Clean It Up
UK Floor Cleaning Forum => Carpet Cleaning Forum => Topic started by: Tony Rowley on March 16, 2012, 09:52:54 pm
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Do you do/use them?
Now getting on a bit (at the grand old age of 39) and looking to the future to build a bigger better business that will either see me into retirement or can sell on as a going concern to fund my retirement( also don't want to be actually cleaning carpets myself in say 10 years time).
I was starting on a business plan last night for the next three years, projections etc etc with some software I got from Barclays and just wondered how undepth you would go, do you find business plans a pain or do you think it helps plan for the future and help you set yourself goals?
I know they are to a certain extent a work of fiction as you cannot predict the future but I found it beneficial to look at forecasts and set goals for yourself and your business.
Tony
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Do you do/use them?
No
Call me old fashioned but I've got better things to do with my time other than writing down what I've done in the past, what I'm doing now and what I'm going to do in the future.
Lifes too short and this industry changes too quickly to have 5 year plans.
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You know what they say "to fail to plan is to plan to fail" I guess it depends on your long term goals, if your happy making a wage then maybe a busubess plan would be a waste of a couple of hours of your time but if you want or think you can do more it would be a couple of hours well spent.
Tony
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Burke ;D
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Burke ;D
Yes you are, probably you should have a royal seal.
Clearly constructive posting does not apply to you.
So Intelegent yet so.......... Can't really find the words Paul.
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Burke ;D
.......So Intelegent yet so..........
What does that mean?????? Never come across that word before
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There have been lots of studies that prove setting goals is a no brainer, they make a big difference to performance even if done poorly.
Done well a business plan can keep you focused, motivated and on track.
Problem is, there are people who get on with it and get stuff done, even though they could have done it better with a plan and there are people who procrastinate and a business plan is yet another delay tactic as is too much research, flitting from one thing to another etc etc.
So Tony, depending on which type of person you are there's my answer.
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Good post wynne, I started the thread because I thought it might be constructive but so far it looks like it won't be. Genuinely wanted to know others points of view. It is good to have a plan/ goal except for Paul moss who thinks that if you have a plan you are a Burke (top businessman he is)
I know where I want to go as I outlined in my opening post. Try to start useful debate and still get poop down, there is absolutely no pleasing you people.
Tony
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I have a business plan but it isn't written down. It's in my head and will always stay there. I'm good at extended thinking and goal-setting mentally without having to commit it all to paper or whatever... but the down side of that is sometimes I get overload. Sometimes I'm guilty of procrastinating too, but I'll tell you more about that later :)
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I'm the same Jim I start something and t
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There have been lots of studies that prove setting goals is a no brainer, they make a big difference to performance even if done poorly.
Done well a business plan can keep you focused, motivated and on track.
Problem is, there are people who get on with it and get stuff done, even though they could have done it better with a plan and there are people who procrastinate and a business plan is yet another delay tactic as is too much research, flitting from one thing to another etc etc.
So Tony, depending on which type of person you are there's my answer.
Says it all.
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I would say this, you must have a plan.
YOU have to plan for
How big you want the business to grow.
What turnover you want to achieve and by when and by how.
Do you want staff.
How do you plan to put "goodwill into the business"
Anyone who says they don't care to plan for the future should stop and think
If you wish to retire at even 65 you could live for another 35 years, what are you going to live on?
Pension, Savings, Wifes Life assurance, state pension (only if you have 30 years of ni).
My advice would first be make sure you use up you tax free allowances and get an ISA every year and one for the wife.
I would then look at buying shares and start building up a good portfolio, over 25 years, you will get a good return. Even today they are saying values will double in 10 years.
One thing i would not do is get someone else to invest your hard earned, from accountants to financial advisors. I have only ever some across people who want a good slice of your money for doing very little.
You could of course just keep plodding on cleaning carpets,
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Very few Carpet cleaners have an exit plan or any plan at all , for me carpet cleaner is just a cash generator to fund far more lucrative property deals , I know half a dozen millionaire carpet cleaners , a couple of them on here.
The vast majority who I have met just struggle on week to week earning a wage , growing older with no real thought for retirement... such a shame.
