What is benchmarking?

The objective of benchmarking is to understand and evaluate the position of a business or organisation relative to best practice either from within their industry or sector, or in a broader context, and to identify areas for performance improvement, and the means of achieving it.

By looking outwards, a business can help understand how their processes and operations compare to others, and identify improvements they can make within their own organisation. The process can also foster a learning culture within a company.

Benchmarking consists of four key elements:

  • A detailed understanding of existing business processes;
  • Analysing the business processes of others;
  • Comparing business performance with those others; and
  • Identifying and implementing the necessary steps to close the performance gap.

One error often made when benchmarking is to limit yourself to competitors or firms within your industry or sector as your yardstick. This is a mistake because you are cutting yourself off from valuable learnings which may be available from firms operating in completely different sectors or regions. A logistics company, for example, could learn about customer service from Google or Amazon.

To be effective, benchmarking should not be a one-off exercise but an integral ongoing improvement initiative, enabling a company to keep on top of evolving best practice.

There are 7 main types of benchmarking – strategic, performance or competitive; process; functional; internal; external; and international.

Strategic Benchmarking

This is used when a business wants to improve its overall performance and entails examining high performers to understand their long-term strategies, and general approaches. High level aspects of performance are considered, such as core skills and strengths, new product and service development, market positioning and how they adapt to changes in the external environment. By its very nature, strategic benchmarking may be difficult and time-consuming to implement.

Performance or Competitive Benchmarking

This type of study is used to measure a company’s position relative to the performance characteristic of key products and services, with benchmarked companies typically those operating in the same sector or industry.

Process Benchmarking

This type of benchmarking focuses on specific critical processes and operations, and targets are companies delivering similar work or services in a way identified as best practice. Process benchmarking can often deliver substantial short-term improvement benefits.

Functional Benchmarking

By benchmarking against companies operating in different business sectors or areas of activity, ways can be found of improving similar functions or work processes, often leading to dramatic performance upturns (in part, because looking outside your existing industry can give you a broader perspective on business challenges, and how to solve them).

Internal Benchmarking

This is used to compare business units or operations from within the same organisation – for example, country or regional operations. There are a number of advantages with internal benchmarking:

  • There are less issues around access to data and information;
  • Standardised data is more readily available; and
  • Less time and resources are usually needed.

However, there is one major drawback. Operations in different parts of an organisation are likely to be more heterogeneous in terms of functionality and performance than those of an external competitor or industry peer. This means there are likely less learnings to be had than with external benchmarking.

External Benchmarking

This involves analysing outside companies that are known to be best in class and have leading edge processes and practices. It is used to get an understanding of best practices and ideas which can be implemented within your own company. However, comparable data and information can take time to collect – much of it is confidential and these companies are not going to make this readily accessible to their competitors! – and process into credible findings which can be translated into actionable recommendations.

International Benchmarking

This is a hybrid of some of the previous benchmark processes, and is used to compare against best practitioners from elsewhere in the world, perhaps because there are insufficient local candidates to produce valid results. Whilst globalisation and technological advances now favour this type of benchmarking, it can take time to collect data, and “national” differences may need to be taken into account.

Albert Einstein famously said “once you stop learning, you start dying”. This is as true for businesses as individuals. Benchmarking is a way to learn from the best, steal or borrow their ideas, and improve the performance of your business. To ignore what others are doing is a sure way to stagnate and, ultimately, to die.

Live Product Streaming

For the past decade, several times a year, Apple has livestreamed new product launches. These have become legendary, must-see events, attracting not only top technical journalists from around the world, but existing and potential new customers as well, eager to see the latest product offerings from the technology giant. The result is a wave of news, traditional and digital media coverage which is of incalculable benefit to Apple (and its shareholders!).

They are by no means the exception. Thousands of businesses are now realising that, with live streaming demonstrations, they can create an immediate buzz around new products that is much more effective and cheaper than traditional marketing campaigns.

Live broadcast, live broadcasting, LiveStreaming Devices, live video streaming, live hd streaming are now just some of the terms that form part of the lexicon of this new marketing phenomenon. But, how do you get started, and why should you consider live streaming for your next product launch?

Apple’s events are successful for three reasons: they are normally showcase great products, the delivery is great (this doesn’t happen by accident, they practice for weeks honing their script and presentation skills), and they create an air of suspense ahead of time. There are no leaks, but plenty of teasers about what new products are in store.

