How to Charge For Your Psychotherapy Services – 9 Steps to Help Calculate and Set a Realistic Fee

When you start out in private practice, one of the most difficult things you have to do is determine what you are going to charge for your services. This article walks you through the 9 steps you need to take to be able to set a realistic hourly rate that will allow you build a practice that will bring you a reasonable income and cover the numerous expenses that you incur from your practice.

Many therapists come to private practice with the view that they will charge relatively little for their services because they are working with a vulnerable population who need help and therefore they have a moral obligation to make their services affordable so that everyone can benefit from them. Now, this is a laudable position to take, certainly, but as a practical business proposition, it fails to realise that a practice does not run on fresh air. You, the therapist, have obligations that you have to meet too, like paying your mortgage, putting food on the table and bills that have to be paid. The only way to do this is to calculate a realistic fee range for your services – and understand how you got to that figure so that you can feel okay in asking for it. But how do you arrive at this figure? This article will guide you in some of the steps you need to consider as you work out what you will charge.

First things first: How much do you want or need to make each year to be “solvent”? So, Step 1 is:

1. Establish your required/anticipated annual salary from the work — perhaps you could initially use what a practitioner would be likely to get in the Public Sector, for the level of experience and the type of work and location, as a guide figure (this can change as you come to understand your market’s potential).

Next, look at the costs you are likely to encounter:

2. Consider the entitlements an employee might expect, such as pension contributions, health insurance, continuing professional development costs, mileage and other reimbursements for out-of-pocket expenses which might reasonably be met for this type of work.

3. Add on costs for office provision, secretarial costs, test and equipment purchases, computing and IT facilities, office furniture, etc., annualised in terms of capital and depreciation costs (I am not an accountant, so you may need to seek professional guidance on this in time).

4. Add on sundry other costs, such as employing people to clean your office and waiting area, provide tea and coffee to patients and other visitors, secretarial and receptionist costs, advertising, public liability insurance, IT technician costs plus others that you will not realise you need until something goes wrong (e.g. electrics, Health and Safety, Information Commission requirements etc.). And do not forget the Taxman will need a cut!

Nearly there, but just in case:

5. Add in a 10% contingency because costs are, in my experience, always underestimated.

Quite a complex exercise, perhaps, but critical to determining what your required outlay is likely to be over the year.

Now, consider how this fits with your target income. Are you likely to be left with enough to achieve the living standard you aspire to? If not, we need to consider Step 6:

6. What additional figure is required to allow you meet your expenses and still have sufficient monies left to allow you to achieve a reasonable lifestyle? By this I mean if you had initially set a figure of 10x as your target income, but discovered that costs come to 5x, and really, you need 8X to be comfortable, then you need to revise your target income figure upwards to 13x.

7. Steps 2 — 6 establishes the gross annual turnover you need to generate each year to produce the type of income you are hoping for in step 1 above.

So, what will your Hourly Rate be?

8. Now, work out how many chargeable hours you will be able to work each year.

This is not a simple 36 hours x 52 weeks, of course. If you plan to work Monday to Friday only, that equates to 261 days a year. Now out of this time allocation, you need to allow for annual leave (if you are looking after yourself, you will take at least 20-30 days leave, for which, obviously, you will not get paid), CPD time (possibly 5 – 10 days a year), Bank Holidays (8 in the UK), sick leave (do not say you will not get sick because we all might, and it is an employment cost that must be scheduled in), admin time (allow around 2 days per month), marketing and business development (aim for maybe 3 days a month) etc. That reduces your “earning” days to around 160 days per year, and within this time, few practitioners can expect to be busy for 7 hours each of these days, so calculate optimistically at around 4 earning hours a day across these 160 days, leaving around 640 earning hours!

9. Divide the total in 7 by the total in 8 to see what your hourly rate must be in order to achieve the salary you are seeking.

Surprised? I imagine that you are, but I hope that this exercise helped you get some perspective on the question of how you calculate what you will charge for your services. If you still wish to support less financially-able clients, certainly you are free to do so, but build their “costs” into your calculations and settle on a realistic hourly rate for your services. This is what you will need to charge to make the living that you aspire to. It is certainly possible, but you need to go forward with a clear understanding of how you came to set this fee for your services so that when it comes time to tell your potential client what you charge, you can do so safe in the knowledge that you are asking a reasonable and realistic amount for you services.

Characteristics of Depreciation, Basic Factors of Determination of Depreciation

Characteristics of Depreciation

Depreciation has the following characteristics:

(1) Depreciation is charged in case of fixed assets only, e.g., Building, Plant and Machinery, Furniture ‘etc. There is no question of depreciation in case of current assets-such as Stock, Debtors, Bills Receivable etc.

(2) Depreciation causes perpetual, gradual and continuous fall in the value of asset

(3) Depreciation occurs till the last day of the estimated working life of asset

(4) Depreciation occurs on account of use of asset In certain cases, however, depreciation may occur even if the assets are not used, e.g., Leasehold Property, Patent right, Copyright etc.

(5) Depreciation is a charge against revenue of an accounting period.

(6) Depreciation does not depend on fluctuations in market value of asset

(7) The amount of depreciation of an accounting year cannot be determined precisely-it has to be estimated. In certain cases, however, it may be ascertained exactly, e.g., Leasehold Property, Patent Right, Copyright etc.

(8) Total depreciation of an asset cannot exceed its depreciable value (cost less scrap value).

Basic factors of determination of depreciation

(1) original cost of fixed asset i.e., purchase price plus freight and installation expenses;

(2) estimated amount of expenditure on repairs during the useful life;

(3) estimated useful life of asset after which it will be discarded;

(4) estimated residual or scrap value;

(5) interest on investment-the amount invested on purchase of asset, if it had been invested in some other investment what interest would have been earned;

(6) possibility of obsolescence.

