At the recent ‘Empowering Women in Business’ roadshow event hosted by Gravity Business Lounge Founder, Vee R-Byrne, our focus was not just on the buzzwords but on delivering practical insights to address real fears and concerns. Alongside a dynamic panel of speakers, we delved into the crucial aspects of business success—identifying warning signs and unlocking the secrets to effective business scaling.
Business Warning Signs: Key Indicators for Financial Health
For any business, understanding the language of financial statements can be like deciphering a code. In our discussions, we shed light on two critical red flags that can significantly impact a business’s financial health:
1. ATO Debt as a Cashflow Indicator
A significant alarm bell rings when ATO Debt appears on a business’s financial statements. If a business cannot immediately settle ATO tax obligations, it may resort to using available cash as a temporary fix, resembling the ATO as a makeshift bank. This practice often hints at potential cash flow issues and not setting aside enough for essential expenses or things that could put you in a stick situation.
To address this, consider:
- Setting up a payment plan if immediate payment is unfeasible.
- Scheduling a discussion with your advisor to explore viable solutions.
2. Owner’s Withdrawals Impacting Business Accounts
Advisors notice a worrisome trend when business owners withdraw funds from the company account for non-essential purposes, beyond wages or notable expenses. This behaviour often suggests that the business owner perceives the company’s funds as personal, indicating a fundamental misunderstanding that the business is a separate entity from their own personal finances.
To rectify this, consider:
- Establishing a regular wage for the owner to discourage unnecessary withdrawals.
- Seeking advice from an advisor to help structure the business in a financially secure manner.
By paying attention to these warning signs and implementing proactive measures, businesses can effectively navigate financial challenges, paving the way for a more secure and sustainable future.
Key to Business Scaling: The Team Advantage
We emphasised the crucial role of a robust team in achieving business growth:
1. Surround Yourself with the Right Team:
Success is all about having the right people in your corner. Whether it’s accountants, business advisors, coaches, lawyers, or financial experts, assembling a team tailored to your needs is key. Working closely with your accountant and advisor, especially between April and June, helps optimise tax planning before the fiscal year ends on June 30. At SEIVA, we take a hands-on approach, delving into personal and business goals in detailed sessions. Through education and guidance, we empower our clients to independently manage certain aspects, creating a positive and fulfilling experience for everyone involved.
In a business world full of unknowns, this roadshow wasn’t just about talking. It’s about giving small businesses real tools to face challenges, go with the flow of the market, and set up a strong foundation for growth. We want to help entrepreneurs like you turn ideas into action and navigate the business journey confidently.
