Five strategies to help your business

Five strategies for kick-starting your small business this financial year

As another end-of-financial-year rolls by, now is as good a time as any to undertake a bit of housekeeping and give your business finances a tidy up!

The daily grind and stresses of running a small business can often distract and exhaust many business owners leaving them rushing and unprepared as they approach the end of yet another financial year.

It’s that time when we draw a line under our business finances for one year, take a deep breath, and dive straight into the next.

This year, before leaping straight into it, why not stop and take a moment to take stock of your finances and begin the year with a fresh outlook?

These are our five ideas to get you started.

Insurance

The Australian government’s business website, www.business.gov.au can help you understand your compulsory insurance requirements, along with other types of cover you should consider, like personal insurances to protect yourself, your income and your family in the event you’re injured or become too ill to work.

Additionally, there are policies to protect your premises, your stock and machinery.

If you’ve had insurance for a while, perhaps shop around to see if there are better options that may provide a better deal for you and/or your business.

Tax planning

The start of a new financial year is perfect for developing a forward strategy. To get organised, and stay organised, throughout the coming year start by understanding your industry’s regulatory obligations and entitlements. Look at government concessions, asset write-offs and deductions.

Stay up-to-date with compliance responsibilities like, Single Touch Payroll, effective from 1 July 2019.

You should:

  • regularly review your profit and loss: monthly, quarterly, annually.
  • track revenue to ensure your billing and collection procedures provides adequate cash flow.
  • calculate and understand the cost of doing business; devote more time to activities that are the most profitable and help grow your business. You’ll be surprised how many business owners have little idea on the margins and profit on the various services and activities they provide
  • A good business adviser can help you put a system in place that will keep your tax records organised and up-to-date throughout the year, it may even make your tax accountant smile. Why not call them to arrange a time to talk it through?

Systems

If you’re doing things a certain way because that’s how they’ve always been done, it may be time to cast a critical eye over some or all of your business procedures.

Are there:

  • better, faster or more efficient ways of doing things?
  • technologies to simplify processes, e.g. point-of-sale (POS) systems?
  • process bottle-necks or duplicated steps that can be safely bypassed?
  • ways to automate manual processes like running reports, making appointments or paying regular accounts?

Business tracking

Staying on top of business performance, trends and cash flow can eliminate surprises by spotting potential problems and identifying supply and demand patterns.

Start by:

  • analysing data and trends from previous years or seasons.
  • looking for peaks and troughs in sales, job completion times and inefficient uses of labour.
  • identifying what worked well and what didn’t work so well.

Plan to grow

Once you know where you are, you can look for ways to move forward.

Whatever your business’s growth strategy is, be sure you have the resources to support it. Consider whether you’ll need to invest in machinery, supplies or specialist staff?

Now, update your business plan and review it regularly to stay focused on where you’re heading.

Running your own business is hard work, but it’s also one of the most satisfying and important things you can do.

Richard Branson once said, “A business is simply an idea to make other people’s lives better.” So, this new financial year, start refreshed and set yourself up to make your life, your family’s life and your customers’ lives even better.

Talk to us find out more.

Good debt or bad debt?

Is household debt consuming you?

By the end of 2018 Australia had, relative to the size of its overall economy, one of the highest levels of household debt in the world. At 127% of gross domestic product (GDP), our household debt, as a percentage of GDP, had nearly doubled over the last 20 years.

So, are Australian households groaning under the weight of oppressive levels of debt? For the most part the answer is surprisingly, no. A major reason for the increase in household debt is that interest rates are much lower than they were 20 years ago, so it’s easier to service larger loans. And over 90% of our household debt is owner-occupied home loans and investment loans.

Good debt, bad debt – is there a difference?

Home loans and investment property loans are often referred to as ‘good’ debt because, when used correctly and responsibly, they (usually) improve well being and build wealth over the long term. That said, poor property selection or unfortunate changes in circumstances – borrowing too much, loss of a job or an increase in interest rates for example – can quickly see ‘good’ housing debt turn ‘bad’ or even “toxic”.

Another type of bad debt is lifestyle debt (the worst kind). This has a negative impact on wealth because the debt is being used to buy things such as cars and caravans, clothing, holidays and electronic gadgets or appliances – things that lose value rather than gaining it. In today’s world it’s easy to accumulate bad debt.

