What’s on your business radar?
As a former commercial passenger jet captain, when you’re flying in cloud … you cannot tell if you’re approaching a storm … without a radar. A weather radar detects precipitation, such as rain or hail. … When these pulses hit water particles they reflect back to the radar as ‘echoes’, much like the echoes of sound you hear in a cave or tunnel. It’s real time data presented to the pilot so they can make educated decisions to avoid the storm. A pilot trains for years to be an expert in reading the data from the radar and know that the colour coding on the screen determines how bad the storm is … with magenta being the worst intensity. They also know that the best way around a storm is to turn tothe up-wind sid eof the storm so the overhang (and danger) is reduced. You also have the threat of storms around your business. Your business needs a radar. Your ‘business radar’ is up-to-date real time data … many businesses don’t have up-to-date real time data AND most business owners are start their business without the training so they aren’t interpreting it like a pilot. Some business owners have street smart knowledge that they’ve gained from the pain of experience … but for most, what they need is a co-pilot that can interpret your data and help guide you around the storms. It’s the key to survival. There are 3 ways that a storm can have effect …
If you can see a storm ahead, you can take action to avoid it.
For a pilot it costs extra fuel and time to go around a storm. For a business owner, it also may cost more and take time to avoid it … but with business storm avoidance guidance, you can take action and avoid the danger. In some cases, you can reduce the fall out from a storm. It’s far better to spend a small amount of extra time and cost to avoid the storm than risk losing your whole business.
You end up in a storm
No pilot ever wants to end up in a storm … the wildest of storms have the potential to rip wings off and sometimes storms can grow fast. If a pilot inadvertently finds themselves in one, their entire focus is applying good training to find the fastest and safest way out of it. As business owners, we all want to avoid a storm, but sometimes they still happen and you could find yourself in one. Would you know the fastest and safest way out of a storm? Where would you turn to?
Clear Skies – no storm
In clear skies you would think are always smooth sailing. However, a pilot is never to complacent and remains on the alert. Unfortunately even in clear skies there may be no storm, but there’s another threat for pilots. And it’s invisible. It’s called CAT (Clear Air Turbulence). You can’t see it and the weather radar can’t see it. That’s because it is not created from moisture but from Jetstreams (high level winds up to 200km/hr). Luckily, a pilot can access a chart which predicts what level and what area CAT could be lurking so they can decide to change level or divert around it. However as it’s invisible, often the only way to avoid CAT is to to have the intel from the chart, listen on the radio to other pilots and Air Traffic Control reports of it. Clear skies may feel great in your business, but we all have to make sure we do not get complacent, to stay alert and use our data to get a sense of what to watch out for. The best place to get your real time data interpreted is by having a co-pilot accountant/adviser. You don’t have to be the expert, but you need to be an expert in bringing in someone to watch your back. How certain do you want to be about the storms lurking around your business? It’s worth a chat to find out if we could be your business co-pilot … Book a time with Naomi on the link below. https://calendly.com/bladebookkeeping/blade-bookkeeping-strategy-call
Remember when you were a kid and there was a secret code to entering the inner sanctum that was ‘The Cubby’? We all know that sometimes growing up can be tough especially if you don’t ‘have the code’ or are singled out and banned from Cubby operations. In fact, being left out can take a lifetime to get over … if at all! It’s a bit like our ‘Secret Xero Handshake’. It gains you entry into our club. Our club (while not being as elaborate as a cubby) does allow members the luxury of confident, smarter decision making within their business. Thankfully, for our clients, entry is easy if you’re part of our pack. The elite. The ones we love. You see to go deep into a client’s business, we need up-to-date real time data so that you can look at your numbers and be confident that they are robust enough to back up a decision. Inside your Xero file is an amazing section that is simply called ‘Discuss’. In this section our team all leave notes and queries to confirm any transactions that we’re not sure of … because guessing reduces any accuracy. When we show our clients how to use this function … something beautiful happens. They end up getting to know their own business better. This small but powerful function allows us to keep your transactions reconciled each month so what you see is real and you can make confident decisions. If you’re not already in our club but would like to learn the secret handshake then perhaps we should talk in private … You can speak to Naomi by booking a time on this link below. https://calendly.com/bladebookkeeping/blade-bookkeeping-strategy-call In a quick 10-minute call, we can find out if our club is a fit for you.
