It may be a cliché, but the start of a new year is actually a great time to take a look at your business finances and implement a few choice changes.
Why? One reason is that as a small business owner you should be performing regular financial checks anyway, and it’s probably been a few months since the last one. Following the busy pre-Christmas period and the holidays, your cash flow may be disrupted and it’s important to get your bearings and check that you have enough funding in place to cover all expected outgoings as well as budget capital required for working capital.
The New Year is also considered a time of change: that means that it’s a good time for planning, goal-setting and reaching out to customers and suppliers. It’s also the most common point for price rises and therefore the moment they will be most expected and accepted by clients.
The following five exercises will help your business get off to a flying start this year; put you on a secure financial footing; and lay the groundwork for increased sales and profits in 2019.
1. Plan Your Cash Flow
Cash flow is a key metric of business and is too often neglected. It is simply critical that you have enough money available to pay your workers, landlords, suppliers and bills. This sounds obvious but it is not always simple to achieve – indeed, cash flow problems are the main reason small businesses go bust. To avoid being part of that statistic, create a cash flow forecast – ideally for the whole of 2019. Of course, you will have to revisit this document regularly as circumstances evolve, but it’s important to have a clear plan to ensure your always have enough financing in place to cover your bills.
2. Scrutinise Your Costs
Since you’ve just put together a concise summary of your outgoings for your cash flow forecast, why not use it to scrutinise areas ripe for savings? We’ve looked in the past at the power of small changes, especially to a firm’s cost base, in disproportionately improving the bottom line. If you’ve run out of savings to make, close to home, take a look at our handy guide to manufacturing abroad; but don’t forget the possibility of negotiating discounts with suppliers in return for prompt payment, using our Trade Finance or Supply Chain Funding solutions.
3. Put Your Prices Up
Everyone does it at this time of year, so if you don’t, your profit margins will be eroded. The cumulative effect of this over time can be disastrous. Therefore, do it! Honestly, it won’t seem strange and customers expect it.
4. Improve Your Service
The best way to make that price hike seem not just reasonable, but actually a good thing, is to up your game at the same time. With staff fresh from their festive break and full of good intentions of their own, this is the perfect time for a bit of training and a renewed focus on excellence, especially where customer contact is concerned.
5. Review Your Business Funding
We’ve said it before, but it’s worth repeating: many SMEs are losing thousands of dollars and getting into all kinds of cash flow-related difficulties because they don’t have the right kind of funding in place. There is more out there than just bank loans and overdrafts exploring smart options such as invoice discounting, trade finance and supply chain funding may provide you with far more flexibility, without the need for any property security. If you’re unsure, ask your accountant for advice or get in touch with TIM to find out what we can offer and how we might be able to assist you and your business.
“Get Tomorrow’s Cash Flow Today”