(First published in Inside Small Business July 2020)
It has been an incredibly difficult year for small business owners across the country. From drought and bushfires to the COVID-19 crisis, chances are you’ve never faced uncertainty like this in your lifetime. But, with the arrival FY 2021, comes the opportunity to reset, revive and focus on your strategy for the year ahead.
At this stage, you will have wrapped up EOFY 2020 – complete with all-new considerations about everything from JobKeeper through to the impact of industry closures. Now that this uniquely challenging financial year has come to an end, it’s time to pause and think about what’s next. Here are my top five confidence-boosting tips to prepare for the new financial year – tackle one step per week and you’ll be on track for success.
1. Get organised and set a budget for the year ahead
When it comes to assessing your financial performance, it pays to plan ahead. Why? In order to understand whether or not your business is succeeding, you need to be able to measure your results against a previously set plan (or budget). Having a budget in place for the year ahead will also allow you to:
- Make important financial decisions around setting revenue budgets and sales strategies.
- Decide to invest in capital expenditure and team development
- Allocate personal remuneration
- Draw unexpected bills without fear
- Manage a cash flow crisis that you didn’t see coming.
Most small businesses start with a good idea, an identified market niche and a tremendous amount of enthusiasm to drive their vision to succeed. But to what end? Having a clear financial goal in mind assists in shaping your broader business strategy for the year, as well as providing you with a sense of purpose.
2. Set your top five goals and put them in writing
Setting concise goals for the NFY will help give you a sense of focus and direction. By identifying the five chief things that will enable you to meet or exceed your financial budget, you’ll be able to ensure that your hard work throughout the year pays off.
Of your top five goals, it’s great practice to identify the number one priority – that’s the one thing that is most important for your business to achieve. This way, you can target your efforts and distribute your time accordingly. It might be that your top five list contains longer term projects, if so, identifying shorter term milestones or actions within them can help keep things achievable and ensure that you’re making progress.
In short, the things that you focus on are the things that get done.
3. Look ahead and forecast your cash flow
During times of uncertainty, it’s vital to ensure that you’re across your business’ numbers. It’s one thing to know that cash flow is important, but it’s another altogether to take the time to understand where your business stands financially and what you need to do to improve it.
Luckily, there’s help to be found. For instance, if you’re using online accounting software like Xero, you’ll have access to features designed to provide the visibility and insights you need to manage your cash flow. Xero’s short-term cash flow feature visually projects your bank balance 30 days into the future, showing you the impact of existing bills and invoices if they’re paid on time. This not only provides clarity, but will help you work out which invoices you should follow up, and see how your cash flow will change if you pay a bill this week versus next week. Other available software platforms have similar features that your Prosperity Adviser can assist you to navigate as appropriate.
Now more than ever, having financial visibility from the outset of the NFY is key. Your accountant or bookkeeper will be a helpful source of advice on your specific circumstances.
4. Streamline your processes and declutter your business
Just like decluttering your home during a much-needed spring clean, seeking out an inefficient process in your business and streamlining it can reap great rewards – both in terms of efficiency and staff satisfaction.
We live in an age where technology can provide solutions for all sorts of problems, and you might be surprised to find that there’s likely an off the shelf answer to your process inefficiencies. Spending too much time entering and filing receipts? Instead, you can use clever apps like HubDoc to snap a photo of your receipts and bills and watch them load straight into your accounting system – no more filing paper. And that’s just the beginning.
Creating a culture of continuous improvement has immense benefits. Start with one small change now, and see where it takes you.
5. Create new habits and learn how to say “no”
Now more than ever, time is a limited commodity. In order to achieve your goals and create positive new habits, you first need to address the old habits that may be holding you back. To identify what these could be, consider the following questions:
- Do you say “yes” too often? Next time, pause and consider whether you’re best placed to look after the task at hand. If so, does it need to be completed right away?
- Do you do things that others could do? Focus on delegation. Leverage others to get tasks progressed and only get involved when they are advanced to a stage where they need your input.
- Do you get caught up in trying to be a perfectionist? From now on, take a moment to consider whether the time spent lines up with the value of the task.
- Are you wasting your time on clunky, repetitive tasks? Take advantage of technology and start automating repetitive processes.
In these challenging times, it helps to feel as prepared as possible for the things that are within your control. With some careful planning and forward thinking, you’ll be ready to take on FY 2021 and set your business up for lasting success.
If you have any questions regarding the above, contact Director of Business Services and Taxation, Megan Smith at firstname.lastname@example.org.