In the lead up to end of the financial year, many small business owners made the mistake of making tax reduction their number one goal, and as a result now face a challenging new year.In this artice I will alert you to ways you can help minimize the negative impact these problems will have on your business and how you can commence the new financial year with a positive outlook.
What happens,commonly, at the end of financial years is that we see a lot of small businesses engaging in inefficient tax strategies where they aim to purchase big, high cost equipment and machinery to benefit from tax incentives.Other common practices undertaken, often after consulting with their financial advisors, is to buy stocks for the following year, pay some overhead expenses early and try and delay debt collections until the next year all with the aim to reduce profit and tax liabilities.
Any business owner that has utilized these strategies will be faced with many challenges at the start of this new year.
These strategies will impact on their business by :
A:Reduced cash flow, restricted by the increased expenditure
B:A reduction in funds able to be put into marketing and product development and therefore inability to attract new leads and customers
C:Because of the reduced profit recorded, the overall value of the business entity will be negatively effected
D:Inability to accurately measure and analyse business performance, due to the delaying of account receivables and prepaying of expenses
If this is you, then don’t fear. It is not the end of the road and you can change the direction of your business if you start now. In my experience with small businesses, I’ve found that there are five top strategies for businesses to start fresh in the new financial year.
They are as follows:
1.Create a financial growth strategy for the next 12 months. Businesses need to be setting 2009-2010′s KPIs and performance drivers now.It is essential that you have a structured plan in place to work with and measure against. This will aid the performance and ensure your business is successful.
2.Elevate costs associated with both marketing and iniative schemes. Marketing is the key driver in growing your business and securing future revenue and cash flow.
3.Reduce non-marketing, non-advertising and non-production expenditure. Ask for better deals from suppliers, and reduce the high value expense items, whose absence doesn’t disrupt the business, first.
4.Fast and swift debt collection. You don’t have to do what everyone else is doing and carry out jobs on account.You have every right to expect payment at time service is provided or even in advance.
5.Get rid of your obsolete and surplus stock as quickly as possible.You would be surprised at how much cash you can generate by getting rid of excess stock.
The new financial year presents the best time for business owners to seek more than just tax advice, and develop a strong working relationship with their accountant. Your accountant has all the information about your business, and is in the best position to help you achieve your performance goals.But because you are the business owner, you also need to have sound financial education and be aware of all aspects relating to the financial side of your business.
Staying up to date with financial education and continuous learning are extremely important.
For more information about some fabulous software and education packages please visit me at http://www.wmitoday/karlieval
Tags: financial management, financial management ebook, financial management practice