Fixed Installment or Original Cost or Straight Line Method, reducing/Diminishing Balance method

Under this method depreciation is not calculated on cost of asset. It is computed on the book value. of asset. The book value of the asset is obtained by deducting depreciation from its cost. The book value of asset gradually reduces on account of depreciation charge. Since the depreciation percent rate is applied on reducing balance of asset. this method is called reducing balance or diminishing installment method or written down value method.

Merits and demerits.

Declining balance method not only equitably matches depreciation expenses against the related revenue but also fairly spreads. the incidence of depreciation and repairs (viz higher depreciation but heavier repairs in later years.) on profit and loss account over the assets life span. Elimination of major portion of cost in early years also minimizes the impact of obsolescence. It is equally useful to management as accelerated depreciation means smaller taxable profits and taxes hence lesser outflow of cash.

Accelerated Depreciation Methods

Sum-of-the year’s digits (SYD). This method of depreciation accelerates depreciation expenses so that the amount recognized in the earlier periods of an asset’s useful life are greater than those recognized in the latter periods. The SYD is found by estimating an asset’s useful life in years, then assigning consecutive numbers to each year, and totaling these numbers. For n years,
SYD = 1 + 2 + 3 + 4 + … +n

Annuity Method

The method recognizes the time value (Interest) of money and hence regards the real cost of using a long-lived asset equivalent to the actual amount invested thereon plus the interest lost on the acquisition of asset. Under this method, so much depreciation is written off each year as after debiting the asset account with interest upon the diminishing value, will reduce the asset to nil at the end of its life. Thus, the amount written off as depreciation is the same every year, but the interest will diminish each year.

The amount of annual depreciation to be written off by Annuity method will be ascertained from Annuity Tables

Depreciation Fund method or Sinking Fund method

Under this method, a fixed amount is charged as depreciation every year. It endeavors to provide the required lump sum cash at the retirement of a long, lived asset by annually setting aside and investing a fixed sum in readily realizable securities. These securities earn interest at fixed rate and the same being reinvested along with successive fixed installments of depreciation, allowed to accumulate at compound interest. The sinking fund method thus takes into account of this probable income from interest while fixing the annual depreciation and investing the same which together with compound interest accumulated to the asset’s depreciable cost by the end of its useful life. Obviously, the fixed installment of annual depreciation is here smaller as compared to straight line method. Its magnitude, however, rests on the asset’s life span and interest rate. Longer the span and higher the rate, smaller is the annual depreciation per rupee of depreciable cost.

Shortcomings of Depreciation Fund Method

Depreciation fund method assumes constant rate of return on every periodic investment in identical securities. This is hardly true in this dynamic world where rates do vary now and then. Any variation in the rate of return upsets the earlier periodic allocation for depreciation and entails refection thereof. Further the amount realized on the sale of security rarely agrees with its acquisition cost owing to made fluctuations which may be both erratic and considerable. Those may cause a wide gap between the required and supplied cash.

Insurance Policy Method

This method endeavors the supply of required cash at the retirement of a specified asset in return of periodic contribution (premium). Under this a trader takes a ‘Capital Redemption Insurance Policy’ from an insurance company which undertakes to pay at a given date a certain sum if the trader, paying a fixed number of premiums after regular intervals. The trader treats the periodic payment as depreciation and charges it to profit and loss account. In this case, depreciation is charged at the end of the year, whereas, the premium is paid at the beginning of the year. At maturity, the insurance company pays the policy money which is normally sufficient to replace the retired set. Normally, amount received is more than total premium paid as the policy yields interest.

Revaluation Method

Under the system, each year the asset is valued and the value is compared with that in the beginning of the year. The fall is treated as depreciation. Suppose if the value of the tools at the beginning of the year was Rs. 8,000, during the year tools worth Rs. 6,000 were purchased and at the end of the year, on valuation these amounted to Rs. 11,000. The amount of depreciation for the year will be : 8,000 + 6,000-11,000 = Rs. 3,000 . This method is useful for charging depreciation on livestock and loose tools.

Depletion Method

Natural resources include physical assets like mineral deposits, oil and gas resources and timber stands. These natural resources get exhausted by exploitation. In some cases, the reduction in physical deposits is offset by growth or development of additional deposits.

The cost of natural resources is the price paid for its acquisition plus price paid for development of such asset in order to bring it to a state suitable for production.

The periodic depletion is better not calculated in terms of year. Rather it is better to calculate the cost per unit and then multiply the cost of unit to units produced in that particular year.

Machine Hour Rate

Under this method, the total number of working hours of a machine during the whole of its effective life is estimated, and then the cost of machine is divided by the expected number of hours of useful life, this gives the rate per hour. The annual depreciation is calculatedly multiplying this rate by the number of hours, the machine actually runs in a year.

Mileage Method

This method is used only for those assets whose useful life depends upon the fact that how many kilometers they have been driven e.g. buses, cars, trucks and rolling stock etc.

Global Method

Under this method, the value of the assets, irrespective of their nature is added together and depreciation is charged at an average rate on aggregated value.

