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How To Keep Your Business Running When You’re on Holiday

How To Keep Your Business Running When You’re on Holiday

As a business owner, the idea of taking a holiday might be far from your mind — you might not have taken one in years.

After all, you’ve got a business to run and that can mean working around the clock. It’s pretty common for business owners to forgo a holiday, but while we agree that business is (obviously) very important, so is taking a break.

It’s not as easy to go on holiday as it once was — you’ve got jobs to track, staff to manage, bills to pay, and customers to please. People expect 24/7 service these days. You can’t just pack up the toolbox and head out. But with a bit of planning, it is possible … and it’s more important than you might think.

1. Why it’s important to take a break

Business owners are usually pretty quick to say they don’t need a break. But here’s why a holiday is good for you, your family – and your business.

    • Gives you time to reflect: Have things in your business been stressful or not working the way you’d like them to? Taking time out is the best way to get a different perspective or find a solution to a business problem.
    • Can inspire new ideas: Sometimes a change of scenery is just what your mind needs to wander – and grow your business. Who knows what new ideas you might have while sitting on the beach with a cold beverage in hand?
    • Sets an example: You’re the boss – your team looks up to you. If you never take a break and are always stressed and tense, your team will follow suit. Lead by example, find a healthy work-life balance and make sure you take regular breaks to reset. That way, your team will do the same – and your workloads will be more sustainable.
    • Improves your health: Life as a business owner is mentally demanding. Throw in the daily duties of a tradesperson, and it’s just as tough physically. Taking a break will give your body some much-needed rest – so you can come back feeling mentally and physically refreshed.
    • Shows faith in your team: You might be nervous that your team can’t cope without you. Handing over the reins for a week or two will empower them – and benefit your business long-term. After all, you’re going to have to step back at some point…
2. How to prepare for your holiday

To make sure things run smoothly while you’re away, there are a few things you’ll need to get in order:

    • Plan ahead: As important as it is to take a decent break, you probably don’t want to go during your busiest time of the year. The further ahead you plan, the more prepared you and your team will be.
    • Identify potential problems: Make sure your team is clued up on potential hazards that could arise while you’re away. Go over your health and safety plans for current jobs and be sure they know how to fix equipment if it breaks or what to do in an emergency.
    • Have procedures in place: Even if you think you’ve got everything under control, things can still happen. Your staff must understand how to manage without you if someone calls in sick, there’s been a break-in, or how to deal with a difficult customer.
    • Set the expectation: Before you go, make it clear what kinds of things (if any) you’ll respond to while you’re away. Setting clear boundaries will mean your team doesn’t disrupt you unnecessarily.
    • Appoint a replacement: You’ll need someone in charge while you’re away to manage the day-to-day running. Appoint someone you can rely on who is up to the job. Your holiday could provide a good opportunity for someone to step up and prove themselves.
    • Delegate jobs: You’ve got a lot on your plate as the boss. Once you’ve appointed someone to fill your boots, delegate jobs to staff so every team member knows what you expect of them.
    • Organize ‘out of office’ emails: When you run the show, you’re usually everyone’s main point of contact. Don’t leave them hanging for a week or two. Set up an automatic out-of-office email to explain who they can contact instead and when you’ll be back.
3. Holidaying as the boss

You’ve made it to your holiday – you pour yourself a well-deserved drink, change into your party shirt… and think of nothing but work. A holiday is a bit pointless if you never completely switch off. Most people take a couple of days to fully relax. Here are our tips to help you switch off so you can get the most out of your break.