Anyone has it in them to make themselves famous in their own town or city as the first choice for cleaning, it does not matter if you are a full house for 50 quid merchant , or 3 pounds a ft rug cleaner, whatever market you aim for there is money to be made.
I always have a written plan for the short medium and long term in my filofax and refer to, and measure it regularly, this was taught to me by the guy who sold his company for 18 million 7 years ago , Chem dry uk .
Although I have made and lost a lot of cash several times this method works for me and many others.
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Tony
Subject to which type of person you are as described by Wynne I think for most people it is a very good idea.
The power of business plans/budgets are many but probably the two most fundamental are that firstly it can flag up major problems early thus allowing you to adapt and secondly, although probably the first reason flows from this, is that the power of a budget is not so much about whether you stick to it but by identifying variances you are forced to analyse what is going on.
So for example if t/o is lower than budgeted for, you can (if you have no plan) delude yourself that all is well, or you can think through why it is so using your budget. Perhaps you've been off ill for a couple of weeks, or perhaps the weather was particularly bad or perhaps you were just unrealistic in your t/o expectations. Whatever, if its set down you will be forced to confront the gap between reality and expectation.
If your plans are very simple or if you have experience of this type of planning then often it can be held in your head. THe fact that you have several years accounts will in most cases be sufficient if you analyse them to work out if you are heading in the right direction or are slowly sinking through a combination of not enough t/o; too high o/heads; or taking too much money out of the business.
However accounts only look backwards whilst a budget looks forward and you can play around to your hearts content say boosting advertising and seeing the knock-on effect on profit if t/o rises in line or indeed if there is no rise in t/o.
I hope this answer is more in line with what you wer eexpecting.
Rog
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I think a part of business planning should be planning for problem, you need to ask your self..... what if
what if i lose my licence
what if i break my leg
what if my van engine blows up
what if my pumps goes
what if I'm sued
if you have an answer for every 'what if' then things should go OK
as an example I get a new van every 3 yrs so its always under warranty,m this covers all the 'what if' s that come from my van, I have every spare i need from engines to pumps, this covers the 'what if' that arise from machinery breaking down
I think the biggest threat to a business is the unforeseen emergency.
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Here's a book that may be relevant and if nothing else may make you want to change what's in your business plan.
http://www.amazon.co.uk/ReWork-Change-Way-Work-Forever/dp/0091929784
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Very few Carpet cleaners have an exit plan or any plan at all , for me carpet cleaner is just a cash generator to fund far more lucrative property deals , I know half a dozen millionaire carpet cleaners , a couple of them on here.
The vast majority who I have met just struggle on week to week earning a wage , growing older with no real thought for retirement... such a shame.
Anyone has it in them to make themselves famous in their own town or city as the first choice for cleaning, it does not matter if you are a full house for 50 quid merchant , or 3 pounds a ft rug cleaner, whatever market you aim for there is money to be made.
I always have a written plan for the short medium and long term in my filofax and refer to, and measure it regularly, this was taught to me by the guy who sold his company for 18 million 7 years ago , Chem dry uk .
Although I have made and lost a lot of cash several times this method works for me and many others.
;D Good old Phil.
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Yeah Big Phil , the first time he came to my house ,he turned up in a beat up rusty Montego estate, told me I would make 50k a year net cleaning carpets.
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mm.... the old biz plan eh :)
Got loads of really positive stuff to say on these as my 5 year biz plan/Targets were complete in 2.5 years and my 3 year plan after 8 months and now ive got a 3 year biz plan and two 5 year biz plans on the go, no i dont set them low at all and the other half thinks there set too high but they give you something to work towards MORE of a personal guide line as you sort of deviate along the way the more you learn about each respective field.
but there is no simple ans here cause its down to the ability and craft of the person working on or deploying the plan.
Jas L makes some valid and correct comments as I know for a fact he has Made and spunked some serious ££££££ over the years, and yes carpet cleaning is a finance company for other higher yields if your a business person in the 1st place.
In all honesty Ive been debating long and hard about giving up my off site Cleaning work but it's £xxxx of pre booked worked and a lot of cash ;) to bin that i worked reasonably hard to build up in a short space of time, we have come up with a solution tho.
