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INTRODUCTION:
When it comes to being a small business accountant it's one thing to give advice but it's another to get people to take action. Inaction can lead to drastic measures and for those of us that were surprised by the American election results, it was a timely reminder that something's going to give if real decisions aren't made to fix the underlying problems.
If you were to loom at your business right now, what is the single biggest thing you need to address with it and what exactly are you doing about it? Here are some things you should be doing to make sure you find the path to better profits, cash flow and business valuations.
Figure 1: Addressing issues is not always pleasant but you also might need professional advice to solve the problem.
1. Find A Real Small Business Advisor/Small Business Accountant
Small business accountants are generally very good at what they do particularly when it comes to tax. Getting a small business accountant who is also very good at advice for business growth, profitability and cash flow assistance is a must. There is no pint having good tax advice if you're not making much money. There is very little value in that.
Find a good business advisor and get them to cast their eyes over your financials and get them to give you feedback. Being able to read a balance sheet and interpret it quickly is a skill rather than just being able to prepare it.
In order to fix something you need to identify it and then admit you have a problem. If somebody can help you pinpoint the issue then you are on the road to recovery.
2. Ensure You Are Receiving Real Time Financial Results
If you really want to effect change financially and have a system in place to recognise and make decisions when warning signs are sounding you need to have timely and accurate financial accounting systems. Cloud accounting makes this task so much easier in today's digital world and you can get help with getting them right by allowing your advisors to log in and see what the right treatment for a transaction might be or a reconciliation conundrum!
Figure 2: Does your accountant review your balance sheet and explain both the good bits and bad bits?
3. Prioritise Your Issues
Having identified what areas need to be fixed, work out the biggest and most important ones and if you were to correct these what effect would they have on the bottom line, cash flow and your business valuation? Use your accountants to model a three way budget (including cash flow forecasts) so you can see what it would mean to you if you took action. This can always be a very good motivator to get something done for the better!
4. Develop An Action Plan
Write down who is going to do what and when by. This could involve yourself , your team or external advisors.
Figure 3: David Bowie was forever trying to improve and reinvent himself. Image courtesy Helen Greer
5. Meet With Your Advisors & Monitor
Meeting with your advisors at least quarterly is always recommended. We have some clients who like to stay on track and meet monthly to discuss business improvement (budget versus actual) and review if people did what they say they would do in the action plan.
This is about accountability!
CONCLUSION:
Business should always be in a state of flux and being reviewed for continual improvement. When was the last time you really analysed its performance?
Improvement won't happen by itself so what are you waiting for?
