Getting back to business

Getting back to business

It goes without saying that change has been a theme of late. Much of the change we’ve experienced has been out of our control. However, if we focus on what we can control, such as our response to change, we can regain some control and plan to maximise outcomes.

Five things within your control that will have the biggest impact on your business:

1. Working on your business, not just in it.
It’s hard stepping back from your operational role. Many of us have been in ’crisis mode’ for an extended period – running on adrenaline and coffee… but it’s still essential to set aside time to focus on your plan and review it regularly. After all, working hard will only pay off if we’re working on the right things. Block out two hours each week to step out of your business and ensure your plan is executed. If this is something you struggle with, ask someone to hold you accountable.

2. Your product/service mix.
It’s likely you’ve already made changes to your product or service offering. This may have happened under pressure and without a proper plan. Take time to thoroughly review your offering. Which products or services have the highest margins? Which products or services haven’t been performing well? Are there new products or services you could introduce which complement your current offering? Do you need to review your pricing?

3. Marketing and communication.
Have you updated your Marketing Plan to reflect changes to your business operations? Clearly communicating with customers and prospects is essential in these times as they need to know when you’re open, that you’re taking their health and safety seriously, and any changes to your offering. You also want to be front of mind as customers look to support businesses.

4. Human resources.
It’s likely that your human resources department took a hit over the last year. While government support helped save some jobs, for some businesses, they had no choice but to reduce the size of their team. Have you spent time reviewing your organisation structure to identify resourcing gaps and areas where you’re over-resourced? You must ensure your team is the right size for your business with the right people on board.

5. Your finance, profitability and cashflow.
You may feel this part is out of your control, however, there are steps you can take to regain control of your finances. If you haven’t already, revise your personal budget and identify areas you could reduce your spending. Then update your business budget, ideally, you’ll review and update this monthly. If you’re struggling with cashflow, we can help you identify improvements you can make to your processes to manage your cashflow.

In Covid times there’s a lot you can control and it’s crucial for morale and progress that we focus on these things to get our business in the best possible shape. Even if your business stayed open during lockdown or you’ve been back to business for a while, use these simple strategies for continuous improvement.

Success in 2021 will look very different from previous years. What does it look like for you and your business? If you need help developing a plan, improving your profitability and cashflow, or just want someone to bounce ideas off, get in touch.

“Success is not final, failure is not fatal: it is the courage to continue that counts.” – Winston Churchill

Don’t neglect your Balance Sheet

Don’t neglect your Balance Sheet 

Business owners tend to focus on increasing profit and driving down costs. While this is important, you must not neglect your Balance Sheet. Profitable businesses can and do go broke; your Balance Sheet is a key indicator of how solvent your business is.

Here are four key areas of your Balance Sheet to focus on:

1. Profitability.
There are seven ways to grow your business and increase profit:

  • Increase customer retention
  • Generate more leads
  • Convert more prospects
  • Increase transaction value
  • Increase transaction frequency
  • Reduce variable costs
  • Reduce overheads

Focus on one or two to increase the profitability of your business.

2. Cashflow.
Improving your cashflow helps build a cash war chest to help your business weather any future downturns. Remember, cash is king and the more cash you have in your business, the stronger it will be.

Focus on strategies to reduce your Cash Conversion Cycle; that is, the time your cash is tied up in your stock and accounts receivable. Negotiating better payment terms with your suppliers to preserve cash for longer, reducing inventory or work in progress, and minimising debtor days will all help build a stronger Balance Sheet by increasing your cash on hand.

3. Solvency.
Maintaining solvency is essential to the success of your business. There are two components of solvency:

  • The ability to pay your debts as they fall due; and
  • Having greater assets than liabilities
    To determine whether you can pay your debts as they fall due, calculate your current ratio by dividing your current assets by your current liabilities. A ratio less than 1 means you don’t have enough assets to pay your debts as they fall due and the business is insolvent.

The second part of the test is calculated by taking away your total assets from your total liabilities. A negative result means your business is insolvent and requires a short-term cash injection.

If your business is currently insolvent, action must be taken immediately to remedy this.

4. Shareholder Advance Accounts.
If your Shareholder Advance Account is a current asset on your Balance Sheet, the shareholders have taken more out of the business than what they’re entitled to. This is incredibly risky as, in the event the business fails, liquidators can call up this loan and your personal assets will be at risk. To avoid an overdrawn Shareholder Advance Account, revisit your personal budget to reduce the amount of drawings you’re taking from the business and stick to a regular amount each week or month.