Yes Im all for biz plans and if you go into biz for yourself and dont even have an idea in your head where you want to be that biz in the near future then your still mentally an employee that wants break free of the system but just not there yet, again all IMO
and that is just small minded
you small minded folk out there know who you are ;D
( if you have ask yourself if are, then you are ....Fact ::) )
R.Montana (TRP.com)
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You don't need to plan - you need to aspire! I aspired to be exactly where I am today and everything I ever got for my self and my family came through making my aspirations a reality. Business plans and sales forecasts are for bank managers and accountants. What you do need is to know what your break even point is, what your costs are and understand the relationship between cost and profit and then go out the front door and make your dreams come true - simple!
Simon
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Yeah Big Phil , the first time he came to my house ,he turned up in a beat up rusty Montego estate, told me I would make 50k a year net cleaning carpets.
Yeah, I remember in the very early days when things got so tight up there as they grew the business a baliff arrived mid training session. They sailed close to the wind to get it going but look who's laughing now. Just goes to show if you have a get out of jail card are you really commited to making it work. With no way back you HAVE to make things work.
Al.
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Simons right you need to know your outgoings, and a breakdown of costs without those your not managing, your re-acting
But a plan is better doing it makes you proactive, I know what we must do on average a day to break even, its a fair amount, but nice to know where you stand on a daily basis, weekly, monthly, yearly ect.
Also business plans are handy for budgeting, if you made 20K profit and it 30 days till the end of the year and you need a new van best time to buy it would be end of the year spend the 20K profit and pay no tax for that year.
I know the barclay package and it not bad very nice to know where things are going and how much, using it I notice that we were getting over billed for telecoms and saved us £2k a year, which is going towards the new eco friendly 224bhp turbo nutter engine in my next van.
plan ahead but don't spend all your time doing it would be my advice
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How do you make God laugh?
Tell him you plans.
Yes, I have plans, I carry them around in my head and scribbled on numerous pieces of scrap paper, but I know that`s crap. Another skill to learn. Good fun this carpet cleaning, init.
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"if you made 20K profit and it 30 days till the end of the year and you need a new van best time to buy it would be end of the year spend the 20K profit and pay no tax for that year."
I dont get this.
Obviously we all have personal bills to pay where the profits usually end up. So what do you do when you buy that van? Borrow from the bank?
Derek West was saying he pays no tax or very little, maybe it was a joke ( I dunno ) but if you pay no tax, you arent making any profit, so how do people survive personally on 0 profit?
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Warren
I am no expert and everyone's individual circumstances will differ but you can have a company and draw a wage up to the current tax threshold and pay no tax, put your wife on the books assuming she has no other income and do the same, this is what the politicians used to do( or may still so) to earn extra money.
The profit being referred to is what you would pay corporation tax on at whatever the rate is, I think currently 20% so it would make sense to invest the money back into the company on an asset like a van or other equipment to lower your tax burden.
The above is assuming a limited company and not a sole trader, again I am no expert so I could be wrong.
Tony
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And to Paul moss your threat of physical violence to me did not go unnoticed,
you keyboard cowboy.
Tony
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I believe a van would have to be depreciated on the books as an asset, it wouldn't all be written off in year one, so take your accountants advice before blowing 'profit' on a large asset like a van. You might find if you blow the cash on the van you'll still finish up with a tax bill and have no cash to pay it and a cash flow problem.
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Two words: Chartered Accountant (and a Taxi for Tony)
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Allan you surprise me thought you were on the ball :) Capital allowances are 100% at the moment.
If I buy a van this month which is the last of my financial year and pay 10k that means my tax bill will be 2k less.
This applies whether you are a sole trader or limited.
As mentioned if you are limited you pay yourself a salary usualy around 90 quid a week which keeps you below the tax and NI threshold. Your profit is then taken in dividends at the end of the year (or at any other time if you wish). Those dividends are taxed as personal income but the profits of the company are also liable to corporation tax.
