Business tune up
The end of financial year isn't only about tax, it's time to get your business in order too, says Mark Bouris
The end of financial year isn't only about tax. It's an opportunity to look at your business and make changes. Here's my 8-part template for fine tuning a business.
Goals: along with the financial targets - earnings, margins, market share etc. - are goals such as how to set goals for your employees; how to define what success is within your business. And never forget about the owner's goals: you have to know what kind of income and fulfilment you desire.
Knowledge: how good are your systems? Do they give you clear and regular reporting? Do they give you measurements against your Key Performance Indicators? Do you use all of your enterprise system's capability? Do you need a new system or do you simply need to know more about the system you currently run?
Funding: it's time to assess your debt, retained earnings and equity. Whether it's equity or debt, capital comes at a cost and you should look at how it's performing and what needs to change in budgeting, dividends and cash flow discipline.
Protection: business owners often overlook basics such as insurances, disaster recovery plans and contingencies for business continuance. If you employ people, they and their families are vulnerable should anything happen to the business or to you. Your family may also rely on you. Have a plan, talk to experts.
Environment: What broader environment is the business is operating in? What is the Reserve Bank saying? Where are interest rates heading? What is happening to your competitors? Is the government talking about your industry? What foreign forces will affect your business? Every owner can start a new financial year with a brief written outline of where their business sits in the economy.
Structure: business owners can go for years with a structure that is wrong for the business, inefficient for tax or inflexible in terms of succession. It's worth having an accountant or solicitor look at your structure. The law provides you with options in how you carry on a business, and you should ensure you are in the structure that best suits you and your plans.
Growth: what did you do in 2011/12 to grow the business? Did it work? This is the time to look at growth strategies. Get your people in one room and listen to ideas - often the best ideas come from the people who are never asked.
Owner: in the end, there has to be a pay-off for the owner. You need an insurance broker to ensure you have products that cover you as a director, you need advice on separate business/personal finances and you should be converting your hard work into a retirement plan with some of the superannuation exemptions and concessions available to business owners, including CGT relief and self managed super.
A lot of these matters are overlooked in the course of doing business. Use the end of financial year to at least give them some thought.
* Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on firstname.lastname@example.org with any queries you may have.
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