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September 2011 - E-NEWS
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
- Don't just work "in" the business - work "on" the business
- Cutting employee training costs in a recession
- Gifts of pre-eminent objects and works of art to the nation
- Capital allowances loophole closed
- SMEs access to equity finance eased
- Retailers warned over online security
- New guidance issued on distance selling
- Rule change on agency workers’ rights looms
- Workplace pensions are changing from 2012
- Government aims to boost small business investment
Don't just work "in" the business - work "on" the business
Today’s business manager is short on time and therefore must prioritise the most important tasks. However, many business owners and / or managers become caught up in the day to day “workings” of the business such as closing sales, invoicing, staff rosters and so on but neglect the strategic aspects of running the firm.
Many managers can be accused of being a bit short sighted when it comes to their goals for the business. Marketing is often seen as “non chargeable time” and may not be prioritised as a result. As such it’s important to focus on the impact that marketing has on the business. The goal of the marketing function is to generate business / sales – after all, if nobody knows who you are / what you do, you won’t have any customers!
Successfully marketing your business entails focusing on what you want the business to achieve, what type of clients you want and the way you target these clients. There are many different strategies for achieving your business targets but the question we are asking here is can you afford not to increase your firm’s profile?
The answer to the above is inevitably no – you need to increase your firm’s profile in order to attract new customers. Therefore business owners / managers need to devote time to working “On” the business.
If you don’t already invest time and resources into marketing then it’s time to build a marketing plan for your business.
The plan should include the following
- Identify your target market
- Identify your goals for the next 12 months (sales targets, market share, etc)
- Identify strategies for achieving these goals
- Build a month by month marketing plan to enable you to successfully implement these strategies
- Identify the likely cost of the above activities and set this in stone (this is your marketing budget)
Cutting employee training costs in a recession
As businesses further tighten the purse strings the likelihood of training budgets being cut increases. However, employees still need to learn new skills and keep up to date in order to realise their full potential. As such here are a few ways to reduce your training spend without neglecting training entirely.
Use online training courses
The availability of online training courses has increased and you can now use these courses to train staff on anything from computer software packages to money laundering. Online training is generally cheaper than getting a trainer on site and your business won’t suffer - since staff don’t need to visit a training session of site – instead they can do it at their computer in the office. Whichever online training provider you use, ensure that they provide a certificate upon completion of the course for your staff training records. While eLearning offers other benefits as well, the cost savings alone can make it worth your while to find online courses that will meet your business's training needs.
Cut all unnecessary training
Many businesses waste money on unnecessary training. For example, an experienced sales manager most likely won’t need a sales training course if they have been competent in the role for the last 10 years. Equally, time management or personal effectiveness courses may not be necessary for experienced staff and your business can save money by allowing these staff members to opt out of such training.
In-house training
If you have some experienced employees your business can achieve cost savings by allowing the experienced staff to train in any new recruits rather than sending the new staff on a training course. This will also help your new staff to develop good rapport with their new colleagues and they will become more aware of the prevailing corporate culture within your business. In order to support in-house training you can develop handouts, tip sheets and reference materials that staff can refer to in the future.
Gifts of pre-eminent objects and works of art to the nation
The aim of this new scheme is to stimulate lifetime giving by encouraging taxpayers to donate pre-eminent objects, or collections of objects, to the nation. In return, donors will receive a reduction in their income tax liability based on a set percentage of the value of the object they are donating. It is therefore of a specialised nature, but such is the scope for tax reductions that we are mentioning it here and are ready to advise fully as soon as the exact rules are known.
The new scheme will share some elements with the existing IHT Acceptance in Lieu (AIL) scheme, which will continue to operate in parallel with this new scheme. The likelihood is that the existing AIL panel of experts will form the basis of the expert panel that will assess gifts made to the nation under the new scheme. Both schemes will share the annual limit that has been available to date for the existing IHT AIL scheme (currently set at £20m per year, so not a worry for most people!).
