Are You Ready For 2011?
As 2010 comes to an end it is an appropriate time to reflect on what has been achieved during a tumultuous year and to consider business strategies for 2011. There are many items to consider including:
- Cash Flow Management: With the latest Reserve Bank interest rate increase and an expectation of ongoing interest rate rises, average debtors' days outstanding still being in excess of 51 days and with reported tougher attitudes by banks, it is very important for businesses to closely monitor their cash flow management. This includes consideration of investment in stock, work in progress and debtors. Now might be an opportune time to review how you manage these key components of cash flow management.
- Interest Rates: Have you considered locking in interest rates for a longer period? Have you prepared cash flow projections on the basis of banks and financiers charging higher interest rates.
- Banks/Financier Arrangements: Once you have reviewed your cash flow forecasts, it is probably an opportune time to have discussions with your banker about your forecasts and negotiate funding arrangements for 2011.
- Suppliers: Many suppliers have run down their inventory levels. As part of your forward planning, have you considered having discussions with your suppliers to ensure that they are going to be able to supply the quantities of stock when you require the stock and are the prices affordable?
- Performance Management: Are you or your accountant preparing regular financial accounts (monthly, or at the very least, quarterly) so that you can monitor your actual financial performance? The review of key performance indicators is a management practice to ensure effective monitoring of all segments of the business.
- Team: Has your team been mentored and trained so that they are able to supply outstanding customer service during the expected improved business conditions in 2011?
- New Employment Rules have been progressively introduced over the last six months and further rules will commence from the 1st January 2010. Have you considered how these new employment rules affect your business?
- Marketing: Now is a good time to review your marketing strategies for 2011. Items to consider include identification of key attributes of your targeted market and determining marketing strategies to highlight the benefits of your product/service to your customers and prospects.
- Cost Management: With the expected upturn in business activity there will be pressure for cost increases from many suppliers, contractors, etc. A cost management review can assist in reducing the impact of cost increases on your business.
- Currency Movements: If you are an importer or exporter then currency movements are of considerable concern to you. Have you determined a policy to lock in currency rates?
- Waste Management Strategy: Have you introduced effective waste management strategies for your business?
- Business Plan: Once you have given consideration to the items mentioned it is an ideal time to review or create a business plan for your business.
2011 should be an interesting year for SMEs. Hopefully the recent signs that the economy is recovering in Australia, and major overseas markets, will assist Australian SMEs to have an outstanding year. However, there are many warning signs that there could be some obstacles for many businesses to overcome. If you would like us to assist you in undertaking a planning review for your business for 2011, please contact us.
For more information contact us for a copy of the paper “Budgets/Cash Flow Management”.
