Builders & Tradies: 8 financial new year’s resolutions that will help you plan for success in 2020
Another year has come and gone, and the New Year is always an excellent opportunity for tradies, construction businesses, and builders to ponder New Year’s resolutions.
Rather than the same old personal “wish lists” that are so popular, we thought about the resolutions that can make a real difference to your business finances in 2020.
Following are eight new year’s resolutions for builders that can help to improve your financial outcomes in the year ahead.
Financial New Year’s resolutions for builders
1. Get accounts and tax returns up to date
Are your 2019 financial accounts and tax returns done?
It’s important to know exactly where you’re at. Last year’s results are important to reflect upon when forecasting future areas of improvement, so the earlier they are done the better.
Talk to your accountant about this ASAP and start collecting any relevant data that they will need.
2. Improve cashflow – cash is king!
Poor cashflow can drown an otherwise profitable business.
Review your debtors and, if they are higher than you would like, review your collection systems. Are they electronic, modern, automated and effective? In line with good cash collection procedures, make sure your business is preparing and sending bills early and quickly.
3. Review your 2019/20 budget
You should have already prepared a budget for the 2019/20 financial year.
Six months into the year is an excellent opportunity to review that budget and make sure that you’re on track.
4. Increase revenue sources
Paying regular attention to the direction of your industry and the needs of your customer base is the secret to staying on the front of the wave.
What are your customers demanding? What do they need? Can you provide a new product or service that meets a need that perhaps they haven’t even thought of yet? How can you commercialise your new ideas?
5. Be smarter with paying yourself
One of the main aims of owning a business is your own financial reward. Is your remuneration properly structured between salaries, superannuation, and dividends?
Smart structuring of remuneration can reduce tax for your business. Consider paying your dividends monthly, in line with your cashflow.
6. Improve cost-efficiency
Increasing the profitability of your building business can take many forms.
Increasing prices is always challenging, so increasing volume and decreasing costs are important and effective tools in raising profits.
If you didn’t review your costs when you prepared your annual budget, do it now!
7. Improve operational efficiency
Hand in hand with reducing costs is increasing operational efficiency.
Have you reviewed your systems and procedures so that your employees work efficiently? Can they access the necessary information quickly enough? Are you handling “paperwork” digitally, or even better, is it automated?
Increasing operational efficiency is how many building and construction businesses have made large gains in the last 10 years of challenging times.
We consider it a major area of improvement still, which can increase the profitability of your business.
8. Make time management more efficient
Last, but not least, what about your own time management?
Can you increase your effectiveness in your business without increasing the time that you spend at work?
Your financial reward from running your own business shouldn’t come with handcuffs that tie you to the business. Delegate more and make your automated systems work for you, not just your business.
Need help with your financial New Year’s resolutions?
Making financial New year’s resolutions for your building and construction business might not seem like your idea of fun. But neither is giving up alcohol or losing weight!
If you want to get better results for your business, do something different this year!
Perhaps then your other New Year’s resolution of “spend more time with family and friends” can be a reality rather than a wish!
If you need help with this, contact our team here.