An $8 million Ignite Ideas Fund super round has been launched.

You can secure funding for one of two distinct innovation pathways:

  • to progress an existing functional prototype product or service towards the brink of market readiness
  • to fast-track the commercialisation of a highly innovative new product or service that’s at the minimum viable product stage or beyond.

Successful applicants to Ignite Spark and Ignite Ideas Round 11 will also gain privileged access to the Ignite+ program. This program offers a wealth of professional expertise, invaluable business advice, and dedicated mentoring to propel your business forward.

Overview of funding available

Apply for grants of $50,000 to $75,000 (excluding GST) to advance the development of an innovative product or service closer to market. This program particularly aims to drive prototypes towards an advanced stage, thoroughly tested, endorsed by customers, and poised for commercialisation.

Submit your EOI by 11am on 31 October 2023.

Secure grants of up to $200,000 (excluding GST) if your business has a new product or service that is at the minimum viable product stage or beyond and ready for commercialisation. Submit your EOI by 11am on 29 September 2023.

You can check your eligibility and further details of the program and how to apply can be found here.

The Ignite Ideas Fund supports Queensland based small to medium businesses that have high-growth potential to undertake commercialisation projects that will:

  • strengthen key industries in Queensland
  • diversify the Queensland economy
  • compete in domestic and global markets
  • engage and/or benefit regional Queensland
  • create new jobs, now and into the future.

Funding is available to commercialise highly innovative and new products or services that are at minimum viable product stage or beyond. The essential core of your new project or service should already have been tested in action with potential customers a proof of concept, prototype and/or pilot.

Ignite Ideas funding will not support the development of a concept for a new business, the further development or improvement of an existing product or service, or to expand into new markets if the product or service is already in a market.

Some previous grant recipients have included funding for:

  • Fashion visualisation technology
  • Solar powered drones
  • Online concrete ordering and scheduling app
  • Injection technology for tree weed control
  • Lock Jaw Ladder Grip
  • Waste to Hydrogen

Please contact the team at MGI if you have any questions or require further information.


The Queensland government has introduced a Business Boost grants program which is aimed at providing support to businesses to advance improvements in their efficiency and productivity with funding of up to $15,000 (excluding GST) on meeting the criteria.

This grant supports activities in 3 project areas:

    1. Future planning
    2. Specialised and automated software
    3. Staff management, development, and planning

Eligibility Criteria

To be eligible for the grant, the business must (at the time of applying):

Eligible Projects to Spend the Grant

1. Future planning

2. Specialised and Automated Software

3. Staff Management, development & planning

Available funding

Your business may be eligible to receive a grant payment of up to $15,000 (excluding GST) on completing your proposed project.

The successful applicants must co-contribute at least 30% of the total project costs.

Grant funding will be paid only after compliant acquittal documentation is received.

Grant funding is not eligible to projects with a total cost of less than $10,715 (excluding GST) and payments made before the approval date.

Application Process

Applications open at 9am on 30 July 2021. The application form will be available online after this date via the DTESB SmartyGrants portal.

This grant program is competitively assessed and not all applications will be funded.

Our team will be available to assist you to maximise your chance of receiving the grant.

What are the key factors to optimise business value?

Value optimisation is all about growing business value. Value optimisation factors are issues within the business that can be planned for and addressed prior to selling that will assist in a smooth sale transaction at the optimum price. The key value areas for your business are growth, performance and succession. By focusing on optimising these areas, your business value will improve.

The path to value optimisation

The following illustration demonstrates the path you can take to optimise the value of your business.

Small Business Planning Image #1

Confused? How do I address these factors in my business?
Take a look at the following table that provides an indication of some of the industry best practice strategies that can be implemented to address these key value factors.

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By addressing all of the above value factors, you will improve profit, improve the value of your business, and maximise your position when it is time to sell.

