The Fizz! Blog

Company income and expenditure to go on the public record

It’s recently been confirmed that, in a year or two, all limited companies will have to file a Profit and Loss Account at Companies House. For many years now, the vast majority have not had to do that, with only the largest of companies having to make details of the year’s income and expenditure publicly available. The snapshot of a company’s year-end position - its Balance Sheet - goes on the public record, giving a broad overview of assets, liabilities and solvency, but not the story of how that position was reached.

This is going to be unwelcome news to many company owners. Some may not want their rivals, customers or suppliers knowing the margins or the profits they’re making. Others may not want to give friends, family, staff or exes an insight into their personal finances! Your claim to be unable to afford to pay more than the National Minimum Wage is going to be undermined slightly if your staff can see you’re making £1m a year yourself.

There will also be people who don’t want the world to see how poorly they are doing! Maybe because they’re worried it’ll spook potential (or even existing) customers, or maybe they’re faking it until they make it at networking events and the like and would prefer the truth to remain obfuscated!

The change is a classic case of being seen to be doing something, even though anyone who understands the issue knows that the thing being done doesn’t actually address the issue. The idea is to try to take some action against rogues who hide behind companies. But those who file rubbish to conceal what they’re really doing will continue to file rubbish, of course, and Companies House will still lack the resources or mandate to do anything about it. And it’s argued that it’s important that the authorities can see in more detail what companies are doing - but HMRC have always received a full version of the accounts, with a far more detailed version of the P&L than is being proposed for the public record!

In any case, barring a u-turn by one government or another, the change is coming. So, if you’re concerned about it (and we should say that the majority of company owners we’ve discussed it with aren’t actually too bothered), is there anything to be done?

Some people will be perfectly happy and able to run their business without a limited company. The effective tax rates of limited company owners and those with unincorporated businesses aren’t that different these days (the main tax benefit of a limited company is the ability to shelter profits from higher rate tax if you don’t need them right now, whereas a sole trader or partner in a partnership pays tax on the lot in the year they make it). If you’re also comfortable giving up limited liability (which is no substitute for adequate insurance anyway), you might well just decide to operate as a sole trader or partnership instead.

Others won’t have the choice. They might be in an industry or a niche where a company is essentially compulsory as people won’t do business with you otherwise. Or sheltering income from higher rate tax might be important enough to them to outweigh any transparency downsides.

Finally, it’s just possible we might see the emergence of unlimited companies as a more popular choice. They give the tax regime (and therefore sheltering possibilities) of a company - but without the protection of limited liability. They don’t have to file accounts at all, but given that they offer no liability protection to their owners, they’re rarely seen in practice (the long-gone clothing chain C&A used to be the most prominent example!) - up until now, anyway.

We’ll all probably get used to it in the end. The exact format of the profit and loss account to be filed has not yet been set, and it may include less detail than people fear. In any case, looking at accounts at Companies House can already be highly instructive under the current regime, but it’s rare that anyone (aside from accountants, anyway) thinks to actually do it. Even if more information is made available, people probably will take less advantage of it than they could.

www.fizzhq.com

Doing great work is the best form of business development

There's an accountant who blogs prolifically about the development of his accountancy business, and has done for years - readers of AccountingWeb would know exactly the person we mean.  We like reading his stuff, and enjoying his account of his journey.  Although he gets *a lot* of stick from some people, we really like having him in our virtual lives - though we would virtually never make the same business decisions as he would.

He generally has someone working for him, maybe two, and constantly battles to get to a position where his staff are doing all the actual accountancy and tax work, freeing him to work on business development and improving the systems in the business, and reduce his contact with clients.  This is almost always a battle he loses, since staff retention tends to be an issue, and he's continually drawn back into doing actual technical work.

Fizz was started as a one-person business at the end of 2007, which we think is pretty much when the blogger was getting started too.  The Fizz approach was essentially the exact opposite of his.  We've never really done a significant amount of active business development.  We've allocated £30 a month to Google Adwords throughout that time (though these days our spend rarely reaches £10 and we can't be bothered to look into it), and gone to plenty of networking events (to chat to people and hear their stories, with absolutely no anxiety about collecting leads or clients), but that's it.  Our business development spend over nearly nine years will have been less than £10,000 without doubt.

We're now at 13 members of staff.  90% of our new clients over that time have come from referrals - mainly from clients who have liked what we've done for them.  If our man had ignored business development and just worked hard on delivering excellent work and service levels, then we're pretty confident that he'd now have a business significantly bigger than he has at present - and that looks much more like the business he's been trying so hard to create.   In our world, at least, word of mouth is very powerful; you just have to be good and be patient.

www.fizzhq.com

Don't leave a lonely badge!

