Three business habits to embrace in the new financial year

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Prepare for a successful new financial year

The new financial year is always a popular time to kickstart positive habits, and for small business owners, this applies just as much to the fiscal year as the calendar. With FY2020 just one week away, now is the opportunity to set clear goals and commit to business behaviour that will set you up for success.

Clearly communicate payment terms

The negative effects of late payments on small business owners has been in the spotlight this year and is an all-too-common problem in Australia. A report released by the Ombudsman for Small Business and Family Enterprises in 2019 showed that late payments were the key cash flow issue for small businesses. Debt collection and managing overdue invoices were also highlighted in a recent Prospa study as a problem area for those running their own ventures.

In order to reduce the number of unpaid invoices, you could:

  • Clearly communicate your payment terms from the start so that suppliers and customers understand the requirements.
  • Consider whether the payment terms are appropriate. For example, if one of your suppliers always pays an invoice within 14 days, factoring this into the payment terms can help you better plan your cash flow.
  • Request a deposit where it makes sense, depending on the service. For example, if you’re producing a video or designing a website for a client, you could ask to receive 50 per cent of the payment upfront and the other half when the work is complete.
  • Proactively ask what you can do on your end to ensure invoices reach the right person, with enough time to be processed. Too often these invoices end up in the wrong person’s inbox and can sit there for weeks.

Delegate where and when you can

Small business owners wear a lot of hats and need a wide range of skills to be competitive but trying to do everything yourself can take its toll. Prospa research shows 9 in 10 are working long hours to manage all the different responsibilities, from people and sales to regulation and accounting. You may want to consider:

  • Hiring expert help for tasks where you’re least comfortable, for example bookkeeping, digital marketing or IT.
  • Delegating more tasks to existing staff members so you can concentrate on those where you deliver the most value.

Bringing in expert support requires an upfront cost but can give you back some hours in the day and produce better business outcomes in the long run, including increased sales, customers and productivity. It can be hard to delegate when your business is your passion but letting go of the areas you don’t need to own can help take it to the next level and empower your staff.

Think ahead and set SMART financial goals

Establish SMART goals (specific, measurable, attainable, relevant, and time-based) so that you have a clear picture of what success looks like, how it can be achieved and in what timeframe. SMART goals are a great motivator, but they also help you plan and prioritise.

When setting these goals, you may want to think about:

  • The seasonal and sector trends that can affect your business in FY2020. Planning for quieter periods can give you peace of mind and help manage cash flow gaps.
  • Consider the growth opportunities that can help you reach these financial goals and plan for the funding required to make this happen.

For example, you may want to launch a new marketing campaign around the holiday period or complete a renovation right before the busy period, and a short-term business loan can help fund this.

While the end of financial year can be stressful for small business owners, it can be a great opportunity to make some new resolutions and embrace positive habits. You may also want to block out some time each quarter to reflect on how you’re tracking and to hold yourself accountable over the next twelve months.

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About the author

Anna Fitzgerald 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.