business budgeting

Reviewing Costs to Increase Cash and Drive Profits

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All businesses should review their expenses periodically.

Prudent expense management helps ensure that valuable cash resources are used wisely. And sometimes, a business may NEED TO reduce expenses as a matter of survival.

No matter what the circumstances, here are some Best Practices in reviewing and managing expenses.

1. Look first at non-core functions

When cost-cutting, focus FIRST on activities which do NOT directly generate a profit, that is, the non-core functions.

The core functions of your business drive revenue and profit, help you to differentiate yourself in the market and usually involve interaction with your customers. These core activities could be inefficient… but look first at the support (or non-core) functions including finance, legal,  administration, the office, human resources, data processing, supply-chain management, and logistics.

2. Look for redundant activities

Every activity or initiative in a business has a lifespan. That means even a really beneficial activity will eventually become inefficient or redundant. Expense reviews are an opportunity to look for redundant positions or processes that can be eliminated or restructured.

3. Look into the future

When considering cost-cutting options, think longer term than just the immediate savings. If something is going to be discontinued in the future anyway, maybe now is a good time to bring it to an early close? For example, no point continuing to invest in your office, training programs or IT systems if these are to be discontinued down the line.

4. Be transparent with employees

Payroll may be the subject of cost cutting. It’s likely your employees have a good idea what is going on and an honest presentation of the facts will bring the best results for the organization. Set reasonable expectations about the future to build a track record and trust.

5. Keep up some marketing presence

How the market perceives your situation is important. Completely ‘falling off the radar’ may raise questions among prospects, clients and referral partners. Maintaining a presence, for example, in social media is an inexpensive way to ‘be seen’ in the market.

6. Nothing is too small…

All of those ‘minor expenses’ add up. Don’t ignore office supplies, snacks, furniture and that fancy coffee machine.

7. Stop autopay

Sounds simple… but most businesses are paying for things without properly scrutinizing whether they are adding value. Autopay makes this scrutiny even harder… and delays the cancellation of underutilized subscriptions.

8. Renegotiate outdated contracts

Look especially at suppliers where you have a long-term relationship. It may be time to revisit the pricing and terms of payment. Sometimes just asking the question about costs will trigger your suppliers to offer a better deal.

And maybe you’re paying for things you don’t need, like cell phones assigned to ex-employees or seldom-used printers or copiers.

Keep a record of all long-term contracts and set alerts so you can revisit these several months ahead of expiration. Then negotiate, instead of simply letting the contract renew with the original terms.

Should you undertake an expense review in your business? Follow these Best Practices as a way to generate more profit and cash.

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Federal Budget 2023-24

Federal Budget 2023-24

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Summary of the areas of impact for tax and superannuation

The Federal Government has handed down its 2023-24 Budget which outlines its economic forecasts and identifies key priorities including cost of living relief and growing the economy.

Federal Budget 2023-2024 Highlights

The Treasurer announced a package of cost-of-living measures, including up to $3bn in energy bill relief (expected to reduce power bills by up to $500 for five million households) and $1.3bn for home energy upgrades. These measures have been designed to provide relief without adding inflationary pressures.

In broad economic terms, a Budget surplus of $4.2bn is forecast in 2022-23, but an underlying cash deficit of $13.9bn is expected in 2023-24 (and a $35.1bn deficit for 2024-25).

Australia’s economic growth is expected to slow from 3.25% in 2022-23 to 1.5% in 2023-24 but is predicted to recover to 2.25% in 2024-25.

While inflation remains elevated at 6% for this year, it is expected to fall to 3.25% in 2023-24 and return to the Reserve Bank of Australia’s target band of 2-3% in 2024-25, which the Treasurer stated was still higher than the Government would like.

Below are some of the key highlights from this year’s Budget:

Personal Taxation Measures

  • Stage 3 tax cuts – The Government did not announce any personal tax rates changes. The Stage 3 personal income tax cuts will commence from 1 July 2024 as previously legislated. From 1 July 2024 the 32.5% marginal tax rate will be cut to 30% for the $45,000 to $200,000 tax bracket. The 37% tax bracket will be entirely abolished at this time.
  • Medicare levy thresholds – The Medicare levy thresholds across all categories have been increased for the 2022-23 and later income years.
  • Medicare levy exemption – Eligible lump sum payments in arrears will be exempt from the Medicare levy for low-income taxpayers provided they satisfy the eligibility requirements for the existing lump sum payment in arrears tax offset. This change will commence from 1 July 2024.

