Master of Nunn (MoN)

Personal Notebook

a quick reference guide for MoN.

masterofnunn.co.uk

Finance & Money

Business as usual

 

Research, Research, Research,

Plan,Plan Plan,

Do, Do ,Do

 

Research

When I went into business apart from reading several books including tax & investment and websites I had Sky installed because at the time they were several Sky investment programmes on TV so I decided that first I needed to have Sky installed before a wooden floors could be laid over the cables  - just a small exaple that you need forward thinking, planning & research.

Ten years ago who would not have thought everybody is now doing their business on a phone! but again you need to research, plan on buying the best e.g. my phone by reviews outstrips most mobiles with a dual lens camera, dual SIm and several Gbs of on-board storage plus it was £500 cheaper than the latest iphone

Sooner or later you will have to take the plunge if you want to start a business and become your own boss I would advise if on a shoestring the following books

Start up a Business for dummies

Website Design for dummies &

Social Media Marketing for dummies;

Which books are also good and

Watch TV business programmes like Dragon's Den and read their books - I particularly like Duncan Bannatyne's books.

But don't get bogged down in total Research e.g. setting up a website is easier than spending hours reading How to set up a website; just like reading about getting fit - it is easier to Just Do it.  

Now on Dragon's Den you would have heard This is not a Business so I'm out. In a lot of cases this is true and many businesses are really a hobby and will not expand beyond that area. Think back to the 20 year plan and consider where you hope to be in the future

Usual scenario “I have a dream”: I have visited many people who believe in their product but

Year 1 Person leaves their £40k job and spends a year inventing and making a widget/gadget = £40k lost plus production costs - say £60k down overall

Year 2. Widget makes £20k but costs £10k to manufacturer plus overheads plus tax = £0 plus still no wage plus last year's loss = £100k down

You still have not paid yourself a penny but you still have to eat, pay monthly mortgage, utilities etc,etc. People think great Idea it will sell for x but you need to factor in costs of goods sold, your overheads, wages, tax (which can take away a 1/5 or more of those profits). Accounts are the most important part of your business. but people are to busy to think WHY am I doing this. I knew of several business that seemed to be doing great Wedding photographer, Jewellery maker, Antique dealer but when you factored in their overheads e.g. petrol, equipment, ongoing costs they were all making a Net Loss not Gross Profit. Plus they do not consider their time and might be making a widget far below minimum wage. For a quick idea of Accounts just look at a Set of Annual Accounts e.g. your local club or even a well known establishment and see what expenditure they have to cope with after their initial Gross Profit. Then get yourself a good quality book on learning accounts and learn how to organise a set of accounts and what you can deduct for tax purposes.

A simple Income and Expenditure spreadsheet can surpass as a beginning for you to check your own profit & loss and this Bookkeeping will provide a good indication of where you are going Profit or Loss wise. Don't just put everything in a shoebox, Know whether or not you are on your way to being a millionaire or a pauper. Those shoebox receipts that you give to your accountant are sorted by a clerk for hours and you will probably be charged at an hourly accountancy rate not a clerk rate, It's up to you.  Depending on your circumstances then consider employing a professional accountant if you think it is required, who will have the latest information on tax deductions & their implications e.g. are you reading this in an office on a computer or writing it down with a pen into a notebook all this could be tax deductible as part of your business under assets, stationery etc. this can then be offset against your Profits hence reducing that Tax bill.

Check the HMRC website for guidance on accounts. A simple income/expenditure sheet will have Date, Business i.e. Buyer Sold to or Seller Bought from; Bank details or Cash which should cross reference to your Bank statements. On the Expenditure side you will have details of your expenses e.g. what you have paid out in relation to your business Assets, Gas, Electricity, Travel, Subsistence, Stationery, These columns will be tailored to your own business some companies have over a thousand different sub accounts. I suggest for tax purposes you start from a tax year and Sum each individual column to see where you are making and spending your money. The clever people look at their accounts weekly if not daily.  Remember, keep everything, the tax man can go back 20 years if they suspect fraud and you have to prove otherwise!

Another vital part of your accounts is Cashflow and Cashflow forecasts - too many people have made “money” but not collected it and could have a good product with several orders but if you haven’t received the money in to fill more orders you could be heading for Liquidation and not an tax haven island in the south seas.  

 

Comparison chart of +/- Property, Shares, Gold, Savings

+Property you only put in the deposit normally 25% of the value; Attention 1 day a month

+Shares you can lose the lot I did with NR; Attention every day if not every hour

+Gold - fluctating badly. Attention every day to check price

+Savings currently minimal rates so not worth checking daily

 

Borrowing:-

Consider Credit cards although the Credit Limits on borrowing have now been reduced and Affordability is also factored in by the c.c. companies, borrowing on some Balance/Bank Transfers are now nearly 4 years to pay back + fees but say £10k + 3% fee = a borrowing rate of .75% i.e. cheaper than most loan/mortgages just remember to pay off every month by D/D and pay off or transfer to another Balance Transfer before due date.

Get other people's money. If you borrow an investor's money and obtain more interest on his investment within 3 months than a bank in a year then he is going to reinvest in you several more times.

 

 

 

Finance