why Motivation Matters

Employee motivation has a direct impact on the financial health of your business. A study by the Harvard Business Review (HBR) found that improving employee motivation can increase gross revenue by up to 47%.

On top of this, motivated employees are more likely to stay loyal to your company rather than seeking roles elsewhere. The HBR has also reported that a 5% increase in employee retention can boost profitability by 25-85%.

Meanwhile, the International Journal of Core Engineering and Management published a paper that found that employee motivation directly improves customer experience.

What Employees Value

So we’ve established that employee motivation is a key component of a successful business, but how do you actually go about it?

It’s important to understand what your employees value so that you can use these factors to motivate them.

Of course, salary is important but there are many other factors that come into play in terms of employee satisfaction. In fact, the HBR found that salary was surprisingly far down the average list of priorities, which are as follows:

• Role design – duties, responsibilities, goals, principles and objectives. Employees want to feel that their work matters and contributes to a greater good.
• Organisational identity –  company culture, values and ethics should align with the employee’s personal beliefs.
• Career development – employees want to keep learning new skills and progress in their career.
• Relationships with colleagues – positive relationships within teams are a key motivator for many workers. A strong team dynamic can help employers retain staff as well as improve productivity and innovation.
• Leadership –  employees want and value clear, consistent leadership.
• Compensation –  salary and benefits are still important, but employees are increasingly looking for flexible working arrangements, social responsibility programmes and other benefits that go beyond just a pay cheque.
• Feedback, evaluation and opportunities to improve –  employees want to receive feedback on a regular basis so that they can understand how they’re doing and what areas to focus on.

How To Motivate Employees

Now that you understand what your employees value, it’s time to use these factors as the foundation of your motivation strategy.

A good starting point is with communication – keeping staff informed about company  happenings, sharing goals and objectives, and giving regular feedback will help employees feel more connected to their work. Remember that no-one wants to feel as though they’re stuck in a dead-end job or doing meaningless work.

It’s also important to create a positive workplace culture where employees feel comfortable taking risks and voicing new ideas. This can be done through team-building exercises, offering training and development opportunities, and celebrating successes together.

Leadership is another key factor – employees need to feel that their leaders are competent and trustworthy. Leaders should be setting an example for the team, modelling desired behaviours and providing clear instructions.

Last but not least, it’s important to recognise and appreciate employees’ efforts. A simple ‘thank you’ can go a long way. However, internal awards and tokens of recognition are even more effective in motivating staff.

Final Thoughts

Employee motivation is a key component of any successful business. By understanding what employees value and using these factors to motivate them, you can create a positive work environment that encourages productivity and innovation. Increasing staff morale plays a powerful role in building a strong, profitable and innovative business so it’s well worth investing your time and energy into.

Three steps to ensuring data is meaningful for your business

Raw data describes the facts and figures that a business processes every day. Over time, every business hoards a certain amount of data and it only becomes meaningful to a business after it has been processed to add context, relevance and purpose.

For example, in a restaurant, every order will be recorded. However, a restaurant won’t learn much by looking at each one in isolation. However, analysis of the orders will reveal trends and patterns, such as peak dining days or biggest-selling menu or bar items. Knowledge of the business comes from the relationship between the singular pieces of information. That restaurant owner may know to do their biggest stock order on a Wednesday by analysing their covers and establishing that sales increase by 38% on Thursdays.

The pace of business in today’s technological times requires businesses to be able to react quickly to changing demands from customers and environmental conditions. The ability to be able to compile, analyse and act on data is increasingly important. In some instances, a high volume of data may need to be accumulated and analysed before trends and patterns emerge.

When you aren’t compiling accurate business data, you can only rely on gut feel and assumptions about past performance to inform your future business decisions.

If your business is already using cloud software for accountancy, project management system or CRM, it’s likely that you’re sitting on a goldmine of data. If properly utilised, this data can greatly aid running a successful business. You’ll have valuable insight into your sales, expenses, profit and staff efficiencies that can help you answer critical questions and drive smart business decisions.

Every business is unique, but here are three quick tips to help you drive data in your business.

1. Data is only powerful if there is context – can you stop to answer these questions?

• What is your primary objective (business or personal)?
• What is happening in the business?
• What isn’t happening?
• How can you influence what happens?