Choice of a Method

Aforesaid methods of depreciation reveal that none is absolutely best or worst as each method has its own merits and demerits. Suitability of every method is relative and depends upon various factors. Most important of these are the type of the asset and purpose of depreciation.
Straight line method suits to buildings and lease etc.. reducing installment method fits to machinery equipment etc. and depletion method for wasting assets like mines. quarries etc. However, the underlying purpose is the basic determinants of the propriety of a depreciation method. Important purpose comprise of true reporting of accounts, tax benefits, comparative product cost, financial flexibility, replacement and expansion etc. For example. depreciation fund method envisages that the amount set aside for depreciation is to be invested outside the business in specific securities. Similarly under insurance policy method, the amount so set aside is handed over to insurance company. If a business is having working capital problems the advisability of these methods is questionable.

Of the above-mentioned methods (1) Fixed Installment and (2) Reducing Installment methods are most widely used.

Distinction between Fixed Installment Method and Reducing Installment Method

Fixed Installment Method

1. The rate and amount of depreciation remain the same each year.

2. Depreciation rate per cent is calculated on cost of asset each year.

3. At the end of its life the value of asset is reduced to zero or scrap value.

4. The older the asset, the larger the cost of its repairs. But the amount of depreciation remains the same each year. Hence, the total of depreciation and repairs increases every year. This reduces annual profit gradually.

5. Computation of depreciation comparatively easy and simple.

Reducing Installment Method

1. The rate remains the same, but the amount of depreciation diminishes gradually.

2. Depreciation rate percent is calculated on book value of asset.

3. The value of asset is never reduced to zero at the end of its life.

4. The amount of depreciation decreases gradually, while the cost of repairs increases.
So the total of depreciation and repairs remains more or less the same each “year. Hence, it causes little or no change in annual profit/loss.

5. Depreciation can be computed without any difficulty, but it is not so easy and simple.

The author is an engineering graduate, B.E.(Hons), and is managing his own software development firm, HiTech Computer Services, that mainly deals in accounting, billing and inventory control software for traders, industries, business houses, hotels, hospitals, medical stores, newspapers, magazines, petrol pumps, automobile dealers, commodity brokers and other business segments, website and web application deveopment for business. The software are available both for intranet and internet. These software are available for download from the website:

Workplace Strategies To Boost Your Bottom Line Without Firing Anyone!

Even though we are all familiar with the economic uncertainties that time has brought, particularly in the face of downsizing and restructuring the gravitational pull is now towards the optimisation of workspace and human capital.

In this edition of series of guides we present 23 workplace strategies to boost your bottom line without firing anyone.

1 – Let offsite storage companies free up expensive desk, floor and office space

If you are like most organisations you and your staff will have perfected the art of negotiating a route around the bundles and boxes of documents and files that have become an accepted part of everyday life at work.

You probably realise that most of the information is hardly ever needed, know it should not be clogging up corners, cupboards and corridors; accept that it is a health and safety hazard and would wager that no-one could lay their hands on information quickly even if they needed to do so.

So why not free up expensive desk, floor and office space by calling in a team of document management and storage experts.

Storage enables those records that are no longer current, but which cannot be destroyed for reasons of infrequent administrative use or legal imperative, to be stored in a secure, monitored environment at a rate much cheaper than office rent.

All good offsite storage companies understand that the control of your files is as much a part of the management function as control of any other vital asset. They treat records as a significant corporate resource, and have developed solutions that will boost your efficiency levels and reduce occupancy costs.

Most will have both large areas of warehouse space for non-current records, and

environmentally controlled media rooms for the storage of vital electronic data at the correct environmental conditions.

2 – Sublet vacant or unused space

The sublease market has been a consistent growth area in the office sector during the past few years, driven mainly by corporate restructuring and downsizing, but also by companies seeking to convert surplus office space into additional income.

Before considering subletting or assignment, it is wise to have the relevant clauses in your lease scrutinised by a competent commercial property lawyer. A consultation with a commercial property agent will enable you to be realistic about the availability of suitable tenants and the terms you should offer – particularly in a tight market. Also, factor into your budget the cost of any refurbishment work required, together with professional fees and marketing costs.

Your property agent will advise you whether to offer different rents for subdivided space on different floors or with different views. If the premium space is leased first, make sure you are not left with remaining space rendered almost unlettable.

Your sublet space should be in a well-maintained, marketable condition. Always take professional advice from your appointed property agent, and a reputable firm of office fit-out consultants, to clearly ascertain what works need to be carried out prior to putting the space on the market.

In short, configure your space so that it hits the hot buttons:

• Refurbished ready for occupation

• Light, bright and airy

• Fixed service charge

• Flexible terms

• Accommodating landlord

• Furnished

3 – Invest in the latest technology

We have not just been imagining it – as far as working life goes, everything is getting smaller.

The cutting-edge products on the market today, from mobile phones to laptops, are more compact and bijou than ever before and have transformed efficiency and productivity levels.

Among the best examples of the contribution made by IT to space optimisation is the advent of compact and lightweight LCD monitors.

Not only do they take up less of your desktop space, they can also be used in many places where a larger monitor cannot fit. Typically, a 12″ LCD monitor with a stand takes up only about one-third of the desk space of a typical 14″ CRT monitor.

Besides being compact and space saving, LCD displays offer several other benefits. For one, LCD monitors consume much less energy than CRT monitors which, of course, has made them great for laptop and portable computers. Secondly, CRT monitors are known to emit harmful radiation, whereas LCD monitors do not and thirdly, the development of LCD monitors has spawned a raft of space saving furniture and storage systems, which allow more people to work in less space.

An LCD monitor will cost more up front, but they will produce far less heat than CRT monitors, which will generate savings from reduced office cooling requirements. So, although on the face of it the savings may not seem much for an individual user, in an office where 50 displays are in use the savings can quickly become much more of an issue.

4 – Renegotiate with your landlord

The current recession has confronted landlords with the need to be much more flexible in the lease terms they were prepared to agree, and many continue to understand the need for a realistic and commercial outlook.