You may not have the resources of an Apple, or Google (who also host renowned live product launches), but that does not preclude smaller companies following their lead. As with many things, proper planning and preparation is key.

If you have a new product to launch, who is going to talk about it? Apple’s product launches work so well because they get people from a range of disciplines – software, engineering, design as well as senior management – to talk about them. Find people from your company who can come across in a live stream as friendly and engaging way, and take another leaf from Apple’s book – emphasise what the new product can do for your customer, not how well it is made or what technology it incorporates.

Consider incorporating pre-recorded videos to enhance the content of your live stream event, and product demos should be considered a must. Having somebody actually try out one of your new products live is the best way to build confidence that it works.

From a technical perspective, you need a live streaming set-up. First of all, check that your venue has sufficient internet speed to stream in full HD quality. You will need a software or hardware encoder, cameras with sufficient high resolution, and the right audio equipment. You will also need somebody to operate the equipment. If you do not have in-house staff capability, there are many third-party providers who can provide the technical support you need to host such an event.

It is also important to select a live stream service provider (or Online Video Platform). Whilst YouTube and Facebook offer live streaming services, they are not suitable for businesses, so find a professional video platform which can provide appropriate security, restrict access to live streams, and assist with the branding of your products or company in the video.

Above all, practice, practice and then practice some more before you live stream a product launch. Make sure that the equipment works, that there is no lag or latency on the line because of internet speeds, that cameras are of the right resolution, and the audio quality is top notch.  There is nothing guaranteed to sink an online product launch more than streaming or technical glitches, so get these ironed-out before you launch.

Streaming new product launches can be a great promotional tool, creating a level of interest amongst customers that traditional marketing just can’t achieve. However, not only do you need to get the human element right – having a presentation that is engaging and information, for example – but the technical side needs to be up to the job as well. Making sure you have the right equipment, of sufficient quality and operated by people who know what they are doing, will help go a long way to ensure your live stream product launch is a success.




Banking giants partner to create a new cryptocurrency

Cryptocurrencies like bitcoin, were created in part as a means of avoiding traditional banking, with its regulatory framework, KYC requirements and high transaction fees. Ironic then that six of the world’s leading banks have now partnered with a number of other financial institutions to create their own cryptocurrency.

The science of cryptography was born during the Second World War out of the need to secure communications that could not be intercepted by the enemy – think of German Enigma machines and codebreakers such as Alan Turing. Moving to the digital age, cryptography has evolved to become a way of securing information and money online, as well as a means of communication as well.

Evolving from this, and starting with Bitcoin in 2009, cryptocurrencies have been created, a form of digital money designed to be secure and, in most cases, anonymous, because information about transfers and purchases is processed using virtually uncrackable code.

A cryptocurrency uses decentralised technology to let users store money and make secure payments online without the need to go through a bank, or even use their name. Running on a distributed public ledger – a consensus of shared, replicated and synchronised digital data which is spread across multiple sites, countries or institutions – also known as a blockchain, a record is maintained of all transactions which is held and updated by all currency holders.

It is the blockchain concept which the banks have been studying, particularly from the viewpoint of security. Banks not only have to keep money secure, they need to keep transaction records safe, whilst ensuring the verification process does not delay the movement of capital.

Swiss banking giant UBS, began exploring the clearing and settling global transactions over a blockchain back in 2015 using a digital coin – known as the “utility settlement coin” – and they have now been joined on the project by Barclays, HSBC, Credit Suisse, MUFG, State Street and Canadian Imperial Bank of Commerce.

The new cryptocurrency is planned for an initial limited release towards the end of 2018, and the banks have already begun discussing the cryptocoin with central bank regulators.

The anonymity and security of a cryptocurrency are both its major strength and, for its detractors, its major weakness. For its proponents it allows online trade to flourish free from the threat of government manipulation or high transaction fees, whilst its decentralised nature means it is available to everyone, with no need for users to have a bank account. Opponents, on the other hand, will point out that bitcoin has become the currency of choice for drug dealers and other criminals.

With the major banks now planning their own digital coin, it perhaps is a symbol that cryptocurrencies are no longer a fad, and can be considered legitimate. At the same time, such banks and financial institutions must work with central banks, which implies a degree of supervision and regulatory oversight which is the antithesis of the concept behind a cryptocurrency.

Russia has announced plans to restrict the trading of bitcoin to qualified investors, whilst several states in the US, including California, Illinois and Florida, are looking to implement new rules for businesses offering digital currency services.

