Zen and the Refreshing Art of Business Spring Cleaning

iStock_000021234364_DoubleThis week I relocated to a new home. I’d lived in the original house for just seven years but I was amazed by the amount of “stuff” that had built up over that time. At the end of the move, not only had I reduced my clutter,  but even more I felt deeply refreshed in my thoughts, attitudes and my whole approach to life.

 

It got me reflecting how often a clean out in the workplace can be equally re-invigorating on so many levels – physical, strategic, monetary, emotional.

Most of us accumulate quantities of ‘stuff’ that we rarely clean it out. Even if we make a conscious effort at the beginning to plan our processes and what we store or archive, somehow they still become cluttered over time.

The clutter can relate to physical items or systems and processes, or even outworn ideas.

Here are some of the changes we’ve made over recent years to ‘declutter’ and refresh our approaches and processes.

  • Six years ago we moved offices and went paperless (well as much as you can be) – and saved ourselves $36,000 per annum ongoing!

    Without the need to store paper files we could reduce our space requirement by 80sqm. At a cost of $450 per sqm, that represented an ongoing saving of $36,000 per annum. Yes it was a tough process at the time. On the upside though, we’ve reaped the benefits of massive savings and we no longer have the nightmare of reams and piles of paper requiring housing somewhere.

  • We re-located our network servers offsite – and saved more space, capital outlay and technical maintenance.

    For years our emails have run out of Microsoft or Google hosted solutions without an issue. It was time to consider replacing the servers we still had onsite.After the exercise of looking at the costs and potential savings, we started the process. As we were already operating remotely from different sites we had invested heavily in access to high-level internet sped and productivity, so we were confident this would not be a problem. Even so, you have to accept and take in your stride that in any transition there will always be a few potential glitches.The end result has been a service that is smooth and operates just as effectively as when the servers were housed in our own offices. We have no large capital outlay and the ongoing costs are less than if we had stayed “in house”. Once again we reaped benefits in terms of physical space and cost savings – and the headache of monitoring and maintaining technical equipment.

  • We reviewed internal systems and saved our clients and our team time and effort by creating a smoother, faster process.

    We examined one of our internal paperwork processes, which was designed around mailing people a physical form. If you wanted a company for instance, we would post you a form to complete, or partially complete, dependent on needs. By switching across to electronic forms our clients can review and respond much more quickly.

  • We recently implemented a secure portal system – and made significant savings in time for everyone while ensuring security of information.

    Emails that contain sensitive information such as tax file numbers dates of birth and bank account details are vulnerable to cyber attack. We do not normally supply this information by email. This has always meant a lot of paperwork and more time for our clients waiting on documents and posting them back. Now if our clients choose they are able to sign the document electronically at a click of a button with complete security. They can review details on screen and if they agree sign documents. If they have changes or questions, they don’t have to print out documents to post. They can ring or respond online safely. It’s been a significant saving in time – even more since the Australia Post service has reduced in frequency.

How to spring clean your business and business systems

A spring clean leaves you feeling fresh and ready to strive towards the goals you have set. The difference will become obvious on many levels too, personal, team and business.

  • Throw out old information (securely of course);
  • Review business systems.  Examine both who performs a task and how they are carried out. Update if appropriate;
  • Look for simple easy tweaks within everyday processes that may save time, effort or give your clients or customers a better result;
  • If you have a particularly big task ahead of you, consider calling in a qualified outsider who can help you assess useful changes. Being in a position to see the inside of so many businesses, this is one area where we can offer many useful suggestions and improvements.

Be aware that you may hit roadblocks. These could be physical or equally importantly emotional as you and your team members struggle to deal with change. And that too is part of our key contribution in helping you transition or change.

 

 

The real time for New Year’s resolutions

Alarm ClockThe promise of a new financial year is the best time of year to come up with resolutions, especially for small to medium sized enterprises. Way too many SMEs are in ‘set and forget’ mode when it comes to cash flow management.

It’s never too early to start planning for the end of the financial year.

In fact preparing for the June 30 is a year-round job. It’s been my experience that the special needs of the end of June 30 often catch SMEs by surprise, even though the same things must be done on an annual basis.

