Now is the time for business operators, medium-size and small, to be planning their business activities as best they can for 2021. Many of your clients are going to need assistance in setting their strategies for this year which hopefully will be different to 2020.
Our suggestion is that you review your client’s business and prepare a list of matters that they could consider in setting their strategies. Some of the items that could be considered include:
COVID-19 Coronavirus Impact
Thousands of businesses are still impacted by the Coronavirus and are continuing to receive JobKeeper support from the federal government. At this stage the governance support finishes at 28 March 2021. What strategies can your client consider in the lead up to 28 March, so that they are able to continue in their business or should alternative strategies be discussed with your client?
The federal government has initiated a special loan which is 50% guaranteed by the government and has an upper limit of $1 million and is available to all businesses with less than 200 employees. The loan funds may be utilised for any business purpose. Applications close on 30 June 2021.
Customers
Are your client’s leadership teams receiving regular prompt updates on what is happening at their customers’ businesses? Have they suggested that all “sales facing staff” should give a daily feedback on what customers are saying to them?
Analysis of financial performance to 31 December 2020
Are the Financial Accounts been prepared for the individual business units within a business so that each of these individual Profit and Loss Accounts can be analysed as if they were a separate business rather than all of the data being consolidated into one Profit and Loss Account?
Are Key Performance Indicators being prepared for each individual business unit?
Have you discussed with the leaders of the individual business units what The Key Performance Indicators are indicating and given them general guidance on being able to read and interpret financial reports?
Research and development
If your client is operating as a company and they undertook legitimate research and development activities in 2019/20 (and many of them may have undertaken research activities during the lockdown periods) and they wish to claim the research expenditure as a Research and Development Incentive Rebate They need to register with AusIndustry by the date of lodgement of the companies income tax return or 30 April 2021 whichever is the earliest.
Shrinkage control
Shrinkage is a huge problem for many businesses primarily in retail and wholesale but it can also apply to trades and manufacturing businesses.
Shrinkage occurs when the business fails to sell an item at its full price. The difference between the potential selling price of a product and the actual selling price is shrinkage.
As part of your service to your clients do you undertake “shrinkage analysis” on an ongoing basis?
Charge Out Rates Review
At this time when business clients are setting strategies for a new calendar year it is an appropriate time to undertake a review of the charge out rates being utilised in a tradie business, manufacturing business and professional services firm.
Retail Pricing Review
You could also assist retail clients to conduct a retail audit on their business to analyse the product mix, mark-up percentages for the various products, overhead expenses and labour costs to determine whether changes can be made to any of these components so as to improve the businesses overall performance.
Business Review Meetings
Some SMEs businesses have seen the “light” and have engaged their accountants to act in a virtual Chief Financial Officer capacity to assist them to run a better business. One of the key benefits of this strategy is that the business then conducts a regular monthly business review meeting to consider all aspects of the business performance.
This is an opportunity for accountants to be positioned as the “project manager” for the organisation of various reports from all components of the business to be prepared for discussion by the leadership team. As the Virtual Chief Financial Officer for the business, accountants can ensure that detailed financial reports including Key Performance Indicators, budget variances and projections for the next twelve months are able to be prepared for discussion.
These business review meetings are not meant to be taxation review meetings. You should keep your taxation review to a separate meeting so that these meetings can be concentrating on how value adding can be achieved in your clients business.
ESS TOOLS are able to assist accountants to deliver a wide range of business improvement strategies to your SME clients.
For information on how you can access these tools to assist in adding value to your clients please visit www.essbiztools.com.au
Peter Towers
- Email: peter@essbiztools.com.au
- Telephone: 1800 232 088
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