At Kreston Stanley Williamson, we believe that financial awareness is key to long-term success. In a recent survey conducted by Allianz, 26% Australians have low financial literacy, which costs them over $7,000 per year. This lack of financial understanding often leads to costly mistakes and missed opportunities. The survey also revealed that Australian households tend to rely on financial advice from family and friends rather seeking guidance from experienced financial advisors. This can further worsen financial difficulties, as well-intentioned advice may not always align with the best practices.
On this Financial Awareness Day, we encourage business owners to take a step back and assess their financial practices. Understanding and managing your finances effectively is not just a yearly exercise; it is an ongoing process that drives growth, stability, and peace.
Why Financial Awareness Matters
Financial awareness means having a clear understanding of your business’s financial health. It is about knowing where you stand today, setting realistic goals for the future, and being prepared for whatever challenges may come your way. Without financial awareness, even the most promising businesses can struggle to attain their full potential.
Here are some key areas to focus on:
- Regular Cash Flow Monitoring – Cash flow is the lifeblood of any business. Regular monitoring allows you to determine trends, anticipate shortfalls, and make informed decisions. Whether it is improving invoicing practices or managing expenses, maintaining your cash flow is essential to maintain operational stability.
- Strategic Budgeting – A well-planned budget is a guide for your business’s financial journey. It helps you allocate resources efficiently, manage unexpected costs, and ensure that your spending is aligned with your objectives. Regularly reviewing and adjusting your budget in response to changing circumstances is a habit that can reduce your business’s financial burden.
- Proactive Tax Planning – Tax obligations can significantly affect your financial results. Proactive tax planning helps you stay compliant while making the most of available deductions and credits. It is about working smarter, not hard, to manage your tax obligations effectively.
- Debt Management – Debt can be a useful tool for growth, but it must be managed wisely. Understanding the terms of your debt, prioritising repayments, and avoiding unnecessary borrowing are key to maintaining financial health. Effective debt management helps you keep control of your finances and reduces the risk of financial strain.
- Setting Achievable Financial Goals – Financial goals provide direction for your business. Whether it is expanding operations, increasing profitability, or preparing for retirement, setting clear, achievable goals is essential. Regularly revisiting these goals and adjusting them as needed ensures that your business stays on track for success.
Taking the Next Steps
At Kreston Stanley Williamson, we offer a complete business health check to help you assess and improve your financial practices. This comprehensive assessment helps identify priorities and areas needing attention. You will receive a simple-to-understand report that outlines recommended changes and serves as a blueprint for planning your business. Our team of experts is here to guide you through every stage of your business cycle, from managing day-to-day finances to preparing for long-term success.
On this Financial Awareness Day, take the opportunity to review your financial practices and identify areas for improvement. For more information on our business health check, visit our Business Advisory page or contact us directly.
Author: Kreston Stanley Williamson
*Correct as of 14 August 2024
*Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.
