Jo Tye of my own firm, Nottinghamshire-based accountants and tax advisers, Barnett & Turner offers her five top recommendations for businesses looking to capitalise on the economic upturn. As we’ve moved out of recession over the past year or two and new opportunities are now presenting themselves for many businesses, it’s a good time to take stock of how your company is shaping up. Here are some suggestions for issues you might want to address, although it’s often good to seek out the advice of your accountants and discuss your plans together:
Rate your business as it is today
An obvious starting point is to examine the strength of your balance sheet and your level of profitability.
Look at your client relationships
Are your clients ‘blue chip’ in terms of their calibre? What’s the depth of your relationship with them? Another critical point is to consider whether they are providing you with a recurring income, or whether you’re often forced to seek out new customers.
Examine your supplier relationships too
It’s worth thinking about how far you’re able to control the supply and price of any goods or services you need to conduct your business. It may not always be possible to pass price increases on to your customers.
Manage your cash flow
What is your situation in relation to cash flow and working capital? Do you have sufficient headroom? It’s very difficult to make long-term decisions if you’re struggling on a daily basis to manage cash. Make sure you don’t have too much of it tied up in debtors and stock.
Write that business plan
This is about looking ahead and thinking about where you want to be and when. Are you hoping to exit? To pave the way for a successor? Or simply to grow the business over the coming five years? This is the time to get anything unnecessary off the balance sheet and ensure that your ownership structure is appropriate to your aims. While you might be able to produce a plan yourself based on, say, your turnover, gross profit margin, net profitability and the amount of money you hold in the bank, anything more complex will need the involvement of your professional adviser.
The real skill of running a business is dealing with these issues over a sustained period – challenging yourself, where necessary, as the journey unfolds. So do schedule regular meetings with your accountant to check on progress. In the meantime, a few hours of thinking time now could prove invaluable in the years ahead.
If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk