Business In Ireland

SME Consulting Ireland

2006-09-06T11:31:00.000Z

As a professional in SME consulting in Ireland, I have a constant problem defining what exactly I do, the experience I have and the benefits of using a consultant in your business.

So here goes:
An SME consultant is responsible for helping small to medium business owners develop, consolidate and expand their business, profits and job satisfaction.
My role is leading the business owner down the path so that they themselves arrive at defining their problems, finding out what lies at the source of these problems and SMART solutions to solving them.
However my role does not stop there. I believe that while problems are an area which demand immediate and urgent responses, I also believe that the strengths of a business and business owner can also be developed so that progress is natural and constant. Building on strengths is as important as working on problems.

In one sentence: My role is to help Business Owners and Entrepreneurs attain and fulfil their business and personal goals. From being able to afford the time and finances to a yearly 4 week holiday, to owning and living in the house of their dreams. I believe success is attaining goals not reaching a certain bank account balance. Focus on the goals and the bank will look after itself.

So what experience do I have? Well, from a background which involved, sales, marketing, finance and PR to eventually setting up my own businesses, I think you will agree that relevant experience is not an issue. So where did I get this experience and why haven’t I stayed in one particular area? Self fulfilment and job satisfaction are the main driving forces behind this answer.
While working I accumulated skills, techniques and contacts. However no one single area allowed me as an individual to develop in the manner which I personally wanted.

Setting up my own business was the greatest challenge and the most satisfying role which I have experienced. It involves personal strength, mental toughness, a shrewd business brain and a dedication to success. When I say this usually, the common interpretation is that I work 20 hours per day driving my business. Incorrect!
A successful business is one where the profits accumulate even when the owner is not present. I work 40 hours per week on average. This often goes up during the winter months and decreases during the long warm summer months.

So what benefits can I bring to the business and personal life of a business owner or entrepreneur?
Well, how many of you would like to have a personal life where you can spend time with family and friends, enjoy the good things in life, have free time and still have a thriving business?

My consultancy, from clients who own professional practices to clients who own a local retail shop, is designed on the following points.

• A complete and comprehensive review of a business, from Business Plan to Weekly Financials.

• A detailed and personal review of a business owner’s hopes and aspirations. Where they are now, what they had hoped to achieve at this point and what they hope to achieve in the future.

• An action schedule to ensure that problem areas are solved.

• A future plan of where they would like to be at regular intervals.

• A review of actions and future plans at regular intervals.

• Action plans arising from regular updates.

• Constant support and training in achieving all personal and business goals.

When I show my clients that they can achieve their life goals, business goals and can often improve upon them, they generally find it difficult to take me seriously, however after the initial meeting you can bet that they have a new confidence and faith in both me and their own personal strengths.

So that’s it, my role as an SME Consultant.

Believe in what you can do, not what others say you are able to do.

Advertising to get hit by New Universal Music free download

2006-08-30T11:20:00.000Z

As expected traditional media executives have rushed to defend their position in relation to the decision by Universal Music in conjunction with SpiralFrog.com to allow FREE music downloads of some of the worlds greatest bands and artists, for at least a 2 year period. Artists such as U2 and Gwen Stefani can be downloaded by merely registering on the site. No Fee.

So whats going to happen to advertising?
Well as previously mentioned in my earlier posts, the big change is underway. Multinational Corporations will now pay the websites to advertise instead of TV, Radio, Newspaper etc. Not to mention the effect this will have on the music stores.

The money will flood in to these websites, and if you think Apple are going to stand still and not compete at this new level, well think again!

Competition will breed competition, increase popularity and the more popular these websites become the more artists will release on the web rather than through current media vehicles.

I honestly fear for independent media networks, for without advertising they are doomed. Unless they too can jump on the bandwagon and get internet friendly very quickly!

In previous attempts at pushing internet accessible music, we have had new releases available at a certain price or for a certain period of time, and from only certain artists. Now we will have global recognition that this is the way forward!

