Strategies to increase profit

Whether you are struggling to keep up a steady income or wanting to grow your business, increasing sales revenue is often a central goal for businesses. Here are some strategies you can consider when looking to improve profit:

Redesign operations for maximum efficiency:
If you really look at the operation processes of your business, you’ll often find that there are certain systems and routines in place that may not be necessary. Try to eliminate the tasks and activities that do not make valuable contributions to the business. Look for any operation processes that can be streamlined to maximise efficiency and save time.

Increase marketing efforts:
Oftentimes, you’re going to have to spend money to make money. Many businesses benefit from investing in a strong marketing campaign or even looking for cost-effective marketing opportunities on social media. Sharing regular updates on social media about your business, pictures of your products or interesting content your followers will like is a great way to keep your business in people’s minds and build a rapport with your customers.

Take care of existing customers:
While it is easy to get carried away with getting as many new customers and followers as you can, don’t forget that it is often easier and cheaper to make a sale to an existing customer than a new customer who you have not developed a relationship with yet. Existing customers will have more trust in your products or services if they have already had a positive experience with your business. Put effort into maintaining a good relationship with existing customers and focus on cross-selling and upselling products and services to them.

Are you prone to emotional overspending? 

Online shopping is available 24/7, making it easy to indulge in retail therapy whenever you’re feeling low. With many consumers using PayPal or saving their credit card details on Google, spending money is so easy that it may not feel like a big deal when clicking the ‘order’ button. While treating yourself every once in a while is normal, making poor and impulsive spending decisions often occurs when you’re in a bad frame of mind.

Here are some ways you can deal with comfort spending:

• Get into the habit of doing a different activity when you’re bored or stressed. There are many hobbies that would benefit your mental and physical health more than shopping, such as taking a walk or talking to a friend.
• Give yourself some financial freedom. If you immediately implement an over-restrictive budget, you might be tempted to splurge after feeling deprived. Try to find a balance between treating yourself every now and comfort spending as a habit.
• Recognise your comfort spending behaviour and set a budget for it, instead of eating into your savings
• Avoid using a credit card, or if you do, make sure you pay the balance off in full each month.

Start saving for the Christmas period early

If shopping centres aren’t even putting up their Christmas decorations yet, then the holiday period may seem to be a concern of the distant future. However, the season has a tendency to creep up on people and can often come with financial burdens. Planning your holiday expenses early can cut out one of the biggest stresses of the season and allow you to focus on enjoying the festivities and spending time with your loved ones.

If you’re worried you’re going to be tempted to dip into your savings, it can be a good idea to set up a Christmas saver account. This is typically done at the start of the year and is offered by some banks. You can make deposits throughout the year, but can only withdraw from the account when the festive season arrives, usually around 1 December. While interest is offered on these account savings, it should be noted that you can generally find better interest rates with other savings accounts such as a bonus saver or online savings account.

Alternatively, you can manually set aside an amount weekly or fortnightly in the months leading up to the holiday period. Setting up an excel sheet can help keep track of this, and can also be used to categorise different budgets for various needs (gifts, travel, food etc.). This can help you plan ahead and estimate how much you will need to cover the cost of the holidays, saving you from the bite of unexpected expenses and keeping you in control of your finances.

If you’ve left things a little late, it can help to cut out a few luxuries to save some extra money. Whether it’s having a cheap night in, or skipping a coffee run every now and then, a little can go a long way.

What you should know about using cryptocurrencies

In an increasingly technologically dependent age, it can be useful to keep up with new forms of currencies in the digital space. Cryptocurrency is internet-based, digital money that is not controlled by any central authority. Currently, the most prominent cryptocurrency is Bitcoin, which has a market capitalization of over 155 billion U.S. dollars.

How do you buy cryptocurrencies?
Ensure a cryptocurrency is legitimate and trustworthy by researching before you buy. Most of the time, it is a good idea to choose a popular one that is already widely used and trusted by other crypto users, such as Bitcoin. There are a number of popular websites and apps that simplify the process of buying cryptocurrencies. Once you have purchased cryptocurrencies, you can store them in a digital crypto wallet for security and easy accessibility.

