Financial advisors and accountant experts are calling for businesses to seize the opportunity presented by the new financial year to set goals and sort out their finances.
Accounting software provider MYOB has released some steps for start-ups to take in the new financial year. Debra Anderson, the owner of leading MYOB consultancy company Legally BAS, spoke to StartupSmart about how to implement them.
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“This is the ideal time of year to write down your goals, whether they’re financial in a budgetary sense or if they’re a marketing goal or even just getting to have a holiday this year. Writing it down is a commitment, and the whole process helps us think about it and organise our business plans to include them,” Anderson says.
Revisit your business plan with the market in mind
Start-ups and small business should focus on a few written goals and overhauling the budget in their business plans.
“The budget is your roadmap. You need to know where you want to get to, so your budget is the really important thing to show you what you’ve got to get there and where you’re going,” Anderson says. “You also need to take a look at what your competitors are doing now.”
“Things have changed a lot, even in six months. The Australian dollar has dived and the interest rates are down. The landscape has changed and it changes quite quickly in the global market.”
Anderson says many businesses make the mistake of believing the business plan should be set and stuck to for the year.
“Work out what you need to change or look at, once you’ve got that top goal, you can work down. It might not be that you do it all today. You don’t need to execute the whole plan and have it all sorted. It’s a dynamic document. You can change it every week if you need to revisit it,” Anderson says.
Work closely with an accountant or financial advisor throughout the year
Anderson says the new financial year is the best time to invite your accountant out to visit your business. She believes this is key to developing a productive and insightful relationship.
“It’s really important that your accountant actually comes out to your business so they can get a feel for the state of affairs,” Anderson says.
According to Anderson, too many small businesses and start-ups underestimate how much their accountant needs to know.
“Actually, make sure your accountant knows what you do, and how you do it. They’re not just there for tax returns, you should be able to use them as a trusted advisor. We don’t talk about money with friends, but that’s our job, the good bad and the ugly,” Anderson says.
Streamline productivity and processes for a more efficient team and business
The new financial year is the perfect time to re-evaluate your business relationships and suppliers, including your accountant and accounting system.
“Streamlining is really important and you should make sure you’ve got some kind of system that is right for your business. That can be really simple, it could just be Excel if you’re running a really basic business or it could be something with more features,” Anderson says, adding that you shouldn’t choose a system simply because your accountant prefers working with it.
According to Anderson, the most common financial management mistakes small business make are not separating their personal and business accounts, and not putting aside funds for upcoming regular payments.
“Too many small businesses have one credit card for business and personal. Combining their personal and business accounts is a huge error,” Anderson says. “Get a business one so you can link it to the financial software, keep it clean and know where your money is going. It’ll streamline the process and if you’ve done it properly, it’ll do all the dirty work like data entry for you.”
Given cashflow is a major issue for start-ups, Anderson says the easiest thing you can do to get on top of the issue today is separate your accounts or create a new one to start sorting funds appropriately.
“Set up that second bank account; put some money aside for taxes and superannuation aside as you go. Run your GST reports monthly or weekly and put that money aside so you don’t get caught out paying it quarterly,” Anderson says.