Ten Steps to Becoming a Profitable Business

1. Debt Collection
Issue invoices to customers at the time of the transaction with the credit terms clearly shown. Reckon Accounts (formerly known as QuickBooks) allows you to email invoices straight from the software so there are no excuses for your customers not receiving an immediate invoice.

Regularly review the Accounts Receivable Aging report that shows the amount each customer owes you over 30 day, 60 day and 90 day periods and use this information to aid in your debt collection efforts. You should aim to have no debts outstanding over 30 days. Check out our article on minimising non-payers here:

2. Cash Flow

Cash flow problems are commonly the cause of small business failure. Create a budget so you can keep track of cash coming in, such as collections of debt and additional funding, and cash going out such as payment of bills, Payroll, tax liabilities and drawings. It is important to budget and anticipate cash flows to avoid negative cash flow and being unable to repay your debts.

3. Reconcile Your Bank Accounts

Bank reconciliations allow you to check your own bookkeeping records against those of an external party, such as a bank. It allows any errors to be identified and corrected quickly and it is best for this to occur as soon as possible. Bank reconciliations should be performed on all bank accounts, loans, credit cards and clearing accounts on a regular basis such as monthly  or even weekly.

4. Be Aware of Your Tax Liability

Regular bookkeeping along with accounting software allows you to monitor the GST you will be required to pay to the ATO. It is important to be aware of what this amount is expected to be to ensure the business does not spend money that really belongs to the ATO and is left short at BAS time.

5. Control Your Drawings

To continue operating, businesses need working capital. The amount available for business operations is often significantly depleted by owners’ constant withdrawals from the business. Set up a strict amount to be transferred from the business account weekly, monthly, or less frequently if possible to minimise the transactions required to be coded by your bookkeeper and ensure your business has enough capital to continue running.

6. Check Actual Figures Against Your Budget

When receiving invoices for expenses be sure to check them against previous months’ and years’ records as well as your budget to ensure you are being as cost-effective as possible. If there are significant differences, look into what has caused them and identify ways to minimise the cost in the future.

7. Be Aware of Your Payroll Obligations

As employers, there are various obligations that must be met such as withholding tax, leave entitlements, allowances, superannuation and Workcover. Ensure you are meeting your obligations to avoid non-compliance and hefty fines.

8. Inventory Management

It is important to keep an eye on your levels of inventory and the amount and time required for them to be converted into sales revenue. Taking the time to monitor your inventory levels can allow you to make more cost-effective and profit-increasing decisions when purchasing inventory.

9. Technology is Your Friend

There are various Accounting software packages available to suit your business and to minimise the time spent performing the menial administrative tasks involved with running your business. Along with the use of email and internet to connect with current and potential clients, technology can be used to your advantage to make your small business thrive.

10. Contact Us!

If you need assistance in implementing the above steps or support in continuing with them, contact Accountant Ready Services to relieve the pressure. We’ll do the work, while you focus on making money.

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Do’s and Don’ts of Media Relations

The DIY mentality of many entrepreneurs leads them to believe that their innovated products or services will create enough word-of-mouth to push their marketing needs forward. However, it is more likely that the small startup businesses that you have heard about have invested in a strategic media plan and are currently devoted to driving it forward.

Here are some benefits to having good publicity in the startup phase:

  • It builds customer trust – if consumers haven’t heard about you or can’t see you they will not trust you. Search results of your business should reveal an active business and an accessible contact. Without this customers will click the back button instantly!
  • It attracts talent – having great content about your business’s visionary work will attract potential partners, distributions opportunities and employees.
  • It gathers speaking engagements – as a published expert, conference organizers will want you to speak at their next industry event, boosting your visibility further.

Creating awareness of your business is a critical predictor of business stability. However spending major amounts on PR before you see any significant revenue may not sound appealing, it is pretty standard.

The Do’s:

  1. Understand what makes your business different! Always lead with this when promoting your business and have it down to a sound bite so it can be incorporated in every blog post, press release and webpage.
  2. Encourage regular customer contact by sending email newsletters, blogging or taking surveys.
  3. Identify a piece of information that’s unique to your company and mine it. This might be a special report, an index, or even a leading industry figure. If you are the only one who has it, you can build a lot of interest with the right content.
  4. When sharing you story, always make sure people know why what you do matters in the larger context of your industry!!!!!!!

The Don’ts:

  1. Bad media can damage your media before your business is even able to get off the ground!! So make sure you stay on track with creating fruitful media relations!
  2. Don’t get caught in the “we can’t talk about that” cycle.  Sometimes customers are nervous to acknowledge that they are working with an early-stage entrepreneur. To encourage customers to talk about you give them a discount for an “acknowledge” engagement or put a “privilege of mutual reference” clause in the contract so both parties can mention who they’re doing business with.
  3. Think you can’t afford publicity? In today’s ever-advancing technologies, media access for entrepreneurs is faster and cheaper than you might ever think!
  4. Media can generate sales, and sales information can influence marketing. So pay attention to how they play off of each other.

