Mundane compliance work, or key to a successful business?

Business Insights

What is the key to a successful business?

For most small business owners, accounting and bookkeeping tasks are generally not high on the priority list, often preferring to spend time working ‘in’ their businesses rather than ‘on’ it.Many tourism and hospitality businesses are rejoicing at the prospect of being able to spend fewer hours in the office crunching numbers and more hours ‘on the floor’ as a result of increasing levels of automation from the new generation of cloud accounting programs.

Many tourism and hospitality businesses are rejoicing at the prospect of being able to spend fewer hours in the office crunching numbers and more hours ‘on the floor’ as a result of increasing levels of automation from the new generation of cloud accounting programs.

However, instead of rushing out of the office the next time you finish your BAS, it might be worth reinvesting that saved time to take a more in-depth look at your financial position.

By leveraging on the latest technology to help analyse and forecast from your financial data, these insights might just give you the edge over your competitors – financially speaking.

With bank feeds streamlining the reconciliation process, our financial data has never been more up to date.

Given our most recent historical financial data is now often only weeks or days old, spending time to run basic financial analysis to help understand what the numbers mean and what has driven them, can often provide important insights into your business.

Many cloud accounting programs (such as Xero), allow you to create and save custom reports so that they can be run regularly with ease.

By spending this time with your adviser to set up customised reports, you can then easily monitor what is most important to your business.

For example
A café or restaurant might be interested in having a ratio to monitor wage expenses as a percentage of turnover. This ratio would provide an insight into how successful the recent rostering has been and whether adjustments need to be made to ensure that any extra labour cost is driving sales and not just burning up your profit.

Next Steps for Successful Business Owners

For businesses interested in taking their analysis to the next level, there is a myriad of analytical tools that integrate directly with cloud accounting programs to provide detailed analysis, and in some cases, predictive forecasting.

To name a few, applications such as Futrli, Fathom and Spotlight leverage on all the hard work you put in processing your historical data in your accounting program, opening a whole new world of dashboards, KPIs and forecasting.

Taking things a step further than creating your own custom reports, these programs come with a multitude of prebuilt management reports which can be run on the actual historical information processed in your cloud accounting program.Digital automation is the next step for successful business owners.

Plus, as these programs are connected to your cloud accounting package using APIs, as you reconcile transactions, the data is seamlessly synchronised allowing you to run these advanced reports with the latest financial information at any time.

For business owners who appreciate a more visual approach to reviewing their financial data, there are also a host of graphs and charts to help illustrate trends and patterns which may otherwise be missed in a sea of numbers.Successful hospitality businesses

Undertaking proper analysis of your historical data is invaluable, however, one of the most exciting features that these management reporting programs offer is the ability to forecast into the future using algorithms to analyse historical patterns and trends in your data.

With the program doing all the heavy lifting to create this rolling three-way forecast (Profit & Loss, Balance Sheet & Cashflow), you can then spend time to analyse potential pain points for your business – such as future cash flow issues due to seasonality of income against fixed expenditures.

Whilst the programs automatically build out these forecasts, they are fully customisable allowing you to adjust as required to reflect unforeseen circumstances.

With all the uncertainty of COVID-19, lockdowns and border closures, the ability to run a forecast to see the potential cash flow impacts this can have on your tourism and hospitality business and simulate possible adjustments, can be the difference between a temporary and permanent closure.

The tourism industry has been particularly hard hit by COVID-19, the lack of international tourists and frequent disruptions to domestic travel due to outbreaks has set many businesses back.

However, as vaccination rates continue to climb, those who have invested the time to truly understand what drives the financial position of their business will be in the best position to capitalise on the anticipated travel boom once borders begin to reopen.

Looking to learn more?

RSM's digital services take the pain away from straightening out your business systems so that you can focus on what you do best. If you would like more information about digital dashboard reporting for WA tourism and hospitality businesses, please contact your nearest RSM Office or your local WA tourism specialist today.