  • Turn your phone off: If turning off your phone for a whole day gives you sweaty palms, try it for a few hours to start with. The most important thing is that you do turn it off for at least some of the time. It’s your holiday — if you’ve prepared the business, then you don’t need to be contactable 24/7.
  • Clear your head: You’re on holiday – the last thing you want to be thinking about is paying invoices or finishing a job. It can be hard to do, but the sooner you can relax and clear your mind, the quicker you’ll be able to enjoy your break. Take a book to read, make dinner plans, go sailing, cycling, or sightseeing for the day. Whatever it is that takes your mind off work, know that it’ll make you more productive on your return.
  • Don’t feel guilty: It’s important to spend time with your family, and friends, as well as some alone time! It’s also crucial for the growth of your business. Remind yourself why you booked the holiday in the first place, and don’t let pangs of guilt take over. Your team will be fine without you, and your business will be better off in the long run.
4. Take a break – for yourself, your family, and your business

It’s common for business owners to go without a holiday in fear of their business falling apart without them. In reality, the complete opposite is true. Taking a holiday empowers your staff and sets a healthy example. It’s also vital for your health. See for yourself — take a break and go back to work refreshed, rejuvenated, motivated, and full of new ideas to grow your business.

 

The following content was originally published by Tradefy. We have updated some of this article for our readers.

DIY Accounting vs Hiring an Accountant

DIY Accounting vs Hiring an Accountant

When you’re starting out as a small business owner, the temptation is to go DIY with your accounting.

Hiring a professional accountant or tax adviser costs money and that’s an overhead that you can remove by doing all the financial management yourself, right?

But is DIY accounting the most sensible option for your business? And why might partnering with an experienced accountant be a valuable investment in your future?

The 5 big challenges of managing your own accounts

At the initial stages of founding your business, you might think that raising a few invoices, paying a few supplier bills and making sure there’s cash in the bank is well within your abilities.

However, as the business grows, and you take on more customers and employees, your finances are likely to get far more complicated – not to mention far more time-consuming. So, should you still be managing your accounts solo at this important stage of your growth?

Here are five of the common challenges of going down the DIY accounting route:
      • The knowledge gap – grasping the finer points of accounting principles and tax regulations is complex. If you try to navigate these financial complexities without the right knowledge and experience, you greatly increase the risk of errors, missed deductions, poor record-keeping and non-compliance with company tax law for your territory.
      • The drain on your time – Managing bookkeeping, payroll, day-to-day accounting and tax filings takes a lot of time out of your week. For example, recent stats show that Aussie business owners spend an average of 6 hours and 19 minutes per week on financial administration. If you’re spending a large chunk of your week working on finance admin, that’s time you’re NOT spending on growing the business. As an ambitious owner, you should be concentrating on business development and the other strategic tasks that will push your growth – not doing the books!
      • Staying up to date with the regulations – Company tax laws and accounting regulations change frequently. If you’re not on the ball with the latest regulatory changes, there’s every chance that you’ll fail to meet your compliance duties. And, you may also miss out on the latest government incentives and tax reliefs too – financial perks that could well be the key to funding the next stage in your business expansion plans.
      • Anxiety about a company audit – going through a company audit from an external auditor can be stressful. Depending on the status of your business, you may well have to comply with the rules for regular auditing. But with no accountant, your record-keeping may be haphazard, making the job more difficult, time-consuming and disruptive.
      • A lack of strategic insight – If you’ve never run a business before, it’s likely you’ll lack the awareness of how good financial management drives your strategic insight. The better your accounts, the higher the quality of your finance data, reporting and management information. And this data and reporting can be a goldmine of information when making big strategic decisions, setting budgets and forecasting cashflow etc.
How working with an accountant turns these challenges into business benefits

Having full responsibility for your own business finances is a major drain on your time as an owner and business leader. But the good news is that partnering with an accountant can very quickly lighten this load and get you back to focusing on your business.