When you leave a networking event, or some similar business thing, there's often some badges left at the front desk, not used by people who said they'd turn up but didn't make it.  I'll habitually have a glance at them.  Around here, there are some people who are definitely serial non-attenders of things they've signed up to.  Obviously, from time-to-time things might crop up at the last minute and you have to reshuffle.  But there are some people who are missing more often than they turn up.

From their point of view, I guess they think it's no big deal, and at another event there will be an opportunity to tell people about what they do and how good they are at it.  But, to anyone who attends events in a particular area on a fairly regular basis and pays attention to the delegate lists and how they match up to the people actually in the room, they're implying time and again that they're someone who can't be relied upon to do what they've said they'll do.  Which is not a good thing, and means we're going to struggle to consider giving them our business, or recommend that our clients and contacts do.  So don't leave a lonely badge - if you sign up, turn up!

www.fizzhq.com

Idea for another new type of networking meeting

I described before how we find that talking about what's going wrong or could be better in a business can actually be more interesting and rewarding than what's brilliant about it.

At "60 seconds" style networking meetings, everyone will normally describe something they're great at, or have done brilliantly, or that delighted a customer.  It can get a bit monotonous after a while (and sometimes it's bravado, of course).  Maybe it would be interesting to have a meeting where you had to spend your 60 seconds describing your biggest mistake or worry or whatever of the previous week.

You could combine this with our previous idea of a networking meeting where everyone has to make their accounts available for the other attendees to take a look at for a really honest environment!

www.fizzhq.com

Maybe we should talk about the negatives a bit more

Twitter (as used by business owners at least) tends to be relentlessly positive.  Every day is brilliant, every event is exciting, every meeting is wonderful.  You can understand that nobody wants to be negative about their business in a public forum, but by and large so much of it is similar that we all end up ignoring it.

Actually meeting people face-to-face at events can be much more interesting.  All the time we'll bump into enthusiastic tweeters we know at real-life business events, and although their Twitter feed might be "Brilliant!  Exciting!  Wonderful!", the reality is of course much more nuanced.  Sometimes it's "Brilliant!", but sometimes it's "Awful" and mostly it's somewhere in between.

Last week we had a really interesting and illuminating chat with a local business at a networking event about the area of their business that isn't really working well at the moment.  We've a really high opinion of the business, and talking about the negatives didn't prejudice our view of them - it led to a really thoughtful discussion about their industry, the differences between local towns, different ways one could look at a problem and so on.  It was very thought-provoking (for us, anyway, and for them too I hope!), and certainly the conversation that was uppermost in our thoughts as we left the event.  Maybe our side of the conversation was helpful to them on this occasion and maybe it wasn't, but I know from my own experience that simply the process of thinking about an issue enough to explain it simply to an outsider can be be really helpful.  Even if they've no useful input, expressing the problem coherently can be enough to spark some ideas of your own.

Of course, it's probably not a brilliant idea to focus on the negatives in your business on Twitter - 140 characters might make you look more bitter than thoughtful, apart from anything else.  But it might benefit many of us if we were to talk a bit more about the aspects of our businesses that could be better, not just the parts that we think are already brilliant.

www.fizzhq.com

There's no perfect networking group

The other day someone at a networking event said to me "Of course, the thing with networking is that it's all about finding the right group."  

That's pretty much the exact opposite of what I believe.

Many people flit from group to group, looking for a magic format that's going to make everything work brilliantly for them right away.  But it doesn't work like that.  Really, all these groups are more or less rooms with people and coffee in them.  If the people are idiots, then there's no format that's going to solve that.  If the people are good, then they'll be able to work round any format, get to know one another, and make useful connections.

Over the years, we've been to various groups, and we've stuck with any where we've thought that there's a critical mass of good people, or where we just enjoy ourselves when we're there, without any particular expectation of financial benefit to our business.  We've got something good out of all of those groups, whether in terms of enjoyment, useful connections for us and our clients (finding good people that we can recommend to our clients and to others is actually a more important aspect of networking to us than getting business for ourselves), and ultimately growing our business.  With all of those successful groups, it's happened because we stuck with it and just talked and got to know people without expecting that this group was just going to do everything for us with its supposedly brilliant and ground-breaking format.