It is worth remembering that bitcoin was created as recently as 2009, and that the market for cryptocurrencies has been volatile, with wild periods of growth followed by sudden slumps. Nevertheless, the underlying trends are upwards. In April this year, the total market capitalisation for all cryptocurrencies was US $25 billion; two months later that figure had grown to over US $100 billion. There are now over 900 cryptocurrencies available on the internet.

It looks then that cryptocurrencies are here to stay but whether those who buy, sell, or own them will have to accept a degree of legal or financial oversight that is against all the fundamental principle of a digital currency – that those who hold or trade them remain anonymous – is yet to be seen.

Domain Names simply explained

Domain names were created because, without them, the Internet’s addressing system really does not work very well. While each computer on the Internet has its own IP (Internet Protocol) address, these are just a string of numbers separated by a dot, such as 165.166.2. Remembering the IP addresses of web sites in this way is virtually impossible, so to make things easier, the domain name system was created.

Domain names can be described as the address of the Internet in humanly readable form. Each domain name is unique in its own way, but all have three common elements:

  • A top level domain (TLD), known sometimes as an extension or domain suffix;
  • A domain name (or IP address); and
  • An optimal subdomain


The top level domain is the formal name for the suffix that appears at the end of a domain name. In the early days of the Internet, seven generic top-level domains were created – .com, .org, .net, .int. .edu,.gov, and .mil – and these continue to have great authority on the web now, although there are actually over 1,000 possible TLDs from which to choose.


One example of this is: and

Then there are the country- code TLDs. Nearly every country has its own two letter TLD name – such as the United States (.us) and the United Kingdom# (.uk). For these TLDs special rules apply, such as who can authorise and issue them, the renewal dates and procedures for transferring them to another owner.

Domain names are the second level of a domain’s hierarchy. Domain names on a specific TLD (called a root domain) are bought and obtained from a register. They can be regarded as representing the unique location of a website, as with the following examples: (where bp is the domain name) (again shell is the domain name)

Internet search engines use the keywords in domain names, but gone are the days when internet marketers could stuff keywords in to their domain names and hope to rank highly on Google! Their algorithms are now specifically designed to spot such tactics and to penalise them accordingly.

The term root domain typically refers to the combination of a unique domain name and a top level domain to form a complete website address. The root domain of a website is the highest page in the site hierarchy – usually the homepage. Whilst individual pages or subdomains can be built off the root domain in theory, to be part of the website each page url must include the same root domain.

An example of a root domain is:

All the pages on a single website have the same root domain. No website can have the same root domain as another.

Subdomains are the third level of a domain’s hierarchy, and are part of a larger top level domain.

The most common subdomain is www, as in the following example: where the www part is the subdomain.

However, with the following site, there is no sub-domain:

The problem is that as the Internet has exploded, there are literally millions of domains out there, and for internet marketers looking to undertake market research, create customer lists and identify potential customers, the task has got too big for humans to undertake alone. For example, according to the Q4 2016 Domain Name Industry Brief, there are approximately 329 MM domain names registered in ccTLDS (country TLDS), gTLD (generic TLDS), and new GTLD zones (new domain strings which are being created by ICANN – the Internet Corporation for Assigned Names, a non-profit which essentially regulates the naming convention and boundaries of the Internet).

Making Money Online

According to statistics reported by the US Bureau of Labor Statistics, there were more than 18.3 million home-based businesses in the US alone in 2011, generating US $427 billion a year in annual revenues (according to Entrepreneur Magazine). Separate studies show that a new Home-Based Business is started every 12 seconds, and that 70% of Americans would prefer to be self-employed.

This is against a backdrop where corporate downsizing has seen swathes of traditional jobs disappear whilst telecommuting has become more accessible and productive because of the Internet. The Digital Economy continues to expand apace every year, and with that growth more online money opportunities are continuously being created.

Those who work from home will point to the advantages it confers such as more freedom and less stress. No more time wasted on the daily commute, no boss or office politics with which to contend, no need to dress-up or clock in by a certain time. You get to choose your own hours, manage your own schedule, and take holidays when you want. At least in theory! This leaves you more time for family and friends, and personal projects.

There is also the opportunity, provided you have the drive, self-discipline, and time management skills, to make a lot of money online, with the advantage  you get to keep all of it (well, with the exception of the bit you have to give to the tax man!) The harder you work, the more you can earn.