Cash flow can become one of the biggest problems for small and medium businesses at the end of each financial year.

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There can be a down-time in trade for stocktake, slashing of profits margins due to seasonal sales, the settling of debts, chasing of creditors, and a binge of last minute budget-balancing spending. Without planning, tax time obligations can deplete current cash flow reserves and this can have a negative impact on the following year’s operations.

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SMEs have the advantage over big business in that they can more readily adapt to the changing environment in which they operate. But on the flip side if you fail to do this you will pay heavily. It is not unusual to find SMEs rigidly sticking to certain ways of doing things, even when small warning signs start to trigger major alarms.

Far too many of my clients tell me that they are too busy running the business to worry about things such as cash flow.

Managing cash flow is critical to the success of any business – small or large – and a bit of advance planning might be all that is needed to free up liquid assets and ensure ongoing profitability.

CashMaxforecaster.com’s 10 Resolutions EOFY for SMEs:

Embrace change

What works one year might not work the next: unsettled markets, fickle clients, different suppliers and staff, changes in operational procedures, refurbishments, capital asset shifts, different taxes, and complying with updated legislation can all have a big impact on cash flow.
As well a changing lifestyle – mortgage, children, travel, retirement plans – can see those cash assets repurposed or diminished.
Resolve to not only embrace change each and every financial year, but to adjust accounting and management practices to accommodate this change. Sticking with the same old way of doing things could limit growth, productivity and profit.

Leverage low interest rates

Cash reserves are not getting the return they were even just a few years ago but low interest rates can be made to work in an SME’s favour.
Consider if it is worth investing in capital equipment and paying off debts while keeping lines of credit open.
Resolve to leverage low interest rates but budget now for higher rates over the next few years.

Cash upfront and in advance

It might seem counterintuitive to pay for some services and utilities including insurance and phone plans upfront when such outgoings can be managed on a monthly basis.
It is possible though to save up to 10 per cent by shopping around and being willing to make a one-off, advance payment. This is especially true when it is known that certain premiums, such as health insurance, rise annually. Paying for the following year in advance before the price rise can see a saving of 3-6 per cent.
Such savings can be much higher than current interest returns on cash deposits.
Resolve to shop around or negotiate savings on fixed costs.

Direct debit not direct debt

Another tactic to improve cash flow is to set up direct debit accounts when discounts for this payment method are offered.
Direct debit can lead to savings of around 4 per cent on fixed costs, but this will be more than wiped out if there are insufficient funds and the supplier and bank impose heavy penalties.
This style of auto debt can also damage a good credit rating.
Resolve to manually check that there is no danger of the autopilot failing.

Dance with the dollar

Even if a business is not an importer or exporter, chances are somewhere along the supply chain it could be slugged with higher costs as the Aussie dollar slumps or reap the rewards when it rebounds.
A rising or falling Australian dollar has an impact on consumer confidence and influences if buyers will go offshore for a better deal, even if it is to buy everyday items online from an offshore outlet.
Resolve to keep an eye on the Aussie dollar.

Time the annual return

If the tax office owes the business money, try and get it back as soon as possible after June 30. The refund might also beat the rush and take less time to process.
Small companies lodging their own returns have until late February 2016 or October this year if there is a history of late reporting.
An accountant will advise on the due date as will the ATO.
Resolve to get that cash back as quickly as possible or avoid paying it out for as long as possible.

Choose the best GST option

Compulsory collection of the goods and services tax can artificially inflate cash assets by 10 per cent. Refunding that 10 per cent to the ATO as a one-off payment can blow a big hole in any business budget.
To help maximise cash flow, choose a GST payment option carefully.
A small business with an annual turnover of less than $2 million or with a GST turnover of less than $2 million can pay GST by monthly instalments or quarterly.
Resolve to choose the best option for GST payments.

1 July changes

July 1 is the usual date for a raft of tax changes to take effect.
In 2015 there will a reduction in the company tax rate from 30 per cent to 28.5 per cent. This could be offset by an additional levy for businesses with a taxable income of more than $5 million.
Other changes to personal tax such as a freeze on income thresholds for private health insurance and the Medicare levy as well as changes to family benefits taxes could indirectly impact business cash flow as household expenditure changes.
Resolve to know how 1 July changes will affect the business.