Whether you want to reduce your rent in return for a longer term, or take advantage of your landlord’s plans to redevelop the building, it is worth consulting with him and learning more about his long-term plans for the building.

In some circumstances you might also want to take advantage of the current market by extending the lease or creating an opportunity to renegotiate some of the nastier lease clauses out of the agreement – e.g. introduce a Service Charge cap or renegotiate onerous dilapidations clauses.

If you meet with your landlord often, have good dialogue with him and feel confident handling the negotiations yourself, it might be wise to consult a commercial property lawyer to review the covenants within your lease to ensure you get the best deal.

If your landlord is a faceless name, it will be wise to instruct an experienced commercial agent with whom you can discuss options, learn about prevailing market conditions and benefit from similar deals secured by him for clients in situations such as yours.

5 – Investigate relocating to new offices

When market forces place the balance of influence in the hands of the tenant, it is an excellent time to prospect the market for alternative space.

If you are not using all your existing space, moving into smaller premises, for instance, could make a dramatic contribution to reducing overheads without any commensurate loss of productivity. Indeed, having staff working closer together in well-designed space, can actually improve morale and efficiency levels.

If space is not your issue, moving could be an option if the original benefits of your prime address are now outweighed by the reduced rent or property costs of a less prestigious part of town or an out-of-town site.

And as a flip side to that coin, if you do feel the need to move to a high profile location, be sure to launch marketing and awareness-building campaigns to leverage the prestigious address or landmark building you have chosen. The additional kudos and new business that may stem from your choice of up-market location could offset the higher occupancy costs.

Of course, before considering relocation always ensure that you take professional advice from a property agent and an experienced fit-out consultant to make sure that all aspects of the project have been taken into consideration, planned and accurately budgeted.

6 – Consolidate premises

If your business is multi-sited, perhaps as a result of acquisitions, consolidating facilities can quickly strip superfluous costs and make a significant contribution to profitability.

The downside is that the process of combining even two locations can often become a logistical nightmare, so it is just as well that there are experienced fit-out firms with move management expertise available to advise you and project manage the entire process.

The good ones understand that move management must be handled like a military exercise if pitfalls are to be avoided and costs controlled. Without a safe pair of hands on board, the process can end up costing you thousands in lost productivity.

Be sure to interview and study several companies before instructing the one you want to work with. Pay close attention to the type of questions they ask. Satisfy yourself that they are not just concerned with showing you project planning charts and catalogues of office furniture, and are instead genuinely interested in learning how your business functions, so that they can make recommendations that will increase your business efficiency.

Planning is where the battle is won. Careful management and scheduling will make a world of difference. Be sure to take professional project management advice.

7 – Consider moving to serviced offices

For many companies it is ideal to have flexible office space in a good location and to pay for it with one monthly payment, which could typically include rates, service charge, electricity, and cleaning as well as furniture, receptionist and secretarial services.

Add to the mix the chance to have access to modern office equipment without having to buy it, and all the support services needed to conduct business in hand on an as-you-need-them basis, then it is not surprising that serviced offices have grown in popularity in recent years.

Neither are today’s serviced offices necessarily more expensive. For smaller companies, in particular, many of the deals currently available have been configured to work out cheaper, whilst allowing maximum flexibility and freedom.

8 – Investigate hot-desking

If you stopped to calculate it, there is a good chance that you would be alarmed by the true cost of providing your staff with workspace (proportion of rent, rates or building purchase costs, heating, lighting, fittings, furniture, services, etc).

Add to the cost the fact that many ‘office staff’ actually spend considerable time away from their offices – at customer s premises, at meetings, onsite, at conferences, etc – and it is easy to see why more and more companies are looking at hot-desking in its various guises.

The concept originates from an old practice in warships, where, to save valuable space, bunks were shared by sailors who were on different shifts.

Today, hot-desking applies to the sharing of a desk/seat/workstation arrangement by more than one member of staff.

If it is a real consideration for your business model, it might be worth speaking to your fit-out or furniture consultant about cost planning.

9 – Allow certain staff to work from home

For many individuals, actually being in the office each day is as important a part of working life as the role they perform while undertaking their job role.

Although some may rise to the challenge of home-working, do not underestimate the culture change that remote workers will experience and must embrace in order to remain productive. In some cases, the negative impact on productivity may outweigh any overhead savings.

One of the things home-workers say they initially fear most is isolation; losing touch with their colleagues, and not being up-to-date with any changes in their company. That is why, if you introduce home-working, you should consider setting up an Intranet with dedicated community spots. It pays to even go to the lengths of introducing informal gossip and chat rooms so that remote workers know what everyone is up to.

From your own perspective, security may also be an issue. Apart from impressing upon individuals the importance of safeguarding equipment from theft, it is essential that your IT infrastructure is sufficiently tight to keep unwanted users out.

Think about introducing a home-workers code of practice or charter that explains to people what is expected of them. When people are working nomadically, it is particularly important that you have the technology needed to back-up data, and the discipline to make sure that it is done.

Viruses are another home-working headache. A lot of viruses are caught during home surfing, particularly as individuals are likely to be using their machines for personal use as well as business purposes. Make sure your IT and webmasters have the very latest in anti-virus software and firewall protection in place.

10 – Commission a Workplace Audit to make sure your business is running at

optimum efficiency

Successful businesses know how dramatically their profitability can be enhanced when their business runs at maximum efficiency, and it is the role of experienced workplace consultants to help you streamline operations, identify savings and reduce wastage.

They explore management and staff attitudes to layout, processes, location and workflow, they assess working styles, relationships between departments, paper-flow, and access to equipment services and facilities, and then consider business forecasts for growth or shrinkage.

