It’s tough for SME businesses right now. Recession news, rising supplier costs, less consumer spending. Many business owners are rightly worried about what this year will bring. Small and medium sized businesses remain the backbone of the UK economy and it is thought that SMEs equate for around 99% of the business population and three-fifths of UK employment. It’s therefore imperative that these businesses are supported through tougher times and helped to get into the best position possible, not just for survival in uncertain markets, but to be optimised for growth as well.
Most SME business owners will think of their accountant as someone who just calculates the tax or questions an expense. They tend to come with bad news, often a tax bill to pay. Obviously, this is what they do, and its important, but given your accountant knows your business inside and out, they can help drive your business forward. In many cases they can help you find additional streams of income in these somewhat turbulent times. As your accountant gets a bird’s eye view of your business, along with the expert knowledge and insight gained from other companies they work with, they may also be able to help you find ways to save money or improve efficiencies.
Your accountant will have a portfolio of clients of all different shapes and sizes across all different sectors with a good grasp of what works and what doesn’t. We should be tapping into this knowledge and insight for the benefit of our own business. It is important to make the most of this expertise and we can only do that by asking the right questions, and knowing what the right questions are. Here are five ways your accountant can help you move the business forward and use 2024 to help you reach the next level.
- Business plan
Your accountant can help you put together a clear business plan that helps define your goals and ambitions for the company. The business plan should outline how you plan to attain these goals and a timeframe in which to reach them. You could also conduct a market analysis and put a marketing plan in place as part of this.
If your accountant has a better understanding of what you are trying to achieve, they can help you plan how to get there and work alongside you to put quarterly goals in place. Within the business plan you should outline the financial strategy and look at the level of sales necessary to reach these targets. Once you have a clear plan of how to reach your goals, your accountant can help you build an achievable budget and work with you to put in place defined targets for sales. You should think of your accountant as an extension to your own team.
- Build a budget
A business of any size should have a proper budget in place to help align activities with goals and visions. At the very least, this should include payroll, rent, utilities, insurance, professional services, any advertising and marketing, loans. With a proper budget in place, you can better anticipate expenses and plan for any cost increases. Your accountant should be able to help put this budget together and can guide you on whether changes need to be made depending on your operational needs. If you have a better understanding of your budget, you will be better placed to make business decisions around project priorities, understand where resources might be able to reallocated and areas that need evaluating. When it comes to money, knowledge is power.
- Cashflow forecasting
Your accountant can look at your numbers and help you plan ahead with cash flow forecasting. This allows you to estimate how much how much money will be coming in, how much will need to go out, and when. Keeping track of your cashflow is really important and allows you to foresee any issues you might have, and flags when you might not have enough funds in the bank to pay the bills, giving you time to make other arrangements.
Planning ahead means you can ensure there is enough money, when you need it, to pay for any growth and investments you might want to make.
- Tax planning
No one wants any nasty surprises, particularly those that involve paying a hefty tax bill. You can take away the element of surprise by keeping accurate and timely accounts records as you go. Having pre-tax conversations throughout the year means your accountant can help predict what your corporation tax might look like to enable you to save as you go and plan ahead. This also means that you can do what you can to limit your tax liability – either with some changes to the structure of the business or some strategic spending.
Have you made the most of every allowance you’re entitled to? Again, if you engage your accountant in these conversations early enough, they can help find ways to legitimately reduce your tax. You should also be open with your accountant about your goals. For example, if your goal is to get a mortgage at a certain level, then you might not want to reduce your profits to reduce your tax. Your accountant can help advice you on the best thing to do.
Sending the accountant your spreadsheet a few days before the deadline doesn’t help anyone, least of all you. Be organised and allow enough time to get everything sorted – better still, do your accounts as you go along so you know where you are at all times. Not doing this is probably costing your business more money. Remember, tax isn’t a bad thing. It’s a sign that your business is growing and doing well.
- Funding
Funding for your business can be for any number of reasons and is an often-underutilised facility. It could be needed to help cashflow when you have a bad debtor, or to invest in research or development to enable the business to grow. But with so many options available, it’s impossible to choose the best one for your business and understand all the mechanics of it. A good accountant will be able to provide advice around different funding options available to you and help analyse what the best solution could be.
A good accountant cares about your business. They want to see it succeed as much as you do. Find an accountant you trust and who you can build a long-lasting relationship with. The more they get to know you, the more they can help. But it’s also down to you to make the most of the advice they can give you by disclosing all the information you have and asking the right questions. Put the above tips into action and see what it does for your business. By taking this holistic approach, you’ll feel the benefits and be more empowered to make informed decisions that are right for your business.
Author: Cheryl Sharp, CEO and founder of Pink Pig Financials