Cashflow

Business Planning – What Do We Include and How Does It Look

Caring Cottage Vision Board

Caring Cottage Vision Board

In a previous blog, business owners who are members of the Albany Creek Business Contacts discussed whether businesses really need to undertake business planning (“We Know We Should, So Why Then Don’t We?” http://balanixsolutions.com.au/we-know-we-should-so-why-then-dont-we/ ). It was agreed that businesses did need plans and that business planning needed to be more than just “in our head”. However, it was also agreed that business planning and plans could take various forms with various detail to support and meet the needs of the individual business.

So, what do business owners believe are the critical information to be contained in plans and what can they look like?

In relation to content, the following was proposed:

  • Real and enduring purpose – this needs to be clearly stated so every decision you make must support this purpose.
  • Stakeholder analysis – stakeholders include clients, suppliers, owners and staff.
  • Marketing/Advertising/Sponsorship plan.
  • Cashflow/Budget/Revenue & Expense analysis.
  • Risk Management/Contingency Plan
  • Pricing/Price Structure (eg, current pricing and planning for future increase)
  • Staff – roles/nature of employment (eg, part-time, full-time, contract etc)
  • Responsibilities and timeframes – ie, who is going to do what by when.

So what does the Business Plan need to look like? Well, in a nutshell – whatever suits you and your business, that you are going to use – whatever makes it visible!

Whenever business planning is mentioned images of 50+ page documents, which sit in a draw, never get used and collect dust, emerge. But this doesn’t have to be – they can take whatever form that makes sense to a business owner and enables them to run and grow their business. Suggested mediums that business use include:

  • Vision Boards (like the one Kirsty has above)
  • Operational Boards – eg, Marketing Board, Operations Board, IT Board etc
  • Notebook
  • iPad/Tablet/Phone
  • Mind Map
  • Whiteboard

The thing is successful businesses need to have direction and plans. However, those plans need to support the business not hinder.

(Blog contributors – Leonard Whittaker (Action Cycle Learning) Rob Carmody (Australian Integrated Communications) Sally Balwin (Balanix Solutions) Kathy Patterson (Brendale Stationery Supplies) Matthew Fox (Brisbane hosting & Web Design) Kirsty Newbery (Caring Cottage) Brad Davies (Conquest Pest & Termite Control) Scott Deaves (David Deane Real Estate) De Wet van der Nest (Express Air Con Cleaning) Oriano Giammichele (GT Racing, Mobile Mechanic) Stuart Bywater (Bywater Design) Rhennen Ford (Streten Mason Lawyers) Tracey Carter (Scrub Mutts) Jason Matthey (Insurance Web) Damien Jenkins (Australian Unity, North Lakes) Anne-Louise Underwood (SMS Toolkits) Bruce Hall (Wombat Electrical)

Albany Creek Business Contacts consists of local quality and reliable businesses who provide a wide range of services from home and residential services to B2B and commercial services. Our service areas cover primarily Albany Creek, Eatons Hill, Brendale, Aspley, Warner, Chermside, Strathpine, North Lakes. However many members will cover greater areas.

Albany Creek Business Contacts meet fortnightly on a Wednesday morning for a 7am breakfast and networking meeting.

Balanix Solutions – Taxation | Accounting | Business Advise.

Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.

Call us today … we can help (07 3264 4783)

Next 12 Months Focus for SMEs

Focus for SMEs over next 12 monthsAt the beginning of each calendar year, the Western Australia’s Small Business Development Corporation (SBDC) surveys a sample of small business operators to determine how they expect their business to be impacted over the coming 12 month period (Link to SBDC survey results http://www.smallbusiness.wa.gov.au/business-in-wa/what-is-a-small-business/business-expectations-survey-2015/ ). This got me thinking about, now that we are 3 months into the calendar year and with 3 months left to the start of the 2015-2016 financial year (to plan and develop strategies), what do business owners think the next 12-18 months will look like? – what are the impacts on Small to Medium Enterprises (SMEs) and what should SMEs be focusing on to survive and proper?

Here’s what the brain trust (that is the Albany Creek Business Contacts) discussed.

