Land & Architectural Survey Blog

Author: Bhavesh Ramburn

  • Land Surveying Business Planning Part 1

    Many types of company structures can be used to set up a land surveying business in the UK. According to a study by the UK’s Office for National Statistics, the most common structures used by land surveying companies are limited companies, sole traders, and partnerships.

    The whole point of these structures is to share or limit the liability of the works done. This is because as a sole trader, your personal assets are at risk in case of business debts.

    A company, if set up correctly, can limit the liability so that your own personal assets are not in danger. A limited company, according to the Companies Act 2006, is a corporation that limits its liability for debts, liabilities, and obligations through state law or charter documents.

    The type of business entity you choose will depend on your business needs and the laws in your country. A survey of business owners by the International Chamber of Commerce found that the choice of business entity is often influenced by factors such as the ownership structure, management, and ownership transferability.

    There are four main types of business entities: Public liability Company, Limited company, Sole trader, and Partnership.

    A Public liability Company is a corporation, but it’s not publicly traded on the stock market. This type of company is used by larger businesses that want to limit their liability and raise capital via debt or equity financing.

    A Limited company, according to the Companies Act 2006, is a corporation that limits its liability for debts, liabilities, and obligations through state law or charter documents.

    A Sole trader is an individual who does business under their own name without incorporating as a separate legal entity.

    A Partnership is created when two or more individuals agree to join together to engage in business activities for profit but without incorporating as a separate legal entity.

    When running a land surveying business, you need to have an objective to help you set your goals for you as the business owner but also the employees/staff.

    The strategies can be just a set of goals that you highlight how you want the business to run. For example, you can have a 5-year plan set out such as: establish the surveying business as a market leader for SMEs who are turning over less than $5m/year, establish an average of 12% margin every year, grow the business turnover to $3m/year by year 5.

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    • Accounting Principles and Procedures Part 4

      Credit checks and financial analysis are essential tools for evaluating a supplier or client’s ability to pay and finance a project, particularly in the construction industry.

      According to Experian, a leading credit reporting agency, conducting thorough credit checks can help prevent financial losses and minimize the risk of non-payment (Experian, n.d.).

      These red flags can indicate a company’s poor credit control, which may result in difficulties in getting paid or completing the project.

      For instance, multiple credit checks, nil assets, or CCJs against the company should raise concerns (Experian, n.d.).

      Fortunately, most credit check portals provide comprehensive information, making it easier to identify these issues (Experian, n.d.).

      If you’re unable to access this information, you can calculate a liquidity ratio to assess a company’s financial stability (DeFrang, 2019).

      Conducting credit checks on clients can help you avoid the financial risks associated with non-payment or unfulfilled projects.

      For example, in the construction industry, companies may go bankrupt or fail to pay their suppliers, leaving you with outstanding debts (Baker, 2018).

      Land surveying clients with poor credit control may also compromise on the quality of their work, insurance, or professionalism.

      To mitigate these risks, it’s crucial to investigate a company’s credit history and assess its ability to pay for your services (Baker, 2018).

      Furthermore, evaluating a company’s liquidity using a liquidity ratio can help you determine its ability to support a project of a given size and duration.

      For instance, if a survey estimated to cost £50,000 is expected to take several months to complete, a company with a limited working capital base of £20,000 per month may struggle to cover its expenses and potentially go insolvency (DeFrang, 2019).

      To avoid such risks, it’s advisable to scrutinize potential clients’ financial stability before engaging your services.

      References

      • Accounting Principles and Procedures Part 3

        Acid Test Ratio The Acid Test Ratio, also known as the Quick Ratio, measures a company’s ability to pay its short-term debts using its liquid assets. According to a study by Forbes, a company with a higher Acid Test Ratio has a higher likelihood of being able to pay its debts, which can lead to improved financial stability. This ratio is calculated by adding a company’s cash, accounts receivable, and short-term investments, then dividing that total by its current liabilities. By analyzing this ratio, investors can gain insight into a company’s ability to meet its short-term obligations.

        Profitability Ratios Profitability Ratios are a measure of a company’s ability to generate earnings from its sales. A well-calculated Profitability Ratio can help investors determine a company’s financial health and potential for future growth. A study by Harvard Business Review found that companies with high Profitability Ratios tend to outperform their peers in terms of long-term financial performance. The margin is calculated using the formula: profit ratio = turnover – (cost of sales/turnover). This ratio provides valuable insight into a company’s ability to manage its costs and generate profits.

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        • Accounting Principles and Procedures Part 2

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