The phrase ‘tax time’ can all too easily translate to feelings of boredom, dread and uncertainty for the small business owner. There’s the income tax return, BAS, payroll tax, super, and more. However, instead of viewing the annual marker as a time-sapping and difficult box-checking exercise, it should be seen as a spring board to bigger and better things.
Here are my top tips for not just getting through the challenges of EOFY, but for using this time to set your business up for success:
Don’t just assess your cash flow, plan for the tough times and save an emergency fund.
Cash flow remains the number one pain point for small businesses, despite acknowledgement that it is the lifeblood of a company. By taking stock of the cash flow peaks and troughs from the year just gone, you can forecast potential issues. This allows you to plan to pay suppliers and employees in the learner periods of the year. For example, if things were quiet due to seasonal changes, you could try offering a price discount or reduce the hours staff work during that time.
Additionally, you should have a plan for when things don’t go as planned! There are numerous reasons why cash flow problems arise but there are a few ways to minimise the impact. Think up a new campaign to drum up extra business in the quiet months such as offering a winter special, create incentives to help clients pay faster, save up an ‘emergency fund’ for those rare black swan events or take out a loan to bridge the gaps and give you a bit more breathing room. It’s also a good idea to know which lender you’ll go to for a loan if needed. If the time comes, you’ll be less tempted to load extra expenses onto your high interest credit card as so many business owners do.
Did you spend lots of time at your desk? This year, plan to be social.
Corporate marketing tactics are often the first thing you think of when you decide it’s time to grow your business. However, the mass-produced mailbox drop, Facebook advertising campaign, or ad space purchase aren’t always the best way to get bang for your buck. Although it is time-consuming, actively networking is one of the best ways to increase your sales pipeline. This is because there’s no substitute for face-to-face time in building trust; and the more time you’re out there meeting people, the stronger your referral base.
Networking also exposes you to new ideas and ways of working. Having a network of like-minded business owners enables you to easily and effectively tap into advice and expertise you otherwise wouldn’t be able to access. Finally, networking raises your profile. Building a reputation as someone who is knowledgeable and reliable is a great way to encourage new business to walk in the door. Don’t let the fear of meeting strangers stop you from networking. If the idea makes you uncomfortable, for the first event or two, you can take a back seat; after all, being visible is the first step to being noticed.
Are you always thinking about your business? Try thinking about the future of the industry.
Business owners can get caught up in the day-to-day running and progress of the company, so it’s important they carve out time to look at the industry as a whole. At least once a year, you should conduct an industry analysis. There are different frameworks to do this but a popular one is Porter’s Dive Force Analysis, which involves looking at industry rivalry, the threat of substitutes, the bargaining power of buyers and suppliers, as well as barriers to entry for new entrants. Assessing these five competitive forces can help you manage your expectations for the next year, and allow you to plan to make the most of opportunities. If competitive forces look low, and economic outlook strong, you might decide 2018 is the year to expand geographically and you can start planning to borrow funds to make that plan a reality.
About the author
Yanir Yakutiel is founder and CEO of small business loan provider Sail Funding. He has more than 15 years’ experience working in finance including in an asset finance function at a leading shipping company and at financial technology innovator, ICAP plc., initially in freight futures and then in cash equities. He also launched, managed and developed a successful global dry freight shipping company.