Year-end is a good time to check the financial health of your business. Reviewing your financial statements for the year will help you identify key areas of weakness or potential threats to your business. Using financial ratios such as liquidity ratios, solvency ratios, profitability ratios and return on investment ratios, and comparing these ratios and indicators with prior year figures and similar businesses in your industry will ensure that you start the new year with complete transparency over all key issues within your business.

After doing a financial health check of your business, you should use the end of the financial year as a time to reconsider the strategic direction of your business. This should involve an analysis of your market and predictions on future developments in your market. It is important that your strategic plan of the business reflects the business owners objectives for the business and those areas that need focus following the financial health check. To bring your strategic plan to life, it should include a work plan, responsibilities and due dates and those should be monitored throughout the coming year

You will need to allocate resources to achieve your strategic plan therefore your budget will need to align with your strategic plan. If the budget shows that a particular objective in your strategic plan is not affordable, you may either need to seek more resources for that objective or modify your strategic plan.

In setting your budget, you should list your assumptions. To stress test your business, you can amend those assumptions to see what it does to your financial position. An example could include a 10 to 20 per cent reduction in sales or a 20 per cent increase in fuel costs.

One of the most important aspects to a budget is regular monitoring against actual results and it is wise to allocate time to reviewing both actual and budget figures to ensure that your strategic objectives set for the financial year will be met.

One of the most significant problems faced by business is poor cash flow. A cash flow forecast is therefore a fundamental part of good business practice. Ensure that your cash-flow forecast aligns with your budget and is monitored regularly.

Issues impacting the profitability of your business may have come to light in your health check, review of your strategic plan and drafting your budget. Other issues impacting the profitability may also be found by reviewing staff productivity (including staff rostering), your production process, your supply chain, how you are using your business assets, the focus of your promotional activity and of course, costs.

You should also review any discounts that are offered, ways to increase sales of your most profitable products or services, reducing input costs and seek advice on tax effective expenditures just to name a few.

All businesses need finance to grow. Finance can be provided from debt, equity and internally generated cash flow. Depending on what you may need the finance for – for example asset purchase versus stock purchases – will determine the type of finance you should access. It is most favourable to have surplus finance available to cover business contingencies and possibly take advantage of new opportunities should they arise during the year.

Where you are seeking finance from a lending institution you should maintain a good ongoing relationship and year end is the perfect time to meet and discuss the business plans for the coming year. You may find that they will offer further assistance with your future plans.

While it may seem obvious, it is important that your marketing plan is focused on achieving key objectives, particularly improving your cash position. Ideas for better aligning your marketing plan with your business needs include:

• focusing on sales that have a high margin and bring in cash quickly. Well placed visual display such as in-store signs and posters can be a great tool to highlight a special or high margin product.
• rewarding staff for sales of products with a higher margin
• only paying staff commission when payment is received
• measuring the success of each promotional activity or campaign so as to gauge its efficiency
• focusing on encouraging customers to pay at the point of purchase or to pay as early as possible.

Whether your business is facing good times or bad, it is important to always have appropriate risk management strategies in place.  Important risks to be aware of and to seek to manage include:

• relying too heavily on a small number of major customers. This can in part be managed through increasing the number of your customers and helping  smaller customers to grow
• relying too heavily on one supplier. This can in part be managed through identify potential alternative suppliers
• selling on credit. This can in part be managed through subjecting potential customers to credit checks, limiting the amount of credit that a customer can have, following up on payment before the due date and stop supplying customers if they are late payers.
• fraud. This can be managed in part through having in place internal controls in high risk areas such as cash handling, making sure those internal controls are enforced and breaches are acted upon promptly.

Don't turn a blind eye to new opportunities that are consistent with your strategic direction and can be properly funded.

Businesses that are well run use these ideas during both the good times and bad in order to maximise their profits, grow and minimise risk. Using them now can help your business to emerge in a much improved condition, which will likely lead to long-term growth.