2021 Financial Resolutions for Small & Medium-Sized Businesses

2021 has arrived! If you’ve been keeping an eye on our blog, you’ll know that there are plenty of reasons for small and medium-sized businesses to be optimistic about the next 12 months. But, optimism won’t translate to results unless you’re prepared. These 5 financial resolutions for 2021 are a great place to start:

1. Plan for the end of JobKeeper

More Victorian businesses relied on JobKeeper than in the rest of the country combined. If no further JobKeeper extensions are announced, businesses will stop receiving the JobKeeper payment at the end of March 2021. It will pay to be prepared for this.

Business Australia recommends that businesses the steps outlined below to prepare for the end of the JobKeeper payment. We’ve included some practical guidance underneath each of their steps so you know where to start:

Evaluate your business model;

Consider where your business is making money and where you’re not. Look to remove the non-profitable products and services from your offering, while keeping (and even expanding) your profitable lines.

Increase your flexibility;

To achieve this, we recommend adapting your operations to maximise and capitalise on any opportunities during the pandemic. This may include reviewing your trading hours, staffing levels, and marketing avenues, as well as how you conduct your business – including looking to move to or increase online sales.

Review your financing arrangements;

Compare your business, home, and personal loans with current loan rates being offered to confirm whether you’re getting the best rate and terms. The terms are a critical part of any loan and should be considered to be as important as the rate itself. If you think you can get a better rate and/or better terms, speak with your advisor about refinancing.

Keep costs down; and

2020 has certainly provided an opportunity for businesses to rethink their rental space expenditure. Meanwhile, narrowing your business focus to your most profitable products/services can also reduce your overall costs and help you increase your profits. Take a look at your financial reports to see where your business is spending money so you can identify areas where you could save, then start to implement changes.

Talk to a trusted business advisor.

Book a review appointment with your trusted advisor to determine your business outlook and changes that may be required for you to stay profitable.

2. Use Diagnostics in Your Small Business

We’ve made a range of diagnostic tools available to businesses looking to scale and grow. These tools help you assess everything from innovation, to workplace culture, to growth and profit solutions.

Based on this assessment, you’ll gain a deeper understanding of the challenges your business is facing and the opportunities you have. More than this, you’ll gain insights into your strengths, weaknesses, and areas to address. This data can help you identify priority areas for improvement and guide your business decision making into the future.

The marketing diagnostic, for example, dives into your understanding of your customers, your competitors, and your business strengths. Your results are compared to a global benchmark, so you can see how your marketing stacks up. All this can lead to better, more focused decision making in your business.

See the full range of Business Diagnostic Tools here.

3. Invest in technology

Tech-enabled companies outperform those which don’t invest in technologies. A 2020 report Uncovering the Connection Between Digital Maturity and Financial Performance notes that digitally mature companies make better products, have happier customers, are more efficient, grow faster, and have higher revenues. Employees at tech-enabled companies are more engaged too.

But, it’s not enough to just invest in technologies. You need to strategically invest in technologies. Your business should base these investment decisions on data, so you can be sure that your investment will have a real impact.

How to strategically invest in new tech:

To do this, you need to start with a business inventory. Document your current processes and identify areas where bottlenecks, duplications, or errors occur. These areas are perfect for intervention!

Common areas for improvement are HR, accounting, database management, communication, order taking, and order tracking. A range of technologies are available to assist with these common pain points.

Once you know where to improve, research the technologies available and look for something that’s scalable, flexible, and within your price range. Then, consider which technologies are right for you right now – and which ones might be best left for the future. Narrow it down to just one, implement that, and track the progress. Slowly integrate additional technologies as your team and business adapt!

4. Build better relationships

Your business relationships are a valuable business asset. Your business (and every other business) has limited time, limited resources, and limited capacity. These limits mean that it’s essential for you to have a strong network.

Your business relationships will look different depending on your business, but here are some examples:

• Build strong ties to businesses offering complementary services for quid pro quo referrals.
• Identify areas of inefficiency in your business and develops networks you can outsource to. Often, outsourcing can be faster and cheaper than doing work in house.
• Cultivate a very strong supply chain, by leveraging local resources as well as national and international sources.
• Add value for your customers by aligning their needs with yours. It’s easier to get a happy customer back through your door than it is to find a new one!

5. Prioritise your bookkeeping

If your books aren’t in order, your business isn’t in order. Bookkeeping provides invaluable data that your business can use to make better decisions on every front. As a result, you’ll know what your current position is, how much you’ve grown, and what you can expect the future to hold.

Here are some first steps towards healthy books:

• If you haven’t already, separate your personal and business bank accounts. This makes it much easier to assess your cashflow and profitability.
• Download the ATO app to capture images of your business receipts.
• Create a budget and a business plan. WA’s Small Business Development Corp. has a range of helpful templates to help you create these yourself.

Make Your Financial Resolutions for 2021 A Reality

Your business has opportunities to make next year a year of growth and development. If you need assistance creating an actionable plan based on your current business finances and your 2021 financial resolutions, reach out. Our experienced business advisors would love to help!