Understanding your financials: How getting to know your money better will elevate your business

As businesses across Australia look to recover financially from the whirlwind year that was 2020, understanding your organisation’s finances is imperative for long term success. 

For our recent webinar, SmartCompany and MYOB brought together a panel of experts to unpack the steps you can take to better understand your business finances.

Hosted by SmartCompany editor Eloise Keating, the three-person panel covered a wide range of industries and experience. 

Amy Chen, owner of Amy Chen Coaching and Consulting, brought her experience working with businesses of all sizes to the session. Caroline Rowlinson shared anecdotes from her role as chief financial officer at MYOB and Julien Moussi, director at Only Hospitality Group, spoke about his own experiences operating and expanding his businesses during the pandemic with the help of strong financial planning. 

Watch the full webinar today to digest the panel’s best insight into small business trends, strategies and resources and get smart about your finances this year.

Understand your data to help your money grow 

Chen outlines the first step she advises business owners to take on their journey to understanding their finances.

“Data is your friend,” she says. 

Looking over what your data is saying in combination with what your own instincts are telling you is a key step in moving in the right direction, according to Chen. 

“Your instincts are going to play a certain role in that. But, you need to be backed up by data.

“Towards the start of the pandemic, I had a lot of people come to me really uncertain. They knew things were bad. The first step we took was to have a look at what their numbers were saying.” 

Looking at the data and making an informed decision was a strategy used by Only Hospitality Group in 2020 as they shifted the business to take-away only.

“We found pivoting to take-away and moving to an online store, we were able to continue moving ahead,” says Moussi.

“After looking at the data and making the decision from there, we were still able to open nine stores across Australia in 2020. It was very scary, but I’m really happy and proud of our team for what we achieved.”

Looking at data may help businesses better understand how their clients are traveling financially, and how best to assist their needs. This was the case for MYOB, who surveyed their clients to see how they had pivoted during the pandemic to survive financially.

Rowlinson says while things were difficult for MYOB’s clients during the pandemic, the data heading into 2021 shows positive trends.

“There is a more optimistic feeling coming into 2021 from a lot of our businesses,” she says.

“53% are saying that they expect things to improve. All signs are positive in terms of people having put 2020 behind them, pivoting their business models and better utilising technology, finding different ways to sell and survive.” 

Taking control of your budget 

When considering exactly what to do with your money once you’ve analysed your data, Moussi believes being positive and aggressive with your budget can help propel a business into a strong position. 

“In terms of broad planning, being positive is really important with decision making,” he says.

“I’m not saying be reckless, but I think not making decisions is the worst decision.” 

Rowlinson echoes these sentiments, adding that comparing budgets to non-pandemic years is a good way to get a grip on how to best use your budget. 

“I think if you’re new to budgeting or it scares you, I think one of the easiest things to do is look at previous years,” she continues. 

“In a non pandemic 2020 world, looking at the last year is often a reasonably good proxy for the year ahead if you’re wanting to start somewhere.” 

In terms of long term budget planning Chen said having a clear vision of what you’re wanting to achieve while not being afraid to make big moves is crucial. 

“Let’s look at what you’ve done and let’s look at where you want to go,” she explained. “Unless you stretch yourself, you’re not going to achieve more than whatever goal that you set, and if you’re really conservative, you’re not going to go anywhere.”

NOW READ: Empowering SME owners at tax time: Financial experts offer four tips to smash EOFY