Creating Healthy Business Habits
Adena Mackin | Principal
Adena is a Chartered Accountant and founder of Accountable NZ who started the business after finding there was a gap in the market for businesses who needed more support and a hands-on approach from a team of people who love to get stuck in. Here to help you do stuff, not just sending you stuff.
EMAIL: adena@accountable.nz
PHONE: 027 675 1414
FACEBOOK: @accountablenz
WEBSITE: www.accountable.nz
Panama Riverbanks residents Accountable NZ share their thoughts on some common problems facing growing businesses and some tips for creating some healthy business habits.
At Accountable we are a boutique advisory firm of accountants and business champions that keep a consciously curated book of clients which means we get to know them warts and all in order to provide a tailored service.
Prepare now for the big business you want to be.
We say this a lot to our clients and we use the analogy of the speedboat and the cruise ship. When you are small and nimble like a speedboat you can react quickly – moving about and changing direction is easy. The downside being that you are more likely to be taken out in bad weather. When you are a cruise ship however you have the stability of being able to face the elements but if you want to change direction or make a change – it’s a lot harder to action and implement due to the sheer size.
We liken this to establishing best practice and good behaviours. We recommend that even small businesses start the journey of developing their ‘how we do things around here’ guide now rather than thinking of it as a future problem. Too often we see larger businesses with bad habits developed as a small business struggling to adapt to the scale of the problem now that they are not so nimble.
Some common problems we see and love helping to solve:
No defined Credit & Customer Policy. Is credit extended to anyone or do you mitigate risk with credit checks or deposits up front.
No Delegated Level of Authority. Who is allowed to do what? Can anyone commit the business to spending thousands of dollars? This is here to protect staff as much as it is the business.
No defined ‘Month End Timetable’. Can you reliably know that at the same time every month you will know how you are performing. Is it accurate and is it timely?
Know your numbers.
We see a lot of businesses who don’t know what ‘good’ looks like and don’t have anything to measure against. Is your Gross Profit eroding and do you know why? Are your overheads growing at a rate that your business cannot sustain? How do you know which activities are making you money and which ones are not? These are just some of the questions we like to challenge businesses on and help them find out!
If you don’t know where to start with creating some healthy habits in your business here are some easy recommendations
Set up a time every month to a deep dive into the numbers. Even better get someone independent involved to hold you to account and keep you focused.
Create a budget. A budget is a plan, actuals reflect how we have executed that plan and reviewing the numbers gives us the opportunity to make corrective actions for the future if we need to.
Pick a couple of simple ratios to track each month. Measuring overheads as a % of revenue is an easy way to track how many of your sales dollars is being consumed by ‘back office’.
Keep a clean balance sheet. Your balance sheet is not a dumping ground! It is just as important to understand what your balance sheet is telling you as it is your profit & loss statement.
If you don’t know where to begin or you are feeling overwhelmed with managing growth and change in your business then we’d love to hear from you – getting stuck in to make things easier is our happy place.