We all hear regularly from all those banks:
“Consistent savings deposits + compounding interest/ROI = wealth security!”
Have you ever wondered how those small amounts of interest/ROI become something great? When you get started as a kid, the interest you get paid isn’t enough to buy a handful of lollies and you may feel doubtful whether the whole thing is worth the wait....
But it works! Just ask anyone older who resisted spending their piggy banks and turned their savings into investment that pays income.
Just as it is true in banking, it is with your business. We always doubt (or disregard) the long-term effect of what we do (or don’t do) today. But compounding your interest in your business works too!
So, How Do You Compound Interest in Your Business?
💡 Do small things regularly that help your business grow.
Obviously, but what does that actually mean?
"Cash for you! It's the primary job your business must do! 💰"
In the first weeks of this new financial year, it's business as usual, right? If that’s the case, then you may find the time to do something quick, but life-changing* for the growth of your business.
*Life-changing? It means more money for you from your business than last year.
You Can Focus on the Following Key Areas:
1. Update Financial Records Quickly but Lodge More Slowly (Before the Due Date):
You might have time until lodgements are due, so there is no need to rush the paperwork. HOWEVER, it is advisable to prepare the figures quickly so that you know how much you might have to pay well before you need to lodge. So:
🔄 Reconcile bank accounts
📄 Review outstanding invoices
📦 Update inventory records
Get some help on this from a bookkeeper if you need and remember you can do as little or as much of the work yourself. With a little bit of bookkeeper guidance, you could be very efficient at the process.
2. 15-Minute Review Financial Performance
For all of you who have pre-planned FY2025 already, this is not for you. If you are one of the other 99 out of 100 people, you can do this quick review in about 15 minutes:
Analyze the financial performance of the previous year by having a quick look at your profit and loss report
Then ask:
Did I do as well as I planned to? If not, what am I going to do better this year? If so, what worked? How are you going to ensure it continues by systemizing it?
How much do you want to earn in FY2025? Work that into your FY2025 plan. It can be as simple as pushing for a minimum sales target each week that makes it possible
Have you thought about the need to raise your prices? Just remember - all govt. departments increase their prices every year (even the ATO fines increase every year!)
Need Help
Book a chat with our business strategist to get a sales free and no obligation, consultation: Contact now 👈
3. How About Those Outstanding Tax Obligations???
Well done if you don’t have them because it is not easy to stay on top of it all (that’s what accountants get asked to do). Just bite that bullet if you have obligations to address and it goes away more quickly.
Lodge any outstanding tax returns or statements. Then….
Make a plan with the ATO to get the payments done. Having that plan protects you because if you stick to it, the ATO considers you as compliant even if you haven’t paid off what you owe.
4. 15-Minutes to Budget and Cash Flow Forecast Using Your Software:
Use your software to prepare a 15-minute budget and cash flow forecast for the new financial year. The more time you spend on it, the clearer your goals become, but if you only have 15 minutes, then focus on your sales targets first.
Use your software to monitor cash flow closely to avoid any liquidity issues.
5. Review and Adjust Pricing:
ASIC and the ATO put up their prices every year! You may know about the company registration fee from ASIC increasing every year but did you know that the ATO also keeps increasing the amount you get fined each year? Fines also need to keep increasing to keep up with inflation!
So what about you? Do you continue to increase your pricing, or will ATO eventually be able to bankrupt you with their penalties? In short, do these things:
Ask your industry association what the recommended pricing is for your services and catch up to match it.
Assess your current pricing strategy. Have a chat with your industry association about what is the fashionable/trendy way to price what you do. Pricing strategies keep cycling just like fashion.
6. Technology and Systems:
Now is the best time to make any changes to your accounting software or structure and it is still not too late to change.
Evaluate and upgrade accounting software and other financial systems if needed.
Ensure cybersecurity measures are in place to protect financial data.
7. Employee Matters:
Review and update employee contracts, awards, and entitlements.
Plan for any necessary training or professional development for staff.
8. Engage with Advisors:
Schedule meetings with your accountant, financial advisor, and other relevant professionals.
Seek advice on strategic planning, financial management, and tax efficiency.
Do these things early this year and by the end of the year, you can be pre-planning and really take advantage of tax breaks and better positioning of your own finances.
JUST CHOOSE ONE!
Addressing any one of these things will make you feel more powerful and in control.
✅ Do one and then do another.
❌ But don’t do them all at once.
Want to have a chat? You can contact us here and make an online appointment. It’s free and the advice is real.
We understand it may be hard to find people who never smashed their piggy banks and spent the money, but here’s a hint - they are the ones who noticeably have more investments than the rest of us.
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