Ask a Mentor – How can I manage my businesses finances more effectively (and economically)?

Here is the latest question from the Ask a Mentor series.

Question

“How can I manage my businesses finances more effectively (and economically)?”

Answer

by Anna Kyriacou, AKA Group

Now that’s a loaded question. This really comes down to how much or how little you wish to be involved in the day to day aspects of your business finances.

1. Hire a bookkeeper to attend to your day to day affairs & BAS
2. Attend to it yourself.

The key to managing your business finance is to create a system that works for you and your advisors. The most cost effective way I have found over the years is to have a good filing and reporting system in place. The key is also not to over complicate the system as you will be less likely to stick to it. I normally recommend to my clients to establish a filing system that works for them, for example they can file all their records in an Arch Folder each Quarter (makes BAS easier). This will hold all banking records, expenses and capital purchases along with relevant finance documents applicable to that quarter. If you run a business with many supplier invoices, you may wish to have a banking folder, a supplier folder and an asset folder.

Another important factor is to go through your banking statements and write down a narration of what the expense was for. It is important to write more then just personal or business, e.g if it was an expense for travel accommodation, write that. This will make preparing your records easier for you, bookkeeper or accountants. Writing down narrations reduce the back and forth questions which in turn will keep your costs down. Do this at least monthly do not leave for the end of the quarter.

When it comes to managing business finances, you cannot avoid a reporting/accounting system. There are a number of packages available to meet your size and needs. I have recently come across an online accounting software called Xero that can assist small business to keep track of the business finances without the need to hold an accounting degree. No matter what system you choose, I do recommend having a chat to your accountant or tax agent, as it is important that what ever you choose they will be able to work from that to complete your end of year tax returns and accounts, as there is nothing worse to have put a strong effort in all year only to be told sorry cannot work with this.

If you decide to hire a bookkeeper, it is important to check their references and that they hold a BAS Agent License if they will be preparing your BAS’s along with relevant professional indemnity insurance.

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Anna Kyriacou - AKA Group Anna Kyriacou is the founder and CEO of AKA Group, established in 1997 as a total financial solutions destination for start-ups through to established small to medium businesses. With 17 years experience working with and advising clients in Australia, London, USA, Holland and South Africa, Anna has sought not only to deliver accounting advice but also to mentor them towards autonomous business success. Anna is driven to help others help themselves, similarly illustrated by her commitment to community and charitable organisations. Operating with sheer professionalism in tandem with genuine caring, Anna applies a holistic approach to business development. Email: anna@akagroup.com.au Website: www.akagroup.com.au Phone: 1300 668 280 Twitter: www.twitter.com/akagrp Facebook: www.facebook.com/akagroup Member Profile: See Anna’s Member Profile

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Ask a Mentor – What habits should a new business owner form?

The latest question from the Ask a Mentor series comes from Ana Lucia Novak.

Question

“What habits should a new business owner form, such as how to manage operations, finances, marketing, networking, and competitors?”

Answer

by Simon Winfield, Planet Wholesome

The answer to this question could be hundreds of pages long, and entail reading a whole library of business books!

Tom Farmer of Kwikfit, a chain of exhaust and tyre fitters started in Edinburgh, Scotland, recounted the real crux of financial control (and operations) as knowing exactly how many car exhausts he needed to sell each day to reach breakeven.

In a sentence this might address ‘operations, finances and marketing’ in your question above.

In order to breakeven, in addition to analysing your operational costs, you will also need to understand your customers, which in turn will lead you to how to market your product.

A stab at a list of habits a new business owner should form would therefore be:

1. Understand the precise cost of making or producing your product or service.
2. Understand the flow of cash within your business, especially the length of time that capital is tied up between buying raw materials and being paid for selling the final product. This will also lead you to a better understanding of the financial needs of your growing business.
3. Research your market by targeting a conversation with a customer every day. People like being asked their opinion.
4. Networking is important, but improve on that by targeting exactly the individual you want to speak with, and plan your route to that individual. Don’t be afraid to pick up the phone to them directly, and ask them to share their expertise with you.
5. Knowing what competitors are doing well, or things they are getting wrong, comes from having conversations with your customers.

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Simon Winfield - Planet Wholesome Planet Wholesome are a consultancy focussing on corporate strategy, with the aim of identifying both strategic opportunities as well as possible risks to the business resulting from climate change. Simon Winfield has over 20 years experience working with investors and corporates in evaluating corporate strategy which can help mentornet members in identifying their key competitive advantage. He also has extensive business to business sales and marketing experience. Phone: 02 6687 2082 Email: simoncwinfield@hotmail.com Blog: planetwholesome.wordpress.com LinkedIn: au.linkedin.com/in/simonwinfield

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Ask a Mentor – How do we move from a small to a medium business and still make a profit?

