Posted on: 28 August 2018
It's amazing how many small business owners fly by the seat of their pants when it comes to managing their operation. They may feel as if they are in control and may be confident for the future, but often they are simply working on a hunch and don't have immediate access to some all-important metrics. This type of approach may be okay on some occasions, but if anything were to go wrong, how quickly would they be able to respond and potentially save their company? If this sounds a bit like you, what should you do instead?
It is very important for any business owner to fully analyse the profitability of their company and to do so on a regular basis. This is something that you may have done when you initially started the organisation, but such a business is subject to so many outside forces and will constantly change over time. Resolve to analyse the state of your business at least once per quarter from scratch, to make sure that you are hitting targets.
Developing the Raw Material
Some people consider accounting to be a chore and think it should be left until just before tax time so they can come up with the requisite figures and send those returns to the ATO. This is a potentially disastrous scenario and you need to be analysing your profitability and liquidity position at the end of each month. You can use something as simple as an Excel spreadsheet to get started if you want, but it's far easier to use a proprietary brand of software that will store all your information in the cloud. Remember, this type of software is specifically designed for a small business owner and will take away a lot of the guesswork. It will also provide you with those all-important accounting metrics to give you advance warning of issues. You can also reach out to a professional for tax advice.
If you don't know where to start, then you should engage an accountant or bookkeeper to set it all up for you. You should get them to help create management accounts at the end of each month, which are essentially a miniature version of your year-end figures. With this level of information, you will be able to make small adjustments as you go, rather than one big – and potentially urgent – adjustment at the end of the year.
Don't Forget Taxes
Finally, always remember to maximise your tax allowances and deductions. The rules are constantly changing here as well, and it's a good idea for you to engage a tax accountant so that you don't miss anything.Share