7 business pitfalls to avoid as a business owner, how hybrid working can affect tax on travel, and support with raising additional finance for your business
Today’s blog post focuses on key tips to enable you to run a financially viable business, from key pitfalls to avoid to raising finance sensibly. Need further advice? Then get in touch, we’d love to hear from you.
Avoiding Business Pitfalls: 7 things you should NOT do as a business owner
Recent surveys of UK business owners show us to be under pressure. This is no surprise. As a business owner, you’re constantly juggling multiple responsibilities and facing a myriad of challenges. While there are countless strategies for success, it’s equally important to be aware of potential pitfalls that could derail your efforts.
In this article, we’ll explore seven common mistakes that business owners should avoid at all costs.
1. Ignore financial management
One of the biggest mistakes a business owner can make is neglecting proper financial management. Failing to keep accurate records, monitor cash flow, and budget effectively can lead to financial instability and ultimately, business failure.
Make it a priority to invest in robust accounting software, seek professional advice when needed, and regularly review your financial performance to make informed decisions.
2. Neglect customer feedback
Your customers are the lifeblood of your business, and their feedback is invaluable.
Ignoring customer complaints, suggestions, or reviews can damage your reputation and lead to losing valuable business.
Look for opportunities to openly communicate with your customers and seek their feedback. The best feedback often comes from informal, relaxed conversations so train your staff to be alert to feedback given to them and ready to pass it on to you.
Demonstrate a willingness to address customer concerns and improve their experience and you will add to their loyalty to you.
3. Overlook employee development
Your employees are your most valuable asset and investing in their development is essential for long-term success.
Neglecting training, mentorship, and opportunities for growth can result in disengagement, high turnover rates, and decreased productivity.
Instead, look for opportunities that could develop your employees. Be willing to consider training. Provide regular feedback and recognition to your staff so that they know what needs improving, but also what they do well. Foster a work culture that encourages teamwork and for staff to work together to overcome problems.
4. Failing to adapt to market changes
Business is constantly changing, and failure to adapt can quickly lead your business into a dead end. Whether it’s changes in consumer preferences, advances in technology, or updates to regulations, staying ahead of the curve is essential for survival.
You need to be monitoring market trends on an ongoing basis. Stay open to the possibility that things will change. Sometimes indications that something is changing can come from reading the news, sometimes it’s from conversations with a customer or supplier, or sometimes you will only pick it up from changes in your sales or accounts figures. When it comes, be ready to pivot your business strategy as needed to stay relevant and competitive.
5. Micromanaging everything
When starting up in business it’s exciting to be involved in everything and feel needed. While it’s natural to want to maintain control over every aspect of your business, micromanaging can be counter-productive and even stifling.
Trust your team to carry out their responsibilities and give them the power and authority to make decisions within their areas of expertise.
If you can delegate tasks, and encourage a culture where staff feel that they can take their initiative, you will free up your own time to be able to focus on strategic priorities and scale your business more effectively.
6. Ignoring legal and regulatory compliance
Complying with laws and regulations is non-negotiable for any business. Ignoring legal obligations can lead to hefty fines, court proceedings, and irreparable damage to your reputation.
Find a way to stay informed about the laws that affect your industry. Be willing to seek legal advice when necessary and implement robust compliance procedures in your business to mitigate risks and keep your business on the right side of the law.
7. Neglecting work-life balance
As a business owner, it’s easy to fall into the trap of working excessively long hours and neglecting your personal well-being. However, burnout can have serious consequences for both you and your business.
Make self-care a priority and set boundaries between your work and your personal life. Make time for your family and for hobbies and relaxation. Remember that maintaining a healthy work-life balance is essential for productivity in the long term and your overall happiness.
In conclusion, avoiding these seven common mistakes can help you navigate the challenges of business ownership more effectively and build a resilient and thriving business that stands the test of time.
Having looked at seven things to avoid why not ask us for our guide on 57 ways to grow your business?
