Spring clean your business

Spring is here and there’s no better time to give your business a good, old-fashioned spring clean. To help you out, here’s an expert guide to giving your business a bit of spit and polish.

1. Clean up bad debts now!

Working with the premise that cash is king, the first place to tidy up a business is to deal with customers that simply don’t pay. Chris Gebhardt, a director of firm William Buck says many business owners are too lenient with their terms of trade. He recommends sticking to a strict credit limit for each customer based on credit due diligence.

“Nothing is easy, apart from cash up front,” he says.

To reduce bad debts this spring, it’s time to:

• Enforce terms of trade earlier.
• Look at progress payments, for example, some payment upfront to secure goods/services and further payments as the job progresses. “These early payments should cover the cost of the job,” says Gebhardt. Then payment on delivery will represent the profit component of the job.
• Install appropriate KPIs around accounts receivable and monitor them regularly.
• Communicate with clients and customers regarding fee and price disputes.
• Don’t allow additional credit when a customer is already outside the terms of trade. (Alternatively, rather than sever the trade, demand COD for any further orders/services.)
• Review current Terms of Trade for reasonableness and appropriateness and prepare new terms if necessary.

2. Clean up your shop window

When a company’s website is stale it’s easy to spot – the CEO’s last blog was 12 months ago, there is no new news on the site and the latest PDF newsletter to download is from Summer 08/09.

This spring, it’s time to jump online and try and objectively assess how fresh the company’s website is. It doesn’t have to be an extreme makeover, but get rid of the stale material. A website is a company’s shop window after all.

Principal of Switch Digital Josh Richards says most of his clients are time poor and struggle to develop and deliver compelling content. Good content attracts customers “so helping clients solve the content dilemma is a priority for us,” he says.

To give your website a spring clean start with:

• Removing stale content from the website urgently.
• Sit down and determine the key goals for the site. “Is it direct sales, phone and email inquiries for example?” says Richards.
• Ask all staff to have a good Google session checking out the competition domestically and internationally and then look at where the company’s website sits, its strengths and weaknesses and the essential new ways the website needs to be marketing online. “Often there are new trends or better ways of selling your services that you can learn from markets where SMEs have had more time on the web,” says Richards.
• Gather company news, relevant media and links to load onto the site immediately based on the new priorities for the site. “If it doesn’t meet the [company’s] needs, ” says Richards, “it doesn’t make it onto the site.”

3. Spruce up your computer systems

Come on, 10,000 emails in your inbox, it’s time to clean it up. Nathan Warnecke, managing director of Melbourne-based specialist SME IT firm Itro has a quick way to free up the most space in an overstuffed mailbox.

Warnecke recommends searching for items with attachments larger than 1Mb – such as the wacky videos, photo albums and attachments that can then be easily deleted. “Keeping your mailbox to a reasonable size will certainly improve the performance of your system,” he says.

The most critical piece of spring-cleaning of computer systems is making sure the system has reliable backups. A bad backup system can cripple a business.

“Data recovery processes from failed hard drives will be at the very least expensive and maybe impossible,” says Warnecke. “The time it takes to recreate all your critical files, templates and financial information will far outweigh any costs related to keeping a good backup system in place.” [Believe me, the author of this piece has paid a data recovery bill and they are exorbitant.] Don’t put it off any longer.

• Clean up the inbox.
• Invest time and money in a reliable backup system.

4. Get mobile spending under control

Managing director of phone bill analysis service Full Circle Group Tony Simmons has seen companies slash 20% off mobile phone bills by simply showing employees a bill that highlights their personal calls including after hours and weekends spending.

“We find personal calls are often 40% of the costs. It should be about 15-20%. If it’s not checked and businesses are not actively looking at it, staff will continue to use it and see it as part of their salary,” he says.

Simmons has found that clients haven’t needed to enforce this rule, that showing employees the data is enough to make staff more conscientious.
Simmons believes businesses have to face facts about the phones they use. “Business owners must ask themselves: ‘What is driving the use of the phone? Does it need every bell and whistle. Is it a genuine business application, like tradesmen emailing quotes straight from the site, or is just a desire for a nice phone?'”

“If it has no business benefit, by all means downgrade the phone,” he says.
Simmons estimates SMEs can save up to 60% on phone costs. Many of SMEs spend $25,000 a year on mobile and broadband. “If we can make a small dent in those bills that is a pretty good return.”

Customers can upload their phone bills for scrutiny and the company’s technology analyses data and costs from a phone bill and looks at the other plans across the business.

“We find out if you are overspending or under spending,” he says. The service also takes into account mobile reception and other variables that make it hard for people to change to a cheaper provider if they won’t have the coverage they need.

For Simmonds, it is always worth shopping around. “The networks are always improving network and price, the deals are completely different from a year ago,” he says.

• Analyse phone bills to look for savings.
• Research new mobile plans. The market changes constantly, so keep the plans up-to-date.
• Keep a lid on staff using work phones for excessive personal phone calls.

5. Crunch costs

During the Global Financial Crisis accountant Rob McAdam, a director of Queensland firm McAdam Siemon has seen many of his business clients going through costs with a fine toothcomb.

“It’s not a bad idea for the owner to regularly sign off on all accounts for a month or two,” he says. “When you start questioning costs it sends a message to staff.”

However McAdam cautions clients who get to fixated – the business must strike a balance or it creates inefficiencies. For example, a $20-a-week spend on fresh fruit for the office is a good investment – it’s a gesture of goodwill, it’s healthy and is a small perk for staff. McAdam does advise clients to take a long-term view. Cutting back dramatically on storage space, for example is another risky strategy. “As the market picks up, you need to be able to operate,” he says.

Rent is another cost that must be closely considered. “Basically in good times, rent should be 8% of turnover, now it’s double that for many businesses,” says McAdam.

This year, McAdam has seen clients save $6,000 on rent over six months through rent relief. Landlords do agree to rent relief, particularly in areas such as industrial parks where many tenants have not survived the GFC. Remember, if you don’t ask, you don’t get.