Every business owner knows that Cashflow is King. However sometimes knowing you need more Cashflow … are getting more Cashflow seem miles apart. Every business should do a Cashflow catchup regularly BEFORE it’s an issue. Many problems if caught earlier … don’t end up a problem. Here’s 5 ways to catch up in your business …
Make sure your Data is up to date and accurate
Imagine you were a pilot for a moment … You’re getting closer to your destination and the weather turns fowl and you’re not sure of how long it will be before you can land … Your fuel gauge suddenly starts jumping around … so you start to become suspicious of it. The pilot can’t make a good decision on how many minutes left in the tank based on a dodgy fuel gauge. The fuel gauge for a pilot is like the data in your business. It’s a matter of life and death. It’s also life and death in your business to have accurate up-to-date numbers so you can make decisions. If you are suspicious of your numbers then you lose your ability to make confident decisions and this effects cashflow in 2 ways …
- You won’t know you’ve got a Cashflow problem … with old or inaccurate numbers you could be happily in denial.
- You can’t determine the solution … Without knowing where you are right now and how much ‘time’ you’ve got before it gets bad …
A hint to know if you’ve got accurate numbers is to log into your Xero and see how far back your unreconciled transactions to go. Our policy is to have your numbers up to date by the 10th of the following month and we rally as a team to achieve this because we know the importance of this for you.
Cashflow is a timing issue. As the pilot of your business your thoughts are spread across every aspect of it. Imagine what the thought bubble would look like in a business owners head! Purchases, setting aside ATO commitments, which debtors have priority, where is the business going, should you expand, when should you expand, staff numbers, staff pay, staff efficiency, tax planning, rent too name just a few. When was the last time you sat down and looked at your Cashflow wish list and your Cashflow reality list? It’s ok if you don’t really know how to figure out cashflow timing … but it’s not ok to put your head in the sand. Ask questions and seek help even if your have to pay for it … because in the long run … without Cashflow knowledge you’ll pay for it with stress.
3. Work out how long it takes to get paid.
Receivables turnover ratio = Annual credit sales (net) / Average accounts receivables
= 42,50,000 / 4,25,000
Receivables collection period = No. of days in the year / Receivable turnover ratio
= 365 / 10
= 36.5 approx. or 37 days.
If you reduce the number of days to get paid, then your cashflow will increase.
4. Review your client quality
When was the last time that you went through your client list? We all know there are some clients are better than others … and you will have your own rating scale on this. It could be on how quickly they pay, how they are to deal with and if they appreciate you. Create a list of A, B and C clients based on your own rating in a spreadsheet. Of your highest paying, list how often they buy and see what comes up. You may even notice that their buying behaviour has changed. If it has changed, pick up the phone and find out what’s going on. There’s a couple of things that can happen …
- New Staff Member
It could be that a new person has started and doesn’t have the relationship with your staff member. Fix that and you’ve increased your Cashflow. You want to be at the front of your clients mind and the buying process has to simple.
- New Buying Behaviour
Perhaps they have changed their policy on payments terms and yours don’t work for them anymore. They may need longer, or you could change your model to offer a discount for early payment. You may also find out that they need a different bulk buying arrangement. Without speaking to your client you’ll never know and it could be a simple solution which works for them AND increases your Cashflow.
- A change in the industry
A change in your client’s buying behaviour could be the first sign of a shift in the industry you’re in and that you need to change with it. They could be doing you a favour by their actions. We all need to continue to innovate to keep the demand up for what we provide … getting lazy or complacent will affect your Cashflow.
