Why hiring an accountant can help your business

There are many good reasons for hiring an accountant, whatever the size or type of your company. That doesn’t mean employing an accountant on a full-time basis, but having them for a few hours support each week or month can be a very valuable investment. Not only can they provide financial knowledge and skills which you might lack, but they can also help free up your time so you can concentrate on what you do best – running the business.

An accountant can help:

  • With the finances. An accountant can help with the bookkeeping, VAT, tax and other government returns, provide payroll services and assist with a host of other daily financial tasks. They can also help analyse your financial situation and identify key trends which will help you understand your business better, as well as keeping an eye on cash flow, a key metric for most businesses.
  • With your company’s legal structure. An experienced accountant will understand what legal business structures are available, and what might be the most appropriate for your business. They can also outline for you the legal and tax implications of such structures, and assist with the set-up and registration of companies. Furthermore, they are likely to know appropriate lawyers who can assist with the process as well, saving you the difficulty of finding your own.
  • Write a business plan. Anybody looking for funding via a bank loan or overdraft, or trying to attract private investment from a venture capitalist or business angel will need to write a business plan. The chances of getting any money from these sources without one are practically nil. An accountant will be able to bring their financial knowledge and advice directly to bear in drafting a business plan. Not only will they be able to produce and present the appropriate historical accounting data and future financial projections that are required in any plan in the right format and in line with recognised international standards. They will also have an appreciation of what other analysis is required as well – a business and economic environment overview, market and competitor analysis, a SWOT (Strengths, Weaknesses, Opportunities, Threats) assessment etc. Without input from a qualified accountant, it can be difficult to create a plan that is realistic, professional and detailed enough to convince.

Furthermore, having an accountant on board can increase your chances of getting that loan or financing. The bank or investor may draw comfort from the fact that there is a professional helping managing the finances of the business, whilst the accountant can answer any questions that they may have about revenue projections and expenses.


  • If you are audited. Whilst unlikely to happen to you, there is a small risk that your business could be subject to a government audit, most likely in the form of a VAT inspection. Rare as such events are, however, anybody who has ever been through such an inspection can attest to how stressful and time-consuming they are, and how inspectors will not only penalise you for discrepancies found but also target your business for regular, future, follow-up visits. An accountant can not only help you manage the inspection process and ensure appropriate action is taken to address any weaknesses found, but can also minimise the damage associated with such visits by introducing suitable controls and procedures before any inspection occurs.
  • You delegate. Many small business owners enjoy the feeling of being in control and managing all aspects of their business. However, as their business grows, the ability to manage everything becomes more and more difficult, increasing workload and stress, and reducing the amount of time that can be spent on core tasks such as new business and product development, or launching into new markets. Delegating your company’s financial affairs to an accountant helps free up valuable time and allows you to concentrate on other things, knowing that an expert is there looking after them for you.
  • With buying or selling a business. If you have decided to buy an existing business rather than start from scratch, you should always consult an accountant before deciding to commit to it. They will be able to look at the company’s financials in detail, and see if anything looks wrong. They can check, for example, if the company’s assets are fully owned, leased or partly-financed, whether the company has any debt, or has appropriate insurance or government licences in place. They can also look at some key financial rations to help assess whether you are buying a valuable business – or a dud.
  • Equally you will need a good accountant if you decide to sell your business. They can produce the accounts and financial statements you will need to show prospective buyers, and can also discuss accounting and other financial matters with the buyers’ advisers during the due diligence process. An accountant can also help structure your financial affairs so that you maximise your returns from selling the business, and advise you as to the most tax-efficient exit strategy.

An accountant can help you at every stage of a company’s development, from initial set-up and business acquisition, through establishing appropriate controls, securing outside investment, growth and eventual sale. That does not necessarily mean hiring an accountant full-time, but having one to support you for a few hours each week or month could make all the difference, allowing you to concentrate on growing the business knowing an expert is on hand to manage the finances. Having the right financial support will also give you peace of mind, allowing you to delegate the one part of your business which may lie outside your comfort zone. A good accountant pays for themselves many times over.


How a consultant can deliver value to your business

Small business owners often want to hire external help and advice in order to grow their business or fill an identified skills’ gap. Engaging a suitably qualified and experienced consultant can frequently result in both short-term process, and, longer-term, financial benefits to a business. yet many SMEs may be hesitant about hiring consultants because of concerns about whether they provide value for money, and questions as to how that value can be recognised.

There are numerous reasons why a small business may want to hire a consultant. These include:

  • To impart specialist knowledge or expertise;
  • To implement new procedures and practices, or improve existing processes;
  • Facilitating organisational change;
  • To lead a specific project;
  • Introducing new, or tightening existing, controls; and
  • To provide a fresh voice and an objective view of the business, or a part of it.

Chosen wisely, a suitable consultant can provide an immediate benefit to your business, as well as offering a very cost effective alternative to a full-time hire. In addition, hiring a consultant gives you flexibility, as they will normally be on short-term contracts. This means it is easy, when you have no longer need of their services, to terminate their contract. Contrast this with the financial and legal challenges encountered in hiring, or terminating, a full-time employee.