  • Cashflow Management: there was general agreement that cashflow management would still be a high focus for SMEs ensuring that a long term management of expected cash in and cash out is managed.
  • Price of Service/Product –v- price of materials/supply: with fluctuating fuel prices, increased electricity prices etc discussion highlighted the need for SMEs to monitor the price of materials and other services/products purchased to ensure margins are maintained in the supply of the SME’s product or service. Comments focussed on ensuring sound buying behaviours to ensure viability of the business.
  • Service: generally, consumers will not haggle over price if they believe they are getting value for money and good service. Maintaining good client/customer service and relationships will continue to be a vital point of difference for SMEs. We all know what it is like dealing with large Telcos/large organisations – being smaller and more personable can be a significant advantage.
  • Technology: technology will continue to be a focus for most businesses. With the continuous rapid change in technology, SMEs need to be constantly monitoring what is available, and what will cost effectively add value to the business.
  • Change: the old adage that “the only things certain in life are taxes and death” has a new room-mate – change. All industries are under constant change and the challenge for SMEs is to keep on top of it and determine what to respond to, what not to respond to and, if appropriate, how to be the change initiator and/or leader.
  • Diversity: SMEs need to continuously monitor their client/customer needs and diversify (if need be) to remain relevant. By way of example, with many businesses moving towards “paperless” stationery suppliers have diversified to offer broader “office supplies” such as cleaning products and safety equipment in addition to traditional stationery supplies.
  • Overseas Outsourcing: SMEs need to be monitoring the growing opportunities to source services and products overseas. Again, SMEs need to understand and be able to communicate their point of difference to compete.
  • Be a Hunter: the market is the market of the day. SMEs need to invest time, resources and strategies in continuously sourcing new clients/customers. Complacency will not win the race.

 

(Blog contributors – Leonard Whittaker (Action Cycle Learning) Rob Carmody (Australian Integrated Communications) Sally Balwin (Balanix Solutions) Kathy Patterson (Brendale Stationery Supplies) Matthew Fox (Brisbane hosting & Web Design) Kirsty Newbery (Caring Cottage) Brad Davies (Conquest Pest & Termite Control) Scott Deaves (David Deane Real Estate) De Wet van der Nest (Express Air Con Cleaning) Oriano Giammichele (GT Racing, Mobile Mechanic) Stuart Bywater (Bywater Design) Rhennen Ford (Streten Mason Lawyers) Tracey Carter (Scrub Mutts) Jason Matthey (Insurance Web) Bruce Hall (Wombat Electrical)

Albany Creek Business Contacts consists of local quality and reliable businesses who provide a wide range of services from home and residential services to B2B and commercial services. Our service areas cover primarily Albany Creek, Eatons Hill, Brendale, Aspley, Warner, Chermside, Strathpine, North Lakes. However many members will cover greater areas.

Albany Creek Business Contacts meet fortnightly on a Wednesday morning for a 7am breakfast and networking meeting.

Balanix Solutions – Taxation | Accounting | Business Advise.

Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.

Call us today … we can help (07 3264 4783)

Simple Lessons Learnt From Politics to Improve Your Business

Simple Lessons Learnt from Politics to improve your businessIt has been interesting watching the political scenery in Australian and evaluating their performance against how they would survive if they applied the same methodology to running a small business rather than the state or the country.

Here in Queensland we have one side of politics accused of not listening to its clients/customers (the electorate) and the other running an election campaign virtually by not providing any real stated vision or plan for the future.

If, as business owners, we applied these strategies to running our businesses, it would amount to:

  1. not listening to what your clients/customers want from you and operating your business on the premise “you know best”;
  2. having no plan or goal as to what you are trying to achieve or how you will get there; and
  3. spending more than you earn and not having plan to resolve this.

So what can we learn as business owners from these scenarios?

  1. Voters who believe that the managers of the country are not listening to their needs will go elsewhere and the same for your clients

TIP: Always listen to what your client’s needs are and if for some reason you are not able to deliver, take the time to explain why you cannot. Don’t assume that they will understand.

 

  1. Governments that don’t have a long term plan invariably lose government and small businesses that do not have a business plan invariably fail within the first five years.

TIP: If you do not have a business plan then what is it that you are trying to achieve and how will you ever know when you have achieved it? Give your business the greatest chance of survival by setting goals which can be measured and mean something.

 

  1. Government who spend more than they collect in revenue will eventually find the interest bill alone consumes a significant portion of the revenue. Lucky for government’s the bankruptcy laws that businesses and individuals face do not apply to them. But for small business spending more than the business earns is not sustainable.