Off peak rates

Prices drop and there is more choice when holidaying out of peak season. The same can be said for financial and legal advice.
Even if accounting and legal fees stay the same year round, seeking advice in off peak times can mean an adviser might be better focussed or more appointments are readily available.
It also means end of year planning can start as soon as possible.
Resolve not to leave finding out what is needs to be done until the same time as everyone else.

Depreciation, deductions and donations

To make the most of a favourable depreciation deal, buy in July.
Grab all cheaper directly deductible bargains right up until midnight on June 30. A deduction is a deduction based on its purchase date, not whether or not it was used.
Be aware too that charitable donations and gifts can offset tax liability. To claim a tax deduction, first check that the organisation has DGR (deductible gift recipients’ ) status.

Side stepping the toxic workplace! Fostering individuals to work in teams

Business man and woman fighting over briefcaseLooking around my office I realise that people are the most expensive item on my profit and loss. And they are also where I experience the most issue within my business. Toxic work environments reduce productivity, create stress and can drive good performers to leave.

For those of you old enough to remember there was a great episode of Yes, Minister where the Minister and Bernard discuss a new hospital completed 15 months previously.  No medical staff had been employed nor had any patients yet been admitted. The 340 odd administrative staff argued that doctors and patients would only wreck a smoothly functioning hospital! People are a problem it seems.

People matter, and people have personalities.

The risk of a toxic workplace

The management of people and how they perform in their roles is a major key to our business success – Duh! No news to me as a business owner.

It has been my observation over many years of working both in my own businesses and with clients that all workplaces have the capacity to become toxic and dysfunctional.  Employees in these workplaces start to define relationships in the workplace not based on the organisational structure but by co-workers they favour and those they do not like or trust. In time your team becomes distracted by gossip, dramas and animosity and inevitably become less productive.

As a manager my answer to this risk is to focus on more closely on ways I can assisting my people to understand that they are part of a business organisational system in which relationships are dominated by work related activities and goals. When they arrive through the door each day, they will be working with other people. People whom they may like or they may actively dislike at times. People who will approach their work in different ways. People who will have different priorities to theirs.

Focus on work related performance

Experienced managers learn that honest and open feedback is your only avenue if the work environment is to function effectively.  Tiptoeing constantly around the personalities and personal issues of various individuals creates a stifling atmosphere.  Change becomes tediously slow and difficult or worse still, cannot be implemented at all.

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We set out to create a system, or workplace in our office that allows open, honest and timely feedback on work related  and technical aspects of performance, focusing on those issues that influence work results.

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Our solution has been to embed a management system within the business that removes some of the personality issues from the system to allow the processes of the business to flow and to ensure that team members are very clear on their roles within the business. If people are aware of their role within the general plan then they can co-operate to work to that plan together.

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People need to understand clearly what they must do to be a successful team member. Focusing on what they need to do to contribute to the goals and outcomes of the business helps to remove the personal angst that can develop.

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And encouraging professional behaviour between team members sets the standard for the kind of work ethic we want in our office.

Communicate constantly and in many ways

Let’s be honest – no one really sets out, or wants, to be merely average in their role.  Everyone wants to achieve and meet their goals, but if those goals aren’t set out and clear, then they fall to a level of mediocre – to the lowest common denominator.

What does this entail?

  • Job descriptions
    What tasks I am expected to perform?  What are the outcomes I need to produce? What are my responsibilities?
  • People development plans
    What plans are in place to help me improve and develop my career
  • Key matrix as to the skills required for them to perform their role
    What skills am I expected to have? What do I need to get training in?
  • Open feedback which is timely and constructive
    Let me know at the time the incident occurred what were the issues and why, and what I can do to change next time
  • Feedback that is interactive, communicative and conducive to meeting their own and the corporate goals
    Who can I discuss this with to give my feedback, resolve my problems and ask for guidance and mentoring? Will my supervisor communicate with me regularly in a constructive way so that we can all achieve our goals

Creating a Performance Management system

We are currently rolling out a performance management system internally that addresses all these areas.   It will focus on work related performance, skills and activities  and on regular communication which is professional and directed to work performance. Shortly it will be released to a number of clients.

