Q4 is a time to focus on business planning for the year ahead, says SARAH DALY.
Budget 2022 had some good news for business owners. The extension of EWSS in a graduated form to 30 April 2022 is a welcome support for eligible businesses and while the corporation tax rate is set to increase, most domestic businesses will continue to qualify for the 12.5% rate. A summary of the Budget is available on the Department of Finance website.
Budget-time each year is also the time when many business owners review their accounts and schedule a meeting with their accountant ahead of the tax filing deadline. This is a good opportunity to look at plans for the coming year.
Rising costs, recruitment problems
Currently, rising fuel and energy costs are a major concern for many businesses while recruitment and retention continue to pose problems in certain sectors. At GroForth, we are certainly seeing that recruitment is a major issue for our payroll and bookkeeping clients in the hospitality, healthcare and construction sectors. Supply chain issues are another challenge with some clients experiencing delays and difficulties sourcing certain products. Meanwhile, the effects of COVID-19 and Brexit continue to affect many businesses.
Against this backdrop, managing cashflow, controlling costs, monitoring your pipeline, treating your staff well and ensuring that your business is correctly structured will be crucial in the months ahead.
Manage your cashflow
Good cashflow management ensures that you have enough cash available to meet day-to-day expenses and pay your staff and suppliers. There are various practical steps that you can take to improve cashflow such as prompt invoicing and making it easy for your customers to pay you. In a recent article, I mentioned how I have been using GoCardless to receive recurring payments through direct debit. This has effectively eliminated late payments in my business. Other steps that can enhance cashflow include credit checking new customers, keeping tabs on money you are owed and avoiding holding too much stock.
When it comes to controlling costs, it’s important to monitor your actual costs against what you budgeted for. If your actual costs are higher than expected, you need to work out why this is the case. There may be opportunities to eliminate waste, renegotiate contracts, switch suppliers, or outsource functions like bookkeeping or payroll that require specialist skills.
It’s also worth examining ways to streamline your business processes. Adopting a cloud accounting solution can be a good way to achieve this. GroForth has helped many small businesses automate their processes. If you are interested in finding out more, check out our cloud accounting articles or contact us for assistance.
Monitor your pipeline
Your sales pipeline is another valuable business management tool. Used properly, it will help you understand lead times which, in turn, will improve the accuracy of your forward planning.
Treat your staff well
Finding and hiring new employees can be a time-consuming and expensive exercise so it makes sense to do everything you can to encourage your employees to remain with you. The better you treat your staff, the easier it will be to attract and retain key workers. Keep in mind that employees often check out a company’s online reviews when considering job offers.
Review your business structure
From time to time, it is also important to check whether your business structure is working for you. I always advise clients to raise this question when they meet their accountant. Depending on the business, it might be time to consider forming a limited company (incorporation) or entering into partnership with another business — for example, if you are a sole trader paying the higher rate of income tax, it might be beneficial to incorporate whereas if you are a freelance consultant, it could be worth considering partnership. Your accountant is the best person to explain the options and advise on the most appropriate structure for a business at your particular stage of development.
Finally, remember when working on your plans for the coming year that you will need to create/update your annual budget. Reliable budgeting and forecasting are essential tools when it comes to running your business efficiently. If you need help, contact GroForth for assistance.