Some of the barriers to improving the value of your business and achieving your desired sale price could include:

  • Business being too principal reliant
  • Not spending enough time working on your business
  • Expenses out of control
  • Lack of client segmentation
  • Poor systems and processes
  • Unrealistic expectations about the value of your business

If any of these barriers are relevant to your business, these should be addressed. Contact your MGI advisor should you require any business coaching or help with business planning.

Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Bstar accepts no responsibility for any loss suffered as a result of any party using or relying on this article.

Much has been spoken about the economic downturn that has come as a result of the COVID-19 outbreak. In our opinion, the key to operating a successful business and making money in an economic downturn or recession is to know where your business performs well and where it can improve.

The ‘signs’ of a healthy business are sustainable profits and strong trading cash flows. Whereas, the ‘symptoms’ of a business underperforming and at risk of being ‘infected’ by a recession or downturn, include declining sales and high fixed costs.

People who care about their health visit an expert – their Doctor. Business owners who care about their business should similarly visit an expert – their Business Adviser to complete a business health check.

If you haven’t felt the impact of COVID-19, all the better as prevention is better than cure!

To ensure your business remains healthy and continues to prosper in these uncertain times, you should undertake a business health check to protect your business from the full effects of a potential recession and better prepare you for recovery. MGI South Queensland can assist you with a business valuation and evaluation technology which includes a Risk and Value Driver Assessment Questionnaire.

The Questionnaire acts like a health check and grades your business in terms of its risk and pinpoints opportunities for value improvements.

Below is a sample of the many topics covered in the Questionnaire:

Questionnaire Mgi

The team at MGI South Queensland have specialists available to help you with all aspects of business growth. Contact us to provide you with a copy of the ‘Risk and Value Driver Assessment’ Questionnaire as a starting point and we will help your business thrive, not just survive.

Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. MGI South Qld Pty Ltd accepts no responsibility for any loss suffered as a result of any party using or relying on this article.

It’s been some time since you started your business. Many business owners have mixed emotions as they experience the highs and lows of owning and running a small business. Very few small business owners take the time to sit back and analyse the changes taking place in their business and business operating environment and then consider how these changes impact on their current and future business situation. Developing business survival strategies is a key part of helping your business to evolve and navigate the ever-changing landscape.

Consider how any or all of the following impact on your business:

Small business owners need to continually evolve the way they do business if they are to survive and thrive. Completing a business SWOT analysis is an essential first step in any effective business planning process with the aim of successfully evolving the business to counter existing weaknesses and threats, bolster strengths and take advantage of opportunities as they arise.

Planning is the key to your future success

Successful small business owners are able to spend less time working in their business, with more time spent planning their future and developing business survival strategies. Take the time to find out what’s happening in your industry, how you compare with your peers (business benchmarking) and establish a picture of what your business will look like in the future. Invest in planning days with your most trusted Advisers (Accountant and Financial Adviser) so you can get independent and objective advice on how your business is performing.

Are you doing any or all of the following?

How you plan for change will improve your chances of surviving and thriving. Developing business survival strategies doesn’t mean you believe you are going to fail. It means you are giving your business the best chance of growing.

The team at MGI South Queensland have helped many businesses not only survive but thrive through difficult times. We have business coaches as well as experts in tax and risk management. Our outsourced CFO and financial management service gives you access to specialist support who can help you improve your financial procedures and improve your bottom line. Give us a call on 07 3002 4800 or book a consultation online today.

Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Readers of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. MGI accepts no responsibility for any loss suffered as a result of any party using or relying on this article.

For business owners, running a successful business is often challenging enough, but for many succeeding in business in tough times becomes even harder. What makes the difference between why businesses succeed and fail, particularly in a tough economic environment? Managing through difficult times is an uphill struggle for sure. However, there is good news: there are a few simple measures you can implement to improve the probability that your business will succeed even when the going gets tough.

Why Businesses Succeed And Fail

Often the factors that lead to success in a business come down to some basic but fundamental principles of business management. Implementing these four tips could make the difference between why businesses succeed and fail when the economic environment takes a downward turn.