Small Business Measures

  • Small business instant asset write-off threshold – The threshold will be temporarily increased to $20,000 for small businesses with aggregated annual turnover of less than $10m for assets that are first used or installed ready for use between 1 July 2023 and 30 June 2024. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
  • Small business energy incentive – Businesses with annual turnover of less than $50m will be able to claim an additional 20% deduction on spending that supports electrification and more efficient use of energy. Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024.
  • Small business lodgment penalty amnesty – Small businesses with aggregate turnover of less than $10m will be given an amnesty which will remit failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due between 1 December 2019 to 29 February 2022.
  • PAYG and GST instalment uplift factor – The GDP uplift factor will be set at 6% (rather than 12% as would otherwise apply under the statutory formula) for instalments with respect to the 2023-24 income year that fall due after the measure is legislated.

Business Taxation Measures

  • Build-to-rent properties – For eligible new build-to-rent projects where construction commences after 7:30 PM (AEST) on 9 May 2023, the Government will increase the rate for the capital works tax deduction (depreciation) to 4% per year and reduce the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments from 30% to 15%.
  • FBT rules for electric vehicles – The Government confirmed that plug-in hybrid electric cars will not be eligible for the FBT exemption for electric cars from 1 April 2025.
  • Part IVA extension – The Government will expand the scope of the general anti-avoidance provisions in Pt IVA of the ITAA 1936 to apply to two additional types of schemes relevant to foreign residents. The changes will apply from 1 July 2024.
  • BEPS Two Pillar Solution start dates – The Government will implement two key aspects of the Two-Pillar Solution to address base erosion and profit shifting. Firstly, a 15% global minimum tax rate for large multinational enterprises with the Income Inclusion Rule (IIR) applying to income years starting on or after 1 January 2024 and the Undertaxed Profits Rule (UTPR) applying to income years starting on or after 1 January 2025. Secondly, a 15% domestic minimum tax will apply to income years starting on or after 1 January 2024.
  • PRRT changes – The Government will make changes to the Petroleum Resource Rent Tax (PRRT) legislation including limiting deductions to 90% of assessable receipts in some circumstances and amending the meaning of “exploration” and “mining, quarrying and prospecting rights” in response to the Shell Energy Holdings Australia case.

Superannuation Measures

  • Non-arm’s length income (NALI) – the amount of non-arm’s length expenses (NALE) taxed at 45% as NALI will be limited to twice (down from a multiple of five) the level of a general expense from 1 July 2023 for SMSFs and small APRA funds. In addition, fund income taxable as NALI will exclude contributions to effectively exempt large APRA regulated funds from the NALI provisions for both general and specific expenses of the fund.
  • Super account balances above $3m – despite pushback from industry, the Government has confirmed its intention to apply an extra 15% tax on total superannuation balances above $3 million from 1 July 2025, including in relation to defined benefit schemes. No further details were released so it is expected the proposed changes will operate as previously announced (ie, unrealised gains will be subject to the extra 15% tax).
  • Payday super – employers will be required to pay their employees’ super guarantee at the same time as their salary and wages from 1 July 2026.
  • Pension drawdowns: no reduction in minimum – the Budget did not announce a further extension to 2023-24 of the temporary 50% reduction in the minimum annual payment amounts for superannuation pensions and annuities.

The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.

The highlights set out are still only proposed and are not yet law.

Source: Financial Professionals Australia

Key Performance Indicators (KPIs)

Using KPIs to Drive Management Decisions

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KPIs as important management tools

Key Performance Indicators (KPIs) are important management tools and we encourage business leaders to use KPIs in their businesses.

What is a KPI?

A KPI is a quantifiable measurement or metric which helps track the progress towards business goals. Leaders use KPIs to make better, data-driven decisions. They also guide behaviour, productivity and decision-making, while providing transparency and accountability.

