Spring clean your business

Spring is here and there's no better time to give your business a good, old-fashioned spring clean. To help you out, here's an expert guide to giving your business a bit of spit and polish.

1. Clean up bad debts now!
Working with the premise that cash is king, the first place to tidy up a business is to deal with customers that simply don't pay.

SEO spring clean - get more website traffic for Christmas

Chris Gebhardt, a director of firm William Buck says many business owners are too lenient with their terms of trade. He recommends sticking to a strict credit limit for each customer based on credit due diligence.

"Nothing is easy, apart from cash up front," he says.

To reduce bad debts this spring, it's time to:

Enforce terms of trade earlier.

Look at progress payments, for example, some payment upfront to secure goods/services and further payments as the job progresses. "These early payments should cover the cost of the job," says Gebhardt. Then payment on delivery will represent the profit component of the job.

Install appropriate KPIs around accounts receivable and monitor them regularly. Communicate with clients and customers regarding fee and price disputes. Don't allow additional credit when a customer is already outside the terms of trade. (Alternatively, rather than sever the trade, demand COD for any further orders/services.)

Review current Terms of Trade for reasonableness and appropriateness and prepare new terms if necessary.

2. Clean up your shop window
When a company's website is stale it's easy to spot - the CEO's last blog was 12 months ago, there is no new news on the site and the latest PDF newsletter to download is from Summer 08/09.

This spring, it's time to jump online and try and objectively assess how fresh the company's website is. It doesn't have to be an extreme makeover, but get rid of the stale material. A website is a company's shop window after all.

Principal of Switch Digital Josh Richards says most of his clients are time poor and struggle to develop and deliver compelling content. Good content attracts customers "so helping clients solve the content dilemma is a priority for us," he says.

To give your website a spring clean start with:

Removing stale content from the website urgently.

Sit down and determine the key goals for the site. "Is it direct sales, phone and email inquiries for example?" says Richards.

Ask all staff to have a good Google session checking out the competition domestically and internationally and then look at where the company's website sits, its strengths and weaknesses and the essential new ways the website needs to be marketing online. "Often there are new trends or better ways of selling your services that you can learn from markets where SMEs have had more time on the web," says Richards.

Gather company news, relevant media and links to load onto the site immediately based on the new priorities for the site. "If it doesn't meet the [company's] needs, " says Richards, "it doesn't make it onto the site."

3. Spruce up your computer systems
Come on, 10,000 emails in your inbox, it's time to clean it up. Nathan Warnecke, managing director of Melbourne-based specialist SME IT firm Itro has a quick way to free up the most space in an overstuffed mailbox.

Warnecke recommends searching for items with attachments larger than 1Mb - such as the wacky videos, photo albums and attachments that can then be easily deleted. "Keeping your mailbox to a reasonable size will certainly improve the performance of your system," he says.

The most critical piece of spring-cleaning of computer systems is making sure the system has reliable backups. A bad backup system can cripple a business.

"Data recovery processes from failed hard drives will be at the very least expensive and maybe impossible," says Warnecke.

"The time it takes to recreate all your critical files, templates and financial information will far outweigh any costs related to keeping a good backup system in place." [Believe me, the author of this piece has paid a data recovery bill and they are exorbitant.] Don't put it off any longer.

Clean up the inbox.

Invest time and money in a reliable backup system.

4. Get mobile spending under control
Managing director of phone bill analysis service Full Circle Group Tony Simmons has seen companies slash 20% off mobile phone bills by simply showing employees a bill that highlights their personal calls including after hours and weekends spending.

"We find personal calls are often 40% of the costs. It should be about 15-20%. If it's not checked and businesses are not actively looking at it, staff will continue to use it and see it as part of their salary," he says.

Simmons has found that clients haven't needed to enforce this rule, that showing employees the data is enough to make staff more conscientious.

Simmons believes businesses have to face facts about the phones they use. "Business owners must ask themselves: ‘What is driving the use of the phone? Does it need every bell and whistle. Is it a genuine business application, like tradesmen emailing quotes straight from the site, or is just a desire for a nice phone?'"

"If it has no business benefit, by all means downgrade the phone," he says. Simmons estimates SMEs can save up to 60% on phone costs. Many of SMEs spend $25,000 a year on mobile and broadband. "If we can make a small dent in those bills that is a pretty good return."

Customers can upload their phone bills for scrutiny and the company's technology analyses data and costs from a phone bill and looks at the other plans across the business.

"We find out if you are overspending or under spending," he says. The service also takes into account mobile reception and other variables that make it hard for people to change to a cheaper provider if they won't have the coverage they need.

