Blog JDW: Jobs Done Well

Key 2021 Business Trends

Key 2021 Business Trends

What are the forces which will impact your business the most this year? We think that these four trends are the ones to watch:

  • Supply chain – right sizing your stock on hand and strengthening your supply lines.
  • Working from home – office workers expect to have work flexibility.
  • Lack of qualified staff – returning NZ citizens may fill some gaps, but not in all industries.
  • Low interest loans – cheap credit, but tighter credit conditions.

Crystal ball on Cocoa Beach

Supply Chain Uncertainty

Covid-19 continues to circle the globe, and it will be several months before the vaccines have a positive impact on international logistics. In New Zealand, we have plenty of food and water for the population, but we will continue to have shortages for imported manufactured parts. The sharp drop of sea freight and air freight deliveries, recent delays unloading at Ports of Auckland, skyrocketing freight charges have made the supply of imported goods less reliable.

Does that mean holding more stock is the answer? Evaluate all your stock items and identify which ones are vital to your current business. What are the lead times? Do you have access to alternatives? Can you lock in a supply agreement on consignment? Make sure you check the supply agreements are water-tight, and you have good relationships with suppliers.

We spoke with Wayne from an Auckland engineering business. He said "Relationships with suppliers and customers are paramount to getting through this.  

"We have raw material (sheet steel) sitting on our shelves as consignment, so we pay for it when we use it, but have some stock on hand. This has reduced the stock holding by our suppliers in their own warehouses and reduces freight costs from them to us.  We forecast (as best we can in current times) to the suppliers and all parties communicate often on where we are. Currently their orders are being short shipped, so they don't know what they are going to get till it arrives. When this happens, those with great relationships go to the front of the line.

 "That said, nothing's perfect, A supplier of ours was keeping stock of a particular material type and size for us, our customer had reduced orders on us which meant we weren't ordering from them. They had a request for the same material and size and sold it from under us without telling us. When we needed it, it was gone and we had to find new supplies from others at increased pricing and limited quantities. We had slipped up with our communication to them.

"Going forward we need to continue the focus on communication for all our suppliers and make sure its two-way, not one-way. It's about being first to know what's changing, so you can act, not react."

Working from Home

The genie is out of the bottle. Now that Covid-19 Alerts have given office workers and their teams a taste of workplace flexibility, they are demanding to be able to work from home at least some of the time. Some corporates continue to have fewer people in the office and more people working remotely. This means that many will be looking for smaller tenancies than before.

An urban pharmacist advised us that foot traffic dropped considerably in the CBD, from a combination of fewer office workers and interminably long roadworks. The current America's Cup will help hospitality, but each Level 3 Alert has a negative impact on all CBD retailers.

Lack of Qualified Staff

When NZ called its citizens home in 2020, we rubbed our hands at the thought of the Brain Gain. Sadly, the returning citizens do not fill all the gaps. Marisa Bidois of the Restaurant Association says 30% of hospitality workers are immigrants on temporary work visas and that its hard finding NZers willing and able to fill vacant roles.

Panel beaters and other trades have also struggled to hire highly skilled workers from within our borders, while immigrants with work visas are unable to enter NZ. They have to be innovative in their recruitment processes and upskill current staff.

Low Interest Rates

Mortgage brokers and lenders are incredibly busy with residential and commercial lending, and borrowers are experiencing long delays getting their paperwork. Commercial lending is applying more structure to the loan book, insisting on up-to-date financials, business plan and cashflow budgets as bare minimums. We are helping many clients prepare more regular reports for lenders.

Even though interest rates are expected to remain low for some time, the banks still want to see that the business can meet repayments.


Covid-19 pressures will be with us for some time. Focus on your supply chain, employing and retaining qualified staff, workplace flexibility and keeping lenders happy if you want to succeed in 2021.

Further Reading:         

                                                      - Serena Irving

 Download a PDF copy here or contact the author

The information and examples given in this article are general in nature and are not personal investment, financial or tax advice. We recommend that you contact the author or another professional advisor for advice that is specific to your needs. Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.


Grab a Lifeline

Grab a Lifeline!

"Resurgence": an increase or revival after a period of little activity, popularity, or occurrence. It could be used to describe the return of community transmission of the deadly virus. Or it could describe the hoped-for bounce back when the virus recedes, with the help of this lifeline.

When Auckland returned to COVID Alert Level 3 in August, the Government quickly moved to offer a further wages subsidy extension nationally. The 2-week COVID-19 Resurgence Wage Subsidy payment is for NZ employers and self-employed who have had a revenue drop of at least 40% because of COVID-19 for a 14-day period between 12 August and 10 September, compared to a similar period last year. New businesses or high-growth businesses must compare against a 14-day period that best estimates the revenue decline.

