Our focus at Sullivan Dewing is to achieve the best financial outcomes for our clients by helping them increase profits, reduce tax, create wealth and protect their assets. The first step is to ensure you are financially well organised.
Here are the first 5 tips on how you can achieve this in your business.
Tip #1 – Use the right business structure
Your business structure should provide you with asset protection, flexibility of profit distribution and the right amount of tax to be paid. Are you confident that you achieve this from your business structure?
Tip #2 – Structuring your salary
If you have not structured your salary correctly, you could be leaking money. Leakage in the form of payroll tax, workers compensation and superannuation. Did you know that just by changing the way you receive your pay, you could be saving your business money, as well as receiving more cash each week yourself. Now there’s a win-win situation!
Tip #3 – Achieve the best profit that you can
You work hard in your business. You need to make sure that you are making a profit after you have paid yourself a market wage – otherwise why not save the headache and just go and get a job?
Profit gives you options. Options like, should I pay myself some more, should I build my wealth plan with superannuation or should I reinvest in my business. You would always rather be the business that makes $200,000 profit, than the business that loses $200,000.
When was the last time you set a profit plan for your business? Consider using a bottom up approach, where you set your desired level of profit, add in your overheads and direct costs, and the balancing number is what you need to sell for the year to make the profit that you want to make. To help you create wealth & freedom.
Tip #4 – Measure the key numbers
This is really simple! How did your actual sales for the month go versus budget? How did your gross profit and net profit go versus budget? Know where you want to go and then track against it each month …and make sure you get there.
Also look at the key non-financial numbers in your business. How many new clients did you get this month, how many quotes did you send out, how many of those jobs did you win? Once you know this information, you can improve on it.
Tip #5 – Know where your cash is
Cash is king! You know the pressure your business is under when cash is tight. What is your watertight system for collecting your debtors? How many days does it take your debtors to pay you? How many days do you take to pay your creditors? How many times does your stock turn each year? These 3 areas are the critical “cash lock up” areas of your business. If your debtors are taking too long to pay, but you’re paying your creditors on time, your cash will be tightening. Review this area and make improvements.
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