1. Protect and grow your revenue

Contact your key customers and ask them how their business is faring. Meet regularly with high-value customers and offer your support. Understanding their situation means you will be better informed about what you can do to assist them and thus protect and potentially grow your business’ revenue. To grow your own revenue, invest in new innovative (low cost) sales strategies, increase (low cost) sales. Develop marketing strategies and show leadership by spending more time with your customers and sales team.

2. Reduce your costs

A reduction in revenue and/or profit means you will need to examine your cost structure to maintain your profitability. Be prepared to make some hard decisions. Low fixed and high variable cost is the ideal cost structure for doing business in tough times.

Non Trading Costs – try to reduce or eliminate non-trading costs. For example, examine wage productivity reports and restructure non-productive roles or encourage multi-skilling to maximise your employee return per hour. Staff reduction is not necessarily a given in tough times!

Variable Costs – examine all your expenses and investigate ways to transfer your business’s fixed costs to variable costs. Outsourcing is a variable cost strategy.

3. Collect your cash

Collecting cash from your customers may become more difficult. Avoid business cash flow problems and consider amending your policies for debtor collection and stock management.

Debtors Collection: place tighter limits on the amount of credit you extend to your customers. If you have exposure to large customers, seek assurances and guarantees on how they will pay their account. Enter repayment schedules and offer ‘cash only’ terms until your customer accounts are in order. If the decision is between being flexible and survival there is really only one choice.

Stock Management: don’t over-invest in stock. Place strict controls over stock ordering and management. If customer sales slow down so should your ordering.

4. Minimise your risks

When looking at why businesses succeed and fail in difficult times, it is important you move quickly to minimise your business risk. The first step is to re-examine or develop a new Business Strategy or Plan to review and assess your current situation and plan the future. When preparing your Business Strategic Plan seek guidance from your accountant who is best positioned to provide this advice. Seeking advice early will mean the difference between your business thriving or simply surviving.

The team at MGI South Queensland have helped many businesses not only survive but thrive through difficult times. We have business coaches as well as experts in tax and risk management. Our outsourced CFO and financial management service gives you access to specialist support who can help you improve your financial procedures and improve your bottom line. Give us a call on 07 3002 4800 or book a consultation online today.

Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Readers of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. MGI accepts no responsibility for any loss suffered as a result of any party using or relying on this article.

“Would you tell me, please, which way I ought to go from here?”

Did you ever ask yourself this question during any stage of your practice career? Long gone are the days of starting a business out on a limb and hoping for the best, with the release of Royal Australian College of General Practitioners (RACGP) 5th Edition, a business plan is listed as one of the new standards required.

Indicators in the RACGP Standards 5th edition provides the following guidance on business planning:

Criterion C3.1A – Our practice plans and sets goals aimed at improving our services.

You must:

You could:

Criterion C3.1B – Our practice evaluates its progress towards achieving its goals.

You could:

Whether you are just starting out in a new practice or other stages of the practice life cycle, establishing a business plan is not merely for meeting the new RACGP Standards 5th edition requirement but is critical to achieve your business goals.

Whilst the initial phase of developing a business plan can be overwhelming, a well-developed business plan will set the roadmap of the business progression and guide/support the operational success of a practice.

We have listed some top tips for you to consider before you embark on the journey of developing a business plan.

  1. Determine who the plan is for
    Target a business plan specific to your practice and the unique offerings you can bring to the community
  2. Conduct relevant research
    Understand your current status quo (structure, marketing, finances strategies) and identify the opportunities that are available. By having accurate and up to date information, you will be more confident with your forecasts and analysis.
  3. Be practical with your process
    Identify the areas your business plans will address and do not attempt to complete your business plan from start to finish.  Good planning takes time and effort to ensure you are mapping out the best road to success possible. Break down the components of the business plan and tackle the areas that are more relevant for your practice first and set aside the areas that don’t have immediate impact.  You can always jump back to the other sections later.
  4. Get guidance
    If you aren’t confident in completing the plan on your own, you can enlist the help of a professional to review your plan and provide you with the relevant advice and direction.
  5. Review
    As with any document, a business plan will evolve over time with the changes in your practice circumstances or the industry.  You should conduct a regular review to ensure your business plan is on track with the vision of your practice.

