🍦 Smash the Glass Ceiling, Unleash Business Growth

Hey friend —

Long time no see!

It's been a while since we've sent out any content, and I can give you a list of excuses, but the only real one I have is that I'm very good at procrastinating! 😅

As with many of you who are most likely business owners too, you will surely know all too well the plate-spinning, task-juggling job we all go through and while some of us put off the admin tasks or the accounting to-do list, my biggest task to dodge was the marketing.

Note the 'was'. I'm a changed man now. I think. We'll see. Feel free to keep me accountable! 🤔

So I wanted to do something different with The Hustle, which we had as our newsletter before. It was feeling stale. It was feeling low in value and distant to all of you. I'm not an expert in copywriting and certainly not an expert in expressing myself or being vulnerable, but I believe I have valuable insight, tips and experiences that I have a duty to share and that I think you'll find helpful and actionable.

With all that said, please let me introduce you to Level Up with Cone Accounting. This new 'new' newsletter will be weekly every Thursday and will cover different topics each week that we, as business owners, face as challenges or roadblocks or sources of procrastination!

Most importantly, it's to find the joy in the journey of owning and running a business. To provide some inspiration for your growth and development of the business and self. You're not alone, and whether you're a high-tech creative agency, a small boutique cafe, an e-commerce store on Shopify or a solopreneur getting started, there's a good chance you'll vibe with our content.

This 'intro' above won't be here for future content - I felt like I owed everyone an explanation of where I've been (or haven't been!) and what this will be moving forward.

Any feedback or ideas/topics you'd be interested in me covering are always welcome, and I hope you get value out of this new content!

In the UK we have created a small business glass ceiling. It's one of the things I get asked about the most by potential clients, existing clients, generally from friends or family, and it's one of the more significant pain points we come across with small business owners.

“I worried I'm nearing the VAT threshold. What do I do?”

The answer 'Well, go VAT registered' is perhaps too simple because this usually isn't what they're really asking.

😫 They're asking if they have to go VAT registered.

🥺 They're asking if there's a way to keep the turnover below the £85,000 turnover threshold.

😭 They're asking if their success so far will be undermined by HMRC and the dreaded VAT.

A lot of this creates a glass ceiling where people try to keep their turnover below £85,000 so they don't have to charge VAT, they don't have to deal with it - not realising that it's long term going to hinder the business and their fears that their price increase will mean no one turns up to buy from them anymore are unfounded.

It underpins a fear that you're not worthy or valued. Adding 20% VAT to your price will automatically mean everyone will shop elsewhere.

It's a fear that everyone will stop using you from one day to the next. It may seem illogical or irrational to some, but it's something that, mainly for business-to-consumer (B2C) businesses, feel and worry about.

Our VAT threshold of £85,000 is one of the highest when you compare to other countries in Europe where it’s not uncommon to see the threshold at around €22,000-€35,000 turnover. Spain even starts with €0 turnover so you’re required to be VAT registered from day 1 of your business.

Therefore, VAT's turning point in those countries is whether you are a hobby business rather than a fully established business earning a living.

Having a higher threshold seems good on the surface but causes issues down the line. It simplifies admin and potential stress as well by putting it off, although this is simply kicking the can down the road, so to speak. It creates a dark cloud looming in the distance, something that people seem to dread rather than treat as a milestone of accomplishment and achievement.

This comes down to mindset more than anything and belief in your product and/or service - removing the barrier or glass ceiling should be a milestone ticked off and not a dreaded battle to keep your turnover lower.

If your business is generating that level of turnover, this isn't a fluke.

💰 This is something people value and buy from you.

🚚 The exchange of product/service for money.

💡 Your idea.

📈 Your business is doing that well.

The biggest concern people come to me with is that everyone will leave.

'My customers won't buy from me again.'

'I can't compete as my competitor isn't VAT registered, and they can undercut me.'

'I'll be too expensive.'

These all come from a place of fear and something you cannot know to be true.

Every customer will not leave. The majority will not even bat an eyelid.

The ones who do, that's fine - everyone has a budget they are willing to pay for a chosen service and quality level.

We'll cover pricing in a future edition of this newsletter, but valuing what you do and what you bring as a business is paramount, as competing on price is a race to the bottom.

The ones who do leave will be replaced by new customers who, contrary to popular belief, do exist, and they are out there and looking to be served by your business. There's a price point for everyone, and you will fit someone's budget.

Tools like Xero or Quickbooks Online can assist with VAT, although we recommend leaving VAT to an accountant. (Spoiler: yes, I'm biased 🤓) 

VAT is one of the most investigated taxes by HMRC as it's the most prone to errors and mistakes.

Peace of mind that your VAT return is taken care of for you is a weight off your shoulders - you're already spinning enough plates, and choosing the right plates to let other people take care of is vital as you grow.

Make sure not to spend the VAT you receive from your customers and put it aside.

Using a tax pot like within Starling Bank or Monzo can help with budgeting it, or using a savings account to set aside 10-20% of your money received.

20% is conservative and almost certainly guarantees you'll have enough for your VAT return.

10% is accounting for expenditures you may or may not have to bring the VAT bill down and could leave you trying to find that missing amount - it is best to check with your accountant if you need assistance as they'll be able to help!

And before anyone asks, no.

Just no. 

You should not ABSORB VAT into your current pricing. 🙈

Please don't do it.

No matter how much fear or temptation, we have never seen it work out with clients who have come to us having done this or clients who have moved on having done it - If you charge £100 right now for something, you need to charge £100+VAT = £120 moving forwards after being VAT registered. £20 is HMRC's, £100 is yours. You are not out of pocket and, in fact, can claim the VAT on your expenses which you couldn't do before.

If you absorb it, you're still receiving £100, but now HMRC wants £16.66 of this. You're doing the same work and only getting £83.33 per sale. Literally the same amount of work for LESS money. You wouldn't do that usually, but VAT can sometimes make us panic, make us irrational that no one will come, no one will pay £120.

I bet you 3 things;

There will be someone doing similar to what you do, charging that same fee right now.

There will be people charging less than you already. Already cheaper than you right now.

There will be people charging 2, 3, 5 times as much as you right now.

There's a customer and a price point for each one of these.

It's not about the price. It's not about the VAT. It's about how you value yourself and your business.

It's about demonstrating your value and worth and celebrating the achievement of reaching the milestone of being VAT registered. That's no simple feat. You're onwards and upwards, you're growing, and you've gotten this far already.

Once the glass ceiling is broken, let's see how far you can go. Maybe, some would say you’re Kenough.

Written and edited by Ben Nacca