Knotted Rope

The subsidy is $585.80 per week per full-time employee (20 hours or more per week) and $350 per week per part-time employee. You can apply between 21 August and 3 September 2020. If you are already getting other COVID-19 payments for that employee, you must wait until those pay periods have run out. You must retain the employees for the period of the subsidy and try your hardest to pay at least 80% of their usual wages. If that isn't possible then pay at least the wages subsidy amount.

If you claim the subsidy you must mitigate the financial impact as appropriate, such as using cash reserves, activating your business continuity plan, claiming insurance, engaging with your bank, seeking advice or support from advisers. The Regional Business Partner programme has received a financial boost so more businesses can apply for COVID-19 support.

If you haven't claimed the 8-week Wage Subsidy Extension already, it's worth working out if you're now eligible for that subsidy rather than the Resurgence Wage Subsidy (see table).

Comparison between Subsidies


Wage Subsidy Extension

Resurgence Wage Subsidy

Application Period

10 June 2020 to 1 September 2020

21 August – 3 September 2020

Period affected

Any 30-day period in the 40 days before you apply

Any 14-day period between 12 August to 10 September

Decline in Revenue vs last year / comparison period



Weeks of subsidy

8 weeks

2 weeks

Total per full time (20+hours)

@ $585.80 per week



Total per part-time (<20 hrs)

@$350 per week



Calculating the Decline in Revenue

Revenue is your gross sales before deducting expenses. For many businesses you can look at your bank data or invoice history to work this out. For example, if you invoiced $15,200 between 12 August and 25 August 2020 inclusive and you invoiced $24,800 between 12 August and 25 August 2019.

Decline in sales = $24,800 - $14,200 = $10,600.

Percentage decline = $10,600/24,800 *100 = 42.7%. The decline is greater than 40%, so you are eligible if you meet the rest of the criteria.

If you collect deposits for work to be carried out later, or if your comparison period is not indicative of lost earnings, discuss it with us. We can help you with the calculations.

 Find out more about the Resurgence Wage Subsidy, and make your application here:

Other Help for Businesses

Talk to us about whether these other lifelines can help you:

·         The Small Business Cashflow loan scheme has been extended until 31 December 2020.

·         Tax loss carry-back, tax instalment arrangements, penalty and interest waiver.

·         Tax deductions for low-value assets, depreciation on commercial and industrial buildings.

·         Regional Business Partner network for HR, health and wellbeing, business continuity, cashflow and finance management, strategy and digital capability.

·         Business debt hibernation.

·         Business finance guarantee scheme.

·         Business Mentors NZ.

We are here to help, so please reach out to us at JDW.

- Serena Irving

Download a PDF copy here or contact the author

The information and examples given in this article are general in nature and are not personal investment, financial or tax advice. We recommend that you contact the author or another professional advisor for advice that is specific to your needs. Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.

Cash Injection to Combat Coronavirus

Cash Injection to Combat Coronavirus

On 17 March 2020, the New Zealand Government announced a $12.1 billion support package for New Zealanders to combat the effects of the coronavirus (COVID-19). In addition to additional health services funding, the Government announced financial assistance in the form of wages subsidies, leave subsidies, tax changes and welfare benefits.

green plant in clear glass with coins

Photo by Micheile Henderson on Unsplash

Wages subsidies

The wage subsidies will be available to sole traders, self-employed and employing companies that have suffered at least a 30% decline in revenue compared to last year for any month between January 2020 and June 2020. Employers must declare that they will continue to employ affected employees at a minimum of 80% of their income during the subsidy period (e.g. 4 out of 5 days of the week). Employers must also have taken steps to mitigate the financial impact of the coronavirus by engaging with their bank or financial advisor.

Applications can be made through the Work and Income portal below, for $585.80 per week for a full-time employee (20 hours or more) or $350 per week for a part-time employee. The payment will be made as a lump sum for a 12-week period, with a maximum amount of $150,000 per employer.

Work and Income MSD portal for employers -

Work and Income MSD portal for self employed and contractors -

Leave & self-isolation support

The leave payment scheme will provide support for employees, sole traders and self-employed who are unable to work because they are in self-isolation, are sick with coronavirus or caring for dependents with coronavirus. It is not available to those who can work from home when self-isolating and can be paid normally by their employer.

The payment will be $585.80 per week for a full-time employee (20 hours or more) or $350 per week for a part-time employee. The payment doesn't affect paid leave entitlements and is available even if an employee is on paid leave for part of the period. Applications are made through the Work and Income portal above.

Tax relief measures

Building depreciation

Depreciation deductions of 2% diminishing value will be re-introduced permanently for commercial and industrial buildings from the 2020-21 income year. This will encourage investment and allow owners to reduce their provisional tax payments.