What forms can KPIs take?

There are different kinds of KPIs. Here’s an overview:

  • Financial KPIs are the most common. Examples include operating and net profit margin, sales growth and accounts receivable turnover
  • Organisational KPIs measure strategic, long-term goals that are tied to a company’s mission or values. Examples include market share gains, customer acquisition increases, global expansion and revenue growth
  • Operational KPIs monitor the day-to-day business performance of processes, teams and individuals in various business functions such as human resources, sales, inventory management and marketing
  • Leading KPIs are predictive. They point to possible future events or outcomes and are useful for planning purposes. For example, a sudden increase in the number of returned products might signal an issue with quality and indicate that revenue will drop in the future
  • Lagging KPIs measure what has already happened and highlight patterns or trends which help leaders make important decisions. For example, if inventory turnover has been decreasing in recent months, management may take action to reverse the trend.

How do leaders develop KPIs for a business? 

Each business is different but establishing KPIs usually means:

  1. Reaffirming the Business Goals. For example, a business aiming to increase revenue, enter new markets, downsize the labour force or acquire a competitor will be interested in different KPIs
  2. Defining KPIs Suited to Your Goals: For example, a business focused on top-line growth may track the number of leads, sales conversion, number of Clients and revenue growth. The industry, or business model will also influence the KPIs you choose. For example, a service provider may monitor Average Hourly Rates achieved on each project while a manufacturer may track how quickly they convert their investment in fixed assets and inventory into cash
  3. Outline the Data Sources for KPIs. There’s no point developing KPIs for which you cannot easily obtain the underlying data or if that data is inaccurate. Establish how data will be collected and how often it will be updated.
  4. Determine How to Communicate KPIs. Charts and graphs presented in dashboards help the team to visualize progress without much explanation. Simplicity also helps leaders get buy-in from all stakeholders, especially those who are critical to achieving the business objectives.

How are KPIs used?

Having developed KPIs, use them for

  1. Planning: Going through the process above will help leaders build robust long and short-term plans.
  2. Tracking Progress: Internal meetings to review performance relative to KPIs helps managers to make adjustments and improve performance
  3. Provide Focus: A team pulling together in the same direction is more likely to be successful. KPIs provide this focus while also forming the basis of incentive plans.

Do you need to develop or update KPIs for your business?

Need help developing KPIs for your business? Get in touch with Notch Above’s Bookkeeping Team on 1300 015 130 or read more at Understanding the Numbers.

Complete tasks for your tax period

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As a small business owner, you want to do what you love

However, managing your accounts might not be what you got into business for.

Use your time wisely to help give you the space to start analysing how your business is tracking and really focus on the growth opportunities available.

Completing financial tasks regularly will give you the ‘creative/thinking space’ to focus not only on growing your business but also take time away from your business to enjoy a holiday.

Are you registered for GST?

One way to set regular timeframes is if you report GST or Goods and Services Tax to the ATO.

GST is reported via a business activity statement or BAS, monthly, quarterly or annually. Use your GST period as your time frame to work towards.

Check with the ATO or speak to your bookkeeper to see if you need to report GST.

Not registered for GST?

You can still set regular time frames for your business to work towards and keep yourself accountable for.

TIP! A great period to work towards is quarterly, so you can start to compare business performance from one quarter to the next.

Tasks

Complete the following day-to-day tasks for each time frame

  • Record all sales
  • Record all expenses, such as bills, wages and other business expenses
  • Reconcile your bank accounts regularly
  • Keep business documents stored within the file library in Xero
  • Keep your payroll and superannuation up to date

What should you be doing at the end of each period?

Reports

Reports that help with comparing periods include:

  • The Profit and loss report: to show your income and expenses for current and past periods
  • The Balance sheet: to understand the financial position of your business

Also start to prepare or chat to your bookkeeper about preparing budgets for your business.

Check out what reporting tools are available in Xero, and how they can help you to track and manage your cash flow more effectively.

Having this knowledge is going to empower you to start making business growth decisions and have more meaningful conversations with your accountant or bookkeeper the next time you talk.

Setting yourself up for the new year

Financial year-end is the perfect time to do a check-up, celebrate your successes, and refocus on business goals.

