Happy New Year! Now that the ball has dropped and the celebrations are settled, it’s time to get started on your resolutions. Some people want to lose a few pounds and eat more healthy. Perhaps you want to spend more time with friends and family? If you are a business owner, do you have financial resolutions for your business? Much like personal resolutions, most people don’t stick to them and by February, they are back to their old habits when the fun and newness wear out. Here are our top 4 financial resolutions for growing your business in the new year.
- Assess your current situation – this is a great yearly tradition to find out where your business is – and where you want to be. Ideally, businesses should take a look at where they’ve been in early January. How did it do compare to forecast? Every business should have a forecast because it gives us clues as to what worked and what didn’t. It also tells us where we made the most of our money. Doing this will allow businesses to set goals that they have the best chance to accomplish this year.
- Look at last year’s spending – did your money go where you really wanted it to go? If it didn’t, it will if you spend it mindfully. That means making spending decisions in the context of your goals. If one of your top goals is to expand the commercial line of your business, do you need to spend more on marketing to that segment of your business? Does that mean spending less on residential marketing? Spending mindfully may require you to reprioritize spending and being more aware of patterns. This will help you make better spending decisions every year.
- Forecast your cash flows – this is perhaps one of the most important things to have in order to run your business and stay ahead of the game. After assessing your current situation, looking at last year’s spending and setting goals for this year, do you have the cash flows you need in order to accomplish your goals? Forecasting your cash flows will help you see whether there are gaps in your cash flows or excess capacity. Having that knowledge is crucial because it helps you determine whether you need to supplement your organic cash flows with outside funding. The sooner you discover gaps in cash flows, the better negotiating power you will have with lenders. If you have excess cash flows, you may be able to take advantage of discounts, pay off debts or invest to earn some interests.
- Talk to your CPA periodically – this is an important preventative financial maintenance you can do to ensure the financial health of your business. Don’t wait till there is an emergency to talk to your CPA. Much like going to the emergency room, it is often stressful and expensive when an emergency brings you to see the doctor. Financial emergencies (e.g. embezzlement, lack of accurate and timely financial information, unexpected cash flows shortfall, unexpectedly high tax bill, unprepared for a financial audit, etc.) put you and your business in a stressful and expensive situation. The key is to minimize stressing your businesses from these emergencies by focusing your effort throughout the year. Your CPA can also help you carry out these financial resolutions for your business and set you up for success for the year.
Like the old saying “To know where you are going, you have to know where you’ve been”. So, look back, assess, evaluate; then look forward, put a plan together, engage your CPA to help guide you along the way and you are already many steps ahead of your competitors. At CFO Connections, we pride ourselves on being the financial compass for businesses. We’ve transformed chaos into stability for many businesses in Tampa and beyond. We love sharing best practices with business owners. To help you kick start and stick to your new year financial resolutions, we offer a one-hour complimentary consultation. Please click here if you want to have a successful 2019!