At present the scheme is up for consultation, but with the proviso that some aspects will not change, such that the new scheme will apply to items that are donated to the nation and will operate within an annual limit. The tax reductions offered under the new scheme will be equal to a set percentage of the value of the object being donated. It will only apply to pre-existing objects and will not cater for, for example, commissioning the creation of new objects. Finally, the new scheme will be limited to chattels (moveable objects), given that donors may already claim income tax relief or corporation tax relief on gifts to charities of land and buildings.
Capital allowances loophole closed
The government has bought forward the closure of a loophole that allowed businesses to accelerate capital allowances claims for plant and machinery and obtain advantageous early tax relief.
The change was announced on 12 August by Economic Secretary to the Treasury Justine Greening and took effect immediately.
The closure of the loophole, which was originally proposed for April 2012, was brought forward because the government had become aware that an avoidance scheme was being promoted that took advantage of the loophole.
Justine Greening said: “By ending this loophole we will preserve important revenue while maintaining a fair system of capital allowances to support business investment.”
The capital allowances regime will undergo major reform from April 2012. The annual investment allowance, which offers tax relief at 100 per cent on qualifying expenditure in the year of purchase, will be reduced to £25,000, while the rates of writing down allowances are also set to fall.
SMEs access to equity finance eased
Small businesses are set to be able to access equity finance more cheaply and effectively with early changes to European regulatory measures. Two amendments to the EU Prospectus Directive have been brought into effect a year early by the UK, allowing businesses to take advantage of the measures from 1 August 2011.
SMEs will now be able to raise equity finance up to €5 million (doubled from €2.5 million) before having to produce a prospectus. The government says that removing the obligation on a significant number of small companies to issue a prospectus will save UK SMEs around £12 million per year.
Small companies will also be able to target a larger pool of investors (up to 150 investors, from 100).
Financial Secretary to the Treasury Mark Hoban said: “I’m delighted to announce that the UK is taking the lead in Europe by introducing these deregulatory measures early.
“Reducing the regulatory burdens faced by business is vital in making the UK the best place in Europe to start, finance and grow a company. In order to play their part in the wider economic recovery, small businesses have to be able to access the finance they need – that includes making it easier for such businesses to tap into capital markets.”
John Walker, national chairman of the Federation of Small Businesses, said: “More small firms should look at equity finance as an alternative route to accessing credit, and these simple changes will help firms who are looking to grow and invest.
“Extending the number of investors and increasing the prospectus value will help more small businesses access equity finance and show there are more options than just going to the bank for credit.”
Retailers warned over online security
Businesses have been urged to do more to protect customers’ data after hackers were able to access the payment details of thousands of customers of cosmetics and toiletries retailer Lush.
Lush breached the Data Protection Act after the security of its website was compromised for four months, the Information Commissioner’s Office (ICO) said.
The breach, which occurred between October 2010 and January 2011, meant that hackers were able to access the payment details of 5,000 customers who had previously shopped on the Lush website.
The ICO announced on 9 August that it has required Lush to sign an undertaking to ensure that future customer credit card data will be processed in accordance with the Payment Card Industry Data Security Standard.
It also warned online retailers who do not adopt this standard, or provide equivalent protection when processing customers’ credit card details, that they risk enforcement action from the ICO.
Lush discovered the security lapse in January 2011 after receiving complaints from 95 customers who had been the victim of card fraud. After making enquiries, Lush found that its website had been subject to a hacking incident that had allowed hackers to access customers’ payment details. The security of the website was then immediately restored.
The ICO’s investigation found that, although Lush had measures in place to keep customers’ payment details secure, they were not sufficient to prevent a determined attack on their website. The retailer’s methods of recording suspicious activity on their website were also insufficient, delaying the time it took the company to identify the security breach.
ICO acting head of enforcement Sally Anne Poole said: “With over 31 million people having shopped online last year, retailers must recognise the value of the information they hold and that their websites are a potential target for criminals.
“This breach should serve as a warning to all retailers that online security must be taken seriously and that the Payment Card Industry Data Security Standard or an equivalent must be followed at all times.”