A whole host of new opportunities are now available for online workers. Programmers, website and graphic designers are continually in demand, both from existing corporations looking to outsource projects, and from start-ups and small businesses looking to enhance their digital footprint. Freelance writers (included related disciplines like proof-readers and copy editors) are always needed to write articles, blogs, product reviews and social media posts, because of the voracious demand for online content. Then there are the online marketing and PR jobs, data entry, virtual assistant and tutoring gigs. Even some senior management roles can now be performed remotely. The list is virtually endless, and limited only by the ability, and, in some cases technological capability, of the individual. The entry requirements are also minimal – you just need a computer and an internet connection.

Affiliate marketing is one of these opportunities. The principle is simple – you earn a commission by selling somebody else’s products or services. For the beginner, affiliate marketing can be an attractive position. There are minimal start-up costs, and you don’t need to come up with a new product or idea – you are promoting something that is already for sale. You also do not need any expert knowledge – you just need to know enough about the product or service you are promoting to market it to somebody else. Furthermore, it can be a great source of passive income which can earn you money time and time again. If you carry a link to the affiliate on your website, for example, and somebody clicks on it, you can continue to earn money as long as you carry their link.

Why would somebody pay you as an affiliate? The answer simply is that it is a great way to promote a product or service online, and a lot cheaper than other marketing channels like Google Ads. Commission is only paid when an affiliate makes a sale, and even if you are paying them 10%, or even 20%, for each sale, acquisition costs are a lot cheaper than other online marketing channels.

There is a huge array of affiliate programs for almost any product or service online. So, if you are prepared to work hard, push their links and promote a company and its services, there is the opportunity to make some serious commission through affiliate marketing.


Business Insurance – make sure you are covered

Business insurance covers any type of insurance taken out by a business to protect against operational losses. The type of loss that an insurance policy might cover depends on the insurance company, the wording of the policy and any local legal or financial limitation. It may also depend on the industry of the type of business for which the insuree wants coverage.

There are several broad types of business insurance. General Liability insurance protects a business against a variety of claims, which might include personal or bodily injury, damage to property, negligence, or a broad variety of other operational mishaps and accidents. Product liability insurance protects against consumer claims in the event that they suffer injury, illness or even death as a result of using products made or supplied by a business which turn out to be faulty or defective in some way. Key Person insurance – also known as Keyman Insurance – is a form of life insurance, and covers a business for financial losses that occur due to the death or incapacity for any length of time of an important member of the business. The CEO, for example, or a key research scientist.

Beyond these general categories, there are other types of specific insurance available which a business might consider taking out to insure itself against risk. There is commercial auto insurance, for example, that protects vehicles which carry a company’s personnel, products or equipment, and even employees who drive their own cars on company business. Professional Liability Insurance – also known as Errors and Omissions Insurance – protects a business which either fails to provide a proper professional service, or whose clients suffer loss as a result of professional advice that turns out to be wrong. This type of protection is not covered by general liability insurance policies so this is something that definitely needs to be considered if you are an accounting firm, lawyer, consultant, real estate agent or even hair salon.

Directors and Officers Insurance protects the directors and senior officers of a company against any actions they take which affect the operations or profitability of a business. Should the director of a company find themselves facing a lawsuit, for example, this type of insurance would protect the business against the resulting damages and legal costs. Then there is Data Breach insurance. Any business that stores sensitive or non-public information about clients or employees on computers, servers or in physical paper files is responsible for protecting that information. A Data Breach policy will provide protection against financial losses or legal action result from this information being released inappropriately.

Some types of insurance are compulsory. If your business, for example, relies on commercial vehicles for the transport of goods, or the provision of services, then you must have auto insurance to cover bodily injury to drivers, passengers and third parties, as well as any resulting damage, in the event of an accident. And, if you employ  staff of any kind, no matter how big or small your company is, then you must have some form of Employers’ Liability Insurance – or Workers’ Compensation – to provide cover in the event that one of your employees is injured or becomes ill as a result of working for you.

Beyond this, there are no mandated types of business insurance, despite the unscrupulous claims of some insurance providers and service providers which suggest otherwise. UK banks, for example, have been fined and had to pay billions of pounds in compensation for the mis-selling of Payment Protection Insurance (PPI) to their customers.

Choosing the right business insurer for you can be difficult, because few service providers excel in every type of business insurance. One might be a top provider of commercial auto insurance, for example, but offer relatively inflexible product liability coverage. Others might be geared to particular types of industry, or positioned to service large companies and multi-nationals primarily.

