Posts

Outsourcing. Does it sound such a scary word to you? For many new and small businesses, the answer is a resounding yes! Outsourcing involves paying someone to do something related to your business. If cashflow is short or you struggle with the thought of others doing something for your business, outsourcing be thought of as a big no-no.

We thought it was time to shed some light on this ‘bad word’ known as outsourcing, explaining the benefits of doing it and identifying exactly what tasks can be outsourced.

What is Outsourcing?

Outsourcing is the hiring of a freelancer or business to do a particular job for you. A good example is engaging the services of a bookkeeper to keep your accounts straight. You pay them to do things specific to this task. You remain in full control of what they are doing and your business.

By far the biggest hurdle for new businesses is getting over the mindset of having to pay someone else to do something they believe they could do. We completely get that. When you have a new business, it’s ‘your baby’ in a way and you want to do everything to help it grow. Becoming a jack of all trades and a master of none is very common. It’s the master of none that is the concerning aspect. By doing absolutely everything, you are not focusing specifically on your strengths; the things that are going to help grow your business. Instead, you spend more time than necessary having to get your head around figuring out (and possibly doing a poor job) how to do something. It’s this task you could have outsourced, and while it would have cost you money, it frees up your time to use your strengths and grow your business. A far better alternative, in our opinion.

Why is Outsourcing a Good Idea?

The best way to answer this is by listing the benefits that outsourcing can provide you with. They include:

  • Saving you time, which saves you money – forget spending 12 hours doing your accounts, when a bookkeeper could do the same amount in one hour!
  • Frees you up to do the things you enjoy doing – you don’t need to do everything, and that especially means the things you dislike doing. You also don’t need to work every hour of every day, which means you can still have a life outside of your business.
  • Cheaper and less hassle than having an employee – there is no overtime, holiday pay or KiwiSaver to worry about. You simply have a contract with the person or company you are outsourcing to, which states what you want them to do, when they’ll do it and how much you will need to pay.
  • Giving you access to new skill-sets – not everyone is good at writing, sewing or using social media. If you are not confident or have little knowledge about a task needing to be done for your business, outsource it to someone who does know what they are doing.
  • You choose how long you need their services for – whether it is for one day a week, the next two months or only at certain times of the year, you decide.

There are also three things to look out for which should be triggering you into thinking it is time to outsource:

  • There is a more cost-effective way to get tasks done
  • Some tasks take too long for you to complete
  • You are unable to do what really needs to be done to grow your business because you are stuck doing the mundane daily business tasks

Once you’ve decided to outsource, next comes deciding what that task will be, and who will do it for you.

Choosing What Business Tasks to Outsource

Start this process by firstly identifying the challenges you are facing in your business. These may include chasing unpaid invoices, posting on social media, not having any free time anymore or struggling to understand how to take your business to the next step. Note down the tasks you enjoy doing and where your strengths are, as well as the ones you hate doing and struggle with completing.

This list should have identified a number of business tasks. Group them into levels of importance and consider which ones you would be happy to give to someone else to do. You’ll also need to consider the cost of outsourcing each task and if outsourced, what return will it give you back in terms of you being able to do something else?

Common tasks new and small businesses outsource include:

There are some tasks though, that shouldn’t be outsourced. These are the absolutely critical things your business does that nobody outside of it would understand how to do. This can include things such as professional development, company culture, manufacture of a highly specific product, or particular service.

Once you have identified exactly what you want to outsource, it’s time to find the right person or company to do the work.

Choosing Who to Outsource to

While it’s not as time-consuming as hiring an employee, it does take time to find the right person to outsource your work to. If you haven’t already got someone in mind, a good place to start your search would be to ask for recommendations. Word of mouth is one of the easiest ways to find and learn about potentials. You can get honest feedback from others and no sense of pressure to hire them.