Temptation galore – it’s a jungle out there

Credit cards, digital wallets on our phones, payday loans and buy-now-pay-later options all make it easier to spend money, even if it’s money we don’t have. Relentless, targeted advertising, the fear of missing out, the increasing level of peer pressure enabled by social media or just paying for daily essentials are all capable of leading us into spiralling debt.

Is debt consuming you? – these are the signs

Some warning signs that you have a debt problem include:

  • Not paying off your credit card in full each month. This means you will be paying a higher rate of interest on the carryover balance.
  • Your total debt is actually increasing month on month, along with your interest payments.
  • You’re experiencing housing stress. This means rent or mortgage repayments consume more than 30% of your pre-tax household income.
  • You’re using debt to fund basic living costs.

Taking control – make a plan

How to deal with your particular debt problem depends very much on personal circumstances, the amount of money you are comfortable wasting and the time frame you have before it consumes you.

  • Track your spending. Australians buy huge amounts of clothes they don’t wear, food they don’t eat and gadgets they don’t use or even open. For every purchase ask yourself, “Do I really need this or am I buying it to impress somebody I don’t even like?”
  • Consider selling items and junk that you no longer use or need. Maybe it’s an exercise bike in the shed or a third television that you have not used for three years. Either way, you’ll be surprised by the amount of junk you can rid yourself from by hosting a simple garage sale or posting an ad on websites like Gumtree.
  • Take out a lower interest rate personal loan to pay off high interest debts such as credit cards. Repay the loan as quickly as possible.
  • If you have a home loan, make sure it has a linked offset account that you use for everyday banking. You only pay interest on the difference between your loan balance and offset account balance, so all of your money is working to pay down your loan.
  • Review your home loan regularly. You may be able to refinance at a lower interest rate. Check for all the fees involved.
  • Talk to your financial adviser. They can look at your specific situation and recommend strategies that will put you in control of your debt rather than having debt consume you.

Contact Bridges Lake Macquarie today

Thought about your insurance lately?

We’re all busy, right? Sometimes just knowing that you’ve got bills covered by setting up your bank accounts to automatically pay your mortgage, council rates and those other regular expenses gives you a peace of mind.

But what about those expenses that will inevitably vary as time goes by? Like your insurance.

Reviewing your insurance strategy is an often-forgotten activity, as many of us adopt that ‘set and forget’ approach outlined above.

When it comes to insurance, you should be regularly reviewing your policies to ensure that you are protected, and your coverage meets the needs of you and your family.

Here’s what you need to consider:

Do you still need insurance?

If you’ve ever been involved in a car accident, had a flight cancelled, become seriously ill or had an injury that has kept you out of action for any length of time, you’ll know how stressful these incidents can be.

If you have insurance, the cost of repairs, medical treatments, travel changes or recovery treatment can be softened. Insurance provides the money you need when things go wrong and, let’s face it, we all know that sometimes things can go dire.

When should you review your cover?

You should review your insurance strategy whenever there is a change for both   your personal or business circumstances. Changes in any of the following areas should prompt you to review your protection as they can impact the type and amount of insurance cover you need:

  • income
  • assets
  • debt levels
  • dependants
  • relationship status (for example marriage, divorce or a new partner)
  • occupation or employment status (for example if you become self-employed or employee)
  • health (improvements or change in health of you or your partner)


What if nothing has really changed?

You should still review your insurance strategy every year, even if nothing in your personal or business circumstances has changed.  Intense competition in the risk insurance marketplace means that insurance providers are always looking for the ‘edge’ with their products, particularly to ensure they remain as  the highest rated products.

This can often mean additional benefits, better policy definitions and the introduction of new additional options which can be of value to you if you need to make a claim.  While many insurers will automatically ‘pass back’ improvements in their policy definitions, this shouldn’t be assumed.

Next steps

It’s best to speak with your Bridges Lake Macquarie financial planner. They specialise in helping you understand the details of any policies you have, or that you are applying for. Contact us today!

Bridges Financial Services Pty Limited (Bridges). ABN 60 003 474 977. ASX Participant. AFSL No 240837. This is general advice only and does not take into account your objectives, financial situation and needs. Before acting on this advice, you should consult a financial planner.