Low value assets

Taxpayers will be able to claim an immediate deduction for assets coding up to $5,000 in the 2020-2021 income year, by expensing the cost rather than spreading it over the useful life of the asset. From 2021-2022 income year onwards, the threshold will be $1,000 (currently $500). This will reduce compliance costs and encourage investment.

Raising the provisional tax threshold

The provisional tax threshold increases for the 2020-2021 income year from $2,500 to $5,000. This means that many smaller taxpayers will have until 7 February or 7 April 2022 to make their 2020-2021 income tax payments, instead of paying in instalments.  This measure reduces compliance costs and allows taxpayers to hold their cash longer. (Note: this doesn't affect the provisional tax payment due 7 May 2020. If you're having difficulty making the 7 May payment, you may still need to consider estimating tax down or applying for an instalment arrangement.)

Writing off interest

Inland Revenue is being given the ability to write off use of money interest (UOMI) for late payments for amounts due on or after 14 February 2020. This includes interest normally charged for income tax, PAYE and GST. The taxpayers would need to let IRD know that they are significantly affected by the coronavirus outbreak and unable to make payments by the due date. The interest write-off will be available for two years. This will assist businesses with cashflow.

Welfare benefits increasing

The main benefits are rising by $25 from 1 April 2020. The Winter Energy Payment for 2020 will be doubled. The hours test for the In-Work Tax Credit is being removed from 1 July 2020, making more working families eligible for family assistance even if their hours are reduced by their employer.

All of these measures have been designed to keep businesses operating and keep people employed. Reach out for help from your advisors and support networks, and keep your doors open.

Download a PDF version here or contact the author by email. Like our Facebook page for regular tips.

-          Serena Irving

Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.

Coronavirus Preparedness for Business

Coronavirus Preparedness for Business

Elbow bumps

Like many other businesses, we have been watching warily as the news of the coronavirus (COVID-19 virus) spreads closer to home.

If employees have been travelling overseas or are planning to travel, what are our responsibilities to all employees? How do we manage health & safety risks? What if our supplies are disrupted or people are quarantined? Is there financial relief for businesses affected by the coronavirus?

We've dusted off our crisis management plan, and asked our employment and financial advisors for their take on how businesses can cope with the pandemic. Here are our tips to help your business get through.

Keeping Employees Safe

The Ministry of Health recommends basic hygiene measures to stop the spread of infections: regular hand washing, staying at home if sick, covering coughs and sneezes and cleaning surfaces regularly. Have plenty of soap, cleaning products, paper towels available and encourage their correct use.

Each business has its own risk factors, which you will need to assess as an owner/manager. If you have a retail outlet, then a bottle of hand sanitiser by the EFTPOS keypad would be a reasonable precaution. Avoid face to face meetings with people who have recently travelled. Maintain a social distance (1metre / 3feet) when meeting others. Encourage employees to stay home when sick. If social distancing is not practical, have disposal gloves and face masks available and train employees to use them correctly.

Glen and Serena bump elbows

Our favourite alternatives to handshakes are: the Thai greeting "Sawadee" with palms together, steepled fingers and a warm smile; or the playful elbow bump suggested by our client John. Not finger guns though!

Provide employees with seasonal flu vaccination, if they want it. Contact your local GP or pharmacist for more information. Make use of mental health services if employees are anxious or stressed.

Leave Obligations for Employers

Employers and employees are obliged to act reasonably and in good faith, in accordance with the employment agreement, Health and Safety at Work Act 2015 and the Holidays Act 2003.

At the time of writing, people returning from China, Italy, South Korea and Iran have been recommended to self-isolate for 14 days.

While self-isolation is not mandatory, it is important for the health & safety of your other employees. You could require a medical clearance before allowing that person to return to work. Could that person work from home for that period?

Who pays for the self-isolation when the person is not sick? Employment New Zealand suggests that if that person is not working from home, then you first treat the self-isolation period as sick leave. If there is not enough sick leave, then by agreement you could pay from annual leave or grant them leave in advance. EMA says if a person is fit to work and the employer refuses to allow them to work, the employer must pay that person for that period (such as suspension).

Getting financial relief

Coronavirus has impacted tourism and education industries, due to a sharp decline in demand. It is likely to impact hospitality and events industries if people become anxious about going out. Other businesses have been impacted due to: supply shortages from import delays; tightening demand, both here and overseas; or customers paying slower than normal. Nick Tuffley, ASB Bank's chief economist recommends making sure you are in regular contact with your key suppliers to understand their supply chains and obvious weak points. (ASB Economic Note "Thinking about coronavirus impacts on business" 5 March 2020)

If your business has been impacted financially by the coronavirus, contact your insurance advisor to see if your situation is covered for business interruption insurance. Contact your bank to move to interest-only repayments to reduce the cashflow burden. If you need help preparing cashflow projections, we can assist you. Talk to us about a fee instalment plan.

