How to set your business up for a smooth financial year
Monday, June 26, 2017/
The financial year has clicked over and in the lead up to it, you may have sifted through various articles about steps to take before 30 June to make your tax return go a bit smoother.
On the flipside, there are a few things to consider post 1 July, about how to boost your business’s performance. It’s not so much about tax, but more about using this time to put some plans in place for the coming year.
Review your financial results for the last two years
Yes, not just last year, but the year before too. It’s important to see how last year went, of course, but it’s also good to see where you’ve made progress and where you’ve fallen behind. A profit and loss statement with prior year comparisons is easy to generate out of your accounting software. Two years’ data is enough to give you a general idea of trends: are your sales growing or declining? What about salary costs? What about capital expenditure? Knowing these numbers should help you.
Set revenue targets for the coming year
Boring, but essential. This is the starting point for setting strategies to achieve those targets, but there is also virtue in just the choosing of them. It provides a mental bookmark which will guide your activities throughout the year, even if you change strategies.
Write a cash flow budget for the coming year
You cannot underestimate the importance of cash flow budgeting – it really is essential. It helps you manage your funds throughout the year. It helps you know when your business has money and when things are tight.
Set plans for the quiet months
Few businesses are flat out 12 months of the year. When are your quiet patches coming up? Gather your staff together to brainstorm a few ideas about how you can drum up extra business during this time or failing that, how you can use that downtime to your company’s advantage.
Review your prices for the coming year
Make an annual habit of reviewing your rates. Look up the CPI rate, or just look at your overhead expenses over the last two years to see the rate of increase. And on the subject of overheads…
Shop around for your ongoing expenses
Rent, insurance, electricity, phone, travel… can you get a better deal? As all of these things tend to increase in price around this time of year, why not spend some time shopping around to see how much you can save.
Reconnect with five old customers
And then another five next month. It’s all too easy to let the business of maintaining relations with your key clients slip. But those you haven’t heard from in a while, may well need reminding that you’re around. Get out of the office. Take a few out for coffee and see what’s on their minds.
Forecast your staffing needs
Are you going to be needing new staff over the next 12 months? How much will that cost and how much extra work do you need to bring in to cover the cost? Factor it into your cash flow budget. Are you going to have to recruit? Or – gulp – let anyone go? Is anyone going on extended leave? What about professional development for staff – when is that going to happen? Draw yourself up a calendar of your HR tasks for the year. Forewarned is forearmed.
Plan your holidays
No, seriously. Are you going to work full time for the next 12 months, without a break? Is that really the smartest move? Taking your leave improves your own performance and helps you manage your business. So plan for it in advance.
Written by David Sharpe, director of business advisory at Generate. A version of this article was originally posted on their Better Business blog.