New Year Resolutions by Brendan Mills; CFO Dynamics

 

Most people set New Year resolutions and don’t follow them, what about setting New Year resolutions for your business and its financial performance? You probably feel the same about your financials as you feel about losing weight after Christmas, you know you should but it’s just too hard. I want to set you the challenge of doing this for 2013 as the benefits for improving financial performance are just like a healthy lifestyle, you’ll feel awesome!

What should you focus on in 2013?

1. Expenses – we hear how expensive the cost of living is in Perth but it is a very expensive place to run a business too. What can you do about it? Monitor all your expenses and look to negotiate better terms with your suppliers. Maximise the return on investment, for example, if you give your employees a 20% pay increase they must provide 20% or more value through improved performance

2. Pipeline – The pipeline is the work you are expecting to do over the next three, six or 12 months based on projects, tenders, quotes and expectations you have in the market. It is nice saying you expect $100,000 in sales over the next three months but what is that based on? This will help you plan for the coming months and assist with decision making. Do you need to market more? Do you need to increase capacity because of more work coming up?

 

3. Cash flow – Last month we discussed cash flow through the Revenue Cycle but this is crucial for your business. It is one thing generating a profit, it is another getting paid. So focus on your Revenue Cycle, be the squeaky wheel by following up debtors and negotiate the best possible terms for your business.

4. Take control – would you fly in a plane if you knew the instruments weren’t working? Of course you wouldn’t so why do so many businesses do the same? Get the financials of your business in order so they can assist you in making business decisions and improve the performance of your business.

5. Knowledge – Most people don’t go into business because they love financial information but as a business owner you have a responsibility to understand your financials. Investing in yourself will see exponential returns for your business.

Finally I wish everyone a safe and enjoyable Christmas and New Year’s and look forward to a dynamic 2013.

 

Brendan Mills is a CPA with 10 years’ of experience working with small, medium size businesses helping

them improve their performance. He believes the skills required to understand and benefit from financial information are learnable for every business owner and his vision is to share this knowledge with the business world.  http://www.cfodynamics.com/

 

 

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