Bean Counters

It’s a bit unfair to call George my bean counter because he’s much more than that, so different to the accountants my mates seem to complain so much about.  He’s always on about “planning”, “strategy”, and “adding value” and at first I though he must have got me mixed up with Bill Gates or Richard Branson but he soon convinced me that all that stuff is just as important to a small business as it is to a large business.  He made me do a business plan – no not one to file away and ignore – but a flexible format that I regularly review.  I have to do it because he asks me questions a bit like a teacher – appropriate really because another thing he’s always preaching is that in business we never stop learning.  The question I asked him is “how can I make more profit” – and he said “why not increase your prices?”  Typical – he still thinks I’m Bill Gates.  I’ve got competitors so if I put my prices up I would lose customers.  But then he said something a bit more radical – how many could I afford to lose if I’m getting a higher price?  And if I’m getting a higher price – could I provide a better service eg more prompt delivery or an extended guarantee?  In fact he made me think about why people buy from me and not my competitors.  Is it about price or am I just better than them – supplying a better product or a better service.

So I did some sums.  Last year I sold 400 Green Grass solar powered lawnmowers at £300.  This year after GMC’s advice, I charged £375.  They cost me £225 and I used to make £75 per unit, now I make £150 per unit but I only sold 300 units.  It’s profit that’s important, last year I made 400 units at £75 = £30,000.  This year I made 300 at £150 = £45,000.  I worked out that an extended warranty would cost me £25 per unit, so I lost 300 x 25 = £7,500, meaning I increased by gross profit from £30,000 to £37,500 by charging more, and working less!  Hey presto – that’s a sales strategy so eat your heart out Bill Gates.  Having a bean counter as an accountant is fine, but I prefer to have someone who will help me plant the seeds.

Ivor

OTS Office of Tax Simplification

I’m a simple man, I want a simple life and I’m all for a simple tax system.  There has to be something perverse about successive governments making the system so complex that it becomes necessary to set up a special office whose job it is to simplify it!  My first simplification would be to get rid of the 5^th April as I said a few weeks ago. 

What would you start with?  I asked my bean counter, George, what he would simplify and he’s promised to set a few examples out for me next week – watch this space.

Tax Freedom Day

May 30^th was Tax Freedom Day – no, income tax wasn’t abolished – it meant that on average our earning up to that day was equivalent to our annual tax bill and from that day we start to work for ourselves. 

Did you celebrate it? 

 If you did you would know that it fell 3 days later than last year so we had to work 3 more days to pay our taxes.  Without a royal wedding it might have been just 2 more but that’s another story.  The economy is struggling and someone decides that small businesses like mine should just pay their staff to have another day’s holiday – and I thought this was a free country!

Ivor

H M Residue & Custard

My last week hasn’t been bad really.

 I’ve been working as hard as ever to grow my business so one day it might qualify as a small business in the eyes of the politicians. Don’t get me started about them! They can run the health service better than the doctors, and run schools better than the teachers – so why can’t we have a tax system that we can all understand?

 I’ve just had the usual letter from the accountant telling me the date or more precisely that we have just passed the 5^th April again. I’ve heard the stories about how centuries ago the 5^th April was set as the end of a tax year but why can’t we have a logical date like 31^st December? The tax year 2011 would then be well, 2011, instead of mainly falling in 2010 and ending part way through 2011! It can’t be that difficult to change?

 I mean, this year we had the Cup Final before the League had finished but it worked out alright. Mind you, football and the taxman – there’s a volatile mixture. Taxpayers own half the banking system and it looks like we’re financing half the football clubs as well. I’m up to date with my taxes – my accountant keeps me right but I still get red letters from HM Residue and Custard – you think they would chase bigger businesses than me – but they only do what politicians tell them.

Anyway, back to my original point, I’m proud of my business. I have a couple of employees and we do a good job. But I’m not on the map when MP’s start visiting what they call a small business. I’m self employed and there’s thousands like me. Maybe we need our own political party as well as a simplified tax system  But it’s not been a bad week so I won’t spoil it by talking politics. More next week.

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