For more Xero tips, advice and bookkeeping essentials for your business, visit How We Help You and get started today with Notch Above Bookkeeping, Australia-wide.

Source: Xero

ATO Payment Plans

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There may be times when cash is tight and paying bills on time difficult

At these times, payment plans with your creditors may be helpful.

But did you know that the Australian Taxation Office (ATO), one of the biggest creditors to small businesses, allows payment of tax debt by instalments as an option?

An ATO Payment Plan is a way for businesses to pay their debt by instalments. Arranging for your business to have an ATO payment plan can provide a legal and convenient way to respond to an overwhelming tax debt.

A payment plan can be set up online via a myGov account, over the phone or by an authorised agent and can help small business owners:

  • Manage cash flow
  • Repay tax debt
  • Avoid unnecessary insolvency action
  • Keep business operating

When setting up a payment plan, you need to consider how much you can pay so you can meet each scheduled instalment, including interest that may accrue on any overdue amounts.

You still need to lodge your activity statements and tax returns on time, even if you can’t pay by the due date. This will show the ATO that you’re aware of your obligations and doing your best to meet them.

The ATO has a payment plan estimator tool that can be used as part of your initial discussions on a payment plan that might work for your business.

If the ATO requests that you demonstrate your businesses viability, they will request additional financial information and explanations regarding the need for the payment plan.

Default of a payment plan

If you miss or are late with a payment on your existing payment plan, this will automatically default a payment plan. Failure to lodge activity statements and tax returns on time and paying them in full by the due date will also automatically default an existing payment plan.

By defaulting a payment plan, it creates bad payment history and should be avoided where possible as it will make it more difficult to put plans in place in the future if needed.

Contact us and we can talk to the Tax Office on your behalf to try to arrange a payment plan for your BAS debt. If you are a Notch Above Bookkeeping client currently supported by us, this service is included in your monthly package.

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Reduce Business Operating Costs

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Every business owner – no matter how big or small the business – wants to reduce operating costs

And it’s not impossible. Here are eight strategies that’ll not only save you money but improve the efficiency of your business.

Operating costs are the ongoing expenses incurred in the normal day-to-day activities of running a business. Lowering these costs is one of the most effective ways to save money and boost your business’s profits.

It’s an important exercise for any business, but especially those still dealing with the impacts of COVID-19. So, how do you do it? It starts with understanding what your business is spending money on before reviewing each activity in detail to see where you might be able to make cuts. We’ve outlined eight areas to help you get started.

1. Automate business process

A sure-fire way to save some cash is by looking into automating some of your business’s processes. In other words, you’ll want to identify processes that are currently being done manually and research whether they can be partially or fully automated with the help of software programs and services.

The idea is that by automating a process, it will free up time for employees to spend on other activities. Processes in departments such as accounting, marketing and communications, legal and HR are some easy places to start.

2. Outsource

Similar to identifying business processes that can be automated, looking at outsourcing functions typically done in-house should also be considered.

In some cases, when responsibility is given to an employee as an add-on to their remit, they’re not properly trained in how to do it. Or they simply don’t have the capacity to do it as best they can. For this reason, outsourcing the work to an agency or freelancer with the time and skills required for the task can lead to a better outcome.

3. Review your insurance policy

Another way to reduce operating costs is to scrutinise your business’s insurance. According to a 2019 Aon study, rates across the majority of its business insurance lines went up by 10% as insurers looked to replenish their returns after being hit by a string of natural disasters.

Although there is no one-size-fits-all solution to reducing your insurance rate, some key options companies can consider are alternative risk-transfer strategies, reviewing their existing insurance programme structure or demonstrating a better risk profile to the market.

If that sounds tricky, Aon may be able to assist you to get a better understanding of your company’s insurance rate

4. Pay invoices on time

Another strategy to help you solve mounting expenses is to pay invoices on time. Late payment fees and penalties eventually add up if you let them slide, and can be easily avoided. Some vendors even offer discounts if you pay your invoice early.

Similarly, try to pay your loan or debt repayments on time to avoid additional interest payments.

