HAPPY NEW YEAR!
As we begin the new year, it's the perfect time for business owners to reflect on the financial health of their company and set realistic resolutions for improvement. To help, we have some resolutions to help owners enhance their financial well-being in the upcoming year; focusing on budgeting strategies, capital expense planning, and the crucial role of accurate bookkeeping in achieving financial goals.
Craft a Comprehensive Budget
Begin the year by creating a detailed budget that covers all aspects of your business operations. This should include fixed and variable expenses, revenue projections, and allowances for unforeseen circumstances. Regularly revisit and adjust your budget as your business evolves to ensure it remains an accurate reflection of your financial reality.
Resolution: Spend an hour each month comparing the prior month’s performance against what you planned in the budget, so you know what caused any variances.
Embrace Technology for Bookkeeping
Accurate and up-to-date bookkeeping is the backbone of a healthy financial strategy. Consider implementing accounting software that automates mundane tasks, reducing the risk of errors and providing real-time insights into your financial standing. Cloud-based solutions also enable seamless collaboration with your accountant, fostering a more efficient financial management process.
Resolution: Set aside a dedicated block of time to keeping your accounts reconciled. Alternatively, if that’s not your expertise, find a bookkeeper who will do it for you.
Prioritize Capital Expense Planning
Evaluate your long-term business needs and create a capital expense plan accordingly. This plan should outline the necessary investments in equipment, technology, and infrastructure to keep your business competitive. Prioritize these expenses strategically, considering their impact on revenue generation and cost savings over time.
Resolution: Find one capital expense that you’ve been reactive on replacing and choose to be proactive by replacing it before it breaks.
Negotiate with Suppliers and Vendors
Strengthening relationships with suppliers can lead to favorable terms, discounts, or extended payment schedules. Take the time to negotiate contracts and explore opportunities for cost savings. This can significantly impact on your bottom line and improve cash flow, contributing to overall financial stability.
Resolution: Reach out to one supplier or vendor once a month and ask if they have any new services, or changes to services you already have, that will make a positive impact on your business.
Diversify Revenue Streams
Overreliance on a single revenue source can expose your business to unnecessary risks. Consider diversifying your product or service offerings to attract a broader customer base. This not only enhances your financial stability but also positions your business for sustained growth.
Resolution: Create a new product that can be an accessory to one of your existing products but can also stand on its own.
Implement a Debt Management Strategy
Evaluate existing debts and establish a clear plan for repayment. Prioritize high-interest debts and explore opportunities to refinance or negotiate better terms. A proactive approach to debt management can free up resources for other essential aspects of your business.
Resolution: Create amortization charts for each of your debts and track payments through the year.
Employee Training and Development
Invest in your workforce by providing relevant training and development opportunities. Well-trained employees are more efficient and contribute to increased productivity, positively impacting on your bottom line. This investment in human capital is an essential component of long-term financial health.
Resolution: Thoroughly document one process or procedure a month that can be used by new employees without needing to ask for additional help.
Regular Financial Health Checkups
Schedule regular reviews of your financial statements and performance metrics. This proactive approach allows you to identify trends, address issues promptly, and make informed decisions to guide your business toward financial success.
Resolution: Set 3 Key Performance Indicators (KPIs) for the most impactful financial or quantifiable data points in your company, recording and reviewing them each week.
How we can help
Elevated Operations Group provides Accounting Servies that include full-service bookkeeping, monthly reconciliation of all Balance Sheet accounts, and monthly financial reviews tailored to our client’s business goals, as well as Business Process Improvement services to help streamline administrative and operational processes and procedures.
By adopting these practical tips and resolutions, small and medium businesses can fortify their financial health in the upcoming year. Remember, consistency is key – implementing these strategies and regularly revisiting your financial plans will pave the way for sustained growth and prosperity.
Cheers to a financially sound and successful year ahead!