Business Goals for a New Year

Setting Financial Business Goals For A New Year

Another year is coming to a close, and a new one is about to start. Yep, you guessed it. Time to set some goals. But what does that mean? When you set goals, do you ever track your progress? Or do you simply rely on blind luck to help you succeed?

If you are going to the trouble of setting a financial business goal, you want to do it properly. Let’s face it; there is no point setting a goal if there is no hope of achieving it, or if it won’t benefit your business in the long run. So let’s explore how you can set the right kind of business goal that will push your financial growth forward.

What Is a Financial Business Goal?

It is essential to understand what this kind of goal is before you try and set it. A financial business goal is more than just a sales target. It is a goal that you set with your business purpose in mind and should ultimately progress your business down the path to financial success.

Because finances are a big part of making or breaking your business, you need to consider them when goal setting. But they should not be your only focus. Here is what we advise you to consider…

Money, Money, Money

It is nice to have money flowing into your bank account. It allows your business to keep operating in the way that you want it to and it pays the bills. But it should not be all about the money.

If you only think about financial gain, then your business purpose will fall by the wayside. You will lose the things that make your business special and those personal touches that draw your clients in. Don’t let the cash blind you and transform your business into something it isn’t.

It can be exciting to see your business grow, but not if you need to sell your soul to get there. All financial goals should be made with your purpose and vision in mind to prevent you from growing faster than you can handle, and also to prevent you from tarnishing your brand. It can be really hard to pull your business back from a negative space that is only concerned with profit.

Set goals that drive growth, but remain true to the reason you started your business and support the clients you serve. Then the money will follow.

Map Out Actionable Goals

Saying that this year you want your business to double the previous year’s revenue is a great goal to have. But how are you going to achieve it? Just because you want it to happen doesn’t mean that it will.

You need to set smaller goals that will help you achieve your larger goals. Have some substance behind the plan to double your revenue, and it becomes an achievable goal. Forecast your numbers and work out what you need to do to get there. Do you need to focus on your biggest profit makers, attract more leads, convert more clients, or review your rates?

Once you understand what you need to do, assess your resources. Do you need more staff members, more stock to sell, or better systems and processes?

When you have a plan for how you will double your revenue, then it is time to break that down into manageable monthly tasks. You will then need to track your progress as time goes. Keep yourself accountable and don’t let your monthly tasks slip.

People always have the best intentions when they first set a goal. But when things get hard, or they are overwhelmed, the goals tend to slide. Focus and constant progress are the key to turning those goals into reality.

Choose The Right Business Goals

Setting financial business goals is definitely important. But they should be set alongside other goals that support your finances and your business as a whole. Consider:

  • Branding: Your business will need visibility and the right image to land your ideal clients.
  • Customer Service: Great customer service encourages trust and repeat business from your clients. It also gives an opportunity for your happy clients to leave positive reviews and pass on referrals.
  • Your Team: Your business will not be able to grow to new levels without the support of your team. Allowing your team to develop with training, support and growth opportunities will show them you value their contributions and encourage their loyalty.

Your business goals should provide you with the opportunity for growth year after year. You don’t need to conquer Everest immediately. Keeping your annual goals realistic and manageable will allow steady growth and success. If you manage this growth correctly, then you will see the financial benefits.

Business Cash Flow

Business Cash Flow Tips For When Your Money Seems To Disappear

Does your business bank account feel like a bit of a black hole? Money seems to go in there, but it never ends up in your pocket. It just seems to disappear without warning. If you had one of those years, it is time to have a bit of a look at your finances and business cash flow. Turn that black hole into a well-oiled profit-generating machine.

I know, sometimes that is easier said than done. So, let’s have a look at how you can review your finances and see where the money is leaking out.

Where Did My Money Go?

Often you choose to start a business because you love what you do. But it is a bit of a shock when you discover that running a business is more than being able to make money from your passion. There is a lot to understand when it comes to business cash flow and finances. It can seem like your money just disappears, but we promise you that it is going somewhere.

These are the key things to keep an eye on…

Stay On Top of Things

With finances, it is essential to stay on top of what is happening on a day to day basis. If you bury your head in the sand and leave things for too long, then you don’t have a clear picture of what is happening in your business. How will you know what money you have to spend if you don’t know what your commitments are?

Keep Accurate Records

You can do this by hiring a bookkeeper, tasking it to your accountant, or by using a great online software. Record your daily transactions so that you can keep a handle on your income and your expenses.

Keep The Business Cash Flow Rolling In

Cashflow is really important in small business, and the best way to keep on top of your cash flow is to send your invoices out on a regular basis. Don’t wait to send them all out at the end of the month. Invoice your work as soon as you can. If you are time poor, then get assistance from a bookkeeper, virtual assistant or team member.

Chase Your Debts

It is one thing to send out your invoices, but you also need to ensure that the money comes in for them. Don’t let the debt age too much; otherwise, your business cash flow will suffer. Try to stay on top of your outstanding invoices.

Sometimes a business will genuinely have forgotten about or misplaced your invoice, so a simple reminder can get the money in the door. In other cases, you might need to take more drastic action and request the assistance of a debt collector.

Know Your Costs

It is really important to know where your money is going. Keep track of all your costs and review them regularly. Are there areas that you can save money, do things more efficiently, or cut costs?

Forecast

Do you have any big expenses coming up? Forecasting for them will ensure that there aren’t any scary surprises. Try to set money aside for these expenses so that you don’t have to magic up hundreds or thousands of dollars when the time comes!

Call In The Experts

If you don’t have a good understanding of the ins and outs of your finances then you should really call on the help of an expert. Speak with your accountant as they will be able to do an in depth analysis of your profit and loss, and your financial statements.

