Small Business: Resilience in Tough Times
/As small businesses experience escalating costs in business operations, your bookkeeper plays a crucial role in preparing and equipping you with valuable financial strategies to help you navigate cost increases effectively.
Your Bookkeeper’s Role: How We Can Help
Managing Cost Increases
According to the Australia Small Business and Family Enterprise Ombudsman (ASBFEO), a significant proportion of small businesses struggle with financial sustainability:
43% of small businesses failed to turn a profit in the previous tax year.
Three-quarters of self-employed individuals earn less than the average total weekly earnings.
These statistics highlight the importance of strategic financial planning. Implementing strategies can help small businesses survive and thrive in the face of impending cost increases.
Enhancing Value Through End-of-Year Analysis
In addition to basic financial reporting, QiBalance Bookkeeping can provide practical insights into your financial data through comprehensive end-of-year analysis. This includes identifying trends, patterns and areas for improvement that can drive growth, cost savings and risk management.
Budgeting and Forecasting Support
QiBalance Bookkeeping can assist you in setting realistic financial goals and creating forecasts based on historical data. We can review and update these forecasts to track your business’s progress, allowing adjustments to be made as necessary and ensuring your business remains successful.
Tax Compliance Strategies
Using our knowledge of business compliance and regulations, QiBalance Bookkeeping helps clients develop effective tax compliance strategies. We keep clients informed about changes in tax laws, deadlines, and lodgement requirements to ensure our clients’ businesses stay compliant.
Analysing Payroll Obligations
QiBalance Bookkeeping can assess the impact of increases in national minimum wages, award rates, and superannuation contributions on the total employment costs of our clients. We can provide insights into employee leave entitlements and the financial implications of pay increases to help businesses manage payroll effectively.
Leveraging Analytical Reports
QiBalance Bookkeeping can use reports to generate data-driven analysis that gives you insight into how your business is running. We compare current performance to previous periods or to budgets, identifying trends and differences that can inform your decision-making and enhance your business strategy.
Delivering Finalised Accounts Insights
QiBalance Bookkeeping can use finalised accounts to identify clear indications of performance movements in sales, expenses, profits and wages. This information enables you to make strategic, informed choices that can drive your business operations and profitability.
Understanding the Breakeven Point
QiBalance Bookkeeping can explain the significance of the breakeven point, which is important for determining the sales or revenue needed to cover all costs and expenses. At the breakeven point, total contribution is equal to fixed cost, and neither a profit nor a loss is made. This understanding guides decisions around pricing, costs, and revenue targets to optimise business operations.
When There’s a Problem
If a significant drop in profit is identified that could lead to financial challenges, QiBalance Bookkeeping is able to take swift action. We can inform you when profits drop, and if appropriate can recommend consulting with a financial expert, such as an insolvency practitioner, to diagnose issues and develop recovery plans. This proactive approach helps your business stay resilient and adaptable in challenging times.
By leveraging the expertise and guidance of the bookkeepers at QiBalance Bookkeeping, you can effectively navigate increased business costs and secure the long-term financial success of your business.
The Small Business Restructuring (SBR) Process
The Small Business Restructuring (SBR) Process provides small businesses experiencing financial distress with a mechanism for reorganising and recovering from financial difficulties.
Simplified debt restructuring has been introduced to address some of the issues raised with voluntary administration, particularly for small businesses (SMEs). A small business restructuring practitioner oversees the debt restructuring, while the company’s directors remain in control of the business.
SBR Process Overview
An overview of the SBR Process is provided below.
Eligibility criteria: Small businesses seeking to use the SBR process must meet the eligibility criteria outlined in the legislation. Generally, businesses must be classified as small business entities with liabilities of less than $1 million.
Appointing a Small Business Restructuring Practitioner (SBRP): Once eligible, a small business can appoint an SBRP. These practitioners are registered professionals with expertise in restructuring and insolvency. They guide the business through the restructuring process and ensure compliance with legal requirements.
Developing a Restructuring Plan: The appointed SBRP collaborates with the business owner to develop a restructuring plan tailored to the business’s unique circumstances. This plan outlines proposed changes to operations, finances and structure, aimed at improving the business’s financial viability.
The Director-driven process framework gives directors more control over negotiating with creditors. This approach simplifies restructuring efforts and allows for more efficient resolution of financial challenges by enabling directors to take the lead in reaching agreements with creditors.
Creditor Involvement: During the restructuring process, creditors are notified of the business’s intention to restructure and have the opportunity to vote on the proposed restructuring plan. The plan must be approved by a majority of creditors in both number and credit value.
Implementation of the Plan: Upon approval, the restructuring plan is implemented. This may involve renegotiating contracts, downsizing operations, selling assets, or other measures aimed at improving the business’s financial position.
Monitoring and Compliance: The SBRP oversees the implementation of the restructuring plan and ensures compliance with the agreed-upon terms. They provide ongoing support and guidance to the business owner throughout the process.
Completion and Discharge: Once the restricting plan is successfully implemented and all obligations are fulfilled, the SBRP issues a certificate of discharge, formally concluding the SBRP Process. The business can then continue to operate with renewed financial stability.
By streamlining the restructuring process and facilitating early intervention, the SBR Process seeks to preserve jobs, safeguard livelihoods, and contribute to the resilience of the small business sector.
Businesses might turn to Small Business Restructuring (SBR) when facing tough financial times, such as big debts or falling sales. This process helps them get back on track by organising their debts and operations in a manageable way.
There are clear benefits to SBR: it eases debt load, helps improve cash management, and lets businesses negotiate new payment terms with creditors. It also gives struggling small businesses a shot at stability and growth. Additionally, it can save jobs and keep relationships with suppliers and customers intact, setting them up for success in the long run.
Source: Simplified debt restructuring: a factsheet for small business
Disclaimer: This blog post is a summary of a newsletter produced by the Institute of Certified Bookkeepers and distributed by members. All or any advice contained in this article is of a general nature only and may not apply to your individual business circumstances.
For specific advice relating to your specific situation, please contact your accountant or contact QiBalance Bookkeeping for further discussion.
The Institute of Certified Bookkeepers
Tel: 1300 856 181
Email: admin@icb.org.au