If people are one of your biggest costs, or if the management of your people has ever been an issue then this system is something you should consider. Ring me personally to discuss your situation.

 

Would I lie to you? The business of trust

Dog with apple on headJust as trust has a huge impact on my personal life and relationships, it has a huge impact on my business. But this should come as no surprise – business after all is made up of transactions between individuals. Customers vote with their dollars when they give you a ‘vote of trust’. So trust translates to dollars spent with your business.

 

What is trust?  Trust is not a concrete object, it’s intangible – it’s a complex mix connected with feelings and judgements on many levels.

Trust is built up, reinforced, undermined or destroyed by our words and actions or inactions on a daily basis.

William Tell had never shot an arrow at an apple placed on his son’s head when he was forced to do that.  But the boy was able to stand still and calm because of a trust in his father fostered over many years.

My partners know I will be loyal to our business agreements because of my actions over many years.

Trust can cause businesses or relationships to fail or breakdown.

How do we build up trust?

Trust is built up through our actions and the intent we bring to the action, through the way we interact with an individual, through demonstrating the degree to which we can be relied upon.

It’s the clarity of communication, the empathy we display, our character and being genuinely ourselves, being present, open and honest.

For example

  • If we give an undertaking to be somewhere – do we make sure we get there?
  • If we promise we will do something, do we do it?
  • If we are unable to fulfil a promise, do we take the initiative to clearly communicate this beforehand? Or do we let it slide and leave the other party wondering what is happening and questioning why is going on?
  • Do we present ourselves as genuine? Or do we come across as fake?
  • Are we present? Does the person we are with at the time, feel we are giving them the attention and respect they deserve, given the nature of the relationship they have with us?
  • Do we communicate clearly, with clarity and intent?
  • Sometimes things go awry – but do we acknowledge and explain? Do we take steps to follow through and prevent a re-occurrence of the problems?
  • Do we show empathy – an understanding of how things can happen, and how people feel about it because we have put ourselves in their shoes? Empathy allows you to get your head around the perception of others; how they story plays out for them. The other person can relate to you because they recognise your understanding and they feel heard. By empathising with your customers, putting yourself in their shoes, you will be able to find ways to provide solutions to their problems and they will trust you to give them genuine advice and service.

How do we destroy trust?

Simply do the opposite to the above – anything that does not build trust destroys trust.

  •  Be unreliable – consistently cancel or change plans and agreements
  • Put other events or people first
  • Be unfair in our dealings – take but not give
  • Be dishonest in our communications

Why is trust so important from a business point of view?

Your profits and the value of your business is based on interactions that occur.

People trust us, or our product, to deliver a service or action.

If they don’t trust us, will they believe and value our advice? And as we commented at the start of this blog – people vote with their dollar when it comes to trusting a business.

The key here is two words – People and Trust.

Business success is built upon People and Relationships.  Relationships are built upon Trust. The success of your business therefore relies upon trust.

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The real secret behind nurturing trust, as I have blogged in the past*, is that it is all about perception. But it’s not your perception that matters; it’s the perception of your customer, your client or your team member.

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Always look at things through the other person’s eyes.

* (Perception is reality from a different angle. Coming to terms with your customer’s world and “But you said ‘later’!” Understanding your customer’s language).

New Year, new cash flow

Walking or running legs in forest, adventure and exercisingMost small businesses relish the year ahead thinking about how to change things for the better. But back in the office instead of on the beach, or checking the accounts payable rather than the cricket scores, new year resolutions might seem like impossible delusions.

 

This doesn’t have to be the case.

Here are my tips to ensure that you keep striding out towards your goals and 2015 doesn’t become the year of the cash flow woes.

 

1. Smooth out the season

If you’re currently riding high in bonanza territory, don’t see it as a one-off.

Stash some cash for those moments when your business is more lonesome cowboy than John Wayne.

If you’re in a financial hole, pole vault out of it and leap to put in place a January resolution to boost cash assets to get a jump on the year.

