With New South Wales emerging from lockdown earlier this week, Victoria set to open back up in early November, and summer holidays on the horizon, if you’re a small business in an industry such as hospitality, travel or retail, you can expect business to not only bounce back, you’re going to be busier than ever.
Plus, if you’re a small business that these industries lean on as part of their daily operations, such as food production and supply, IT, HR, copywriting, marketing or design, you’ll experience the flow on effect of these what we all hope will be prosperous times!
Now this is all great news, but to really reap the full benefits of this period, it’s important to get your bookkeeping and finances in order now, and commit to ongoing financial management too. Why? To put it simply, it’ll help you make informed decisions, keep costs down, and the big one – increase your cash flow.
Get your personal finances in order
Firstly take a look at and update your own living expenses. Look back at your outgoings pre lockdown, as chances are many of these costs will have been eliminated over the past few months – think gym memberships, childcare, and entertainment such as going to the movies, dining out and attending sporting events.
Then, look to a budget planner to input and keep on top of this data. Money.com.au has a free, downloadable template I’d recommend you consider using to streamline the process, but there are a number of other resources out there to help you get on top of your personal finances and budgeting too.
Adjust – and update – your small business forecast
You’re entering a busy time, so it’s important to not only adjust your forecast and budget to reflect this, get into a routine where you update your forecasts on a weekly (or ideally two to three times each week) basis.
When forecasting, make sure you account for those updated personal living expenses you’ve identified, any changes in overheads like supplier pricing or rent (if your landlord reduced this during lockdown, for example), and I cannot stress this enough – make sure you pay yourself! This is one of the biggest mistakes I see small business owners make. It’s so important to put money aside for your own salary, which you can calculate based on the analysis you do of your day-to-day living costs.
Leverage tech to join the dots between sales and staffing
Technology plays an important role in helping you plan for busy and quiet times, pretty much in real time, so it will be important to lean on it more than ever. By looking at the data your accounting software pulls, you can see which months, days, and times sales and income are higher than others.
Once you’ve done this, open up your rostering software to make sure you’ve got enough staff on to cater to your customers and clients. This will prevent the need for you to turn them away as you’re understaffed – or risk losing them because you or your team were rushed off their feet, and end up delivering a product or service that’s of a lesser quality.
Monitor your liabilities ongoing
At the same time, make sure you use these accounting tools to look at your upcoming costs and liabilities, as it might feel like the business is tracking really well, but you may have forgotten about some big expenses coming up, like GST and other taxes, rents, supplier payments and wages. By analysing these on a regular basis, you’ll be able to calculate your actuals and then make more accurate conclusions about things like staffing and inventory.
Mutually beneficial agreements are key
Chances are, a lot of your partners and suppliers will be coming out of a difficult period too, so in addition to signing contracts with all of them before you begin working together, work out agreements that benefit you both.
If you know you’ll need the support of a certain company from November through to February as this is your busiest time, for example, and you don’t want the headache of running out of key products or resources that your business relies on, lock in a four month contract with them in return for a discount. This is ideal for all parties involved, as you won’t run out of what you need when you need it most, and the supplier can sleep easy knowing they’ve got some guaranteed business coming in.
If you want to make sure you’re set up for success but all of this feels a bit daunting, book your quick 15-minute (because we know you’re busy) bookkeeping consultation with me here and we can chat through your current financials, business goals, and discuss what needs to be done to get there.
Good luck out there, team MicroChilli are cheering you on from the sidelines!