There are a number of ways that you can get tax relief. For income tax, you can estimate your provisional tax down before the third provisional tax due date (7 May for most taxpayers). If you've overpaid provisional tax you can ask for a refund.

If you need more time to pay any of your tax obligations, you can apply for an instalment arrangement. Under certain circumstances you can ask for remission of late filing and late payment penalties. IRD will also consider a write off for serious hardship.

The Government has released its Business Continuity Package  ( which includes a targeted wage subsidy scheme, training and re-deployment options for affected employees and working with banks for working capital support for businesses. They have opted not to stop the increase in minimum wage from $17.70 to $18.90 on 1 April 2020, and we think they missed a chance to help all NZ businesses and employment rates.

Planning for the Worst, Hoping for the Best

How will widespread illness, school closures, loss of key customers affect your business?

If you're worried about the future, then your employees probably are too. Showing leadership, being proactive and communicative at this time, will do a lot to reassure your team. Ask them for input into identifying the risks and your emergency planning. We can also help you with contingency planning.

Have a communication plan. Do you know how to reach your employees, suppliers, and key customers if your IT goes down? If you can't be reached, can someone else access this information? How do you reach families of staff?

Back up your data, offsite or in the cloud. Not just your accounts, but any vital information that you need to run your business. Assess if remote working is possible and test your systems. How quickly could you be operational if you couldn't access your workplace? Practice retrieving your data, so it becomes a familiar process.

Examine your processes and decision-making methods. Could the business continue without you or your key people? Have multiple ways of accessing key information so that business can continue, despite disruption or staff absences.

Take care of your own health and your employees. Make your business more resilience by reviewing systems and mitigating risks. Seek financial help if cashflow is tight. Plan ahead to ensure that your business survives the coronavirus.

Download a PDF version here or contact the author by email. Like our Facebook page for regular tips.

- By Serena Irving, JDW Chartered Accountants

Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists. 

Useful Links:

Ministry of Health

Employers and Manufacturers Assn

Employment New Zealand

National Emergency Management Agency

Inland Revenue


Death Knell for Cheques

Death Knell for Cheques

When was the last time you wrote a cheque? With EFTPOS, electronic banking and direct debits, I haven't written a personal cheque in over a decade. But that's not true for everyone. For some, it's going to be a challenging time when cheques are no longer accepted. Especially if they don't currently have a computer or smart phone. The death knell is ringing for the cheque, and JDW has tips to help you adapt.


ACC and IRD will stop processing cheques for payments from 1 March 2020. IRD Commissioner Sharon Thompson's media release says: "Cheques are part of a paper-based world and don't mesh with the increasingly digital world we now operate in. The number of cheques being used is spiralling down and will continue to trend that way. Electronic payments are simpler, easier and safer."

IRD recommends that tax payments be made electronically via internet banking (using your bank's website or app) or direct debit in MyIR (IRD's website). In MyIR, you can also schedule regular direct debits. IRD's website also accepts payment by credit card or debit card, but a transaction fee is charged when you use this service. You can also pay your tax payments by cash or EFTPOS at your local Westpac branch. Some chartered accountants, like JDW, also have trust account services to help clients manage tax payments.

Kiwibank will stop issuing bank cheques from 28 February 2020 and will stop accepting cheque deposits on that date. Kiwibank customers have been asked to stop writing cheques on that date, as they may not be honoured. The Kiwibank website says, "There are a number of ways we can help you get prepared for this change including Stepping UP digital banking workshops, Kiwibank Tech Teas or our digital support hub."

 "The cheque is in the mail" used to be a convenient excuse when suppliers called to find out why customers' payments were delayed. With electronic payments, this is a phrase that has been consigned to history, as are paper invoices (see E-invoicing sidebar). Electronic payments are less susceptible to theft or tampering, and the funds are available instantaneously or overnight, depending on the bank. They aren't fool proof though, so take extra care if you are relying on someone else to set up payments for you. Do you have appropriate invoice approval measures, security measures such as two-factor authorisation and bank account checks for your business, to protect against theft or fraud?


Direct electronic invoicing between suppliers and business customers, using the PEPPOL standard invoicing framework, is on the way. This is going to be a huge time-saver and cost-saver for businesses: no printing and mailing paper invoices on the supplier side, no re-keying or scanning invoice data on the customer side. Higher accuracy, better security, fewer opportunities for fraud and fewer delays. When e-invoicing is teamed with electronic payment services, suppliers will be paid faster. 

To make sure that you get the most out of e-invoicing, make sure that you have a New Zealand Business Number (NZBN) and your accounting system is PEPPOL-compliant. New Zealand companies are issued a NZBN when they are registered. The major accounting system providers, Xero, MYOB and Reckon, are due to make announcements about e-invoicing in early 2020.

