We’ve all heard the same old resolutions. Get fit, eat better, travel more. It’s up to each individual to make an effort to stick to their goals. But working on resolutions without a plan in mind is a sure way to abandon your goals before they become a reality. That’s why we’re giving small business owners a guide to what may be your most useful resolution for the New Year: getting your business finances in order.
Take a seat, grab a drink and crack your knuckles so you can spend some time charting out your upcoming year. Try to foresee any coming lifestyle changes and keep them in mind, such as changing houses or taking a vacation. This is your game plan for both the short and long term, so make sure your model is a good one and covers at least the next six months. Talk to your accountant for help because he or she should be as aware of your business finances as you are.
Other issues to consider: how much money will go into payroll, expansion, recruiting, supplies and development.
Track Your Expenses
Consider this an adjoining tip to the previous one. Financial planning and financial tracking go hand in hand. Tracking your business’ activity will tell you if you’re following your guideline and if it’s suiting you. If not, you can make amendments to your business plan.
Charting your cash flow with accounting software will help you be mindful of inflows and outflows of your finances. It will help you spot trends in your business that you can then keep in mind when planning for the future.
Think of this as an investment for your business. Good software can keep track of the many financial comings and goings in your business. This is not something you should skimp on in favour of a pen and memo pad. From balance sheets to cash flow to depreciation reports, the right program will make things simple.
Useful software will also cut the costs of hiring a professional to keep things organized.
Make Sure Customers Pay You
No need to grab a baseball bat to go collecting. This is only a reminder to run your business as it should be run. This means no favours for friends, and use contracts or payment terms when necessary. If you’ve ever watched an episode of Judge Judy, you’ll know contracts are the deciding factor in many legal battles.
If your business is not running as efficiently as possible, it can throw your financial plan off. Cover your bases with payment terms, and by following up on late or absent payees with payment reminders. And be sure to be professional. It avoids the risk of losing potential repeat customers.
In the end, it comes down to dedicating the time to formulating a good plan and closely monitoring your business’ numbers. Stay organized and be aware of trends that can throw a wrench in your plans.
Alex Correa | The Edge Blog