2. Push for upfront payments

Map when your clients might take a little longer than usual to pay.

Overdue invoice? Late delivery?

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A quick phone call can often resolve things more quickly and effectively. Leave the streaming to Netflix, not endless emails.

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Asking for accounts to be fully or partly settled in advance can also help identify problem payers as well as uncover the Accounts Champions of 2015.

 3. Think “Christmas” all year round

Growing your customer base is a sure-fire way of improving immediate profits and long-term viability.

Some proprietors see their business an extension of their personality. This means they might be providing a service or product that meets only their needs.

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It’s not really possible to understand what you can give until you can see your business from your customers’ point of view.

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Think of three typical clients: who are they, where do they live and work?

What interests and motivates them? And that card to go with the gift, how might you personalise the message to each of them?

4. The only stuff that’s secret is what you haven’t yet found out

Want to know even more about your customers? Ask them.

Want to know even more about your competitors? It may seem ridiculously simple, but Google them. There’s often no need to guess what the competition is up to. It’s usually online for all to see.

And if you’re feeling truly inquisitive, find some squirrelly way of soliciting how your customers feel about your competitors.

5. Are all systems GO!?

It can be tempting to begin the new year assuming everything is in place and set to go … after all, it all worked ok last year, didn’t it?

  • With more knowledge about your clients and competitors, do a systems check: What new skills do you need?
  • Is there a need for a faster, more secure website with live chat or better in-store or over-the-phone customer service?
  • Would your product descriptions make sense to someone who has never heard of you?
  • Is there a staff member who has an interest in a more financially-viable role?
  • Are you still relying on faxes when new software can do the job?
  • When did you last update your accountancy software?
  • Sometimes smaller short-term investments can lead bigger long-term gains.

6. Sweat the small stuff

A small increase in the profit margin of each and every sale – combined with more customers and stronger positioning against competitors – can significantly boost cash flow.

Small efficiencies can also do much for the bottom line. While it might not be thought fashionable to sweat the small stuff, it’s the little things that keep customers coming back for more and an eye for detail the keeps cash flow in control.

7. Cut costs

You don’t have to go the full Scrooge to cut costs. After all, shrinking a business isn’t the best way to guarantee an effective cash flow.

Only give the gifts that count; look at the expenses that generate the results. If there’s spending that’s not going anywhere, stop it before you too wind up at a dead end.

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Resolve: If it’s not generating income, don’t spend it.

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8. Sort your suppliers

Have a clean out and review old agreements.

Use the new year to renegotiate better terms and conditions, cheaper fees or added value from suppliers.

9. Embrace chaos

Monitor the market and see what others are offering.

Shop around and take advantage of any volatility that could see a good return or an opportunity to dispose of seemingly unsaleable stock.

10. Credit only where credit is due

Some SMEs survive on a boom and bust cycle. When customers want to spend up big, check their credit before celebrating.

If in doubt note the warning signs, tighten your terms and conditions or initiate a strict cash-on-delivery or EFT – electronic funds transfer – policy.

Putting the squeeze on doesn’t need to be a permanent preoccupation. July 1 provides the perfect opportunity for review.

11. Let the banks pay

Accepting credit card payments means the issuing financial institution, rather than your business, carries the risk.

So this year why not take advantage of the bank’s generosity and let them give the gift of an interest-free period?

12. Tax and Super don’t go on holidays

It can be easy to overlook setting aside extra cash for to cover regular outgoings during the year’s financial fluctuations.

Payroll tax and superannuation levies don’t go on holidays even though staff do. Take note of due dates, set aside adequate funds in a holding account, and don’t be tempted to use this money to compensate for a drop in cash flow.

Be aware that increased sales attract extra GST, so plan ahead.

13. Spend other people’s money, wisely

Building business based on borrowing is a well-practiced principle.

Ensure that any sudden solution adopted to stump-up a slump doesn’t become a long-term liability.

Carefully consider the borrowing terms. Unless needing backing for major, long-term capital investment, short-term options such as an overdraft or credit card payment might be enough to tide your business over.

