Australian Drilling Attachments

Four red flags that your SME needs some help

(First published in Kochie’s Business Builders)
 
Allan McKeown,
Zoe Wright
Prosperity Advisers Group
 
More than 60% of small businesses fail within the first three years of starting up. This is an alarmingly high percentage of small business! What are the key red flags you should be alert to as an SME owner to keep you on track and steering your business to success?
 
Not planning for taxes
Plan ahead and do not damage your credit rating and reputation. Small businesses make up 65.2% ($13 billion) of all outstanding ATO tax debt. From 1 July 2017 all outstanding ATO debt greater than ten thousand dollars and at least ninety days overdue will be reported by the ATO to credit reporting agencies. This has the potential to damage your credit rating and reputation, potentially affecting your future borrowing capacity and relationship with suppliers. You should run your business with the mentality that tax debts are just as important as loan repayments. Therefore, always ensure you make payments on time. If you are unable to meet your tax obligations you would be wise to engage an experienced adviser who will negotiate with the ATO on your behalf as well as help you plan future tax payments.
 
Limited access to funding
The power of leverage to grow your business. A number of business owners are spreading their business across several banks to leverage more opportunities to borrow. To be able to access these funding opportunities it is a necessity to have up to date records. Cloud-based accounting systems are now making it easier for businesses to have reliable and up to date data available on the go. This allows for business owners to secure funding for growth and to be able to capitalise on low interest rates faster.
Furthermore, this assists with negotiating better interest rates on existing funding.
 
Owner dependence and failure to delegate
Can your business run independently of your involvement?
Small business owners who dedicate every spare minute and penny to their business may be limiting business growth and setting their own expiry date. The large majority of small business owners continually fail to delegate responsibilities and decision making, making it very difficult for their business to continue to grow and operate without their constant presence. To improve the potential value of your business you need to start delegating more control to your employees and partners. This can prove difficult for owners who have spent years tied to their business but in the long run you will unlock scope to grow and create more spare time. New technologies and cloud based apps can also integrate into your daily business processes to allow you some physical time away while being able to access your people and systems remotely.
 
Cash Poor?
Poor cashflow is the life sentence you want to avoid for your business. There are a number of things to consider when managing cashflow effectively:
• Do you have a large amount of capital tied up in stock and work-in progress?
• Do your customers pay on time?
• Do you pay your suppliers on time? Do you pay them too early?
• Have you reviewed your staff mix and rostering for cost savings?
• Are you paying high interest rates on unsecured loans or credit cards?
A great way to analyse your cashflow - before it is too late, is to start looking at your management reports on a weekly basis, including reviewing your debtors, creditors and stock turn over.
This is easier than ever to implement with cloud based and real time data now available for the majority of businesses. Always remember that cashflow is the lifeblood of your business.
These are only four items you should be aware of as a small business owner. To improve your position on any of these factors then seek the help of your trusted business adviser.
 
For further information contact Prosperity Advisers on (02) 4907 7222, email mail@prosperityadvisers.com.au or visit www.prosperity.com.au

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