Advertising gurus have predicted this for the past few years, each becoming more boisterous as time progressed. Now they can give the big FY to their counterparts in traditional media. Well, as long as the price of advertising is indexed with the exposure that web advertising can offer!!

Can you imagine the knock on effects?
How long will it be before we have x factorish webcasts etc, where the hopefuls upload to a site, are viewed and judged by the public, and downloaded globally! How much do you think a multinational will pay for prominent advertising on a site like this?

Communication in Business

2006-08-18T11:03:00.000Z

I often ask people what they do for a living, just to see how they answer. Often it is a single line answer, which gives me no detail into what their job actually entails. Imagine I was looking for help with a business problem and they lost me as a potential client because of their single line answer. For example, I might need busines cards done up, so I ask somebody what they do and they tell me they are a graphic designer. They immediately lose my attention because I see them as an artist. The reality is most graphic designers either do print work also or know some body who specialises in printing, but because of their answer I havent given them my business.

It is perhaps one of the most commonly asked questions of any person, but how many of us can honestly say that we have answered that question as articulately and concisely as we would have wanted. How many times do you feel that you have just let a good opportunity to self promote, slip through your fingers?

It is a tough question, one for which we should be readily able to answer, perhaps not with an exact script but with a good basic outline of the content and structure of our answer.

Thankfully there are ways in which we can prepare for this, just follow my simple guides below and you will grow in confidence with your answer. At least if a potential client is listening, they won’t be completely turned off by your answer.

This guide is not designed to tell you to smile, create eye contact, maintain eye contact- these are obvious and I won’t patronise you by explaining why you should do these things. Just make sure you incorporate them into every speech or conversation that you ever have; personal and business.

This guide focuses on 4 simple questions:

Who are your clients (both desired and current)?
What are their most important problems?
What problems do you solve for them?
What benefits can you bring to them?

If you can clearly define the above questions you merely need to adapt them into the following format.

I work with (who are your clients). I find that they have many issues like (what are their most important problems).
What I do is I (what problems do you solve) and from this they (what benefits do you bring).
Often times you will get interrupted at this stage, but if not, quantify how you feel about it. Is it a source of great pride to you? Do you feel that you wish you could help more people than you currently do? Try not to say that it makes you wealthy, your success should be evident in the enthusiasm you reflect.

Unfortunately not every conversation will develop enough to allow you to give an answer in the above format, however if you have this answer on the tip of your tongue, you can easily adapt to make sure you get your point across.

There are many theories as to why this formulae works, but mainly it boils down to the fact that people can more easily relate to what you are saying if you give them personal information, the basics to your job role rather than a job title.

You captivate them immediately because you are involving them in a conversation rather than a 1 line answer. You are involving them rather than merely answering their question, and from this you will always get a further question/ statement of interest/acknowledgment that they understand your answer.
Now as I said previously I am not going to tell you the basics to good conversational technique; eye contact, smiling etc. however I am going to recommend a few pointers to ensure you can come up with your answer more easily.

Rehearse your piece. If you are an entrepreneur or in employment not immediately recognisable, you probably get asked this question frequently, so no excuse for not practising. This will lead to a more confident answer and will allow you to appear more confident than you actually may be.
Try to sound relaxed. Do not give an exact script, be adaptable. If you are comfortable and sound enthusiastic about what you do, others will feed of your enthusiasm. After all good communication is 55% facial reaction/expression, 38% tone and 7% information.
Listen. Listen to the person who asked the question. This is a conversation not a bulletin and they say that a good listener is a good conversationalist.

I sincerely hope that the above guide will be as valuable to you as it has been to me over the years!

Accounting: Buying and Selling a Practice in 21st Century Ireland

2006-08-18T09:45:00.000Z

Buying And Selling An Accountancy Practice in 21st Century Ireland

Another interesting problem which we encounter is the process involved with selling accountancy practices. How to value etc.

