10 new financial year resolutions for your small business
As the 2013-2014 financial year comes to a close, many small businesses are scrambling to get all their finances in order before tax time.
It’s OK, we’re all a bit that way at some time, however for those of us determined never to have to wade to shoeboxes of receipts, printouts and expense forms, there are some thing you can do from July 1 to ensure that this time next year you won’t be quite so frazzled!
A new financial year a fantastic time to take charge of your business finances and, though most of us make New Year resolutions, this year, why not make a few new financial year resolutions?
Automate, automate, automate!
By reducing the manual work you have to do, you also reduce the effort and hassles, and you improve accuracy and accessibility to your financial information.
So, consider what manual accounting and related procedures you are doing and look for ways to automate some of those processes.
Is your accounting system still paper based? Are you still writing invoices by hand? Manual invoicing means you have to post those invoices separately and update your cashbook by hand as well.
Why not use an automated invoicing system that not only produces professionally printed invoiced, but also takes care of updating linked systems such as accounts receivable, your cashbook and ledger?
The same will apply to other systems such as purchase orders, expenses ledgers and so on.
Invest in an accounting package
There are many nifty accounting packages for small business that will help your automation process and maintain your accounting records in an organised and accessible fashion.
Some accounting packages suitable for Australian businesses include MYOB and Quickbooks.
There are also dedicated online accounting systems such as Freshbooks which enable you to access your accounts from any connected location.
Planning and budgeting
There is still much debate about who spoke the famous words “If you fail to plan, you plan to fail. “ But, whether it was Benjamin Franklin, Winston Churchill or some other wise soul, those words will always ring true.
So, what planning tools can you use to improve your finances? There are super tools that range from spreadsheets to project management systems.
There are even useful mobile apps that can help you track expenses on the go.
Budgeting is an important part of your financial planning. By preparing a financial budget you create a vision of your financial future and a record against which you can measure your actual performance.
This way you can make adjustments and corrections if things are not going according to plan.
Unfortunately, we live in a world where calamities and disasters occur and Australia is no exception. We all face risks such as fires, floods, windstorms, earthquakes as well as losses from criminal acts such as fraud and theft.
Then of course there is the risk of daily mishaps; every day events such as car accidents or work related accidents can happen to anyone at any time.
Any of these events can have severe financial consequences and now is a good time to have a serious look at your insurance portfolio. Are you covered for your real risks? Are you paying too much for your insurance?
Prevention is always better than the cure and, though there are some events that are beyond our control, there are still many that are well within our control.
You should consider ways to prevent potential losses rather than try and recover from them after they have occurred.
For example, backing up your hard drive weekly could save you losing years of work. Make a list of all the risks your business faces and address them!
Use your information
When you have current and up-to-date information in your accounting, planning and project management systems, you can extract valuable reports and queries such as profit / loss statements, tasks that need attention, expense reports, sales by product types, performance reports and so on. The same goes with your website analytics, which can tell you so much about your customer’s behaviour.
You have so much information at your fingertips, but if you don’t use it and act on it, it’s of no use.
For example if you have overdue debtors, you need to send out reminder letters or even letters of demand.
If your expenses are running over budget you need to scale back.
If your sales are below target you need to improve your marketing and sales efforts.
The thing is, without looking into the reams of data you have access to, you won’t know about any of this until it’s too late!
Play by the rules
As a small business, you have to deal with establishment such as high-street banks, local authorities and government institutions.
They all have rules and it is best to stick to their rules rather than looking for loopholes or simply neglecting them.
Submit your tax returns on time, stick to your overdraft limits and other arrangements with service providers, suppliers and customers.
If you submit your tax returns after due date, exceed agreed banking limits or make late payments, you will likely face expensive penalties and unnecessary charges and costs.
You will also aggravate the people involved and it is not good for your business or your reputation.
If you do find yourself in a difficult situation then you must contact the affected people and authorities and make appropriate arrangements. Burying your head in the sand won’t make problems go away.
Use the services of professionals and specialists
You don’t need to figure out complicated things like tax returns and insurance policies on your own.
Make use of professionals who know how to do these things properly.
This way you will avoid costly mistakes and have more time to focus on the things that you are good at, such as running your business.
Take a look at your whole banking solution and ensure you are getting the banking services you need at a cost that is competitive and affordable. You’d be surprised at how much you can save by sitting down taking a good hard look at all your bank accounts.
Are you paying too much interest on your credit cards? Do you have too many bank accounts, each of which is costing you exorbitant monthly account keeping fees?
A small tweak could save you big dough!
Delegate and manage
As a small business owner you need to manage many things, bou don’t have to do it all yourself – in fact, you should not even try.
But you must manage your business and the things only you can manage.
For the rest of your business-related tasks, delegate functions where appropriate and where possible.
You can use the services of a bookkeeper, an accountant, a tax consultant and so on. But you need to keep tabs on things and act and react as and when necessary.
Financial matters may not be at the top of your list of exciting things to worry about when it comes to your business, but they are crucial to your business’ success and economic survival and, ultimately, yours!
Put even one or two of the above suggestions into practice over the next 12 months and you’re guaranteed to be less frustrated – and frightened – at the end of the next financial year! You may even be in a better financial position.