While your work day might involve drilling, drones, geology or any number of other fee generating tasks, the fact is, it’s understanding your numbers that will ultimately bring business success.
You’ll be able to take control of your business once you know what the information in your financial reports actually means, and understanding ‘the numbers’ will enable you to build a better mining and resources business.
Taking the time to review your business from a numbers perspective is a worthwhile and important investment.
Understanding the numbers reported in your quarterly BAS and Profit and Loss Statements, as well as your tax commitments that include GST, payroll tax, fringe benefits and income tax, will inform and strengthen your business decisions.
However, this means making the most of your accounting system. The key is accuracy and real-time numbers (offered by cloud-based systems) that will provide a current and accurate indication of your financial position.
Reliable data allows you to generate meaningful financial reports that will help you to understand your financial position now so you can work efficiently towards where you want to be in future. Accurate reporting will also indicate your financial strengths, weaknesses, opportunities and threats. This type of financial SWOT analysis will help you to better plan your business activities and make crucial decisions that will allow you to achieve outcomes.
In its simplest form, understanding the numbers will give you clarity on matters including where you make your money and where you don’t.
For example, the numbers may highlight that the services you most enjoy providing your clients are actually the least profitable. Demand for those services may be in decline or they may be too costly to deliver and don’t return the level of profit needed to sustain, let alone grow, your business.
By contrast, the numbers may indicate high demand for particular services or specialisations, offering an opportunity for you to increase your fees, and in turn, your revenue and profitability.
Once you know where you stand financially, you can make better decisions. This may include reviewing your costs and changing suppliers to enjoy better rates and terms of payment; engaging staff with different skillsets; creating greater efficiencies by implementing or updating equipment; modifying or discontinuing declining services; and generating greater enquiry by better focusing your sales and marketing efforts.
In my experience, you will gain financial confidence, a sense of control and the clarity you need for achieving business as well as personal goals. However, you’ll need help. Two heads are definitely better than one, especially when your head is in the business keeping operations on track. When you consider your accountant part of your team, rather than an external advisor, you’ll benefit from financial insights that you may otherwise overlook.
With substantial hands on experience working with mining and resources business owners, we can help you to better understand the numbers to create a better mining and resources business and in turn, build your own personal prosperity. If we can help you achieve your business goals, please contact Resources Unearthed on 61 (0)7 3007 2000 or contact@resourcesunearthed.com.au
Further Reading
ESS & Tax: How to Avoid Expensive Mistakes
Tax Planning for your Mining & Resources Business
Case Study: Business Sale Success
Resources Unearthed is a solutions hub that provides integrated financial, legal, property and accounting & business advisory services for executives, professionals and business owners in mining and resources.
The information contained here is general and not intended to serve as advice. Any information supplied is not a substitute for independent professional advice. We do not warrant the accuracy, reliability, completeness or adequacy of the information or material. All information is subject to change without notice.