However, there is a perception in some quarters that consultants are “over priced” guns for hire, and that they frequently fail to deliver the anticipated value. Undoubtedly, there are examples of consultants who deliberately seek to cheat their clients, or who lack the skills that they claim. These are the exception, not the rule, however. The main reasons why consultancy engagements fail lie elsewhere – with poorly defined project scopes, a misalignment of objectives, unrealistic expectations and inadequate communication. And, whilst the consultant no doubt has their part to pay in ensuring the engagement operates within the right framework, the business owner/contractor must also take responsibility in this area.

How do you know the consultant has the expertise they claim? There is no need to take this on trust. Ask about their background, qualifications and experience. Do they belong to a professional body or associations? If so, which ones? Look at their CV and/or Linked-In Profile. Request references from other clients – and if these can’t be provided for confidentiality reasons, from fellow professionals. It should be easy enough to gather enough evidence as to whether they do, in fact, have the skills, expertise and experience that they claim (and if the consultant is not prepared to share at least some of this evidence with you, we suggest finding somebody else).

Having satisfied yourself that the proposed consultant has the necessary skills and expertise, how do you judge the fairness of their cost? Most consultants will charge at an hourly rate (although some might charge by the day, month, project etc). Again, how do you form a judgement as to what is reasonable? Clearly, you will start with a budgeted cost in mind. However, the best way is to make a market comparison, so you can compare the costs of a number of consultants offering similar services before making your decision.

However, there are some important provisos to bear in mind. Remember you are looking to hire skills and expertise that you do not have, and that you should be expecting to pay market value for that service. This is not like buying baked beans in the supermarket. Going for the cheapest will, almost certainly, not mean the best in this case.

Equally, do not be beguiled by “big names”. For example, if you are looking for an accountant or auditor, hiring a Big Four firm, or one of their mid-tier competitors, may sound impressive but does not necessarily give you value for money. Their charge-out rates will be higher than a smaller firm – how do you think they pay for all those fancy glass offices? – and you may well find yourself paying more for one of their junior staff members than an experienced partner in a smaller firm.

Try and find somebody with both skills and experience who offer their services at a reasonable rate, really want to work with you, and can add value to the engagement.

Having satisfied yourself that the proposed consultant has the right skills and experience, and is reasonably priced, now it is time to define the objectives and scope of the engagement.

One of the primary reasons a consultant can appear to fail to deliver value is because of a failure, in advance, to clearly define what is expected of them. By failing to set initial objectives and defining the scope of an engagement, there is a substantive risk that the project will not succeed, and/or overrun in terms of both cost and time.

Failure to agree the scope of a project can have a number of consequences, all of which can be serious, both from the viewpoint of the contracting party and the consultant. These include:

  1. Scope creep. The consultant becomes involved with areas that are outside the specific remit of their engagement. This not only means that the project objectives are not met but also that the consultant becomes an operational resource of the business – like a standard employee.
  2. Failing to plan for knowledge transfer to existing staff. This means that once the consultant leaves, their knowledge goes with them, so the organisation gets no long-term benefit from the engagement.
  3. Blurred or indistinct objectives. The consultant provides solutions where there was either no issue or pressing business need, whilst problem areas remain “unfixed”.

Therefore, it is vital, from the outset, that the terms and the scope of the engagement are clearly defined and agreed with the consultant. This ensures that both the objectives, and the expectations, of the engagement are mutually aligned, and that any ambiguity is eliminated. A well scoped engagement also provides a measure of value. If the defined objectives are achieved, then value has been added (of course, this does not preclude objectives and expectations being adjusted once the project has started, provided that these updates are mutually agreed with the consultant).

The other major reason why a consultancy engagement can be seen as failing to add value is due to poor or inadequate communication. This can take a number of forms. For example, the objectives of the engagement may be well defined but if there is no agreed mechanism for communication of progress or end results, then the project will be doomed to fail. Or a business owner or manager may engage a consultant for a specific project, yet fail to adequately brief those staff who may be affected by their work or who need to cooperate with the consultant to ensure the project’s success. As a result, those staff either may not be able, or be willing, to devote the time and resource necessary to collaborate with the consultant.

Therefore, it is very important that the means and form of communication – verbal or written, email, report, formal meeting etc. – with the consultant are defined in advance, as well as their frequency. In addition, all those who may be impacted by the hire of a consultant should be briefed, at least in broad terms as to the objectives of the engagement and how they are expected to facilitate it. Team buy-in is critical to ensure the consultant delivers the value expected.

A suitably qualified and experienced consultant, if chosen well, can add considerable value to your business, through their knowledge, expertise and skills. By all means check that they have the skills and experience that they claim, and that their fees are competitive and reasonable.  However, choosing the right consultant is only part of the challenge. To ensure that they really deliver what you want, it is critical at the outset that the terms and objectives of their engagement are properly defined, and mutual expectations aligned. It is also vital to ensure that the right communication strategy is in place, both with the consultant and with all those who will be impacted by their work. This will help ensure that the value provided by the consultant is maximised.




Scope the engagement and get the best from your consultant

One of the primary reasons a consultant can appear to fail to deliver value is because of a failure in advance to clearly define what is expected of them. By failing to set initial objectives and defining the scope of an engagement, there is a substantive risk that the project will not succeed, and/or overrun in terms of both cost and time. Much better to work with the consultant to scope the work in advance, so that both sides can agree what is to be done, how, and by what date.

