Financial health for businesses means more than doing your end of year taxes. Running a business is like sailing a ship, and if you don't check your compass regularly, you may find yourself steering off course without your knowledge.
According to CPA Australia, waiting until the last moment to manage your finances puts unnecessary strain on your business and employees which may hurt your profitability. However, it's understandable that for small businesses, finding the time and energy to regularly review things can be a challenge.
Enlisting the aid of some sound financial advice is a good step towards easing the burden, but there are many daily financial habits you can easily incorporate into your routine that are both good for your finances and your business:
What are some good habits you can start with today?
In order to better understand your business, as well as identifying opportunities and risks in a timely manner, CPA Australia recommends that ensuring the integrity of your data, keeping your financial software up to date and reconciling bank statements are all ongoing tasks essential to good business practice.
Business Victoria also offers a number of other helpful tips. Basic steps, like knowing your break even point, profit margin and markup to avoid losing money on sales can help small businesses pay staff on time, maintain cash flow and meet all their tax obligations.
Regular financial checks are key to good business practice.
In a more holistic approach, good habits go beyond just the financial, according to Business Victoria. Sales and marketing basics, such as getting to know your customers, conducting marketing research and working on adding value rather than cutting costs are ongoing mantras that need to be adopted in order to stay flexible and ready to face any changes.
Why adopt regular good practice?
CPA Australia explains that regular financial checks are key to good business practice, the benefits of which work in a number of ways:
- Businesses are more likely to be profitable with better cash flow, operating with lower financial risk.
- If and when it comes time to sell, the selling process may be easier and might result in a higher price.
- Easier to find external help from banks and lenders.
- Better poised to capitalise on future opportunities.
It's a good time to be running a business in Victoria. Growth is up 1.6 per cent, according to the Australian Bureau of Statistics, and so any good financial habits will help your business continue to be part of this growth.
To find out about how Ashfords Accountancy can assist your business, get in touch with our team today.