With the 2020/21 financial year drawing to a close, we’ve put together the best advice our accountants have for small businesses. The tips in this blog post are designed to help you reduce costs, improve your processes, and grow:
Our Accountant’s Advice for Small Businesses:
1 – Start with a complete business review.
Knowing where you are today helps you make better decisions for your businesses future. You should start any business planning with a complete business review:
- Take a look at your current team. Do you have the right people working for you? If so, are they managing the right tasks? You should ensure your managers have enough capacity to focus on management, with team members underneath them to handle tasks they can delegate.
- Review your financial position. What are your current expenses? How much are you earning? Which areas of your business are profitable/thriving – and which aren’t? Is your cash flow strong?
- Map your business processes. Ask your team whether there are aspects of your business operations that take too much time or could be improved.
Alternatively, you can use our GPS Business Diagnostic to help you identify your current strengths and weaknesses. It’s a 25-question diagnostic that takes about 5 minutes and is available here: https://sharpaccounting.com.au/diagnostic-tools
2 – Your small business is better with targets.
If you aren’t already making your business decisions strategically, now is the time to start. You can use the information you gathered for your business review to start setting targets that will help you grow. The ‘best’ targets for your business will depend on your industry, current position, and future goals, but some targets we commonly suggest are:
- Cashflow targets.
- Turnover and gross profit targets
- Targets in key areas such as employment costs and material costs
- Minimum profit targets (and if product lines don’t meet them, consider cutting them).
- Customer satisfaction targets.
3 – A lack of focus can be expensive.
Small business owners, particularly those that offer services, are often tempted to take on any work that comes their way. This can be more costly for your business than you might think:
First, you and your team will spend more time learning to do a broader range of work. If you focus on particular products or services, you can work on increasing efficiencies and improving your profit margin. Conversely, sourcing broader ranges of products or providing broad services is time consuming and (often) an inefficient use of your resources.
Focus on providing a set selection of products or services and ensure that any decision to add to your offering is thoughtful and data driven.
4 – Routinely assess your financing arrangements.
Routinely reviewing your current financing arrangements offers two significant benefits:
- It helps to ensure you aren’t paying too much for your current financing; and
- It prompts you to check in and ensure you have adequate finance available for your future plans.
You should start each financial year by reviewing your current financing arrangements and considering your options to reduce costs and/or access finance in the future. If your current financing arrangements don’t meet your current or future needs, you should develop a plan to align your business planning and financing.
5 – Growth takes careful planning.
Business growth doesn’t just happen. You need to have the finances, products, and human resources in place to cope with increased demand. At the same time, you may need to invest (or invest more) in your marketing to attract more customers to your business.
Working with Sharp Accounting, you can develop future-focused business plans designed to stimulate growth over time. Our practical advice ensures you know exactly what you need to do today, this month, and this year to grow successfully. The tips in this blog post with our best advice for small businesses is just the beginning.