Cheques are being phased out and this is welcome news for anyone who has had to balance a cheque book. But for some payers, alternative methods of payment are beyond their current abilities or resources. If you find the removal of cheques a challenge, contact your banker or chartered accountant to discuss how you can make payments easier.

Download a PDF version here or contact the author by email. Like our Facebook page for regular tips.

- By Serena Irving, JDW Chartered Accountants

Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.


Scaling Up

Scaling Up

Petronas Twin Towers

A Cautionary Tale

When to scale and how fast? Sales are booming for the first time, so is it time for fancy new offices, more staff and more powerful equipment? I know of a tech company which grew too fast: hired more salespeople and developers, got into an expensive lease and then lost its major client a few months later. The company used up its cash reserve as month after month of trading losses took their toll. The company had to shed two-thirds of its workforce, sell its expensive "toys" and negotiate with the landlord to return to profitability. 

What are you basing your decision to scale on? Is your turnover reliant on the continuing support of one major client? Is current growth rate sustainable? Be conservative with your revenue forecasts. See our article on Key Metrics for help. 

How to Scale Up

  • Reinvest profits – leave money earned in the company
  • Invest your own capital or make loans to the company
  • Borrow from the bank, other lenders
  • Invite new investors

When you are looking beyond self-funding options, with its greater potential for growth on a grand scale, you take on greater responsibility to others. Don't over-promise results. Start fundraising early enough so that you have the funds when you are ready to move to the next stage.

Clear Strategic Purpose

Have a clear strategic purpose for each round of fundraising. For instance:
- Seed rounds: concept into prototype
- Series A: commercial viability
- Series B: viable product, scaling up
- Series C: scaling up including capital expenditure (capex)
- Series D+: preparing to exit via acquisition or initial public offering (IPO)

By having clear purpose for each round, you can set realistic timelines. If you meet your deliverables on the first round, it will give investors and lenders more confidence to support you in future rounds. If you over-promise and fail to deliver, you will have tighter constraints in future rounds.

Make sure that you invest for the best return. For each new hire or new equipment or marketing campaign, can you justify it with projected increase in revenue or reduction in costs? Don't indulge in luxuries of first-class travel and sensory deprivation chambers, especially when you have outside investors.

Pay Yourself Realistically 

Ask for enough funding to get the job done. As founders and initial employees, you may be willing to pour in sweat equity, but eventually you and they may burn out if you haven't hired enough people. Or you may take on a paying gig and then be too tired to focus on your business.

Fundraising Takes Time

How long is your funding runway? That is, how many months will your funding last before you run out of cash? Build an extra three-month buffer into your projections.

Start raising funds about 12 months before you need it. This allows 3 months to plan, 6 months to promote and start conversations and 3 months to complete serious conversations. 

Diluting Capital

New investors want to protect their investment and will negotiate for better terms for themselves. Make sure that you get good legal advice in terms of the contractual arrangements, share rights and how that affects your control of the company and returns you can expect from your founding investment.


Scaling up should be a strategic decision. Planning involves clear goal posts, budgets and timelines. Meet or exceed performance targets to keep your investors and lenders supportive of your business. Start fund raising early. Engage professionals to put together your fund raising proposals, so that you can wow the investors and show your business is a serious contender for their money. 

Download a PDF version here or contact the author by email. Like our Facebook page for regular tips.

- By Serena Irving, JDW Chartered Accountants and Jing Seth, Kahu Partners

Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.

Jing Seth is a partner in Kahu Partners Limited, a boutique business strategy consultancy. A quantitative analyst who also has deep experience in taking complex propositions to market, Jing has sold to high-tech start-ups, national defense agencies and Fortune 100 corporates. He has codified winning processes, and designed and led specialist sales teams. In his most recent role he rebuilt the growth engine from scratch and closed deals that ended a 12-month sales drought for the company.

What to Measure

What to Measure – Key Metrics for Start-ups

Manage What You Measure

Traditional accounting methods and timescales don't work for start-up businesses. A lot of start-up businesses are not well-funded. Those which are well-funded can still hit financial trouble if they don't have warning signals in place.


An annual reporting cycle is too long. Even quarterly may be too long, if funding is tight. Some metrics need to be measured daily and weekly so that founders can show investors that they are tracking well.

Profit vs Cashflow

Profit and cashflows are not the same. If you have a subscription model with customers paying 12-months on signing up, for cashflow purposes you have the cash inflow up front. For tax purposes, some of that income is in advance. If your balance date is March and the customer signed on at the start of January, then you have received 9 months in advance. Your profit is not as high as your cashflow because you still have to provide 9 months of services to that customer.

Conversely, if you buy stock upfront or employ staff to fulfil services and invoice on completion with payment on the 20th of the month following, you'll have cash flowing out of the business even if you are profitable.

