If you’ve been reviewing your business’s financial position and are looking for ways to improve your cash flow, one of the first things to look at are your expenses. As your business grows, so will your costs, but there are things you and your employees can do to keep them down as much as possible and so improve your cash flow by optimising overheads.

It’s important not to rest on your laurels. Continually thinking of ways to reduce your overheads is essential for a healthy cash flow, so conducting regular reviews of your business expenses should be a regular task.

Reducing Expenses

Although there’s no getting around paying for things like phones, internet, power, office equipment and rent, there are ways to optimise these overheads and keep these costs to a minimum. Review these expenses and consider the following:

  • Communications – with fierce competition in this industry, it should be easy for you to negotiate a better deal for phone and internet use. Talk to your current supplier about a new deal and if they won’t come to the party, shop around for a new one.
  • Energy costs – some of this is obvious, such as turning off things when they’re not in use. Green energy options are worth looking into, especially if you’re shopping around for a new energy supplier.
  • Rent – if your business is not client-facing, you might consider working from home. Not only can you claim your home office as a business expense, but not paying commercial rent is a huge saving. More and more businesses are becoming virtual – it’s worth considering if yours can be as well.

It’s worth joining industry associations relevant to your business. They often organize discounts for their members. And the networking contacts you make will often have ideas about savings or deals they’ve made that are reducing their expenses.

Outsourcing

The great thing about outsourcing is that it frees you up to spend more time in activities that grow your business. This is especially true of administrative tasks, so you could look at outsourcing:

  • Payroll – this is time consuming and often stressful, especially if you make mistakes. Outsourcing this task eliminates those factors and frees you up for more profitable activities.
  • IT systems – unless you’re an actual IT-based business, retaining someone to look after your IT needs is a very costly expense. Outsourcing your IT often means you can negotiate a contract that’s almost as good as having someone on site because there’s lots of competition in the IT industry.

You might also want to consider reducing your staff expenses by converting some of them to part-time instead of full-time employees, especially if the workload justifies it.

Ways to Save

There are a number of things you can look at here, tried-and-true methods for keeping costs down. Some of the most effective are:

  • Business taxes – talk to your accountant or a business tax specialist about ways you can legally save on your taxes. For instance, can you claim an area of your home as an office, which is a legitimate business expense?
  • Importing – you could look at importing your business’s raw materials. It could be that they’re cheaper to buy from an overseas supplier than the one you’ve been using locally.
  • Make the most of technology – moving your accounts to a cloud-based system, reducing manual paperwork processes and communicating with your customers over Skype or Zoom instead of visiting them face-to-face will all help reduce costs. You can even have your staff work from home and, as mentioned above, save on renting a commercial space.

Summary

As with most things in business, optimising overheads comes down to planning and creative thinking. Talk to your staff as they might have ideas on savings, and it’s important to make sure that they’re doing what they can on a regular basis to keep costs down.

It is also important to keep in mind that cutting expenses can often lead to a slower recovery for your business following a cashflow crisis. Making smart choices in what to save on so that you don;t limit your ability to scale back up in the future is essential to your long term survival.

Optimising overheads by cutting costs is a short-term solution to what may be a long term issue. If you need some advice and support, reach out to the team at MBP for a free 30 minute consultation. You can book a chat with us HERE.

Employees at businesses both large and small are now telecommuting/ working from home. Many companies around the world are restructuring their management practices to meet the challenges and opportunities of managing remote teams.

Now with the spread of the COVID-19 and workers being asked to work-from-home the need for managing remote teams is higher than it’s ever been.

Because they tend to be more agile and open to change, small businesses are particularly well positioned to adapt to telecommuting. Increased productivity and happier employees who appreciate the added flexibility are just a few benefits winning over small business owners.

But telecommuting also presents some challenges – in particular, two core issues: keeping track of what remote workers are doing and ensuring that remote and in-house teams form a cohesive unit.

These tips can help you effectively manage and support your remote employees and ensue the ongoing success of a remote business.

Promote Communication and Accountability when Managing Remote Teams

Defining expectations and setting up methods to track results are essential elements of remote team management. Here are a few ways to make sure your remote workers understand what is expected of them:

  • Set up a shareable daily work log your remote workers can use to report their progress on ongoing projects (Google Drive offers some good options).
  • Utilize a project management system to exchange messages, assign tasks and monitor projects rather than relying solely on email.
  • Determine key indicators for success for each remote worker and share these indicators with your employees (these might be daily, weekly or monthly goals).
  • Conduct regular reviews with remote workers to assess their performance.

Include Remote Workers in Office Culture

Positive work culture and employee engagement are quickly becoming top priorities for business managers who want to retain top talent. These tips will help your remote workers feel just as valued and validated as your in-house team.

  • If your in-house workers enjoy a monthly pizza party, don’t forget to include your remote workers. Invite them to attend, have a meal delivered to them or offer a gift certificate to a favorite restaurant.
  • Get to know and spend time with your remote workers, just as you would with in-house staff. Set aside a few moments each day to inquire about their families, personal interests, recent challenges and successes.
  • Consider pairing up remote workers to complete complex tasks. You’ll improve efficiency while helping remote workers feel like part of the team.

