MANAGING CASHFLOW DURING TOUGH TIMES

Cash flow is crucial for any business, especially during tough times. Cash flow refers to the amount of cash coming in and going out of a business, and it is essential for a company's financial stability and growth.

 During tough times, such as an economic downturn or unexpected market disruption, businesses may experience a decrease in sales or revenue, making it harder to cover expenses like rent, payroll, and supplier payments.

 Effective cash flow management helps businesses anticipate and mitigate potential cash flow issues and ensure that they have enough cash on hand to cover their expenses.

 Some ways to manage cash flow during tough times include…

Forecasting

Accurately forecasting your cash inflows and outflows can help you identify potential cash shortfalls in advance and make necessary adjustments.

Monitoring expenses

Reducing expenses or delaying non-essential spending can help preserve cash.

Managing receivables

Promptly collecting payments from customers can help increase cash inflows.

Negotiating with suppliers

Negotiating extended payment terms with suppliers can help improve cash flow.

Consider external financing

In some cases, securing external financing, such as a loan or line of credit, can help bridge a temporary cash shortfall.

By effectively managing cash flow, businesses can maintain financial stability during tough times and position themselves for long-term success.

Profit Focus Over Tax Reduction

As the financial year-end approaches, it's important for business owners to resist the temptation to engage in short-term tax minimization strategies, such as buying an expensive item to reduce profits. These strategies may provide a temporary reduction in tax liabilities, but they can also reduce cash flow and inhibit the company's ability to reinvest in its operations and grow in the long term.  For example, a purchase of a $20,000 item to avoid paying $5,000 is not worth the effort overall you will be $15,000 out of pocket, to save $5,000. This is cash you could have used to re-invest in your business for growth.

Instead, working with a professional accountant who has business experience can help business owners develop ethical tax minimization strategies that align with the company's long-term goals. These strategies may include maximizing deductions and credits, implementing tax-efficient investment strategies, and optimizing business structures to minimize tax liabilities.

Furthermore, by engaging with a professional accountant, business owners can gain valuable insights into their company's financial performance and identify areas for potential growth and investment. By developing reports, budgets, and forecasts, and analysing key financial metrics, accountants can help business owners make informed decisions about how to manage cash flow and allocate resources for future growth.

In summary, as the financial year-end approaches, it's important for business owners to resist the temptation to engage in short-term tax minimization strategies and instead work with a professional accountant who can provide ethical tax minimization strategies and valuable insights into their company's financial performance. By focusing on long-term growth and sustainability, businesses can create more opportunities for success and profitability in the future.

The benefits a team brings to help grow your business

💼 Business owners need a 👥 team to help grow their 🏢 business for several reasons. One of the main reasons is that having a team allows for a diversification of skills and knowledge. Business owners typically bring a specific set of skills and knowledge to the table, but having a team with diverse expertise can cover any gaps and provide a well-rounded approach to growth.

Additionally, having a team increases productivity by dividing tasks and working collaboratively to achieve shared goals. This means that there are more hands on deck, leading to more potential for progress and growth. With a team in place, business owners can also delegate tasks and responsibilities to other team members, freeing up their time to focus on higher-level strategic planning and decision-making.

💡 Having a team also enhances creativity. A team with diverse backgrounds and skillsets can bring new perspectives and fresh ideas to the table. This can lead to more creative solutions and innovation, which can help the business to stand out in a crowded market. Moreover, having a team improves decision-making. With a team of experts in different areas of the business, decision-making becomes more informed and strategic. Ideas and opinions are shared, and the team works together to identify the best course of action.

However, if a business owner can't afford a full team, there are still several options available to help them grow their business. One option is to outsource tasks or projects to contractors or freelancers. This can be a cost-effective way to get access to the expertise needed without hiring full-time employees.

📊 Outsourcing accounting functions, for example, can be a wise choice for business owners who don't have the expertise or time to manage their own books. By outsourcing, they can access the services of experienced accountants who can help to manage their financial records, prepare tax returns, and provide financial analysis. This can free up the business owner's time and ensure that the financials are managed accurately and efficiently.

Additionally, a business owner can partner with other businesses or individuals to share resources and expertise to reduce costs and create new opportunities for growth. This option can help business owners to collaborate with others and gain new insights and ideas.

