Profitology

Category: Uncategorized

  • We’ve always done it that way…

    We’ve always done it that way…

    One thing 2020 taught us that the old adage “we’ve always done it that way” simply doesn’t stack up anymore. The year of 2020 proved to us that there is always the possibility of undertaking tasks in more than one way, and that taking a step back to consider alternate approaches can be extremely beneficial to your business.

    When COVID-19 first struck in March 2020 I was employed as a business advisor providing support and guidance to business owners from various industries. We quickly adapted to providing this service via Zoom as many others did. One of the areas I advised in was the provision of Xero training. I was adamant up until this time that this had to be on a face-to-face basis in order to be effective. However, I was directed by my manager that I had no choice and to do my best to make it work.

    Having no other option showed me that providing Xero training over Zoom was possible and just as effective as if we were to do it in person. I have successfully delivered Xero training via Zoom on many occasions since.

    Although, this is a reasonably simple example of how I found myself needing to adapt, it highlights how even the simplest of tasks can be performed in a more effective manner if we take a step back and consider “What If?”

    It has also encouraged me to consider which other aspects I can change to create efficiencies or provide a greater service.

    As you prepare to get back in to the swing of things for 2021, I challenge you to consider how you may be able to do things differently in your business.

    Following are some prompts which may help the ideas flow:

    1.      Who made the rule…

    2.      Why do we do it this way…

    3.      What if we try…

    4.      Yes, and…

    5.      How can we achieve…

    Remember, keep an open mind and allow ideas to sit and ponder before automatically striking them out. You will be amazed at what you come up with. 

  • End the EOFY Tax Planning Panic

    End the EOFY Tax Planning Panic

    With 30 June fast approaching, we are hearing from many accountants and tax professionals about the need to undertake tax planning to minimise the amount of tax that you will pay for this current financial year.

    Now is the time to be reviewing your business profits and considering what actions, if any, you need to take prior to 30 June.

    WRONG!

    Tax planning should be a year long process. There shouldn’t be a mad panic in the last few weeks of June to spend spend spend. Your accountant should be speaking to you throughout the year to review your business results and discuss the decision making processes you choose to implement in your business, considering the most tax effective options at the time.

    Did you have plans to buy that new car? Do you really need that new laptop?

    Spending up in June to get that tax saving of 27.5% for the sake of it, is like going to the boxing day sales and showing off the bargains you got when you had no intention of buying the items in the first place.

    Sure, if you intend to buy that new office furniture then purchasing it in June instead of July makes sense. If you can hold off invoicing your customers without hindering your cash flow then this will help reduce your tax. Making your superannuation contributions prior to 30 June to get the tax deduction this year is also a sensible business decision.

    A Switched-On business owner is reviewing their business profits and business results on a monthly basis.

    A Switched-On business owner is making informed decisions considering the impact on staff morale, customer satisfaction, supplier relations and of course, cash flow.

    A Switched-On business owner is making decisions which will help them achieve their overall business objectives.

    A Switched-On business owner is making tax planning decisions all year long.

    Want to become that Switched-On Business Owner, or already are but feel that you aren’t getting the support and guidance from your accountant? Reach out for an obligation free chat. 

  • Are you Thriving During COVID-19?

    Are you Thriving During COVID-19?

    There’s been plenty of media coverage about the impact that COVID is having on small business. You can’t read or listen to a news bulletin without hearing something about the Government’s stimulus packages to support business owners through this period of disruption, and there is plenty of commentary about how businesses can use this period of downtime to reassess their business operations, streamline processes and introduce new ways of conducting business.

    What if you are one of the fortunate businesses to be relatively unaffected during this time? Or better still have experienced an upswing in your business due to an increased demand for your products or services? Congratulations!

    If this is the case, I have some questions for you:

    How are you managing with the growth in the business? Is the increase in sales filtering through to your bottom line? Are you experiencing a surge in your net cash position? Have you thought about what you might do with the additional cash in your business?

    You may be able to use this surplus to assist to invest in technology or improvements within the business to create ongoing efficiencies. Do you have outstanding debt which you can pay down? Or would you like to look at extracting some of the cash to create other wealth opportunities?

    Many years ago, I worked with a business owner who were managing on a day to day basis. They experienced an unexpected period of growth in sales due to a large construction project which was taking place nearby. Their business thrived during this time, and the business owners chose to invest the surplus funds in re-fitting their premises. Unfortunately, once the construction project finished sales nosedived, with the business reporting turnover figures lower than those reported prior to the construction project taking place.

    The owners missed the vital signs that once the construction project finished, the foot traffic walking past their door would alter significantly. Hindsight is a wonderful thing.

    Had the business owners identified this risk, they may have been able to take action to implement methods to encourage customers to detour into their store. They may also have been able to identify different customer bases and concentrated on building another element of their business.

    Rather than directing funds to revamping the look and feel of the premises, they may have been better directed to marketing, or other measures to attract ongoing revenue.

    Tying this back to our current circumstances. Your business may be flying right now. You may be so busy you don’t have time to stop and reflect on where your business and industry is headed. I encourage you to take the time and consider:

    1.      Do you have a cash surplus, and if so how may it be best utilised?

    2.      What changes may be happening within your industry to adapt to the COVID-19 disruption? Will these have a long term impact on your industry and business once the COVID-19 pandemic is over?

    3.      Are your customers looking for alternate methods to your products and services to satisfy their needs? The solution you offer may satisfy a need now, however, customers may not be satisfied with this stop-gap measure in the long term and hence looking for alternate methods to meet their demand.

    Self-reflection can be the most important type of business plan. Where is your business at now? Where do you see yourselves in 3 months? In 6 months? Is this sustainable? 

    Above all, enjoy the ride. COVID-19 is simply another feather to stick in our cap to say we experienced, learnt from and will leave us with a story to share.