Leonherman Blog

The 80/20 rule – How can it work for you?

The Pareto principle also known as the 80–20 rule, Management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto who, while at the University of Lausanne in 1896, he published his first paper “Cours d’économie politique.” Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population.

In business, it is usually applied as follows: 80% of your company’s profits will come from 20% of your customers. In essence, 80% of whatever outcome you’re expecting will come from 20% of whatever you put into your project.

Why is it so important?

Using the 80/20 rule allows you to focus your business planning in a way that will allow you to maximise profit, production, or any other aspect of your business, with a minimum of effort.

80% of profit comes from 20% of customers

It would make sense to focus on making sure that 20% of your customer base is happy before expending resources on the rest. The same thing can be applied to any situation, it doesn’t always come out to 80/20, but the basic concept still applies.

This same rule can be applied to marketing, profit predictions and many other business aspects can also be applied to time management and other things that you use every single day, whether you realise it or not 80% of your results comes from 20% of your effort.

It’s easy to be pulled into projects around your business that aren’t going to be terribly productive and the 80/20 rule is a great rule of thumb but it isn’t set in stone. It’s a useful guideline and should be used as such.

Don’t try to lock everything you do into that 80/20 ratio or you’ll find yourself striving for something that is impossible to achieve. That said, take a look at the various aspects of your business, and see how you could benefit from implementing the rule. You’ll be surprised at the amount of extra time and productivity you can obtain with a little change of perspective.

If you are looking for support in achieving your business goals, please get in touch.

Posted in Benefits, News

New Year, New Plan

Growing and reviewing your business:

The New Year is a great time to sit down and reflect on the past year and consider your plans for the year ahead, take stock of what has worked and what has not.

You may have a business plan, but when did you last review it? Are you on target to achieve your goals or is it time to set new ones?

Strategy planning:

Strategic planning helps you to put your vision into achievable objectives and milestones, identifying your key objectives, review your budgets and cash flow management. But remember the words of Albert Einstein, “Everything should be made as simple as possible – but not simpler.” Businesses need a strategy to succeed, but it shouldn’t be complicated. The very best strategic plans are 1 page of A4.

Your plan should include the strengths, weaknesses, opportunities and threats of the business, the company’s core values and mission.

Once you have finalised your plan, ensure that you communicate it effectively so that everyone in the business understands what the objectives of the business are and what they need to do to achieve the overall goal of growing the business.

Leonherman offer business planning and financial forecasting services to businesses that are looking towards the future and want to plan how they can grow and develop.

GET IN TOUCH if this could benefit you – partners@leonherman.co.uk

 

Posted in Ask the Expert, News

Wishing you a Merry Christmas from Leonherman

This year we had fun putting together our Christmas message, we hope you enjoy it as much as we did making it.

May we take this opportunity to wish you and yours a Merry Christmas and a Prosperous New Year.

Please note that our office will be closed from 12pm on Tuesday 24th December 2019 for the Christmas holidays reopening
at 9am on Thursday 2nd January 2020

We won’t be sending Christmas cards this year, instead we are proud to continue supporting the Wood Street Mission Christmas Appeal and have been collecting gifts ready to be distributed to local children.

This year marks 150 years since the charity began in 1869, providing toys for local children at Christmas across Manchester and Salford.

Posted in Uncategorized

A message from Jerry!

It has been an exciting time here at Leonherman as we have successfully completed the management buyout, but we have even more exciting times ahead as we draw to the end of 2019. We have taken the time to listen to our customers and the Leonherman team and we will continue to build on this great foundation by announcing three beneficial new services.

Watch this space…

Posted in Uncategorized

Congratulations to Joanna and Grace 

We are delighted to announce that Joanna Jeffrey and Grace Park have been promoted to Directors.

Grace joined Leonherman back in 2007 as an accounts trainee, before progressing to Business Services Manager. Grace has been instrumental in ensuring Leonherman embraces the use of new technology and has been our in-house Xero champion for a number of years, which has involved training both the team and clients on Xero and other accounting software to ensure they get the most out of it.  Grace will now take on the role of Operations Director, where she will be remain an integral member of the management team along with ensuring we continue to develop and change to suit our clients needs.

