Become end-of-financial-year ready with these five strategies
Take the time to plan, strategise, and despite the challenges of uncertainty, lay a strong foundation for the year ahead.
As the new financial year approaches, small and medium-sized enterprises (SMEs) face an array of challenges, including rising interest rates, soaring fuel costs, and increasing expenses. In this uncertain landscape, it is crucial for SMEs to evaluate their past performance, plan ahead, and take proactive measures to cut unnecessary costs while driving growth.
Unveiling fantasy goals and long-term vision
EOFY planning should extend beyond a once-a-year event focused solely on the year ahead. For SME owners, an annual personal planning strategy session can be an invaluable practice. This session serves as an opportunity to uncover “fantasy goals” for the business — ambitious, large-scale aspirations that spark inspiration. These goals may include scenarios like selling the business at a desired price, expanding into new markets, or even undertaking a complete pivot.
By exploring these possibilities, business owners gain insights into their long-term vision (all scenarios reveal something that’s on my radar). Armed with this knowledge, they can dedicate the next 12 months to investigating possibilities, putting infrastructure in place, and assessing the feasibility of their aspirations for resilience and sustainability. It’s important to keep these ideas private — or between you and a trusted advisor or mentor — until ready to make them official, ensuring a strategic advantage in the decision-making process.
Developing a system for effective record keeping
One key aspect of EOFY planning is recognising the importance of organised record keeping. Never presume that you will remember transaction details 12 months later. To combat this, develop a system that leaves clues — reference numbers or account codes — that aid both personal understanding and enable others to decipher the information. Also, most large transactions in a business involve debt or finance, and these will impact a lot more than just the annual budget for catering or stationery, and that needs to factor in for moving forward. By diligently maintaining records, you can ensure greater clarity and efficiency in financial management, making informed decisions much easier.
Embrace fresh beginnings and learn from the past
EOFY marks a fresh start, providing an opportunity to learn from past mistakes and improve financial practices. Don’t be too hard on yourself if you fall short of winning the “neatest and tidiest record-keeping category.” Instead, focus on moving forward. Starting fresh from July 1 each year allows SMEs to let go of past errors and embrace new beginnings. Be diligent in wrapping up historical financial data, facing the consequences of any mistakes or shortcomings. By clearly understanding what went wrong and the exact cost of it, SMEs gain valuable learnings that can drive better outcomes in the future.
Budgeting for EOFY sales
EOFY sales can be an excellent opportunity for SMEs to make or save money, especially in the challenging financial landscape. However, it’s essential to approach these sales with caution and avoid accumulating debt. Allocate a specific budget for EOFY sales, ensuring that it aligns with your financial goals and the overall health of your business.
Carefully evaluate potential returns and risks associated with any financial commitments during this period. By maintaining a prudent approach, small businesses can maximise the benefits of EOFY sales, increasing their tangible assets, and in turn, taxable deductions moving forward, without compromising their financial stability.
Seek professional advice and stay informed
In the face of an uncertain financial landscape, seeking professional advice becomes invaluable for business operators. Consulting with financial experts or business advisors can provide valuable insights and guidance tailored to the unique needs of your business.
Additionally, staying informed about economic trends and government policies allows SMEs to make informed decisions and adapt their strategies accordingly. Knowledge is power, and staying up to date with relevant information empowers small business managers to navigate challenges effectively.
Finally
The EOFY period presents both challenges and opportunities for SMEs in Australia. By assessing financial performance, setting realistic goals, managing cash flow, adjusting budgets, exploring financing options, and optimising business operations, SMEs can position themselves for success in a challenging economic climate. Strengthening customer relationships, diversifying revenue streams, seeking professional advice, and staying informed about economic trends, will further enhance their chances of thriving in the face of uncertainty.
Remember, the key to thriving lies not just in reacting to immediate financial needs, but in proactively shaping the future of your business. So, take the time to plan, strategise, and despite the challenges of uncertainty, lay a strong foundation for the year ahead.
