Getting Ready for 2012

Some of the headlines in TV news bulletins have issued grim warnings as to what might occur in 2012 with some commentators claiming that the emerging financial positions are the worst in 25 years.

Australia will not be able to totally escape problems from the ongoing mess in Europe which, when coupled with continuing problems in America and the “two-speed” economy in Australia, highlights the necessity for all businesses to be doing some planning now, to ensure business survival in 2012. 

Some of the things to think about:

• Have you “stress tested” your business (refer article in November issue)?  You should review your cash management control procedures, particularly relating to: debtors, work in progress and compliance with bank covenants on any financial facility that the bank has made available to you.

• Be careful about an over-reliance on bank overdraft because banks have been known to suddenly withdraw overdraft facilities with little warning to the small business.  If it is possible to arrange for a loan to incorporate a bank overdraft facility then this might be a better approach to securing ongoing bank facilities.

• Have you thought about the carbon tax issues?  The effects of these on your business and the changes you need to make to minimise the effect of the flow through from the carbon tax.

• It is probably a good time to undertake a wastage review – could costs be reduced relative to electricity, gas usage, travel expenses and telephone?

• Difficult trading conditions should not stop small business operators from maintaining a good relationship with their team.  To survive in difficult times, small businesses need the best possible team they can employ. 

Our recommendation is for all businesses to prepare Budgets and Cashflow Forecasts for the likely trading scenario in 2012 and have a meeting with your bank in relation to the facilities required.

If you would like to have a discussion with us relative to any aspect of Getting Ready for 2012, please do not hesitate to contact us.