With extensive experience in helping medical and dental practices to thrive, the team at MGI South Queensland can help you with your existing plan or the development of a business plan to concrete your roadmap to success.

Did you know there’s free money out there that can help your business to grow?

Yes there is really free money out there and no, this is not click bait. There are a number of Government grants for small business at both Federal and State levels intended to help businesses to improve and grow.

For example, we have recently assisted a number of clients to obtain grants under the Entrepreneurs’ Program such as the Business Growth grants to assist them with business needs as varied as:

  • strategic planning
  • employee share scheme design and implementation
  • advisory board
  • financial performance management
  • exit planning and much more.

This programme aims to drive business growth for businesses in the five growth sectors, which are:

If you are not sure if you qualify for one of the Government grants for small business in one of these sectors, by all means have a chat with us. These categories are broader than you think!

How you can use Government grants for small business

If you are in one of these sectors, there may be Government business grants available under this program to help your business to:

  • commercialise novel products, processes and services (Accelerating Commercialisation Grant);
  • access expert support to identify growth opportunities, improve management skills and business systems, increase market share and improve the financial performance of the business (Business Management Grant);
  • assist start-ups to develop the capabilities required to achieve commercial success in international markets (Incubator Support Grant); and
  • access expert guidance to address knowledge or research related issues (Innovation Connections Grant).

Each of the above are dollar for dollar matching grants of between $20,000 and $50,000, meaning a $40,000 project may only cost you $20,000. It’s crazy to say no, when the government offers to pay half of your costs. And this is just one of a number of grant programs available at the federal level.

At a state level, there are also Government business grants available. For example, the Queensland government’s Business Growth Grant is designed to support fast growing businesses looking to put on staff, purchase specialised equipment and access services to support business growth. Grant applications may attract funding of up to $50,000 depending on the application. Successful applicants may only have to contribute 25% – 50% of total project costs.

Here’s a flowchart we use to help our clients assess whether they are eligible for some of the most common grants we see.

Grant Flow Chart

We outlined a number of the available small business grants in a little more detail in an earlier blog post so take a read and to find out more.

For further details about the Government business grants mentioned or if you would like to know whether you are eligible, please contact the expert team at MGI South Queensland on 07 3002 4800.

This article aims to provide you with an overview of the grants that may be available to you. It is not intended to be specific advice for your business.

Despite a reputation for being some of the best paid professions in Australia, there is no guarantee that medical and dental practices will make money. In fact, one survey showed that 20% of medical practices make losses.1 Having worked with many medical and dental practices, both general and specialist, here are 10 ways we think practice owners can improve their profitability.


  1. Do you have to do it?

    Leverage is the name of the game. The effective use of nurses and administration staff is a key area where practices should look to improve their profitability. This is also an area where there is a great deal of difference between practices. For general medical practices, we think clients should aim for one administrative staff (other than the practice manager) per 2 GPs and 1 nurse between 4 to 5 GPs.2 On average, non-GP staff cost is 23% of gross patients, but the top 20% manage to operate on just under 15%. For dental practices, the average is 30% (this includes dental assistants and hygienists) but some manage under 20%!

  2. Are they coming back?

    One of the biggest challenges for the doctors and dentists we work with is getting patients to come back. Many practices have invested time and money in setting up systems to remind patients to come back for a check-up. For us accountants, there’s Big Brother (the tax office) with a stick that “reminds” everyone when it’s tax season. Getting high reappointment rate at your practice, however, requires a lot more work than an automated reminder. The benefits are significant though. Analysis of dental practices show the biggest difference between practices that make $500k in patient fees and those than make $1m is reappointments for regular check-ups. And we all know it is a lot more expensive to get a new patient to pay you a visit than an existing one.