Operating an accountancy practice in today’s highly regulated environment is not an easy task. Clients, staff and cashflow all contribute to many accountants questioning their choice of profession. In their darkest days many practising accountants have considered the possibility of selling their practice. Conversely it is a natural progression for accountancy practices to expand. The growth of an accountancy practice can be achieved in many different ways, but purchasing a block of clients or an existing practice is probably the most direct route for rapid expansion. For this reason, from time to time, practising accountants who, at one stage may have thought about selling their practice, may have also considered the possibility of purchasing a practice. Bought avenues are fraught with potential pitfalls and hazards and neither decision should be taken lightly.

As with all trades the rules of supply and demand prevail, with the seller and purchaser having very different agendas and desired outcomes. The seller wants to maximise the sale price of his clients, while the purchaser seeks the lowest possible price to acquire the goodwill. Currently the market for buying and selling practices favours the seller with demand exceeding supply. This can be clearly seen from the interest generated when a practice is put on the market. While there can be no definitive guidance for purchasing or selling a practice both parties involved must look at the transaction from both the seller’s and purchaser’s perspective in order to reach agreement.

Goodwill
The purchase of an accountancy practice is effectively the purchase of goodwill. This goodwill exists on the basis that there is a continuing business, which will generate future profits. Legally defined goodwill is “Nothing more than the probability that the old customers will revert to the old place even though the old trader has gone” (Lord Eldon in Crutwell V Lye). The sale price of a practice on an open market will invariably be calculated on a multiple of annual fees, but it is essential when agreeing this multiple not to lose sight of the fact that goodwill is the asset being traded. The valuation of goodwill should ideally be based on the profits that the block of clients will generate rather than the additional income that they will produce. The aim of the purchaser should be to create profit rather than to merely acquire supplementary turnover.

Synergies
Acquiring an accountancy practice with a view to incorporating it into an existing practice has the potential to produce many synergies. Seasoned campaigners, who have gone through the process of purchasing a practice on more than one occasion, have identified the achievable synergies as a significant consideration in the overall deal. The scope for increased productivity and reduced overheads can have a significant effect on the multiples used and the eventual valuation of the purchase price. The review of the potential synergies should include reviewing the increased expertise and specialism, reduction in staff numbers, reduction in office space, economic usage of equipment and software, reduction in general overheads and an improved quality of service.

Clients
Clients are the fundamental consideration when buying an accountancy practice. Goodwill and future profits are dependant on these clients. The profiling of the client base being acquired is imperative to the success of the purchase and certain information should be obtained in relation to all clients in the portfolio at the initial stages of the purchase. Some of the data, which should be collated, includes: -
· Activity and industry sector
· Entity type – limited company / sole trader / partnership
· Decision makers age
· Turnover
· Type of recurring work and annual fee
· Type of special assignments undertaken recently
· Fee recovery history
· Length of relationship with the practice
· Relationship with principals or staff
· Dependency of relationship with staff
· Relationship with other clients
· Geographic location of client

The clients should be grouped based on recurring fees to enable use of the fee multiples at the valuation stage.

The age profile of clients is extremely important, as clients are generally more comfortable dealing with someone around their own age. A generation gap between the vendor and purchaser may affect the continuity of client fees and thus the purchase consideration.

Staff
The quality of an accountancy practice is dependant on both the principles and the staff who work in the practice. Unlike a normal employment situation a practice purchase affords the buyer the opportunity to independently review the quality of the staff and their work prior to employment without solely relying on information obtained from interview or references. Due to a combination of poor quality staff in a practice and the synergies that will be created through its acquisition, reducing staff numbers may become a necessity. Usually this responsibility to downsize falls to the seller as part of the final agreement prior to the transition period.

While the purchase of a practice is usually a sensitive issue and discretion is always required, it may be necessary to consult with key staff prior to finalising a purchase agreement. The continuing support of long established staff is essential to ensure the continuity of past fee income.