Otherwise to find freelancers or companies are to look for recommendations on websites, social media or networking groups. Visit their website and learn more about the services they offer and how they work. Many are happy to have a free chat with you to discuss your needs and explain how they could help meet them. If you are wanting to meet in person, then choosing someone local becomes important. But if you are happy to chat via Skype, phone or email, then their location shouldn’t be a factor in your decision.

It’s also important that you contact your shortlist of potentials to ‘interview’ them, in a way. Asking for references or clients to talk with helps you learn more about how they work. You’ll also see what their communication is like, be it by email or phone. It’s a good idea to use their services in a small scale first, before signing any long-term contracts. In regard to the contract itself, read the fine print regarding any cancellation or other penalties you may be up for.

At MBP Online, it’s true that you can outsource all of your accounting and bookkeeping tasks to us. But we can also help you with keeping on top of your taxes and making future plans to grow your business. Based in Taupo (where our espresso machine is always on for clients), we work with both local and NZ wide businesses. Get in touch and let’s have a chat about your needs and how we can help.

Is business insurance really necessary? If so, what types of insurance might I need? These are two questions business owners often ask, especially if they are just starting out. Business insurance can seem like an unnecessary expense, especially when things are financially tight and profits are small or non-existent. We think this issue is an important one to address though, and that’s what we’re focusing on today.

11 Reasons to Say Yes to Business Insurance

We’re not insurance advisers; we’re accountants, bookkeepers and business consultants. What we do know though, is that the benefits of having business insurance provides are well worth the expense. Here are 11 reasons why you should say yes to insurance for your business:

  1. Some contracts, such as entering into a contract for a lease on a business site or a loan with a bank or financial institution require business insurance.
  2. Most trade shows require exhibitors to be insured.
  3. Financial protection for natural disasters such as flooding or fire, as home policies most likely won’t cover any business-related property or tasks.
  4. To protect against harm to property or person.
  5. Keeps your business going financially if something unforeseen is to occur.
  6. Assist with costs needed to correct any cyber crime harm.
  7. Cover from employee theft and damage.
  8. Stock protection and replacement.
  9. Protect your business from high litigation costs should you get sued.
  10. Business insurance is a tax deductible expense.
  11. Gives peace of mind that if something happens, you will not suffer financially.

Next, we’ll discuss the many types of business insurance, helping you decide which ones your business needs.

8 Types of Business Insurance to Consider

There are eight types of insurance you should consider for your business. They are:

  • Business asset insurance, which covers property, buildings, machinery, office equipment
  • Business interruption insurance to cover for acts such as flood, theft to cover loss of income and employees’ wages
  • Key person insurance, especially in a small business this can be very important as it may rely on one or few staff to run it
  • Vehicle cover for company cars
  • Professional indemnity insurance, especially when you are offering a service like professional advice or consultancy.
  • Public indemnity insurance protects against damage to public property by you or your employees
  • Statutory liability insurance for protection against unintentional breaches of NZ law
  • Cyber insurance, for loss or damage to data

Business insurance is a small expense which brings great peace of mind to business owners. While it is something we strongly recommend, we suggest chatting with a business insurance advisor for personalised advice to meet your own requirements before making any decisions. Not really sure where to start or who to talk to? Get in touch with the team at MBP and we ca help point you in the right direction.

Thinking about hiring your first employee? Reaching a point in your business where you need an extra pair of hands is a milestone to celebrate. It is also a time when you recognise that in order to grow your business, adding new team members follows along naturally.

Before you start asking for resumes, there are some steps to follow first:

  • Assessing if you are truly ready to hire your first employee
  • Identifying the role, they will play by creating a job description
  • Calculating how much it will cost you to hire an employee
  • Deciding how you will manage the hiring process
  • Learning about your employee’s legal rights and entitlements
  • Choosing a payroll system
  • Onboarding your new employee

We’ll cover each of those here today.

Are Your Ready to Hire Your First Employee?

