Whether the goal of 2021 is for stability or growth, the disruptions of 2020 and ongoing demand a different approach to running a business. However, departing from the normal rules of business can put your business at significant risk.
It is more important than ever before to have clarity as to your vision, an effective strategy, and sound financial management.
Vision and Strategy
What is your business? Without clarity, it is easy to become diverted. Can your vision be translated into figures? A budget prepared consistent with the vision will validate the strategy and provide a system to measure your progress. Regular review will ensure that there is alignment between what was planned and what is happening.
Strong governance plays a vital role in empowering and supporting leadership to execute strategy by providing accountability, objectivity, integrity, and a long-term view.
Records are not just for the bookkeeper or finance; they are essential for the business's
operation. Everyone needs to be involved and encouraged to operate within acceptable financial practices.
Ensure compliance with authorities. Integrity and on-time lodgment of all taxation and statutory authority returns. Never delay lodgment and recording the liabilities in your accounts even if there are insufficient funds to pay. In these times, the Federal, State, and Local government authorities are being very reasonable, granting payment extensions often without affecting your credit rating: providing lodgments are up to date.
A budget prepared according to the vision and providing a standard for the business's financial operations.
Reporting of profit and loss, balance sheet, and cash flow is essential and must be accurate, on-time, and understandable. To be meaningful, they must be presented comparatively against budget and prior periods.
Focus on profitability, what are the costs associated with making the sale. Review pricing often – always upwards.
Review all costs; however, be mindful of what will create the most significant impact for the least amount of disruption. Be aware that excessive cost-cutting may harm the future of your business.
Management of cash is essential. Keep contact and collect debts as soon as possible. Work with suppliers to obtain the best prices and terms. Reduce stock holdings were possible and review order quantities. Review additional funding sources and act early and often communicate to ensure that commitments are met.