They study your existing technology infrastructure, and identify any functions that could be outsourced. At the end of the process they produce frameworks and principles to apply to new chosen workplaces.

They establish whether the space within your building supports staff in their efforts to meet their operational objectives. They audit space utilisation and illustrate findings on layouts using CAD plans and visuals, which are then presented to you for comment and feedback.

The market leaders will then be able to plug their findings into a competent design and fit-out solutions business, which will deliver the programme of work needed to boost your efficiency levels and productivity.

11 – Make sure you are taking full advantage of available Capital Allowances

Throughout the life of a business, investments are made in fixed capital assets for use in the business. Over a period of time, as the assets are used, they will generally fall in value and this reducing value will be reflected in profitability.

However, capital costs are not directly tax deductible like overheads and so instead a relief is given by way of Capital Allowances that are deducted from taxable profits and which reflect the depreciation in value over the life of the asset.

Whilst you cannot deduct expenditure on items of a capital nature directly from business profits, you can deduct Capital Allowances and it is worth making sure your bottom line is enjoying the maximum advantage.

The allowances themselves are based on the cost of the capital item and can include the cost of some elements of an office fit-out and refurbishment. Be careful though to distinguish between repairs, which can be set off against profits and fit-out costs that are treated as capital.

Take advice from a capital allowance or tax specialist to ensure that you achieve the optimal tax position.

12 – Look at the feasibility of a sale and leaseback deal

Even though commercial property is traditionally the second or third largest balance sheet item for many owner-occupiers, its relative importance has not always been recognised because property is often seen as an inflexible consequence of existing as a business rather than a strategic asset.

If you are a property owner, restructuring the basis of your ownership through a sale and leaseback arrangement can free up a significant amount of working capital for reinvestment into the business be it for acquisitions, or for the purchase of plant and machinery, the returns on which often outweigh the cost of renting the building back.

13 – Review the business rates you are paying

The rateable value of your business premises and the amount you are actually paying is substantial enough to warrant regular reviews.

If you are paying too much, the possibility of a reduction would be welcome, and even if you are not, there is the peace of mind of putting another tick in a good housekeeping box.

It is particularly important to look at business rates if you are considering subletting, or planning to enter into lease negotiations with your landlord.

You should consult with the rating department of a commercial property agent who will review the rateable value of your property and secure a reduction on your behalf, if appropriate.

The agent s team will ensure that your claim is optimised, and in many cases, will be prepared to work with you on a shared gain basis. They will also advise you whether half rates are available on your unused office space.

14 – Weigh up the pros and cons of outsourcing

One of the battle cries in business today is to determine the one thing that your business does best, become even better at it, and outsource absolutely everything else.

There is certainly a lot to be said for taking a careful look at every function in your business and asking yourself if you should outsource it, particularly given the raft of specialist companies who have entered the market in recent years.

In buoyant markets, outsourcing will avoid having valuable resources sucked into often menial and routine processes, and in a challenging trading climate, outsourcing gives you the chance to utilise certain services on an as-you-need-them basis rather than as a permanent overhead.

Either way, there are significant cost savings to be made, but take a hard look at the numbers before you decide to jump on the bandwagon.

Areas to focus on are facilities management, debt factoring and IT.

15 – Reduce the impact of workplace stress on productivity

Over 90 million working days each year – a third of all sick leave taken across Britain – are lost because of stress.

Not only is this absenteeism likely to cost you dearly in direct terms, but also the negative effects of stress can reduce employee efficiency and motivation. There is also the spectre of compensation claims against you relating directly to stress.

One solution is to familiarise yourself with the sources of stress, and the ways in which you can mitigate it. In many cases the causes are apparent and easily avoided or remedied.

Even where they are not so obvious, any effort on your part to take an empathic approach and address stress-related aspects of your workplace or operations, can serve you well if litigation should come your way.

There are now numerous specialists available to share their research and wisdom on stress and its impact on your bottom line. Most can also recommend cost effective solutions that could, in the long run, make a major contribution to your profitability.

16 – Exercise your break clause

Understanding the nature of the break clause in your lease is as important as making sure you have the right approach to exploiting it.

Around 50% of companies that seek to exercise their break discover to their dismay that they have failed to do so before a deadline. If you intend to exercise a break clause, it is crucial that you check your lease now to make certain that you understand your obligations.

Good housekeeping suggests that you should do this at least 12-18 months before the break date in order to give the relevant notice to your landlord. You might also have to vacate your premises much earlier than you had originally envisaged to ensure there is sufficient time to carry out any dilapidations to your old space, and fit-out works to your new space.

17 – Make sure your air conditioning system is not wasting money

If you do not regularly make sure that your air conditioning system is operating efficiently and only when you need it, there is a good chance that you will be incurring unnecessary costs.

Proper planned preventative maintenance will ensure your system performs to its maximum efficiency, as well as contributing to the system’s longevity. A poorly maintained system can push up energy costs as well as expensive repair and maintenance bills when the system eventually goes wrong or fails to perform.

It is very important to check how the system has been set up and programmed as many companies have reported the heating from their air conditioning working 24 hours a day, 7 days a week, when in fact their office only ran for 10 hours a day, 5 days a week.

Many companies also forget to adjust their system for holiday periods such as Christmas and Easter and once again money could be wasted.

A wise move would be to have the system completely checked by a competent firm of consultants and sign up for a fully comprehensive maintenance contract to avoid future problems.

18 – Check for Sick Building Syndrome (SBS)

If your office staff have started to complain of headaches and nausea, feeling lethargic and dizzy, or suffering allergic reactions for the first time, your workplace could be faced with the silent epidemic of Sick Building Syndrome or SBS for short.