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John
I have always wondered about how much you can pay yourself in a Limited Company
Does Minimum wage legislation not apply to directors
if you work say 30hrs roughly £`180 a week so how can you pay yourself £90
Also is Capital depreciation this year only it seems to vary from year to year
Perhaps with budget coming everybody better go and buy new equipment
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I always do a business plan at the end of each year, just a simple thing to look at what has changed within the business and where we want to target our efforts in the next 12 months and how we are going to get there. Doesn't always work but I set objectives and tick them off as and when they are achieved.
I'd like to think that we have a sustainable business now and something that would be attractive if we ever decided to sell it and retire.
If anyone has £400K spare they can take it now! ;)
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See Duncan Bannatyne .
If thats its genuine worth well done .
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Business plans are ok for a general view of the "direction " you want to take your company / business , but I feel and know , from personal experience from another business I was running a few years ago, THE most important thing to do each month are " monthly management accounts " ie a profit and loss account every month, this will give up upto date info as to how your company is preforming, its no good finding out in month 11 of your financial year that you are not making any money.
Another very important bit of info, NEVER ever have your Business bank account and your's (and your wife's and children's ) personal bank or mortgage accounts with the same banking group !!!!
This was one of the very best and most valuable info I have ever been given in business.
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Allan you surprise me thought you were on the ball :) Capital allowances are 100% at the moment.
If I buy a van this month which is the last of my financial year and pay 10k that means my tax bill will be 2k less.
This applies whether you are a sole trader or limited.
As mentioned if you are limited you pay yourself a salary usualy around 90 quid a week which keeps you below the tax and NI threshold. Your profit is then taken in dividends at the end of the year (or at any other time if you wish). Those dividends are taxed as personal income but the profits of the company are also liable to corporation tax.
Yeah, understand the limited stuff but DIDN'T realise Capital allowance on Vehicles was 100%, will ask my accountant again now, thanks John. Anyone know a good accountant?
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"if you made 20K profit and it 30 days till the end of the year and you need a new van best time to buy it would be end of the year spend the 20K profit and pay no tax for that year."
I dont get this.
Obviously we all have personal bills to pay where the profits usually end up. So what do you do when you buy that van? Borrow from the bank?
Derek West was saying he pays no tax or very little, maybe it was a joke ( I dunno ) but if you pay no tax, you arent making any profit, so how do people survive personally on 0 profit?
only for the first 3 years warren, i'm affraid ive used all my perks now, got a whopper this year (and thats with the wife on the books) unless anyones got some advice, hmmmmm can i pay my 5 and 2 year old a wage for helping me wash the van on sunday. ;D
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My accountant told me capital allownce at 100 % finishes at the end of this tax year, and goes back to 25% per annum like it used to be, although i stand to be corrected.
So if you have made a large profit this year and looking at a large tax bill, it may be worth buying a newer van or machine in next week or so.
Andrew
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Allan you can still do it the old way it's YOUR choice. The old ways not changed it's an additional option.
You can use the old system of capital allowance and take the 20% WDA each year.
OR if you wish you can use the new AIA (Anual Investment Allowance) in which you can put 100% through in the year of purchase.
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only for the first 3 years warren, i'm affraid ive used all my perks now, got a whopper this year (and thats with the wife on the books) unless anyones got some advice, hmmmmm can i pay my 5 and 2 year old a wage for helping me wash the van on sunday. ;D
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Pension Contributions?
and yes you can pay the kids when they are 13 and over, better that than pocket money from your pocket.
Personally I think Limited companies are good as you pay yourself PAYE so no nasty tax surprises at the end of the year and if you put the right figures into a accounts package the press of a button will tell you where you stand on a daily basis.
Then during the years you have the choice of getting money out of the business completely legally by either
Taking it as wages
Paying back the directors loan account you formed at the start of the company as your existing company had value
Dividends
pension contributions ( a very good way, just pensions are performing so badly its a little off putting)
or reinvesting it to grow the company, just remember the tax man is not daft you will eventually have to take out the profit even if you keep reinvesting it for ever on your death or retirement it will be taxable so they will get you in the end. Its really just about whats the best way for you at the time.
