Bring Your Costs Down
This is always a tricky one as often business owners feel out of control of their costs.
In every business there is always room for efficiency gains which in turn lead to decreases in cost. This will then improve your margin and profit.
Where are these efficiencies hiding in your business? Does someone need to drive 40minutes to complete a 30minute job? Can you purchase in bulk to receive a discount?
Decreasing costs requires a dive into your current costs and analysing where gains could be made with different solutions. The same with your processes.
Be careful not to ‘cut cost’ and mistake this for decreasing the value you are providing to your customer.
Unlock the value of your business by reviewing your costs to help your business grow.
So #whatsNext?
The above should seem easy enough and probably make a lot of sense but to benefit, you need to commit and make some time to work on your business to discover some of the opportunities that are sitting right in front of you.
If you need help to do this, we’d love to be a part of that. Contact Us and we can help you execute on what may only remain as thoughts.
What ever you choose to do, we hope you have your best financial year to date.
![From what we have seen, business owners SHOULD NOT blindly pay their May tax without advice as to whether their profitability warrants it. Why? Because, 1/3rd of our clients won’t be paying tax in May. Accountants are on the front line of the economy and we have real time financial data. At the time of writing this, it is less than 10 days after the end of the financial year, and we’ve mostly finished reviewing the profitability of a good cross-section of the NZ economy: construction, engineering, marketing, e-commerce, services. All sorts. Here’s some tax insight that might help you understand what’s happening in the economy. AND, hopefully understand how tax works for many of you businesses owners. For some background, a lot of NZ SME’s pay tax in August, January and May to stay current with tax. This is loosely based on their profitability of the year before (2023FY ended 31/3/2023). This means that when they get their accounts done, they have hopefully cleared taxes on profits for the current financial year (2024FY ended 31/3/2024). We don't just tell our clients to pay tax based on last year. Every year is different. We review our clients' profitability throughout the year and by this final payment on the 7th of May, we have a really clear insight as to how profitable the financial year was. The 2 common themes are: 🔸 A lot of businesses don’t even need to make a payment in May because their profitability will be lower than last financial year, so they have less tax to pay. They've paid enough tax in August & January. 🔸 Some of those who do need to pay tax (even at a higher rate) are struggling to collect the cash (income from the work they’ve done) so they are battling to see how they can make the payment.
One of the tricky things for a growing business is that IF they don’t collect the money for the work they do in a timely manner, they will always struggle to pay their tax. Why? Because they’ve done the work, sent the invoice which recognises revenue and profit, BUT they haven’t turned it into cash in their business. [Continued in comments...]](https://nextadvisory.nz/wp-content/plugins/instagram-feed/img/placeholder.png)
