Many business owners and managers are so busy working on what their customers and clients need that they forget to take the time to work on their own business.
But being efficient is the first step in business success, so it’s worthwhile investing the time.
Five key areas to focus on that will make a difference include:
1. Getting organised
Decluttering and organising inboxes, filing systems and other paperwork is essential.
For every piece of correspondence received, whether physical or by email, there are four options:
- Bin it/delete it
- File it/archive it
- Give/forward to someone else
- Action it
It is important to retain a lot of financial information for tax and many other purposes. Having an adequate and systematic filing system will help.
Also, do some research or get advice on which information needs to be kept, and for how long.
2. Reduce debt
Review current debt and the different types and interest rates being charged.
With the level of competition among financial institutions, it is worthwhile comparing offerings to see if there is a better deal – it may be possible to refinance to pay less interest.
The usual rule of thumb is that high interest-bearing liabilities should be paid off first.
Also consider paying off non-tax-deductible debt as quickly as possible.
For those who can afford to do so, slightly increasing repayments and increasing the frequency (from fortnightly to weekly) can also decrease the life of the loan and overall interest paid.
3. Look after cash flow
The other side of the coin to debt is cash flow, often called the lifeblood of a business.
Any business that offers credit needs to actively manage this, including setting – and sticking to – terms of trade and following up on outstanding payments.
Business owners shouldn’t feel concerned or embarrassed about following up with slow-paying customers – if they’re not paying, they’re probably not worth keeping.
Experience has shown that slow-paying customers often become non-paying, and ultimately cost the business money.
4. Review expenditure
Insurance for both business and personal needs should be reviewed at least annually to ensure cover in the event of a claim is adequate.
Also review other expenditure – for instance, can a better deal be negotiated with the telecommunications provider?
Are there high bank account fees that could be eliminated? A change to a different plan or account may be all that is needed, rather than changing suppliers.
5. Business succession
While no one likes to think about it, illness or death can occur at any time. If contingency plans haven’t been made, this can leave business partners and employees, as well as family, in extremely difficult circumstances.
Business succession is often perceived as being too difficult to think about, but it is better to have some plans in place rather than nothing at all.
Everyone’s circumstances are different. It’s important to spend some time identifying requirements and issues so an action plan and time frame can be developed.