A small or medium business owner will often look to engage the services of a consultant or contractor in some shape or form, either to provide particular expertise or knowledge, or to help fill a skills gap. The consultant may, perhaps, be brought in to:

  • Implement new practices and procedures;
  • Deliver specific expertise or knowledge;
  • Facilitate organisational change;
  • Run a specific project;
  • Introduce new controls or “tighten-up” existing processes.

These are all good, valid reasons to engage a suitably qualified, professional consultant. And, if the path to success was only paved with good intentions, just determining the project need would be enough! Sadly, for the engagement to be successful, the scope of the project needs to be clearly defined as well. What resources does the consultant need, who will they work with and report to, how involved will senior management be with the project? This is over and above some of the big questions such as:

  • How long will the engagement last?
  • What are the desired outcomes? and
  • Are those outcomes achievable given the time and resource constraints, or wildly optimistic?

Failure to agree the scope of a project can have a number of consequences, all of which can be serious, both from the viewpoint of the contracting party and the consultant. These include:

  1. The consultant becomes involved with areas that are outside the specific remit of the scope. This not only means that the project objectives are not met but also that the consultant becomes an operational resource – like a standard employee.
  2. No plans are put in place to ensure knowledge transfer to existing staff. This means that once the consultant leaves, their knowledge goes with them, so the organisation gets no long-term benefit from the engagement.
  3. The consultant provides solutions where there was either no issue or pressing business need, whilst problem areas remain “unfixed”.

It is important, also, if a consultancy engagement is to succeed, that the organisation is ready. Existing staff need to be briefed as to the broad objectives of the project, and their role in helping achieve them. If a consultant begins work and finds out that company staff do not know why they have been brought in, or are not prepared, or able, to devote the time to work with them, then the project will likely veer off track almost from the start.

The outcomes of failing to define the scope of an engagement are:

  • The initial engagement does not deliver what is expected of it;
  • The budget for the project is exceeded and cost overruns incurred;
  • The reputation of the consultant is tarnished. More broadly, faith in the ability of outside professionals to deliver meaningful solutions to internal problems is undermined, perhaps for good. This could isolate and exclude a company from important external advice and teachings going forward.
  • The consultant becomes “embedded” in the company, who become reluctant to lose their knowledge and expertise.

To avoid these types of outcome, the scope of the engagement needs to be clearly defined in advance, with a written agreement signed off by both parties. This could include a Statement of Work which lays out all the activities and work involved, key milestones, and resources,including the internal team who will work with their consultant, and their roles and responsibilities within the project. At the very least, however, the scope should include a clarification as to overall objectives, timelines, and reporting relationships.

Having a defined scope does not mean that the project needs to be set in stone from the outset. It may well be, that once the consultant has begun their work, they identify that the outcomes cannot be achieved within the agreed time or budget, or with the existing resources. Or they may identify other objectives outside the current remit but within their area of expertise which it might be desirable to achieve. In that case, however, the scope of work can be revisited by both parties and new objectives, timelines, resources etc, agreed.

Consultants can be a very effective way of obtaining key knowledge and expertise which can benefit your company with almost immediate effect. They can also provide an objective “voice” which can be of enormous benefits for those in a start-up phase, or for companies looking to improve internal processes, policies and procedures. However, too often, consulting engagements fail to deliver, with missed objectives, budget over-runs, and frustrations on both the client and the consultant side.

The best way to avoid these outcomes is to clearly define the scope of the consultant’s engagement from the outset. By defining the objectives, timelines, resources (and budget) in advance, both parties can be clear as to what is to be done, when, and how. This does not mean that all projects need to be rigidly defined. Priorities change, and projects may need to be amended, and objectives updated, as business needs evolve.

However, by redefining the scope of the engagement in such cases, overall control of the process can be maintained by both the company and the contractor, helping to achieve long-term success and the fulfillment of objectives.

The benefits of hiring a consultant

So you have a vacancy on your team or have identified a skill or knowledge gap that needs to be filled in your company. Time to draft the recruitment ad or call the headhunters? Not necessarily. Consider, before going any further, whether you want to recruit a full-time employee or if it is worth taking an alternative course of action by hiring a consultant instead. You may well find that the consultant route offers you numerous benefits in terms of reduced cost, greater flexibility, a significantly lower commitment from you in terms of time, and immediate access to the knowledge and expertise you are seeking.

Here are some of the key benefits from hiring a consultant as opposed to a full-time employee.

  • Lower Cost.

Hiring full-time employees means assuming the cost of not only their salary. You have to add to this social insurance and payroll taxes, holiday pay and, depending on the employer and the type of contract, potentially health insurance as well. There might also be a requirement to pay into a pension scheme or provident fund as well.

All this means that a full-time employee can cost significantly greater than a contractor who will normally charge by the hour at a pre-agreed rate with no hidden additional costs.

Not only, however, are you required to pay for all the employee’s costs;  you are required to administer them as well. Changing regulations add complexity and cost to a business. And whilst the cost of employment administration rises, so does the seriousness of the consequences if you fail to meet those regulations.There are payments and reports to be made to government departments, employment legislation to be understood and complied with, additional reporting requirements, and other administrative burdens. Contrast this to the hire of a consultant where the burden of such issues falls on them.

