10 resolutions for small business to make (and keep!) at EOFY

By June 19, 2018 February 21st, 2020 No Comments

The End of the Financial Year (EOFY) falls on 30 June and while many businesses concentrate on getting their tax affairs in order, this is also a good time to set resolutions for the next 12 months.


1 Financial health check

The EOFY is a good time to check your business finances. You should review all of your financial statements and assess your liquidity, solvency, profitability and return on investment.

You should compare your findings to those of previous years to make sure that you are on the right track. When possible, you should also compare your finances to those of similar businesses to help you identify key strengths and weaknesses as well as opportunities and threats.


2 Is it time to update your strategic plan?

Your business strategy is your long-term plan to visualise where you see yourself in the future. The thing about strategic planning is that while you have a longer term goal, circumstances change a time rolls by.

At EOFY, you should analyse the market space you operate in and map out future developments.

As a small business owner, it is important that your strategic plan reflects your objectives for both your business and your personal life. If you have identified weaknesses in your business finances, you should draft a plan to address them within set time frames. You should continue to monitor this plan and how your business performs throughout the year.


3 Make a budget… and stick to it

outsourced accountingWhen drafting a budget, you must align it with your strategic plan so you can allocate resources to achieve your goals.

Your budget should be realistic and if you find that an objective you have set is not achievable, then you will need to seek more resources, such as a bank loan or funding, or modify your strategic plan.

You should also try and stress test the budget to see what it does to your financial position. You should also monitor it regularly and compare it to your actual results so you can act accordingly and tweak it.


4 Cash flow forecasting

The number one business killer is lack of cash flow. You can be doing fantastically in terms of trading, but if you are not being paid on time, you will not have the funds you need to pay your own bills. Monitor your cash flow at all times.

You can prepare charts manually, but there are heaps of cloud-based solutions that not only monitor your cash flow, but integrate it with any other accounting software you may use.


5 Review your profits

At the end of the day, your business needs to be profitable to survive. At EOFY, you should always look at ways to improve your profitability by increasing the sales of your best products and services, while at the same time reducing unnecessary costs.

You should carry out reviews of your staff productivity, your production process, supply chain and overall expenditure.


6 Make sure you have access to finance

If you want your business to expand, then you will need the cash to finance it. You can get finance by simply taking out a bank loan, equity and cash flow generated by your business.

You should pursue plenty of options and identifying the reason why you need the cash – an asset acquisition, for example – will help you identify which source would work best. You should get the advice of an accountant to help you make the best and most informed decision.

If you borrow money from a lending institution, EOFY is a perfect time to set a meeting and discuss your plans for the coming year with potential lenders. You should always have some options available for a rainy day, or to take advantage of new opportunities that arise out of the blue.


7 Assess your marketing plan

Your marketing plan should be focused on achieving key objectives, in particular improving your profitability and cash flow while stimulating growth.

You should focus your marketing campaign on high-margin sales that bring cash into the mix quickly. This can be achieved through well placed physical and digital advertising.

Another way to stimulate growth is by rewarding staff for high-end sales and paying commission when payment from the buyer is received.

You should also audit your campaigns to see which are performing well and delivering the desired results. You can tweak them in the future to take advantage of those that work best.


8 Digitisation

The link between going digital and business growth is undeniable. Businesses that sell their products or services online and use social media and digital marketing are significantly more likely to grow than other businesses that don’t.

Dexterous can offer expert advice of what technology, apps and programmes to use to tap into the online market space. Remember that digital technology is constantly developing and what may have worked six months ago, may not be working as well now. Sit down with an expert and evaluate your overall direction.

9 Risk management

To run a business soundly, you need to have solid risk management strategies in place. One of the most important things to keep in mind is to not rely on a small number of big customers. If they go out of business, or decide to switch to another supplier, then you might find yourself in big trouble. You should try and diversify your customer base to get as many as possible on the books.

You should also be wary of relying on one supplier. As with the above, if they go out of business, you will find yourself in deep waters.

You should also try and avoid selling on credit. Always push for cash up front, but if you do sell on credit, ensure that you carry out credit checks on your customers. Limit the amount of credit you allow and follow up if they pay late. You can make use of debt-chasing software such as Debtor Daddy to make your life easier.

If you trade online, you should also employ robust measures to prevent fraud and hacking.

10 Avoid these mistakes

When running a business, you should always record cash income and expenditure and take personal drawings into account. You should always keep business and private expenses separate and record any goods that you take for your own use.

You should always keep valid tax invoices for creditable acquisitions when registered for the goods and services tax (GST), adequate stock records and adequate records to substantiate motor vehicle claims.