Fresh Start for Your Financials

Fresh Start for Your Financials

Fresh start for your financials

The best way to get your financials into shape is to bring in a financial fitness trainer, says Lisa Martin, Executive Director of specialist small-business accounting firm, GoFi8ure

Every January we set ambitious resolutions to eat healthier food, hit the gym or spend more time with our family. But what about your business? Like your personal life, making one small tweak to your business habits in 2018 could deliver tremendous results and set you on course for your most successful year yet.

We all put off things, particularly if we do not consider them ‘fun’. A 6.00am start at a spinning class, easing off the booze and opting for a salad instead of a steak sandwich and a portion of steaming hot chips may not epitomise ‘fun’ at first. But, once you have made a start towards the new you, or the old (younger and trimmer) you from a few years ago, you will soon feel the benefits of choosing a healthier, fitter lifestyle and you’ll quickly find the fun factor.

The same goes for your business. Who doesn’t want their company to leap over the hurdles nimbly and effortlessly without being slowed down by too much excess and a lack of energy? And just think how elated you’ll feel if your business is running on more lean muscle than fat. How much fun would that be?

Now is the time for change
But, I am jumping the gun a bit. Let’s back track a little. I always think that the hardest part of decision-making is actually deciding what you want to do. Only you know what you want for yourself personally but when it comes to your business’ finances

I’m sure everyone wants a smooth running operation that utilises good accounting software to save time and cost as well as track how the company is going.

Most small business owners I talk to definitely understand the importance of good book-keeping for their company. They can see the value of best practice records, logs and filing – and they know that they are legally obliged to make sure they are accountable for every cent that flows through the business.

Yet, while so many small businesses agree that book-keeping is the backbone of healthy accounts, and a healthy business plan, some get stuck on implementing change. This sticking point seems to come down to human nature but I can see that there are three main reasons that hold people back.

The first is that most of us need a ‘defining moment’ to start something new. That is why New Year resolutions are so popular – and why diets always start on Mondays. There is nothing wrong with this, in fact the idea of creating change with a clean slate; a new beginning is fantastic. And that is why I am talking to you about implementing change just before the start of the new financial year. This is the perfect time to start afresh and set new financial systems in place so that from 1st April everything is ready to roll just how you want it to.

If you need a benchmark to get you going then that benchmark is now; before the end of the tax year. If you’re lucky enough not to need a calendar marker then ‘there’s no time like the present’.

Out with the old in with the new
The second reason why many small business owners stall over the thought of changing an aspect of their business – particularly when it involves number-crunching – is a lack of knowledge. And I do not mean this disparagingly.

Just think back to when you started your business. You knew then that you needed a system that could capture all your financial information. So, you may well have signed up for the first package that you came across. And, it probably works just fine. But since Xero entered our world accounting technology has moved on tremendously. Xero’s commitment to cloud computing has revolutionised book-keeping and the gap between older financial software and what Xero can offer is huge. If you’re using an older programme it’s likely you won’t be getting as much financial information as you need to help grow your business. This might be OK for you, for now, just as long as you are aware that a system like Xero will illuminate your business. Tailored to your company, it will show you where your business is at (in real time), what your projections are, how your cash-flow is tracking, your profits on any date and, importantly, it will flag any inconsistencies.

Nearly all of GoFi8ure’s clients now use Xero. Some have jumped at the chance of switching, others have been reluctant to change, and that’s understandable, but all have been blown away by the difference between the ‘old’ and the ‘new’ and none have looked back.

Call in the professionals
The third reason why, I think, people stumble when it comes to changing the way they manage their books is because figures just aren’t their forte. One of my mantras is ‘you didn’t go into business to be a Bookkeeper, but I did’. And it is true. You started your business because you had a great idea and the drive and ambition to make it happen. You did not do it because you love working out your tax credits, your GST and your payroll – unlike me.

Unfortunately, in New Zealand, many small business owners work by an unwritten rule that says ‘You Must Do Everything Youself’. I think this is in our Kiwi make-up but we really need to shake ourselves out of it and recognise that each of us have different strengths and weaknesses. Very rarely is someone extremely good at everything. If you accept this, then you may just have to accept that if you’re doing your own figures, then you’re probably doing them averagely – and you might not be doing them correctly.

Wouldn’t you rather bring in someone who can sort our your finances professionally and accurately? This is actually the smart thing to do since it will save you time and money. Think of the hours you spend battling with your accounts – wouldn’t you rather spend that time doing what you love in your business?

If we zip back to our fitness analogy this is similar to finding that new resolve to be healthy, heading to the gym and jumping on all the equipment for hours on end. But, oops, you haven’t attend the intro session to find out how the cross-trainer works and how to change the setting on the treadmill. You’ve put the hours in, but, I’m afraid, you’re not getting any thinner. It’s time to call in a personal trainer.

In a nutshell, my new year message is – take a good look at your finances, assess the system you’re using and if it is not giving you the information you need then it is time for change. Do it now and do it properly. Do not do it yourself if you do not know what you are doing. Be smart, bring in a financial fitness trainer and reap the financial rewards.

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