5 new financial year resolutions for your business

By June 11, 2020Blog
Targeting A Dart Circle - Goal Setting

With the new financial year fast approaching it is important to plan ahead. Advivo have put together our top 5 things to complete before this end of financial year.

 

1. Perform a financial health-check on your business – This is about understanding your ‘Now’.

Now is a great time to check the health status of your business. Completing a review of your financials can provide clarity on liquidity, solvency, profitability, and return on investment for you and your business.

This is about understanding the current position and performance of your business and can be used to identify your business’ strengths, weaknesses, opportunities and threats. This will help recognise areas for improvement and options for the potential strategic direction of your business. We have a range of business tools to help with this, be sure to contact us today!

2. Strategic Planning – This is about your ‘Where’.

Having a clear understanding of your current position and results, revisit your strategic plan. If you don’t have one, make one.  It doesn’t need to be complex, but it does need to be specific for your business (see this link for help).  A key inclusion should be an analysis of your business’ current market and predictions on future developments.

Your strategic plan should reflect the objectives of your business, but we also recommend it considers objectives for you as the business owner and your personal goals.  Anyone managing a team will understand the importance of this and it should be no different for yourself.

If any weaknesses were highlighted during your financial health-check, your strategic plan can allow you to identify the key actions, complete with responsibilities and due dates for how best to address them. Each strategy documented should have time-based goal which are measurable. Advivo offers strategic planning tools and services to assist with exactly this type of process such as our One Page Plan.

3. Budget and forecasting for the new financial year

Align your budget with your strategic plan so that you can appropriately allocate resources to achieve your objectives. If the budget indicates some of your goals are not achievable within the desired time-frame, you may need to seek additional resources to allow them to be achieved, or you may need to adjust your time expectations within your strategic plan. Using your budget as a tool side-by-side your strategic plan is a great way to test how realistic your goals are with respect to the timing and allocation of resources required.

Your budget should be regularly monitored against your actual results so as adjustments can be made as required.

Utilise your budget to forecast what your business growth will look like for the coming year. Business owners can build their forecast and take it a step further, turning them into fully functioning financial models. This allows you to “stress test” your business model by running scenarios, modelling the impact of business decisions and reviewing any associated cash flow implications. Xero and other software providers have some good basic tools to get you started. A word of caution though; if you’re going to use these basic tools for decision-making be sure you understand the components which are being reported on because all businesses are different and a ‘basic’ cash flow tool may miss some key cash components of your business.

4. Review your risk management

Regardless of your current business position, it is important to always have the appropriate risk management strategies in place. Risks to be aware of and manage include:

  • Relying heavily on part of your customer base: this can be managed in part by looking at new ways to increase your customer numbers and assisting your smaller customers grow. Diversifying your customer base into different segments may also help mitigate this risk.
  • Relying on one main supplier: investigate alternative suppliers finding multiple avenues to source your stock.
  • Selling on credit: perform customer credit checks, limits the amount of credit allowed per customer, following up with a friendly reminder before the due date and managing payments of client who regularly pay late. Debtor insurance is another method of mitigating risk here.
  • Fraud: have strict internal controls in place for areas of risk, ensuring those controls are enforced and any breaches are acted upon promptly.
  • Cyber security: enlist the help of your IT support provider to help identify areas of risk and what type of threats you may face. They should be able to work with you and advise how best to mitigate these threats and train your staff in how to avoid “at risk” behaviour.

Updating and revising your risk management as part of your new financial year will help keep your business updated with any changes and ensure you haven’t overlooked anything from the previous year.

5. Take advantage of opportunities

One of the biggest benefits of completing the above tasks as part of your new financial year is having a clearer view of your business’ future. Look at where your business is tracking for the coming year and be more confident in considering new opportunities.

Often focusing on everyday business means you may have to overlook these opportunities or put them on hold. With your strategic plan in place and your forecast guiding your business you will be able to see how such a decision fits into your plan and what impact it will have, both now and for the future.

If you have any questions about planning for the new financial year or any of the tools we have mentioned that can help you and your business, please don’t hesitate to call us on 07 3226 1800 or message us via our Contact Page. We have a talented team of accountants, business advisors and consultants who will listen and take a hands-on approach to assisting with your business and individual financial needs.

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