    The key to getting patients to come back is to have you, the practitioner, explain to your patient why it’s important to come back for a check-up. I know, I know, the pressure to move onto the next appointment can sometimes be immense. But hear me out. Your patients are there because they trust you with what they value the most, their own bodies. So you are by far the best placed person to explain to them the importance of regular check-ups. Only when you take the time to explain, will they perceive enough value in the regular check-up to warrant them to come back. So by all means investing in automated reminders, but also take time to explain to your patients the benefits of regular check-ups (e.g. overall health benefits, avoiding emergency appointments, early detection of issues, I’m sure you know them way better than I do).

  3. Would you like fries with that?

    This iconic phrase of McDonald’s has now become synonymous with up-selling. Whilst many of us may be reluctant, being able to up-sell is an essential skill for any business owner. There are many businesses that depend on the up-sell to make a buck. You know the ones I’m talking about: a free book that leads to an offer about another (a cheap book). You are then offered a (slightly more expensive) course, which leads to a seminar which up-sells to a $20k “mastermind” workshop.

    Applying a similar strategy for our dentist friends, you could offer say, a free tooth clean in your marketing. Remember the most expensive sale is the first sale. It is worth investing some time to get them in the door. Once they are in, you know what to do: depending on what they need, subtly offer them whitening, filling, cosmetics, crown etc. Work your way up the value chain for your practice. And don’t forget the previous point, make sure they come back and measure your reappointment rate.

  4. Beware of benchmarking!

    This might rile some of my fellow accountants up a little. If your accountant is worth their salt they would have sent you some industry benchmarks for your practice. And we are all for benchmarking (call us if you’d like to benchmark your practice against your peers). It is an easy way to access where you are compared to your peers. The idea is that you can get the most bang for buck for your efforts in the areas with large dollar impact and where you are most behind.

    Be warned, there is a trap with benchmarking: you need someone experienced with the numbers to figure out what the numbers are saying that you should do.

    Back to medical practices. To give an example, according to a recent survey, the industry average of gross patient fees for a GP is approximately $400k. The top 20% generated over $590k per annum. The same survey says 60% of those fees are bulk-billed. But the top 20% bulk bill 91% of the fees. On the surface, increasing bulk-billing percentage might seem like a valid strategy. However, there’s actually no definitive link between bulking billing and the profitability of the practice. As the saying goes, Sales is Vanity, Profit is Sanity and Cash is Reality. If it doesn’t turn into profit and cash in your pocket, all you are doing is stressing yourself out with increased activity. Don’t get me wrong, I’m not saying increasing your bulk-billing percentage is never a good idea. This will depend on a number of factors, not least the demographics of surrounding suburbs. What I’m saying is that it is worth bearing in mind that often practices that only or mostly bulk bill will have lower profit margins than private practices. As a result, there’s often a lot more pressure put on the doctors of bulk billing practices to have shorter appointments, something not necessarily the best for patient care. But it may be necessary for practice survival.

    A better metric to measure, in our opinion, is how well the consulting rooms are utilised. One study found the average consulting room usage is 49.3%. This means half the time the practice is open, nothing’s happening in those rooms! The best practices manage 75.1% on average.

    Beware of benchmarks and make sure your accountant understands the drivers of profitability in your practice.


  1. Focus on the North Star Metric

    If you’ve ever been to a business awards night, you’ll hear stories of astronomical growth and heroic tales of overcoming obstacles to conquer the world. If you ever read the financial press, you’ll read about the insane profits the big banks make. Amidst the glamour, glitz, shock and awe, rarely will you hear the rational (accountant) voice that everyone’s forgetting what matters the most – return on investment. It is not cheap to start and run a practice (something our dentist friends understand the most I suspect). How do you know if you’ve made enough money to compensate the time and effort as well as the risks you’ve taken? Our answer, measure, measure and always measure your return on investment. More specifically, measure Return on Capital Employed which is the most important measure of financial performance for any business. Not just for the business, the same principle applies to every marketing campaign and buying new practice equipment.

