On Cash flow Projections and Budgets
 Prepare accurate financial projections for this financial year (1 April – 31 March 2012).
Your projections should show monthly profit and loss, cash flows and monthly balance sheets. If you don’t integrate all three reports and include provisional tax payments, chances are your projections will be flawed.
Monthly variance reporting monitors progress against your projections. Your monthly reporting must again integrate all three core projection reports. If not, you will be getting half the picture and making decisions based on incomplete data. 2012 will not be the year for amateur financial forecasting.
Bring together the key people in your business (this may be 3, 4 or 5 including yourself) and state clearly that to be in business in 12 months time, you will need to increase your gross profit percentage by (say) 5% and reduce all your cost by (say) 10%. Enlist their help. You will be surprised what they come up with. They will be interested in keeping the company alive and well as their next job may not be easy to find.
Get into your bank. You need them and they need you. Meet with them to negotiate down the interest rate. Check what you’re paying against other business owners. Go over your projections with your bank manger. But be wary of showing them your homemade spreadsheet special. If you look like an amateur, the bank will place low credibility upon what you are telling them.
Get back on the floor of your business. Get back to your clients and customers. Get back close to the action. Get your hands dirty again. If you think that working ON rather than IN the business in tough times is the answer, you may not have a business in a year’s time.
This is the year you put those extra hours in. This is the year you engage your family in how important it is for the business to survive. If your family don't buy into your story, then check the story. Do they see more downside than upside? If they do, work through the issues with them. They may see it more clearly than you.
The Canterbury earthquakes and the new ‘normal’ mean that it is never a better time then NOW to sit down with us and prepare a set of cash flow projections or forecasts. Businesses don’t plan to fail, they fail to plan. By putting in place a means to measure your business performance, idiosyncrasies and issues can be ironed out in a timely and receptive manner.
Contact Nicole today to make an appointment to discuss your plan going forward.
Poorly Constructed Business Plans...
Not defining the problem. A business plan should define a problem and explain how your business will solve it. It should be focused on potential customers, not on the fix itself.
Not recognising the target market. Business plans that make unrealistic claims about the potential market share they can gather show not enough research is being done. There must be evidence of a customer demand for the product.
Unrealistic profit expectations. A strong business plan relies on spreadsheets explaining how the numbers can be made to work.
Over inking the executive team. A strong business plan identifies critical success factors and shows where the top people’s experience is suited to addressing then. Have experience to back a fancy title.
Not identifying any problems. There is no business which will not face problems. Identifying them, and being honest about them in the business plan is critical, as it helps map a way forward.
Business Tips in Hard Times
FOCUS ON YOUR CORE. Focus your resources on your core strengths, your most profitable products and customers. Refine your marketing to directly target and entice your core customers.
CULL NON-CORE unprofitable activities. Cull unprofitable clients and bad payers.
FINANCIAL CONTROL - improve your expense controls, stock controls, and debtor controls.
COMMUNICATE your financial position and financial goals with the staff (especially profit and liquidity). Help them think like business owners.
MAINTAIN MARKETING - Studies show that businesses who sustain their marketing spend in tough times, have 5 times the profit growth when the economy recovers than companies that cut their spend. Measure your Return on Investment and target your marketing spend accordingly.
EMPLOYEE ENGAGEMENT – use employee engagement tools like the Gallup Q12 to keep good staff and increase their individual productivity. "Free up the future" of unproductive, disengaged staff.
 Contact us to discuss your buisness planning requirements on 339-7260
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MARKETING TIP
Have you been displaced and relocated?
Print your best small advert on a postcard and post it directly to your targeted market. People read postcards when the message is brief. A small advert on a post card can drive a high volume of business to your website or new premises and generate a flood of new leads for a very small cost.
INSURANCE CLAIMS
If you are having issues preparing your insurance claim and feel like you are making little progress getting the figures together; or you have a loss adjuster giving you a hard time, bring your claim to us.
We now have a very experienced Insurance Claims Team who are getting good results for clients and the fee for claim preparation is probably covered by the insurance policy itself.
FRADUDULENT INVOICES
They are back out there doing the rounds
It is always worth checking invoices received for advertising. Some outright scammers will send an invoice for advertising that was never published. Other legitimate businesses sometimes scan your advert from another publication in which it has appeared, then print it in their own publication without your authority. They then send you an invoice, along with a copy of your advert as it appeared in their publication.
Always ensure you or someone in your organisation has authorised the advertisement before paying and invoice. Unscrupulous businesses count on you not checking.
BUILDING & DISASTERS NOT JUST CHRISTCHURCH
Laws relating to depreciation recovered on buildings are to be changed, probably in about August this year. While the changes arise from the Canterbury earthquakes, some of them will apply universally. There is to be some rollover relief from depreciation recovered for those affected by the earthquakes. It includes buildings and fit out and machinery replacements. The deadline proposed for having the equipment replaced is the end of the 2016 tax year. The deemed sale, which arises when insurance money is received, is to occur only when proceeds can be reasonably estimated.
This change will apply generally. Following the central North Island flooding in 2004, buildings destroyed by natural disasters, could be written off for tax purposes. What if a building is not destroyed and could readily be repaired but has to be pulled down? This could arise in Christchurch. The law will extend the 2004 change to include this type of situation and it will apply universally.
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