The 2023 financial year came to an end some time ago. And the financial world will tell you should (and need) to plan for 2024. I am no different although the way I will tell you to plan for 2024 will be a bit different than other accountants. But I don’t believe in planning for an entire year. You plan continuously which is why you are getting this way after June 2023
Most accountants will teach you to do things that in theory is true and make sense. Except we do not live in a theoretical world – we live a practical world so I will tell you to operate practically not necessary what is great in theory.
Let me put it this way. In theory we all know we should eat less and exercise more. In practice we will stuff our mouths until our tummies explode. And then we will pretended we have exercised by walking to the convenience store to buy a tub of ice cream.
See what I mean.
You know you are probably OK when we do not eat so much that our tummy’s explode or walk to buy some milk instead of a buying a tube of ice cream.
So, this article is basically how you can eat enough to be full and not over indulge on the ice cream. This is because I know you are never going to follow the route to obtain a six pack.
1. Don’t bother with a budget – but be clear on what you need money for
I have found budgets never work really. I have tried them. My clients have tried them and the grand total of success is ….. drum roll…….. NIL. Yep never I ever seen a budget agree with reality. So why plan for something that is never going to be achieved.
Budgets work perfectly in a theory world, but never in a practical world.
But you need something to keep you on track. So, this is what I do.
- I add up the money that comes into my bank account. I take out a % to pay for my BAS and transfer to a separate Tax account.
- I work out the withholding tax & Superannuation for all wages and transfer that to a separate tax account.
- I have a % figure which is my profit and I take that out too. You see I decide what my profit is and take it out immediately.
- Whatever is left I know I can spend on my business – if I need to spend more than what is in the account I have a spending issue or need to generate more income than what I am currently generating. It is relatively easy to plan for regular costs such as wages, rent etc. The rest you know you can spend on ad hoc stuff if you need to.
If you stick to this the chances are
- You will always have money to pay the taxman
- The profits you wanted to make is transferred out before spending
- You can easily work out what you are spending your money on and knock out unnecessary expenses because if you do not you run out of money. This makes you look into spending and forces you to budget your spending.
2. Have a max of 5 goals
3. A 2 page plan
I have seen some serious business plans in my career. I have usually found that they are in pristine condition often bound and printed. If it is still in pristine condition after 3 months then you know it has not been opened since it was prepared. A business plan should be falling apart if printed as it has been used, checked and read so many times.
I appreciate we now keep plans on the cloud and this rarely crumbles but you get my point. Most are not used because they are complex, long winded and downright boring. But a simple 2 page plan can do wonders.
It needs to be simple:
- What is your mission?
- What is the business’s vision?
- What are our core values?
- What are our 5 goals?
- What are we going to do in next 90 days to meet our goals
That’s it. There are entire business books written on business plans but as I said it works in theory but rarely in practice.
4. Meet with Your Accountant!
Yeah I get it. Sitting with a boring grey accountant can’t be fun. But find one who is not and then see what happens. Because the good ones will help you work less, earn more and become wealthy.
But if you want them to help you do that then they need to know you, understand you but more importantly they need to meet with you regularly.
Let me put it to you this way. If you are serious about becoming fit, do you go to the gym once a year, come out hours later and say you do not need to do anything else for the next 12 months? You know that is not going to work.
In the same way if you want to work less, earn more and become wealthy you are not going to get there is you see your accountant once or twice a year.
So, if you want to really move in the next 12 months this is the way to do it. Everything else is just theory, noise and well BS.