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Give your Business a Financial Facelift

Tuesday, September 17, 2013   By Mike Reddy

 

“Boiled down to the essentials, financial (or fiscal) planning is about two things - accumulating wealth and protecting it".

Don’t feel like these two simple things are happening? Then it is probably time to consider a financial facelift.

Like its surgical equivalent, a financial facelift entails a quick nick and tuck procedure. The end result is a more streamlined, youthful and refreshed appearance.

Unlike its surgical equivalent, a financial facelift must penetrate below the surface and repair deep beneath the outer layers.

So what are the doctor’s orders when it comes to financial repair? First on the list is a prescription for better planning.

No, we cannot will ourselves to become fortune tellers but we most certainly can incorporate more informed planning and foresight into daily operations.

Take better stock of your financial situation and take cues from the many financial ratios that are available and use them to predict your trends. We can help you with the best ratios for your situation. Use them as part of your dashboard reporting. History is the best predictor of the future.

Next, find a healthier way to thrive. Examine the nitty-gritty details of your business plan and cut the fat out. Track your stats.

Being inventive, frugal, creative - these qualities are great in a small business owner. But you must recognise when strategies are strangling profits. Be willing to make changes or you may be faced with an undesirable outcome.

Revisit the financial portion of the original business plan, particularly planned income and expenditure, estimated balance sheets and cash-flow projections. How do they look in reality? Can you achieve income expectations with the projected expenditure?

Establish a tighter budget with a cash flow plan. Shop around for lower prices among your vendors’ competitors but ensure quality and delivery are at least as good as you are getting now. There could be a real opportunity here as suppliers may well have incentives in place in order to recruit new customers.

Make sure that your team is aware of what is going on at every point. Keeping them up with the play not only makes them feel part of the team, it can also mean you have more eyes looking for opportunities.

Like the work of a surgeon with their scalpel, the financial facelift should be neat, tidy, and almost unnoticeable. The small changes highlighted here can lead to big results.

As any surgically modified person will tell you - no pain, no gain! Suck it up; the results will be a glowing new business structure with an improved profit line!


Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.