EOFY Survival Guide For Small Business
EOFY isn’t only about getting your financials in order. It’s a great time for small businesses to review and plan.
Judging by the TV and radio ads, you’d be forgiven for thinking that EOFY was another holiday, up there with Christmas, Easter, and New Year. Just like Christmas campaigns, they encourage us to buy up big before the special day, have a festive feel, and play on the pressure of a deadline. You almost expect savvy kids to be drawing up an EOFY present list!
But putting aside the hype, the end of the financial year on 30th June, or more specifically the period leading up to it, is an important time for small businesses. If the end of the tax accounting period means that there are certain financial actions to be taken. Also, as with the end of a calendar year, it is a time that straddles two periods, and is therefore often a chance for reflection – looking back over the last year and forward to the new year.
Let’s look in more detail at some of the things that a small business owner might want to do as the EOFY approaches:
The approach to the end of the financial year is first and foremost of course a time to ensure all your financials are in order. Your accountant and/or bookkeeper is your best friend at this time of year (as they are all year!) and will be able to help you with looking at:
• Debt – the lead-up to the end of the financial year is the time to review the list of people or organisations that owe your business money. You’ll need to divide these into two groups – the ones from whom you have a good chance of collecting the debt and the ones that you are just going to have to write off to experience.
Then it’s a question of chasing the first group hard to collect all the cash you can before the end of the financial year and maximising your revenue.
• Superannuation – legislation changes this year on June 30th that will have implications for your business and your staff. Make sure you arm yourself with the latest changes to the Super rules on the ATO website, Key superannuation rates and thresholds.
• Bring forward purchases –The purchase of certain items, relevant to the running of your business is tax-deductible, meaning that you can offset the amount of tax paid against the tax you owe. So as the end of the financial year approaches, think about any items you need for your business and whether it makes sense to purchase them before 30th June, and therefore have the tax deduction in the current tax year, rather than waiting until July or later to make the purchase.
• Sell surplus stock – Unsold stock not only represents unrealised revenue but will be shown as a liability on your balance sheet, impacting the overall financial health of your business. It is a good idea to review your stock position and decide whether to carry the stock over, whether you want to have the campaign sell as much as possible before the 30th June deadline.
But EOFY isn’t only about getting your financials in order. It’s a time to review and plan and small businesses might also want to think about:
The financial year changeover is a good trigger to review your progress against your business goals.
Michele Carson of Influence is a strategic planning expert and business coach. She explains: “The end of one year and the beginning of the next is the perfect time to review your strategic plan. Take a look at what you have achieved and whether it aligns with the goals you set for the business. Look at your business figures for the last year and get underneath the numbers to understand what they are telling you. Are you growing at the rate you planned for in your strategy? If not, can you work out what you need to change?”
Part of your planning process will be to prepare budgets and cash flows for the coming year. Use data from the current year to plan for the new one. And remember that it’s not just about revenue - cash flow is king, so ensure you work with your bookkeeper or accountant to plan not only your expense and revenue plan but the cash flow that will keep you afloat.
Michele has one final tip, which is to allocate time in your diary every week to work on your business - before and after the new financial year. “It’s one of the most important things you can do for your business”, she says, “because all of the 'must do' lists in the world are useless unless you take the time to action them.”
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