5. Review expenses regularly

On that note, another way to reduce operational costs is to take the time to look over the invoice or expense bill before paying it. Too many business owners make the mistake of paying bills without looking at the charges in detail – especially if the bill is set to automatic payment.

Often, owners discover they’ve been paying regularly for services they no longer use, like professional memberships. Once identified, these fees and dues can be cancelled immediately.

6. Cut down on office space

One of the biggest expenses for a business with an office is the fees associated with leasing it, cleaning and maintaining it – not to mention the utility costs. As such, ending your lease at the end of the lease period and allowing your employees to work remotely will free up a considerable amount of cash.

If your entire team working remotely full-time isn’t an option – consider leasing a smaller space or renting desks at a co-working space and staggering out workdays.

7. Shop around for the best rate

If you’ve been working with the same vendors for a while now, it’s worth looking into their rates and comparing them to other vendors who offer similar products or services. While the price differences could end up being negligible – particularly if there’s a fee for transferring your service – you might also find you’ve been overpaying, and the switch is worth it.

Another helpful tip: consider negotiating a discount by offering a vendor cash. It’s a win-win for both parties – you’ll be spending less, and they’ll be getting paid faster.

8. Ask your employees for ideas

Finally, one of the best ways to reduce operating costs is to ask your staff for suggestions. Working so close to processes and using them day-in and day-out should mean they’re able to better identify inefficiencies and recommend potential tweaks.

Though a concern for every business owner, operating costs are not always given the attention they deserve. When you consider that a few simple tweaks alone can generate major results – saving you hundreds or, in some cases, thousands each year – they’re well worth looking into.

Notch Above Bookkeeping is a team of Platinum Certified Xero bookkeepers and BAS Agents. We help small business owners across Australia (especially medical specialists such as dentists, orthodontists, optometrists and anaesthetists) to prepare their BAS returns and streamline their bookkeeping processes, payroll and accounting records using cloud technology.

Source: Business Australia

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Personal budgeting Notch Above Bookkeeping

7 Budgeting Tips to TAKE CONTROL and Regain Financial Power

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Using your business like a personal bank? 7 budgeting tips to TAKE CONTROL and regain financial power.

As a business owner, have you ever felt like you’re just not getting ahead financially, and that even when your income increases you seem to be on a treadmill of spending every cent you earn and sometimes even more?

Often, when I meet clients for the first time, and ask them how much they are spending and how much they are saving each month, they either have no idea or openly say they are saving nothing, but know they can (and should) save more.

So why is controlling our finances so difficult? It’s mainly because we don’t try!

Why not? Because it seems too hard to set up a system or put a plan in place to help us keep track of our income and our spending, and to set and stick to savings goals. But here’s the thing…. You can change your current situation, if that’s what You really want. It doesn’t have to be this way anymore.

Think about it…. How good would it feel to get your finances on track, and stop stressing about them? You’d have the life you want. You’d TAKE CONTROL…!

If you have read this far, I know this resonates with you and I’m sure you want to take action. Enough is enough right?…. Take your financial life to the next level by starting new habits and following these tips.

  1. Embrace Financial Technology to track your spending

Tracking your spending helps you understand your daily money habits so you can create new ones.

Gone are the days of having to keep all of your receipts and enter them all into a notebook or spreadsheet each month to see what you have earned, spent & saved. Having to spend ages doing this is one of the main reasons people stop budgeting.

There are now a wide variety of apps and software programs available to help you do this easily. They range from fairly simple to very comprehensive. The best of these can: link to all of your accounts (even business accounts), let you upload photos of receipts, automatically categorise your income and expenses, help you set & tracks savings goals, help manage your debts and even track your super.

  1. Review your cashflow

It helps to treat your personal finances like a business. Measure the revenue (money coming in) against costs (what is spent), and look at what you own versus what you owe.

Calculate the proportion of your income that goes to meeting your expenses, is the key here as it helps you identify the areas where you are spending more than you realised.

By simply understanding your potential to save you can make better financial decisions about investing, borrowing, cost-cutting and spending.

  1. Create a cash flow plan

By understanding the current flow of your money and then setting both spending and savings goals you can establish a cash flow plan. Once you have committed to a list of goals you will have a stronger motivation to change your money habits. Here’s an article on 5 quick tips on faster customer payments, which will help your cashflow.

