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During the Christmas/New Year break many people take some time to reflect on the year that has been and consider their resolutions for the year ahead. And we don’t just mean the decision that is made on New Year's Day every year about cutting down alcohol intake and losing weight!
Time to read: 5 mins
Just as you need to take time out to reflect on your personal life and goals, you should also do this regularly for your business. If you haven't ready done so it is not too late to have a think about what you want to achieve during the 2021 year. Lisa Stirling & Keryn Jarvis of our Tauranga Firm share their thoughts on planning for another year of "change and challenge".
Whatever financial or business resolutions you set for the year, it is a good idea to share these with your accountant. Not only does this give you some accountability for these goals, but your accountant can also act as a sounding board to help discuss how you might achieve your goals and how best to measure your success and keep you on track.
So what are some of the things you may have considered? Obviously this depends on your business or personal situation, but the following are some key areas that may be food for thought:
We all know the saying "if you fail to plan you plan to fail", but do we really think about this as much as we should? Do you have a business plan? Is it in your head or on paper? Do you regularly monitor your performance and consider your key goals when making decisions? If not, then perhaps this can be your resolution for 2021. Put your goals down on paper, work out what steps you need to take to achieve them and work on implementation. You can't expect to do it all overnight, but set a plan to work towards it and monitor where you are and where you are heading. Make sure the staff involved in your business are also aware of the Business Plan.
Have you considered where you are spending your time, and how much time you are spending either working in your business or managing it? The amount of time you spend will obviously depend on the type of business, and the stage of the life cycle your business is in, however it is important to regularly monitor this and consider what the optimum is for you.; For some it may be time to consider contracting out some of the tasks to free up more time for family or personal interests.
Achieving our goals can often be difficult without the cash flow to fund the way there. If you currently do not regularly assess your cash flow requirements then this may be a good resolution for you. Particularly if you are in a start up or growth phase, it is important to have the facilities in place that you need to cover any periods of cash shortfall and have good management reporting so that you can regularly review what your requirements going forward will be. You may need to sit down with your Banker and ensure that the cover you need is available when you need it.
Are you wondering what could happen with Covid19 this year given what is happening in the rest of the world? In times of uncertainty, understanding your future cashflows by looking at a range of different scenarios is key. It will enable you to make better decisions, communicate impacts on your business to stakeholders and work out what levers could be pulled to get you through.
Have you thought "One of these days I'm going to get around to it"? Is looking at your business structure one of those things? Have you been contemplating a Family Trust but haven't had time to look into it, or are you still operating as a Partnership or Sole Trader, when perhaps a Company structure may have advantages? Structuring is not a one size fits all by any means and should be regularly reviewed. Now is a good time to touch base with your accountant and review opportunities, prior to the end of the financial year.
The income you get whilst operating your business is important, but you should also be considering your exit strategy, which depending on your business and industry may take any manner of form.
As mentioned above there are many forms of exit, ranging from closing the doors or ceasing to trade, outright sale of the business to a third party, a family member stepping in or maybe even a management buy out, as some examples. How you intend to exit the business will heavily impact on your economic future once you have exited. If you currently have no idea or plans in this respect, then make it your resolution for 2021 to give it some thought and look into your options. A sound succession plan will generally take 2-5 years to implement.
These are just some areas worth considering for your business New Years resolutions. Whatever your resolutions are, make sure you let us know, we would love to hear where you would like to take your business in 2021 so we can assist wherever possible.
DISCLAIMER No liability is assumed by Baker Tilly Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.