Achieving financial success

This is a helpful booklet I found on CPA site for those that financially challenged.

The booklet ‘a guide to Achieving financial success’ covers in detail the key practices that small businesses should adopt to ensure good financial management.

By implementing these practices early, your business will benefit from strong financial management that will allow you to concentrate on core business operations.

Information in this guide includes:

  • business finance basics
  • improving business finances
  • financing your business
  • managing lenders
  • better financial management

Visit the site to obtain your free copy of the PDF booklet.

This publication was jointly developed by CPA Australia and the Victorian Government’s Small Business Victoria.

Go Figure – 29th Sept 2009

Michelle Hamer ‘Go Figure’ workshop is essential for small business operators.  She’s savvy, and she tells it like it is.  It really made me look at my business and taught me how to implement strategies for what I want to be – A big business making lots of $.
Outcomes: I’ll be able to look at our profit and loss statements, break even and understand what is really going on in our business.
Dione I

The course has been great and I have gained fantastic knowledge which will assist me in my business.
Outcomes: Becoming disciplined in setting up strategies and analyzing figures.
Gloria B

I have become more aware of my business profit and loss, exit planning, and looking at my business from above, looking in and deciding on what I am doing – more awareness.  It was extremely fin and challenging.  I’m so glad I came!
Outcomes: Much more awareness of my business, it was very informative
Cathy L

You can never stop learning skills to increase your business growth.  “Go Figure” must keep on circulating through small business on the Sunshine Coast.
Outcomes: To analyse figures
Robbie M

It’s a lot of information to take in but its very well structured and broken up into bite-size chunks.  I’m at a crucial point of developing my skills (as an artist) into an accountable business and many of these skills were absent from my skill set.  While they’re still new to me, I hope I can get more support to keep learning.  Thanks!
Outcomes: I know that I need (and how to do) balance sheet, profit and loss and some of the figures.
Nicole M

A far better understanding of where my business is currently and the possible avenues to utilize to improve efficiently and financial position.  I was thoroughly impressed with the course and extremely glad that I attended.
Dane C

Go Figure – 23rd July, 2009

WOW!  I almost didn’t sign up for this workshop.  But this has turned out to be the best investment of my time in many years.  I’m signing up for all the others.  The special guest appearance of Ken Waddington (lawyer) alone was worth the price of admission.  No small business owner can afford to miss this workshop.
Outcomes: Learn ways to benchmark my business performance; find out ‘how we’re doing’
Randy L

Great course; Outcomes: taken a fundamental look at how to analyse financial statements.
Evan R.

Go Figure – 15th July, 2009

Fantastic information; great networking; yummy food
Outcomes: Many, accountability, looking at figures and understanding what they mean
Liz C

The financials can be my new friend!  Thanks to Michelle I’m losing forward to get back to the business and start analysing these figures to really understand where we are at.
Outcomes: The fear of the financials has been overcome
Steven C

Many programs/seminars have a heavy bias toward increasing business volumes as the ultimate means to success.  Go Figure focuses on better harvesting techniques of your existing throughout & reminds us why we went into business in the first place.
Outcomes: Importance & regular review of the details in the financial statements to facilitate better planning and policy development.
Tex P

Income: You + Business + Savings + 30 days (LOVE IT); it sums up everything for me besides the current assets/current liabilities ratios
Outcomes: Assistance for our small business & maximise our growth potential
Emma S

Very applicable, motivating and empowering 
Outcomes: Great direction and empowerment
Duncan J

Outcomes: Learnt ratios but would have like more time on how to read business figures.  Learnt to utilise professionals and not reply on myself for everything.
Lee T

I really enjoyed the day – the session was informative, succinct and relevant.  There was a great mix of people & it was a pleasure to participate in the discussion.
Outcomes: A succinct guide to planning and measuring a business
Karen D

As a very new home based business this course has been of great values to understanding the cash flow and break even analysis, thanks Michelle.
Outcomes: Understanding entities, profit and loss statements, break even analysis
Marie L

I would thoroughly recommend this workshop to anyone establishing or working in a small business.  The lessons to learn will provide such valuable insight into crucial areas in business that we need to address & consistently work on to ensure business profitability.
Outcomes: More knowledge about financial statements & the necessity to take control and really keep my finger on the pulse; the need to consult with a lawyer to address the business structure, to find a new accountant and change banks. 
Jenny S

I attended this program and learnt some valuable tools to analyse my business on a regular basis.  Very informative day – met some interesting people.
Outcomes: Awareness of adopting a business mentality; focus on cash flow
Rachelle J

I knew almost nothing when I came.  You have given me the tools to get started again.  Thank you.
Marilyn N

How much is your information technology and telecommunications really costing you?

