Another Financial Year Down, On to the Next
The 2019 financial year has come and gone and that means a couple of things…
- One, it means your next business tax return and associated compliance work is, or should be, now on your To Do list (drag I know), and
- Two, the chance to put a genuine plan in place to help make 2020 a successful year will soon pass you by if you don’t act now!
My Strategy for a Great 2020
Many of you already know my strategy for getting the most out of each new financial year.
The first step, as boring as it sounds, involves making sure that my compliance obligations for the year just gone, including my tax returns, all of which in themselves add no value to my businesses, are completed as a matter of extreme, urgent priority.
So much so that as I write this, in the evening of 1 July, I am probably already about 80% through all my year end work, having completed as much of it as possible in the lead up to the end of the financial year and then committing all of this weekend just pass to the task.
Now my commitment to myself is to ensure that by the end of this coming weekend, it will all be done, off my To Do list for another year, and then I can get back as quickly as possible to focusing on improving and growing my businesses.
The second step, which has already begun in a modest way but which will be my focus over the next two to three days in the office, is to use the completed financial reports for the 2019 year, I have done the most important first, as the basis for building detailed budgets, with new stretch targets, for the next 12 months.
These budgets and the new targets, will become our guide at every step of the 2020 financial year, telling us if we are on the right path, and helping us to correct if required, to ensure we achieve our ambitions for the year.
For us, the secret to budget building is the mantra of ‘pay yourself first’!
By that we mean –
- Determine up front, what it is you want to make as your profit for the year.
- Be realistic, but don’t be shy, don’t undervalue your and your Team’s value.
- Then work backwards to determine what your business needs to look like to achieve it.
- What do your current overheads look like? Can they be trimmed, or made more efficient? Or are just what they need to be, and there is little to be gained from focusing on them too much (this may well be the case, and that is ok)?
- What additional overheads, specifically out sourcing work, or hiring new people, are required in order to allow you to focus only on high pay-off tasks? And specifically, to focus on your marketing and your revenue generation!
- Now that you know your main costs, what revenue do you need to generate your target profit?
- Finally, what marketing needs to be done, and what marketing costs need to be incurred, to allow you to produce that revenue (plus a bit more to cover those marketing activities)?
- Complete your budget, lock it in, ensure it is in your accounting system so you can readily report your actual performance relative to it.
- Then ensure at every step, with each decision throughout the year, that you stick to the plan and do what needs to be done to keep on track, and…
You will be amazed at what you can achieve!