Another saving with the hiring of consultants comes from the avoidance of recruitment costs. Whilst at the lower-end of the scale recruitment expenses may just be limited to placing an online ad on a job board, recruitment at middle management level may well require the services of a dedicated recruitment firm. In return for sourcing, vetting and short-listing candidates, such recruitment consultants will expect a fixed fee when an appointment is made, usually equivalent to several months’ salary of the successful applicant. At the most extreme levels, senior appointments may be filled by employing a specialist headhunter who can charge up to six months’ salary for a successful hire. There are no recruitment costs when you hire a consultant.

  • Increased flexibility

Consultants can normally be hired, and fired, with minimal notice. This is in contrast with full-time employees where there can be significant legal obstacles associated with recruiting, and more especially, terminating them. The issues may begin with the initial employment.

You have drafted the ad, engaged the recruitment consultancy, interviewed the short-listed candidate, and made an offer to the successful applicant which they have accepted. Great, except if they are currently working for an existing employee, in which case they may legally be obliged to serve their notice period. This can be a matter of a few weeks, or a few months. Meanwhile, you might have need of their skills and knowledge now. Why wait? Hire a consultant and they can begin working for you almost immediately.

Making somebody redundant, or terminating their contract, can be even more difficult. There may be internal procedures to navigate, including disciplinary procedures and notice periods, or local legal and government regulations that prevent firms making employees redundant easily, or without significant financial and administrative cost. In some countries this may extend to restrictions on subsequent hiring, forcing employers either to do without or to realign roles and responsibilities to get around the legislation. Compare and contrast with the consultant where the engagement can be terminated easily and with no lasting repercussions.

  • Reduced commitment of time.

Hiring an experienced consultant usually entails significantly less of your time than is required with a full-time employee. Not only are you spared the considerable time that the recruitment process normally entails. Provided the consultant has the requisite skills and knowledge, they should need considerably less management time than a new employee, where you will be required to manage them, not only on a day-to-day basis – especially in the beginning, when they are new – but also in terms of an ongoing commitment to their training and development.

There is also a less emotional commitment from your side with an external consultant. Because they normally do not work for you, or your company, on a long-term basis, there is less shared identification, and focus on mutual objectives. Your relationship can remain strictly professional. This is opposed to the full-time employee where personal relationships, and often friendships, are formed. This means that when painful decisions have to be made that affect the employee – for example, turning down a promotion or terminating the position – there can be personal as well as corporate consequences. Having to make somebody redundant, for instance, whom you have known and worked with for years can be emotionally very stressful.

  • Immediate access to knowledge and expertise

When you hire a consultant, you are engaging them for their existing skills and expertise, knowledge which they can bring to your business immediately. Provided you have done your homework, made sure that the consultant has the necessary expertise and qualifications to do the job, and that you defined the terms and scope of the engagement properly, there should be minimal training required in order for them to make an immediate contribution. This may be in contrast to a full-time employee where it might take months, or even years, to train them to a level where they can properly fulfill a role, or where you might be waiting for them to serve a notice period with their present employer before their knowledge and skills are available to you (and even then few are so qualified that they can hit the ground running with no initial training required first).


Broadly speaking, employing people is expensive and administratively burdensome. As employment regulations change, the complexity and cost for businesses increase. whilst the consequences of failing to comply with regulations becomes more severe. Fortunately, a viable alternative to the full-time employee is at hand.

Engaging an experienced, skilled consultant rather than hiring a full-time employee can be less expensive, offer greater flexibility, require less valuable management time, and give you immediate access to their knowledge and expertise.

If you have a vacancy now, or expect to have one in the future, think before placing that advert or ringing those recruitment consultants. A much better alternative could be close at hand.









VAT in Cyprus

VAT registration is mandatory for any company that provides goods or services in Cyprus above a certain limit. It is also imposed on the importation of goods into Cyprus, and on the acquisition of goods from the European Union (EU).

The standard rate is currently 19%, with reduced rates of 9% for various goods and services that affect the tourist industry, and restaurant and catering services, and 5% for some basic foodstuffs, pharmaceutical products, books and newspapers, as well as a list of other sundry items. There are also certain goods and services which are zero-rated, and others which are exempt from VAT altogether.

Businesses which make exempt supplies, such as immovable property, hospital and medical services, and insurance, financial and educational services, are not eligible to register for VAT. This means the VAT they incur on their purchases, expenses and imports cannot be recovered.

Taxable persons charge VAT on their taxable supplies (output tax), and they are charged with the VAT on the goods or services that they receive (input tax). If the output tax in a VAT period exceeds the input tax, then a payment has to be made to the state. If the input tax exceeds the output tax, either the balance can be carried forward and used as a credit against future VAT obligations, or a refund can be obtained. It should be noted, however, that our experience is that the Cyprus authorities are not known for making refunds on a timely basis, so best not to include rebates in any cash flow forecast!

A Cyprus company is obliged to register for VAT if:

  • At the end of any month, the valuable of taxable supplies for the preceding year (12 months) exceeded €15,600;
  • If there are grounds to expect that the value of taxable supplies in the next 30 days will exceed the €15,600 threshold; and
  • If the acquisition of goods from suppliers in other EU Member States exceeds €10,250.

Even businesses with turnover below the €15,600 limit can voluntarily register for VAT provided they are trading in taxable supplies.

