With the silly season in full swing, many business owners are focused on their final jobs for the year before making it to the holiday season and taking a much-needed break to re-energise for the New Year to come.
We thought this was the perfect time to put together a list of four simple New Year’s resolutions for business success that could be provided to your clients in order to help improve the performance of their business whether they are looking to grow or escape financial difficulty.
Our list of resolutions is short as we know how hard it can be to stick to them, however, implement any one of them and business owners are sure to see an improvement across their business.
1 – Gain a Better Understanding of Your Financials
Do you have up to date financial records? How often do you sit down and review your financials? Do you understand how your profit and loss can impact your balance sheet?
New Year’s resolution number one is an important one, as business owners who don’t understand the true financial position of their business are not able to make informed decisions about how to move forward.
This resolution has three steps:
- Bring your financial records up to date;
- Make a commitment to review your financials regularly and compare them to prior periods. This will help you understand the impact, positive or negative, decisions are having on your business; and
- Talk with somebody about your business’s financials. This may be your board of directors, your business partner, your family or your accountant. It is important to have a sounding board, as others may see problems you are too close to see.
2 – Plan, Plan, Plan
We can all be guilty of working in the business too much, and not working on the business enough.
There is no exact rule for how much time you should spend working on your business, however, from experience, we can say there are few business owners who actually spend enough time working on their business.
So, for resolution number two, only two parts to focus on:
- Commit to reviewing your business goals, determine if they need to be adjusted and make an actionable plan for how you will work to achieve your goals; and
- Regularly assess your business’ performance and take the time to plan how you will improve.
Importantly, if you have a plan, don’t put it away only to look at it in another year. Every time you review your financials (resolution number 1) have your plan with you, analyse the data to evaluate your progress and the impact your plan is having on your financials then, make changes as regularly as needed to ensure you are making progress.
3 – Build a Cash Flow
If you don’t already use budgeting and cash flow tools in your business, start in the New Year. In simple terms, a cash flow will help you understand the cash required to operate your business and whether it will generate a surplus or have a deficiency of cash at a given point.
Understanding the cash position of your business at a future point will let you plan and adjust. A significant cash surplus at a given point might present the opportunity for those funds to be deployed to achieve business goals. A deficiency of cash signals adjustments to the business needs to be made. You’ll be in a much stronger position if you know a cash deficiency is coming and are able to plan for it.
As a starting point, work to build a 12-week cash flow for your business. Start with your balance sheet and note any of the current cash assets, as this is your opening cash position. Then review historical profit or loss statements and use your knowledge of the business to build the cash inflows and outflows over the period which will impact the closing cash position. It is important to have a weekly closing balance of available cash as this will highlight potential opportunities to seize or problems that need to be addressed.
If you’re not already utilising digital tools to make your business more efficient and profitable, a great starting point is available here.
4 – Ask For Help
Business owners typically excel at providing a high-quality product or service in their given industry. This is in part why they have gone into business.
However, not all business owners have a good financial background and must work to build their business acumen. This is nothing to be ashamed of. When we have seen businesses fail, it is often the result of the business owners sticking their heads in the sand and not being prepared to ask for help soon enough.
In the New Year, don’t be afraid to ask for help in your business.
Stick to Your New Year’s Resolutions
The intention of these resolutions is to encourage business owners to take a proactive approach in the New Year and make the most of, what can be for many, a quieter period in the year. Please do not hesitate to get in touch with our office to discuss how these resolutions could be implemented or to ask any questions you may have.