Figure out what you’re currently trying to achieve before anything else. It’s important to periodically go back and ask yourself these questions and what goals develop from the answers, as answers evolve over time. You may have started out with your primary objective as running the best restaurant in your area. However as time has passed, your primary objective might now be to take time away from the business to spend more time with your children.

2. The only way your data can help you drive your business is if it’s accurate and organised appropriately – ask yourself:

• Are your financials up-to-date?
• Do you have any unreconciled transactions?
• Are you tax compliant?
• Are your staff trained on what systems and processes to use for different parts of your business?
• Are your cloud systems being correctly utilised?

The worst thing you can do is to attempt to analyse incorrect data and attempt to make decisions for the business based on it! Tools like Spotlight Reporting can help you with the reports you need for business decisions.

3. Understand what the data necessities are and what the niceties are.

• What would you most like to understand about your business?
• What figures pinpoint success for you?
• What are your objectives over the next six to twelve months, and two to five years?

Remember, to focus on what truly matters and build from there. If you want help with the process, we can accumulate, analyse, report and advise on your data; or show you the tools to use.

Your business needs a budget but when you’re starting out it can be tempting to skip this step. That would be a mistake, because a budget is a powerful tool to ensure the financial health of your small business. A realistic budget enables you to make confident financial decisions and save money for future investment and expansion. On top of this, your budget will prevent you from overspending and provide concrete goals against which you can measure your success.

It can be difficult to know where to start when it comes to creating a budget, particularly during your first year in business. You’ll need to work with estimates if this is the case, but it will still make financial planning much easier. Once you’ve laid out a realistic budget, you’ll be able to adjust it as necessary rather than starting from scratch. Here are six easy steps to creating a realistic budget for your business.

1. Calculate Your Income

Business income is the money you receive from customers for your goods or services. This is easy to work out from your records if you’ve been in business for a while, but if you’re just starting out you’ll need to make an estimate. Try to be as realistic as possible but if in doubt, always err on the side of caution. It’s better to be conservative with your budget than risk overspending.

If you’ve been in business for a year or more, take some time to analyse seasonal trends. If you’re new, do some research on patterns within your industry. Many businesses experience a boom in sales at Christmas, followed by a lull in January.  It’s important to plan for these peaks and troughs as accurately as you can.

2. Determine Your Costs

Once you’ve worked out your projected income, it’s time to take a look at your expenses. Business costs fall into three different categories: fixed, semi-variable and variable.

Fixed: these costs are the easiest ones to calculate. Fixed costs are the expenses that are likely to remain the same for the next year or so, such as rent, internet and insurance.

Semi-variable: this is a bit of a grey area. Semi-variable costs are fixed costs which may increase or decrease in proportion to your workload. For example, a boom in sales might result in increased hires, phone bills or power usage.

Variables: these expenses are directly linked to your number of sales, such as commissions or raw materials. This is the part of your budget that you’re most likely to have to tweak over time. You can calculate this by adding together all of your variable costs over a given period of time and then dividing them by your production volume.

3. Factor in One-Off Expenses

You need some wiggle room in your budget in case things go wrong. Unforeseen expenses do crop up every now as then, so you need to be ready for them. For example, if a piece of equipment breaks down, you’ll need to replace it as soon as possible so that it doesn’t impede productivity. Of course, some one-off expenses are planned, such as facility upgrades or conferences. Keep a separate fund for this type of cost and don’t be tempted to put it towards your regular expenses.

4. Work Out Your Profit

Your profit represents how much money you’re actually making. You could have a huge income, but that doesn’t mean much if it’s outweighed by even larger costs. To calculate your profit, subtract your costs from your income.

5. Refresh

A budget doesn’t mean much if you don’t review it regularly, and a lot can change in a surprisingly short amount of time. It’s vital to keep checking your budget and making adjustments whenever necessary. Each month, set aside some time to check your finances and compare them against your plan. This will keep you on track and allow you to keep your budget relevant to your business.

6. Use Bookkeeping Tools

Staying on top of your budget can be time-consuming, especially when your business is growing and you’ve got a million other things to do. Cloud-based bookkeeping software is the easiest and most reliable way to keep track of your expenses and you’ll have 24/7 access to your records from anywhere in the world, as long as there is an internet connection.