Finance
The availability of finance to the purchaser or the lack thereof, will impact considerably on the purchasing power of a potential buyer and indirectly the eventual valuation price. Accountants are however viewed as good target customers by financial institutions because of their potential. Practising accountants have a duality of purpose for banks; as customers in their own right and also as a source of future business. Regardless of the favourable view taken of accountancy practices lending institutions would generally expect purchasers to provide one third of the total purchase price from own funds. The bank would then provide the remaining two thirds of the purchase price in the form of a term loan over five to seven years. The repayment capacity of this term loan would generally be based upon capital repayments not exceeding 15% to 20% of pre-tax earnings. When calculated, this multiple for capital repayments would suggest that the valuation of a sole practice in bank terms should approximately be a multiple of twice the maintainable profits of the practice.

Due Diligence Process
The size, complexity and sensitivity of the practice being acquired will impact significantly on the due diligence process undertaken. Human nature dictates that many individuals are fiercely protective of their personal and business information, but the disclosure of pertinent information and a detailed due diligence are essential. Relevant information required includes: -
· Fee notes for the preceding 3 years
· Client profile review
· Staff quality review
· Fixtures, fittings and equipment schedules
· Practice location and premises suitability
· Client files
· Listing of fee finance and monthly standing order clients
· Aged debtors listing
· Work in progress listing
· Professional Indemnity Insurance Review
· Legal review including any pending litigation
· Cashflow analysis for the preceding 3 years
· Bank statements for the preceding 3 years
· P.35’s and Vat returns for the preceding 3 years
· Practice accounts for the preceding 3 years

Unfortunately sellers might be reluctant to impart with much of the information detailed above but the acquisition of an accountancy practice is no different from any business and the detailed review of most of the information listed is essential to enable the buyer reach an informed decision on the purchase.

Pitfalls and Hazards
It is not possible to identify all the potential difficulties that may be encountered in purchasing an accountancy practice. Each transaction brings its own unique circumstances and both the seller and the buyer will need to be aware of the many pitfalls that they may encounter. Some potential areas of difficulty may include:

· Identifying time included in work in progress that has been previously billed as interim fees or paid in advance.
· Clients who pay by monthly standing order require a detailed review in order to assess the amount of time and work required to complete the file compared to the scope for additional billing.
· Discrepancies in staff charge out rates and billing levels between the purchasing and selling practice.
· Staff harmonization to ensure that all employees consistently apply work practices, procedures and standards.
· Attaining a consistent level of fee recovery across the new practice.

Basis of Valuation
The overall valuation is based upon a combination of all of the above particularly the scenario set out in relation to finance. Essentially a practice on sale in the open market is driven by the price the market is willing to offer. Invariably the sale of an accountancy practice is based upon a multiple of gross annual recurring fees. While there are no hard and fast rules for defining these multiples a generally accepted rule of thumb used in the valuation is set out below: -

Gross Annual Recurring Fees Value
(Profiled by individual client)

Up to €5,000 €0.75 per €1.00

€5,000 to €10,000 €1.00 per €1.00

Over €10,000 €1.25 per €1.00

The above multiples and range may require expansion depending on the circumstances, profile and condition of a practice.

The Deal
The agreement to purchase the practice is largely based on the valuation of the goodwill in the client portfolio, but other considerations including office equipment and fixtures and fittings, work in progress, debtors, transition period, payment and claw back terms must be agreed before finalising the purchase price and agreement.

Routine office furniture is usually acquired at a significantly discounted value but expensive specialized computer equipment or software may not be acquired unless it compliments the purchasers existing IT strategy.

The responsibility for the collection of debtors usually falls to the vendor, but by agreement, for a set fee, the purchaser may collect the debtors on behalf of the seller and pass on the proceeds as they are received.

The seller should always aim to minimize the value of work in progress at the execution date of the contract. Once the work in progress has been agreed the purchaser usually pays the vendor the value of the work in progress as the relevant fees are collected upon job completion.

Ideally the purchase of a practice should include a changeover period whereby the vendor and the purchaser work side by side in the new practice. The transition period has a dual beneficial effect of assisting the incoming accountant familiarise themselves with the clients while also minimizing the possibility of losing clients. Certain circumstances such as health, immigration and the seller’s career plan may dictate otherwise but a minimum transition period of 6 to 12 months has yielded positive results in the past.

