By Rachel Harris, above, founder of @accountant_she
The practice of setting goals to mark the new year has become virtually universal; it’s almost impossible to have a conversation in the first week of January without someone asking what your resolution for the year ahead is. But how often does someone ask you the same question in April?
For much of the general public, April is simply the gateway to longer days and less rain. But for small business owners, April marks a critical time: the start of the new tax year.
As a small business owner myself, and also as an accountant who supports other SME owners, I know all too well the stresses and frustrations that can come from the tax reporting season. For me, numbers are my happy place but for so many that choose to launch their own business, the numbers are the worst part. In fact, new research from Intuit QuickBooks recently revealed that for 33% of SME owners, managing this period is their least favourite part of running a business.
Yet, despite the stress often associated with this time, the New Tax Year is actually an excellent opportunity for small business owners to carve out their path to success.
Financial wellbeing all year long
When it comes to the end of the financial year, many of the businesses that I work with express an immediate concern around reporting and compliance. Before they’ve even told me any of the numbers, they tell me how they feel about it – and almost always, the answer is: worried.
Being tax compliant is of course a vital process for small business owners, but it can be a mistake to think of compliance in isolation. This isn’t something to focus on just at the end of the tax year when attempting to work through year end reports and balance accounts; rather, it is something to factor into your financial plans throughout the year.
QuickBooks’s study found that 30% of small business owners find preparing for the start of the new tax year the most stressful and high-pressure time of year in running their business, second only to the Christmas period! And the impact of this stress cannot be overstated: one in six small business owners lose sleep from the end of tax year process. It is not only for the wellbeing of the business but also for the wellbeing of the owner that financials need to be prepared for and planned for – not just during the reporting period, but also throughout the year.
Setting a business up for success through informed planning is one of the best ways that a business owner can grant themselves peace of mind when working through challenging times. But how can you be sure your plans reflect the realities of your business?
Well, this brings us right back to the New Tax Year and those “new year” resolutions. One of the best ways a small business can plan for the next financial year is by updating their business plans with all the information and data insights financial software reveals through year end reporting, and looking at how they can invest back into their business. Creating new goals from accurate data establishes goal posts to aim for as well as guideposts to keep track of progress.
I realise that for a lot of people this feels like an “easier said than done” situation. When managing the reporting alone can feel overwhelming, the idea of interpreting the financial data and translating it into a business plan may as well be speaking in a foreign language. But that is okay – it is not a weakness to feel uncomfortable with numbers. Recognising areas where you could benefit from expert guidance and bring in the support you need, is a vital skill for business owners.
When I speak to my clients, the source of inspiration behind starting their business is very rarely the numbers. From artistic creativity, to spotting a key gap in the market, to creating a successful social media platform – it is truly amazing to hear how each person’s spark that lit their business drive comes from a different origin.
So when your strengths lie in a field outside of financial management, you shouldn’t feel obliged to struggle through the numbers alone. Be it through hiring an accountant or employing new financial management software, there are ways that small business owners can reinforce the financial preparedness of the business without it being a drain on their own time and mental capacity.
Plan with your strengths
Embedding some financial support can be a great way to feel prepared and supported throughout the year. However, that doesn’t mean you have to hand over the role of business planning to the financial pros.
The best trick to setting effective business goals is to start where you feel comfortable. Forget about what the numbers say for now and ask yourself what it is you want to achieve this financial year. Is it more sales? To create more? To gain new followers? Choose a goal in a metric that you love and understand. This is now your business goal. The insights learned from the year end reporting process can then be used to shed light on what the numbers required to meet this goal would look like and provide a framework for how you expect to progress throughout the year.
While preparations for the new tax year are often complex and time consuming, for businesses and accountants alike, it also offers a unique opportunity to delve deep into the inner workings of your business and extract data-backed insights to build your goals for the year to come. From there you’ll need to think about best practice for keeping to these goals and building impactful habits – but first it all starts with your goals. Your New Tax Year Resolutions; to inspire growth and strive towards throughout the year.