Do you want to grow your business?
Most business owners would be quick to answer yes, but is this really what you want? A bigger business can mean more overheads and more stress for a business owner. It doesn’t necessarily mean more profit. Growth needs to be planned. Sometimes a sudden increase in sales can lead to cash flow problems. Depending on the circumstances, it may be better to be more selective in which sales to take on if this can improve margins and therefore...
Read MoreBookkeeping checklist
We often see businesses that have poor and inaccurate accounts. Do you know if your business made a profit last month? We have worked with a number of businesses to support their bookkeeper and improve the quality of information. Email us for a copy of our “monthly bookkeeping checklist”.
Read MoreInsolvent trading
Australia has some of the harshest laws in the world when it comes to insolvent trading, but it is also bad business to be trading with cash flow problems. If you consistently pay creditors late they are less likely to give price discounts, key staff feel insecure and can leave, interest payments can cause a further squeeze on business cash flow. It is time to be honest with yourself, put together a realistic budget and consider if the business actually can be profitable. Then either work out how to fund a profitable business or plan what to do with an unprofitable...
Read MoreThe danger of employing 15 or more staff
If you have 14 staff (including yourself if your business trades as a company) and are thinking of employing more, STOP. Read this first. There are several reasons to plan carefully before employing any more staff. • Once you have 15 staff redundancy is payable if you have to cut back later on.This can be a significant expense for a small business. Redundancy payments have to be made just as sales revenue is dropping putting a strain on business cash flow. http://www.fairwork.gov.au/resources/fact-sheets/conditions-of-employment/pages/termination-of-employment-fact-sheet.aspx • Many businesses of this size are managed closely by the business owner. As the number of staff increases it becomes increasingly difficult for a business to be managed by one person. The need for systems or a more experienced middle manager adds additional cost and can squeeze profit. Many businesses that were profitable with 10 staff become unprofitable at 20 staff if the growth is not managed properly. • Payroll tax (depending on State) kicks in at around this level of staff further squeezing business cash flow. • If your business has had workers compensation claims, premiums can increase dramatically. Smaller businesses are partly shielded from this, but once the premium hits certain thresholds the premium based on claims experience can go up substantially. (Again this may depend on which State you are in). • If you sell on credit, you have to pay for the labour and usually the materials for the job before getting paid. The busier you are, the less cash flow in the business. Before bringing on additional staff, have you calculated the additional cash needed in the business to help with business growth? Do you want to grow your business? Most business owners would be quick to answer yes, but is this really what you want? A bigger business can mean more overheads and more stress for a business owner. It doesn’t necessarily mean more profit. Growth needs to be planned. Sometimes a sudden increase in sales can lead to cash flow problems. Depending on the circumstances, it may be better to be more selective in which sales to take on if this can improve margins and therefore...
Read MoreTimely information leads to successful business decision making
It is quite common for business owners to be surprised at how much their business made or lost. This information is sometimes only available when their accountant prepares the tax return, often over 18 months after the start of that tax year. Business conditions can change very rapidly and a once profitable business can be loss making for a long time before the owner finds out. The business owners we work with gain piece of mind from a monthly review of performance for the prior month. This often highlights areas of concern or opportunity that can be addressed immediately, minimising losses and maximising...
Read More