The timing of payment is an essential part of the negotiation process and agreement can sometimes be difficult as there may be a direct conflict between the seller’s requirements for finance and the purchaser’s desire to meet these requirements. Underlying the finance issues a seller will naturally seek to maximise the short-term payments, while a purchaser will seek to extend the period and claw back conditions to protect their investment. As with valuation multiples there are no definitive terms but a commonly used payment structure is set out below: -

· 40% of agreed purchase consideration payable on date of execution of agreement

· 30% of agreed purchase consideration 12 months after the date of execution

· 30% of agreed purchase consideration 24 months after the date of execution

The final 30% of the agreed purchase consideration will be reduced to reflect the loss of any clients not retained by the purchaser after 24 months. The claw back terms should reflect the original purchase valuation of the specific client.

Purchase Agreement
The agreement used for the sale of an accountancy practice obviously requires specific legal and taxation advice, tailored to reflect the exact circumstances of the acquisition, but some of the issues, which universally require consideration and mention, are set out below: -

· Purchase date and assets being sold
· Assumption of debts and liabilities of the practice
· Payment terms
· Claw back conditions
· Non-competition and assistance agreement
· Treatment of work in progress and debtors
· Terms of consultancy agreement during handover period
· Staffing considerations
· Arbitration stipulations

A New Practice is Born
Advising clients of the purchase and change in their professional advisors requires sensitivity and diplomacy. In developing any business relationship the initial contact can dictate the tone and nature of the relationship going forward. The generally accepted method is to write to all clients advising them of the change and identifying the benefits from their perspective. This communication should be issued on the headed paper of the new practice and signed by both the vendor and purchaser. Ideally personal meetings should be arranged for all clients as a method of introduction, but depending on the size of the acquired practice this may be extremely difficult.

The announcement of the successful purchase should be delivered to staff individually or as a group depending on their seniority and influence. Staff should be reassured of their position, while simultaneously identifying the benefits of the purchase from their perspective. As soon as possible, employees of the new practice should sign their employment contracts and be introduced to any revision in practice procedures.

The confidential nature of the accountancy profession dictates that a relatively low profile approach is invariably taken to the announcement of the purchase to the general public.

Conclusion
Regardless whether you are a buyer or a seller, buying or selling an accountancy practice is not an easy task. The seller must groom his practice and pre-empt the questions and queries a buyer will present. A buyer must ask the right questions to get the best value. The sale or purchase of a practice is one of the most important transactions an accountant is likely to undertake in their professional career and the process should be afforded the respect it deserves.

Internet Business Use for SME, Start Ups and Entrepreneurs in Ireland

2006-08-17T16:10:00.000Z

Every client I go into consultation with now asks me one recurring question at the end of the first session, and I don’t even bring the subject up. For me I leave it until we get into Marketing and Sales.
That question is: The internet, what is it really going to do for me? How can I use it to best ability and is it a fad that’s going to go out of fashion?
The Answer: It’s going to be your most important marketing and selling tool for the rest of your corporate life, and you had better get used to it quickly, or you will be left behind! And then I tell them “This is going to make you money!”

Increased Revenue, the main objective of every Organisation.

Remember an invention called The Gutenberg Press? No? Well it revolutionised the world. The world as it was in 1440.

The movable press, or Gutenberg Press, is closely associated with The Bible; it brought The Bible to the masses (Pardon the Pun).

However what it also did was give certain educated people a great deal of power. The ordinary person wanted The Bible, but couldn’t read it- Only teachers of Religion could, hence power over the people.
Does this sound familiar?
Take this situation and apply it to the Modern World:
Who has the power? Answer: Governments/ Large Corporations.
What Power do they have? Answer: Control over Communications and the Flow of information. When was the last time that a government site provided you with a document or download that you could actually use? How much does it cost to get your company on TV?

Now for the revolution!

The power is slipping- Web casts, Pod casts, Chat functions, Blogs and Forums are allowing information, and real information to flow easily across the public. There is no more waiting for information to be passed down. And because this information is widely available it is very cheap! That’s the main point- free or relatively cheap information is the opposite to the needs of Large Corporations. They want control so they can sell on information at high prices.