Although it may seem that working conditions are so over-regulated that the only illness or injury likely to be suffered from work is strangulation by red tape, experts estimate that 30% of offices have something environmentally wrong with them and that as many as one in three work absences are building-related.

Indeed, because its negative impact on productivity and profitability is considerable, SBS has recently been the focus of huge attention by the Health and Safety Executive (HSE). There is said to be a greater likelihood that office staff and their efficiency and productivity will suffer if their working environment features:

Poorly maintained air conditioning

Inadequate ventilation

Fluctuating temperatures

Low standards of hygiene

Poorly designed workstations

High glare and flickering lighting

19 – Ensure that your telecoms provider is pulling its weight

Competition within the telecoms sector means great news if you are looking to optimise your telephone system and reduce your call costs. The very first step in controlling the telecom dragon is commissioning an audit of your current system and the way in which you use it.

This should include a study of your contracts, bills and current network configuration and, ideally, should be unbiased. If you commission a service provider to carry out the audit, expect it to also be free – although you will be expected to take their advice and implement their proposed solutions. In most cases this will feature the best rates available from the best networks and buying power to make sure costs are minimised. Review your call restriction policy on premium numbers, international calls and mobiles where costs can easily run away with themselves. Consider installing a phone logger to

monitor those areas of the business that spend the most.

20 – Think about how you could reduce your utilities bills

Utility costs are a major item of expenditure for most companies, and even a small adjustment can bring about worthwhile operational savings that find their way straight to your bottom line.

Many of the measures are obvious and can be taken immediately. They include adjusting thermostats, installing water flow restrictors, checking heating seals and ducting, replacing air filters, sealing off unused areas, turning off equipment at the end of the working day and generally encouraging employees to be energy conscious. To be sure you have every measure covered, it might be wise to commission a complete building management system audit. Your office fit-out & refurbishment consultant will have teams available to carry this out.

21 – Try to control runaway IT costs

IT hardware and infrastructure costs can so easily become a black hole.

Many business owners are uneasy with rising IT costs, but are either reluctant to meddle with existing infrastructures for fear of disturbing vital network services, or guilty of being too liberal with capital expenditure budgets.

The idea that “if it isn t broken, don’t fix it” often guides the decision to stay with the IT status quo, no matter what it costs. But the truth is, when it comes to IT, it does not have to be broken to need fixing. New technologies emerge, new hardware comes along, and new ways to improve productivity, eliminate downtime, streamline backup processes and squeeze more out of less become available every year.

Investigate the use of portable wireless equipment which allows email, diary management, Internet access and mobile phone use in one handheld device.

The cost of a `Smart Phone’ and other such units are only a fraction of the cost of a laptop or desktop pc and allow the user to access its diary and email anywhere in the world using the GPRS service.

22 – Optimise the workplace

An uncomfortable poorly planned and inefficient working environment invariably reduces employee productivity, morale and absenteeism and leads to a lack of creativity, a greater propensity to make mistakes and poor internal communication.

Europe’s leading ergonomist, Dr Jason Devereux, was commissioned to launch an investigation into the way in which office design and fit-out affects workplace productivity and staff morale. Using his team at the University of Surrey’s European Institute of Health and Medical Sciences, he produced a scientific study on the impact of an office fit-out on productivity.

After workplace optimisation the companies surveyed reported the following:

• Staff morale improved in 80% of companies

• 61% of companies said efficiency increased

• The mood of the employees became more positive in 70% of companies

• The optimisation made staff better organised and more in tune with each other in 87% of companies.

In a similar study in the United States, the Bank of Boston reported that 25% fewer staff produced the same amount of work in 30% less space following the optimisation of its working environment.

Significantly the whole project paid for itself in less than 24 months.

23 – Turn meetings into money

It is 9 am. You have an important report due by the end of the day, at least a dozen phone messages to return, six clients to call, and your email inbox is already screaming for attention.

What you did not anticipate on this exhaustively busy day at the office was an impromptu, unplanned meeting. By 10 am you are checking your watch, and by noon you have pretty much given up any hope of completing that report or getting to your clients because this meeting has got out of hand.

Relax, you are a victim of “Meeting Mania”; a malaise which is stifling productivity, turning the work day into wasted time, wasted energy and most importantly lost profits.

In fact, it is surprising to learn that out of an average day, 37% of a mid-level manager’s time is devoted entirely to meetings. Among top executives, that figure rises to an amazing 75%.

Of course, not all meetings are a waste of time. Some actually do generate great ideas, solve problems, and create solutions. The problem is that most are just too lengthy and take an exorbitant amount of time to overcome the barriers that prevent meeting effectiveness.

Make a start today to end the crass waste of time and money, by introducing a culture that streamlines the meeting process – and watch how quickly huge benefits build up for the company and your employees.

Most UK companies overestimate the amount of meeting space required when in fact 40% of meeting rooms that have been booked in advance, are never actually used.

The author, Alan Whitehead is the CEO of Whitehead Francis Associates, providing specialist project management and cost consultancy services for companies all over the UK or moving to the UK from abroad. Including project management and cost control services for all aspects of commercial interior fit out, refurbishment and move management.

So You Want to Start a VOIP Business in Uganda?

I have recently been reviewing the business model for a company that is dealing in VOIP. For the uninitiated, VOIP stands for Voice Over Internet Protocol(VOIP). It is basically a technology/ies that allows telephone calls to be made over the internet rather than over traditional telephone lines.

I set out my simple and straight forward observations.

