SPRING NEWSLETTER

Hugh's Views
Putting your prices up
Australia to collect NZ tax debt
High Interest Rates - Watch your cashflow
Are you really in business?
Marketing will help you succeed
Accounting software we support
Welcome
M&A gains Approved Training Organisation status
Curling at Naseby
Disclaimer

HUGH'S VIEWS
We are well into October and the year appears to be almost over. From our perspective we have certainly broken the back of our annual workload and judging by our filing statistics with the IRD we are pretty much up to where they expect us to be and while we have not got all our work done we are certainly well on top of it and the pressure has come off to some extent.

We achieved this result by having plenty of capacity and over the summer months we will probably have some spare time up our sleeves. If there are clients who need assistance in the office or for some special project then we would be happy to second staff, possibly directly to the client or at a special “summer” rate. We do have a number of our staff who take extra time off at this time of year so I don’t think we will be sitting around doing nothing.

Personal Investment for Dummies
In July, Brent Wilson and I presented our first course on this subject. We had a modest number of attendees, but they all seemed to go away pretty happy with the input. We are planning to do this again in the New Year and have already looked at content and what we can do to improve it. Having presented, we are now more than comfortable to recommend it to those people who need some help in organising their personal finances.

Economy
It is hard to ignore, from all the noise that comes to us through the media, that our economy is heading towards (if it hasn’t already arrived in some places) a slow down. We have for quite a while been able to look at it happening further up the country, but there are signs now that some sectors of our local economy are starting to be affected.

One of the benefits of living in an area which has such a diversified economic base is that while some sectors are going to have a hard time, some of the other sectors, such as those which are influenced by the exchange rate may well have some benefits from the movements that we are seeing with the New Zealand dollar. This hopefully will flow through not only to the meat and wool, but particularly to the horticulture and also the viticulture sectors as well. Our local tourism industry is possibly more aligned to national rather than international travellers and may escape some of the issues that appear to be surfacing in Queenstown in relation to visitor numbers.

Macdonald Crawford life
In September we welcomed Bruce Macdonald and Shane Crawford onto our floor, along with their Finance and Insurance services. We have already found significant benefits where we have mutual clients and hopefully our clients will benefit from us working closely together. It is very convenient to be able to have Insurance and Finance advice “next door” along with Investment Advice from Brent Wilson at Spicers.

Education
As times are getting a bit tough in the business world there is often the need to catch up on some of the basic issues in operating a business. We have surveyed some of our clients recently to see if there is a need for seminars on any particular topics and we are in the process of planning for a series of two or three workshop-type presentations to assist.

Just a reminder that as economic activity tightens up then cashflow becomes more important and where you have issues then we can’t emphasise how important it is for you to keep in touch with your bank and, where appropriate, your advisor.

We are happy to help as and when required.

Hugh

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PUTTING YOUR PRICES UP
With inflation predicted to reach 5%, you are probably going to have to put up your prices. The following five rules may assist:

1. It is usually better to be putting your prices up at the same time as others.
2. Small amounts regularly (but not too often) are better than big amounts infrequently. Don’t keep putting off this task.
3. Can you move something down at the same time?
4. Your top 20% of customers need to be handled more carefully than the others. Try giving them a few weeks to adjust. Consider personal contact as part of your strategy. As one client says “Sell the bill”.

Give your customers true explanations for the increase.

A businessman put up his prices 8% in one go. “I had to bite the bullet” he said “my prices had got too low. I lost just two small customers.”

Another doubled his prices and lost half his business. Incredible! Customers do not like nasty surprises.

Sometimes you may be able to achieve a price increase without appearing to have done so. Try these ideas:

• Revise your discount structure downwards
• Change your minimum order size or unit sizes
• Charge for delivery or travel – an excellent excuse in the current environment of high petrol prices
• If asked for a rushed order, can you charge for overtime?
• Your terms of trade should include interest payable on overdue accounts. Try enforcing this charge. Even if you later forgive it, the threat should have a positive effect on cash flow.
• It may be time to put escalation clauses back into contracts. The supplier, when quoting, puts in a condition that the price is subject to change if material prices increase.

Contractors
If your prices are higher than your competitors, for example you may be a painting contractor, explain why the customer would benefit from paying you more money for the job. Don’t just put in your price and hope. References from happy customers could be included with your quote.

AUSTRALIA TO COLLECT NZ TAX DEBT 
Arrangements are now in place to allow New Zealand and Australia to help each other collect tax debts, Revenue Minister Peter Dunne announced on the 18th of September. The arrangements form part of New Zealand’s tax treaty with Australia and came into effect on the 8th of September 2008. They improve New Zealand’s ability to collect outstanding tax from people who have left the country and reinforce cooperation between Australia and New Zealand in the enforcement of tax laws and the collection of tax, Mr Dunne said.

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HIGH INTEREST RATES - WATCH YOUR CASHFLOW
In an environment where interest rates are relatively high, your business will be affected if you are operating your business with loan funds, bank overdrafts, credit cards etc. Now is an appropriate time to fully review all of the processes which can affect your cashflow including:

• Do you promptly dispatch invoices to clients?
• Do you have clients complete a credit application form?
• Do you obtain personal guarantees from company directors of customers?
• Do you promptly dispatch debtors’ statements at the end of the month?
• Do you follow-up debtors who are not paying in accordance with your firm’s payment terms?
• Have you clearly stated to your customers what your payment terms are?
• Have you analysed your work in progress to ensure that jobs are completed and billed as soon as possible?
• Have you analysed your stock turn? Are you trying to do something about slow-moving stock?
• Should you negotiate better terms or delayed payments with your creditors?

