Six Ways to Start the New Financial Year

For many small businesses, this past financial year has been a really challenging time.

As Victoria went into a number COVID-19 lockdowns, local and regional businesses were forced to suspend face-to-face operations. Even for those that could continue online or for some, take-away trading, many had no choice but to reduce staff hours or wages in response to the diminished demand. On top of the financial loss and people impact, and the possibility of further COVID disruptions until the population is fully vaccinated, the future remains uncertain for many small business owners.

The new financial year is a chance to ‘reflect and reassess’ and start with a positive outlook. While the outlook will look different for everyone, there are some business basics every owner can keep in mind, particularly as the last 2 financial years will be unique against the backdrop of the current and foreseeable economic climate.

Here are six ways to have a strong start to the new financial year:

1.    Start with a Business Health Check – Find your financial and operational “pain points” and look for solutions.

Small business owners often wear many hats; from management to operational roles – running a smooth business operation is no mean feat.

It is important to use the new financial year as a chance to reflect on the business processes and procedures that are problematic, resource intensive and cause stress for you and the team. Explore options to resolve and determine solutions. Focussed and objective analysis will identify that there are options of people, process, technology, and communication solutions that offer affordable, automated, and efficient solutions for the most common pain points faced by small business owners.

If your pain points are not only slowing you down but also restricting your capacity to innovate, diversify and or differentiate your business, then do some research to find the best solutions for your business, and compare the worldwide market. 

Do not be afraid to reach out to other small business owners within your community via networking, LinkedIn or social media posts, to ask for advice and first-hand reviews and experience of the tools you’re looking at investing in.

2. Be prepared! The likelihood of further disruption to your business is real.

The reality is that Federal, State and Local Government’s capacity to assist and support businesses with financial assistance or subsidies to support businesses impacted by COVID lockdowns is finite. This is a daunting prospect for businesses as they have been reliant on this support and assistance for the ongoing viability and sustainability of operations over the past 2 financial years. Similarly, availability of business grants and subsidies will be subject to more rigorous and focussed business cases going forward, so now is the time to review your business strategies and prepare forward looking business plans and goals for the new financial year.

In conjunction with your bookkeeper/accountant establish the current financial health of your business, then start creating a financial plan and 3-monthly budget forecasts based on various scenarios. Take a hard look at your cash flow for the past 6 months, including direct and overhead costs, wages, asset acquisitions, cash reserves and debts. 

For example, if a 1-2 week, COVID lockdown were to occur, what immediate costs could you cut, what if supplies are delayed or unavailable, what is the impact on cash flow? Could you ask your staff to reduce hours or wages? These are the possible financial scenarios that you need to plan for in the new financial year.

Expecting the unexpected eliminates some of the stress associated with the unknown. While no one can predict the end of COVID-19 impact on the economy and business, therefore being ready to act is your best chance of business survival.

3. Lead with purpose, but be flexible

Taking decisive action is always better than doing nothing. As a leader, do not allow yourself to become paralysed by uncertainty. Be empathic, authentic, and purposeful in your decision-making by balancing strong leadership with vulnerability. Teams will always appreciate seeing your human side.

With that said, never fear over-communicating with your team. As a leader, it’s your responsibility to be there for their support, be that through regular ‘pulse-checks’ like employee mental wellness surveys or getting your entire workforce together at least once a week for a motivational address, situation updates and celebrations of achieving milestones and or goals.

If you need to work remotely in the new financial year, start building an online culture of reward and recognition. When teams are working from home, it becomes harder to quickly say ‘thank you’.  Creating budget accounts, like a reward and recognition account dedicated to recognising star performers or investing in the right employee engagement software, will foster connection within your team and boost engagement through value-reinforcement.

Having a strong, connected workforce that looks out for one another enables your business to better handle disruption. You will not get through the other side of the COVID-19 crisis if you’re operating on auto-pilot – so be prepared to be available at multiple destinations with a moment’s notice assured by the knowledge that your team is backing your decisions.

4. Start with ‘WHY am I doing this?’

Simon Sinek popularised the idea of finding your ‘WHY’ back in his 2009 TED Talk on ‘how great leaders inspire action’. The concept is still relevant today for many business leaders striving for growth through innovation, diversification, communication plus improved customer supplier and employee loyalty.

Defining your ‘WHY’ is about finding the purpose, cause or belief that drives you. No matter how small your business is, every leader needs to tap into their purpose. By leading with your ‘WHY’, will help drive every decision you make and will keep long-term objectives and goals aligned to your business’ growth.

5. Identify then prioritise the goals for the new financial year

This activity encapsulates the long-term vision built from your businesses core values and purpose that you plan to achieve within the next 10 to 15 years. Your new financial year goals should also align to the longer-term vision and your ‘WHY’.

The new financial year goals need to be visionary, challenging and daring. They must be measurable and grounded in your company’s underlying strategy to be relevant to the current environment and marketplace. Examples of new financial year goals may include expanding into new or diversified markets, doubling the size of your team, or becoming the leader in key markets that you serve.

The new financial year goals will be your driving force; it will impact the types of people you recruit now, and in the future, and will align your team to the greater vision and purpose.

The start of a new financial year is the perfect opportunity to think positive, reassess your business’ vision and objectives and start making positive changes and align with your unique new financial year goals.

6. Moving forward using a goal-setting framework

Now you have got your ‘WHY’ and your new financial year goals defined, move forward by break down these driving forces into prioritised actionable steps. Leading with purpose is great, but real success in the new financial year comes down to having a clear goal-setting framework. Experience of successful business owners is to set Key Results Areas (KRA’s) and measurable Key Results Criteria (KRC’s) for their teams work plus a well communicated 90-Day Goal Action Plan to achieve the desired outcomes in each quarter of the new financial year..

Businesses use KRA’s and KRC’s to align their teams to achieving each of the identified goals, using KRC’s to measure progress in achieving these key goals and milestones. Essentially, KRC’s take on a more holistic approach to accountable goal setting by tracking qualitative outcomes – often quarterly – rather than quantitative Key Performance Indicator (KPI) metrics such as gross margins and profit.

Defining your ‘WHY’ with KRC’s helps business leaders to:

·       Focusing staff on achieving overarching vision and purpose, no matter how ‘blue-sky’ the objective is;

·       Create a transparent business vision for the future;

·       Improve employee engagement and motivation by empowering individual responsibility and accountability, and;

·       Provide a clear, structured summary of accomplishments and progress of the new financial year on a quarterly basis.

Clinton Bugg, Small Business Mentoring Service Mentor

Clinton uses his extensive business consulting experience to help small businesses with people, processes, technology, and communication by assisting in research, business strategy, start-up and growth planning, expense management, revenue generation, risk, cash flow and project management.