Registration is achieved by completing the appropriate application forms and submitting them to your local VAT office. These forms can be obtained from your local VAT office or downloading them from the relevant government website (www.mof.gov.cy/mof/vat). Unfortunately, the forms are currently only in Greek, and can be something of a challenge to complete for the uninitiated. A VAT number is normally issued within 2 weeks of the application being submitted.

VAT returns must be submitted quarterly, with the payment of any VAT due made within 40 days of the end of each quarter.

From May 2017, all VAT declarations should be submitted electronically through the Taxisnet system. Again application for Taxisnet registration can be made either online or through your local VAT office.

If you are selling to another EU business that is registered for VAT then, under the so-called reverse charge mechanism, there is no need to add VAT when invoicing them. However, this will need to be reflected in the VAT return and eligible businesses are required to register and report such transactions online through the VIES (VAT Information Exchange System).

VAT is an unfortunate fact of life for many businesses, but, in most cases, one that cannot be avoided. The rules can be complicated, especially when dealing with transactions with companies in other EU member states, and when making a distinction between so-called B2B (Business to Business) and B2C (Business to Consumer) transactions, and between the supply, and acquisition, of goods as opposed to services.

If the idea of registering and then reporting VAT seems daunting, however, there is help at hand. AJD Consultants have registered many Cyprus companies for VAT, have Taxisnet and VIES registration fro them, and prepared and submitted numerous returns. We can advise on some of the complexities you may face in preparing your returns, and, more specifically, with the interpretation of the rules and their application.

Please contact us for further information and advice.



Why the Cyprus annual company levy should be repealed

In 2011, Cyprus introduced a law whereby all companies incorporated in the Republic were required to pay an annual levy to the Registrar of Companies of €350. What was intended, however, to be a temporary measure to help depleted state finances remains in place today, with no signs of the Cypriot government having any plans soon to repeal it. This is very short-sighted of them, and discourages inward investment in a country, whose economic credibility was so damaged by the 2013 bank bail-out and the resultant 10% haircut on investor deposits. Given, therefore, that the deadline for this year’s payment is fast approaching, it is surely time to revisit this issue and question the net benefit for the country of the continuation of the levy.

Per the current legislation – reflected in Article 391 of Cyprus Company Law (as amended Law No. 6 (I) 2013) – it is obligatory for all companies registered in Cyprus, whether active or dormant, and including non-profit companies, to pay an annual levy of €350 to the Registrar of Companies. All payments need to be made by 30th of June for the relevant years, with late payment attracting penalties escalating from 10% to 30%, depending on how overdue is the payment. In the worst case, the Registrar can decide to strike a company off the register in the event of non-payment.

While this levy has become an important and regular source of income, however, it should be argued that it has outlived its use – if it ever had one. When it was originally introduced, it was presented as a temporary measure, not something intended to be a regular part of the corporate tax landscape.

Businesses do not like it. It can be administratively difficult to collect and, for small businesses at least, a drain on cash flow. For those who own a number of companies, the sums involved can mount up as well. It also discourages the formation and registration of companies. Potential investors will hold off if they do not expect to begin trading immediately, as the levy applies to all companies, irrespective of status.

What the government fails to realise is the negative impact this tax has on business, and the business community. It harms Cyprus and its competitiveness compared to other tax regimes which do not impose such annual penalties on companies. This is especially unhelpful for a country desperately trying to regain it financial credibility and attractiveness after the unprecedented damage done by the 2013 bail-out. Foreign investors need reassurance after the hair-cut on bank deposits imposed 4 years ago, not an annual levy that is effectively a tax imposed on all Cyprus companies.

Perhaps it should not come as a surprise that the Cypriot authorities are too short-sighted to see the error of their ways. After all, this is the same government that imposed an additional income tax burden on private sector employees and self-employed individuals (the so-called special contribution) until it was abolished from January 1st this year. In other words, they chose to penalise and discourage the wealth creators in society by taxing them more so as to help fund a bloated public sector.

Arguably, the maintenance of the annual company levy is a continuance of the same policy, whereby the private sector and the self-employed bear a disproportionate share of the Cypriot economic and tax burden.

Abolishing the levy would go some way to show that Cyprus is open for business again, and restore some faith among a very disillusioned international investor community. The government would lose the annual €350 from each company, that is for sure. However, the increase in individuals and companies investing in Cyprus, would surely more than offset this in the form of increased revenue from corporation tax and VAT. It would also encourage more business to open offices and businesses in the country, creating more jobs, and, again more revenue from income tax (and, at the same time, lowering unemployment costs).

If the annual company levy ever had a use, it has now surely outlived it. The wisest course of action would be for the government to announce the abolition of the tax by the end of this year, signalling that Cyprus is a serious destination for external investment again. Unfortunately, it is likely that the current short-sighted and blighted policies will remain in place for some time to come yet.



Why you need a Business Plan

Starting a business without a business plan is like starting on a trip with no idea where you are going or how to get there. Unless you are addicted to risk or don’t care about the outcome, you would do some research and preparation before setting out on your journey. The same logic applies when starting a business. You might have a great idea for you new business but, before investing your time and money, it is much wiser to make the effort to scope the idea out. Is it feasible? What are the risks? How difficult will it be to establish yourself in the market?

A business plan is not a static document but should be a blueprint for your business as it grows and develops. It should be updated and modified as your business evolves, as the economic and industry landscape changes, and as your objectives are redefined.

There are a number if reasons why a business plan should be prepared.

  • To test the feasibility of a business idea

A business plan allows you to test the feasibility of a business idea before you devote valuable time and money on it. Working through the business plan methodically and objectively, can help you identify at an early stage if the idea or business concept is impractical or unlikely to succeed. Often analysis of the market or competitive environment will reveal that your business idea or model is not robust enough to survive. Don’t ignore the warnings! Discard the idea and move on to another – and hopefully better – one.

  • To identify opportunities and obstacles

Writing a business plan makes you focus on both the objectives and the details of your new business. It forces you to define and clarify both the operational and financial objectives of your new business, as well as the practical details, such as budgeting and market planning.

Furthermore, in creating the business plan you will be able to identify both potential opportunities and obstacles in advance, allowing you to formulate plans for dealing with them, meaning that you are better prepared for upsides, and downsides, when they arise. This means that your start-up phase should be smoother, with fewer unforeseen challenges.

  • To secure funding

Most businesses need operational and start-up capital to fund their growth, usually in the form of bank loans. However, having a well-developed and robust business plan is usually a prerequisite before any established financial institution will even consider lending you any money. If you are not prepared to spend time on a business plan that lays out the idea behind the business, the market, the industry, the economic and competitor environment, the risks and opportunities, and to demonstrate that it is financially viable, then don’t expect any bank to risk their money lending to you. Banks have become very risk averse. The onus is on you to demonstrate that your business is a safe investment for them.

It is not just in the start-up phase that you may look for bank funding. You may need new equipment, want to offer a new service, or enter another and different market. In such cases you may well look to bank loans to help you achieve these aims. But again, without a business plan, don’t expect a bank to lend to you.

  • To attract investors

Apart from banks or other financial institutions, there are other people who may choose to invest in your business, like venture capitalists or business angels. However, like the banks, they will expect there to be a solid, well-argued and robust plan for them to study before they consider investing in your business.

Expect them also to scrutinise your plan and quiz you in detail on it. Make sure that you can defend your assumptions and that you have spent enough time defining the market and analysing the competitors. A potential investor is going to need convincing that, not only is your business idea sound, but also that you have the necessary business acumen, understanding and commercial awareness to implement it.

  • To facilitate business planning

Not only is a business plan an essential tool for a start-up, but it should also be an important planning mechanism for an established business. A viable business evolves, changing, growing (and sometimes contracting) as time elapses. A business plan needs to be dynamic, revised as new goals are set or the economic or competitive landscape changes.

Revising and updating your business plan on a regular basis helps you see what goals have been accomplished (and which have been missed), what changes need to be made, and what new opportunities may have arisen since you started the business.

  • To aid with the sell or closure of a business

A business plan can also be very useful if you decide to sell your business, or close it – for whatever reason. A well thought-out plan can assist with the sales process, helping to ensure that you get as good a price as possible for the business, or helping to ensure that the transition to the new owner is as seamless as possible. And, if the decision is made to close the business, the plan can reflect the strategies and timelines for dissolution and withdrawal from the market.

Whilst writing a business plan can be time consuming, it should be regarded as an essential task if you want to have a business that will not only survive the start-up phase, but will go on to grow and prosper. Not only will a well developed plan help you determine the feasibility of your business idea, and identify opportunities and risks – and develop strategies for dealing with them – before they arise, but it will also help you plan for the future as your business evolves. It is also an absolute prerequisite if you want to apply for a bank loan or get outside investment from a venture capitalist or business angel.

If you are worried that you lack the financial skills or knowledge to construct an effective business plan, engage an experienced financial consultant to help prepare it for you. However,don’t neglect this very important task. If you don’t know where you are going, how do you expect to get there?




Cash forecasting for small businesses

One of the major reasons small businesses fail is due to fact that the money coming into the business is less than the cash going out. To anticipate problems in advance and know when cash is likely to be tight, it is important to prepare a forecast for your business and update it on a regular basis. Failure to prepare such a forecast leaves you at the mercy of events, and deprives you of the ability to make contingency plans – such as obtaining short-term loans or deferring planned expenditure – should sales be weaker, or costs higher, than expected.

Forecasts should be prepared on a regular basis and, at least for a small business or start-up, it is recommended this should be monthly, until such time as the cash flow has stabilised, or the business established itself (and even then regular forecasting should be a prudent course of action exercise for the wise business owner). The ideal situation is to have a rolling monthly forecast, with quarterly or even annual projections as well, although the further into the future  you are planning, the less detailed and more “big picture” your estimates will be.

Key elements of a cash flow forecast are:

  • Sales

Forecast sales for a period based on how much you actually expect to collect from your customers, not how much you are likely to invoice them. Accounts receivable are a problem for many small businesses, and late payment, or a failure to collect what is due, often puts cash flow under pressure. So be realistic and only include what you can reasonably expect to collect in the period.

  • Costs

Try and include as many costs as you can think of in your forecast. Whilst it is easy to think of the larger items, such as salaries, stock or equipment, it is equally easy to overlook some of the smaller expenses, such as monthly software subscriptions, or courier costs. Small items can mount-up, and, in the long run, amount to significant amounts so make sure you always include them.

Costs should be included on the basis of when money changes hands, not when they are invoiced. For example, if you have a monthly software subscription payable one month in arrears, the May 2017 cash flow forecast should include the April, not the May, subscription.