Faced with such a choice, your first step should be to review your business carefully and determine what type of insurance you actually need. Then you need to find an insurer that meets those needs. There are literally thousands of insurers and brokers to choose from, so do your research and compare them.

If you are a small or medium-sized firm make sure that your potential insurer really caters to this sector of the market, have sales staff that understand your business, are prepared to give you insurance that meets your needs, and are not trying to sell you unnecessary or excessive cover. Business insurance of some form or other is both a necessity and an investment. Make sure you are getting a good return on that investment.

Cyprus gets another Mountain

This weekend sees the hosting of Cyprus Comic Con which will take place on Saturday 2nd and Sunday 3rd September. This is the fourth such annual event, but the first to be held at the Nicosia State Fair, having already outgrown the venue for the past 2 years, the Philoxenia Centre (which, in turn, had been an upgrade on the site for the first convention, the European University).

From humble beginnings – organisers expected to attract only a small crowd of dedicated gamers, cosplayers and comic book aficiandos  to the first Comic Con – the event has expanded to become one of the most anticipated and well-attended gatherings on the Cypriot calendar, with last year’s two day festival attracting more than 15,000 visitors, including people who travelled from Eastern Europe, the Middle East and North Africa to attend. And while Cyprus Comic Con may be dwarfed by the conventions held in places like San Diego and London, the numbers it attracts are still hugely impressive given the size of Cyprus and its location.

What is even more remarkable is that the whole event is run as a non-profit organisation by a core team of nine people (assisted by some 50 volunteers who help set-up and dismantle everything) who dedicate hundreds of hours of their free time planning, coordinating and organising it, for no reward other than the satisfaction they get from seeing the pleasure Cyprus Comic Con gives to thousands. And, as soon as this year’s event is over, they will start planning for 2018.

Despite its modest size, Cyprus Comic Con has managed to attract some big stars to headline the event. Last year these included Julian Glover, star of Game of Thrones, Indiana Jones and Bond villain to boot, comic book legend Neil Gibson, and Cypriot born  Miltos Yerolemou (GoT), fencer extraordinaire. This year is no different – stars don’t come much bigger than Hafƥór Júlíus Björnsson, who plays The Mountain in HBO’s Game of Thrones. Björnsson is joined on the guest list by Star Wars’ actor Gerald Home, Bulgarian animator and comic book creator Rumen Petkov, and local painter and illustrator Chris Achilleos, who, among other things, has designed posters for movies like Blade Runner and Supergirl.

However, if you have never been to Cyprus Comic Con before, the guest stars are just a small element of the attractions in store. There are the gaming events, the vendor stalls offering a range of handicrafts, models and memorabilia, a film festival and the centrepiece cosplay competition, where participants dress-up as a variety of comic book characters and super heroes. The standard of cosplay is always incredibly high, reflecting the hours, weeks, and, in some cases, months spent by some competitors preparing their costumes and make-up (try to guess in advance how many Darnerys’s, Queen of Dragons, Negans (The Walking Dead) or Wonderwomen we will see this year!).

If all that is still not enough for you, there is a wide range of musical entertainment on offer, from local bands like Winter’s Verge, The Xiles and The Reveries, to DJs playing the decks and an after-show party on Saturday which will go on until the small hours. And, if you get hungry or thirsty, there will be a wide range of food, drinks and other refreshments available in the open-air Food Court.

There is literally something for everyone at Cyprus Comic Con, and, even if gaming, comic book characters, cosplaying or video games are not up your street, chances are that there is someone in your family who will enjoy it. Even if you are sceptical, once you get through the doors you will be surprised at what is on offer.

Tickets for Cyprus Comic Con are available through their website( or can be bought on the day at the Nicosia State Fair.

AJD Consultants provide financial and accounting support to Cyprus Comic Con.



Why book-keeping is important for small businesses

Few people start a new business so that can do paperwork or fill in forms. For many keeping up to date financial records falls into this category of seemingly unnecessary bureaucracy, a waste of time which detracts from the main job of running the business. However, this is not the case. Whilst it may be regarded by some as a necessary evil, the wiser will realise that being on top of your business’s finance is vital if you are to understand trends and identify problems before they occur. Ignoring the need to keep your business records up to date can have serious consequences for both you and the business. So, whether you tackle it yourself or choose to delegate it to a qualified professional, make sure your book-keeping is up to date.