First the cons (of course)

1. Internet stability.
Internet in Uganda can be very unreliable and where it is reliable it is very expensive. Now this is very critical as to make calls over the internet you need VERY RELIABLE internet and so this is the starting point for anyone looking to invest in this sector. It is however not uncommon for an ISP to charge $1400 per month for 64 kbps. That’s not a lot of bandwidth as a typical telephone call requires about 8kbps at any time and so 64kbps supports only about 8 simultaneous conversations or less depending on internet conditions. The good news of course is that this is changing with fibre optic cables being laid all the time and so internet costs reduce. My best advice, use ADSL and shared bandwidth. UTL does a good job here, with a great value and generally reliable product if you can get the telephone line.

2. Competition
VOIP prides itself in being cheaper than the traditional telephone companies and many a VOIP provider will give you rates that are much cheaper than the networks. That was until recently. Many telecom providers in Uganda for example Orange have great international calling bundles that give the VOIP provider a run for their money. The VOIP provider is therefore having to compete with the telecom companies in offering customers international calling services. You have to therefore be prepared to look at your financials closely and constantly lest you fall into losses so do yourself a favour, get a good accountant!

3. The Exchange rate
The Uganda shilling is depreciating against the dollar and this may continue to be the case. In 2006 for example the rate was Shs 1,700 to the dollar. In 2011 at the time of writing, it is Shs 2800. For VOIP,this is critical as the main purchase is “digital airtime” from international VOIP providers. This is purchased in dollars and as such the prices charged to customers need to factor in the exchange rate, in addition to ensuring remaining competitive against the BIG BAD WOLVES (I mean the telecom companies).

4. Technology know how
VOIP is a specialised sector and so it of course requires someone with interest but this is not such a significant matter as employing an IT person will help reduce the entreprenuers need to worry about this.

5. Start up capital
From my rough estimates, a typical VOIP business (say a phone shop to support 6 phone booths) can ideally start up business from as little as UGX 8.7m. This should cover; rent at 500k per month (including 2 month deposit bringing it to 1.5m), internet installation and subscription; 700k, purchase of the VOIP and computer equipment; 1.975m, furniture/ fittings; 1m an inverter; 2m, legal and related costs; 700k and signage(to advertise); 500k.

From my analysis, a VOIP business on its own is however not profitable and therefore it is ESSENTIAL to also have an internet cafe running side by side. The costs of the internet cafe side plus the VOIP side stripping out the shared start up costs like rent and inverter will be 20,383,275. I have written about an internet cafe set up costs separately in the article on the internet cafe. The total start up cost is therefore about Shs 20m

AND NOW THE PROS

1. Profitability and quick return on capital
Like the rest of Africa, In Uganda there are tremendous growth opportunities in the ICT/ communications sector and per Uganda Investment Authority, this is one of their key sectors for investment. Call traffic continually increases as Ugandans enjoy higher incomes. Despite the biting inflation, there is a continual increase in call traffic. VOIP is not being left behind and assuming ICT sector growths averaging 25% per year turnover averaging Shs 53m would not be an exaggeration. On the basis of my knowledge of this sector, I set out a summary profitability picture as well as the return on capital (this includes a diversified model which includes an internet cafe). All estimates are in UGX. The exchange rate to the USD is about 1 USD = Shs 2,700.

Gross profit

1.Revenue- calls: 65,520,000. Assuming 7 days a week at 180k per day.
2.Revenue- internet: 13,884,000. Assuming Shs 290k per week from 4 computers and multi purpose maching.
3.Cost of sales: -49,140,000. Assuming it is 75% of revenue for calls on basis of exchange rate and reseller margin.
4.credit transfer cost: -1,228,500. Assuming 2.5% of cost of sales
5.Franchise fee: – 655,200. 1% of revenue-calls.

Gross profit: 28,380,300

Overheads
Rent: Shs 4,800,000
Internet: Shs 3,840,000
Staff costs:Shs 6,000,000
Other overheads: Shs. 1,800,000
Total overheads: 16,440,000

Net Profit: 11,940,300

Capital investment: 20,383,275

Return on Investment: 1.71 years.

2. Return on capital
On the basis of the above profit picture therefore, this business should be able to have a return on capital of 1.71 years. A word of caution here. The model above assumes full capacity growth and so may not necessarily reflect a start up business in say its first few months. In addition the model assumes the internet cafe and call shop will run side by side and concurrently. I have done a separate analysis of the VOIP model on its own and from my analysis it will take 90 years to get a return on your capital! In Uganda, there is therefore no alternative for a VOIP investor but to integrate the call shop and the VOIP services.

Why Discount Office Furniture Makes Sense

There are a lot of great deals on discount office furniture currently available and being advertised on the web as well as magazines, newspapers, etc… The obvious reason is the sometimes massive stock of office furniture lying with the larger manufacturers and those whose brands are not too well known. These have remained unsold due to the belt tightening that almost every company across the world has gone in for over the last year and a half due to the massive recession. Another related reason is that companies and businesses that have been forced to close some or all their operations are selling off furniture to collect whatever money they can, with the rates touching rock bottom – usually a small fraction of their original, or even depreciated rates.

Do remember however, that purchase of discount office furniture usually means that there will not be any refund policy after payment has been made, so you are stuck if you land up with one or more bad pieces. Also the shipping charges can add up to quite a bit – sometimes more than the amount paid for the merchandise itself, primarily because any furniture is likely to be bulky. The most common discount structures currently being offered are a straight percentage off on the marked price for even one or two items, bigger discounts on bulk purchases of similar items, discounts on buying sets containing predetermined items of furniture – such as a computer table, appropriate chair, side table for storage purposes, etc.