A Quick Summary from our first seminar:

Andrew McInally (IT Director, Evans Harch Technology) presented “IT RULES OF THUMB” as:

In Information Technology (IT) there is ALWAYS more than one way to achieve a desired result. Below are some rules of thumb that Andrew suggests clients should be aware of:

1. Software will be upgraded on a 2 year minor cycle, 4 year major cycle.

2. Hardware will require replacement on a 3-5 year cycle.
a. Always purchase at least a 3 year warranty
b. Investigate the possibility of Onsite Warranty (compared with Return to Base)

3. Backup and Security Programs are insurance policies and should be viewed as such.
a. Tape Backups and Removable Drives provide improved off site security
b. A good backup solution will have multiple points of failure
c. Backups are only as good as the last test restore.

4. Information Technology is becoming a Utility (like electricity/water etc)
a. Try and see your IT lease payments as an overhead not a liability.
b. Also look at your maintenance as an insurance policy.

5. When investigating IT costs – Return on Investment is crucial.
a. If the expense will save you time – how much is that time worth to you?
b. If the expense alleviates a risk – how much would the “risky event” cost, and how likely is it to occur?

Catherine Little (Commercial Specialist, Telstra Country Wide) explained the terms of:
>> Broadband as an all encompassing term for internet connection

>> ADSL is one form of broadband.  Catherine likened ASDL to a watering system with lots of connector pipes.  The large black pipe is the ADSL line and each home office/house is a connector.  Thus (lots of) people are potentially sharing the main line.

>> Business Broadband is a large pipeline directly connecting an office to the internet (there is minimal or no sharing of resources).

Catherine also spoke about how you can use your mobile to find “Whereis Everybody” and how to promote your business using “Qrious” codes (the latest crazy in marketing).  You can check out Qrious at http://www.telstra.com.au/codes

Wayne Lawson (Managing Director, Inhale Technologies) highlighted the fact that 76% people look online before they contact businesses.  So it is critical to have your webpage hitting at least the first 2 pages in any search engine.  To enable your page to start reaching the first 2 search pages consider using:

>> Google Analytics to understand who and how people are coming to your website

>> Google Adwords to drive your website to the (paid) panel on the right hand side

>> Google Adsense to drive visitors to like minded sights from your web page

Wayne also spoke about how users of your site want to “feel”:
> Let then know they are getting a good deal
> They are in a trusted environment
> This is exactly what they are looking for
> That they can act now.. ie it is easy to buy from your or contact you?
To finish off the learning experience a wine tasting was hosted by Tim Abbott from Tanunda Cellars on the balcony over looking Lake Kawana.
PS: We used Sticky tickets (www.stickytickets.com.au) to host the bookings for this event and it was an excellent tool.

Go Figure – 15, 22 & 29th May, 2009

At this point I was overloaded, I need to do this again so it will sink in.  This course is valuable & Michelle was excellent.
Outcomes – How to put things into practice and know where my business is going
Josephine C

The knowledge I have gained during this workshop has given me a peace of mind I have needed.  I have always wanted to feel confidence in each aspect of building my business, and finally, I do.  Overall Satisfaction – Brilliant!
Outcomes: Confidence in the financial field. Think I’ve finally realised that blockage!
Karen M

Top marks – I was so impressed with Michelle Hamer’s methodology and delivery.  A nominal amount of $’s investment for an essential tool in business.  I would thoroughly recommend this to prospective new business owners as well as long standing businesses.  This course is invaluable.
Outcomes: A better understanding on how to read financial statements.  I was amazed!
Helen D

Should be compulsory for everyone starting a new business.  Gave me a greater knowledge of how a business works and how to go about checking figures.
Outcomes: Much better understanding of financial reports.
Nola C

What a great “shake-up” Michelle Hamer speaks in a basic manner, in which all participants understood & participated.  Learning how to understand the financials and place greater credence on the information gained.
Outcomes: Reiterated what I need to do – having completed the course with Michelle before.
Merran D

The program enabled me to review aspects of my established business to be more profitable, organised and structured.  Michelle’s presentation was superb.
Outcomes: Positive understanding of ratios, and separation of personal and business expenses.
Karen N

As well as taking the fear out of finance, it has inspired me & given me the tools to take action in relation to my personal & business financial situation.  I now view my personal & business finances as both on challenge and an opportunity … one that I control, rather than it controlling me. 
Outcomes: Better understanding of how to plan and manage for financial security
Louisa H

Importance of knowing where I am at and constant reviewing of financials ; Up to me to take responsibility
Sue P

Really like the action plan & follow up by Michelle – it is a problem of mine.
Chelsea H

Get Stuffed …

Whilst chatting with a colleague last week she spoke highly of a tip I had recently shared with her regarding what I call the “stuff folder”. 

