Using A Small Business Accountant To Win Next Year's Trifecta!

INTRODUCTION:

Another Melbourne Cup has been run and won and for those that missed out or feel they could have done better, the time starts now for preparing for another tilt in 12 months' time. The ultimate trifecta in business is better cash flow, better profits and a bigger business valuation.

Preparing a small business for a victory run is pretty much the same as a horse preparing for its Melbourne Cup. The only difference might be that in order to get business growth and great profits and cash flow, you need to prepare for a number of cups to get the prized result in the end. In terms of getting meaningful help from your small business accountant, today we look at what things should be considered so you can celebrate by drinking out of that business excellence silverware.

Figure 1: Sitting down and planning with advisors is the first step to making a difference to profits and cash flow.

1. What Shape Are You In Now?

Just like almost anything when something is not right or working, you need to admit you have a problem. To do this, you need to assess what shape your business is in and discussing this with your small business accountants is a great place to start. This will usually mean looking at a number of things including:

• profitability;
• cash;
• key performance indicators (debtor days, supplier days, inventory days, gross margins etc);
• working capital;
• current business valuation;
• bench marking.

Small business accountants with experience in business advisory matters should be able to look at a balance sheet and profit and loss statement and quickly pinpoint some key issues that need addressing.It will help if they have experience as business valuers as they will also know what truly drives value and what needs to be done to get this business growth.

2. What Do You Need To Do To Get Fit?

Having worked out exactly what shape you are in presently, now it's time to work out how to get your business back into shape. This means that if cash flow is the biggest problem you have, then some goals need to be set and through business planning cash flow forecasts should be prepared which is usually best prepared through a three way budget. This should be the first thing small business accountants Sydney & Dubbo have in their armory.

Business planning might sound like hard work but with a bit of help a simple one page plan can be created.

The things that you need to improve to get your business fit will mean having little action points that will chip away at the problems until they are either completely fixed or improved greatly.

Figure 2: Climb every mountain to reach your business goal. Photo courtesy Balmain Baz and Lara Scolari Gallery Balmain

3. The 3 Things You Need To Have In Place To win

There are 3 things I believe you need to have in place to get you to where you want to be over time. These are:

• Dedication and commitment to improvement;
• Willingness to seek help from experienced business advisors; and
• Solid reporting systems.

Fixing a business doesn't just happen. There needs to be a complete focus on addressing the little things (the one per centers). Bringing people in such as your small business accountants will be a great way to get things moving but you need to be prepared to put the work in also.

If you don't thing you want to seek help, that is fine but it's amazing what you can learn by talking to others. As a small business advisor myself I learn new things every day. being willing to explore business alternatives and views will get you think more outside the square. Being challenged is always healthy.

Finally, if you really want to succeed then you need to get reliable reporting systems in place that are accurate and timely. With the advent of cloud accounting these days, programs such as Xero are very successful tools to help you achieve this.

If you aren't getting timely information about your business, it's going to be very hard to make changes that will help you get the improvement you want over a suitable time frame.

How are your reporting systems currently? Are they prepared accurately and how long does it take after month end to find out where you are or how you performed?

4. Improving The Odds Of Success

To improve the odds of succeeding you need to monitor your actuals versus your goals at least quarterly. This is where you need your small business advisors to schedule meetings so that they occur and in a way they are run efficiently through a well defined agenda.

CONCLUSION:

How will you win your Melbourne Cup and if it's not next year how will you get closer?

Better to act now and start to get the ball rolling as before you know it another year will come and pass and each year you leave it the harder it will be to ever raise the trophy!