Apart from the fact that any small business will have regular statutory reporting requirements – ranging from VAT and tax declarations, to social security returns and annual accounts and audit requirements – being on top of your book-keeping is important so can manage your business properly. It enables you to identify trends in your business early, and ensure that you have a good handle on your cash flow. Thousands of new businesses are started each year, and thousands fail, not because of flaws in the business concept or idea, but because the owners could not manage their cash flow or company’s finances. Don’t be one of them.

Book-keeping should be a regular task so make sure time is set aside for it. Leaving it too long to update your books or trying to squeeze this in at night when you are tired invites mistakes. Either you will be tired or not remember the details of important transactions after the fact.

Use a spreadsheet or consider investing in an appropriate accounting software package for your business. There are a lot available on the market, but you may want to take advice from an accountant or financial adviser as to the best solution for your business.

Alternatively, and for many a better option, hire a book-keeper or accountant to help you with your business finances. Not only will they help get your books up to date and make sure that you are compliant with local laws and statutory requirements, but they will help save you money as well. By identifying trends, potential cost savings, and providing broader financial advice, they should certainly save you more money than they cost. Plus, employing them just on a freelance basis to look after your finances frees up your time so you can do what you do best – running the business itself.

Irrespective of whether you choose to do it yourself, or hire qualified help, there are some basics that need to be followed to get your book-keeping right.

As a general rule, get an invoice or receipt for everything you buy, and issue one for everything you sell. Statistically, the longer you are in business, the greater the chance of a VAT or tax inspection. These should be nothing to worry about if you have all the paperwork to hand and employ the services of a good accountant. If you have neither, they can be a nightmare. While the cash economy – the use of cash to avoid VAT and other taxes – remains in force in many countries and industries, successive national governments and agencies are attempting to crackdown on such practices. Don’t be tempted to make sales or purchases “off the books”. It may help you in the short-term if you get away with it, but long-term you will get found out. The consequences, both for the business, and yourself, can be severe.

Cash is king is an oft-quoted expression. The maxim is true for many small business owners because cash flow management is a vital component of business survival. Monitor all payments and receipts into and out of your bank account, and remember to take into account scheduled payments like standing orders, direct debits and subscriptions, as well as bank charges and interest. If you are still using cheques to pay suppliers, take into account any unpresented amounts when assessing your cash position at any point in time.

Don’t wait for monthly bank statements but get online banking facilities in place so you can monitor cash movements and payments in real time. By the time the statements arrive, you could find yourself in cash flow difficulties, struggling to make payments. Better to have an ongoing record of your cash position at all times.

Remember, if you run a limited company, even if you own it 100%, that the money of the business is not yours – it belongs to the company. That means that, unless you have a legitimate business expense, you cannot spend the company’s money on your own purchases. Sadly, this is where many well-meaning small business owners get into trouble. By failing to maintain accurate, up-to-date accounting records, the personal and the corporate get confused. The result can be not only higher tax bills, penalties and fines (both for the business and for the individual), but also more extended consequences such as disciplinary action for professionals such as lawyers and accountants who conflate client monies with their own.

Make sure that all the sales invoices you issue are recorded. A major cause of many small business failures is poor management of accounts receivable – the issue of sales invoices to customers, and the subsequent monitoring and collection against those invoices. With a well-maintained set of books and accounting records, it is easy to identify what has been invoiced to what customer and at what price. More importantly, it is easy to identify what invoices are outstanding, enabling you to initiate appropriate follow-up action. This could be vital for business survival.

While many small business owners may resent the need to maintain accurate accounting books and records, and regard it as a waste of their valuable time, it is a vital part of running any successful business. Not only does it help meet your statutory and other legal reporting requirements, but, more pertinently, it provides an essential guide and insight as to the health of your business. With so many new businesses failing due to poor cash flow and inability to manage their finances, the need for good accounting records should be self-evident. So whether you decide to do it yourself on a spreadsheet, invest in an accounting software package or outsource to a qualified book-keeper or accountant, don’t neglect the book-keeping. It might make the difference between going out of business and longer-term growth and prosperity.


Why a well-planned budget can help your business grow

Many business owners do not create a budget, either because they don’t know how or because they do not consider it worth their valuable time. This is unfortunate because a well thought-out plan can help you control spending, ensure that resources are available for those things that support business growth and development, and allows you to identify cash flow problems and other bottlenecks before they can harm your business.

