The close of the 2012 tax year provides you with useful figures to benchmark and assess your business performance – use this data to implement strategies and improve your results for the 2013 tax year.
It’s never too early, or too late, to start planning ahead. As the financial year comes to a close, now is as good a time as any to reflect on business operations and find ways to work smarter.
In fact, with up-to-date, accurate financial information readily available, it’s possibly the best time to compare your 2012 tax year performance against previous years’ data. This allows you to spot both positive and negative trends and plan accordingly.
Build on positive trends
Look for areas where your business is doing well – and then look for ways to do even better to make the most of your competitive advantage or market conditions. If your sales peak in summer, or winter, look for ways to maximise sales and revenue in these peak periods.
If you’ve brought in a new product that correctly anticipates a market trend and sales are going well, find ways to capitalise on this as demand grows. Can you add more products to capture a larger share of a growing market, or anticipate user demand again and add new features?
If your gross profit margin has improved year-on-year, can you continue the trend in 2013 with a small increase in prices, or by buying in bulk, sourcing new suppliers or trying other products to reduce your cost of sales?
Minimise the negative trends
Look to minimise, or even negate, those negative trends. If your sales cycle has a traditional slump in winter, or after Christmas, look for ways to increase your turnover during this period. Can you appeal to a different market segment by offering off-peak specials or package deals? Can you increase sales by offering free lessons – such as a free casting clinic with every trout rod sold?
Similarly, can you reduce your sales troughs by introducing new products that will sell in your slow season? If most of your profit comes from ice cream sales in summer, can you boost winter sales by selling hot chocolate? Look for your business equivalent to help minimise your sales troughs.
If net profit is down year-on-year, look for ways to increase sales, reduce overheads and fixed costs, or to reduce your input and running costs. Explore ways to operate more efficiently – whether you’ve had a bumper 2012 or struggled through the year, it will all help to improve your 2013 bottom line.
Update your business plan
The financial year-end is a good time to look back over the year and review your progress relative to your business plan – or to write up a business plan, if you don’t have one. It’s relatively easy to get side-tracked by a new idea or opportunity, so you’ll want to assess if you’re on track to achieve your business goals and ensure you’re not diversifying when your goal is to specialise in a niche market, for example.
This is also an opportunity to assess whether your goals and plans are still valid. You might find market conditions or trends have changed, or that you’ve uncovered a new opportunity that you would like to explore. Schedule some time to review your plans and work strategically for the 2013 tax year.