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New financial year resolutions: Act now if you want to be prosperous

Many small business owners find themselves half way into the new financial year before they realise they’ve only got a vague idea of their business resolutions for the year. And, with almost half of small business owners across Australia working six or seven days a week, it can be hard to find the time to set long-term strategies.

If you’re the one in three small businesses Xero’s research states is focused on the day-to-day with no long-term strategy, here’s a list of key steps you can follow to kickstart your business planning.

#1 – Start from the inside

In order to lay the groundwork for growth, we suggest looking at developing consistency in the way you conduct business, and setting standards your customers can rely on. This might take the form of establishing some basic internal policies and procedures for your team to refer back to. For example, response times to customer enquiries online and via the telephone. You can even draft a simple policy manual as a training tool for new staff, and an objective reference for employee performance.

#2 – Evaluate your cash flow

Consistent cash flow is critical. In April 2018, Xero’s Small Business Insights showed that only 52% of Australian small businesses were cash flow positive, which means 48% were striving to get out of the red. While it’s normal to experience cash flow fluctuations – especially for a seasonal business – you can mitigate damage by reviewing last year’s earnings, and get a handle on where they might drop off briefly, in order to prepare ahead of time. If you know you’ll need extra finance to help manage peak periods, such as hiring extra people over the holiday season, then organise this in advance.

#3 – Use a digital accounting tool

By moving all of your financial operations online, you can both streamline and automate the majority of your activity. You’ll find it saves you both time and effort once it’s set up, so think short term pain, long term gain, and take the plunge. Access useful functionality like a cash flow calculator or a profit and loss projection tool, with reminders to keep you organised. These tools are subscription based and you can add different resources based on your preference and your budget. If you’re offered free trials, consider the most likely solution first – you won’t want to invest time in transferring all your data into a system just to move it again in a few months.

#4 – Collect payments quickly

Payment terms with both customers and suppliers can have a considerable impact on your cash flow. If you operate with a 30-day payment contract, consider offering a small discount for your customers who pay within the first 15 days. Chase up overdue invoices immediately. Consider offering payment plans to customers who are having trouble making payments. You can also improve your cash flow flexibility by inquiring into extended payment times with your vendors.

#5 – Review your team

The beginning of a new financial year is also a great time to conduct performance reviews for your team. This does not require paperwork, or assigning numbers to performances, rather, spend some time thinking about how each team member has contributed to the business’s success, and prepare some feedback to keep them on track.  If you establish respectful and open communication between yourself and your team, you’ll see the benefits in their contribution. It also helps if these conversations are a regular occurance as opposed to a yearly event.

 

With these priorities in place, you can move forward with confidence into the new financial year – better late than never!

For more information in regards to evaluating your cash flow and lending, visit Prospa. Additionally, learn how CreditorWatch can assist in helping you get paid faster.

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About the author

Elan
Anna Fitgerald is the Group Head of Corporate Relations at Prospa. She focuses on media relations and driving our government, public policy and regulatory agenda. Prospa is Australia’s #1 online lender to small businesses. Prospa understands small business owners need faster finance solutions so that they can make timely decisions quickly and seize opportunities with confidence.