By engaging an accountant to take on your financial management, you get:

      • The knowledge of an experienced finance professional – when you hire an accountant, you add a financial expert to your team. They’ll help you navigate the complexity of accounting, will keep your records accurate and will make sure you comply with all relevant tax regulations. This minimizes errors and maximizes your deductions.
      • More time to focus on the business – by delegating your bookkeeping, payroll, accounting and tax filings to an accountant, you free up valuable time. This gives you more time in the day to talk to customers, develop growth strategies and build relationships with clients, partners, lenders and investors.
      • Stay ahead of the regulatory curve – a professional accountant knows exactly which legislative and regulatory changes are planned and will make sure you’re always ticking the right compliance boxes. They’ll also be aware of any new government tax deductions or funding incentives that may open up extra cash for your business plans.
      • Peace of mind when it comes to an audit – with an accountant managing your accounts, you can rest assured that you have the best possible record-keeping, reporting and financial compliance. This is a major bonus when you face an external audit process. Your accountant can even represent you during the audit process, cutting down the potential stress and keeping you focused on running the business.
      • Expert strategic guidance – accountants do way more than just crunching numbers. Your accountant will work with you to analyze your financial data, manage your cashflow, identify patterns and trends and provide the valuable insights you need to inform your decision-making. An accountant is a key part of your management and strategic team, helping you drive the success, efficiency and profitability of your business.

Talk to us about outsourcing your financial management

Hiring a great accountant is definitely a better investment in your business than opting for DIY accounting. Instead of getting bogged down in bookkeeping, or going red in the face with record-keeping, just hand over the financial management workload to the experts.

We’re here to lighten the load, sort out your accounts and put you back in complete control of your finances and strategic decision-making.

Get in touch to discuss taking on your accounting tasks.

 

The following content was originally published by BOMA. We have updated some of this article for our readers.

Budgeting for Success: The Importance of Good Financial Management

Budgeting for Success: The Importance of Good Financial Management

When you’re operating and managing a small business, you have a finite pot of cash to work with.

Because of this, it’s incredibly important to manage your cash well and to have clear budgets and spending limits for every area of your business operations.

Let’s take a look at why budgeting is such a vital part of your financial management, and what you can do to keep your company on budget and in a positive cashflow position.

4 ways to stay in control of your business budgeting

It’s impossible to run a successful business without having a tight rein over your expenditure.

Sales may be bringing in healthy revenues, but the income and profits you’re generating can quickly be eaten up if you’re overspending on operational costs, marketing campaigns, staff payroll or investments in new hardware and software.

We’ve highlighted four ways to put good, solid budgeting at the heart of your financial process:

1. Embrace the power of budgeting

A well-crafted business budget gives you the foundations to become a financially healthy and successful business that’s in control of its spending.

You don’t have to use a complicated budgeting app; a simple breakdown of income and expenses in an Excel spreadsheet can be a great starting point.

To get started:

      • Track your projected sales, so you understand your future revenue numbers and have a solid projection for your income over the course of the year, or budget period.
      • Calculate your costs, including fixed costs like rent and utilities, and variable costs like inventory and marketing. This gives you an understanding of your total expenditure. Don’t forget to factor in business taxes and contingency funds to cover emergencies.
      • Set clear budgets for the coming period’s spending, based on the total income you’ve predicted and the total fixed and variable costs you’ve estimated. Always leave some wriggle room to account for inflation and changing costs.
      • Regularly review your budget, so the document is always evolving. Reviewing and updating your budget helps you stay on track, identify areas for cost-cutting, and make informed decisions about resource allocation. Remember, a budget is a living document, so adapt it as your business evolves.
2. Track your budgets, income and spending

Setting the budget isn’t the end of the process. It’s important to track all income and expenses and to update your budget in line with the current health of your business finances.

Using the latest cloud accounting software can work wonders. These cloud tools help you record your incoming and outgoing transactions in real time, so you can work with the most up-to-date numbers and financial data when reviewing and reworking your budget.