Joanna joined the firm 4 years ago as Practice Manager and has championed the HR and People role leading to our successful accreditations with the ACCA and Investors in People.  Joanna proved herself to be invaluable during the recent acquisition and she will now adopt the role of Practice Director, joining the Firm’s management Board.  Joanna will continue with management of the practice and support the Board with delivering the Firm’s medium to long term strategies.

Jerry Scriven Managing Partner has said; “Having only had the pleasure of working alongside Joanna and Grace for the past six months, I was able to quickly see the impact their work ethic and commitment to Leonherman has on the rest of the team around them and they are instrumental in the delivery of our plans. Michael and I are delighted to have them join us on the management team and we are looking forward a very bright future for everyone at Leonherman.”

Posted in News, Office News

The importance of Financial Forecasting

The lack of planning and control of cash resources is the reason often given for the failure of many businesses. By undertaking good financial forecasting businesses can help reduce this business risk.

Much like a map helps you plan a long road journey, a financial forecast helps you achieve your goals and get your business to where you want it to be.

A financial forecast is simply a financial plan or budget for your business. It is an estimate of two essential future financial outcomes for a business – your projected income and expenses.

Predicting the financial future of your business is not easy, especially if you are starting a business and do not have a trading history. This is where Leonherman can help. We are experienced in preparing financial forecasts that are both achievable yet still challenging.

Advantages of an effective financial forecast:

  • Demonstrates the financial viability of a new business venture. Allowing you to construct a model of how your business might perform financially if certain strategies, events and plans are carried out
  • Allows you to measure the actual financial operation of the business against the forecast financial plan and make adjustments where necessary
  • Allows you to guide your business in the right direction and take control of your cash flow
  • Provides a benchmark against which to measure future performance
  • Identifies potential risks and cash shortfalls to keep the business out of financial trouble
  • Provides an estimate of future cash needs and whether additional private equity or borrowing is necessary
  • Assists you to secure a bank loan or other funding, lenders and investors require financial forecasts to show your capacity to repay the loan

Leonherman offer business planning and financial forecasting services to businesses that are looking towards the future and want to plan how they can grow and develop.

GET IN TOUCH if this could benefit you – partners@leonherman.co.uk

Posted in Ask the Expert, News

When is a van not a van?

HMRC are being urged to provide clarity and consistency on the tax treatment of commercial vehicles such as VW Kombi Vans marketed as goods vehicles. The need for clarity follows the ruling in an important tax tribunal case involving “vans” provided to employees of Coca Cola.

The court has upheld the HMRC view that certain vehicles are not goods vehicles but motor cars for benefit in kind purposes. Consequently, the income tax and national insurance payable by employee and employer is significantly higher than if the vehicles had been classified as goods vehicles.

CERTAIN VANS ARE EXEMPT FROM INCOME TAX

There is no assessable benefit in kind where the van is only used for business journeys or the private use of the vehicle is insignificant. Examples would include making a slight detour to pick up a newspaper on the way to work or taking an old mattress or other rubbish to the tip once or twice a year. 

INCOME TAX DEFINITION OF “GOODS VEHICLE”

The income tax legislation defines a “goods vehicle” as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description…”

Although the VW Kombi vans failed this test the Tribunal held that Vauxhall Vivaro vans provided by Coca Cola did fall within the definition of goods vehicles!

It is understood that this case is due to be heard at the Court of Appeal which will provide legal precedent over the tax treatment. Until then it gives employers a dilemma as to how to report such vehicles on employees’ form P11d and also whether the position in earlier years should be rectified.  The tribunal had to seek evidence from automotive industry experts so how are employers expected to interpret the rules!

What is also particularly confusing, and thus difficult for businesses to deal with, is that the benefit in kind rules are not the same as the rules for capital allowances and VAT.

CAPITAL ALLOWANCES DEFINITION OF “MOTOR CAR”

The definition of a “motor car” for plant and machinery allowances purposes is a mechanically propelled vehicle except a vehicle:

  1. constructed in such a way that it is primarily suited for transporting goods of any sort, or
  2. of a type which is not commonly used as a private vehicle and is not suitable for use as a private vehicle. 

