Peter Sherwin, a partner at Grant Thornton New Zealand, an independent assurance, tax and advisory firm.
Where do owners of small businesses have to take care with cash flow at this time of year?
Owners of small businesses, in particular, are normally very optimistic about the state of the business and how things will be in a year's time. But they often make forecasts based on best case scenario rather than allowing for some hurdles.
While working out the business expenses for a year can be relatively straightforward, working out income is totally different.
The back of the cigarette packet calculation that next year's income will be 10 per cent higher than this year's seldom runs true. What is needed is a sensitivity analysis to outline the state of the business if the promised income was 20 per cent less than expected.