It’s important that you secure any advances made to the business so that, in a liquidation, you stand a higher chance of getting your money back.

Have you been neglecting your Balance Sheet? Take some time to review your profitability, cashflow, solvency and Shareholder Advance Accounts. If you need help calculating your ratios or understanding what your Balance Sheet is telling you, get in touch!

Cash is not profit and vice versa

The purpose of a business is to make money, and that means you have to know the difference between profit and cashflow

Net profit is what you have left after you deduct all your business expenses from all your revenue. You change net profit only by changing the things that affect revenue and expenses.

For example, if:

  • You renegotiate with your suppliers, you may get stock cheaper, or carry less inventory
  • Your staff engage with customers better, you can learn more about what they do and don’t like – and get more business
  • You can roster staff differently, you may be able to run your business more efficiently.

Cashflow comes from various sources. However, it also covers operating expenses, taxes, equipment purchases, repayments, distribution, and so on.

Note that a profitable business does not always have good cashflow. And a business with good cashflow is not always profitable. For example, you can have good cashflow, and loss-making expenses.

To work out how fast you can grow your business, you need to look at your projected cashflow. We can advise you on this.

Keeping cash crowned as King

Your business can’t survive without cash.

The following six takeaways are essential for business success:

  1. Protect your cash position, by knowing what it is. Build a cashflow statement and always keep it up-to-date. If you foresee a shortfall, start at once to fix it.
  2. Create a cash buffer as an insurance against unexpected difficulties.
  3. Protect your cash position against revenue shocks, by maintaining a balance equivalent to at least two months of operating expenses.
  4. Be realistic with revenue expectations. Take action now if it looks like sales are not going to get you to breakeven.
  5. Credit checking up front will reduce the risk of customer non-payment. Make sure you follow up with clear payment terms agreed in writing. Communicate regularly with customers and automate where possible.
  6. Every dollar you spend reduces cash reserves. The best way to protect your cash is to create a budget for the spend you know you need, and stick to it.

Looking to improve cashflow? Make a time to talk to us. We are here to help.

Understanding who your customers are is essential for your business

Understanding who your customers are is essential for your business

Successful businesses really understand their customers.

Knowing your target audience is half the battle when it comes developing successful marketing activities.

When you understand the specific characteristics and needs of your customer base, you can deliver your solution at the right price, in the right place and in their language.

Learn more about your customers and you will be ahead of your competition in no time. This will save you time and money in the long run. It’s about going slowly now to go quickly later. By answering the following questions, you will be able to both identify and unlock the potential of your customers.

What types of customers do you want?

Analyse the different types of buyers for your products and determine which are likely to be the most valuable to your business, these are the customers you will want to focus on.

What revenue do you want them to bring?

Project the likely revenue so you can set a reasonable cost to acquire them.

Understanding your customer and the role your product plays in their lives

  • Use surveys and questionnaires
  • Look at comments or frequently asked questions
  • Use social media
  • Segment your customers based on buying behaviour

How do you reach them – What channels are they using every day?

Different demographic groups tend to favour different types of media, so detailed knowledge of your customer base will help you in devising a marketing campaign to reach them.

How do you acquire them as customers?

Your marketing goals will determine what approach you take for campaigns. Consider the following factors:

  • Campaign timetable
  • Campaign budget
  • Relevant audience

Knowing and understanding your customers is key to successful business and can give you a profitable advantage. Take some time to understand your valued clients and you’ll be more likely to succeed in attracting more.

Read more about understanding and attracting new customers here.

GoFi8ure – Certified Spotlight Reporting Consultants

GoFi8ure – Certified Spotlight Reporting Consultants  

Did you know we have Certified Spotlight Reporting consultants ready to help you understand your numbers?

At GoFi8ure we are experts in Spotlight Reporting and creating dashboards and reporting that gives you the real insight into your business and provides you with the facts and information to make more informed business decisions.

Curious to know what Spotlight can really do for your business? It provides:

Powerful Reporting
Easily create powerful and visual reports. Reveal key drivers that impact performance.

Forecasting & Budgets
Our Forecasting tool is an ‘all-in-one’ budget creator, full three-way forecasting and scenario builder.

Visual Dashboards
Dashboard provides an instant snapshot of business performance – enabling you to focus on what really matters.

Multi Entity
For franchises, not for profits and industry specialists: Multi allows you to aggregate, rank and benchmark.

Find out more about how we can help your business by sending us an email –

Make your business more profitable

Make your business more profitable  

Making a profit isn’t something that happens overnight – to create a good return from your business you need a clear focus and a well thought-out strategy for increasing profitability.