LINK: PCI Security Standards Council
New guidance issued on distance selling
The Office of Fair Trading (OFT) has launched a new online resource to help businesses comply with the law when selling goods and services at a distance, such as website or mail order sales
The Distance Selling Hub provides information about the rules and regulations that apply to the sale of certain goods and services over the internet, telephone, through interactive TV, by text or by mail order.
OFT research shows that many businesses are not fully complying with the Distance Selling Regulations (DSRs), the main law that relates to shopping from a distance. An OFT report in 2010 estimated that only nine per cent of business respondents considered themselves to be very familiar with the DSRs.
The DSRs give shoppers specific legal protections and different cancellation rights from those buying in store, including:
- an unconditional cooling off period (usually seven days), during which an order can be cancelled and a full refund received (this excludes certain items such as perishable items or personalised goods)
- a full refund if the goods or services are not provided by the date agreed. If a date was not agreed, then the shopper is entitled to a refund if the goods or services are not provided within 30 days.
The OFT is urging traders to review their sales and returns policies to make sure they are lawful and has launched the Distance Selling Hub help them understand their legal requirements. It provides a simple at-a-glance guide to the law, detailed explanations, practical examples, and training materials developed to help businesses understand their obligations.
Jason Freeman, director in the OFT's Goods and Consumer Group, said: “The growth in distance selling – in particular via the internet – is bringing great benefits to consumers and the economy, but also creates new risks.
'Businesses need to check that they are treating their customers fairly so that shoppers trust them and can continue to shop confidently. We know most traders want to comply with the rules and the development of this hub is designed to help them stay on the right side of the law.'
LINK: www.oft.gov.uk/distanceselling
Rule change on agency workers’ rights looms
New rules affecting employers who take on agency and temporary workers will take effect from 1 October 2011.
From that date, the Agency Workers Regulations mean that agency workers who work in the same role with the same hirer for 12 continuous calendar weeks will be entitled to the same basic employment and working conditions as employees in comparable roles.
Agency workers will be able to accumulate the 12 weeks’ service even if they only work a few hours a week. Once the qualifying period is completed, they must be treated as if they had been directly recruited on the first day of the assignment.
As of the first day in a temporary role, the hirer must give agency workers:
- access to the same on-site facilities as a comparable employee would have, e.g. staff canteens, childcare, parking and transport
- access to information on relevant job vacancies within the business.
Once agency workers complete the 12-week qualifying period, the hirer must also give them the following equal treatment entitlements:
- key elements of pay, including salary, overtime pay, shift allowances, bonuses, lunch vouchers, and/or annual leave pay
- working time, including duration of working time, night work, rest periods and breaks and annual leave.
LINK: www.oft.gov.uk/distanceselling
Workplace pensions are changing from 2012
The government estimates that around seven million people are not saving enough to meet their retirement aspirations and the government is making changes to the pension system.
To encourage more people to save in a private pension the government has introduced workplace pension reforms from 2012.
From 2012 employers will be required to automatically enrol all eligible job holders into a qualifying workplace pension and to make minimum contributions into it. Don’t panic though, these changes are being phased in with larger employers needing to comply before small firms.
If you employ less than 50 employees you will have until 1 March, 2014 to comply.
See www.dwp.gov.uk for more details or please talk to us about putting the best scheme in place for your business.
Government aims to boost small business investment
Encouraging business investment is central to Government efforts to re-balance the economy, which is why the Treasury is holding a consultation on ways and means of increasing the level of funds that are put into smaller enterprises with good growth potential.
The consultation will look at how Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs) can be simplified and changed. Also under consideration is a plan to support seed investment through offering tax reliefs to business angels. Many smaller firms experience difficulties in attracting equity finance because the modest size of the investment can put off investors who would rather invest larger sums in larger companies.
HWB
Chartered Accountants, Highland House, Mayflower Close, Chandlers Ford, Eastleigh,
Hampshire, SO53 4AR.