The Importance of Budgeting

A realistic budget for your business makes it so much easier to plan for the future. However, regularly reviewing and adjusting your budget is essential, or it could quickly become outdated. Your budget is a roadmap for your business and it helps you to prepare for all manner of situations. Most importantly, it gives you control over your finances, which will help your business not just to survive, but to flourish.

It’s a fact – humans are bad at assessing risk. We’re terrified of things that rarely happen (plane crashes, power station meltdowns) but relatively blasé about things that are statistically more likely to harm us, such as unwashed lettuce.The likelihood of HMRC swooping to investigate your business’s tax affairs seems to be a particularly difficult risk to quantify.

Why take the chance?

In 2017, the Government published a report called ‘Understanding evasion by small and mid-sized businesses’. The authors interviewed 45 people known to have engaged in deliberate tax evasion in an attempt to get to the bottom of what made them risk it. It found that tax evaders cited a range of reasons for withholding tax. Some judged the risk of detection to be low, and assumed evasion would be hard to prove even when suspected, or thought that any fine they did incur would be outweighed by the financial benefits of bending the rules.Others were emboldened by a belief that, to paraphrase, “everybody does it, and nobody cares”. Meanwhile, those who fancied themselves as having the gift of the gab simply assumed they would be able to talk their way out of prosecution. The report concludes that it is a problem for HMRC if people think the chances of being investigated, prosecuted and fined are low, and recommends raising the perceived threat level to deter would-be evaders.

How likely is an investigation?

There are no concrete figures on how likely it is that a business will be investigated, because the Revenue guards this information closely.For quite understandable reasons, it doesn’t want people to know exactly how likely an investigation is, or what the triggers might be. The fact is, as with most law enforcement, its work depends on the fear of being caught as much as on actual prosecutions.There are some statistics that HMRC is willing to share, however, which give a sense of its activity:

• Since 2010, it has secured £185 billion in extra tax through investigation and prosecution.
• It is successful in more than 90% of criminal cases it brings to trial, and in 2018 secured more than 830 criminal convictions for tax and duty fraud – more than 80% of those charged.
• Since 2010, HMRC investigations have resulted in more than 5,000 individuals being criminally convicted.

Of course there’s no way to know what percentage of people who evade tax or duty is represented in those figures, but it’s clear that it’s by no means a risk-free way to operate.

The cost of an investigation

Quite apart from any penalties for failing to pay tax, and even if an investigation finds that your tax returns are complete and accurate after all, the process can be expensive, time consuming and stressful. The length of the investigation and the number of individual queries from inspectors is beyond your control, or that of your accountant. It is not uncommon for them to roll on for more than a year, and cost thousands of pounds.We offer a tax investigation insurance package for just £10 a month which will help cover the costs of unexpected and prolonged probes, and can help soften the blow. Please get in touch if you would like to take out this insurance or find out more.

What triggers investigations?

HMRC doesn’t publish a big list of behaviours it’s looking out for because, obviously, it doesn’t want to give would-be evaders ideas for disguising what they’re up to.It is generally acknowledged, though, that there are certain red flags.High variation in turnover or profit from year to year would be one example. Consistently paying little or no tax is another.If your business is substantial and profitable but you are still managing your own accounts rather than working with an accountant, that can also raise suspicions.In short, anything that seems out of the ordinary or out of step with the norm for your sector or region – ‘dodgy’ is the most common turn of phrase – will at the very least prompt further scrutiny.

Supercomputers and whistle-blowers

When it comes to spotting potential ‘dodginess’, HMRC is better equipped now than ever. Since 2010 it has used a powerful data analysis system called Connect to pull in and cross-reference vast amounts of information on taxpayers. It uses data from other government agencies, such as the Driver and Vehicle Licensing Agency (DVLA) as well as online auction and car trading websites, to identify anomalies. Putting all that data together might, for example, highlight someone reporting minimal profit from a business in a generally profitable sector, while at the same time whizzing about in top-of-the-line sports cars.On the other hand, many investigations are the result of something distinctly less high-tech: tip-offs from disgruntled neighbours, friends, relatives or employees.In 2017/18 HMRC’s tax fraud hotline received 40,000 calls, and more than £340,000 was paid out in rewards to informants.

