Is one of your New Year’s resolutions to get in better shape? Maybe you should make the same kind of vow for your business. I’m talking about getting your business in good financial shape for the coming year. The economy is slowly bouncing back, and consumer spending seems to be on an upswing. So there’s profit to be had and money to be made out there—but if your business isn’t in top form, even an increase in sales won’t help your company grow. Here are some steps you can take now to put your business on the road to fiscal fitness.
Monitor your finances. Hopefully your company already uses one of today’s simple software programs like QuickBooks to keep track of income and outgo. (If you’re not already using one, a SCORE Mentor can help you choose the right program.) Are you using all the tools at your disposal to make the most of the software? Today’s accounting packages can show you the state of your finances at a glance. But too many business owners keep their heads in the sand and don’t pay attention on a regular basis. The buck stops with you, so start paying attention to it.
Get schooled. If you’re not sure you know what you’re looking at when you look at your financial statements, you’re not alone. Many of us start businesses based on our expertise in some other area, like marketing or retail sales, then consider accounting an “afterthought.” There’s no shame in this, but even if you’re using an accountant to handle the books, you need to understand the basics of what your business’s money is doing and where it’s going. Like I said before, the buck stops with you. Talk to a SCORE Mentor or visit SCORE’s website to find seminars both online and offline that can help you with accounting basics.
Count pennies. You’ve probably become a bit of a skinflint over the past two years as the economy crashed. It’s not quite time to let go of your Scrooge-like ways. Keep track of every expense—things like ongoing subscriptions and monthly fees quickly add up. Check for redundancy (are three people in your company paying for the same thing)? Assess how much each expense contributes to your bottom line.
Don’t be penny-wise and pound-foolish. Reread the last sentence of that last paragraph. If an expense does contribute to your bottom line, go right ahead and spend some money. Prices for many business products and services are at rock-bottom now, so if there’s a new investment that could boost your business’s sales, productivity or efficiency, this could be the time to spring for it. Just be sure you run the numbers first. Again, your SCORE Mentor can help.
Rethink your banking relationships. Is now the time to switch banks? After giving small businesses the cold shoulder for the past few years, many business banks are now wooing them again. Review the products and services you currently get from your bank. Do you need more? Are you paying too much? As your business grows, your banker is a key factor that can help you—or hold you back—so don’t be afraid to shop around until you get what you need.
Rieva Lesonsky – CEO, GrowBiz Media
Rieva is CEO of GrowBiz Media, a content and consulting company specializing in covering small businesses and entrepreneurship. She was formerly Editorial Director of Entrepreneur Magazine and has written several books about small business and entrepreneurship.
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