The stuff folder is for all those things you think you need to keep but you don’t know where to put them.  In fact – I have a “stuff” box.  I don’t know if this means that I have graduated or that I have just gotten a little more sentimental about keeping things!

Now, before you think “great – this is a perfect solution for all those things I don’t know what to do with”, I am going to put some boundaries around the “stuff” zone!

  1. Before any thing is placed in the stuff zone it must be dated.
  2. If you retrieve an item from the stuff zone put a line through the original date and write the new “touch” date.
  3. Every 8 months make a date with yourself to go through the stuffed things and toss anything you find that has a date greater than 8 months – that right, toss it.  If you haven’t touched it in 8 months the information is probably out of date.

Another favourite tip of mine is to use colour in my filing.  For example, anything to do with money (superannuation, share portfolio, etc) is in green, anything to do with Smart Advice is in dark blue, PC Smart is in light blue and personal information is in purple.  This way if, for example, I want to lay my hands on the financials of Smart Advice, I can easily find this information in the dark blue folder in the financial draw. 

By colour coding the various parts of my business it is easy for me to locate information.  Try it – I am sure you will find it much quicker when searching for things.

Are your expenses out of control?

When you are focusing intently on growing your business, it is all too easy for operating expenses to blow out.

For this reason, the start of a new financial year is a great time to conduct an annual review of expenses.

Run off a report that details the business’s last financial year expenses. Compare the actuals with the budget for the same period and, ideally, with actuals for the year before.

Highlight the increases with an orange highlighter and the decreases with a yellow highlighter. Then investigate the reasons for these variances. It is critical to take action on expenses that need reining in.

Even if your expenses are on track, examine all costs to ensure you are getting maximum value for money. Is it possible to negotiate a better rate with your courier company?

Are you planning your purchases to take advantage of sales by suppliers? What procedures do you have in place to make sure what is purchased is received?

It is also a great time to review your incoming money situation. Are you raising invoices and posting them immediately? Are overdue amounts actively being pursued?

Remember, you are not a bank.

Did you know that you need 3 business bank accounts?

The 3rd Quarter can always be a financial stretch.  In this quarter you will be finding money to pay your Christmas credit card(s), your BAS and the usually accounts.  And I know you keep saying each year you will get this better organised so you are not so financially stretched in the 3rd Quarter.  So here is a tip – have three business bank accounts.

Account 1 – this is your everyday trading account.

Account 2 – is for your committed funds eg: BAS, your holiday pay, staff holiday pay, long service pay, rent, electricity, etc.

Account 3 – is your profit account.

Even if you do not have any staff, you are a staff member of the business and you should be putting funds away to enable you to receive a wage during your break.

Now Account 3:

This is an interesting account.  As an owner, have you considered or do you know for each dollar that comes into your business what percentage goes to you?  Do you have an expectation that your business will give you a return of 15%?  What return are you expecting?  What ever this percentage is, consider transferring this percentage amount into the Account 3 so you achieve your financial goals

What is a fair price?

“All too often, corporate strategists overlook one of their best weapons: improved pricing strategies” .. Robert Doctors

Three interesting and extremely relevant facts:
1. The price is directly related to the businesses profitability, that is Profit = (Price x Qty) – Total Costs.
2. The price is the sum of all values (including money) that buyers exchange for the benefits of using a good or service.
3. The buyer and seller each bring different needs and objectives that indicate what a fair price is.

From a sellers point of reference, the major determinants that can influence a fair price include:

> The businesses pricing objective.  That is, is your pricing objective:
 • profit-oriented; You want to maximise your current financial results;
 • market-oriented; You want to maximise your market share so you lower your prices; or
 • competition based; That is you set your price in accordance with what your competitors change.

> The cost of conducting business.  Here you need to calculate your break-even point and charge a price that is this plus a percentage.

> Other marketing strategies. For example, do you run seasonal promotion activities (eg. hot prices for bikini in winter)?

> What are your distribution channel expectations!  For example, do you pay a commission?

> Know what your competition charge, understanding that you do not have to match this price.

> Are there any legal and regulatory issues associated with your product or service?

And most importantly, “how will your buyer interpret the price and respond to it?”  That is, will the buyer consider the price to be:
 • a great deal;
 • a fair price; or
 • a rip-off

Price setting should be a least an annual event.  When next you are reviewing your pricing structure you may like to include these factors in your calculation.