Organising your business for success in the new financial year
I recently accompanied the Australian Minister for Small Business, Bruce Billson MP, as he visited small businesses in Templestowe Village, Victoria. The Minister was out selling the good news in the budget about the immediate deductibility of assets costing less than $20,000 (for small businesses with an aggregated turnover less than $2 million). He talked with young entrepreneurs and owners of businesses ranging from restaurants and dry cleaners, to cafés and specialty fashion retailers. Did you know the deduction was available on purchases from 7.30pm 12 May 2015?
There are two reasons I mention this. The first is that things happen when they are part of a process. In this case, the Federal Budget processes help organise an incredibly complex economy and ecosystem we call Australia. Secondly, your own business needs to have its processes agile enough to move quickly if necessary. For instance, is your business organised well enough to purchase an eligible asset before 30 June? If you were an eligible small business set to make a $20,000 taxable profit this year, bringing forward a $20,000 eligible asset purchase from July into June would reduce a small business’s tax to zero.
Here is a list of some ideas to help you get organised for the new financial year:
- Prepare for a fresh start: Do a physical cleanup, but remember that a large part of being organised is in the mind:
- Physical: Certainly do a physical and administrative wrap-up for financial yearend as promptly as you can. Get it behind you because it is all about next year now!
- Psychological: Use June 30 as psychological opportunity for a fresh start as well. Reflect on what you have achieved, thank those who helped you during past year and look back objectively at any major issues experienced during the year.
- Take care of tax: Get your tax returns done quickly using online accounting software like MYOB Essentials, and always try to visit your accountant in May or June. An accountant can’t help you much once the year is over; you need to touch base before June 30 to get advice:
- The new $20,000 immediate deduction: should you go out now and buy something before June 30 to get the benefit this year, or will this starve your cash flow for the new year?
- Should you increase your June superannuation contribution or adjust your remuneration or drawings in the month of June? Are you on track for a profit or a loss? Try to end the year with no surprises.
- Allocate time for planning: A large part of being organised is simply planning. To prepare for the year ahead, you need to allow yourself time to plan.
- Create or update your business plan: Don’t lose sight of the big picture by getting caught in the detail. Your business plan is a strategic view of your business. Key points to update include:
- Has the mission or objectives of the business changed?
- Summarise the competitive environment (new competitors, changes in market price, general economic condition, etc. that may impact your business in the new year)
- Based on your reflections on the prior year and your discussion in the planning session, quickly develop a strengths, weaknesses, opportunities and threats (SWOT) analysis and determine changes in strategy, direction or objectives
- Set high-level targets for the year. For example, what growth do you expect in which months? Then follow any strategic changes through to each element of the business to ensure you have adequate resources (such as employees, cash flow or stock) to achieve the annual targets
- Rank and prioritise items from your SWOT analysis. You can’t do everything, but there will be critical threats, risks or opportunities that must be addressed
- Ensure the marketing and projects calendar is reflected in your projected cash flow, profit and loss and balance sheet statements
- Finish your plan and financial statements as soon as possible into the new year. Know your targets and your key dates
- Get organised: As a gross generalisation, I’m prepared to say the root cause of most business activities ‘going wrong’ can be traced back to a failure to plan, prepare and be organised in advance. So get organised!
- Online accounting software: Using online accounting software like MYOB Essentials helps take care of GST, invoices, reporting expenses and payroll. It gives an accurate view of your cash flow and makes end of financial year obligations easier
- Mobility: If you have not already done so, ensure you can access your vital documents via your mobile device: email, contacts, calendar and invoicing at minimum
- Diary: Usually from your email provider, like Google, diarise all your meetings, and client re-contact times. Then actually use it to send a meeting request to be accepted
- Calendar: Create a marketing and project calendar by month highlighting the particular strategies, campaigns or projects to undertaken in the those months. This could be done in Excel, Word or similar program
- Staff: Your staff are your most critical asset. Meet with each employee if possible and develop a performance plan for the year. There are plenty of templates around. It can be one page with expectations, outcomes and development opportunities (such as BAS training)
- Contractors: Look at the return on investment from your time spent doing something verses contracting it out. A good example is bookkeeping and BAS statements. Why spend ten hours on it yourself if you can get a bookkeeper to do it in two hours?
- Ditch the paper: Are you still sending paper accounts, estimates or items by post? If they can be sent digitally, for instance by email or direct bank downloads, do it. The short-term learning curve will quickly be out-weighted by the benefits
- Upgrade: Review your systems and processes: Do you have the latest version of accounting software? Look at all the benefits of upgrading. For example, is your accounting system mobile friendly, secure and in the cloud? If not, suggest visiting myob.com.au/upgrade
- Other efficiencies: Look at new stock control systems or other tools like Kounta to manage your most critical, time consuming or low-return activities
I find a lot of small to medium sized businesses — and some large enterprises — fail to plan adequately. They become complacent. If you have no changes to your business plan, are you stagnate while your competitors are leaving you behind? When was the last time you got comprehensive feedback from your employees, clients or suppliers? If your targets are increasing by 20%, what strategy are you implementing to do that — and is it profitable growth? Know what your unit costs are and when you will make a profit or loss.
We are moving to a digital economy. Are you on social media, and do you have a digital shopping cart? Is your website mobile friendly? Look at the add-on modules for MYOB and see if any will improve the efficiency of what you need do and how you do it. There is an incredible array of tools, apps and other systems to address just about every need. These days, a year is a long time; so even if there was nothing out there a year ago, look again for tools to assist you, your staff and clients. There is an app for almost everything!
This information is general in nature and is subject to change without notice. No representation is made as to how accurate, current or complete the information is, even though every effort has been taken to ensure this is the case. This general information is not a substitute for independent professional advice and users should obtain any appropriate accounting, legal or other professional advice relevant to their particular circumstances.