They will be able to notice any holes in your processes, address any negative trends, and generally examine what is working and what isn’t. Your accountant can also help keep you on track with your tax and GST obligations, ensuring you only pay what you need to and don’t receive any penalties.

Now You Are In The Know

Once you have a clear picture of your finances, you will know exactly where your money is going and what you have left to spend. It will become apparent that there isn’t a naughty little elf stealing your money! Once you know what is happening to it, you can make a budget and a plan to use your funds wisely. That way you can ensure your costs are covered, and there is enough leftover to pay yourself!

Please don’t hesitate to get in touch with us here at Accountants Plus if you need some help understanding your business cash flow, or if those funds really do seem like they are disappearing without reason. We have a range of services available to help you manage your finances effectively.

Five bad money habits

The 5 Money Habits That Are Financially Derailing Your Small Business

As accountants, we want to see our clients succeed with their businesses. Liquidating hopes and dreams is not fun for anyone involved! Although there is a lot WE can do to help get you on the right track, there are some critical money mistakes that are often made in business that YOU want to try and avoid to ensure upwards growth and business success.

Listed below are our top five ‘no-no’s when it comes to money habits in small businesses.

Not Saving Money

Aye caramba! Not saving money is probably the worst mistake you can make in business. You need both operating capital and a separate savings account/ accounts for things such as: putting aside money for taxes throughout the year and having funds at the ready for when a great investment opportunity pops up. When you don’t have a dedicated savings plan in your business, you run the risk of digging too far into your operational accounts and being caught short when it comes to paying bills, staff, and even yourself! It can be one of the quickest ways to run your business into the ground.

Low Returns on Large Investments

Another common mistake and a bit of an all-round money-wasting black hole is continually spending money on things that don’t make (as much) money in return. This is especially important in small businesses that are not yet established. Bigger companies have the funds to take risks like running a new, edgy marketing campaign. It could be a huge flop and a waste of $200k, but hey – they have the capital behind them to shake it off and move forward. While we understand the importance of taking a leap of faith in business, it needs to be calculated. Start small, record your stats and build up a clear picture of what is working and what isn’t. From there you can develop a business plan to accommodate. Return on investment tracking is easy, not to mention incredibly smart, business. Yes, Facebook advertising might be all the rage, but are you getting more back than you put in? You might be surprised when you discover what your best business generators actually are. Once you find out, you can put a little more money and effort into that area and reap the rewards as your business kicks up a notch.

In a similar vein – try not to get caught in the ‘instant money’ trap. This is where you take a quick sale with no potential for repeat business in the future, rather than taking the time to build a sales pipeline that will help give you ongoing business. This will look different for every business type (services and products), but the concept is the same. Too much instant gratification could leave you with no future income.

Getting Too Creative With Your Bill Payments

‘To be paid by the 20th of the following month’ catches a lot of businesses out. It is important to establish robust payment schedules to ensure you are on top of your business debt. Knowing exactly how much you owe and have owed to you can get mighty confusing! You always want to know how much you actually have in your accounts after everything has been paid and accounted for each month. Make it a point to pay in the current month, so you don’t catch yourself out.

As an added bonus – Did you know that if another company decides to check your credit rating, your credit rating goes down! The whole thing works on a risk matrix system, so if you haven’t been paying your bills on time and someone decides to check up on you, the algorithm sees that as a little mark against your name. Yikes!

Money Tunnel Vision

An example of money tunnel vision in business might be: You have always wanted to make a business that sells homemade baby clothes. One day your dream is realised, and you open the doors to ‘Baby Made’. Things are going along quite steadily; you have a loyal customer base, and sales have been going so well, you’ve been able to turn the business into your full-time job! Talking to customers, you’ve started to notice that people are enquiring a lot about buying toddler sizes. Ha. Funny. You don’t currently stock/ make them because you are ‘Baby Made’, a store that is focused on baby clothes…. WAIT A SECOND. It is so important to diversify in business! Listen to your customers – is there a trend appearing? If they like you, they buy from you, and they are suggesting something else they want to buy from you – you pretty much can’t go wrong! If you don’t listen, guess what? They are going to go someplace else that can cater to their needs and you could lose them altogether!

Did you know that it is reported that millionaires have at least seven income streams! SEVEN! It sounds crazy, but it is very smart business. It is always good to have other options to fall back on, and/ or to help build up another area you are working on. You could achieve this by diversifying something you already offer, like the example above, or by having another income stream in an entirely different arena (stocks, bonds, private music tuition, yoga instruction – the list goes on).

Not Recording ALL Your Expenses And Transactions

Those $4 coffees, and business related parking costs you forget to record, really add up! Over an entire year, you could be missing out on hundreds, even thousands, of dollars. We want to know all your expenses so we can get the best out of your finances through tax deductions. The best way to track your expenses is with an EFTPOS/ credit card linked to your business account. If you happen to use cash, or a non-business card, remember to add it to your expense tracking and keep the receipt so we can process that transaction for you. Also, talk to us! We can help you work out all sorts of things that you might not be recording in your business, that you are eligible to be claiming tax back on.

If you have been cringing while you read through some of these, don’t worry. We are done with our scary list of small business money no-nos for now! Take some comfort in knowing that we all make one or two of these mistakes when we are finding our feet in business. Hopefully, something you have read here might help you with your small/ medium sized business money habits moving forward.

Remember, we are financial growth and good money habit experts, and we are here to assist you with advice and support if you need us!

Calling all Employers

The adult minimum wage will rise from 1 April 2015: it will go from $14.25 an hour to $14.75 an hour.

Don’t forget there are some savings as well though…ACC levies will decrease by an average of 5%.

Have you budgeted these factors in for the new year?