Traditional Metrics

Here are some metrics which we use frequently with established businesses. Some of these may be useful for start-ups but not all start-ups will find these relevant.

Revenue or TurnoverSales, expressed in dollar amounts or percentage increase. Are your sales reliant on one or two large customers? Consider broadening your customer base, to spread the risk of losing your biggest customer.

Gross profit­Revenue - Cost of sales. Analyse gross profit by customer or by project. What if you were losing money every time you made a sale to your biggest customer because of the big discounts they received?

Net profitGross profit – Operating expenses. Expressed before or after tax.

Return on investment – Net profit / Owners' equity. This measure tells you how well your investment is performing.

EBITDA (Earnings before interest, tax, depreciation & amortisation)Net profit + Interest + Depreciation/Amortisation. Takes the source of funding out of the picture when considering profitability.

Stock turn – Cost of sales / Average inventory. Slow moving stock (a low number) is inefficient as it ties up money that could be used elsewhere. It may point to having the wrong stock or obsolete stock.

Accounts receivable daysAverage receivables / Revenue x 365 days. How long it takes to receive payment.

Accounts payable daysAverage payables / Cost of sales x 365 days. How long it takes to pay bills. A high number may suggest that a company is struggling to meet its obligations. But on the other hand a low number may suggest that suppliers are unwilling to allow trade terms, so this might also be a warning sign.

Current ratioCurrent assets / Current liabilities. Should be higher than 1 to show that a company is able to pay debts as they fall due.

Liquidity ratio or Quick ratio(Cash or equivalents + Accounts receivable) / Current liabilities. More conservative than current ratio, as it recognises that it can be difficult to sell inventory in a hurry to pay bills.

Start-Up Metrics relating to Customers

Monthly recurring revenue (MRR) – For subscription services, the sum of the monthly fees paid by your customers. Could be calculated as average fee per customer times the number of customers. Net New MRR = New MRR + Expansion MRR – Churn MRR

Customer lifetime value (LTV) – Ave purchase value x frequency x lifespan. How much revenue they can expect one customer to generate over the course of the business relationship. The longer a customer continues to purchase from a company, the greater their lifetime value becomes.

Customer Acquisition Cost (CAC) – total marketing and sales cost to gain a customer over time. Direct costs such as Facebook or Google AdWords, sales commissions, but also indirect costs such as overheads.

Compare LTV with CAC to assess the effectiveness of your marketing spend.

Customer Churn Rate – the percentage of customer who cancel or don't renew their subscription. It's generally cheaper to retain existing customers than to attract new ones so this is an important measure.

Start-Up Metrics when you don't have Customers

Some metrics like gross profit are reliant on sales. What if you're not selling anything yet? Profitability and return on investment are not as important as subscriber numbers, conversion rates and cashflow.

If you can track and measure these, you can prove whether you are performing, even without a sale.

User Engagement – How often they open your app, number of interactions inside the app, how long they spend using it, how many recommend to friends.

Conversion Funnel ratio – How many potential customers move from one stage in your sales funnel to another, expressed as a percentage. For instance your sales funnel may be made up of various stages: website visit, selecting products, adding them to a cart, paying for the goods. This may help you to identify friction, such as difficulties completing a signup form or abandoning a shopping cart because it took too long.

Retention Analysis – How many users return to your app without a given timeframe. See cohort analysis below.

Forecasting and budgeting is critical to making sure that a business survives until the next cashflow injection. Budget your spending in advance and keep to your budget.

Burn rate – How much money you spend a month.

Runway – how long before you run out of money in your bank account based on your burn rate. Compare this with your investment cycle, how long it takes to obtain another cash injection.

Vanity Metrics

Vanity metrics should be avoided in reporting. Vanity metrics are measures which make you look good, but don't help you with decision-making. E.g the number registered users vs the number of users who engage regularly. Just about any measure could be a vanity metric if they aren't driving decision making.

Making Useful Comparisons

Using cohort analysis and AB testing you can provide a truer picture of a start-up's progress. Cohort analysis might be grouping users who started using your app at the same time and comparing the retention rate against an earlier group of users. Ideally you should be seeing a higher retention rate with each cohort.

AB testing might be showing one version of your website to half your visitors and another version to the other half. Then you can see which version is more successful at converting visitors to customers.

You can only manage what you measure, according to Peter Drucker. Make sure that you are measuring the right things on a regular basis, so you can manage your start-up effectively.

Download a PDF version here or contact the author by email. Like our Facebook page for regular tips.

Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.

Business Strategies to Overcome Wage Increases

If one-third of your costs rose by 20% over three years, would your business survive?