In summary, a team can provide business owners with the support they need to navigate challenges, capitalize on opportunities, and take their business to the next level of success. However, if a business owner can't afford a full team, there are still several options available to access the support and expertise needed to achieve growth.

BUSINESS CHALLENGES AND HOW TO OVERCOME THEM

1.     Financial Management:

One of the biggest challenges for any business owner is managing finances, including cash flow, budgeting, and bookkeeping.

There is no point in trying to overcome this yourself, you will only put it off and make errors that will cost you a lot of money further down the track when you need to have all your records up to date in order to do your taxes and or apply for business financing

Hire a professional accountant who has a very good understanding of business operations to help with bookkeeping, budgeting, cash flow management, and business coaching. Using financial management tools such as accounting software to help keep track of your finances, will help give you clarity in your business to enable growth.

 2.     Competition

 In a crowded market, businesses must differentiate themselves and stand out from competitors. This can be especially challenging for small businesses with limited resources.

 Differentiate your business by providing unique value propositions or offering exceptional customer service. Conduct market research to identify gaps in the market and create products or services that meet those needs. 

 3.     Hiring and Retaining Talent

Finding and retaining skilled employees is a challenge for many businesses, particularly in industries with high turnover rates or a shortage of qualified candidates.

Offer competitive salaries, benefits, and employee incentives to attract and retain skilled workers. Create a positive company culture that promotes work-life balance, professional development, and job satisfaction.

4.     Marketing:

Effective marketing is crucial for attracting and retaining customers. Still, it can be difficult to create a marketing strategy that resonates with your target audience and generates a positive return on investment.

Create a comprehensive marketing plan that includes online and offline marketing strategies such as SEO, social media, content marketing, and email marketing. Use analytics to track the effectiveness of your marketing campaigns and adjust your strategies accordingly.

 5.     Regulatory Compliance

Businesses must comply with a wide range of regulations and legal requirements, including tax laws, labour laws, and environmental regulations.

Hire legal professionals or consultants to help navigate regulatory compliance issues and stay up-to-date on changes in the law. Invest in employee training and development to ensure they know regulatory requirements. 

7.     Technology:

Technology is constantly evolving, and businesses must keep up with the latest trends to remain competitive. This can be particularly challenging for small businesses with limited IT resources.

 Invest in the latest technology to improve productivity, efficiency, and customer experience. Consider outsourcing IT services to reduce costs and access specialised expertise.

  8.     Scaling

Growing a business requires careful planning and execution, and many businesses struggle to scale effectively without compromising quality or profitability.

 Develop a growth strategy that includes expanding product lines, entering new markets, and investing in marketing and sales. Hire additional staff or outsource services as needed to support growth.

 9.     Customer Satisfaction

Satisfying customers is critical for any business, but it can be challenging to meet the needs and expectations of diverse customer groups.

Focus on providing exceptional customer service and creating a positive customer experience. Use customer feedback to improve products and services and adjust strategies to meet changing customer needs.

In conclusion, running a business can be challenging, but business owners can overcome these challenges by implementing effective strategies and seeking professional help when necessary. By staying up-to-date with industry trends, being adaptable, and prioritizing customer satisfaction, business owners can successfully navigate these challenges and achieve their goals.

3 Things to Consider when Hiring

1. People:

You need to look at the person not the hard skills, skills can be taught, the person is a product of their own personal development and are the real asset that you are investing into.

2. Culture:

You need to step outside the confinement of the job description and ask yourself what this person believes in, what matters to them beyond what is being presented in an interview. Building a culture in a workplace impacts how long and how dedicated the team is to your business. Bring in the wrong person and the harmony of your entire team is at risk.

3. Technology:

You need to consider staff that know how to operate systems and platforms that you have in place. This might not mean that they have used the specific platforms, but there needs to be some indication that given the opportunity they are good with the technology.

The old saying “That’s not how we use to do it” is one of the most toxic phrases in a modern business. A team of innovators and leaders write the rules as they go, building and evolving as the opportunities arise. That’s a dream team.

7 Most Common Money Mistakes to Avoid

Smart financial management is essential for any business, no matter how big or small. However, it can be difficult to get things right, especially if you do not have someone trained and experienced to guide you. Poor financial planning is one of the most common reasons that businesses fail, so the sooner you take ownership of your business’s financial health, the better. Dealing with your finances head-on from the get-go is the best way to set yourself up for lasting success. Careful planning can help you to avoid common money mistakes and shows potential investors that you’re serious. Here are the most common financial mistakes that businesses make and how to avoid them.