How can you tell when the time is right to hire your very first employee? Here are some signs to look out for:

  • You are so busy that you can’t do all of the work yourself
  • Your business is growing and your cashflow is above what you planned for
  • You are ready to grow your business but can’t do it by yourself
  • Your customer service levels are dropping as you can’t provide excellent service by yourself anymore
  • You need new skills to work alongside yours to grow your business
  • There are new services or products you want to offer, but you don’t have the skills to do them yet
  • Your free time has completely disappeared, and you’d like some of it back

It’s going to be a combination of these signs that demonstrates to you the need to considering hiring your first employee. Talk things over first with a trusted advisor if you are unsure if it’s the right step for you and your business.

Writing a Job Description for Your First Employee

When taking on a new employee, you need to have a very clear understanding of what you want them to be doing. This means nailing down the specific roles they will be performing for your business. Creating a job description will help you identify their day to day responsibilities and tasks, the skills, experience and qualifications they will need to perform the role, the hours they will work and what their salary will be. You will also need to be clear on:

  • The type of employee they will be – casual, contractor, permanent, part-time, full time
  • The amount of responsibility you are happy to delegate to them
  • What resources you will need to have before they start, such as equipment, insurance, and wages
  • The specific skills they need to be able to demonstrate they have
  • What training you are prepared to offer, or if they need to be fully trained already
  • The number of hours it would take to do specific tasks each week

All of this information can be put together into a comprehensive job description which can be given to prospective employees and help you create the advertisements for hire too.

How Much Will It Cost You to Hire Your First Employee?

Here we’re not only talking their wage or salary, but also holiday pay, KiwiSaver contributions, business insurance, training, new equipment, uniforms and recruitment costs. The Ministry of Business, Innovation and Employment’s website has a handy Employee Cost Calculator which is free to use and can help you identify how much it will cost.

How Will You Go About Hiring Your First Employee?

You’ll need to decide if you will manage the entire recruitment process yourself, or if you will hire a professional to help you do this. Besides your budget, there are a few things to consider if you should use a recruiter to help you or not, depending on how confident you are with:

  • Writing job advertisements
  • Analysing CVs
  • Performing interviews
  • Making an offer to an applicant
  • Creating employment contracts
  • Checking references

There are pros and cons for both, but for your first employee, we’d recommend getting some support when you do it.

Understanding an Employee’s Rights & Responsibilities

Employment legislation is present for a purpose: to avoid employees being used and ripped off. Neither of you can opt-out of these entitlements, and they are valid regardless of any signed contract. To understand fully the minimum rights of employees, we recommend taking a read of the Employment New Zealand website’s employment rights guide. Generally speaking, an employee’s rights include:

  • Pay at or above the minimum wage
  • Paid time off and public holiday entitlements
  • Sick and bereavement leave
  • Maternity leave
  • Overtime pay
  • Leave for jury service
  • A safe working environment free from discrimination

Once again, a recruitment or human resource professional will be able to assist you further with these, helping identify specific ones in your unique situation too.

Choosing a Business Payroll System

It may not be too much of a biggie with just one employee, but what if your business continues to grow to five or twenty employees? A payroll is a list of your employees and contains information about the money you pay them, including tax deductions. You can run your payroll by:

  • Good old traditional pen and paper spreadsheets
  • Outsource to a payroll professional such as ourselves
  • Use a DIY software which can work out things for you, but you need to make payments
  • Full-service software which does everything including making payments on your behalf

Doing the payroll means you’ll have to do things such as calculate gross pay, pre-tax deductions including KiwiSaver, PAYE, taxes on benefits, student loan repayments, pay the wages, file and pay taxes and deductions, plus keep all of these things on record for at least seven years!
One of the things we’re here to do is to help you decide which payroll system suits you best, and even assist you with the running of it if required too.