So, our recommendation: if you find a group that has a decent number of people going and not too many of them are idiots, then stick with it.  It might get you business, it might get you friends, it might get you some interesting anecdotes, it might give you some support if you work alone, it might give you people to bounce ideas off, it might make you better at explaining concisely just what you do and the benefits you bring (it will definitely do that, in fact), but it will certainly do something for your business and for you as a person.  If you keep going into new groups, getting to know people on a superficial level and then leaving again, little of that is likely to happen.  Turning up consistently to something good is likely to be far better for you than searching endlessly for something perfect.

www.fizzhq.com

New networking group in Thame

There's a new networking group starting just outside of Thame, on Wednesday 22^nd June (8-10am).  It's part of the 4N Networking group. 

You can find more out about it here:

http://www.4networking.biz/Events/Group/Thame

We've no formal connection with it, but we're very likely to pop along and check it out.  Perhaps we'll see some of you there?

www.fizzhq.com

A semi-serious proposition

Sometimes we think it would be good if there were business networking meetings where participants had to make the accounts of their business available for everyone else to look at.

We regularly download accounts from Companies House to do background research on companies that want to do business with us, or who we've talked to at a networking event of some sort.  Even if they're just the abbreviated accounts that most small companies put on the public record, they can still be revealing.  Often we find that a rosy picture painted by a director is somewhat unrealistic.  Your eagerness to do business with someone is going to be affected - or at least it should be - if their company is £50k in the red, or just hopelessly behind in its preparation of accounts and returns.  If you run a company and we talk to you for more than a couple of minutes, we'll almost certainly download your last accounts and have a look at them, so there isn't any point telling us things that are immediately undermined by the evidence of the public record.

But most people aren't going to check out people's accounts, they'll often just accept the assurances of a director or salesperson at face value.  So I wonder if there would be any demand for a group where full disclosure of accounts is a prerequisite for participation.  Perhaps people just aren't interested in knowing more about who they're doing business with.  But maybe enough are interested that it could have some potential.

And, of course, if you're thinking of doing business with us - download our accounts!

www.fizzhq.com

Thame Lunch Club

We've a new website for Thame Lunch Club, a long-established group.

Thame Lunch Club (TLC) is a networking group for people working in professional services in and around Thame, in Oxfordshire.  Attendees are generally from areas like accountancy, law, banking, surveying, estate agency and the like.  Sometimes we let people with proper, useful jobs come as well!  There’s no limit on the number of people from a single profession who can attend a lunch.  There’s no formal timetable for the meeting, and no requirement (or opportunity) to stand up and talk about your business.  It’s simply an opportunity to eat, chat and have fun.  TLC is a very informal group, with an emphasis on regular attendance, socialising and enjoyment.

We meet once a month, usually in the Rising Sun or House of Spice in Thame.   Usually attendance is between 12 and 15 people at each lunch during the year, with maybe 25 people at our Christmas do.  However, numbers by themselves are not the aim, and we prune our circulation list on a regular basis so that we don’t trouble non-attenders with emails for an event they’re not really interested in.  The group is aimed at people who are keen to put some time and commitment into building strong, long-term and hopefully profitable business relationships.

The lunches are organised by Greg Lovett of Fizz Accounting and Chris Stocker of Stocker & Co, Solicitors.

Have a look here at some of the businesses that regularly attend.

If you’d like to be added to the email list for the group – or if you’ve any questions about it – please drop Greg a line at [email protected]

Networking with Fizz #2 - Turn up!

A short networking tip this week - by and large, networking only works when you're committed to turning up to a group or event month in and month out (or week in and week out) regardless of whether you see instant results or not.  People need to get to know, like and trust you, and that won't happen if you meet them once every six months.

Clearly, this means that it's going to help if you actually enjoy the process.  If you're not actually interested in the people you're talking to and you're just there because you think it may be financially rewarding then you're probably not going to keep going for long.  If, on the other hand, you like going, and you like the people, and you're really interested in what they do and their experiences, and in fact you'd carry on going even if there was no prospect of getting any business from it, then you'll probably do well.  In other words, if you're genuinely not too worried whether or not you'll get any business from the process, you'll probably do fine, but if you're desperate to get some business out of it then you probably won't.

The idea that consistent attendance is a good idea might seem obvious, but I know quite a few people who attend the events I go to, but very irregularly. I imagine that they know they're "supposed" to do some networking, but they're not really that enthusiastic and committed, so they just do enough that they feel they can tick it off their list.  Unfortunately - though it's always possible they meet someone by chance who's perfect for them and wants to do business right away - I suspect that they're probably going to get very little out of it.

www.fizzhq.com