5. Have a marketing plan
It can be easy to fall into a marketing panic. Many business owners spend dumb money. There’s a pressure to advertise and often this pressure leads to jumping into everything rather than strategically into the right thing. Facebook Ads … Google adwords … glossy brochure campaigns. We’re not saying these shouldn’t be done, we are saying that they need to be strategically planned, costed and the results measured. This will affect your Cashflow in spending money without measuring results as well as spending it at the wrong time. These 5 steps can affect the health of your Cashflow. Just being suspicious of your Cashflow isn’t going to fix it. It’s also good to remember that you’re not alone in Cashflow catch up. ALL businesses need to work at it … ALL of the time. At the bigger business end we are a co-pilot as their outsourced CFO providing on-demand real time analysis of Cashflow. For smaller businesses we have created a ‘lite’ version which keeps your numbers up to date and monitored monthly or quarterly so you can make better decisions.
Sometimes all the bank jargon can be confusing, and we’ve relied on the fact that the regulator had a handle on things. We felt safe in the understanding that the regulator had our backs. When we hear all the media about some of the banks behaving badly, so much so that a Royal Commission was called … as Australian business owners we can be forgiven for feeling a bit ripped off and confused. It’s even hard to know which banks we need to be worried about. On the up side … at least it’s all out in the open now. But what does it mean for the business owner like you?
Loss of Trust
We all know that old saying that trust is easily to lose and hard to gain. Many of us now aren’t sure if the banks have our best interest at heart. We’ve lost a bit of trust. What to do about it … It simply means that you need to refresh your banking habits. It’s all our responsibility to monitor for ourselves.
- Look at your bank statements, understand your fees and ask more questions.
- Look at your relationship with your bank, and ask yourself “Do I get the service I need?”
- Spread your risk … talk to your adviser about your options
Getting a loan will become harder
The free and easy loan approvals of the past is gone. As the regulator tightens the belt, you will have to prove that you’re a good risk to get a loan approved. To prove that you’re a good risk you have to be a good business citizen and here’s how you can do that … Make sure you look the part … that means make sure your numbers are up to date and accurate. Pay your ATO obligations or set aside money so you’re not late in paying it. Take a good hard look at your money management … on-demand advice is possible because we do it. Remember that if it sounds to good to be true (like you see on TV) … then it probably is. In this current climate, if your loan was approved to easily … then look deeper as there probably is a catch. You could be getting stung with a High Interest rate for a start or trying to stretch to something that you can’t really afford. We have tough conversations with clients based on their up to date data and sometimes simply have to say that you can’t afford it and to cut back on their spending. It’s hard to hear sometimes but it’s not always forever. The secret to wealth hasn’t changed in thousands of years ….
Spend Less Than You Earn
If a loan is too easy then seek advice … and get the advice from your adviser independently from a broker.
Your Economic Community
Whether you’re fully aware or not, you are the centre of your own economic community. If you don’t thrive, your suppliers get less orders from you … and then their suppliers get less orders from them … and so it goes on. Then there’s your staff … If you’re not thriving and you need less staff, then their families are affected. The ripple effects your economic community. There is an upside … Although uncomfortable, quite often we all do our best work when we’re things are tough. If bank money doesn’t come as easy, we’re all forced to innovate, be clever and a positive result can be to find other solutions. Sometimes you just weren’t looking in the right place or asking the right questions. When things are tough, the tough get going … because we have to. Use this as an opportunity to look into your business and see where it’s got a bit fat and a bit lazy. Tighten the belt and use this as an excuse to freshen up your business. Don’t be afraid to make tough decisions … your economic community is depending on you.
Super is due at 4 times in the year … the last one was due on January 28th … and next one is April 28th. Super is it is only deductable as an expense once paid. Missed payments can also trigger the SGC (Super Guarantee Surcharge). Here’s a refresher as to the benefits of Super …
- Tax Effective savings
- Tax Effective Capital growth
- Lower Tax rate
- In some cases, Super Benefits are Protected from Bankruptcy
There are other compliance deadlines as well as Super … so we’ve put together a guide to help you stay on top. Download it here … KEY DATE WALL PLANNER for Blade Bookkeeping clients Remember to seek advise from your adviser if you’re not sure.
