Spring brings a nice change in the weather and people love to spend spring getting organised. But when was the last time you gave your finances a spring clean?
Spring is the perfect time to reassess your spending habits, your pricing and your financial goals. Most people think the end of the financial year, or the Christmas break is the only time to take a deep dive into your numbers, but we think Spring is just as great. And here is why:
- The weather is getting warmer and heck there is sunshine, so naturally, your mood improves. Why should this matter? Well, if numbers aren’t your thing, trying to get on top of financial forecasts, money goals and spending habits in the deep, dark winter months is just near impossible. But as spring comes along, all of a sudden your mood improves and tackling those financial spreadsheets is a welcome challenge.
- Review your invoicing model. So many clients we see are invoicing after the job is complete. Now this is fine to an extent – but they also have no contracts in place. So take a look at your engagement letters and contracts for new work. Does it cover invoicing, pricing, ad hoc work, non-payment clause, and debt collection processes? This document should be signed by every client before you start the work. Invoicing should be a minimum of 50 per cent upfront and progress payments where possible.
- Don’t assume that clients who were profitable last year are still profitable this year. And don’t assume your business model is the same as what it was last year. Ask yourself “are you working with clients who value me?” and if not, then you need to assess if your business is leading you, or if you are leading your business. Working with the wrong clients can affect your brand reputation, affect your profit and affect your mental state. Value yourself, and your clients will too.
- Ask you customers what they want. This freaks out a lot of people. But with a change in season and a more positive mindset, it is the perfect time to send out performance evaluations to clients. Ask them how are you are performing, what other services would they like, what things could you improve on. Constructive criticism whilst scary, is the best way to give your clients exactly what they want. This will enable you to tweak your business so your customer feels even more valued than they already do, and create brand loyalty like no other.
- Review those subscriptions. If you haven’t logged in to programs for over three months, just cancel them. Don’t um and ah over it – it is a business decision and that money can be used far better in other areas (or even saved for a rainy day).
Running a financially healthy business takes time and planning. Becoming profitable rarely happens due to luck, accident or magic. Planning to be profitable includes reviewing and understanding your pricing structure, your breakeven point, the difference between essential and non-essential costs, cashflow forecasting and reviewing your payment terms with your customers.
As business owners, we are often guilty of wearing too many hats and trying to do it all ourselves. Whilst getting a trusted advisor on your team does cost money – the benefits are long term for your business. So put a spring in your step and if one of your goals for 2018/2019 is to boost your profit, then someone with a knowledgeable financial background is really instrumental to have on your team.
Stacey Price, Accountant and BAS Agent, Healthy Business Finances