Many of us start the New Year with a set of personal goals and resolutions to improve our health and wellbeing.
You remember that gym subscription you paid for in January, right?
Well the new financial year also provides a perfect opportunity to do the same for your business such that it stays in great shape and thrives as few hiccups as possible.
Here are my six top tips on how to plan for a a healthy and prosperous financial year.
1. Dust off your business plan
The start of the new financial year is the opportune time to dust off your business plan, just as you would those running shoes in January.
As we launch into the new financial year, it’s a good idea to undertake a new SWOT analysis and this time make it a strategic SWOT.
Don’t end with just a “laundry list” of strengths, weaknesses, opportunities and threats. That’s too easy and seldom adds value.
The real value of a SWOT is to then develop strategy.
- How can you use those top three strengths to capitalise on your opportunities?
- How can you use your strengths to overcome your threats?
- How do you prevent your weaknesses from capitalising on your opportunities?
- How can you mitigate any damage if your weaknesses and threats coincide?
You might end up with up to twenty potential strategies. But you can’t physically implement them all, so pick your top three and implement them.
Once you’ve ticked them off then pick your next three and so on. When choosing which ones to prioritise, pick those easier to implement but with a high potential impact.
2. Future proof your business strategy
“Future proofing” is all about anticipating the future and developing strategies for minimising shock and capitalising on opportunities.
In the New Year setting physical goals like ‘to run a marathon’ is not uncommon but, you have to have things in place for when injury strikes or your training is thrown off track.
Your business plan requires the same attention and it should be a priority. We use a simple process – Now, Where, How. This requires thought about where the business is now, where you want to be in the future and an action plan to work out how you are going to get there.
Your SWOT analysis will help you establish the ‘How’ so you can make goals and identify any hurdles your business could face. But you’ll need to have clarity around your vision so that you know where your business is headed.
3. Undertake a risk assessment
A risk assessment should be an integral part of your planning process. Recognising potential threats to your business is naturally the first step to avoiding them.
When undertaking a risk assessment you should identify any likely risks your business faces and estimate both the likelihood and the potential impact of each of these risks so that you can plan and prioritise accordingly.
Some examples of what you should ask yourself are; what happens if key employees get sick or injured and can’t do their job; or what would you do if the building you operate from is affected by a fire or flood?
It might be a bit depressing but make it a point to think about all the possible things that could go wrong and put in place strategies to mitigate those risks.
4. Focus on the small steps
Business success doesn’t always involve massive changes in order to turn the business around. Often, many small changes can make a big difference.
Despite this, some business owners think that their panacea can be achieved simply by increasing prices and increasing sales.
Based on my experiences, just as it is in sport, it’s the one-percenters that will put your business above the crowd; small achievable changes made to a handful of areas can have a multiplied effect on return on capital employed (ROCE).
5. Reduce waste in your business
If you don’t think you have waste in your business, try thinking about the waste in your home – wasted power, wasted water, wasted food and wasted money – particularly if you have children. Now try putting a dollar figure to this.
Then do the same with your business. You’ll be amazed at how much waste you’ll find. You can then apply the simple (yet powerful) Seven Wastes methodology of lean manufacturing to reduce those wastes and add thousands to your bottom line.
6. Consider your estate planning
No amount of healthy eating and exercise can make you invincible, which is why you must plan for the inevitable future and ensure your family is prepared when you are no longer around. The same needs be done for your business. The new financial year poses as the opportune time to revisit your estate planning.
Estate planning is more than just having an up to date will, however if you haven’t reviewed your will in the last couple of years, now is the time to make sure it accurately represents your wishes.
Making time to review your assets and planning how they will be managed on your death will not only give you peace of mind, but it will ensure you preserve wealth for your family.
Stop putting it off!
Many people don’t realise that a lot of our assets are not really “ours”. Things like your jointly owned family home, your super and anything held in a family trust are most likely not “your” assets to leave, so be sure that you have thought things through when drafting your will.
The key is to ensure that those assets end up where you want them to end up. Ideally, ask us to review it for you and work with your lawyer when drafting it.
Grant Field is Managing Director of MGI South Queensland and Executive Chairman of MGI Australasia, a global alliance of independent accountants and business advisors. A management consultant specialising in family and privately-owned business, Grant has over 30 years accounting and business development experience, complemented by more than 10 years experience in banking and finance.