With the New Year, comes the chance to start fresh with new business AND personal goals. So, what have you got planned for 2019? Are you going to increase turnover? Double it? Or are you going to take the time to systemise the business so ultimately, you can step out of it to spend more time with your family? Whatever your plan… The Next Level Tradie live event can help… Andy and Ange from Lifestyle Tradie are headed back to Brisbane, Melbourne, & Sydney with their live event ‘The Next Level Tradie’ in February and March. And the best news? We’ve secured you FREE tickets… CLICK HERE to claim your FREE Blade Bookkeeping ticket! Turn your goals into reality this year using Andy & Ange’s specific trade business success strategies tested and proven in their own award-winning plumbing business. Including:
- Latest technology tips to streamline and automate your trade business.
- Discover 111 savvy marketing strategies to attract, deliver, and encourage repeat A-grade customers!
- The 7 financial errors every trade business owner makes and what to do to make them right.
- The exact steps they took to leverage Andy out of their business and how you can too… scale or sell, the option is yours…
Through these strategies, and many more, you’ll truly be able to take your trade business to the ‘Next Level’ in 2019. Want to check it out…? Through us, you can CLICK HERE, AND bring a partner/mate along with you. CLICK HERE to claim your FREE Blade Bookkeeping ticket. PS CLICK HERE to secure your FREE ticket to attend ‘Next Level Tradie’ in Brisbane, Melbourne, & Sydney in February & March NOW (Tickets are limited). Remember to bring your partner/mate along with you.
If you’ve ever dreamed of having your business run without you, selling your business or accelerating your business … then you may be in need of being ‘Corporate Ready’. What this means is that you need to set your business up to operate in a ‘corporate way’ with accurate data, dependable and predictable systems and insight so that the business becomes its own self-sustaining machine. It takes insight and execution. I believe that all business owners should go through intense training like my CEO Naomi. As a former commercial passenger jet captain, she knows how to risk manage, interpret data, follow the system and stay on track. She is able to execute with precision so the insight that I can see in any business is clear and usable for a business owner. How good would those skills be in your business? Although, the program I am talking about is for mid-size family businesses, it is possible for smaller business to behave in a corporate fashion by following the same template but it will take training and discipline. We can train you … if you are willing to listen. Many small businesses stay small because they don’t listen. Don’t let that be you. Book a time with Naomi on the link below, as she decides how likely you are to execute the insight that I provide at Blade Bookkeeping. Then she brings me in to apply the insight. It’s a formula that we’ve developed for the right businesses … could that be yours?
Reminder … Single Touch Payroll mandatory from 1st July!
The ATO has mandated Single Touch Payroll from 1 July. If you are not set up … then it’s soon time.
If you are a client of ours, we will be working with you to make sure you’re all set. The great news is that all our clients are on Xero.
Please contact us if you have any concerns.
Tax Office Random Phone call Alert
Yes, unfortunately it’s happening again. There’s a call going around that we’ve had many clients ask us about.
- The phone rings – it’s a local Sydney number.
- A robotic voice introduces themselves as the ATO.
- “There’s a lawsuit in your name, if you don’t ring back immediately, we will issue an arrest warrant under your name and get you arrested,” it says.
IGNORE IT AND HANG UP. If the ATO are chasing you, they will ring your accountant. And the ATO won’t threaten you … Remember, if you are unsure then hang up and check with your accountant.
Summer has been so hot … cooking had to move outside! Try grilling corn and pineapple on the barbie. Directions … Corn
- Preheat an outdoor grill for high heat and lightly oil grate.
- Peel back corn husks and remove silk. Place 1 tablespoon butter, salt and pepper on each piece of corn. Close husks.
- Wrap each ear of corn tightly in aluminum foil. Place on the prepared grill.
It takes about 30 minutes. Directions … pineapple
- Make sure it’s sweet
- Place it straight on the bbq grill
It takes about 5 minutes. They are delicious and different. Enjoy!
Out and about with Blade Bookkeeping!
We’ve just been to the Xero Roadshow in Melbourne and Perth. We’re staying up to date so that our clients get the latest and the best in automation and data … so we can always give you better advice.
If you’re reading this, then you’ve reached the end. Thank you … and have a productive month!