Good business practice, says CPA Australia, involves identifying the critical tasks that must be done to keep your business in good shape.
Importantly, you need to have the discipline to ensure these tasks are carried out consistently and regularly.
These include the returns and forms that have to be completed very soon after the close of the financial year—only weeks away.
To help small business owners get to grips with their financial, management and regulatory tasks, CPA Australia has published a checklist.
It shows the actions businesses should carry out—not only at the end of the financial year, but throughout the year.
Many of the actions would be familiar to most business owners, particularly those relating to the preparation of financial statements.
But there are a number of strategic financial and management tasks that might not occur to you but which could benefit your business. For example, you should:
Review and analyse financial statements: Compare performance against financial targets and past performances; and compare key ratios—such as working capital, stock turnover ratio or profit per employee—to industry averages (which your accountant may be able to obtain for you).
Review actual performance against budget: Undertake variance analysis (ask yourself: What caused any gap between budget and actual? How can we overcome this problem?)
Undertake sensitivity analysis: Ask yourself: What if sales dropped by 15 to 20 per cent? Or you lost a major customer? Or a major supplier stopped selling to you? What if your best sales staff resigned? episode passes Factor answers to such questions into your budget forecasts and risk-management strategies.
Review loans, leases, credit cards or other finance: For example, look at what other lenders are offering—not just their interest rate, but also their terms—and consider whether you should switch lenders.
Review your insurances: Is your insurance cover adequate? Are there risks you are not protected against? You should avoid under- and over-insurance.
For more information, read CPA Australia’s Good practice checklist for small business. CPA Australia (Certified Practising Accountants) is one of the world’s largest accounting bodies, with more than 150,000 members in 120 countries.