Tax time: preparing for the end of financial year

Business planning

With the global economic downturn, virtually every business will feel some impact. The March 2009 MYOB Small Business Survey revealed that a significant 78 percent of small business owners surveyed have not spoken to their accountant about developing a plan or strategy to ensure their business survives through a potential economic recession.

Remember… your accountant is there to help you, and not only with your tax, but with your business planning and ensuring your business is running as efficiently as possible. You may need to ask them specifically for help, as they’re not mind readers! Yes, the more you ask of them the greater their fees, but good accountants are conscious of delivering value for money. They should be happy to explain how their advice can deliver a significant return on your investment.

For many businesses, times are getting tougher. But as an independent business owner you can choose your own path. Rather than just react to the daily challenges (and there will be many) now is the time to create your plan for meeting and beating the challenges ahead.

Spending time planning now will give you more time to focus on other areas and the long term, which is becoming increasingly important. Don’t be fixated on coming up with a thick written plan. As former US President Eisenhower once said: “Plans are nothing; planning is everything.”

If you already have a business plan, now would be a good time to review and revise this plan for the new financial year. If you don’t have a business plan, now, more than ever, is a good time to put one in place that sets out how you will get through the next 12-to-24 months.

A number of Government websites have free templates that you can download. Remember, business plans are dynamic and sometimes circumstances change, which may mean you don’t hit your targets. Don’t be surprised if the first set of goals proves to be unrealistic.  Plans need to be dynamic and you need to adjust based on learning what’s working and what’s not in changing times. Consider how often you should be revising your plans—daily or weekly is too short and annually, too long.

Developing a plan with goals that you can share with your team will ensure you can focus your team’s energy towards achieving success. Running a business without goals is a bit like playing football without goals: there’s a lot of action but it’s hard to get a result.

Research

To put together a meaningful business plan with realistic goals, you should research both the internal and external environments of your business. As part of this research, sit down with your accountant and review your books and internal processes over the last year. Consider:

• Cashflow – How can you better manage relationships with customers and suppliers to maintain consistent cashflow?
• Finance – If your business plan will include future growth plans, is there enough capital to finance this?
• Employees – There needs to be a balance between optimal head count and short-medium future expectations.
• Customers and suppliers – Optimise your relationships up and down the supply chain. Look at the buying and selling terms that you’ve negotiated with your suppliers and customers, do they need to be renegotiated?
• Marketing – During tough times, you should review and possibly revise your marketing plan. Now might be an excellent time to win market share if your competitors wind back their marketing activity.

To further assist with developing your business plan you could also examine the landscape inside and outside your industry, profession or trade. Things you could consider include:

• Will your category expand, maintain or contract in the short-medium term?
• Gather information from industry bodies, consumer groups, ABS, business.gov.au and research groups. There’s loads of information available so carefully consider which information is most relevant to your category.
• Source information about your target market (eg demographics, disposable income, spending habits, etc). This information, along with industry data, will help construct a realistic business plan and really help you understand key statistics about your customers and prospects.
• Don’t forget to seek customer feedback.  Seek insights from your very best customers as well as drilling into why someone chose another supplier over you.

This information will help you work with your accountant to develop a comprehensive business plan.