Ready to Enjoy the Benefits of Managing Remote Teams?

If the benefits of  managing remote teams outweighs the risks in your view, try offering your staff a work day from home a week – then, if it works out, you can try hiring remote employees. Some small business owners hire a remote employee in another region – a great way to expand their market.

If you trust your employees to work hard no matter where they’re located, the main thing to remember is fostering teamwork. A monthly meeting that everyone is required to attend can encourage stronger relationships, allow opportunities to clear the air or discuss any challenges – and improve a sense of teamwork and camaraderie.

Got a question about your business? Get in touch with the team at MBP. We can help you develop a remote working tech stack, implement HR policies for remote working and health & safety as well as work with you on your business culture and performance.

We all have tasks that get in the way of our business moving forward. It’s all these tasks that we tend to procrastinate, that we would rather void doing and that just suck up too much of our valuable time. Time that we should be spending on our businesses. Thankfully, there are lots of businesses, like MBP, that exist to help you identify what to outsource and take over completing those tasks for you. Get back to what you do best, what you enjoy doing and outsource the rest.

When looking to identify what to outsource in your business, we have a few simple questions you should ask yourself. What are the things you hate doing? What are the things you can’t do or struggle to do yourself? What are the things that you just shouldn’t be doing?

What Are The Things You Hate Doing?

It seems like common sense the the stuff you hate shot be what to outsource, right? You’d be surprised how many business owners don’t realise that there are people who love doing the things you hate. For example, that weekly payroll, bookkeeping and copywriting are all ideal things for you to outsource. These are the things you either push aside or neglect as you simply don’t have the passion to do them. The things you stress about but that aren’t really worth the stress. These things are the things you hate that are perfect for you to outsource.

What Things Can’t You Do Yourself?

None of us know it all. As much as us small business owners like to wear all the hats in our businesses and do everything, there are a lot of things that we simply don’t know how to do. There is absolutely nothing wrong with not knowing everything.

“Knowledge is everything you have learnt. Wisdom is knowing what you don’t know.”

It would be nice to know everything. It certainly helps to have a working knowledge of absolutely everything that goes on in your business. However, there simply is not enough time for you to be an expert in everything from payroll and bookkeeping to marketing and SEO. In order to run your business properly, you need to focus on what you know and do best. The rest is what to outsource.

Outsource the tasks you aren’t completely confident on to an expert. You can rest assured they will be done properly and in a much quicker time-frame than you could do. You can then sleep easy having avoided the stress of worrying about doing the task correctly and invest more time into the things you do best, further developing the expertise that makes your business thrive.

Are There Any One-Off Tasks You Need Done?

Every now and then, a job pops up that we don’t necessarily have time for. The job isn’t large enough or ongoing so there isn’t an option to hire an employee to complete the job. Even if it is a job that may take a few months, the added costs and delays of on-boarding anew employee can make the job unprofitable or considerably reduce it value to your business.

It could be something as simple as a few hours of data entry or something as complex as a transition to a new database or the implementation of a new software system. These are the perfect things to outsource. Especially with implementation of new systems as the experts you use can manage the change management process, implement the system and train you and your staff on everything you need to know. Outsourcing also allows you and your team to keep going with business as usual while the one-off tasks are completed. It’s a no-brainer really.

What Are The Things You Just Shouldn’t Be Doing?

Whether you are just starting out in business or you’ve been running a successful business for many years, the business landscape is constantly evolving and you need to be able to keep up. So focus on keeping up. As a business owner you need to be focused on your business and its growth. Everything that distracts you from that focus is something that should be outsourced.

These tasks aren’t necessarily business tasks. What to outsource can also include your cleaning, grocery shopping and anything else that sucks up your valuable time and distracts your from your business.

If you’re not sure where to begin, book in a free chat with an MBP Business Support Advisor. They are experts at assessing what tasks you can outsource to others. At MBP, we are expert Certified Bookkeepers, Accountants and Business Development Advisors but there is a lot of stuff that we don’t do. We outsource to experts ourselves and can put you in touch with our most trusted experts for whatever it is you are looking to outsource.

If you sell or make products then you’ll likely have stock on hand or work-in-progress at year end. In order to get accurate figures for your tax and annual financial statements, you’ll need to know the value of this stock. This means you’ll need to do a stocktake.

The end of the financial year (EOFY) comes around like clockwork but for many business owners it can be a stressful time. It doesn’t have to be with the right planning. Planning your stocktake in advance  can save you time and stress and is the best way to ensure that your closing stock figure is accurate and that you aren’t under or over declaring your business performance and financial position.

An EOFY stocktake will show you how much of your capital is locked up in stock. This is a serious consideration for cashflow and will inform your budgets for stock ordering for the year ahead. When planning your stocktake, you should also plan to follow it up with your annual business plan and cashflow forecasting. This will help to inform your overall strategy and help you make sure you are carrying the right amount of stock.

The closing stock figure you get with your stocktake has a big impact on your taxable profit. This means it has tax implications as well as effecting your KPI‘s by making an adjustment to your Gross Profit Margin. This means it really important to get it right. If you need a hand, get in touch with our expert bookkeepers or tax advisors, they can give you some tips tailored to your specific requirements.