This means reviewing your business model and looking at every area of the business, to see where you can cut costs, increase margins and maximise revenue.

Focus on your key drivers

Having surplus cash at the end of the year allows you to invest back into the business, fund your growth plans and increase the size of your own dividends and drawings as the owner.

To achieve these profits, it is important to focus on the key financial drivers in your business.

To drive profits:

  • Boost sales – the more sales you make, the bigger your net revenue, so investing in marketing, sales activity and business development will be key to a better bottom line.
  • Increase prices – by setting a higher price point, and keeping your ‘cost of goods sold’ number low, you create a larger profit margin on each sale – upping your profitability.
  • Cut costs – operational costs and overheads eat into your potential profits. So spend management and cost reduction are vital to creating a more profitable model.
  • Reduce taxes – tax liabilities will be one of your biggest costs, so sensible tax planning and use of tax reliefs will help to reduce your taxes and ramp up your end profit.

Talk to us about boosting your profits

If your business goal is to increase profitability, we will help you review your business model, identify your key financial drivers and proactively drive your profit performance.

Get in touch and let’s start boosting your profits.

 

What do you need to do to get ready for the New Financial Year?

What do you need to do to get ready for the New Financial Year?

For many the 31st of March feels like a huge milestone on the calendar. It can be a busy and frenetic time, and can feel even more stressful for business owners. Add to that Easter and it feels overwhelming! However the end of financial year process need not be a painful one! Read on to find out how.

A recent US study found 69% of adults attribute their stress to “money-related” issues and, as the End of the Financial Year (EOFY) draws near, it is typical for thoughts of money and dreaded taxes to dominate our mental space and drive us to despair.

To help take some of the pressure off GoFi8ure has prepared some simple steps for you to follow in your accounting software so that EOFY feels more manageable:

Step 1: Gather your paperwork aka “source documents”

The more information/paperwork you give to your Accountant, the less time they need to spend chasing you (which costs time and money).

Go through your files and emails and collate your source documents (Statements, Invoices, Receipts etc) for your accounts.

Paperwork includes at a minimum bank, credit card, loan statements as at the 31.3.2019, copies of all fixed asset invoices purchased during the last financial year, GST work papers and returns/receipts to IR, year to date payroll records, ACC invoices, insurances and premiums, legal, repairs and maintenance, lease expenses, finance agreements, use of home office, out of pocket expenses and year to date personal tax information if you are a shareholder. Depending on the complexity of your accounts you may need to provide more examples of source documents. Your Accountant will ask for these so be prepared.

Tip: Use Xero’s File Library to upload all of your paperwork/source documents as PDFs. It is really easy to do and your Accountant will love you for it.

  1. On the top left hand side click on the company name
  2. Click on the Files option
  3. Create a new folder called EOFY2019
  4. Label each file with a clear name. For example: 00 Savings Bank Statement 31.3.2019 or ACC Levy Invoice etc
  5. Upload labelled files into the electronic folder – it is that easy! This will keep everything your Accountant needs in one easy to view/access location in the cloud

Step 2: Complete a Stock Take / Stock Valuation

If you are carrying stock, you are required to do a stock take to record how much and the “value” you have on hand as at the 31st of March 2019. The figures should be at cost, excluding GST. It is important when you are dealing with stock that you use the best tools available. Whatever tracking system you use, make sure you have the right software to support it. If you are currently using Excel spreadsheets to manage your inventory, you may want to consider moving to a cloud based inventory system like Unleashed.

An effective, easy-to-use inventory system eliminates human error that can occur whilst using Excel. Inventory software gives you real-time inventory control and reporting. It also helps you to understand your product margins and provides you with important information to help you make better decisions based on real-time, accurate profit reporting.

Step 3: Round up those overdue invoices and debt collect

Review your Aged Receivables detail report and identify all invoices that are 30+ days overdue. Once this has been done make one final determined effort to collect the debt before the 31st of March. If you have exhausted all avenues for collecting unpaid invoices and do not envisage collecting them at any point in the future, you can write off the outstanding invoices to a bad debt expense. Contact us to find out how.

Tip: If you are going to write off any outstanding invoices; make sure to apply a credit note against the invoice owing. We do not recommend using the “void” option in your accounting software.