VAT DEFINITION OF “MOTOR CAR”

For VAT purposes the definition of a motor car has been amended several times over the years. The current definition states: “Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

  1. is constructed or adapted solely or mainly for the carriage of passengers; or
  2. has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;

There are a number of exceptions to this rule notably vehicles constructed to carry a payload of one tonne or more. A common example would be a “double cab” pick-up such as a Mitsubishi L200 or Toyota Hilux.

If you are unsure how this may affect you or want to look at purchasing some vans for your business get in touch on 0161 249 5040

Posted in Ask the Expert, News

Who is responsible for your own personal development?

As a business owner, you are focused on developing the people around you. But who is responsible for your own development?

Most business owners wear many different hats, some they feel comfortable and experience to wear and others not so much so. But if you want to help your employees to grow and develop, you need to invest time in developing yourself as well.

If you don’t, your team and your business could outgrow you and your own career could stagnate. You need to ensure that you allocate time to focus on your own personal development, just as you would for your employees.

Lead by example

Most businesses want to see their team take time to invest in their own personal development, you need to lead by example. If you make time to learn and develop new skills, your team are more likely to follow suit. You may even be able to make suggestions to your team members, based on your own learning and development experiences.

Make use of technology

There is an ever-expanding range of learning opportunities available online. The beauty of this is that you can take courses and attend webinars at a time that works for you. Learning and development doesn’t have to involve taking several days out to attend a conference or training session. 

What interests you?

You are more likely to develop a skill if you are interested in it. You want to feel motivated and keen to develop new skills. Find a development opportunity that you are passionate about or an area you want to feel more confident in whether that is finance, marketing or presenting skills. There is no point forcing yourself to develop your skills in an area that you have no interest in, otherwise it will feel like a chore and you will be less likely to do it. 

Take a step back

Focusing on your own personal development gives you an opportunity to step back from your day job. There is a reason why the best ideas come to you when you are walking, at the gym or driving as it allows your mind to wonder. Taking time away from the day-to-day can help to provide new perspectives on things and re-evaluate your priorities. When you get back to your desk, you may have new ideas and you should feel re-energised.

At Leonherman we pride ourselves on being able to give advice to our clients on all aspects of their business. Get in touch if you would like to discuss your business plans on 0161 249 5040

 

Posted in Ask the Expert, News

Inheritance tax to be made simple!

About time to we hear you say, the Office of Tax Simplification (OTS) have undertaken a detailed review of Inheritance Tax (IHT), which I think we can all agree is a complicated tax. Their report is likely to lead to future changes to the rules. We will keep you posted as the changes may require you to amend your Will or to review your financial planning.

We have experienced many misconceptions about how the tax operates, particularly in connection with gifts. One of the proposed changes is to shorten the period for lifetime gifts to be exempt from 7 to 5 years. The OTS also recommended replacing the current £3,000 annual allowance, marriage allowances and the exemption for regular gifts out of income with a £25,000 personal allowance each year, so far so good….

No tax free CGT uplift on death

Although the Office of Tax Simplification were only tasked with simplifying inheritance tax, they also considered the interaction with Capital Gains Tax. Many asset transfers can have both CGT and IHT implications. Currently there is no CGT on assets transferred on death and the recipient inherits the asset at its market value.

The suggestion is that capital gains tax uplift on death distorts decision making relating to assets that benefit from an exemption from Inheritance Tax. Currently when an individual holds such an asset that has risen in value, and is considering transferring it during their life, they are often advised to retain it until death rather than giving it away during their lifetime, because of the tax benefits.

For example when a business is retained until death, any potential capital gains are wiped out and there is no Inheritance Tax to pay. This could then lead to an asset being retained and transferred to the next generation at a time that is right for the business.

We will monitor the progress of this proposed change as it is likely to have significant implications on family businesses and your succession planning.

If you are concerned about how these proposed changes may affect you, please get in touch or call 0161 249 5040

Posted in Uncategorized

Email issues – please call us

Due to an IT upgrade that has overrun, we are not receiving external emails.

We hope to be up and running by the end of the day.

Please call on 0161 249 5040.

Thank you for your patience.

Posted in Office News