A new year always brings a sense of optimism. January marks a time to refresh and reset, and put strong processes in place for the rest of the year.
If you haven’t already, it’s an ideal time to conduct a financial health check and ensure your small business is in good stead.
2024 is set to be the biggest global election year in history, with at least 50 nations voting on new governments. You need to make sure your business is resilient enough to weather any storms ahead, but also that you’re ready to seize opportunities when consumer confidence returns.
Here are six ways to prepare your small business for the fiscal year, from setting ambitious goals to cutting back on spending.
Ask yourself:
Set aside plenty of time to analyse the data. You want to conduct a careful evaluation of debts, the liquidity of the business, revenue and profits. Review cash flow for each part of your business, looking at what generates income and what doesn’t.
Use this information to think about:
If you achieved your goals last year, you might want to add a stretch goal to your goal setting. Stretch goals are ambitious objectives that go far beyond your existing capabilities. There isn’t the same level of pressure to achieve them, but they’re a powerful way to motivate teams and encourage you to always strive for more.
Common areas of wasted expense include:
If you do decide to keep something, create a plan for how you’ll get a good return on investment. This might include providing training for your team or planning how often something needs to be used to be worth the cash.
When was the last time you had a face-to-face meeting with your most important customers? Checking in over email or video call can help you stay in touch, but ultimately there’s nothing like an in-person meeting to bolster a working relationship.
The first few months of a year are great times to arrange coffee or lunch. People are usually still getting back into the routines and aren’t as busy, but they’re also doing their own thinking about what they want to accomplish this year.
Meet up and see what opportunities could be in the pipeline. If they’re thinking about growing a product range or venturing into a new sector, you want to be the first one there to show how your business could support them.
“Streamline” has become a bit of a buzzword, but it involves looking at the processes you use every day and figuring out how you can employ faster or simpler methods to make them more efficient.
Common sources of business inefficiencies include:
UKBF’s Business Membership gives you access to a wide range of benefits and services, all designed to help your business succeed. It includes:
If you haven’t already, it’s an ideal time to conduct a financial health check and ensure your small business is in good stead.
2024 is set to be the biggest global election year in history, with at least 50 nations voting on new governments. You need to make sure your business is resilient enough to weather any storms ahead, but also that you’re ready to seize opportunities when consumer confidence returns.
Here are six ways to prepare your small business for the fiscal year, from setting ambitious goals to cutting back on spending.
Six ways to conduct a financial health check
1. Reflect on last year’s financial goals
Before you look to the future, take some time to reflect on the financial goals you set for your business last year.Ask yourself:
- Did you achieve your financial goals? If not, why not?
- Is there anything you could have done differently?
- What external factors affected your ability to achieve your goals? (e.g. supply chain material shortages)
- What internal factors affected your ability to achieve your goals? (e.g. a key employee left)
- Were your goals realistic in hindsight?
- What should you do differently when you set goals this year?
2. Review your financial statements
As part of this review process, collect financial statements including your income statement, balance sheet and cash flow statements. Looking at the last three to five years will give you enough data to make comparisons about your recent financial performance.Set aside plenty of time to analyse the data. You want to conduct a careful evaluation of debts, the liquidity of the business, revenue and profits. Review cash flow for each part of your business, looking at what generates income and what doesn’t.
Use this information to think about:
- Your financial strengths and weaknesses
- Potential opportunities and areas for growth this year
- Risks to your financial performance (both internal and external)
- Financial trends across the last three years
3. Set new financial goals for this year
Once you’ve reflected on last year’s goals and financial statements, set your goals for this year. These should be specific and measurable, both to give you enough direction and enable you to track your progress throughout the year.If you achieved your goals last year, you might want to add a stretch goal to your goal setting. Stretch goals are ambitious objectives that go far beyond your existing capabilities. There isn’t the same level of pressure to achieve them, but they’re a powerful way to motivate teams and encourage you to always strive for more.
4. Cut back on unnecessary expenses
The next step in your financial health check is to look at your operating expenses and think critically about what could be cut for the year ahead. If you’re using accounting software, expenses should be automatically tracked and categorised, so they’re easy to find.Common areas of wasted expense include:
- Multiple software subscriptions that ultimately do the same thing (e.g. several different video conferencing and project management tools)
- Technology or equipment that your team doesn’t know how to use
- Rental of office space and desks, if you find yourself travelling or working from home most of the time
- Regularly renting equipment that would be cheaper to buy in the long term
If you do decide to keep something, create a plan for how you’ll get a good return on investment. This might include providing training for your team or planning how often something needs to be used to be worth the cash.
5. Schedule in-person meetings with key clients
A financial health check isn’t just about cutting costs, but exploring new ways to prosper – and existing clients can play a big role in that.When was the last time you had a face-to-face meeting with your most important customers? Checking in over email or video call can help you stay in touch, but ultimately there’s nothing like an in-person meeting to bolster a working relationship.
The first few months of a year are great times to arrange coffee or lunch. People are usually still getting back into the routines and aren’t as busy, but they’re also doing their own thinking about what they want to accomplish this year.
Meet up and see what opportunities could be in the pipeline. If they’re thinking about growing a product range or venturing into a new sector, you want to be the first one there to show how your business could support them.
6. Streamline your business processes
Finally, look at your internal processes and see what needs changing to support your financial plans this year.“Streamline” has become a bit of a buzzword, but it involves looking at the processes you use every day and figuring out how you can employ faster or simpler methods to make them more efficient.
Common sources of business inefficiencies include:
- Manual tasks that could be automated
- Processes that are outdated but have “always been done this way”
- The lack of a centralised system, causing information to be lost or misplaced
- No team communication tool, meaning urgent messages get missed
- Sluggish technology or equipment
Get exclusive perks and discounts with UKBF in 2024
Want to give yourself the best chance of achieving your financial goals this year? Boost your business visibility and supercharge your network with UKBF.UKBF’s Business Membership gives you access to a wide range of benefits and services, all designed to help your business succeed. It includes:
- A premium listing in our business finder
- Verified status to build trust in your reputation
- Exclusive offers from partners like Google, ClearBooks and Wix