Onboarding Your New Employee

The contract is signed, sealed and delivered. It’s time for your new employee to start work. This means you’ve already organised the equipment they will be needing to use, gotten all of the digital systems ready such as IT logins and let your insurer know they need to adapt your coverage. You’ll also have to start an employee file, where you keep information about them and their role, plus all of the specific onboarding requirements:

  • Health and safety policies
  • Dress codes
  • Hours of work
  • Detailed training required
  • Access to the workplace and other tools
  • Organise holidays and leave
  • Introducing to customers
  • How reviews will be done

Many businesses spend time creating a written onboarding process to make things easier for the first and subsequent employees.

Here at MBP, we like to think of ourselves as our client’s right-hand helper (not man, cause we’re all equals here). From accounting to bookkeeping services, business development and planning, we do it all. Get in touch with us today or check out our business packages to learn more about how we can help you grow your business.

Welcome to the world of business finance. Full of tempting offers and lots of promises, applying for business finance seems to be exactly what every self-respecting business should do. But is it? In this beginner’s guide to business finance, we look into your options for it, what you need to have in order to apply for it and how it could be used to benefit your business.

Understanding Your Business Finance Options

Like with most things, when it comes to finance for a business, one size does not fit all. Consequently, there are many different options available:

  • Term loans
  • Overdrafts
  • Peer to peer lending
  • Line of credit
  • Grants
  • Pre-sales
  • Angel investors
  • Business incubators and accelerators
  • Crowdfunding
  • Friends and family
  • Venture capital

The type of business finance you choose does matter significantly, which is why taking your time to chat with a business advisor makes good financial sense. We’re here to help: book a time now.

How to Get Business Finance

Just like when applying for a residential mortgage, you need to be fully prepared, although in a slightly different way. While there will be specific criteria for each finance option, in general you will need to have organised your:

  • Business plan – what is the opportunity you are needing cash for? How will you take advantage of it, and what exactly will each dollar be spent on? What are the risks and how will you manage them?
  • Finances – you’ll need a budget which demonstrates how you will meet and make finance repayments, details of past and future cashflow and two years of profit and loss statements.
  • Security – if required, what security can you offer the financer to mitigate the risk of lending to you?

Once you’ve put your application together, it’s time to approach the financer. Remember, they’re not wanting the wow factor, but rather how you will meet repayments.

Beneficial Ways to Use Business Financing

Like with any type of repayable financing, it’s important to note that it does involve going into debt. Because of this, you’ll want to make the right decisions as to what you will use it for. Some examples of financially smart ways to use it include:

  • Purchasing new equipment which will allow you to produce your product or service faster and more cost effectively
  • Debt consolidation – rather than paying lots of little loans, refinancing into one with a lower interest rate will save you cash
  • Marketing – paying for an advertising campaign to bring in new clients or customers to boost your cashflow
  • Purchasing inventory – especially for seasonal businesses, using financing to purchase new inventory for the upcoming months can make sense

Before you jump headfirst into obtaining any business finance, give us a call. We can help you decide if this really is the best option for you, and help you create a workable plan to obtain and repay it.

Your considering turning your hobby into a profitable business but have a few questions you’d like answered first. We’re guessing they include questions such as:

  • How do I know if it will be successful?
  • What steps do I need to take to set up a new business?
  • Should I quit my job and do my business full time?
  • How do I know if I’ve got what it takes to run a profitable business?

As you’re thinking seriously about turning your hobby into a profitable business, you must already be passionate and reasonably confident about it. So, let us help you understand what steps you will need to take to turn your hobby into a business.

Am I Ready to Take the Next Step with My Hobby?

Before you jump into making any big decisions, there are a few questions you should be asking yourself first:

  • Will I enjoy my hobby when I have to work to a deadline to fulfil orders?
  • Do I like my hobby enough to live and breathe it 24/7?
  • Am I happy with the quality of the goods I produce and know that my customers would be satisfied too?
  • How much are you prepared to sacrifice to start up this business (emotionally, physically and financially)?

If you are happy with your answers, then the chances are that now is a good time for you to start looking into turning your hobby into a business.

Can a Hobby Become a Profitable Business?