How is this going to make me money though?
Well, think about it. What large corporation do you know? Maybe it’s a TV broadcast company….who relies on advertising to earn revenue. Where do they get there information and material for TV programmes from? Answer: Other Large Corporations. Now what happens if the suppliers of the material take their best pieces to the internet? They decide to hold the information or show over the internet instead and suddenly nobody is watching TV anymore.
For you this means that TV is no longer the mass media advertising power that it once was. People are now watching for advertising on the internet, which is cheap or free to use. That’s where you make your revenue: You save on advertising on TV or Newspaper, and you get your webcam up and running! You become an early user of this forum to advertise your product or service, you get all the time you require to air your views and sell your product, and suddenly…aren’t you the most popular choice.

So why will the public warm to this media tool?
Interaction, one single word.
Take a look around you. What radio shows are most popular? Talk shows! Interactive shows where you the listener become you the supplier of content. People like to air their views, to seek affirmation.
Look at TV.
Reality TV in every format has had the largest viewing audiences over the past decade. Why? Because we the viewer get the chance to influence the final outcome, to participate as contestants or judges.
The internet in its format of web casts, Pod casts, web seminars all provide this essential ingredient, interaction with the host or with each other. This is a powerful insight and one which very soon, you as a business person are going to want to know how to use to the best of your ability. And I don’t only mean from an IT perspective, you will need to know how to present yourself, how to communicate effectively, how long to stay on view and how to present your product in the best possible way. That’s where I come in, it’s my job to make sure that you take advantage of the internet or New Media, and it’s my job to make sure that your revenue increases as a result. That’s exactly what my clients hear from me, and they are starting to believe!

Branding for the Entrepreneur or Start Up Business

2006-08-17T10:00:00.000Z

Branding:

Most recently I have come across many small businesses who do not seem to have an idea about what Brand they want to create,or for existing businesses, why and what Brand image they have created.

Branding always appears to draw that blank expression from my clients. They know they have to do something with it but never know how to get started or what goal to set out when eventually they do start.

Its a simple concept really, just follow a few guide rules and before you know it you are on the way.

Now we all know of brands which have made it in Ireland, whos tea do we prefer?, what breakfast cereals do we pick first from the shelves of our supermarkets, even what supermarkets do we shop at? All distinctive brands which have been very succesful, espically in Ireland where we know what we like and like what we know.

How to start:
Find a style, a personal style of how you will conduct business. Make this style distinctive, authentic and concise. If you do this you will attract the clients and customers with whom you want to do business. Then build your brand around your chosen style, afterall your brand is how you will express yourself!

So how to find your style:
Just answer the following questions and you are on the way:
1: What is your personality, who you are and what exactly are you going to do with your business?
2: Why are you in this business sector? Why are you doing this and not something else?

Let me help.
1: Personality: What makes you different to others( And be honest, this is no place for modesty)
What problems can you solve? What skills do you have and what are those skills best used for?
Do your skills solve the problems which you confronted?

2: Why did you train or study for your particular skill? What inspired you to spend time learning about your skills? Maybe they are genetic, if so, what are they and how do you know they are going to help in your chosen business?
Why will people work with you or buy from you? What value are you offering them that others aren't? Remember if you are passionate about something, your passion will inspire other likeminded to join you and your brand.

After determining your style you now set to work on Building your Brand around your Style:
What colours best suit your particular style?
Is the image sharp, funny, serious- Base it on your style, not your business or target market! Many accountants would attract far more clients if they took a less serious approach and a friendlier more approachable style .
Base your brand marketing and advertising on your style not your target market. Make sure that you get the clients that will best satisfy your business goals and your personal satisfaction.

Remember: Create a style around your best personal traits, keep this style to the fore when deciding on branding material and make your business work to the standards and style that your brand portrays.

If you are interested in any of my ideas you can leave a message for me here and I will be delighted to get back to you. Your problem is my challenge and together we will arrive at the solution.