To improve your tracking:

      • Use codes to categorize your expenses – the Chart of Accounts in your accounting software makes it easy to categorize each expense as it’s incurred. It’s then easy as ABC to review your financial reports and to analyse your spending patterns.
      • Review your spending – check your spending against each code and see where budgets are on track, or where there’s overspending that’s threatening your budget. Are there subscriptions you can cancel? Or could you renegotiate rates with your vendors?
      • Plan for seasonal trends and patterns – tracking your income and expenditure helps you to spot, predict and plan for the financial ups and down you’ll experience over the year. The more you understand your cashflow, the better equipped you are to stay on budget, make solid strategic financial decisions and avoid unexpected shortfalls.
3. Separate your personal and business finances

It’s tempting to think of the money in the business as ‘your money’. But it’s crucial to have a clear divide between the company’s money and your own money, as an owner and director.

Here’s why that separation is important:

      • Open a dedicated business bank account – all the cash you generate, supplier bills you pay and transactions you carry out will be logged through this account. This keeps your own cash and your business cash entirely separate.
      • Track your business expenses – by having separate business and personal bank accounts, you can easily track your business expenses and manage your budgets. There’s no confusion around personal expenses that could potentially muddy the water.
      • Consider getting a business debit card – a business card helps you to pay for business-related costs directly from your business bank account. This helps you to track your expenses and keep a closer eye on your budget.
4. Forecast for the future: don’t just track the past

Basing your budget and financial strategy on historic data is a great foundation stone. But you can also use this data to project the data forwards in time and create useful forecasts.

For example, you can:

      • Get clear cashflow forecasts – based on your historical sales trends and projected expenses, you can quickly estimate your future cashflow. Having this view of your future cash position is extremely helpful when setting out your budget for the period.
      • Plan out your budgets and cash management – with forecasts at your fingertips, you can plan for seasonal fluctuations, identify potential funding needs and make informed decisions about the short, medium and long-term strategy of the business.
      • Be ahead of the curve – with solid budgets, forecasts and a great overview of your finances, you can be more in control as a business owner. Whatever the market throws at you, you’re better prepared, agile and ready to respond.

Talk to us about getting on top of your budgeting

Financial management can be overwhelming, especially if you’re new to running a business. But don’t be afraid to seek help from a qualified accounting professional.

As your adviser, we can:

  1. Streamline your record-keeping, bookkeeping and financial reporting.
  2. Give guidance on budgeting, forecasting and financial management.
  3. Ensure your cashflow and budgets are always looking positive and healthy.

Let’s sit down and talk about getting your budgets and financial management in order.

Get in touch now to talk about budgeting

 

The following content was originally published by BOMA. We have updated some of this article for our readers.

Understanding Your Balance Sheet

Understanding Your Balance Sheet

To understand the financial position of a business at a specific point of time, look at the balance sheet.

The balance sheet may also be called the statement of financial position. Together with the Profit and Loss Statement, and possibly other reports such as the Statement of Cash-flow, these reports provide a complete understanding of the financial position and business performance.

So what’s involved? – The balance sheet has three sections: assets, liabilities and equity.

What are Assets?

Assets are things and resources that a company owns. They have current and/or future value and can be measured in currency.

Assets may be subdivided on the balance sheet into bank accounts, current assets, (receivable within one year), fixed assets, inventory, non-current (or long term) assets, intangible assets and prepayments.

These include banks and other financial accounts held, accounts receivable (trade debtors), supplier deposits or bonds, stock on hand, property, equipment, vehicles, investments and intellectual property. All of these can be translated into monetary value.

What are Liabilities?

Liabilities are amounts owed to suppliers and other creditors for goods or services already received. Liabilities may also include amounts received in advance for future services yet to be provided by the business.

Liabilities are generally subdivided into current, (payable within one year), and non-current liabilities.

These include accounts payable (trade creditors), payroll obligations (salaries, taxes, superannuation), interest, customer deposits received, warranties and loans.

What is Equity?

Equity includes owner funds contributed, drawings, retained earnings and stocks. The value of the equity equals assets minus liabilities.

Transactions that affect profit and loss accounts also affect balance sheet accounts. For example, providing a service increases the accounts receivable balance, which therefore increases the equity.

The Balance Sheet Equation

The balance sheet must always balance! Asset value = liabilities + equity.

