What does successful money management look like | New Zealand business magazine

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One of the most critical relationships that exist in any industry is that between the business owner and the accountant. Lisa Martin, executive director of transformational accounting consultancy GoFi8ure, explains why this is a relationship that deserves constant attention and scrutiny.

If you’re a smart business owner, you’ll have your accountant on speed dial, says Lisa Martin of GoFi8ure.

“He or she is really like your financial coach,” she explains. “So if you want to bounce ideas off, then you should
be able to speak frankly to your accountant.

“It shouldn’t be about emailing a question and never hearing from them.” The same rule applies to your lawyer or human resources consultant, she says. “There are specific issues that require you to tap into that expertise. You can’t just drive it.

And if you’re worried about being charged for consultation time, it might be time to negotiate a flat fee, she suggests.
“You really need to build a relationship where you’re not afraid to ask questions.”

So, let’s take a look at what keeps New Zealand business owners up at night?

According to Lisa, these are resources (including people), capacity and capabilities, intellectual property and IT, brand, corporate reputation, resilience, mental health and most importantly: l ‘silver.

In today’s business environment, still reeling from the impact of covid, many of these concerns are heightened and business owners simply need to face the facts.

“For example, if customers are asking more and more of your business, be upfront and let them know about your capacity constraints. It’s time for some honesty,” says Lisa.

WISH LIST FOR ACCOUNTANTS
When it comes to honesty, Lisa has a wish list of tax-related topics that she thinks more accountants should share with clients. For example, there needs to be more conversations about the difference between cash and profit, what an income statement really says, and what balance sheets are for.

“Also, the difference between position and performance; the difference between what you own and what you owe.

“Accountants need to talk to clients about financial literacy and financial discipline, the best tax structure for them, and what the highest tax rate actually means. [to their financial position].

“There needs to be a discussion about how dividends and imputation credits actually work,” adds Lisa. “Remember that everyone’s situation is unique. You can talk to a friend who seems to pay less tax than you, but their situation will be different. And don’t forget that the tax rules are updated every year.

A coffee or meal from your local cafe might have been tax deductible a few years ago, but the rules and interpretations of IR are constantly changing, she says. “So use your common sense. Never push your luck on taxes or anything else to do with your business finances.

Lisa wants accountants to explain what the shareholders checking account means for business owner clients as well. “For example, the drawings do not represent free money. At some point, you will have to pay taxes on it.

“They also need to explain that the GST is a direct third-party tax. We collect it on behalf of the government, whereas income tax is a tax based on your income. The two are very distinct on the balance sheet.

You also can’t claim all of an asset’s expenses at once, Lisa says.

“You record an asset in your books and depreciate that asset over its useful life at an IR-approved depreciation rate. So, just like a vehicle, its value could decrease by 30% over its useful life.

The true test of an accountant is to clearly explain this to clients.

WHY BUSINESSES FAIL
To be successful in financial management of a business, you must first understand why businesses fail.

Lisa is strong on this. “This can be a direct result of a lack of planning, which is usually linked to having little or no focus or strategy. You haven’t looked at the big picture of what’s happening on your market and what your competitors are doing better than you.

“If you have strategic drivers in your business model, you can be as successful as your competitors.”

Your strategy should be aligned with a vision, Lisa emphasizes. “What if your business doesn’t have one, or maybe you have one but your staff don’t understand it?”

Know where you are, where you’re going, how you’ll get there, and who you’ll need on board, she says. “And remember, it’s better to learn from other people’s mistakes than just learn from your own.”

“Why not pay for additional expertise to help you implement your ideas or start your business?”

Having a strategy or an idea is also useless if you’re not ready to implement it, suggests Lisa. And then if it doesn’t work out at first, be prepared to pivot or persevere.

If, perhaps, you are looking to market a product globally, seek advice from someone with experience in product development, and ideally in the particular market you are targeting.

Succeeding in business also means being agile and putting aside your ego.

“We all need help and a reminder that we don’t know everything,” says Lisa. “To be a true leader, accept that there are others who know how to implement your business strategy better than you.”

Avoiding failure and succeeding, especially in building a business around products, also relies on investing in smart marketing and promotion, talented employees, and sorting out your distribution channel.

ROTATE, PATCH OR PERSEVERE
The global pandemic has forced many businesses to “pivot, fix or persevere,” says Lisa.
“Persisting with continuous improvement and transformation can be painful and money-sucking, but in the end, your business can thrive, not just survive.”

When you’re ready to dig deeper into your company’s financial health, get tips on how to conduct a competitive SWOT analysis, both internally and in the external market. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.

There’s also one last weapon in your arsenal for financial management success — and that’s data. “Whoever extracts the most insight from their data wins,” Lisa says. “Data comes to you from social media in the form of shares, likes and comments; website visits and search engine optimization; Google ads, or Net Promoter Scores (NPS) which
rate your business from one to ten. All of this data reveals why people want to engage with you.

“Capture and analyze this data, and turn it into actionable information on which to base business decisions and improvements.
“Your competitors are probably doing all of this. If you don’t, then to a large extent you are flying blind. ■

You and your accountant.
Ask yourself these questions:
1. How often do you see your accountant? enough to feel
confident that you are making the best financial decisions
if necessary?
2. Do you understand your annual financial statements and your taxation
returns, and are you sure to explain them if necessary
– for example, when dealing with your bank?
3. How accessible is your accountant? Do you feel comfortable
talk to them whenever you need their help? Do they
offer a sounding board, or challenge yourself? Above all, do they
to answer quickly ?
4. Is your accountant related to your business and vice
versa? Did they really put themselves in your shoes and create a
successful business themselves?
5. Does your accountant explain concepts and respond to your
questions in plain English?

gofi8ure.co.nz

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