|I’m making profit but have no cash, where is it?|
|I don’t know how my business is performing. How do I measure it?|
|Why am I always stressed about our finances?|
|How am I going to pay our tax obligations?|
|I’m working too many hours, is a work/life balance really possible?|
Once you’ve established yourself in business and have entered the growth period, the challenges change. Your biggest task is not only increasing sales and profits but also managing growth so it doesn’t run ahead and derail you.
“Do I have enough staff?”, “Are my current premises big enough?”, “What is the market doing and what should I do in response to it?” These are the kind of front of mind questions you’ll need to deal with so that you can stay two steps in front.
By working with you to explore the opportunities, identify the threats and create forward-looking plans for efficiency, we can make sure you have the right resources in place when you need them so you can navigate this stage more successfully.
We can help you form plans and generate financial projections to grow your business more confidently.
After calculating your potential future tax liability, we can recommend how to plan for it and legitimately reduce it.
Working with your bank, we can help you secure the additional funds you need to grow your business.
Is your corporate structure still suitable? We can help you review it to see if it still offers the best outcomes.
We keep track of your business performance and call regular meetings to discuss where you’re at.
It’s easy to assume that the money you have in your bank account is all profit but this is not always or necessarily the case. Profitability and cashflow are two different things. Just because you have profit doesn’t mean you have cash.
For example, you could invoice a client $20,000 but they haven’t paid you by the end of the month therefore you will be owed that money. On its own this would show as a profit, however, because you are owed that money the cash is not sitting in your bank account.
Likewise, if you’re making loan repayments, these are not an expense but a balance sheet item. Therefore the cash derived from profit has been used to repay them. Profits could also have been used for acquiring assets.
Performance can often be measured simply by reviewing your trading results against what you have budgeted for and/or prior year performance.
If you haven’t prepared a forecast or budget, we highly recommend you review the trading performance of your business. This can be done by reviewing your internal records including your profitability, sales performance and KPIs (gross profit, direct profit, labour costs etc.).
Being stressed is a sign you feel out of control. It’s typically experienced when you don’t know your financial position or have a firm grip on your balance sheet and cashflow.
By putting a plan in place, keeping a close eye on the figures and effectively managing your cashflow and debtors, you’ll feel more relaxed, even when times get tough or busy.
Firstly, it’s important you understand what your tax obligations are. Secondly, you need to put a plan in place to help you meet them and avoid any penalties for late or non-payment.
To do this, you need to create a budget that takes your tax into account. You also need to effectively manage your debtors and cashflow so that you can ensure you have enough money in your bank account by the due dates.
The response to this is typically very black and white. Some people say it is, some people say it isn’t, there is no grey area.
People generally go into business for two reasons: to make more money and work less hours. However, the reality is often the reverse. It can take a long time for a business to get to a stage where work/life balance seems to be improving.
Ultimately, you choose whether you work that 80 hour week. You also have the power to change it. If you want to spend more time on yourself or with your family, you just need the commitment and confidence to make that change.
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