The latest question from the Ask a Mentor series comes from Tasha Dauphine of Everten.

Question

“How do we move from a small to a medium business and still make a profit? Also, how do we maintain our company culture?”

Answer

by Linda McDonald, Corporate Learning

Growth usually comes in small steps by adding contractors or employees, new products, new locations, etc., depending on the nature of the business. You should consult your accountant before making significant moves so he/she can help you plan your cash flow. When adding people to your business, think about what work is best for new people to be doing in conjunction with what you, the business owner, should be doing in the business. Remember you should be spending more time working ON the business rather than IN the business particularly as it grows. You also need to have a good business plan including financials which should be reviewed and modified if necessary at least annually. That provides a framework for your business and growth can be planned more carefully.

You can maintain your company culture by careful recruiting of new staff. Start with a job description and a person specification. It’s a good idea to have your company values written and communicated to new staff as they come into the company. Explain clearly your expectations of a new person. A good induction program for new staff that reflects the culture is also important. Where possible put systems and procedures in place which reflect your culture ,e.g. customer service procedures, staff procedures and policies and also ensure everyone knows what is expected.

This is a short question for a complex issue. I hope this brief response is of some use. If you want more details, feel free to contact me again. For more detailed answer I would need more information about your company and the business.

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Linda McDonald - Corporate Learning Linda is Director of Corporate Learning Pty Limited, consultants in leadership and organisation development. She specialises in executive coaching, leadership and team development and performance management systems. Linda works with small through to large organisations over a range of industries. She has been a mentor on five Mentornet programs. Prior to that she was a mentor with the NSW Department of State and Regional Development. Linda is married and is an active competitive masters rower in her spare time. She competed at the recent World Masters Games in Sydney and won two silver medals. She works from her home in the Sydney suburb of Lindfield. Phone: 02 9416 1576 Email: linda@corporatelearning.com.au Website: www.corporatelearning.com.au LinkedIn: au.linkedin.com/in/lindajunemcdonald

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Ask a Mentor: What aspect of business should I focus on?

The inaugural question for the new Ask a Mentor series comes from Kate Barber of Big Steps Little Feet.

Question

“Looking at my business and all the hats I wear, juggle and manage, what should I (wear) focus on and do really well? What should I do with all the other hats?”

Answer

by Megan Tough, Complete Potential

Great question Kate. There is more than one answer, depending on the stage your business is at, your long term goals and your role in the business. This is about getting a team around you that you can trust. Whether you employ them, contract someone to come in x times per week, or outsource – you need to establish this team so you can start removing some of the hats.

Which hat(s) should you focus on?

First – decide where you add the most value in the business. Is it in actual sales and business development? Is it in delivery of your product or service? Is it as true CEO where you focus on future direction and longer term growth while other people look after the day to day? Then think about your personal strengths. Do they match up with where you add the most value? Hopefully yes, so there is a clear benefit in you performing this high value-add activity (because you are best placed to do it). This is where you should be spending your time, once you have decided how to manage the other hats. Don’t just stop wearing the other hats immediately or something will fall through the cracks.

If you wear the same kinds of hats as other businesses, you might be involved in: Administration, technology/IT, marketing, business development, distribution/delivery, service.

In my view, the two hats you can take off most easily are administration and technology. After that, potentially marketing and distribution are easiest to remove.

Administration Hat
First of all, no matter how easy it is for you, doing your own administration is not value adding work. It sucks up time – time that could be better spent wearing other hats. And it doesn’t bring any revenue into the business. This is your number one activity to outsource. Stop spending time doing things like mail, email, filing, bookkeeping etc. It might force you to establish some solid procedures but this should be first on your outsource list.

IT/Technology
Nothing takes up more time than fooling around with technology when we aren’t specialists. The money you spend on hiring someone to support your IT/Network/Website is totally worth it. When you work out what your time is worth (and you are probably undervaluing it) you’ll find you are saving time and money.

Marketing
Get someone to help you with a solid marketing plan and strategy. Find a designer you like and trust and can communicate with virtually to save time.

Delivery/Distribution
If you are the prime deliverer of service, it’s time to document what you do and find other people to deliver it. It’s hard to expand beyond one person when you have to provide the service yourself.

If your business is in start-up phase and your funds are limited, you may be financially constrained in some respects.

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Megan Tough - Complete Potential Pty Ltd Megan Tough is the Sydney based director of Complete Potential. She has worked and managed all around Australia in the areas of general management, operations, HR, professional development, leadership, culture and change management. Megan has a Bachelor of Psychology (Hons), an MBA and degree in coaching. Email: megan@completepotential.com Website: www.completepotential.com Phone: 0412 500 663 Twitter: www.twitter.com/megantough LinkedIn: au.linkedin.com/in/megantough Member Profile: See Megan’s Member Profile

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