  • VAT

Irrespective of whether you are registered for VAT or not, your cash flow forecast should reflect receipts and payments inclusive of VAT, as these are the amounts that will actually be paid into, or out of, your bank account.

If you expect to have to make a VAT payment to your local revenue authority, then this should be included as a cash outflow in your forecast in the period when you are due to make the payment.

In terms of VAT refunds, care should be taken before including these in any cash flow forecast. In the first place, whilst revenue authorities are usually very happy to receive money from you, they are less willing to pay it out, so there may well be a long delay before you get any refund due! This is typically the case in Cyprus, for example. Secondly, the authorities may choose to challenge the amounts to be refunded, so don’t assume you will get back all the money you have claimed.

  • Other items to include in a cash flow forecast

A cash flow forecast should include all the cash that moves in or out of a business bank account, even if some of these items have little to do with the daily running of the operation. On the income side, apart from customer sales, this may include bank borrowings or loans from family members or friends. On the debit side, this will include taxes, bank loan or interest repayments, and money spent on new equipment – capital expenditure.


While preparing a cash flow forecast and keeping it up to date may seem a burdensome task for a small business owner, it is actually a very important way of measuring the health of your business, and making sure you will not only survive, but prosper, in the future. If you feel that preparing such a forecast is outside your comfort zone or core competence, hire an experienced financial consultant like AJD Consultants to set this up and maintain it for you. Not only will they help with the mechanics of the exercise but they can also help interpret it for you and identify likely problem areas.

Whatever course of action you take, don’t neglect this task. A well maintained cash flow forecast could be the difference between business survival or failure.

For more information on how AJD Consultants can help with the preparation and maintenance of your cash flow forecasts, please contact us for an informal discussion.




Why use a Small Business Consultant?

Many small business owners are used to doing everything for themselves – from sales and marketing, buying and logistics, IT and finance – switching hats at will as they address each task that arises. However, because they are so used to multi-tasking, they don’t realise they are wasting valuable time on complex tasks that are outside their natural area of expertise. Better to engage a consultant to handle some of these tasks, so the owner can concentrate on what they do best – growing the business.

Engaging a business consultant can create value for a small business in a number of ways.

  • Saves time and money

Many small business owners waste valuable time doing complex tasks – such as VAT returns and bookkeeping – which are outside their area of expertise. It is better to delegate such jobs to an expert, freeing the business owner to concentrate on more valuable tasks – such as growing the business itself. Furthermore, an experienced consultant can offer advice and strategies on key business issues such as controlling costs, increasing efficiency and cash flow management, often a major challenge for any small business.

  • Provides expert advice when needed

By engaging a suitably qualified consultant, a small business owner can get the benefit of their expertise and knowledge immediately. Whilst the consultant may not know your industry or sector in detail, it is likely that they have experience of similar firms in similar sectors, and will be able to bring you their insights and judgments, and practical suggestions for improvements with minimal briefing required from you.

A consultant can also provide an objective, third-party view on business challenges or issues that you face, and offer a valuable sounding board for new ideas. Small business owners are often mired in the daily challenges of running their business, and having an outside voice can provide a much-needed sense of perspective, and an alternative viewpoint as to the way forward.

A small business consultant can also provide help in assessing and evaluating your business strategy, processes, exposure to risk and much more.

  • Offers flexibility and avoids the expense of hiring

With a business consultant, you may only need their advice or assistance for a short period of time, or for a specific assignment. In such a case, you can conclude their engagement and you no longer need to pay for the service. Contrast this with the cost and time involved in hiring staff on a full-time basis. Staff are usually the largest expense item for any business, and the hardest to cut if times get tough. Not only are you required to pay staff salaries and related costs – tax, social security, health insurance, pensions etc. – when you hire them, you are also committing to managing, training and developing them, as well as increasing your bureaucratic burden with additional payroll reporting.

Terminating your contractual relationship with a consultant is usually easy and straightforward. Getting rid of a staff member, however, can be expensive, take time, and, depending on the circumstances, legally and emotionally, painful.

Even if you decide to hire a consultant for an extended period of time – as an interim manager, for example -it still gives you more flexibility than making a permanent staff appointment.

  • Allows you to meet changing workloads

As discussed above, hiring full-time staff should be avoided until you can be sure that your business can sustain the cost. But, if you find that demand suddenly increases, or you want to offer new products or services, could you deliver given your existing resources and manpower?

Bringing in a small business consultant is an easy way of meeting such challenges and responding to fluctuations in supply and demand, ensuring you can respond to the opportunities that arise, without increasing your business risk in terms of your fixed cost base.


Consultants can offer a range of solutions for small business owners, from short-term assignments to longer-term interim managers, with services ranging from technical tasks such as the completion of VAT returns and accounting, to advice on how to improve business processes and efficiency, through to more strategic roles such as business development, or preparation for a business sale or IPO.

Whatever your needs, an experienced business consultant can meet them, giving expert advice and skills when required, providing flexibility whilst avoiding the expense and burdens associated with hiring full-time staff, and enabling you to meet changing workloads and demand. Above all, using a consultant can give you back valuable time, which can then be devoted to what you do best – growing your business.

For more information on how AJD Consultants can help grow your business, please contact us for an informal discussion.