Hybrid working – what counts as a business journey for tax purposes?
HM Revenue and Customs (HMRC) have updated their guidance on what qualifies as ordinary commuting and private travel for tax purposes to include hybrid or flexible working.
Generally, where an employee works at home as an objective requirement of the job, then HMRC will usually accept that the employee is entitled to tax relief for the expenses of travelling from their home to another workplace, such as the office, when this is in performance of the duties of their job.
Usually, HMRC will only accept that working at home is an objective requirement of the job if facilities that an employee needs to do their job are only practically available at their home.
On the other hand, if an employer provides appropriate facilities in other locations that could be practically used by the employee, or the employee chooses to work from home, then HMRC will not accept that working from home is an objective requirement of the job.
HMRC provide an example to illustrate this. The work of an area sales manager living in Glasgow requires her to manage the company’s regional sales team across Scotland, but the companies nearest office is in Newcastle. Since the manager cannot practically attend that office and is required by her employer to keep all client information securely at home, she is entitled to tax relief for her costs on the occasions she travels to the company’s office in Newcastle.
Since COVID and with the developments in communication technology, many employers now allow their employees the choice of working from home on a flexible or hybrid basis. The employee will usually have a base office that they attend on the days they are working in the office.
Since this flexible way of working is voluntary for the employee, they are not required to work from home. This means that any journeys they make from home to the office are ordinary commuting and do not qualify for tax relief.
This is important to be aware of as an employer if you reimburse staff using the approved mileage rates. You must make sure that you do not reimburse expense claims for home to office travel for employees who are hybrid workers by their own choice. If you do, the payment then becomes a benefit and will need to have tax and national insurance deducted via payroll.
If you are not sure about whether you or an employee qualifies for tax relief on home to office journeys, please feel free to call us at any time. We will be happy to help you!
Financing your business – what should you know?
Growing a business often requires capital. If you don’t have that capital personally or already in the business, then one option is to get finance from a bank.
What types of finance are available? How can you present a request to a bank and have it accepted? We will endeavour to answer those questions in this article.
Common types of finance
Financing can usually be broken down into 3 main areas: loans, leases, and hire purchase.
- Loans are usually provided by a bank and could be as simple as an agreed overdraft or a fixed term loan. There are often requirements imposed by a bank, such as securing the borrowing against business or even personal assets.
- Leases involve renting an asset for a set period rather than owning it. The initial outlay is often lower than with other forms of finance. However, if you look at the total cost, leases can work out more expensive in the long run.
- Hire purchase normally involves a finance company buying an asset and then ‘hiring’ it to you. Once you pay the final instalment you get legal ownership. Interest rates can be more expensive than for a loan, but it pays to check.
It pays to compare interest rates and look at the total cost of ownership. Loans are usually the cheapest source of finance to a business, but there can be good reasons for considering leases or hire purchase.
Matters considered by a bank
When looking at an overdraft or loan application, a bank will consider what they know about you and your business, and the experience they have of the trade you are in. They will also look at your experience with the business and how you handle your accounts with the bank.
The bank will also consider the amount of finance being requested and whether it is enough to complete the aim of the finance. They will want to see cashflow forecasts and whether other factors relating to the finance request have been properly considered. For instance, if the finance is to expand property, are planning applications needed?
A bank will also look at whether the repayment period of the finance fits with the use of the asset. For example, a 10-year loan for a laptop is unlikely to be accepted.
Banks will often flex their interest rates and fees to cover them for the risk they may feel there is in lending to you. And, particularly with an overdraft, they may want to see regular financial reports from you.
When you can show that you have requested an adequate amount of finance for what you are proposing, you have demonstrated the need for the finance, and you have up to date accounts and forecasts including cashflow projections, you are giving the bank plenty of reasons for confidence in lending you the money.
We have connections with local banks and have many years of experience working with clients to get the finance that takes their business forward. Please just get in touch and we will be happy to guide you through the finance maze!