Look forward not back at tax time

Our research showed three-quarters of small-business owners didn’t even set an annual budget last financial year.

30 June is fast approaching but rather than focus on what hasn’t been achieved we’d urge businesses to utilise the next two months for planning for the next financial year.

It’s easy to get bogged down in paperwork at this time of year, and highlighting what hasn’t been achieved, when it is actually the perfect time to assess your business performance while you are focused on the finances.

Our national survey revealed poor financial management caused one in 10 small businesses to lose money last year. Assessing financial-management practices should top the list for all small-business owners. Many businesses make entirely avoidable mistakes that cost them big bucks.

Furthermore, our research showed three-quarters of small-business owners didn’t even set an annual budget last financial year. Another 28% did not review cashflow, stating ‘as long as there is money in the bank I don’t worry’. This is quite concerning given good financial management practices, seeking new ways to boost profit and setting a budget are fundamental to business success.

Now is the time to focus on what has worked for you, what hasn’t and what you’d like to improve on over the next year. The New Year presents a fresh start and requires a strategy to ensure your business is as profitable as it can be.

Planning for the next financial year helps reduce financial risk, leads to business growth, encourages you to prioritise and focus, and prepares you for every eventuality. It is imperative to long-term business success.

Our top end of financial year tips are:

Organise your records: it’s important to keep your records in order all year round so that you’re not in a panic at tax time, and can use the time more wisely for reviews. Filing and keeping receipts, for example, is a must. Use Apps such as Receipt Bank to manage your expenses and file electronically to reduce paperwork.
Set new financial goals: now is the perfect time to assess your progress over the last 12 months. Look at if you achieved your targets and if you didn’t, do you know why not? Set new financial goals for the year ahead – budgeting is an essential part of this. Develop a comprehensive financial plan that will guide you through the next 12 months. Set targets that will stretch you, not stress you.
Review your business plan: while a budget generally plans for the next 12 months, a business plan often looks several years ahead. Use EOFY to reassess your current business plan and help direct you and your team towards your goals over the coming years.
Ensure you have adequate capital support: Make sure you have the financial support you need to achieve your growth strategy by assessing how you can improve cashflow and any banking products/tools you might require over the next 12 months. Devise a cashflow projection for the year ahead.
Focus on sales growth: sales growth is necessary for the health of a growing company, so take time to make sure the necessary plan is in place to grow your sales. Ongoing sales-performance training, for example, is key to ensuring long-term success.
Create additional revenue: ‘Monetise’ – adapt non-revenue-generating assets to generate extra income. Look for creative ways to generate additional profit from your existing products and services.
Assess your expenses: consider prepaying expenses you know are imminent or delay them until next year, depending on your profit. Review the previous year’s spending to identify where you can save on costs and reduce overheads. Consider direct debit on essentials services like phones, internet and rent to avoid fines.