Cash is King – the importance of cash flow management

A recent study has found that more than 80% of all startups and small businesses fail due to poor cash flow management. That means that, however brilliant your idea or business model, however profitable on paper your enterprise, however good the quality of people with whom you work, if you cannot manage your cash flow, you will not survive.

There are a number of common mistakes businesses make when it comes to managing their cash flow.

  • They are too optimistic. Whilst a positive outlook and never-say-never attitude is important for any business owner and entrepreneur, over optimism can be a major weakness when it comes to estimating the strength of your business, especially when it comes to sales. Forecast sales based on real, historic data where available, rather than using wild assumptions and hopes. Where there is no historic data available, such as in the first months or year of business, apply a heavy dose of pessimism when forecasting initial sales or revenue. The worst that can happen is that you completely underestimate your sales or revenue. Much better, and safer, than the opposite.


  • Over spend during the start-up phase. While the expression “you have to speculate to accumulate” can be a truism in business, there is a tendency to over spend when you are just starting out, and to put your cash flow under pressure from the outset.

Fancy offices and premises, expensive computers and servers, top of the range accessories, equipment and advisers are all affordable for a successful, established business. For a start-up, however, they can be a costly luxury which could be avoided. Work from home, or rent office space in the cheaper suburbs rather than a town or city centre. Minimise expenditure on IT and buy only what you really need, using sales and promotional offers to get as big a bargain as possible. Outsource website design and IT and server maintenance to third party providers. Avoid “big name” lawyers, accountants and auditors. Local consultants offer much better value and often are of an equal, or even superior, quality and skill,

Above all, do not hire staff until the business economics fully support it. Personnel costs are usually the largest expense in any business and the hardest to reduce when times get tough. When you hire people you not only have to pay their salaries and related costs such as tax, social security payments, health insurance and pension provisions, you are also expected to make a commitment to them in terms of time, career development and training. Better, in the early stages at least, to use consultants who will bring existing expertise and knowledge, with no training need on your part, and where a contracted relationship can be concluded easily, without the sometimes protracted legal consequences associated with terminating an employee.

Avoid unnecessary initial expenses, minimise waste and outsource all but the essential tasks in the early months.


  • Fail to proactively manage receivables. One of the biggest reasons many businesses find themselves in cash flow difficulties is the late payment of invoices by customers. This is a problem which besets businesses of all sized and in nearly every industry and sector. The impact, however, for small businesses can be fatal, directly affecting its ability, in turn, to pay salaries, suppliers and other stakeholders, sometimes forcing them into bankruptcy.

A small business needs to have clear payment terms for sales invoices, with penalties for late payment and/or the threat of work cessation for ongoing projects. Giving discounts for early payment could also be considered.

However you tackle it, the most important factor is to take a proactive approach to receivables. Many small businesses are so grateful to have a customer’s business that they are nervous of offending them by asking payment of what is due to them! This gives all the power to the client, and, in many cases, they will take advantage of this, either consciously or not. The result is that their cash flow benefits at the expense of yours.

Much better to establish a proper, commercial relationship with your client from the outset. Set out your invoice terms and policies, and respectfully, but firmly, make sure that you stick to them.


  • Have no “rainy-day” cushion. No matter how carefully you manage the business, setbacks occur which can affect cash flow. A sudden drop in sales, an unexpected cost, a natural disaster like bad weather or a flood, a public relations or marketing issue. All of these events can put your business model under sudden pressure. If you have a cushion of savings on hand, these unexpected occurrences can be survived, at least in the short-term. However, if you are living a hand-to-mouth existence, a sudden downturn or expense could signal disaster.

The best way to cushion yourself from these “rainy day” events is to have a least 2 months’ operating expenses in reserve. This will allow you to ride out any unforeseen storms without an immediate impact on your business. It will also give you time to try and find some additional funding if the problem causing the cash flow pressure looks likely to continue beyond the short-term.

  • Fail to use a cash flow budget or forecast. Setting realistic sales targets, maintaining a tight control on expenses, proactively managing accounts receivables, and having a rainy-day cushion all help a company’s long-term  cash flow. But, unless you track and monitor this on a day-to-day basis, your business could still founder.

Using a cash flow statement and forecast will not only help track revenue and expenses over a specific time period, but it will also enable you to identify “pinch points” and likely problem periods. For example, if supplier payments will become due for inventory before the resultant sales of that stock, then there could be a problem paying bills on time.

Proper cash flow forecasting and tracking helps you plan ahead and make contingency arrangements, rather than simply reacting to events as they happen. Without such tools in place, you are just guessing and hoping you are going to have enough cash in hand to meet the bills that become due. Not an enviable position to be in for any business owner.

If you feel you lack the skills, knowledge, or experience to monitor and forecast your cash flow properly, consider hiring expertise such as AJD Consultants. They provide highly qualified, expert advice and knowledge to small businesses and entrepreneurs. They will provide the tools to monitor your cash flow projections and needs, as well as offering advice to to how to improve your business performance, profitability and processes.


Cash flow management is one of the greatest challenges of business ownership. The statistics prove the likelihood and the high cost of getting it wrong. But, if you can be realistic in forecasting sales, maintain a tight rein on costs, actively manage your receivables, keep a suitable “rainy day” cushion and, above all, monitor closely and forecast your cash needs, you will be well set for long-term business survival and success.