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John
I have always wondered about how much you can pay yourself in a Limited Company
Does Minimum wage legislation not apply to directors
In short NO
A director is a office holder and say you had £10 in the bank and the company owes you for 2 hours work at £5.65 you couldn't pay yourself £11.30 without making the company insolvent thereby making your in abandonment of you directorial duties ( very simple figure but you get the idea) So your excused from Min wage regulations for that reason and a few others
Handy eh!
on the bad side if you authorise someone else to do 2 hours work ( or order a big million pound machine) and the company becomes insolvent because of it then limited or not its you that personally is liable. as you have neglected your directorial duties. Lot of people forget that one. But its real and should be remembered you usually hear about it as "money reclaimed from the directors of the company that went bust" on the news
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When I was driving around all day listening to Radio 5 I heard talk of Pension that you can run yourself.
But i do not know if it was a figurement of my imagination.
Thanks Paul , that is very handy , so I could legitimately pay myself nothing ;D ;D
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When I was driving around all day listening to Radio 5 I heard talk of Pension that you can run yourself.
But i do not know if it was a figurement of my imagination.
Thanks Paul , that is very handy , so I could legitimately pay myself nothing ;D ;D
Yes but if you were working you'd be wise to pay yourself the £90 figure mentioned previously as you could take that without tax or ni contributions, unless the business had no income then you could make the company dormant, pay yourself nothing, and claim job seekers allowance
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Allan you can still do it the old way it's YOUR choice. The old ways not changed it's an additional option.
You can use the old system of capital allowance and take the 20% WDA each year.
OR if you wish you can use the new AIA (Anual Investment Allowance) in which you can put 100% through in the year of purchase.
Have I missed a trick here then Craig as I though AIA was as others have suggested and just for 'new starts'. I have to admit I'm crap at this side of the business, we just pay an accountant to sort it, we get a bloody big accountancy bill and he tell us how much he recons he's saved by doing what he's done. Perhaps I should gem up a bit more and not just take his word for it :-[
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No not for new starts I believe it came into effect in 2010.
It one good thing this governments done for small businesses.
I put my last van I through as AIA 100% had a tiny tax bill 8) :)
The new start thing does ring a bell I think that was the situation before 2010.
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Labour brought 100% capital allowances in a good few years back. These lot were going to scrap it but had second thoughts. Sure it runs out this month though.
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No but it has been seriously reduced max amount next year, http://www.hmrc.gov.uk/budget-updates/autumn-tax/tiin1315.htm
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When I was driving around all day listening to Radio 5 I heard talk of Pension that you can run yourself.
But i do not know if it was a figurement of my imagination.
I think you mean Self-invested personal pension (SIPP)
http://en.wikipedia.org/wiki/Self-invested_personal_pension
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I did an nvq in business management several years ago and for some time was a member of the institute of business management. There is a lot of emphassis on business plans and if you are starting of in bussiness would be something that you would need to show people such as the banks and any other financiers.
The main point of the plans is to get people going into business focused on things that they may have no experience of such as cash flow expansion, equipment purchase and so many other aspects of business that most people would not even think of. It should be pointed out however that 75% of new businesses fail within the 1st 2 years whether they have a plan or not. This illusrates how few businesses actually stick to the plan. By sticking to a plan it should be an early indication of when things are starting to go wrong, before it is too late to do anything about it.
I personally do not have a business plan but am very focused on a lot of aspects of my business and using the programs etc that we use are able to instantly see the amount that our long term existing customer are spending, how often, much they owe etc.
Just writing a plan will get you thinking about a lot of things that are relevent so will not be time wasted, it just needs to be changed if circumstances and situations change.
Peter
www.carpetcleanercardiff.com (http://www.carpetcleanercardiff.com)
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If you are committed to Rent , Leasing Charges etc it can be very difficult to correct a situation especially if you are dependent on footfall
Perhaps in our business if you have spare funds you can throw more marketing at the problem
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The Sipp pension is your best friend if you are making money , Self invested personal pension, buy commercial , or some types of residential property , and its all deductable , the profits from it go into your pension tax free , this is how you can amass a decent wealth which can be taken at age 50 TAX FREE , 7years 2 weeks for me!