If family or friends are part of your cash flow rescue plan, ensure their agreement well before a loan is needed. Professionalism remains essential. Prepare a written agreement that details all terms and conditions and have it signed by all parties, well before breaking out the bubbles to celebrate.

14. Don’t let it rain on your parade

Having a respectable, additional cash reserve in a separate, high interest bearing account could mean that every financial cloud literally has a silver lining.

15. Keep it real

Financial reports need to clearly and accurately detail the basics: what funds are available today, what is tied up, and what is owed.

Our clients use tools like CashMAX Forecaster to help them manage and monitor their business activity in real time.

If you haven’t already done so, make a New Year’s resolution to keep financial reporting real, and monitor your cash flow daily for many happy returns throughout 2015.

 

++ This article was published in Ninemsn Finance and Inside Small Business .

 

The 12 Days of Christmas

12DaysChristmas… How to avoid seasonal cash slump and make the most of your Christmas trading. This article  I put together for Kochie’s Business Builders should help you through.

Most of us enjoy the traditions of Christmas parties and days on the beach, but for small businesses there can also be the less happy tradition of cash flow woes.

An advantage of running a SME is that adjustments can be made quickly to take advantage of opportunities or to detour to avoid disaster.

Rather than ending up stranded like a partridge in a pear tree come the New Year, this Christmas why not focus on one sound business principle a day, for twelve days, to help avoid a financial dilemma?

Day 1 – Push for upfront payments

Collecting payments upfront rather than spending time chasing debt in the New Year will bring good cheer to any business.

Remember a quick phone call can often resolve confusion over an overdue invoice or a late delivery far better than a string of emails bouncing backwards and forwards.

In the longer term, asking for accounts to be fully or partly settled in advance, can help identify problem payers as well as uncover the champions in accounts payable department.

Day 2 – Look from the outside in

Growing your customer base is a sure-fire way of improving immediate profits and long-term sustainability.

Increasing your customer base means understanding not only your clients, but your competitors, from an outsider’s perspective.

Think of three typical clients: who are they, where do they live and work? What interests and motivates them? If you sent Christmas cards, how would you personalise the message on each?

Also, beware the Grinch. Find three potential competitors. What are they doing to attract your three profiled clients and steal Christmas away from you?

Day 3 – Now look at the inside, from the inside

With a clearer picture of the way your business is seen by customers and competitors, it’s time to start dishing out the presents around your workplace.

With your client and competitor profiles in mind do a checklist: Is there a need for a faster, more secure website with live chat or better in-store or over-the-phone customer service?

Would your product descriptions make sense to someone with no background knowledge?

Is there a staff member who has an interest in a more financially-viable role? When were your accountancy systems last updated?

Day 4 – Sweat the small stuff

A small increase in the profit margin of each and every sale – combined with more customers and stronger positioning against competitors – can significantly boost cash flow.

Small efficiencies can also do much for the bottom line. While it might not be thought fashionable to sweat the small stuff, it’s the little things remembered from Christmases past that keep customers coming back.

Day 5 – Cut costs

You don’t have to go the full Scrooge to cut costs. After all, shrinking a business isn’t the best way to guarantee an effective cash flow.Look at the expenses that generate results.

If there’s spending that’s not going anywhere, that’s the sort of free gift you don’t want to be giving away this festive season. Make a resolution; if the money is not generating income, don’t spend it.

Day 6 – Sort out your suppliers

Have a clean out and review old supplier agreements.Use the New Year to renegotiate better terms and conditions, cheaper fees or added value from suppliers who might have gotten as stales as last year’s mince pies.

What are others are offering? Shop around and take advantage of any seasonal volatility that could see a good return or an opportunity to dispose of seemingly unsaleable stock.

Day 7 – Credit only where credit is due

Christmas can be a time when new customers want to spend up big. Don’t swing into holiday mode too early by failing to run a credit check.

If in doubt, note the warning signs, tighten your terms and conditions or initiate a strict cash-on-delivery or EFT policy, which of course can be reviewed in the New Year.

Day 8 – Let the banks pay

Accepting credit card payments means the issuing financial institution, rather than your business, carries the risk.So this Christmas why not let the banks give the gift of an interest-free period?

