Reviewing your Small Business

Reviewing your small business practices and position is an integral part of running a business, particularly as it expands.

Below is a checklist put together by the ATO to help you analyse how your business is performing and to get ahead of any changes on the horizon:

1. Business Structure 

Even if your current business structure is working, it’s good to review this to see if a different structure would better suit your business needs. 

There are various reasons for a business to change structure:
  • Changes in management, such as taking on a new partner
  • Changes in ownership, for example, when you buy into an operating business
  • Financial reasons, for example, to improve cash flow, profitability or to maximise tax benefits
  • Operational reasons, such as reorganising internal functions to improve the way the business operates
  • Business growth, to accommodate expansions in your business 
  • Economic downturn or downsizing, for example if you want to minimise your obligations or compliance requirements

2. Bookkeeping and record keeping systems

Keeping good records makes running your business easier and allows you to keep track of how your business is performing financially. 

Depending on your industry, you might also need to keep certain records to meet ATO responsibilities or obligations. For example, annual reporting of contractor payments and details for those businesses in the building industry through the Taxable Payments Reporting process. 

As your business grows you may find that your bookkeeping requirements will change as well. When you first start out, spreadsheet records or smaller bookkeeping programs may be sufficient, but as you expand your business and start employing staff, a bookkeeping system that allows for payroll and STP reporting will become essential.

3. Current Financial Position

Reviewing your business finances with AFYF or your bookkeeper can be integral to growing your business. This is important in assessing whether your business has the ability to pay outstanding debts and meet its ongoing commitments to creditors.

Set targets and check on your performance regularly to determine whether you are meeting these targets. Reviewing your performance can allow you to modify practices and processes to better reach these goals. 

The ATO also offers Small Business Benchmarks, so you can compare your business’s performance with similar businesses to yours.

4. Registrations, licences and insurances

Check you have the right insurance policies in place for your business, particularly if your situation has changed from when you first started out. 
 
You may need to consider changes in location, expansion, new assets purchased, if you’re now employing staff, or if you’ve changed your business structure. 
 
It’s also important to make sure your business holds the correct necessary licences or permits, and keeps these up to date. Generally business licences and permits are managed by state, territory or local governments.

5. Business and marketing plans
 
Your business plan is crucial to the ongoing growth of your business. As your business expands, you should regularly review and update your plans. See our article here for more details on business plans and a downloadable template.

Reviewing your marketing plan through the different stages of your business is also important. The more you know about your business, customers and competition, the better you will be able to update your marketing plan to suit your needs.  

6. Staffing and leave requirements

When it comes time to employ staff for the first time, or if you need to hire a new employee, it’s good to first sit down and consider what you want to achieve by hiring or increasing staff. You can then decide on what type of employee you will need – casual, full-time, part-time, contractor, apprentice, etc. 

There are numerous requirements when employing staff, so it’s important to understand your obligations and your employee’s entitlements first.

One of these entitlements is leave and for small businesses it can be vital to have a leave policy in place. Particularly to avoid situations when multiple staff are on leave at the same time or making large payouts of unused leave that can impact your cash flow. 

Read our checklist for employers here.

7. Skills and training needs

To keep up with or to create business growth, it’s important to make sure you’re continually developing your skills and those of your staff. 

Attending training on new technologies, industry specific topics or internal processes like financial management, can help increase your profits, productivity, staff motivation and customer satisfaction. 

8. Ability to innovate

Keeping your business flexible and innovative can be vital to making your business successful. 

Coming up with new ways of doing things will enable you to develop or create more effective processes, products and ideas for your business. 

It is important to innovate as it can help you save time and money and help grow your business. 
 
 


Disclaimer

This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.