Are we at a turning point for business?

February 2014

The NAB has released its monthly survey results for December, suggesting that while business conditions have improved to a two and a half year high, business confidence remains broadly unchanged. The report, released 28 January, suggests that while sales and profits have improved in some sectors, there is still some concern that the uptick in conditions may not be sustainable.

Though indications are that a consumer sentiment has improved following the estimated $15.1 billions spent in the lead up to Christmas, many small businesses are still struggling, having borne the brunt of rising costs, difficulty accessing finance and less than stellar revenue.

So if the tide really is turning, how can small business take advantage of improving conditions despite the uncertainty that still exists as we start 2014?

Know your numbers
The start of a new calendar year is also the midpoint for the financial year and it's a good opportunity to look at your numbers.

February is often a time of year when business owners hit something of a cash flow wall, largely because the income has tapered off over Christmas thanks to outstanding revenues coupled with slower trade.  But if you've planned well and managed your cash flow through the slower summer months, the halfway point of the financial year is a good time to get clear on whether you'll make your targets for the year.

The other upside of knowing your numbers is the ability to take advantage of opportunities as they arise and evaluate them within the context of your strategy, business resources and capabilities. If the business climate is truly turning a corner, having clear data at your fingertips will enable you to make the right decisions for your business such as whether the opportunity is worth pursuing.

We're fans of online accounting solutions for that reason. Cloud accounting tools such as Xero and Saasu offer the efficient tools for collecting, evaluating and reporting your financial data, which means you can have that information very quickly.

Look to your existing clients for opportunities
Many businesses tend to focus on acquiring new business to achieve growth, yet overlook or don't prioritise opportunities within their own customer base. More often than not, developing repeat business is the lifeblood for smaller enterprises, yet often gaps exist between the products and services you offer vs those the customer knows about or currently uses.

It's a well-known maxim that acquiring new business requires significantly more effort and expense than it does to generate new sales from customers you already have. Provided you've been taking good care of the relationships, it's likely they'll buy from you again or be willing to look at new services or products you offer.  Other ways to encourage repeat sales include special client-only offers on complementary products or services, loyalty programs, time-limited free shipping or a review of how they use your current service.

Understand your value proposition

It's understandable that when SMEs look for growth the focus falls on generating new business or seizing opportunities that have potential to inject much needed cash into your business.

While we all know what our business does or sells, it's important to be able to clearly and succinctly communicate the benefits of your business to customers.  In a nutshell, a value proposition is a clear statement about how you solve problems for your clients, what value your services or products deliver and why your business does this well.  

If you're struggling to get new business or maximise the sales potential from your existing customer base, it may well be worth revisiting your value proposition with your accountant or business advisor.

Keep up with policy changes
The Government has been focused on overturning a number of unlegislated or unresolved tax and super announcements since late last year and has earmarked March 26 as a 'repeal day' when it will focus on more than 8,000 redundant Federal laws to reduce red tape.

It's important as a business owner to stay abreast of policy shifts, however regular contact with your accountant and business advisers will help you to understand the impact of these changes on your business.

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Last updated February 2014. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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