There are a number of good reasons for creating a budget:

  • To set targets

Every business needs targets, otherwise it has no measure of performance, and no means of distinguishing success from failure. A budget will project both revenues and expenses in order to determine both its short, and longer-term, strategy. By focusing on the essentials, and restricting time and money spent on items that are not in the plan, you can ensure appropriate resources are available to support the objectives of the business.

  • Strategy requires funding

Strategy and planning are integral to one another. A budget helps achieve strategic and operational goals by ensuring that money is allocated to those things and activities that support the strategy – for example, the launch of a new product or service.

  •  To set priorities

A well-structured budget helps identify business priorities and communicates them to a broader audience, both within a company, and, if shared with potential investors or lenders, externally as well. Business owners can help employees understand the company’s strategy, and how the annual budget funds these priorities. In the case of lenders and investors, a budget demonstrates that the business has defined its objectives, identified priorities and allocated resources accordingly. In other words, it helps build credibility and trust. A potential investor is much more likely to lend money to a business that has a budget, than one that does not.

  • Helps control spending

The production of any budget involves discussions about spending priorities and cost control which is a healthy dialogue for any business to engage in, providing that the dialogue is constructive. When funds are allocated, spending is controlled, and a measure provided as to what is an acceptable level of cost in the business. By focusing on the implementation of the budget, unplanned spending can be reduced to a minimum.

  • Identifies major capital expenditure and other large ticket items

An effective budget identifies the need for capital investment and other large one-off items, and make sure funds will be available and allocated to fund their purchase. It also reflects complementary activities – for example, if you plan on having 3 new staff you might need to buy 3 new laptops for them to use.

In terms of how you create your budget, there is no need to make it too complicated – what you are trying to determine, after all, is what you are likely to earn, and spend, in the next financial year.

Your starting point should be to collect information on past sales and costs. These should be as accurate and complete as possible as they will be the basis of your plan. If you have employees, ask them for input on their relevant areas of operation; not only does it help give you as full and accurate picture as possible, but involving them helps their engagement and buy-in to the budget process and objectives. They may also be able to offer ideas as to how costs could be reduced or sales boosted, which, in turn, could lead to you amending your budget to reflect their input.

The next step is to consider what changes have occurred, or are likely to occur, which will impact your future plans. For example, has the competitive landscape been changed by the entry of a new aggressive, low-cost competitor. Have their been changes in the industry more broadly, due to the introduction of new technology, or increased regulatory requirements? How have your resources changed and how has this impacted your ability to supply your products or services?

Having got this information, prepare your sales forecast, allowing for any business seasonality, or any other significant fluctuations, such as the impact of a large one-off contract.

Turning to the cost side, work out first your fixed costs – those business overheads which will be incurred regardless of your level of activity. These might include salaries, rent, utility costs, IT expenses etc. Then calculate your variable costs – those expenses which vary depending on your level of sales. These might include materials, labour (including staff overtime), the hire of special equipment to fulfil an order etc. Finally, include any non-operational costs – these might include bank charges, interest, tax and VAT payments.

Having collected all your data, everything should now be consolidated, either in a spreadsheet or, if your accounting system supports it, within an applicable budget template.

Once your budget has been prepared, sit back and review it with a critical eye. Is it as realistic as possible and is it achievable? Whilst an over-optimistic sales forecast or a predicted fall in costs may look good on paper, will they materialise in reality? A too optimistic budget can cause you to expand too quickly, or run into cash flow problems. So, if need be, build some conservatism into your estimates, or create another version of the budget which reflects more of the downside risk.

Finally, while the budget is a very good tool for planning and managing your business, it is normally created at one point in time. Events and market fluctuations may cause fundamental changes to the business assumptions on which it was based. Update your budget accordingly, or prepare a forecast which reflects the changes in assumptions, realignment of priorities or amended targets.

Budgeting is an essential element of business success, as it helps with both planning and control of an organisation’s financial and other resources. Business planning involves decisions about strategy and identifying priorities, while controlling ensures plans and objectives are achieved and managed. Managing a business without a budget is like leaving home with no idea of your destination. If you embark on a journey with no plan as to where you are going, how do you know when you’ve got there?


Setting the right price for your services

Trying to set the right price for your services can be a tricky business for many service providers. Should you use the prevailing market rates and try to match them, and should you be charging a premium for your experience and skill set? The best way to work out your prices is to calculate your overheads and billable hours, come up with an hourly rate, and then adjust, as need be, to reflect what the market can bear, and what you can expect as a reward for your efforts.