Now that you have an accurate picture of your cashflow, lowering or eliminating the unnecessary expenses becomes a lot easier. Whether it’s, entertainment, food and alcohol, interest on financed purchased, or travel that are out of whack, scaling these back is the secret to creating positive cash flow.

The trick is not to waste your new found positive cashflow, but instead to save and or invest in order to maximise profits and increase wealth. If you don’t have positive cash flow, it’s nearly impossible to do this.

  1. Pay yourself first

One of the most difficult (but important) aspects of cash flow management is having the discipline to pay yourself set amounts of money for separate goals. For instance:

  • to cover your day-to-day living expenses
  • to pay down debts
  • to go towards a savings goal – home, car, holiday
  • to invest

Having all your income paid into a hub account and then setting up automatic payments into multiple accounts for each of these goals is one way to manage this.

  1. Make clearing personal debt a priority.

One of the largest obstacles to financial growth is personal debt. The problem is that personal debt, particularly credit cards and short-term financing attract high interest rates and if the principal is not repaid, the debt will quickly compound, making it your most expensive liability.

Paying off your personal debt as your first cashflow priority helps to prioritise your other expenses. By forming this habit, you will become debt-free sooner. 

  1. Invest 

Once you’ve implemented a cashflow plan that has reduced your expenses, established some saving and eliminated personal debt, it’s time to consider investing into assets that will help you grow your wealth for years to come.

There are a range of ways to invest your hard-earned money: real estate, direct shares, managed investments, superannuation and venture capital. Do extensive research, ask questions and choose the investment types where you feel most comfortable investing.

  1. Seek advice from experts.

Develop a habit of seeking advice to help you plan and test out major financial decisions. This can help you avoid making costly mistakes that you’ll end up regretting. When seeking financial advice, make sure you seek it from qualified experienced advisers who are able to provide strategic advice, not just sell you a product. This way you’ll be less likely to take financial risks that could hurt your lifestyle.

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Specialising in Xero bookkeeping, Notch Above is a Brisbane bookkeeper and BAS Agent located in Alderley that offers Xero setup, as well as training and ongoing support.  Notch Above can take care of all the bookkeeping tasks you would rather not do, like bank reconciliations, supplier payments, payroll services, debtor control and BAS returns.  

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Budgeting Notch Above Bookkeeping Brisbane

Personal Budgeting & Avoiding Future Tax Troubles

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Using your business like a personal bank? 3 red flags and how to fix them

After a good long break, I’d like to start 2018 by talking about personal budgeting. Although I deal with business finances, I can tell you that your personal budget is inextricably linked to your company’s success.

I’ve seen it happen many times in my line of work.

Time and time again, business owners make good profit and then commit the fatal mistake of spending more than what they earn. They run into tax problems with the ATO as they can’t pay their GST, PAYG and superannuation obligations. If left unchecked, it will spiral out of control until their business falls into financial ruin and their personal life in distress.

Red Flag #1: Treating the business like your personal wallet

The first common red flag is when you consistently have a debit balance loan account in your business, or what the ATO calls division 7A loan. This can happen when a business owner or shareholder, takes out money from the company for themselves without declaring it as a salary or bonus. Essentially, this amount is treated as a loan from the company to you if unpaid within a year, so your business will have a debit balance loan.

However, the ATO’s rule on division 7A loan treats this amount as “dividend” for the person who drew the money. This means you will have to pay personal tax on the amount at the end of the fiscal year. Therefore, you shouldn’t treat your business like a personal bank because you can’t run away from paying taxes.

Red Flag #2: Always scrambling to pay your debts

The second red flag is when you’re constantly struggling to pay all your bills and tax obligations. It’s the stuff of nightmares for business owners to get slapped with a huge tax bill. If you’re always using credit to pay the ATO or your personal expenses, then you will eventually run out of resources for money.

Red Flag #3: Your savings are depleting

Having a substantial amount in savings is important to your personal wellbeing. If you’re constantly breaking your piggy bank or have zero amount allocated for savings, then you need a huge reality check.

