To ensure that you are set for the year ahead and the challenges it may bring, there are several key factors to consider, including budgeting, forecasting, cloud accounting, cash flow and business planning, which can all help you cope with the challenges of lockdown and move forward through the rest of the year.
Budgeting is one of the key components of any business and you must monitor monthly incomings and outgoings to provide a solid foundation for your business.
Typical outgoings include rent, taxes, vehicles, daily expenses, emergencies & repairs, energy and utility bills, insurance, payroll, marketing & advertising costs, plus any one-off expenses, planned investments, upgrades and professional fees.
Having either less money coming in and more money going out, or a chaotic cash flow is one of the most frequent factors in business insolvency.
Recent research has even revealed that late payment of invoices is the cause of one in five company insolvencies, and during a particularly challenging economic period, it is more important than ever to ensure that you are managing your cash flow effectively.
Despite larger companies being the sole cause of cash flow problems among the small and medium-sized enterprise (SME) community, how they conduct business is out of your control. This is why SMEs need to think efficiently about business decisions, such as who you do business with.
Obtaining a contract with a larger company, who has a reputation for late payments, may not be the optimum use of your resources. It may instead be more prudent to consider acquiring several contracts with reputable contacts.
These will be smaller individual contracts, but importantly, the risk is spread and this also enables the development of more business relationships to ensure a good, consistent flow of cash.
The impact of forecasting
Forecasting for the unexpected, such as the events of 2020, is an essential step that an advisor can help you with, as the forecast will need to be as accurate and comprehensive as possible to create a precise cash flow model.
Successful businesses are only as strong as their strategies, which is why monthly management accounts should be a key consideration for any business.
Whereas a business plan states your goals, strategy and key activities, the value of the forecast lies in testing your plan 'on paper' before you make any costly changes or investments.
An effective strategic planning process
Stepping back and taking time to agree on a way forward with your management team means you can all move ahead together, with each member of the team understanding the plan to achieve your goals.
As a business owner you have no doubt been reminded about the importance of business planning recognise the role it plays in your business.
Without sound analysis, clear projections, and well-thought out strategies, businesses can end up being drive by market forces, rather than being in control of their destiny. That is why it's important that businesses have long-term strategic objectives and monitor their performance regularly, ensuring that plans are adjusted where appropriate.
The benefits of cloud accounting
Whether you're starting up or growing your business, it makes sense to use technology that will make the running of your business easier.
With advancements in technology, the nature of accounting is changing. It's thanks to these developments that cloud accounting can provide your business with the solution to your needs.
In recognition of the fact that may business owners have reasonably straightforward affairs, but like the reassurance of knowing that a qualified Accountant has compiled and submitted their figures to HMRC, we are delighted to announce our new national service, Suncloud Accounting.
All work is completed by qualified Accountants and our principal holds Chartered status in both Accountancy and Taxation.
How can Sunny Accountants help me and my business?
We offer a range of services to assist your business and ensure that you are set for 2021.
We have helped many of our clients to grow and develop their businesses over the years by providing a comprehensive range of financial and business support services with ongoing strategic advice.
We know that every business is different, and that your goals and objectives are unique to you, so we work with you to ensure that you have the accurate, up-to-date information to make informed decisions and help you plan for the future.
For help and advice, get in touch with our expert team at Sunny Accountants today.
For a free chat on how we can help you, please complete the contact form below and we will be in touch.