With the right plan, help and advice, your stocktake can be painless.

Plan For Stocktake Success

Successful, painless and accurate stocktakes don’t just happen, you need to plan.

The first thing to consider is timing. When you do your stocktake is important. For tax purposes, your end of year stocktake needs to be done reasonably close to your financial year balance date. This is so that you get an accurate and relevant figure for your financial statements. However, you need to select a time that has the least possible impact on your business. It may be that you need to close up early or open late and put in some extra work on stocktake day to make sure you get everything you need done while not impacting your customers too much (and missing sales!).

To keep track of stock throughout the year and make each stocktake easier and less of a ground-up exercise, we recommend planning mini-stocktakes throughout the year. Your end of year stocktake will then be based on more up-to-date figures and should be less of a chore. Software like Vend makes it easy to run partial stocktakes.

Get The Right Software

These days there is a niche piece of software to simplify every part of your business. Your stock is likely one of your biggest assets so deserves a dedicated, expert solution. Using inventory management software makes monitoring stock a breeze throughout the year. Solutions like Vend and Dear are worth the investment. They allow you to get accurate information in a timely manner and make informed decisions.

Get The Stocktake Team Together

If you have a lot of stock, getting some help will make things a lot easier. If you have staff then it makes sense to use them. They know your business and your products so they will be able to spot things that are out of the ordinary, damaged or obsolete. Using your own staff is likely more expensive than using students or other casuals but you’ll often get a better and more reliabel result, allowing you to make better informed business decisions.

Clear The SLOBs

March is often full of stocktake sales. There’s a simple reason for this, stores want to clear their SLOBs while optimising their tax and financial positions.

SLOBs are your SLow-moving and OBsolete stock. This is the stock you really don’t want to carry through to next year and is a much greater benefit to you converted to cash. Carrying too much stock isnt a good thing for many reasons. Holding stock that isnt selling takes up space in your warehousing and shop floor. This costs money in lease and other overheads for every day it sits there. There is also a daily risk that items get damaged and their realisable value decreases as a result. There’s also an added benefit, it’s also a lot easier to count less stock.

Sort Out The Stock Room

When you first set up your store you probably had a meticulous warehousing layout. However, as soon as the orders start flowing the order tends to go out the window. Its common for stock rooms to devolve into a bit of a mess with the same items stored in several different locations. This can be an expensive issue as its harder to fulfill customer orders on time, its harder to monitor stock levels and you’re more likely to order replacement stock that you don’t actually need.

To make your stocktake easier, quicker and more reliable, invest some time in making sure your stock room is well organised.

A well organised stock room not only speeds up stocktake but also speeds up order fulfillment and monitoring for the right time to order replacement stock.

Verify Your Purchase Data before Stocktake

Take some time to look through your inventory system and check that the cost prices you have recorded are accurate.

If you import stock, ensure you have accounted for the full imported cost, including customs charges, duty and currency fluctuations.

Store Sold Or Shipping Stock Separately

If you’ve sold something and the customer has paid for it, it shouldn’t be included in your stocktake. This is another reason why you need to sort out your stock room before stocktake.

Items that are sold should ideally be stored in a separate area of your stock room so that you can ignore them easily during stocktake.

Count Everything

Accuracy is essential. Your stocktake determines the value of your stock that is deducted from your direct costs. This increases your taxable profit. It is tempting to simply make a guess, especially if the total value of your stock is below $10,000 and you are allowed by the IRD to make an informed estimate rather than do a physical count.

Taking the time to do a physical count is a valuable exercise for your business. It informs you what is selling and what is just sitting on shelves, it lets you confirm that you do in fact have exactly the products that you think yo do but most importantly, it makes sure you pay the exact right amount of tax you need to.

Count every item. Open boxes to check the correct stock in in there (and isn’t damaged). Mark off the sections that are counted but leave a note pad there to record any movement of items out while the stocktake is underway.

Review Everything

Once in a blue moon, a physical stocktake matches perfectly to your industry software. In most cases, there are variances. If the variance is material (more than a certian percentage you deem to be significant) then recount the stock affected to double check.

Missing stock can be cause by any number of issues. These could be simple accounting errors, software coding errors or even theft. Regular partial stocktakes can be an early warning system for issues in your business, allowing you to make any required changes before they become serious issues in a years time. This could be implementing better warehousing, security or ordering process.

Start Planning For Next Years Stocktake

Every stocktake is a valuable learning experience. It can help to inform your stock purchasing for the year ahead but also the way that you store and move stock through your business. Use it as a time to optimise your stock room layout, establish efficient and simple systems for partial stocktakes throughout the year, and up-skill yourself and any staff on best practices with stock ordering, dispatch and warehousing.

If you would like to discuss your options for more efficient business systems, software or processes with your stocktake, get in touch with the team at MBP. Our Business Support Administrators, Business Advisors and Accountants can help your to plan for a painless stocktake. It might seem like a chore, but it can be a really valuable exercise when done properly and with the right support.