Let us take a purely hypothetical situation…
A training gym that, er, maybe doesn’t declare all of their cash revenue
I’ll pause for 2-seconds, as I’m sure that never happens, so is perhaps a bit of a stretch to imagine…
I’m not heading anywhere judgemental with this. Quoox is a software company, not a revenue collection agency or government spy – and it’s sometimes easy to forget to record every payment, right?
But, are there potential consequences that might be worth considering?
We’ll skip over the obvious bit that HRMC/IRS will have their “angry faces” on, and you could be looking at an all-inclusive spell of bed-and-board at her majesty’s pleasure. What about the less obvious impact on your business…
KPIs: They’re really handy, aren’t they. They tell you how your business is performing, and where to target your efforts. Oh, but hang on. They’re all wrong. You’ve not got the full revenue figures in there, so all of your metrics are out-of-kilter. What does any of it mean any more? You might as well stick a blindfold on, and just blunder around aimlessly.
Business value: An investor moves into your area. They want to invest in/purchase a well-performing training gym, and they’ve heard great things about you. You go to show them the figures but, oh dear, you then have to explain that they don’t actually reflect the money you’re taking. There’s this extra pot of “undeclared” cash that isn’t shown in the books. You sit back in your chair, as you watch £1M walk away. But, on the plus side, you saved yourself £10 tax on a few sessions.
As you operate your business on a day-to-day basis, there is a potential for every decision you make to have long term consequences.
Ask yourself what your goals are. Are you trying to make a living, or are you reaching for a bigger prize in a few years time?
Set yourself up for the win. Get your business processes in place early, and have a demonstrable track record. By being fully aware of your financial position and KPIs at any moment, you are positioned to operate your business proactively, effectively and profitably.
Ultimately, you must run your business as you choose. But, make your decisions from a position of knowledge and forethought, not just focusing on short-term gain.