Making Tax Digital

One of the motivations for the rollout of the Making Tax Digital (MTD) programme is to make business accounts more transparent. MTD will make it compulsory for businesses to keep their accounts using software rather than on paper. The first stage of MTD, covering VAT, kicked in on 1 April 2019, and applies to businesses with a taxable turnover above the VAT-registration threshold of £85,000. Although there won’t be any requirement for businesses to submit details of every single transaction to HMRC on a real-time basis, they will be obliged to record them, and may be asked to hand over those more detailed records in the event of an investigation. There will also be an option down the line for businesses to voluntarily submit more detail. Will businesses look as if they have something to hide if they don’t do so? That is certainly a risk.

Going straight

If you’re worried the way you’ve handled your tax affairs in the past hasn’t been quite above board and you want to clear your conscience, the first thing to do is talk to someone. HMRC advise those who have failed to declare income, or to pay tax on it, to make full disclosure to them at the earliest opportunity. Depending on the size and complexity of your disclosure, however, talking to us as your accountant could considerably reduce the stress. We will help you work through the issue and pin down the numbers, and we can counsel you through potentially difficult conversations with HMRC. We can help with compliance and disclosure.

A DIFFERENT PERSPECTIVE ON YOUR BUSINESS

A bookkeeper helps you put financial systems in place, runs reports to show how you are doing each month, where your funds are going and how your hard work is paying off. We can give you that ‘Big picture’ through real time data. Another set of eyes around your business is always beneficial.

YOUR WORK – LIFE BALANCE

Do you find you have little time for everything besides your business? Whilst you are concentrating on starting up your business and its day to day running’s, you have little time left at the end of the day or the week for yourself or your loved ones. At Sunnyside Bookkeeping and Accountancy Services we can take away that strain.

ESCAPE THE THINGS YOU FIND TEDIOUS

Do finances bore you? Do you feel put off about organizing receipts and paperwork? Do you hate doing credit control? If your reply is yes, then hand them over to somebody who enjoys it, Sunnyside Bookkeeping and Accountancy Services are here to help you complete tasks you would rather not do yourself.

THE THINGS YOU DON’T REALLY UNDERSTAND EXPLAINED

We’ve got you covered. Not many business startups have experience with finance, VAT, a working knowledge in purchase ledger or Sales ledger. Mistakes can be costly to you and your business, if you miss a bill or forget to pay something it can impact your business’ credit score, this is why its better to allow a qualified bookkeeper to handle these areas of the business for you so you have the peace of mind that you can be on top of everything.

FOCUSING ON YOUR BUSINESS NEEDS

Growing your product or a service needs a lot of attention, you should devote your time to developing a strategy, doing your market research and finding gaps in the market, Funding your business and other key areas that are essential for your business rather than spending all your time on operational tasks, This is what we can do for you.

YOUR CASH FLOW

When you’re busy its easy to forget outstanding payments from your clients. Your cash may stop flowing into your bank account and this could have a knock-on effect on other running’s of the business. Sending payment reminders and checking your bank accounts regularly to make sure nothing goes unnoticed can take up treasured time, We can do that for you.

MAKE SURE EVERYTHING IS BEING PAID ON TIME

Balancing marketing, your daily to do list, planning and many other things means that some things can get missed. This is often bills that need paying. This could have a negative impact on your business reputation and your credit score, At Sunnyside Bookkeeping and Accountancy Services we can help you relax by knowing that everything is being taken care of for you.

GET THAT VAT RETURN DONE ON TIME

We can support you to get set up and handle the quarterly returns going forwards. The last thing you want to happen is to not get your VAT return done on time and get caught out especially with Making Tax Digital now Live.

COSTS VS VALUE

There’s a misconception that doing everything yourself is cheaper but having a qualified bookkeeper by your side actually saves you more. It can reduce the risk of human error, out-of-date knowledge, missed payments, delayed income and VAT deadlines missed by getting Sunnyside Bookkeeping and Accountancy Services to help.

DEALING WITH ANY QUERIES OR CONFLICT

If your start up is a partnership, it is highly important that everybody is on equal footing and knows about the finances. A bookkeeper is the key holder of the money, Maintaining security, creating a robust approval process, integrity and keeping everybody up to date.