Benefits:

• Fast: Transaction speeds are usually fast, making things like paying bills and shopping online easier.
• Low Fees: There are generally minimal to no transaction fees in crypto exchanges, so using cryptocurrencies can be a good way to avoid online banking fees and charges.
• Anonymity: Making transactions online with traditional banking methods generally requires information such as your name, credit card number, phone number and address. However, cryptocurrencies allow you to be anonymous in these transactions by only showing your crypto ID or a nickname of your choosing.

Drawbacks:

• Security risks: While it is harder and more technical to steal digital money as opposed to physical cash, cryptocurrencies are still susceptible to skilled hackers and scams. Because cryptocurrencies are decentralised with no authoritative control, any loss of cryptocurrency due to theft or scams cannot be recovered.
• Value instability: Cryptocurrencies tend to fluctuate in price and value, which can reduce their reliability as you can never be certain how much they will be worth the next day.

• Lack of merchants: Many companies have not taken the step to adopt cryptocurrencies as a form of payment, so it can lack usefulness in everyday transactions.

Spring clean your finances

When it comes to your money, whether it be loans, insurance, savings or superannuation, having a ‘set and forget’ attitude can be detrimental to your long term finances. Checking in on the different aspects that make up your finances every now and then to see if they need freshening up is a good way to ensure you are getting the most out of your money.

Your budget:
Since a person’s income and expenses will change over time, making sure your budget is up to date can help keep track of your spending and calculate how long it will take to reach your savings goal. This is also impacted more by day to day and surprise expenses you may incur so regular assessment will better your planning.

Your savings:
Spring is the perfect time to reconsider the type of savings product you currently have and whether the return you receive on your savings is at the best rate out there. For those with a term deposit that is about to mature, consider whether there is another savings account that pays higher interest or if another term deposit is a better option.

Your superannuation:
To get to know your superannuation better this Spring, find your latest super statement and check the following:

• If you have multiple super accounts: consolidating all of your super accounts to just one will save you fees and make it easier to keep track of.
• Investment options: consider the best investment option for each stage of life when choosing super investments. How close an individual is to retirement can affect how aggressive or conservative they want their investment strategy.
• Contributions: consider how much you are currently contributing to your super; the sooner you start contributing extra, the less you have to give up each week to make a difference in the long-term.

Short-term vs long-term financing

Maintaining healthy cash flow can be challenging; between ongoing expenses and bills, poor cash flow can severely impact your customers, staff and bottom line. Business owners need to understand the differences between short and long-term financing when developing a cash flow strategy.

There are various sources of financing available, with each being useful for different situations. Choosing the right source and mix is key for good cash flow, with financing options often being classified into two categories based on time period: short-term and long-term. To find the right plan for you, determine your needs and then match a financing option to meet those needs.

Short-term financing:
Short term financing, or working capital financing, looks at needs that arise in relation to financing current assets – for a period of less than one year. Working capital is the funds that are used in the day-to-day trading operations of a business. Short-term financing can help you to pay suppliers, increase inventory and cover expenses when you do not have sufficient cash on hand.

Long-term financing:
Long-term financing options can help you invest in overall improvements to your business, for a period of more than 5 years. Capital expenditures, such as upgrading equipment, buying additional vehicles and renovating are funded using long-term sources of finance.

Getting on top of cash flow

Managing cash flow is critical to the success of a small business. While it is necessary to be profitable, your profit is a number that shows up on your accounts at the end of the year whereas your cash is the money you have in the bank. By incorporating the following tricks, you can help to maintain the flow of money coming in and keep the business running smoothly.

Prepare a cash flow projection:
There are always unforeseen challenges or changes in the marketplace. While you won’t always be able to predict or forecast these, you can gain a better grasp on industry trends and patterns. Drawing up a cash flow projection can help you plan the ups and downs of your spending. In your projection, be sure to include:

• Cash receipts, including income from sales and income from financing.
• Cash disbursements, including all expenses (cost of goods, operating expenses, loan payments, income tax payments, etc).
• Net cash flow — opening cash balance plus receipts, minus disbursements.
• Ending cash balance.