In part B to this article Craig Buntain from CFL Financial Planning explains how to take control of this situation and regain the financial power.

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Specialising in Xero bookkeeping, Notch Above is a Brisbane bookkeeper and BAS Agent located in Alderley that offers Xero setup, as well as training and ongoing support.  Notch Above can take care of all the bookkeeping tasks you would rather not do, like bank reconciliations, supplier payments, payroll services, debtor control and BAS returns.  

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Are you on track with your business goals?

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As we come to the tail end of winter – hurrah! – some of us may be coming out of hibernation or still lost in the monotony of day-to-day tasks in business.

I don’t blame you, especially since we haven’t had a long weekend in a while. Well, I’m here to give you a wake-up call so you can embrace the coming spring season with confidence. August is usually a period when I need to give my clients a much-needed motivational boost to stay on course with their business targets.

Do you have a set of business goals?

First, are you monitoring critical KPIs such as business costs, profitability, sales, cashflow health and your budget?

If you’re not, you need to start doing so as soon as possible. Get in touch with your bookkeeper and accountant to start drafting a realistic set of business goals. One of the things I love about Xero is the ‘Dashboard’ because it gives an eagle’s eye view of my business.

The Xero Dashboard is fully customisable so you can set what you would like to track based on your current goals, such as reducing business costs or increasing the profit margin.

Here are just a handful of KPIs that Xero can track:

  • Cash flow to monitor your inflow and outflow of cash to see whether you are ahead of your plans or facing a potential crisis.
  • Money you owe and owed to you
  • Your budget and how much you have spent
  • Profit margin and current liability

Are you achieving your business goals? (Breaking down your goals to projects)

Business goals can be overwhelming if you don’t break them down into several projects or areas of improvements. Projects can then be broken down to tasks or actions. Doing this will prevent you from feeling overwhelmed or unmotivated to start kicking your goals.

One of the most common issues faced by my clients is they tend to get lost in their everyday tasks. When you’re constantly looking at a list of things to do every single day, you will start to feel like a hamster running on a spinning wheel. It never ends, and soon you will lose any motivation to run your business.

Understand the difference between everyday tasks that must be done to run the business and comply with the law, and tasks that help achieve your targets. The latter will grow your business in the long run so you must set aside time for it or outsource tasks to subject matter experts. You can’t do it all.

If you don’t keep your eye on the prize, you’ll start to get upset and anxious over little setbacks, which are part and parcel of business. You will be working long hours without making more income or sales. You will burn out faster than you anyone else.

If you already have goals in place, it’s crucial to monitor and fix any issues as they arise. This is where you need to work closely with your bookkeeper to track the numbers. If you’re in need of some motivation, look at what you’ve achieved so far and have a little celebration with your staff.  Learn from any mistakes and regroup with your team.

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What if you’re falling behind with your business goals? 

Get in touch with your bookkeeper or accountant quickly. As the subject matter experts for business operating numbers, I can’t tell you how many times I have caught something before it became a major problem for my clients. In fact, a good bookkeeper will raise alarm bells before you speak to them. We produce monthly reports and schedule catch-ups with our clients so nothing goes unnoticed.

Anything can happen in business. The economy may shrink, which affects consumer spending, regulations may change or tax benefits may be cut. You need to stay one step ahead by regularly monitoring your goals and revising your plans as needed.

Get your team members to commit to resolving any issues that is hindering you from reaching your goals. Draft a plan of attack and work together to tackle it as a team. Establish a standard of accountability among team members. This is not to punish them when something goes wrong, but for your business to thrive by tackling problems head on.

At the very least, talk to your bookkeeper who can help set goals, assist you in deciphering the numbers and guiding you to stay on the right course towards your targets. It is never too late to start new goals or to fix any issues. This way, you know you truly deserve that long break over Christmas and the New Year.

 

Specialising in Xero bookkeeping, Notch Above is a Brisbane bookkeeper and BAS
Agent located in Alderley that offers Xero setup, as well as training and ongoing support. Notch Abov
e can take care of all the bookkeeping tasks you would rather not do, like bank reconciliations,
supplier payments, payroll services, debtor control and BAS returns.
 
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