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Christ Jason that paper round in Sheffield must have taken its toll :)
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Christ Jason that paper round in Sheffield must have taken its toll :)
I grew up in Nottingham , and started my paper round in the posh suburb of West Bridgford , I used to deliver Ken clarkes (hard core conservative MP) papers , he used to make comments as he left early in the morning , like good to see someone up early and working, creating wealth etc ....
then age 14 my family moved to Hucknall the other side of town , this was a mining town , the 18 month miners strike started soon after I started my paper round , which took me through Linby mine . I soon started buying extra papers, pulling them on my bike ,selling them to police and pickets at well above cover price , no internet or other information sources in those days ..... I bought a nice RD50 as soon as I was 16 , then a car the day I turned 17 , it was all about the earning capacity.
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The Sipp pension is your best friend if you are making money , Self invested personal pension, buy commercial , or some types of residential property , and its all deductable , the profits from it go into your pension tax free , this is how you can amass a decent wealth which can be taken at age 50 TAX FREE , 7years 2 weeks for me!
As I undesrtand it,
Its not tax free, its tax deferred and I believe if you sell your shares there is a possibility you will be hit with CGT,
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Not in a pension you dont get taxed on gains, you get taxed on the income you take from a pension though .
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Not in a pension you dont get taxed on gains, you get taxed on the income you take from a pension though .
Its the same thing isnt it ?
If your pension increases in value its added to your pot as you draw your pension you get taxed.
If you decide to cash in your shares they are liable for CGT,
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You would have to earn the cash to invest in shares which you are taxed on , the cash you earn to put into a pension is not taxed , sorry for the confusion
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The short answer is YES. But so often time is spent writing a business plan maybe to convince he bank or other shareholder, only to see this valuable document languishing in drawer.
Planning is an iterative process and all the stakeholders in the business need to be using this as part of a regular review process to ensure that the plan is on track and to take any actions necessary it improve performance.
Software can help, but the support of mentor to help challenge the assumptions can be invaluable. This can be a friend with a strong record of business success or one of the many consultants who can offer their services. With regard to the latter, make sure if you go that route, that any paid for help comes from someone who really understands your market and your personal goals.
Modified by admin, advertising via posts breaks forum rules
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Get your cheque book out Peter, "the management" will be on to you ;D
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Gladf to you you agree with me Peter
Your unbiased advice will be apprechiated very much.
www.businessplanscheap.com (http://www.businessplanscheap.com)
www.petermayburybusinessplans.co.uk (http://www.petermayburybusinessplans.co.uk)
Peter
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Get your cheque book out Peter, "the management" will be on to you ;D
;D Oh yes they definitely will be Jim ;) They do take bank transfer too ;D
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Gladf to you you agree with me Peter
Your unbiased advice will be apprechiated very much.
www.businessplanscheap.com (http://www.businessplanscheap.com)
www.petermayburybusinessplans.co.uk (http://www.petermayburybusinessplans.co.uk)
Peter
Perhaps you should register those Peter, I couldn't resist seeing if they were real sites ;D
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Here's my plan.
Limit the liability and cane it into the red. ;D
Pete
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We started a SIPP last year in order to buy our new workshop, basically the funds from my pension bought the workshop through a SIPP and our business now pays rent for the workshop into the SIPP at the going rate for the size of the premises. This rent goes directly into the SIPP therefore increasing the funds in the pension at a pretty dramatic rate.
There is a £400 /year charge for the management of the SIPP. However when we come to sell the workshop any profit from the sale is not liable to CGT, whereas if I'd bought it through Lionheart Cleaning or Ian Rochester then it would have been liable. Alternatively we could rent out the workshop to another business and draw an income from the SIPP at age 50. (2yrs 10 month!)
It really is worth looking at long term plans for your businesses, as self employed people the only ones looking after your financial interests in old age is yourselves, a lot of people say "get an accountant" and yes you definately do need a good accountant, however you also need a good Independant Financial Advisor to help you decide how best to invest any spare income you have by maximising it's growth and spreading the risks. I took on an IFA 5 years ago and we meet every 6 months to look at our options.
When my daughter turned 13 she became an employee of the business as she works weekends and helps out in the office (think it was Derek West who advised me on this at a CCDO) and we also started a pension for her at the same time.
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I know several CD franchisees who did similar in the 90s , and are now very well off definately the way to go.