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How to boost your businesses bottom line

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When you’re running your own show, it’s all too easy to get caught up in the day-to-day trivia. Sometimes you neglect to stop — even if it’s just for a few minutes — and take a look around to see the bigger picture, to understand the forces shaping your business’s bottom line.

So, what challenges are Australian businesses — yours included — up against?

Recently, NAB’s December Business Confidence Survey showed a drop of 11 points. To uncover how businesses are feeling, I caught up with group executive of NAB’s business banking unit, Joseph Healy.

Of the drop in confidence, Healy said it’s important to consider the bigger picture — the decline was down from the high of the last survey, but he assured me, was still “well above” the long-term average.

“It’s important to put that in context,” said Healy.

The drop, said Healy, reflected a sense of realism in the business community as they came face-to-face with the interest rate rises they had been anticipating.

“I wouldn’t consider the correction to be a negative thing; it’s just a degree of realism creeping in.”

On a day-to-day basis, Healy said, the sentiment reflects this.

“Businesses, generally, are cautiously optimistic — I hate using that phrase — I think optimism is certainly there.”

It’s just not driving investment decisions as yet — the level of business lending was at a 17-year low at the end of last year. This, said Healy, betrays the fact that businesses are holding back on investments because they want to see more evidence that the “economic recovery, so to speak, is proving to be resilient”.

Even as the country’s leading business bank — with excess of $100 billion in loans out to small and mid-sized businesses — Healy told me credit demand, for the meanwhile, remains low. But why?

Are you holding back on investing in your business? Or, do you think you’re being held back?

“I don’t think we can ignore the fact that we’re constantly hearing businesses say they can’t get access to finance or that the terms and conditions and the price at which that finance is being available to them is not acceptable,” said Healy. 

My bet is you need to grow your business, but you’re not sure you’re ready to take the gamble when it comes to borrowing the funds to take your business further.

If this is the case, now is the time to review your business plan and structure. Where do you want it to be a year from now? Five years from now? Or even ten? Take your plan to your accountant. He or she should be an expert in your industry and be familiar with the lurks and perks within it. Work out the practical steps you need to take when it comes to the business’s finances in order to meet these goals. Review your cash flow management systems to ensure you don’t fall victim to a lack of finances — simple steps such as reducing your terms of payment from 90 days to 30, or reviewing your invoice and debtor management systems could be the key to saving your business’s bottom line.

If, on review, your figures are low, it’s important to ask yourself why.

When it comes to money, be innovative — look for growth areas and invest in them. Keep up-to-date with the forces driving your industry and work out practical ways to harness these for the benefit of your business.

A great example of this is the baby boomer generation’s spending habits — not only are they living longer, but they’re becoming increasingly well practiced in the art of spending their kids’ inheritance.

Brent Green, author of Marketing to Leading-Edge Baby Boomers, on the CNBC website encourages businesses to “lockstep” with this area of growth.

“When boomers focus their wealth on shared goals, such as the need to see the world before they die, billions of dollars will follow. ‘Generation reinvention’, as I like to call it, will answer unrequited dreams notated on countless bucket lists. Travel and tourism-related expenditures will grow dramatically. Thousands of entrepreneurial businesses will emerge,” he wrote.

Savvy businesses will tailor their services to take advantage of these industries.

Before I let you off the hook for this week, let me share a final point from Healy:

“We want to avoid that boiled frog syndrome where we’re sitting there thinking ‘we’ve done well’ when there are some aspects of our economy that really need our attention. The big challenge is to be pleased with where we’re at and not to be complacent. We need to focus on the things that are weaknesses.”

This is advice all business owners need to sit up and pay attention to. Despite the rush of good news in the headlines proclaiming the storm has passed, you need to actively get your finances in order to ensure you can survive the next storm. A pat on the back isn’t going to do it.

So, if after careful planning and consideration, the answer is investing in the next stage of your business, then get spending!

Work on your business, not in it. To learn how, book a complimentary business assessment today with a Switzer Business Coach.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

sment with Switzer Business Coaching today. 

 

Published on: Tuesday, April 13, 2010

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