A new year is here, and the age-old tradition of establishing resolutions for improving your livelihood – in whatever capacity – is imminent.
As a small business owner, you have already taken the crucial step of launching a startup based on a great idea. You’ve built your business through hard work, knowledge, and determination. But as is the case with any endeavor in life, there’s always room for improvement. January 1st marks the beginning of 2017 – let’s analyze 5 financial resolutions that small business owners can start developing and implementing right now. Give your company (and yourself) the competitive advantage of starting the year strong with these resolutions:
1. ESTABLISH A REALISTIC SNAPSHOT OF YOUR COMPANY’S FINANCIAL STATE
As the owner of a small business, you no doubt have a general understanding of how your business is performing financially. However, keeping yourself closely apprised of your firm’s bottom line is certainly an area where many can improve upon.
One tip for 2017 in this regard is to consider transitioning to a cloud-based accounting software system, if you aren’t currently utilizing one. Having your organization’s financial metrics at the click of a mouse — as opposed to manual spreadsheets that are in constant need of updating — allows this task to greatly simplified.
Cloud-based accounting software also allows for seamless collaboration with the person managing your financial affairs, whether that is an in-house team member or an outside accountant. Once you’ve established where your company is really at as we enter 2017, it’s vital to schedule and complete regular meetings with your financial professional so that you’re staying current with how your business is faring.
2. MAKE MARKETING A PRIORITY
Every savvy business owner understands how important a cogent and focused marketing campaign is for the long-term benefit of their organization. The first step is to formulate a marketing budget — then decide what kind of ROI your goal is going to be. Perhaps you’d like to concentrate on growing brand awareness as opposed to higher raw sales numbers.
Your marketing goal – which should be clearly stated – will in turn dictate how your advertising dollars are being spent. If you lack the needed expertise in this area, seeking out a social media marketing guru to spearhead this effort could pay off handsomely in the long run.
3. TAKE ACTION ON YOUR ACCOUNTS RECEIVABLE
It’s an immutable truth that small businesses are guilty of allowing their customers latitude on paying. This is often necessary to build your business when first launching, but the practice should go away if you are hoping to propel your company to the next level.
Now is the ideal time to scrutinize the amount of outstanding money that is owed to your company, as well as the process currently in place for collections. There’s usually room for improvement in this area – after you have a firm grasp on your total AR picture and have developed a solid set of collection processes, allocate a block of time on a weekly basis that’s dedicated to getting your receivables flowing in the door. Establishing a plan and sticking to it consistently will yield results in the form of improved cash flow and a lower number for your average collection period.
4. ESTABLISH A BUDGET (OR BUDGETS)
This is where you can definitely use the expertise and knowledge of your accountant or financial professional. Reach out to this person to schedule a comprehensive budget meeting for the upcoming year. Ideally, an overall company budget should be in place, and also budgets for each department in your business (depending on the scope of your operation, of course).
A primary goal of budgeting is to build a healthy reserve for contingency expenses that might pop up. The key to financial success for any business – regardless of how big or small – is proper planning.
5. MAKE YOUR RESOLUTIONS S.M.A.R.T
After you’ve set financial resolutions for your business, the final step is to make them SMART. Ensure that your newly established goals meet the following criteria:
- Specific: A vague or general goal such as “collect money faster” won’t benefit you. Make sure that your goal is specific and well-defined.
- Measurable: Every goal needs to be quantifiable in order to have value. “Increasing sales” is a fine aspiration, but how about $500,000 in sales for the month of January?
- Achievable: In this step, you want to take a look at your resolutions. Does your business have the right plans in place to realize these goals? A goal without a plan to get there is destined for failure.
- Realistic: It would be fantastic to triple your sales in the coming year. But is that really going to happen? Ensure that your resolutions are high, but not unrealistic.
- Timely: It’s crucial that your resolutions have a definitive time frame that they are given. Otherwise, they are lumped in to the basket of “We should try that soon” — in other words, it will probably never happen.
Every new year is an exciting time filled with hope and promise. By keying in on important financial metrics related to your company’s growth and sustainability, you can make 2017 a banner year and when you’re ready for an injection in capital, apply for a Camino Financial business loan by clicking here.