Yes, absolutely! There is a catch, though; it requires plenty of hard work and determination. A hobby is something you do because you enjoy doing it. A business is when you sell products (which you could make by doing your hobby) for a profit.

The Ministry of Business, Innovation and Employment (along with the IRD), clearly state that if you sell goods regularly online or in person, you are in trade. This means that you are in business if you:

  • Buy and resell goods
  • Intend to make a profit selling goods
  • Are creating goods to sell for a profit
  • Offer your goods to others to sell on your behalf
  • Receive payment (cash or otherwise) for goods

If you already are or want to be selling what you make for a profit, then it’s time to get serious!

First Steps in Turning a Hobby into a Business

A profitable business is one which receives more income than it has expenses. That sounds simple enough, but it is the biggest thing new businesses struggle to achieve. A business is more likely to fail in its first two to three years, making planning and preparation before starting a business vital. To successfully turn your hobby into a profitable business, you will need to do the following:

  • Research your industry – who else is making products like yours? What do they sell them for? Is there a market for your type of products?
  • Investigate your own products – what is the time and cost involved in making each product? What can you realistically sell them for? How much profit will you make, and is it enough? What makes your products different from those sold by your competitors? Do some product testing in that you ask your target audience what they think of your product, if they would buy it, and how much they would pay. Check out how others promote products similar to yours.
  • Create a business plan – this is your blueprint which contains all of the steps you will need to take over the first year. It also lists your goals, where you will go for help if needed, your additional resources and how you will sell your products. We can help you with your business planning – just ask!
  • Investigate the rules and regulations for your industry – there are some industries including clothing, food and toys which have many compulsory regulations to follow. Not meeting these can result in huge financial penalties against you.
  • Apply for a business IRD number
  • Decide upon your business structure – sole trader or company – and set it up
  • Register for GST if necessary
  • Open a business only bank account
  • Organise your business’ resources including domain name and website, logo and graphics, social media accounts and products
  • Seek advice from a business advisor. Yes, it will cost you money when things may be tight. However, it is best to pay a small amount now and get things right from the start, than to be out of pocket for huge expenses if you make bad decisions.

You’ll also need to decide if you are going to treat your business as a supplementary income and keep your existing job. Or if you are willing to resign and work on your business full-time. There’s pros and cons for both options, and it all comes down to the level of risk you are prepared to take.

We are more than willing and able to help get your new business off on the right foot. Our business planning services team can help you create realistic goals and identify the steps needed to achieve them. Get in touch with us now, and let’s have a chat over coffee: our shout!

Taking the Next Steps in Turning Your Hobby into a Profitable Business

Most likely you’ve got a website up and going and are busy building a following on social media. Creating an online presence is an affordable way for a new business to sell and promote its products. Other activities you’re involved with should include networking both in person and online with other small business owners, following helpful business blogs (like ours), and keeping up to date with the latest developments in your industry.

It’s also essential that you keep financial records for your new business. This includes keeping receipts for expenses, details of all income received, bank records, credit and debit notes, details of wages and PAYE if required. A company structured business will have different financial reporting requirements than a sole trader, so make sure that understand what they are.

Each year you will be required to create financial statements for your business. The bare minimum of information you must include in these are:

  • Balance sheet detailing assets, liabilities and net assets
  • Profit and loss statement, or income and expenditure
  • Statement of accounting policies
  • Details of this year’s results against last years

If this seems completely overwhelming and is not the reason why you wanted to start a business, we understand. Not everyone wants to be a bean counter and spend hours drooling over columns of numbers. But we do, except we don’t drool – just drink plenty of coffee!

Our team of accountants and bookkeepers can handle your businesses’ financial paperwork and obligations for you. We love diving into tax returns, completing financial reports and identifying ways our clients can reduce their tax obligations; legally, of course.

We offer a range of tailored business accounting packages for all businesses, including start-ups like yours. We’d be honoured to help support you as you make your way in transforming your hobby into a profitable business. Get in touch with us today, and let’s chat!