Staying ‘out the red’

In light of RedFeb and our ongoing recognition of those affected by heart disease, we’d also like to highlight another big ‘red’ you as a business may need to look out for.

That is…’staying out of the red’.

What do we mean by this?

In the accounting industry, being ‘in the red’ refers to a business that may be experiencing financial loss for a certain period. It is a zone that businesses may find themselves in from time to time, but they should not dabble for too long in this zone and should actively seek ways to move themselves out.

But why are we highlighting this now?

At the end of 2021, the Xero Small Business Index indicated that small business performance was improving once again for the first time since July 2021. With the easing of restrictions across the country, businesses hindered by the lockdowns grasped the opportunity to get back out there and embrace their first signs of freedom.

With more people out and about and spending more time and money in their local communities, especially over the bustling months leading up to the Christmas period, businesses finished the year off with a bang.

However, with the excitement of the Christmas and New Year’s period behind us, many businesses may be feeling a lag in profits. This is normal!

During February and March certain industries, notably the food and retail industries, tend to experience a natural downturn in sales…pushing them closer and closer to the oh-so-despised ‘red zone’.

Navigating this quiet period is normal, however, it is essential that you take actions to keep your business from the ‘red zone’ or prevent your business from lingering there for too long.

Our red-hot tips and advice for staying ‘out of the red’

Seek advice from professionals

Our WSC Group team has access to a wealth of knowledge and experience in all your business endeavours, whether it be acquiring, running, or selling a business. We can help you develop an effective strategy based on the strong understanding of markets, regulation, and business fundamentals. We can assist in budget reporting, business planning, and can focus on long-term strategies for your business success.

Have a business plan

If you started driving towards a destination without knowing where you were heading, or which direction you’d turn next, would you be feeling confident?

Manoeuvring around the challenges of a business is extremely difficult when you must think on the spot and have no set plan on how to deal with the situations.

Writing a business plan is an essential tool for guiding your decision when you do run into these challenges. It is your roadmap to success. By creating a plan, you can articulate your business goals, break them down into small steps, and outline the resources required to achieve them. You can refer back to your business plan periodically to guide changes and opportunities or amend your strategy should you face unexpected hurdles.

Manage your cashflow

Keep track of your cashflow using a cashflow statement. This lists any incoming or outgoing cash items for the next 12-months, allowing you to plan ahead. You can also try improving your cashflow by chasing up on outstanding payments or reducing expenses.

Reassess, reduce, or rearrange your expenses

Reduce or rearrange expenses to cut back during slow periods. This can be actions as small as changing how much stock you buy or switching to cheaper supplies or services.

Marketing

A bit of a change of pace here, but slow periods may open opportunities to spend more time on marketing. By getting your messages out there, you can continue to stay in touch base with your clients. Your marketing strategy doesn’t have to be extravagant by any means, simply investing in social media can be a great and cheap option for sharing your brand messages and your products/services.

There’s no need to raise alarm bells just yet!

There are many ways to keep your business on track and stay ‘out the red’ and, by seeking out advice, you don’t need to deal with your struggles alone.

We are expert business advisors and our experienced team are ready to help.

If you’d like to get in touch to learn some more on what WSC Group can over you, please get in touch on 1300 365 125 or email us at info@wscgroup.com.au.