Generate new business:
The business is going well; you’re meeting your targets, money is coming in, and you’re happy. This is not a time to relax, it is a time to be seeking out and generating more business. Cash flow may keep your business alive, but sales are what keeps cash flow alive. Keep expanding and preparing your business to cater for growth. This will help prevent you from chasing your tail when times are tough.

Strategies for achieving your financial goals

Setting financial goals can be a great way to ensure that you’re always in control of your money. However, we all have frivolous spending habits that can derail us from achieving these goals. With perseverance and dedication, many of these habits can be changed over time. Here are some strategies that you can implement to set your plans in place and help to achieve these financial goals.

Use your budget:
Building a basic budget can provide you with a snapshot of your current financial situation, your financial health and your spending habits. It’s difficult to know how you will reach your financial goals if you don’t understand where you stand financially. By using a budget, you can work out how much is required to save each month for your goal, monitor your spending habits and have a better picture of whether your goal is attainable.

Sacrifice:
Incorporating frugal spending habits like avoiding that daily takeaway coffee, cutting back on your paid subscriptions or any other unnecessary expenses can help you save faster. You may challenge yourself to stop spending money in specific categories for a small period to work out where it will be feasible to cut costs.

Reduce your debt:
Debt can be one of the major obstacles when it comes to your savings. Don’t let your debt overwhelm you, but identify where it is and implement strategies to help pay it off faster. These tactics may be to cut expenses or to shift higher-interest loans to a single lower-interest loan if possible.

Using your tax return wisely

Getting your tax refund back is exciting, but as tempting as it is to splurge, consider other ways you can put that money to good use. It is easy to get caught treating your return as extra money when you shouldn’t see it any differently than your regular paycheck. Give the money a purpose by thinking about your personal financial situation and determining your needs.

Emergency fund:
An emergency fund can make all the difference if a difficult financial situation comes up, acting as a backup in the case of an emergency such as losing your job or medical costs. Building an emergency fund with enough money to cover at least three months worth of expenses is a good starting point. Make sure the money is added to a high-interest savings account to utilise compound interest. If you are contributing regularly to this fund, adding money from your tax return can boost it above schedule.

Make debt repayments:
With a bit more money at your disposal, now is the time to make repayments on debts you may have. Start with the higher interest debts and work down, your interest repayments will drop when you lower your outstanding balance. These debts can be things like credit cards, personal loans, outstanding bills or mortgage repayments.

What to consider in an employee share scheme

Employee share schemes (ESS) provide employees with a financial share in the organisation that they work for. They can be offered by organisations as a way to grow their business by attracting, retaining and motivating their employees.

How they work:
ESS gives employees shares in the organisation they work for at a discounted price, and the opportunity to purchase shares in the future. The discount refers to the difference between the market value of the ESS interests, and the amount paid by the employee to acquire them. This discount forms part of an employee’s assessable income, and will need to be included in their tax return.

Employee share purchase plans offer eligible employees the chance to purchase shares from their employer, often through a loan. The shares can be paid through a salary sacrifice plan over a set period, or by using the dividends received on the shares. Employees who are on a higher income may be eligible to receive shares as a performance bonus or as a form of remuneration instead of receiving a higher salary.

Possible limitations:
There may be restrictions on when employees can buy, sell and access their shares through an organisation’s share scheme. For example, employees may have to get permission from the business before buying or selling their shares, or there could be an annual window during which shares can be bought or sold.

What to consider:
Employees should take time to research the organisation they are considering participating in an ESS with. This will help determine how well the scheme is doing, and whether the shares are likely to increase in value. To avoid losing a large part of your investment portfolio, consider purchasing shares that are part of a diversified investment plan.

Before entering into an employee share scheme, consider seeking professional financial advice that is specific to your circumstances.