As with all discount shopping, being a sensible discount office furniture shopper is vital as otherwise a person is likely to lose his or her head seeing the fabulous offers for chairs, desks, tables, cabinets, cupboards, etc. and go in for purchasing much more than what is really required just because they look good. Besides denting the pocket, in all likelihood the unnecessary items will be housed in the garage for disposal at a later date without ever being used! Therefore before going in for the actual purchase it is always good to take proper measurements of the space available for the discount office furnishings as well as any other furniture planned to be bought. Otherwise along with shipping, it may become quite expensive to modify the item(s) to fit properly. It may also be very difficult to get the colour combinations you want and there is always the possibility that the furniture will arrive in a damaged, broken or scratched condition – correcting which would require even more expense.

It is therefore always advisable to purchase discount office furniture only from trusted businesses and manufacturers, whether though the web or from the local office / store. Going by the suggestions of people who have already gone through the process and whom you can trust should be the watchword, as well as the facility to physically inspect the goods before handing over the money.

Tips To Choose The Best Office Furniture Desk

Successful office furniture desks are the ones which not only look good and elegant but are also functional. With a plethora of options available in the market, getting confused about choosing the best fitting furniture for the office is very common. However, if you adhere to some basic tips while choosing your office desk, you can the furniture that best suits your office.

Following are some tips on choosing the right office furniture desk:

1. An office desk is most probably the largest piece of furniture in any office environment. Thus, its style should match the image of the company. It should accurately blend into the decor of the office and should be easy on the eyes and convenient to use for the employees and visitors alike.

2. Employee comfort is the next important aspect to consider. Selecting ergonomic furniture would not just elevate the comfort levels of the employees working on the desks, but also, increases the productivity and efficiency of the employees thereby contributing to the growth of the company.

3. Understanding the usage is the next aspect to consider. Take into account the different activities which will be performed on each of the table and choose the design accordingly. Remember that the functionality of a reception desk is different from that for a draftsman and the same applies for other functions as well. Requirements also differ for a desk in a conference room to that of visitor’s room. So understand individual needs separately before deciding on your office furniture.

4. Material is the next on the list. Available in metal or wood, the right material which suits your budget and style needs to be carefully selected. With a wide variety of selections available in both materials, choosing the color and design matching the decor of the office is easier today.

5. Plan for the future and think about the expansion plans which the company would be hoping to achieve. The desk design you choose should be flexible and adjustable to accommodate future changes in technology and processes.

6. Finally, choose to go with value for money office desks rather than choosing the cheapest furniture available in the market, which has questionable durability and reliability. Your office furniture should match the calculated depreciation of its value. Faster depreciation would force you to go for additional expenditure way ahead of time and add to the costs of the company.

Adhering to all the tips mentioned above, only a handful of office furniture companies are committed to provide the best value for money. Hence, it is advised that you perform a proper research and find out the right vendor who can provide you with quality furniture at competitive rates.

Quantity Surveyors and the Preparation of Depreciation Schedules in Australia

In Australia, quantity surveyors are now the only professionals authorised by the Australian Tax Office (ATO), to prepare Tax Depreciation Schedules for Investment Properties. Property investment owners should only engage ATO registered quantity surveyors to prepare a depreciation report that includes the capital write down of construction cost on their investment property according to relevant ATO tax legislation. Tax depreciation schedules should include two main components:

1. Depreciation schedule for Fixtures and Fittings (Assets decline in value Div 40) All properties are eligible for depreciation of fixtures and fittings due to declining value of these assets, regardless of the age of the building.

2. Depreciation Schedule for Construction Costs (Capital Works deduction Div 43) Properties constructed after: 17 July1985 (residential); and 20 July 1982 (non-residential) are eligible for depreciation of the construction costs.

Construction Allowance Under DIV 43 Items Depreciable @ 4% or 2.5% for residential properties include:

. Building Structure and Footings
. Plumbing and Drainage
. Electrical work including Switch Boards
. Ceramic Floor Tiles
. Internal and External Windows and Doors
. Built in kitchen Cupboards
. Bathroom and Sanitary Fixtures
. Concrete Swimming Pools and fixed Spas
. Concrete driveway or Paving
. Permanent Garden Sheds
. Fencing and Gates
. Builder’s establishment costs
. Architects and Consultants fees
. Additions or extensions
. Refurbishment to internal structure e.g. new bathroom or new kitchen

Depreciation for Fixtures and Fittings include: (Div 40) at various rates according to ATO effective life include:

. Air-conditioners – split and wall units
. Blinds and Curtains e.g. Venetian
. Carpet, vinyl and floating timber flooring
. Ceiling Fans
. Dishwashers
. Furniture e.g. beds, lounges, chairs, tables etc.
. Hot water System
. Intercom Panels
. Light fittings (excluding hardwired)
. Range Hoods
. Roller Door Motors
. Refrigerators
. Stoves, cook tops and ovens
. Security System Panels
. Swimming Pool Pumps and Chlorination Systems
. T V Aerials amplifiers and Modulators
. Washing Machines

Quantity Surveyors who are registered ATO Tax Agents are qualified to prepare tax depreciation reports for property investments.

Quantity Surveyors tax depreciation reports should also include the following: the latest ATO Rulings, comprehensive and easy translation by individuals, accountants and tax agents, prepared according to Australian Institute of Quantity Surveyors (AIQS) Property Depreciation Handbook, include all items allowable under ATO Rulings, and construction costs are estimated by a qualified quantity surveyor.

Quantity Surveyors tax depreciation schedules allow property investors to optimise their tax return using either Prime Cost, Diminishing Value & Low Value Pool.