  • Overheads

Work out what money you need to cover your overheads or fixed costs. As the name suggests, your fixed costs are there, whatever your level of business, and need to be paid. Such fixed costs might include rent, utility bills, server, internet and IT costs, stationery, and administration costs.

  • Consumables

Depending on your type of business, you may be required to provide consumables as part of your service. A cleaning service might require a range of cleaning products, cloths, sponges and dusters, for example, an advertising agency may use quite a lot of ink and paper presenting concepts and storyboards to their potential customers, while a lawyer might incur court and registry fees on behalf of their clients. Whatever the nature of these costs, such consumables should either be built into your overheads or charged separately to clients. Don’t ignore them – to do so will impact on the profitability of your business.

  • Expected Earnings

Estimate how much you would like, or need, to earn in a year – but be realistic! This could be based, at the basic level, on your personal expenses, and the bills you have to pay, or more likely the going rate, or “salary”, in your industry, for somebody with your experience, skills and ability. Compare this with other competitors and service providers in your field, remembering that their rates, in turn, do not reflect what they pocket at the end of the day, but include an amount to cover their own overheads and consumables.

  • Billable Hours

Your billable hours are the amount of hours you are likely to charge out in a year, assuming a standard working day of 8 hours. Billable hours are not the same as available hours. You need to exclude weekends, public holidays, personal vacation time and possible sick leave. You also need to factor in time for administration, advertising, business development and finding new clients, especially in the early days when you are unlikely to have a steady stream of business. Most likely, you will only be able to charge for 4 or 5 hours a day, out of every working day, which means your hourly rate has to be able to cover all your downtime and non-availability, as well as the time you spend on direct client activities.

Therefore, with all the holidays, illnesses and non direct client activity factored into the equation, and assuming 40 weeks as the available time frame available per year, then your billable hours will be either 800 (40 weeks * 5 days a week * 4 hours a day) or 1,000 (40 weeks * 5 days a week * 5 hours a day) a year.

  • Calculate your hourly rate

To calculate your hourly rate, add your overheads and expected earnings and divide by your billable hours (overheads+ earning earnings/billable hours). For example, if your overheads are €45,000 and expected earnings €55,000, and your billable hours are 1,000 a year, then your hourly rate is €100 an hour (€45,000 +  €55,000/1,000).

  • Calculate your rate of service

Depending on the industry and sector in which you work, you may simply charge your hourly rate, or an increment of it – 15 minutes, for example – for your service. However, there may be some instances where a client wants to know, in advance, what they can expect to pay for a particular service.

In such instances, work out a service rate for the job based on the hourly rate and the amount of time you expect a particular job to take. For example, a business trainer might charge 4 hours for a morning’s presentation, with travel time factored in as well. So, in the example above, assuming an hourly rate of €100, they would charge the client €400 for the service.

  • Adjusting to market rates and premium pricing

If the hourly rate you have calculated is out of kilter with the prevailing market rates, then you may need to adjust your calculations. Find a way of reducing your overheads, lower your income expectations, or increase your billable hours. On the other hand, make sure that you are not under pricing yourself and are making a fair comparison to those market rates. You would expect to pay more for an accountant with 30 years of experience and knowledge than for somebody who has just qualified, for example, whilst a highly qualified web designer will command a premium over somebody who just offers tech support. Make sure prospective clients appreciate this and the understand the added value you offer.

  • Discounts

Depending on your industry you may want to discount your rates for large volumes of wok or regular work from the same client. This will need to be determined on a case by case basis. You could also discount your rates in return for a non-monetary return, such as a client providing links to your websites on theirs, or giving client testimonials for you.

  •  Charging Multiple Rates

Again depending on your industry and sector, you could offer different rates for different markets or services. Copy editors and proof readers, for instance, may charge different hourly rates depending on the type, complexity and degree of specialist knowledge required of the text they are editing, whilst an accountant may charge a lower rate for compliance work such as preparing a VAT return or making supplier payments, and a higher rate for offering detailed tax or financial advice.

Setting the right price for your services is not easy and a number of factors need to be taken into account in your calculations – your overheads, consumables, expected earnings, billable hours and prevailing market and industry rates. Remember that you may need to adjust your rates if they are out of line with the market, but don’t under sell yourself, especially if you are offering professional, skilled services. Above all, bear in mind that your rates can be changed and, hopefully, increased, as you gain more clients, experience and standing.