Leading Australian mid-tier accounting firm RSM Bird Cameron offers 14 suggestions for business owners to improve profits and cash flow, and reduce stress levels during the holiday season.
Andrew Graham, national head of business solutions explains many industries are still experiencing difficult times; the retail sector faces challenges such as the battle for online sales, decreased consumer confidence and unemployment while resources, mining and manufacturing are encountering challenges caused by exchange rates and the high cost of doing business in Australia.
The latest RSM Bird Cameron thinkBIG study showed that 64 per cent of SMEs are optimistic and believe their business will grow in the next 12 months. However, according to Graham, business owners need to make the most of this optimism and ensure they have a clear path to growth by having strategies in place to end the year and start the new one in the best shape possible.
14 things business owners should do before 2014
1. Review the products and services being sold: One should tailor the mix to appeal to changing customer needs for the holiday and New Year season. This exercise should be replicated across other seasons to reflect customers’ changing needs, say during Easter.
2. Review pricing structures to ensure competitiveness and profitability: Put formal procedures in place to monitor and proactively respond to competitor pricing changes.
3. Review stock levels: Customer demand for profitable product and service lines must be met to their complete satisfaction. Slow moving stock can be identified and liquidated as ‘bargain buys’ or bundled with other products as a value-add.
4. Review sales, marketing and promotion plans: Make sure plans are optimised to help achieve the best results not only during the holiday season but well into the new year. The staff must be trained to be aware of the targets for each week and be proactive in monitoring and addressing shortfalls.
5. Review staffing plans and confirm acceptance of the rosters by all staff: Annual leave plans in non-retail businesses need to be balanced and finalised as early as possible to ensure the business continues to operate effectively. A shutdown period can be considered during Christmas and New Year to use up staff annual leave balances if the period is traditionally not busy.
6. Review fraud and theft protection systems: Staff should be reminded of their responsibility to be vigilant as customer traffic goes up, with the pressures of Christmas expectations motivating increased levels of customer and staff theft.
7. Review debtor lists and actively chase all overdue accounts: Any amount not collected by December 23 is unlikely to be collected until February or later. Collecting money owed to the business is critical particularly over this period when the cash cycle tends to tighten.
8. Review the use of finance products for effectiveness: Overdrafts, premium funding, lease facilities and cash flow funding products can all be excellent tools to help match a business’ cash supply with planned outlays, and may be especially useful in managing cash flow throughout the holiday season.
9. Complete a GST health check: Small businesses are in danger of losing time and money because of unreliable or outdated business systems causing them to incorrectly report GST.
10. Set effective goals: The beginning of the New Year is an ideal time to review goals set at the beginning of the financial year, ensure one is on track to achieve them and put in place an action for areas that need improvement. Important things to consider include retirement planning, present and future investments, maximising one’s superannuation scheme and reviewing assets.
11. Update business plans: The business plan should be updated regularly to reflect changing market and economic conditions. A solid business plan is critical to meeting financing requirements as many industries face increased scrutiny from government and financial institutions requiring a much higher quality of management reporting and strategic planning to support funding applications and reviews.
12. Strategically plan end of year gifts and entertainment: Gifting key customers, prospects, suppliers and business partners at the end of the year will strengthen relationships into the New Year.
13. Carefully plan end of year staff parties to reward and recognise efforts for the year. Business owners must remember their workplace obligations to provide a safe environment for the event in relation to alcohol and discrimination.
14. Take a deserving break: Plan to take advantage of any public holidays or other time off to protect health and wellbeing and reduce the chance of illness disrupting business activities.