My first employer doubled my wages every year until Prime Minister, Sir Robert Muldoon, instigated a wage and price freeze to curb inflation. My employer was my Dad, I was aged six, and an increase from five cents to ten cents a week wasn't going to hurt his dairy's finances. The minimum wage increases are a different story.

On 1 April 2019 the minimum wage will rise to $17.70/hour, rising to $20/hour by 1 April 2021. Source: Workers on higher wage rates will want to keep relativity to the minimum wages. ANZ analysts suggest that a typical hospitality business could see an overall wages & salaries increase of 20% between March 2018 and April 2021. Sales would need to increase by 7%, or other costs decrease to compensate.

Your businesses already struggle with skilled labour shortages, and stress for overworked owners. Now is the time to prepare for change.

Values, Purpose & Uniqueness

If your values, purpose and uniqueness resonate with your customers, they will be back time and again. The right business strategies will incorporate these.

Your business's core VALUES are at the heart of what you do. It provides clarity and makes decisions easier. When your actions align with your values, you feel confident and at peace. If a behaviour annoys or upsets you, it may be that it is conflict with your core values. It reflects in the look and feel of your establishment and the food you serve (E.g. Fast and Fresh, Tranquil, Family Friendly).

If your customers and employees relate to your PURPOSE, they will remain loyal. According to Simon Sinek, the Wright Brothers were the first team to achieve motorised flight because their purpose was inspirational. Source:  Your purpose may be to share your signature style of cuisine with the world, to feed families with wholesome food or it may be to build neighbourhood communities.

If you offer a UNIQUE experience, then you can price accordingly. Dans Le Noir at Rydges Auckland has a blacked-out restaurant, with blind wait staff. Customers are led into the restaurant in single file, cannot see to eat and have a few giggles when a neighbour spills a drink. They leave with more empathy for the visually impaired.

Business Strategies

Two-thirds of hospitality employers told the Restaurant Association they would raise prices. But raising your prices too high will cause customers to go down the road or dine at home. Look at the table of strategies and compare it with your values. Which strategies align? If you adopt one strategy, what is the flow-on effect? What else would need to change?


Basic Business Strategies

Sell more

Increase prices


Flexible menu pricing

More advertising

Increase capacity

More tables

Breakfast service

Extra dinner service

Additional services

Rent space and equipment

Customer experience

Reduce food costs

Flexible menus

Seasonal produce

Reduce portion sizes

Supplier agreements

Reduce overhead costs

Better utility plans

Negotiate interest terms

Cut Staff Hours

Owner works longer hours

Reduce other staff benefits

Improve Efficiencies

Automate booking and/or ordering systems

Improve workflow

Cut wastage


Forecasting and budgeting

With business strategy in hand, how will you pay for it? Will you see a positive return from the effort? With the help of your accountant or bookkeeper, create a monthly or weekly budget of your expenses and capital expenses. Forecast your expected revenue considering seasonal fluctuations. Work out how much extra investment and borrowings you will need.

The minimum wage is rising and with it your labour costs, so the impact for your business will be huge. Increasing menu prices and working longer hours are not the only answers to this problem. Will you be ready with a clear strategy that aligns to your values, purpose and uniqueness?


First published in Savour magazine, March 2019 edition, alongside a Restaurant Association workshop "Business Strategies to Overcome Wage Increases".

Download a PDF version here or contact the author by email if you would like a copy of the workshop booklet. Like our Facebook page for regular tips.

Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.


JDW Celebrating 60 Years in Service

Our Village Locals - A History of Business


Look up above the Bakers Delight in Main Highway and you will see a large Chartered Accountants sign. From the street level, it's almost imperceptible. But JDW Chartered Accountants Limited is a hidden gem. When you walk up the stairs, you are greeted by Carol or Kimberley or one of the directors as an old friend, and then you notice that the offices are larger and more comfortable than you expect. There are thirteen in the team, ready and willing to help.

Frank Jolly and Don Stanway created their accounting partnership in 1958. Murray Wells joined the firm in 1971, and in 1973 he and Gerald Duncan teamed with Frank Jolly & Don Stanway to form Stanway & Partners. Don Stanway left four years later. Jolly Duncan & Wells moved to Ellerslie in 1986. Auditor Brian Sheridan was promoted to director in 1996 and the business incorporated in 2000. They have refurbished a couple of times since then, and recently rebranded to JDW Chartered Accountants Limited. Serena Irving became a director in June 2018 and Rupesh Parikh will become a director in April 2019.

Frank Jolly, Don Stanway and Gerald Duncan have passed on, but JDW continues to serve the second and third generation of their original clients. This gives JDW a unique insight into succession planning, trust and estate management from these long associations.

