The most successful businesses regularly review where they are heading and what they need to do to reach their goals.
From my experience working with financial planning businesses, I’ve identified four key points you must consider to ensure your business goes from strength to strength this year and beyond.
1. Manage your cash flow
Cash flow is probably the single biggest challenge for most businesses, financial planning practices included. To be successful you need to balance the cash flow in and out. Review your cashflow forecast with a best and worst case scenario and work out whether you have reserve funds or need to borrow. Understanding the timing of the inflows and outflows is critical and should be tailored depending upon the timing of your dealer group or fund manager payments. If you need extra cash, ensure you discuss the timing of repayments as well as the amount, to best match expected cashflow. Also consider the different types of finance available, including term loans, overdrafts and leasing.
2. Interest rate management
With recent downwards movements in interest rates, consider an interest rate management strategy such as consolidating business loans, fixing interest rates on outstanding loans or repaying debt to reduce your exposure. Your local professional will be able to advise you as to the suitability of these strategies for your business.
3. Consider tax effective strategies to maximise surplus funds
Structure your debts so as to maximise tax deductibility via reducing personal non-deductible debts. If you have extra cash, also consider re-investing into the business to ensure an efficient operating model.
4. Protect your assets
Take out adequate insurance cover over your business assets such as plant and equipment, but more importantly over the most valuable asset to the business, YOU. Consider items such as key person insurance, and buy/sell agreements where multiple layers of ownership and business partnerships exist. If something unexpected happens, your business and your loved ones need to be able to be provided for. You can never plan for the unexpected and this will help you sleep better at night.