If you are experiencing delays in receipts and you are relying on loan funds, bank overdrafts and/or credit cards to finance your business then the cost of high interest rates will be an additional expense on your business.

The key thing for you to do is to be aware of the necessity to monitor your cashflow position on an on-going basis, particularly relating to work in progress, stock, debtors and creditors, to see whether any improvements can be made that would have the effect of reducing reliance on borrowings, therefore reducing interest cost.

We can assist you in reviewing your cashflow position.

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ARE YOU REALLY IN BUSINESS?
GETTING into business is not easy.

We see some clients who have what Michael Gerber calls the “entrepreneurial seizure”. They get fed up working for a boss. They decide the profits they have been making would be better in their own pockets.

The day comes when they hand in their notice and have a go themselves. They work hard and the business grows. They might enjoy a bigger income than when they were employees, but they have merely swapped bosses from their former employer to themselves.

They invariably work long hours. They probably earn, after taking into account the evenings and weekends spent on accounting and preparing quotes, much the same rate per hour as they did before going out on their own.

These people are self-employed. They are not in business.

A business is a money-making machine. You should be able to leave it for a long time and it will continue to make money in your absence. It should not depend on you. A McDonald’s franchise is a business.

The question is, how do you switch from self-employment to business?

• Start by finding a mentor. This is someone outside your business who has been successful and can help you analyse what you do and how you can do it better.
• Be ruthless with yourself. If someone else could do the job, don’t do it yourself.
• Remember you don’t have to delegate to your staff alone. You can outsource services.
• Make full use of modern technology. Make full use of your word processor. Use standard letters. Use cut and paste. Use the internet to access information. An outworker at home could access your computer just as easily as a person at your workplace.
• Plan to make yourself redundant and measure your progress. Others can do your work when you have given them systems to follow. Focus on systems for your business. This includes scripts when selling and checklists when performing work.
• You should be the ideas person, but never forget if you have staff, they also have brains. Use them. If you encourage contributions from staff and reward them, they will help provide those ideas.

People in business do not need to work long hours. The test of being in business is – how long can you stay away and the business function without you?

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MARKETING WILL HELP YOU SUCCEED
In this day and age marketing is a multi-layered activity which can make a massive difference to your clientele, your growth and your bottom line.

You need to ask yourself some questions:

• What do you want to achieve in your business?
• What are your personal goals?
• What are your business goals?
• Have you set any goals?

These types of questions need to be answered before undertaking the task of preparing a business plan.

What are your differences? What makes you unique? What are your strengths and weaknesses?

Many people consider marketing to be advertising or promotion, however marketing is much more than that. Marketing is a number of related activities which start from producing products and services that meet people's needs, making those products and services available and letting potential customers know of the existence of the products and services. The key strategy is to concentrate on keeping the customers and clients coming back again and again.

Marketing is concerned with everything involved in the transfer of goods or services to your customers.

The aim is to provide the right product or service at the right price, at the right place with the right promotion.

The key questions to be asked include:

• What is your product or service?
• How do you determine its price?
• Who is your target demographic?
• Where and how do you sell? - Direct? Through Agents? Over the internet?
• What do you do to promote your product to your customers or potential customers?

A marketing review is a very important component of the business planning process. Factors which can be important today include branding, accessibility via the internet, perceived social responsibility and technology compatibility.

ACCOUNTING SOFTWARE WE SUPPORT

• MYOB – George Flannery is an Approved MYOB Certified Trainer
• XERO – Paul Checketts & Ellen Colligan are Certified Trainers of Xero
• BankLink
• ACE Payroll
• CashManager
• Quickbooks

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WELCOME..
In early September we welcomed, Shane, Bruce, Esme and Kirsten to the building. They now have offices adjacent to our own with Mike Pero Mortgages and also Macdonald Crawford life. It’s nice to have you here.

McINTYRE & ASSOCIATES GAINS "APPROVED TRAINING ORGANISATION" STATUS
Our firm was recently awarded “Approved Training Organisation” status by the NZ Institute of Chartered Accountants.

This means we are recognized as having the programmes, work experience and expertise in-house to train young graduates to become fully qualified Chartered Accountants.

Gaining ATO status is another feather in our cap, and makes McIntyre & Associates desirable as an employer for young accountants wishing to become fully qualified.

CURLING AT NASEBY
After number of years and attempts to get to Naseby for curling our social club finally got there for our mid winter do in August. We had a great day out at the rink and left for dinner at The Royal Hotel amidst a fairly decent snowfall. After the meal, many a snowball was thrown and then it was back on the bus to head home..

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DISCLAIMER
We don’t claim to know it all, so with that in mind here’s what we’re obliged to say; this newsletter has had input from a variety of sources, people and publications. For all input we are grateful. Grateful and careful. Whenever we can, we do our very best to ensure all the information contained in this newsletter is accurate and timely. If there’s something here you plan to place some considerable reliance on and we haven’t made the implications totally clear to you, get in touch and we’ll clarify it for you.