If you’re a small business owner, the beginning of the New Year is an ideal time to review your financial planning strategy. If you’re just getting started in a new business, you’ve plenty to learn and if you’ve been doing it for years, there’s always room for improvement. Here are some indispensable planning tips to see your business through the coming year.
Review Your Current Financial Status
You can’t plan for the future unless you know the present state of your business finances . You should have reports at your fingertips detailing business basics like profit and loss, cash flow and sales, as well as market reports to evaluate your competitors. Don’t just order them but read and analyse them: your future growth depends on sustaining the successful aspects of your business and reforming the weaker parts.
Draw up a Business Plan
For most small businesses, a 12-month plan is ideal. Consider how far, and fast, you want the business to grow over the next year. Which months are likely to provide cash surpluses and which months will be leanest? Are you going to need more employees or extra inventory? A 12-month target for growth will help to motivate both you and your employees towards improving current practices and creating new opportunities.
Consider Additional Funding
It’s likely that after drawing up a plan for business expansion, you’re going to need extra financing to fulfill those ambitions. Don’t leave finding funds till the moment you need them, but take time to review the many financing options available. Are you looking for a long-term loan or a short cash injection? Should you expand using debt or equity financing? There are many alternatives to traditional lenders so it’s important to figure out which option is best for your business.
Streamline Your Accounting Practices
If your business’ books aren’t in order, you’re probably wasting a lot of valuable time, and missing a lot of potential savings. Keeping clear, up-to-date records is vital for staying on top of your business so if you’re not a wizard with figures, hire someone who is. Another good solution is to invest in dedicated accounting software, or move to the cloud, where you can streamline not only your bookkeeping but other aspects of your business such as logistics, payroll and tax.
Pay Attention to Your Cashflow
Many new and small businesses end up on the rocks because their cashflow runs dry, and they haven’t planned adequately for it. Even if your business is profitable, not having enough cash on hand to pay wages, rent or suppliers could spell serious trouble. Most cashflow problems stem from late payments by customers or suppliers, so chase up your invoices or offer discounts for early payment if you’re worried about getting left short of cash.
Thorough financial planning is the key to your business’ success so make these tips your New Year’s resolutions and look forward to a bumper business year!