For Simmonds, it is always worth shopping around. "The networks are always improving network and price, the deals are completely different from a year ago," he says.

Analyse phone bills to look for savings. Research new mobile plans. The market changes constantly, so keep the plans up-to-date.

Keep a lid on staff using work phones for excessive personal phone calls.

5. Crunch costs
During the Global Financial Crisis accountant Rob McAdam, a director of Queensland firm McAdam Siemon has seen many of his business clients going through costs with a fine toothcomb.

"It's not a bad idea for the owner to regularly sign off on all accounts for a month or two," he says. "When you start questioning costs it sends a message to staff."

However McAdam cautions clients who get to fixated - the business must strike a balance or it creates inefficiencies. For example, a $20-a-week spend on fresh fruit for the office is a good investment - it's a gesture of goodwill, it's healthy and is a small perk for staff.

McAdam does advise clients to take a long-term view. Cutting back dramatically on storage space, for example is another risky strategy. "As the market picks up, you need to be able to operate," he says.

Rent is another cost that must be closely considered. "Basically in good times, rent should be 8% of turnover, now it's double that for many businesses," says McAdam.

This year, McAdam has seen clients save $6,000 on rent over six months through rent relief. Landlords do agree to rent relief, particularly in areas such as industrial parks where many tenants have not survived the GFC. Remember, if you don't ask, you don't get.

6. Ensure supply agreements are watertight
Lawyer and principal of commercial firm Omond & Co, James Omond, recommends business owners spring clean their supply agreements and ensure that all the paperwork is in order to avoid problems "if things go pear-shaped". Here's his spring checklist:

Written terms of supply (and purchase as well).

Communicate these terms of supply to customers and keep a written record for proof of receipt of information.

Terms must include a right to apply interest on overdue accounts and specify what rate this is by reference to a published reference rate. "If you don't," says Omond. "You are not allowed to charge interest unless and until you issue court proceedings."

Include a "retention of title" clause (this is also known as a Romalpa clause) when selling goods - this allows repossession of the goods if the customer doesn't pay. "And if they go bust," says Omond, "it bumps you up the pecking order, ahead of even secured creditors."

7. Keep your tax affairs nice
This is an unavoidable spring-cleaning chore.

If the business cannot meet its tax obligations this spring, get on to the tax department quickly.

Lodge paperwork on time.

Try and pay at least some of the bill.

Micro businesses with turnover of less than $2 million have a 12-month interest free period, however if a company does not meet its commitments and defaults, the interest applies right the way back to the start.

8. Get up close and personal with the fundamentals of the business
Not every business owner really understands financial data. This spring it is time to ensure that the financials you are receiving from accounts are timely, accurate and make sense.

McAdam's clients receive monthly score cards that spell out the health of their business in layman's terms. The system, using EIS software is designed for clients who aren't brilliant with a P&L statement. The reports include green ticks for good figures, red crosses for the bad news, plus arrows to announce whether this figure is trending up or down.

Clients also receive an overall grading from A to D, graphs of the scorecard trends and fundamentals such as business' liquidity, working capital, asset usage, efficiency, gearing and profitability. The reports start from around $400. "There's no use having an accountant show them a P&L sheet if they can't interpret it," says McAdams.

9. Make the office cleaner and greener
"One of the best things you can do is get people to get rid of their crap," says global innovation leader for Geyer, Laurie Aznavooria. She also recommends buying a good scanner and hiring a "college kid" to come in and scan essential papers, then get rid of the paper.

Continue to enforce basic greener practices such as double-sided printing, energy-efficient light globes, standby power switches and green power, however these practices are not going to make a huge difference to a company's carbon footprint.

"If you want to go greener, get more strategic," she says. Cut back on business travel, encourage staff to take a bus rather than a taxi and offer showers and bike racks for cycling commuters.

A critical way that companies can improve their workplace productivity is to look at ways to make staff feel more comfortable and more productive.

Wireless networks, different workspaces away from the traditional desk and opportunities for staff to customise their workspace will give workers an element of control over the way they work.

This spring, take the time to look at new ways staff can work. For Aznavooria, the GFC is a time when many businesses are not flat out. They have the time to step back and think about how they run their business, how they can attract new generations of workers, how they can boost productivity. "Use this time to think, create strategies now so that when it gets busy again, you will be on the right track."

10. Be a better time manager
Sit back and watch the 'Last Lecture' from Carnegie Mellon professor Randy Pausch in the last days of his life, cut short by pancreatic cancer in July 2008. If you haven't already, join the 10.2 million on YouTube who have.

This article first appeared on SmartCompany.com.au, Australia’s premier site for business advice, news, forums and blogs.