TIP: Develop a good cashflow projection (not a budget) and workout how much money you expect to make and when and then do the same for what you expect to spend and when. If the revenue is less than expenditure you need to look at deferring expenditure or increasing revenue or decide that the business is not viable.

 

  1. In both politics and business being honest with your customers/clients and yourself is paramount to being successful!!!
David Balwin FCPA Registered Tax Agent Accountant Business Advisor

David Balwin
FCPA | Registered Tax Agent | Business Advisor

 

Balanix Solutions – Taxation | Accounting | Business Advice

Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.

A Tip on the Road to Financial Happiness

HappinessOne of the biggest economic impacts on both business and private costs over the last 12 months has been the drop in oil prices internationally which has resulted in lower fuel prices. The price per barrel has dropped from over $100/barrel down to $47/barrel. Watching Sunrise the other morning Craig James from Commsec stated that the flow-on effect was the equivalent of a .25% drop in interest for a person on a $350,000 home loan.

Given that the Reserve Bank yesterday dropped the official rate by .25% we should really be making sure that we are taking advantage of the current situation.

The old saying of paying down non tax deductible debt as your primary goal is never more true. I have not in my 40 years as an adult seen an economic environment where the opportunity to reduce debt has been more favorable. Yes there are some concerns on the job front with the end of the resource boom in Australia but with home loans at their lowest rates for a longtime and petrol prices way down from when they were above $1.50 to now (the lowest I have seen at 97.8 cents) it really is a great opportunity to reduce personal debt and set yourself up for the future.

If you take the 50 cents per litre on petrol and the quarter of a percent interest cut on home loans and put this against your credit card or home loan you are on your way to financial happiness.

These opportunities do not come along every day and it is very easy for us not to realise just how much this saving adds up when you take into account how not only can you reduce your debt but in doing so reduce the interest you will have on your reduced outstanding balance. It is a win win situation.

David Balwin FCPA Registered Tax Agent Accountant Business Advisor

David Balwin
FCPA | Registered Tax Agent | Business Advisor

 

Balanix Solutions – Taxation | Accounting | Business Advise

Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.

Benchmarking in Your Business

David Balwin
A good thing about having this budget and getting this process going is that you can then start to benchmark. Benchmarking month to month is of limited value because you can get too many fluctuations over a short period of time. But once you’ve got two or three years of history you can look at what this was for the year, year to year, and what I do, the most common thing I do is, I use sales as a hundred percent. So the revenue from sales equals one hundred percent. Every single one of these, I put that cost over the sales cost and work out what percentage of one hundred percent that is. So I want to know for example, well take a common one, salary and wages, on average, it’s going to vary from industry to industry, on average, that’s probably going to run somewhere around thirty percent. If your wages are running around fifty to sixty percent you know you’ve got a problem – I guarantee you’ve got a problem. If it’s running around ten percent, it might look good, but the question is – are you really utilising sufficiently to generate revenue. So you can be too low as well. But, what we want to do over a two to three year period, we can actually use this information to do benchmarking year to year. And what we’re trying to do is make sure expenses as a percentage of sales are either static or going in which direction? We’ve got one going that way and one going that way – as a percentage of revenue do you want expenses going down or up? You want them going down. That’s correct, the more they are going down the more profit you make. And it’s why I use percentage as opposed to dollars, is because dollars can be deceptive. If my telephone bill went from three thousand to ten thousand, and I was simply looking at dollars, what would I think? Bloody Telstra – I’ve got a problem with the telephone bill. But what would happen if my telephone bill went from three thousand to ten thousand but my sales went from one million to fifteen million. Would I be too worried? No – correct, so that’s why you’ve got to look at it as a percentage. That’s why I like percentages as opposed to dollar value. Because percentages will tell you, particularly over a two to three year period or a three to five year period, it will tell you a lot more facts about the business than straight dollar figures.

Audience
Will, David, will MYOB give you that which you’ve got there?

David
MYOB will give you that, yes. There is a budget which will do exactly that for you on a month to month – you can print it out in one spreadsheet over twelve months. What MYOB will do will let you take last twelve months figures and just bring them straight over and then you can play with them. And it will actually allow you to vary it by ten percent or vary it by percentages too – so you can play around with it. If you don’t know how, give me a yell during the week and I’ll give you a quick demo on how to do that.