Its (EOFY) time, here is a List of must-do tasks for Business Owners.
The end of the financial year is always an opportunist time to reflect on the year gone, look at the scoreboard and strategies for the year/time ahead. Regardless of what you do, if you do it honestly, then you will have more clarity to forge forward.
Below are definitely not an extensive list of all the things a business owner can do, rather it is a list of the top must-dos. In no specific order, business owners need to:
1. Review your business plan for the changed in personal situation, environment, and economic conditions
It is good practice to revisit your business plan (if you have one). If you’re personal situation, environment and/or business environment condition changes your plan and strategy need to reflect current circumstances.
Tasks you can consider undertaking navigating forward:
Ø Review and evaluate your performance to your business plan
Ø Take time out or go on a break and celebrate your wins and learnings
Ø Review the assumptions underpinning your business plan and, if those assumptions need to change, then amend and incorporate this into your plan to reflect current condition
Ø Develop strategies to improve performance in the business plan moving forward
Ø Commit to working your plan
2. Improve your business productivity
Regardless of the types of business, businesses should model on getting more from existing assets and employees. For a business to sustain good times and bad, it needs to ensure that their business is operating as efficiently and effectively as possible.
Tasks you can consider undertaking to improve productivity:
Ø Have more data points of evaluating the current performance of your business, start by collecting data on business performance and comparing that performance to previous performance, industry benchmarks and the strategic goals of your business. Peter Drucker puts it best when he says “You can’t manage what you don’t measure”.
Ø Establish key levers and drivers of your business and set goals for them
Ø Regular review performance in those key drivers against such goals and identify areas for improvement, areas of risk and trends. The best practical approach is to develop and put in place systems and process such as the use of dashboard for quick reporting. This puts you in control and places you in the best position to share this feedback with your team in a clear and concise manner.
Ø Develop and implement strategies based on the data as feedback and monitor their effectiveness, then measure and adjusting, raise and repeat, if necessary adopt a new strategy when ineffective.
3. Review and minimise reliance on external funding.
Debt is debt, be it in a personal setting or business manner. Businesses will evitable take on debt when their businesses are either stagnating or growing. Businesses should be focused on increasing the productivity (efficiency) of existing assets including employees as well as improving cash flow as a measure of reducing their reliance on external finance.
Improving cash flow can free up money to fund necessary to purchases or invest without having to seek external finance, it also can be used to pay down debt.
Tasks you can consider undertaking to improve cash flow:
Ø Follow up on outstanding debts
Ø Examines trading terms and credit accounts
Ø Work closely with your bookkeeper/accountant and perform regular cash flow forecasts
Ø Focus and prioritise your marketing towards products and services that can be turned into cash quickly
Ø Maximise your suppliers’ payment terms, (honour your commitment and do not pay late)
Ø Reduce stock levels and replace slow-moving with stock that has a faster turn-around time
Ø Sell unnecessary assets and obsolete stock that are clearly not fit for purpose
4. Identify and adopt appropriate risk management strategies
Businesses are exposed to risks that threaten its viability and affects its current and future maintainable earnings. Therefore identifying and adopting appropriate risk management strategies to reduce identify and manage risks, especially the following:
Ø Reduce client/supplier concentration risk. When your business relies too heavily on a small number of major customers or supplier, you and your business are exposed
Ø Reduce the reliance on one type, or source, of funding/finance
Ø Review your credit policy and terms, when you sell on credit without appropriate checks you are exposed
5. Review your cost structures and look for saving opportunities
Increasing business costs pressure is a promenade theme for business owners in almost all fields of operations.In the world of private and small business, cost of living increase will ultimately place pressure on the business having to provide the funding to maintain your current level of lifestyle.
If you cannot put the cost in check and under control or pass increases onto customers, the end result is a reduction in both cash flow and profitability and can and will impact the future viability of your business if you do not review your cost structure and look for saving opportunities.
Tasks you can consider undertaking for cost structure review and find savings:
Ø Reviewing costs which are under your control. Be strategic in cost-cutting, consider phasing changes in as it is not uncommon for businesses to cut aggressively, only to have to undo some of those cost-cutting measures
Ø If you don’t ask you won’t know. Do not be afraid to ask suppliers for discounts and/or better deal, consider other terms and condition not just price. For example “stock on consignment” can reduce warehousing costs or if they supply to you on a “just in time” basis.
Ø Do your research, compare your cost structures with industry benchmark, speak to other businesses in your industry and identify areas for improvement, perhaps by working together.
While all businesses are inherently different, opportunities are endless, even if you had to create such opportunities for yourself. It takes a special kind of person to enter the world of business, so I commend you all for your courage and belief in yourself. My final recommendation is for you to work closer with your team of professional and expert, let them help put you in a position to make the best economic decision. Good Luck!
Email us at firstname.lastname@example.org or call 07 3668 0646 if you need assistance and support with your small business from start, scale thru to sale.
James Huy Vuong is a CPA and the owner of Your Accounting Partners. Partnering with businesses from start to scale thru to sale.