  2. How much does the alternative cost me?

    Running a business is about making decisions, big and small, day in and day out. One of the questions asked when making decisions is: how much is it going to cost me? What is often not asked, though, is: what does the alternative cost? It is worth comparing the costs and benefits of alternatives.

    For example, some practitioners prefer to hire casual staff rather than permanent staff. It is rare though, for the practitioner to how work out the costs of benefits of employing casual versus permanent staff. The comparison it not straight-forward. A permanent staff member is entitled to leave (annual, personal and long service) whilst a casual staff isn’t. But a casual staff member gets an uplift in pay (typically 25% under most of the relevant awards) to compensate for this. Whilst this depends on the practice and the roles filled by those staff, it is often the case that the practice may save money by replacing casual staff by permanent staff. This might come as a surprise to some and it is worth thinking about how you’ve structured staffing.

  3. I didn’t make any money so why do I need to pay tax? Watch the cash.

    When we present financial statements to clients, it is not unusual to see clients say that whilst they understand they’ve made a profit, it doesn’t feel like it and no one wants to pay tax when they don’t have the cash.

    Cash flow management is often an overlooked area in business. For our practice clients, we see this issue most often with our orthodontist clients, although it is an area that needs monitoring by all. DentiCare is great in getting patients over the line to getting treatment, but spreading receipt for patient fees over two to three years will put strain on your cash flow. It is therefore important to befriend your bank manager and your accountant (yes accountants need friends too) to:

    1. Monitor and forecast when you might need help with cash flow
    2. Warn your bank manager so they are not taken by surprise.

    Early detection and warning is crucial. After all, there is only one reason why businesses go broke – running out of cash.


  1. Don’t forget your most valuable asset

    Being some of the best paid professions in Australia, the vast majority of medical/dental practices are profitable.You’re no doubt inundated with requests to invest your hard-earned money in all sorts of investments: bonds, TDs, shares, property, precious metals, Bitcoins etc. etc.

    You may or may not have thought about what your most valuable asset (other than your home) – your practice, is worth. Especially given the recent trend in consolidators buying practices, this is becoming something at the forefront of more practitioners’ mind.

    Practice valuation is not a simple exercise but it doesn’t have to cost an arm and a leg either. If you want to know how much your practice is worth, download our business valuation guide or come and talk to us. If you aren’t happy with the current value of your practice, a good place to start is to re-read this piece and start implementing some changes. By all means come and talk to us if you want help.

  2. Get advice

    Doctors and dentists are some of the busiest people. Pressure of back-to-back appointments often makes it difficult for you to take time out to seek advice from other professionals who can help you. In order to grow your wealth, getting the structuring of investments right can protect your assets as well as potentially saving you hundreds of thousands in tax. Working on your business is just as important as working in your business. So when your professional advisors want to meet for a meeting, say yes! A good professional will be accommodating of your schedule.

    Read the story of how we’ve helped an orthodontist throughout his entrepreneurial journey.

  3. What is your end game? Visions of the not-too-distant future.

    What does your life look like in 5, 10 or 20 years’ time? Where will you live? What will you do? What does family life look like? What does your social life look like? What will give your life meaning?

    “Begin with the end in mind”, says Stephen Covey in his brilliant book, ‘Seven habits of highly effective people. When you are in the midst of things, it’s easy to miss the forest for the trees. Be sure to take some time out to plan what your future will look like. You’ll find this will inform what you should be doing now and what changes you might want to make to get there.

MGI South Queensland have helped many medical and dental practices increase their profitability and manage their businesses more efficiently. If you would like to talk to one of our senior accounting team in Brisbane or on the Gold Coast about how we can help grow your medical or dental practice profitability, give us a call on 07 3002 4800 today or fill in your details below and one of the team will be in touch.

1. As compared to if that practitioner was in a job rather than owning a business.
2. All full time equivalents.

1) Make sure you are not holding more stock than you need

Holding more stock than you need is never a good idea. Excess stock can literally be dead money taking up space and locking up your cash flow. As interest rates increase it can also be very expensive to fund.

