Start 2022 off strong by preparing now
Although it’s hard to believe, the end of the year is fast approaching. While this can be a frantic time – especially if you’re racing to get all your financial reports sorted for tax time – it can also be a fantastic opportunity to reflect and set new financial goals for the new year.
1.Start by reviewing your previous financial year
As many reflect on the past year, small business owners too should reflect on how their business operates. To start the new year off strong, it's essential to review your financial statements from the previous financial year to determine what is working well and what needs refining.
Explore your current business practices and determine what the most time-consuming tasks are. Do some research to find solutions to these pain points and develop a plan to implement over the next 12 months.
2.Look at your business as a consumer
As many people begin to focus on the holidays, some small businesses might find themselves in a bit of a slow period. However, this is a wonderful time to reflect on financial decisions, accomplishments, and weaknesses. Step back and look at your business from an external perspective. If you weren't the owner, how would you view the financial health of the company? Is there anything you would change heading into the new year?
3.Examine your existing customer base
Another helpful exercise is to review your existing customer base. Are you heavily relying on a small number of customers? Should you look at diversifying your customer base? Finally, take the time to review revenue by measuring the customer as a percentage of your total revenue. How could these customers be upsold, or how could new customers be acquired? These questions will help you deep dive into what needs to be done to grow your business as you head into the new year.
4.Create an ambitious yet achievable strategy
To scale your business in the new year, you'll need a business plan or financial strategy. As essential as it is to reflect on the previous year, it's equally important to start thinking ahead about the goals you'll look to achieve for the upcoming year. Having a clearly defined set of goals that drive your business forward will help inform every decision and keep your long-term purpose aligned to your business growth.
5.Create a financial forecast
While a defined business strategy and ambitious goals are essential, you need the framework for measuring and ultimately achieving your goals. Having a clear path toward these ambitions will empower your team with responsibility and keep them accountable to these goals and provide them with vision.
To do this, work with your outsourced accountant to prepare a business strategy that includes a financial forecast for the following year. Then, try to narrow it down to one or two metrics to help conclude what needs to be done to reach your goals. This sets a goal for your budget to work towards, while a cash flow forecast assists with making sure you can meet all your payments at the same time.
6.Communicate GOALS with your team
Communication is vital for business growth and starting the new financial year on the right foot. Listening to your team and learning their needs will help you identify areas that need work to continue scaling your company.
An excellent place to start is by asking your team what projects they enjoyed the most in the past year, then determine which tasks are the more profitable and can be replicated. If your group likes working on profitable jobs, consider delegating those mundane tasks to an outsourced professional.
It’s easy to make confident business decisions when you have the right financial partner by your side. So reach out to your controller to find out how we can help you start the new year strong.
