business planning  finance 
Taking a few days out to review the past year’s successes and failures can save you a fortune – or help make one – in the year to come We are now into a new financial year and many firms should have draft annual accounts and have a good idea as to how last year turned out. That’s great. File your tax return, pay your tax and get on with this year. If that is how you run your business then you are missing out on the best opportunity you will have to make some plans, some progress and some profits.

It is the best time of the year for your annual review and it is an opportunity missed by too many management types who get too busy and don’t see the woods for the trees.

I remember as a junior accounting clerk being puzzled when the partner I worked for used to leave the office for a couple of days each year to attend a client’s meeting of directors. He was not a director but was always asked to this one meeting which was their annual review.

I made some enquiries and found that at that meeting each year they reviewed everything. Looked at what went right and why. Considered what went wrong and why and looked into all matters likely to influence the future activities of that firm.

For me it was a real eye opener and an excellent lesson in business practice and management. I actually prefer to keep a constant lookout rather than make it an annual event but keeping a constant lookout should be one of the ongoing benefits from starting the practice of holding an annual review.

If you don’t believe me then have a look at the circumstances next time there is a collision at sea. I am sure you will find the parties [ management ] were busy below decks [ working away ] while the ship [ business ] was on automatic pilot and so were not aware of the looming crisis. In fact you can learn valuable lessons from sailing and the sea. I suspect however that you would have trouble convincing Inland Revenue that the operation of your yacht was a legitimate business expense.

In the April issue of New Zealand Printer I dealt with a lot of key internal financial measures so there is no point in covering them again so soon. They should though be part of your annual and ongoing review.

It is easy to overlook the external factors which are outside your control but which may be of greater importance for your future than anything you do inside the business. Let’s look at a few topics which seriously affect your business. Any list would have to include the following.

The Economy
Is it on the way up or on the way down and how will any changes affect your business? Will a tightening of credit and an increase in interest rates sink you?

The Exchange Rate
If the N Z $ increases in value then imports become cheaper. What will that do to or for your business? Import substitution is a very important business influence these days and many could lose basic business to overseas suppliers. The reverse can happen if the dollar drops and imports become more expensive. It could bring opportunities for you.

Trade Agreements
The signing of a trade agreement is likely to be bad news if the other country is a low cost one and operating in your industry. Keep in touch with industry matters and if you don’t like what you see happening then speak out and make your views public. If you don’t then no one else will be concerned about your position.

Competition
Keep an eye on the opposition to see what they are up to. Are there mergers in the wind that could create problems for you? If there are then how do you plan to cope?

Technology
The one constant factor here is change. You may not have to invest in the latest gear but you certainly do need to know what is new and what is soon to appear. How will new processes affect your business and your present plant and equipment?

I have listed a few of the external matters which you need to keep an eye on and which could be good or bad or fatal for your business. I don’t see them as problems, more as opportunities but if you ignore them then for certain they will be negatives.

Put some time aside, get some independent advisors along and have a long hard look at where you and your industry are heading. Be like the boy scouts and be prepared.