While funding has been accessible and rates low, it can lull businesses into a false sense of security that they can perhaps take advantage of a “good deal” and stock up while the price is right etc. This kind of thinking can however lead to disaster as your free cash flow dries up and interest rates start to rise.

You would have no doubt heard of lean manufacturing and “just in time” ordering in the manufacturing environment. This concept is to have just enough stock for the production cycle at any point in time and no excess. This keeps your cash requirements in stock low. The just in time theory may not always be as easily applied in other environments where say items need to be imported or there is a long lead time etc from your supplier, it is something that you should think about applying to your business.

Advisers and accountants often talk about your “inventory turn” in terms of your business operating cycle. Inventory turn is the number of times in a year your inventory is completely turned over. If say, your cost of goods sold is $500,000 and you hold $100,000 in stock, your turn rate is 5 times. From a business management perspective the higher the rate of inventory, turn the lower the amount that you have invested in inventories and therefore the lower the risks for your business. It is therefore an important that you have a goal of maximum inventory turns. It will free up your cash and free up your warehouse!

You will need to consider your buying patterns. You obviously need to have enough stock to meet customer demand, so give thought to lead times on products. Is it possible to order less more frequently?

Although volume discounts and shipping costs can mean the price per unit may increase if you are ordering smaller quantities you will need to compare this to the cost of holding that stock for longer than you need to. There is the financing cost, the warehouse storage space being occupied as well as the opportunity cost of what you might be able to do with your money if it wasn’t tied up in stock.

Understanding your sales patterns comes from having good data and systems to track which customers are buying which items, when and in what quantities. This information is critical in you setting your buying strategy.

2) Organise your inventory for better accessibility and visibility.

Make sure you know where your stock is. Organise it so that it is accessible and visible when you need it. You don’t want to be in a situation where your inventory management system is saying you have items in stock but you can’t find them when your customers want them or even worse “mystery” boxes of stock popping up and surprising you. You can’t sell what you don’t know you have. Good organisation of your storage area will keep things in plain sight and at hand when needed.

You should also consider investing in good inventory tracking software or add-ons to your accounting system. This will streamline your stock takes and keep the information you need about your stock holdings at your fingertips. There are quite literally a myriad of different stock management applications that can integrate to your general ledger, online store, point of sales and other systems. Speak to your adviser about how to select the best option for you and your business.

3) Look to maximise the credit offered to you by suppliers

Supplier terms of trade will also be important in your buying strategy. Looking at credit terms that suppliers offer, it is a low cost tool in funding your inventory.

As we move more to the digital marketplace and online shopping small businesses might also find it easier to purchase goods direct online. This will generally mean that payment is required before the goods ship. Again, you may be able to source a better per unit price this way but you will need the free cash flow to fund the purchases.

An alternative is to look to more traditional supplier that do offer trading terms. In this case matching your stock orders to the terms offered will help you maximise your cash flow. Ideally, if your suppliers offer 30 day terms you would only order sufficient stock to cover 30 days sales.

Some suppliers may allow terms which are a set number of days after end of month. Where this is the case, consider ordering inventory earlier in the month to maximise the number of days you have available to sell the goods before having to pay for them.

4) Focus on your stocks “best before” date and take action to minimise obsolence.

Another really important consideration is the life of the product. Is there a risk that it will be come obsolete before you have the opportunity to sell it or does it have some other “use by” or “best before” date consideration. The longer you hold your stock the higher the risk that you may have to dispose of it before you can sell it.

Slow moving stock is a problem in many businesses. While we all want to maximise our return or profit margin on our stock purchases, sometimes it is best to accept that you may have made the wrong call about some items or that the market has moved and see if you can sell them at a discount before those goods become obsolete.

A good handle on your operating cycle and stock requirements will keep your cash working for you and clear out your storage areas, keeping you focussed on high value sales and services. Whereas a lack of focus on your stock levels can really cost you more than you may realise.


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