For example, if you buy a new vehicle for the business at say 50,000, having paid a 10,000 deposit and taking out a 40,000 loan, the value of fixed assets increases by 50k, but the bank asset value decreases by the 10k deposit paid. The value of liabilities increases by 40k loan, thus leaving the balance sheet balanced on both sides of the equation.

The balance sheet equation shows you how much money you would have left over if you paid all your bills and debts and sold all your assets at a given date. This amount is the Owner’s Equity.

Note that the balance sheet equity total is not necessarily how much the business is worth at market value. Assets are listed on the balance sheet at their transaction value, which may be very different from the market value. Some assets may be worth more, and others may depreciate in value. Business value is calculated not just on the balance sheet figures but many other factors.

Need more information?

Talk to us. Get the complete picture of your business performance and financial position, regardless of what stage of business you are at.

 

The following content was originally published by BOMA. We have updated some of this article for our readers.

Understanding Your Breakeven Point

Understanding Your Breakeven Point

Understanding your business breakeven point is essential to know how much money you need to make to stay in business.

It can therefore help you make well-informed financial decisions and practical business plans.

The breakeven point is the income or sales needed to cover all costs. Any earnings above this point generate profit. So your breakeven point tells you the minimum sales required to continue operating a viable business.

Understanding the breakeven point in conjunction with financial reports can give you valuable data to analyse fixed and variable costs and set sales targets for the business or individual staff members.

Fixed and Variable Costs

      • Fixed costs – remain the same regardless of how many sales you make. Expenses like rent, equipment lease repayments or full-time staff have to be paid whether you sell any goods or services or not. Fixed costs are often called overheads.
      • Variable expenses – (sometimes called production costs) fluctuate based on sales. For example, cost of goods sold, production labour, and commissions paid to salespeople will vary according to the number of goods or services sold.

It’s helpful to work out an amount or percentage of variable costs compared to the sale price of your products or service. This may not be exact initially, but even if you get a rough figure to work with, this will help calculate your breakeven point. Over time as you analyze your financial reports, you’ll be able to refine the calculation and adjust your selling price accordingly.

How to Calculate Breakeven

You’ll need to know your fixed costs (overheads), selling price and production costs.

One common method of calculating breakeven is as follows: 

Overheads / (selling price – production cost)

For example, let’s say overheads per month (rent, vehicle lease, administration staff) are $20,000, and you sell a coaching program for $3,000 with variable costs (coach fees, handout materials for participants, advertising) of $1,500 per program.

$20,000 / ($3,000 – $1,500) = 13.33

You would need to sell over 13 programs per month to break even, which equates to $40,000 worth of sales.

If the same program had variable costs of $1,800, you would need to sell 17 programs per month to generate $50,000 worth of monthly sales just to cover costs. Variable costs of $1,000 per program would mean you only need to sell 10 per month to break even.

With these examples, you can see how important it is to understand your fixed and variable costs. Then you’ll know exactly how much you need to make to remain in business and the resulting impact on your financial position.

Once you have a reasonably accurate breakeven figure, you can quickly calculate your profit before tax for sales above the breakeven point. In the example where variable costs are $1,500 per program, let’s say you sell 20 programs each month. This would result in an extra $10,000 in profit (before tax) after paying for overheads and variable costs.

Can breakeven help with your pricing?

Understanding your breakeven point can give you some deep insights into your selling prices, helping you understand if they’re realistic.

For example, if your variable costs are high, how much more income will you need to reach breakeven. Is there a fair price for consumers that covers your expenses in a reasonable time frame? Do you need to raise prices to account for fixed and variable costs accurately?

Talk to us about calculating your breakeven point

There are different ways of calculating your breakeven point to confirm the viability of your business, and the ideal pricing point for driving both sales and profitability.

We’d love to help you understand your business financials in more depth, so you can plan for long-term sustainability, enjoyment and profitability.

 

The following content was originally published by BOMA. We have updated some of this article for our readers.