Whether you pay someone to spread the word or educated people with your stories via online outlets, a strong media presence pays off. Knowing you exist is the first step to getting customers’ attention. Then, it’s up to you to convert these mentions into real business.

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5 Ways to Minimise Non-Payments

Customers who do not make payments cause cash flow problems for any small business.

Unfortunately, non-payments are unavoidable for most small businesses. However there are ways to minimise the effect non-payments have on your business.

Accountant Ready Services recommends the following:

1. Have a quote, letter of engagement or contract set up. These documents outline the expectations of each party over the course of a project.

2. Require a partial payment up front for all products or services (e.g. a deposit to cover your fixed costs).

Requiring a minimum deposit is fair and minimises risk of non-payments.

3. Doing too much business with one company can be like putting all your eggs in one basket. Try to conduct business with various customers of all sizes to avoid relying to greatly on one customer.

4. Have a terms invoicing period. Shorter terms are much better for your cash flow. If the non-payer has not paid for the service by the invoice date follow up by email then a phone call soon after.

5. Be consistent with chasing your non-payers. It is your money after all. Ensure you always contact them during reasonable hours and in a professional manner.

 

If you have been unsuccessful in chasing up non-payments and exhausted all efforts, contact us for a NO COLLECTION, NO FEE DEBT COLLECTION SERVICE!

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Why Do I Need A Bookkeeper?

A question many small business owners find themselves asking, is why to hire a bookkeeper when you already have an accountant.

An accountant is able to provide you tax services, analyse the big picture of your business and offer strategic advice.

While all of these services are vital to the growth of your business, you may find yourself only visiting your accountant once a year.

On the other hand, a bookkeeper can perform the day-to-day tasks you may find challenging and menial, like recording sales and purchases transactions or processing your payroll.

These tasks require constant attention and maintenance and by keeping your transactions up-to-date, your bookkeeper is able to provide you with current reports to identify weaknesses in your business that require attention. This present time reporting will allow you to gain a clearer picture of your accounts payable, accounts receivable and cash flow so you can act sooner rather than later saving you money and time in the long run.

Hiring a bookkeeper means you can save time and money while you focus on the business you know best – yours! A bookkeeper can take the stress out of knowing your ATO responsibilities and correctly reporting transactions, which will assist your accountant at year-end.

A good professional bookkeeper should cater to your needs in a cost-effective and convenient manner. Accountant Ready Services offers both offsite and onsite options and are available as and when required. Contact us here.

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5 Reasons That Small Businesses Fail

In the current economic climate, small business failure is becoming all too common. However, by being aware of the common pitfalls you can help avoid these problems and get your business on the track to success!

 

1. You started a business for the wrong reasons

Starting a small business with the singular goal of making a lot of money often leads to disappointment: the financial rewards gained from operating a small business are often not enough to counteract the reality of long hours; great physical demand, and repeated setbacks. You will likely experience greater success if you are passionate about your field, physically strong, and both patient and determine in the face of failure.

2. You haven’t researched or planned well

Many small businesses encounter problems because they have not conducted thorough research or generated a solid, detailed plan before starting out. You need accurate information to make good business decisions, including careful consideration of what your business stands for and what it offers, the financial climate, budgeting and financial constraints and opportunities, the employment market, and competition. Research and planning are an ongoing process and you will need to reassess your position and goals on a regular basis.

3. You positioned yourself unwisely

This applies to both your position in the market and your physical location. Consider your competition and your accessibility. Does it make sense to operate as an online vendor if your target customers are elderly people who access the Internet less often and with less confidence? Are there several similar businesses in the same street or suburb? If you expect to attract a large volume of customer traffic, can your server or car-parking allocation handle it? This pitfall relates, again, to insufficient planning. And remember that your position can shift gradually over time due to external changes.

4. You exercise poor financial control

That poor financial control leads to small business failure is a no-brainer. Common problems for small business include taking on too much debt, guestimating financial position (i.e. cash flow) rather than keeping meticulous records, and not retaining enough reserve capital to carry you through seasonal declines or unexpected hiccups. If you struggle to keep track of the ‘business side of business’, consider outsourcing these tasks to a professional small business bookkeeper. It could save you a lot of cash — even your entire business — in the long term.

5. You have grown too fast

Some small business operators gauge their success by rapid growth — or try to impress potential investors with the promise of speedy expansion. In fact, growing too fast is a common cause of cash flow crisis and bankruptcy. Rapid growth places enormous stress on your organisational, financial, and employee structure. Without trying to stymie expansion, focus instead on slow, steady sustainable growth. To accommodate growth, go back to the drawing board. Research and plan. Make sure that you understand why your business is growing so that you can respond to your increasing customer base or demand in an effective way. Importantly, you will need to plan your cash cycle so that you can meet all of your expense obligations in the growth phase, including cost of goods and wages.

Of course, small businesses can fail due to a combination of any of these problems or many other problems that we have not mentioned here. But, by making sure that your heart is in the right place and that you conduct thoughtful, thorough research and planning, you needn’t bolster failure statistics.

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