1. Prioritising Instinct over Information

Whilst following your gut is generally a good principle, it’s a dangerous game to make assumptions about your finances. It’s vital that you meticulously track your revenue and expenses and closely monitor your cash flow. If a small mistake goes unnoticed for too long, it could prove very damaging for your business. Using accounting software can help keep track of your income and expenses quicker and more accurately.

2. DIY Accounting

Managing your accounts by yourself up a lot of your time and usually is done after hours giving no time to relax and turn off. It’s wise to hire a professional accountant as early as possible. Juggling self-taught accounting with running a small business will eventually result in a backlog of errors, which can prove costly in the long run. Professional accounting services save time, money and stress, allowing you to focus on growth. Outsourcing this task will also give you access to an advisor that you can bounce things off and can give you valuable business advice.

3. Failing to have a Budget

Creating a budget to helps prevent from draining your finances should something go wrong. A clear budget will allow you to reassess your finances should it you require more money and make smart decisions that won’t damage your business.

4. Disorganised Files

The importance of balancing bank statements and keeping receipts in order cannot be overstated. Patchy bookkeeping can cause chaos for your business and result in a lot of trouble, not to mention wasted personal hours trying to resolve the problem. Keeping all of your receipts and cross-referencing your accounts with your bank statements is vital for transparency and future success.

5. Misunderstanding Your Target Market

In order for your business to be successful, you need to understand what your customers need. Knowing your target market helps you to reach them, as well as how to appropriately price your products and services. Here are some questions to consider:

• What is your market position?

• What need do you fulfill for your customers?

• How much value do your products or services provide?

• Who is your competition - and what makes you stand out?

Miscalculating prices can prove to be a grave error for a small business, but knowing your market well will help you to figure things out.

6. Hiring Quantity over Quality

Over-hiring is an expensive mistake to make. Hiring employees is one of the most costly parts of running a business, so going overboard is a huge waste of money. It can also damage staff morale and productivity, and lay-offs will only amplify the problem further down the line.

Bad hires are another threat to a small business. Hiring the wrong employee can create an imbalance within the company culture. In turn, this can negatively impact other staff and even damage your business’ reputation. Don’t rush the hiring process. Taking extra care to avoid mistakes can save a lot of trouble in the long run.

7. Miscalculating Expenses

In order to keep your business afloat, you need to know exactly how much cash your business burns each month. Keeping a meticulous record of your expenses allows you to understand where your money is going, and how much you’ll need to survive. Underestimating your cash burn can land your business in hot water, so create a projection of your monthly expenditure and be sure to monitor it closely, making adjustments whenever necessary.

A successful business needs a robust financial foundation, so keep these mistakes in mind. No business is invincible and it really does pay to be cautious and always stay one step ahead.

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Break The Vicious Cycle

You started your own business to

• Do what you love best and you are good at it

• Be your own boss

• Have flexibility to spend more time with family and friends

Instead, you find

• You start not liking what you once loved

• Your business is your boss

• No flexibility, no time for family and friends

You are doing all the heavy lifting yourself to keep expenses down, you feel alone and have no one that understands you to help you see through this vicious cycle you are in.

It does not have to be this way, there is help and we can show you how to break this vicious cycle and take control of your business to achieve your freedom.

We work alongside our clients throughout the year in partnership to help

Here is the journey to getting back control and improving profits in your business to achieve the freedom you desire.

5 Profit Boosting Strategies

1. BUDGET

Setting a budget is about becoming financially literate, an essential skill. The better you understand your business finances, the higher your chance of success.

2. INCREASE SALES

Look at your sales rate and adjust up if possible. Sometimes it does not take a lot, increasing membership, subscription, or sales rate by a fraction can make all the difference.

3. REDUCE LABOUR COSTS

Reduce payroll costs by outsourcing were possible like accounting, marketing, and VA services

4. GET BETTER DEALS

Negotiate better deals, with other vendors, you can also leverage your relationships with existing vendors.

5. EVALUATE FLOOR SPACE COSTS

Do you need the full floor space you are renting? If not consider moving to a smaller space, renegotiate your rent with your landlord, or sublease excess space to complementing businesses, creating a win for both