While we are still all recovering from the surprise and stress of the COVID-19 outbreak, there has never been a better time to review your business processes. Below are 7 tips to help you take a breath, re-assess and hit the ground running.
1. Cash, Cash, Cash
Cash is the lifeblood of any business. Businesses large and small have felt the pinch from the economic implications of the virus. Just last week, Qantas raised a further $1.9B from investors to shore up their balance sheet and ensure they have enough cash to survive the recovery from the pandemic. How do you plan on maintaining cash flow through this period? Do you have 3 months cash to pay expenses? Poor cash flow can stifle growth and increase unneeded stress on business owners and employees. Now is a great time to review your spending habits, both business and personal. Aim to build a cash reserve of at least 3 months worth of expenses and your stress levels will start to subside. You can do this by:
Reviewing your payments terms and making changes to slow paying customers
Chase up old debtors and turn on invoice reminders
Reevaluating and reviewing ongoing operating expenses
Discussing the need for an overdraft or small business loan facility
Increasing your service or product offering
2. Review your budget
A budget is a great way to work out a prediction of your expenses and profit for the year ahead. This can help alleviate any cash flow surprises and assist in targeting net spends on items such as marketing, subscriptions, wages and rent. Xero, MYOB and quickbooks all have tools that can assist you in helping create a budget and then comparing this to the actual expenditure throughout the year. We have the instruction links below and please get in touch with our team if you would like any assistance.
3. Update or create your Operations Manual
An operations manual is essentially a how-to guide for your business. Your business processes from start to finish should be recorded in your operations manual and this can be made readily available via a shared drive or company intranet. Take some time to write out your business processes. These can be anywhere from marketing, admin, sales, HR, policies and procedures to creating an organisational chart and further defining job roles. This can be a document shared with employees to standardise tasks along with being a document that can grow with the business.
4. Perform a subscriptions audit
Software as a service/subscriptions can be a great way to increase productivity, streamline processes and are usually great value for money, but what if you aren’t using the service anymore or not getting the value you once were? Like an unused gym membership, subscriptions don’t stop when you stop using them and can be a drain on cash flow. Take some time to review your direct debits and the value you are receiving from them and make some decisions regarding their need moving forward.
5. Take a look at your business and marketing plan
Given the current economic changes that are taking place, it is a great time to review your business and marketing plan, as previous strategies may not be relevant anymore. Business.gov.au actually has some great templates to tools to help you reassess and document your changes https://www.business.gov.au/Planning/Business-plans
6. Take some time to reflect on the financial year just passed
What could you have done better or differently? Were mistakes made that can be easily avoided in the future or can efficiencies be gained on repetitive tasks? Taking some time to reflect on the financial year just passed. Jotting down some points to improve on is a great way to start building goals to improve on for the 2020-21 financial year.
7. Set some goals for your business
Goal setting can feel daunting but if you take some time to think about what you truly want to get out of your business, goals should start to flow. Goals should fit the SMART acronym (Specific, measurable, achievable, relevant and time bound) and can be both financial and non-financial. You can start with generic goals like wanting to increase net profit by x% within 12 months, then work backwards to work out what needs to happen to get to this figure, such as increasing sales by y%, how many new customers or what total job value is needed to achieve this per month, etc.
JPL Partners is an accounting firm based in Cronulla in Sydney's south.
We've been serving local businesses and families with integrity and care since 1997.
Our chartered accountants and business advisers strive to help you grow and to order your tax, business and superannuation affairs so that you may achieve your financial goals.
Please note that this blog post does not constitute financial advice.