How to prepare your business for the new financial year

The new financial year presents a great opportunity to review, assess and adapt current business practices, processes, and procedures to make informed decisions about the year ahead.

With the last 18 months disrupting many companies’ ways of dealing, the pandemic has demonstrated how businesses can transform swiftly to adapt to significant changes in the market.

SMEs especially need to review changes constantly and invest in solutions that provide flexibility and agility yet achieve greater efficiencies whilst allowing growth opportunities.

The new financial year poses the perfect opportunity to assess current practices and identify potential improvements and growth. Some steps for SMEs to consider are;

1. Review This Year’s Results

Seems obvious but dig deep into your income and expenses from the current year, reviewing your budget with a variance analysis. If there are variations from your projections, find out why. Review more than your revenue – look at which products or services performed best, which locations/demographics generated the most revenue and what marketing activity resulted in the most return. Do not review alone, sit down with your management team and discuss their thoughts on why you performed this way.

2. Create a budget

Discuss with your team your projected sales and expenses for the year ahead and based on this create a detailed master budget that includes your income and expense projections, a cash flow statement, cash reserves and credit availability estimates, debt-service numbers, profit-and-loss statement, and balance sheet. Once you have done this you can look at your estimated year-end profit and decide whether you need to lower costs, increase sales or reduce debt.

3. Discuss Growth

Once you have your potential performance mapped out, it is now a great opportunity to consider areas of growth in the business, whether that be a new service or product, opening another location, increasing marketing efforts, selling through another channel, or diversifying into a new market. Calculate the costs, analyse the risks and rewards, and start uncovering whether you can afford to do so.

4. Invest In Solutions

Now that you have ideas and goals think about what solutions you may need to ensure you stay on track. Is it a hybrid working environments so your staff can work remotely in case there is another lockdown? Is it leveraging automation for greater business efficiencies? SMEs should invest in cloud-based solutions to successfully streamline processes and prepare for the future.

5. Create Your Plan

After reviewing last year’s performance, making your projections, and discussing new opportunities for growth – make your plan for the year ahead. Involve management and create benchmarks and triggers when you are underperforming or going off track, so you can steer back or make needed changes.

The new financial year is truly a great opportunity for SMEs to assess last year, make new plans and set goals for the year ahead. By understanding your strengths and weaknesses you can better position yourself for a successful new financial year.

If your business needs guidance on its strategy, budget, or procedures for the year ahead, then find out more about Growth iQ’s business and operational services. Book a FREE consult with our team to discuss how we can help.