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5 Steps to Start the Next Financial Year and Complete This Financial Year

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5 Steps to Start the Next Financial Year and Complete This Financial Year

Whilst the New Financial Year doesn’t have the same ring to it as New Year’s Day when we ring in a new calendar year; it’s a great time to take stock of what you’ve achieved in the past 12 months and an opportunity to plan the next 12 months.

Making sure you’re not paying more tax than you need to and putting tax planning strategies into place before 30 June is a given. But, what will make the biggest difference to your financial results moving forward, is setting financial targets.

Step 1 – Review revenue.

Hopefully, you will have already segmented your revenue into income streams so that it is easy to see how much income you’ve received from each stream. If not, then go back through the income and do your best to dissect it into the different income streams. How do the actual numbers stack up against your goals from last year; hopefully, you set some?

Step 2 – Review costs of sales and delivery.

If you’re selling product, check your gross margins, if you’re selling services then check the costs to delivery for each income stream. Determine the percentage of net income for each income stream and list them in descending order to identify which are the best performing.

Now, take a good hard look at these results. Firstly, you may have found a few surprises in the results, think about those. Consider whether you need to be putting your focus on different income streams to get more revenue from the better-performing ones. Consider whether you have some products or services that you could eliminate completely and whether that would impact your customer/client sales.

Step 3 – Set goals.

For each income stream, set a new target for the next 12 months. The target could be an increase of 5% or 10%, or it could be a dollar amount. Whilst setting these goals, if you’re a service-based business, make sure that you have the capacity to deliver at that level without the need to add more team members, or if you do need to add more team members, make sure that the net effect is an increase in the overall net profit for the business.

Step 4 – Review expenses.

Go through your expenses with a fine-tooth comb. Delve into the detail and see if there are any costs that you could eliminate, consider what costs will increase and by how much and add a Consumer Price Index or flat 3% or 5% increase to all other costs.

If you need to add to your team, factor in the additional wages and on-costs, if you’re planning to move premises, take that into account too. Think about what changes you’re likely to make over the 12 months and add any additional costs to your expenses.

Step 5 – Enter your financial goals into your accounting system.

This is a vital step as once this is done you will be able to produce reports each month that will show you your actual results against your goals. Reviewing that on a monthly basis will help to keep you on track and focused on achieving your goals.

Review your actual results for the current year against your goals from last year. How well did you do? What lessons can you learn from the numbers? What went well, what didn’t go quite so well?

Bonus Step.

At the end of the financial year, celebrate. Celebrate another year in business, celebrate the wins you had over the past 12 months, celebrate the team you’ve built around you, celebrate the new connections you’ve made, celebrate the new clients or customers you’ve served and so on. Whether it’s been a great year, an ordinary or a less than ordinary year, celebrate. You’ll find something to celebrate. And whilst you’re celebrating share your goals for the next year.

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