Step 4: Review Creditors entered and reconcile to Supplier Statements

Do you have outstanding supplier invoices showing on your ledger? Are you confident that these are correct? GoFi8ure recommends that you reconcile all creditors to supplier statements and balances before the 31st of March to ensure any missing invoices are received and entered into Xero. You may find that some suppliers have in fact been paid, however, the payment was not allocated against the supplier invoice. If this has happened it is important to correct it soon as possible.

Need help actioning a creditors reconciliation? Send us a message so we can help.

Tip: If you are disputing an account or are no longer paying an invoice then you should apply to the supplier for a credit note and once received reconcile the credit note to the invoice in your ledger (creditors reconciliation). If you would like accounting support please contact us.

Now is the time to make the conscious decision to take action with steps 1-4. If you would like GoFi8ure to take your end of year stress away and do these steps for you, get in touch with us today via email or call us on 0800 463 488 and quote End of Financial Year Help.

 

 

Women in Business on Fire

Women in Business on Fire

Lisa’s key messages are that when goal setting there are always further goals to achieve and that self-actualization is important to try and achieve. On digital disruption within the accounting industry, she is riding the way with her firm offering innovative products. Lisa understands the reason why for her business as well as the importance of goal setting! What goals are you setting for your business? We can help! please a comment and we will be in touch! #communityovercompetition
#lovewhatyoudo

CLICK HERE TO VIEW THE VIDEO. 

Congratulations to GoFi8ure’s Managing Director Tania Hayes on completing the Taxation Toolkit

Congratulations to GoFi8ure’s Managing Director Tania Hayes on completing the Taxation Toolkit through the Career Academy

At GoFi8ure we pride ourselves on consistently up-skilling and staying at the forefront of tax and accounting legislation and compliance. Another KPI ticked and achieved!

Check out this amazing feedback Tania received from her tutor.

Tax Fundamentals – Introduction

Grade: Pass

Hello Tania, thank you for submitting your Tax Fundamentals assessment for grading. You have done an excellent job at this assignment and I am impressed with your knowledge in this topic. I have left a few comments in your feedback files about a few extra information not in the course material if you want to go deeper into residency and DTAs. Keep up the awesome work and we look forward to your next assessment.

Tax Fundamentals – Income & Deductions

Grade: Pass

Hello Tania, thank you for submitting your Allowable Deductions assessment for grading. You have done an excellent job at this assignment and I am impressed with your knowledge. I have left a few comments and some of the situations in this assessment in terms of tax planning. Keep up the awesome work and we look forward to your next submission.

Understanding GST

Grade: Pass

Tania, this is a brilliant submission. All the income and expenses transactions were accurately captured under payments basis. Along with that you successfully managed to calculate GST payable. I am pleased with your progress in your course. Keep firing the assessments in to us!

Tax Fundamentals – Tax Calculation & Return Preparation

Grade: Pass

Hello Tania, thank you for going over my comments and amending your assessment. I am very impressed that you sorted out couple of those issues. Now I can see that you understand Provisional Tax. Keep up the awesome work and we look forward to your next assessment.

Depreciation

Grade: Pass with Distinction

Phenomenal work Tania and thanks for completing your assessment.  From your submission, you have provided excellent calculations and I can see that you have put in a wonderful amount of effort into this assessment.  Additionally, your work demonstrates that you have an in-depth understanding of this topic.  Congratulations on passing your assessment and keep up the amazing drive throughout your course.  I look forward to seeing another awesome submission from you soon.

Look Through Companies

Grade: Pass with Distinction

Well done with your submission for LTC’s Tania – it was interesting for me to read how simple you made this sound whilst still being accurate. You really broke down the fundamentals of LTC’s whilst displaying very good knowledge of the basics of this concept!! Great work on your part and I look forward to further work coming through from you as you progress towards your qualification with us!

Company Taxation

Grade: Pass with Distinction

You have a definite style in your explanations Tania that makes it clear to the reader that you are sure of your facts – it is easy to see your application of the theory in your explanations and you take it to the next level by providing examples throughout your answers which is really nice to see. Thanks for your efforts here Tania and again it is my pleasure to be able to provide you with your passing grade!

Lisa Martin nominated for Top 50 Women in Accounting sponsored by Practice Ignition

Lisa Martin nominated for Top 50 Women in Accounting sponsored by Practice Ignition

We were very excited to receive this notification today. The team at GoFi8ure are so proud of Lisa and what she has achieved for the accounting and bookkeeping industry.

A big thanks to Practice Ignition and Brooke Holmes for this amazing opportunity and recognition for women in the accounting industry.#hugabookkeeper #huganaccountant #betterschoolsandhospitals#deservingnominee