JDW supports the Ellerslie community in many ways. It hosts the Ellerslie Village Business Association bi-monthly meetings and offers workshops to its members. Murray and Sharon Wells have been active members of Ellerslie Community Patrol for many years, and JDW provides administration support to the patrol. Murray is also a trustee of Ellerslie Community Arts Trust, which puts on the annual Ellerslie Spring Fairy & Pirate Festival. JDW sponsors One Tree Hill College and Ellerslie Bowling Club regularly and sponsored the Ellerslie Santa Parade for the first time in 2018.

Murray Wells has been chairman of Bucklands Beach Yacht Club Marina for the past 30 years. Brian Sheridan is a trustee of the Saint Patrick's Festival Trust and a committee member of the Irish Business Network New Zealand Inc. Serena Irving has been a Toastmaster for 20 years and is currently Division N Director for central Auckland clubs. Rupesh Parikh has an active involvement in the Gujarati Indian community in Auckland.

JDW's mission is: We help business owners to succeed by giving them the financial, tax and business information and support they need to make better decisions. With their core values of integrity, empathy, simplicity and partnership, people are their most important asset. The team speaks a variety of languages: English, Afrikaans, Cantonese, Gaelic, Gujarati, Hindi, Marathi, Mandarin, & Niuean. As Murray said in their 60th anniversary function, "We have friends who have become clients, and clients who have become friends."

Being a Chartered Accountant in 2019 is not just about producing financial statements, GST returns and tax returns. With cloud accounting, machine learning and process automation making compliance tasks easier, JDW Chartered Accountants are focussed on helping business owners make sense of their numbers, plan for the future, build relationships, providing expertise and friendly advice when required.

Happy Anniversary JDW – Here's to the next 60 Years!

JDW Values

Integrity – We stand by our moral and ethical principles. We are honest and reliable.

Empathy – We identify with the feelings of others. We care for our clients and our community.

Simplicity – We use words that are easy to understand. We look for straight-forward solutions to complex problems.

Partnership – We work alongside our clients. We offer our experience and advice when they need it. We look for opportunities to help them in their business.

How can you get the most from your Chartered Accountant?

Out-source what you aren't good at. Focus on your strengths. We help you:

            Understand your balance sheet and profit or loss reports.

            Structure your business and investments for asset protection and tax minimisation.

            Price your goods or services.

            Focus on your key performance indicators.

            Plan for growth.

            Manage your accounting fees.

            Move your data into the cloud.

First published in Ellerslie village magazine, March 2019 edition.

Download a PDF version here or contact the author by email. Like our Facebook page for regular tips.

Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.

Accounting For Success

Accounting for SUCCESS

"If you can't measure it, you can't improve it." - Peter Drucker

If numbers aren't your forte, you aren't alone. Thousands of NZ small business owners admit they struggle to understand profit & loss reports and balance sheets. Chartered Accountant Serena Irving says that is when they ask for help.

"Outsource what you aren't good at. Focus on your strengths." But if year-end accounts, GST and income tax returns are all you request from your Chartered Accountant, Serena says you are missing out on a valuable resource. See her hot tips below.


"Don't compete on price, especially if you are creating something unique." Serena's cake topper client was struggling to get sales and profits. They discussed hourly rates and ingredient costs. They compared prices with competitors. They created set prices for standard icing toppers and increased her prices for one-off creations.

Key Performance Indicators (KPIs) and Dashboards

KPIs are your early warning systems for business health. It's difficult and costly to track them all. "We help you select and focus on the three or four which have the biggest impact on your business."

Xero and other accounting packages have basic dashboards. Chartered Accountants also create specific dashboards suitable to your needs. Using graphs and colour indicators, you get a snapshot of business performance.

Planning for Growth

Whether you are investing in people or capital to grow, your Chartered Accountant helps you manage it successfully. Serena's film editor client found spare capacity by re-organising his team's work and spacing out jobs more evenly. He grew his business without adding on more rent and wages costs.


A business issue arises with your customer or supplier. Your best friend is sympathetic but can't help. Your spouse suggests getting paid employment. Chartered Accountants can be mentors for those times. "We listen with understanding and experience. Other clients have worked through similar issues."

Cashflow Forecasting and Budgeting

Life and cashflow are hardly ever smooth. Your Chartered Accountant helps you through rough patches too. "A client owed over $300,000 income tax, GST and other taxes before he joined us. We set cashflow budgets, negotiated with IRD and arranged tax pool finance. He paid his tax bill off in 4 years."

Keeping Fees Down

If you already pay enough to your Chartered Accountant, chat with her/him about that too. Fix your regular coding errors. Negotiate an agreed fee with your Chartered Accountant so help is there when needed. Spread payments monthly to help cashflow.

Engage with your Chartered Accountant regularly and not just when your taxes are due. Get your Chartered Accountant working alongside you, improving your business success.

Download a PDF version here or contact the author by email. Like our Facebook page for regular tips.

Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.


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