Day 9 – Tax and super don’t holiday

It can be easy to overlook the payment of taxes such as GST as well as superannuation in the midst of so many public and staff holidays.Take note of due dates, set aside adequate funds in a holding account, and don’t be tempted to use this money to compensate for a drop in cash flow.Be aware that increased sales attract extra GST so plan ahead.

Day 10 – Spend other people’s money, wisely

Building business based on borrowing is a well-practiced principle. Ensure that any sudden solution you adopt over the festive season doesn’t become a long-term liability.

Consider carefully the borrowing terms. Unless needing backing for major, long-term capital investment, short-term options such as an overdraft or credit card payment might be enough to tide your business over.

Day 11 – Keep some cash in reserve

Having a respectable stash of cash squirrelled away in a separate, high interest bearing account could be the difference between SME Santa going Ho! Ho! Ho! rather than Oh No! No! No!

Day 12 – Keep it real

Financial reports need to clearly and accurately detail the basics: what funds are available today, what is tied up, and what is owed.

On the twelfth day of Christmas, make a new year’s resolution to keep financial reporting real, and monitor your cash flow daily for many happy returns throughout 2015.

Why Small Businesses don’t make it: an accountant’s perspective

You might remember we talked to Business Insider last August about the three mistakes you need to avoid as a small business owner hoping to grow your business.

This month I took the theme up with Business Review Australia in an article ‘Why Small Businesses Don’t Make It: An Accountant’s Perspective“.

One of the big dangers I see is that new starters will often wing it with a cursory internet search to suffice as competitor analysis of marketing or pricing points without fully realising big companies can afford to run marketing campaigns such as loss—leaders, manage for years without profit or have other strategies to support their losses.

They also need to recognise that they really have to ‘sweat the small stuff’.  It gets down to understanding literally how many cups of coffee you need to sell each day from your small coffee shop, to make a profit.

Shoot over and read my article “Why Small Businesses Don’t Make It:An Accountant’s Perspective, I think you’ll find it helpful.

And I have suggested some actions you can take yourself without needing an accountant or business adviser to get you through.

Don’t make these 3 mistakes if you want your business to succeed

holding plant sprouting from handful of coinsWhat are the issues faced when transforming your company from a small business into a large enterprise?

In my experience, SMEs are hindering their growth in three major ways: emotions-based decision making, lack of attention to key business drivers and a business as-a-hobby mentality.

 

 

  1. As small business owners we fail to focus on the key overarching factors driving our business because we are trapped down in the operational detail.
  2. Decisions are often made for emotional and family related reasons and not based on solid facts.
  3. Many of us treat our business as a hobby, pursuing parts of the business we find enjoyable, rather than taking decisions based on business profitability.

Having worked with SMEs over the last 20 years, I see these problem areas regularly and consistently, and as I explained to Business Insider  journalist Sarah Kimmorley, they can be easily fixed with focus and goal setting.

How do you make sure your small-to-mid sized business doesn’t make the same mistake?

Read the full article in Business Insider, Don’t Make These 3 Mistakes If You Want Your Business To Succeed.

New tool takes the pain out of planning and managing cash flow

Kochie’s Business Builders has hit the streets with the CashMAX Forecaster story. CashMAX  aims to stop business owners burying their heads in the sand when it comes to cash flow.

The tool covers forecasts for specific areas like loans, sales, labour, expenses and stock and compares them to actual results.

David, the tool’s creator, accountant and CEO ROCG Asia Pacific says “spreadsheets tend to break easily and don’t cut it anymore. We found a lot of small businesses give the paperwork to their accountant and sit there, then get a plan back, without being aware of what’s going on. This tool breaks it down into dynamics that work for that business.”  To read the full story visit Kochie’s Business Builders.

 

CashMX

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The Ten commandments of cash flow management

Fundamental to business success is sound cashflow management, underpinned by three principles: collect income, increase income and cut costs.

Big business often has an opaque financial department, obfuscating the reality of its cash flows. Here’s where you as the owner of an SME has an advantage: you can rapidly make adjustments to take advantage of opportunity or change direction before hitting a cash flow crunch.  Check out my article published in the Business Review Weekly (BRW).