Whats the Return on Investment from Bartercard? Reply

To join bartercard there is a “once only initial investment” so how can we quantify our return on investment?

Every business has had to make an investment in their business to get it started, for example a hairdresser would need to fit out her shop with fixtures, fittings and equipment, so in accounting terms how can we evaluate the investment that we make when we join bartercard?

1. Pay Back Period – how many years does it take to get back our initial investment in profits – for normal investments anything less than 3 years is considered good – because Bartercard specialise in selling spare capacity and as such only product replacement costs are relevant, its likely that the profit on each sale will be around 70% profit (as used in our hairdresser/accountant trading story) – as Bartercard guarantee to get more than the joining fee in sales in the first year, the payback period is likely to be less than 2 years – so thats an excellent return on investment

2. Average Rate of Return (ARR) – this method of appraisal takes the average of the profits made over say a 3 year period (or the life of an asset) and shows the result as a % of the initial investment I estimate a 70% ARR, obviously this will vary from business to business, but I am sure you will quickly be able to work out the return for your business

3. Net Present Value/Discounted Cash Flow – this method of appraisal takes into account the time value of returns, its often considered the best and most precise way to assess returns, to calculate the Net Present Value you create a cash flow table year 0, shows the investment as a cost, then the net profits are shown in the subsequent years and a factor is applied to remove the effect of inflation, the higher the NPV the better the investment

4. Internal Rate of Return – this is also described as the effectie interest rate, to calculate this we increase the Discount Rate in the DCF (3 above) until the NPV equals zero and that produces the return rate

If you need help doing this analysis for your business drop me an e mail

steve.bicknell@uk.bartercard.net

Increased Sales without discounting, guaranteed! Reply

The reason most businesses join bartercard is to increase their sales. Isn’t that what everyone wants? it’s why we go networking, why we advertise and its generally the reason we went into business in the first place – because we thought we could earn more (by selling more) than working for someone else.

When you barter using bartercard you swap your services at their full value, there are many discount schemes now being promoted, they generally get you to heavily discount your product/service and charge you a fee on top. The theory being that the new clients who use the discount scheme will want to come back and pay full price, it could work, but I suspect many people just take the special offers.

Bartercard now have 75,000 worldwide members, so there are plenty of businesses to swap with and Bartercard give a guarantee that they will get sales for your business. So if you want more sales, why not give it a go?

steve@bicknells.net

Will the Euro exist in a years time and do we care? Reply

A growing number of economists and financial experts are predicting that the Euro will fall within 12 months and there will be a return to individual currencies, here is a recent article from Business Insider

http://www.businessinsider.com/economist-charles-gave-the-euro-will-not-exist-in-one-year-2011-6

You can understand why with the problems of Greece growing ever larger and the risk of problems spreading.

From Britains point of view, its a good job we didnt adopt the Euro but we have still had to bail out our european friends, the last thing we need is to have to write off debts at a time we are desparately trying to balance our own books.

steve@bicknells.net

Can strike action ever be a positive thing? Reply

On the 30th June 2011 we are likely to see 750,000 public sectors go on strike with the potential of over 3 million workers going on strike in the autumn. The UK has to cut costs, is striking really the best way to solve our problems?

I appreciate that raising the retirement age, increasing pension contributions and job cuts are not going to be popular but strikes won’t help, positive constructive negotiation and ideas are what we need.

For those not involved in the strike action we need to work on strategies to limit the impact on our businesses and avoid further damage to our fragile economy.

steve@bicknells.net

When you buy an ERP system, what happens post order? Reply

Enterprise Resource Planning systems such as Microsoft Dynamics can be configured in many ways.

Prior to Order, you will probably have issued an RFP (Request for Proposal) and had a bid process. Typically a Dynamics system might start from £200k with probably half the cost or more being for consultancy.

Once you have selected your supplier, the first stage is Systems Design, I have worked on many of these, basically, you gather information on how the business works now, right down to fine detail such as how control accounts are used and what reports are currently used, then you consider what is possible with the new ERP system, what is the best way to perform tasks, how are results reported, some of the information will be flowcharted and a route map drawn up to get from where the business is now to the new ERP system. It is a highly detailed process, my reports were typically 200 pages long and the supplier and client sign off the report before configuration work starts.

Next the system experts get to work and make a mock up of the system and then workshops are done with senior management and directors to makesure the clients instructions have been correctly intrepreted, this process is then signed off.

The next stage is Training, normally immediately before the system goes live.

If you need any help let me know.

steve@bicknells.net

How to account for 46,343 members eating breakfasts 4 times a week Reply

For anyone running a large networking or membership organisation coping with thousands of transactions of the same value is a challenge. In the case of 4Networking, Tuesday to Friday thousands of members are booking breakfasts online for £10 each (they all need a VAT receipt), so what information do they analyse, well they need to know, which member or visitor, which group/venue, which area leader, for visitors they need to know the number of visits (so that they can charge when the maximum is reached), when membership renewals are due. Thats a lot of information and to run an efficient network you need to quickly see the results and take action if attendees drop.

The solution that we used was to have a description made up of numbers separated with a # so that you could quickly extract results for any data group or multiple groups.

The other challenge faced is that Memberships cover a future period and to comply with revenue recognition rules the revenue must be phased over the period to which it relates.

steve@bicknells.net

Knowledge Transfer Partnerships – KTP Reply

I attended a excellent presentation today from Bournemouth University and Dorset Cereals on KTPs, under the scheme a Gradute is recruited jointly by the company and the University and placed at the company for up to 36 months. You also get University support of half a day a week.

The Graduate is engaged to work on strategic projects within the business and the business contributes a 33% to 50% towards the cost, the rest is grant funded.

It sounds like an excellent scheme as you not only get a graduate but also get help from the University too.

Find out more at http://www.bournemouth.ac.uk/businessfunding

steve@bicknells.net

Could Referralkey.com work for your business? 1

In the last few days I have started receiving lots of requests to become a colleague on Referral Key. Its Free, its measurable, you set a price you are prepared to pay to get successful referrals, so it sounds pretty good to me, but is it any better than any other form of social networking? I am always happy to refer business to people I know without looking for financial reward because I believe in the ‘Givers gain’ philosophy.

steve@bicknells.net

Training Grant of upto £1000 Reply

Matched funding is now available from Skill South East for Leadership and Management Training, the maximum funding is £1000 Grant when you spend £2000 on Training.

Provided you have at least 2 employees and can show that your business has the potential for fast growth you should qualify.

Bicknell Business Advisers are approved providers but we also have access to bartercard trainers who can provide training too.

If you want to know more drop me an e mail steve@bicknells.net

Sharing Profit without losing Control Reply

Retaining talent or to give special rights to specific investors or creating an incentive for associated businesses to use your company are all good commercial reasons why you might create multiple share classes.

Normally you would have Class A Shares with voting rights (so that the ownership is kept unchanged) and the other Classes of Share (for example Class B etc) would receive a share of the profits via dividends. Setting these classes up is quite straight forward and guidance is available from Companies House.

But watch out for the Settlement Legislation(rules which seek to prevent individuals diverting income to pay less tax), take a look at this link

http://www.rossmartin.co.uk/index.php/sme-tax-news/35-sme-tax-news/451-a-new-settlements-case-with-a-twist

steve@bicknells.net