It’s never-ending for business owners: if it’s not BAS time, it’s EOFY, then the cycle starts all over again. With the EOFY rush receding, July as the first month of the new financial year is a great time to take stock.
Here are five actions we recommend for any business owner looking to grow in 2019/20.
1. Write a business plan
We know from experience that this one often falls into the “I’m too busy/it’s too hard basket” for time-pressed business owners. But putting down a plan on paper is time well spent. It keeps you accountable to your goals and shows any potential financier that you have a road map to follow. It doesn’t have to be as long as an epic novel – the plan might only be a few pages that outline your goals and set out how you plan to reach them.
A simple SWOT analysis covers most bases. Outline the strengths and weaknesses of the business, list the opportunities and threats you can foresee, then outline how you plan to cope with, manage or take advantage of these. Have you locked in key customers and key staff, and if not, how will you do so? Think about disruption and how it might apply to your industry – if you think you might be vulnerable to disruption, disrupt yourself!
2. Produce a meaningful budget
Budgets are great tools for predicting the financial implications of the business plan, provided your assumptions are realistic. A meaningful budget shows how delivering on your business plan will impact your cashflow. It should contain forward-looking financial forecasts including profit and loss, balance sheet and cashflow statements.
It’s important to think about how you should be funding your business, and what are the viable financing options. Having a business plan and robust financial forecasts in place will help a business owner with any conversations they have with potential financiers.
3. Get a better understanding of your cashflow
There is a saying that turnover is vanity, profit is sanity and cashflow is reality. A profit on paper doesn’t equal cash in the bank so it’s important to understand when payments are expected in and when outgoings need to be paid.
For businesses that provide products or services to other businesses on standard trade credit terms, Scottish Pacific’s working capital facilities can have a positive cashflow impact on your business. For example, invoice finance offers a line of credit linked to outstanding accounts receivables, supporting business growth and increasing purchasing power without the need for real estate security.
4. Talk to trusted advisers
If your business is looking for opportunities to expand it pays to take the time to review your cashflow, sit down with your accountant and work out how best to fund this growth. Professionals such as accountants and commercial brokers who specialise in working with SMEs can really add value to a business by providing cashflow and business improvement guidance as well as information on a wide range of funding options.
Talk to your trusted adviser and get their professional help to ensure your business has taken the right steps to make you more appealing to investors or potential lenders.
5. Monitor legislative changes and have an eye for deals
If you haven’t already done so, July’s the time to get on top of new regulatory requirements, from STP to minimum wage revamps to the new PAYG withholding scales. To help business owners get on top of Single Touch Payroll, the small business ombudsman has a handy fact sheet.
Don’t fall foul of the ATO, or fall behind in tax commitments, as it can have a negative roll-on effect for your business and make you personally liable for company tax arrears. It’s also a great time of year to run a close eye over business expenditure to see where you might get a better deal.
For example, if you switched all your company phone requirements to a different provider would you make a large saving? If you took a longer office lease could you get more preferable terms? Could you be getting a better deal with a different energy provider?
Wayne Smith, Head of Debtor Finance, Scottish Pacific