If you’re like many owners and operators of small businesses, you’re looking at the year ahead and trying to figure out how next year can be better than before. While New Year’s resolutions might not work, getting the year off on the right track is time well spent for your small business.
From reviewing the processes and procedures your small business uses regularly, looking at cash flow, invoicing and how you use a debt collection agency, to just some basic goal setting, it’s important to review your small business goals annually.
If you are running a small business and are eager to boost your profits in the coming year, check out our tips for building your small business and improving your processes this year.
Conduct a complete financial assessment
If you want your small business to be more profitable in the coming year, then you and your team will need to conduct a thorough review of the previous year’s financial performance. You’ll want to analyze everything, including your income sources, complete a review of expenses as well as analyze your profit margins.
Improve your small business cash flow management
Many small businesses quite simply leave money on the table so if you’re going to become more profitable in the coming year, you are going to have to place an intense focus on managing your small business cash flow. If you’re running a small business, you are being pulled in many directions simultaneously. But improving cash flow for the new year will require you to hit the pause button and spend some time with your bookkeeper or CPA. Improve your invoicing strategies and timing and update payment processes to help accelerate cash flow. Partner with a reputable debt collection agency that will treat your customers respectfully and get you paid faster.
Goal setting for your small business
Based on your financial assessment, you’ll want to establish clear and realistic financial goals for the upcoming year. For better tracking, many small businesses break down their annual goals into quarterly and even monthly targets. For example, if you’re operating a landscaping business, it may be wise to look at each month because of seasonal fluctuations. Setting financial goals for your small business can breathe new life and energy for the upcoming year.
Manage your costs and expenses
If you haven’t done so already, you should take a hard look at your small business expenses. Many of these can creep up on you and sooner or later, they’re eating into your overall profits. Try to identify areas for cost reduction without compromising the quality of service you provide your customers. If you can negotiate with your suppliers for better deals and even explore cost-reducing strategies such as bulk purchases, this is a great way to manage your expenses.
Diversify your revenue
Many small businesses got caught flat-footed during the COVID-19 pandemic. Mainly because they had limited revenue streams. If you’re looking to boost revenue and profits, one of the best ways to do that is to diversify the revenue coming into your small business. There are several ways to do that, including exploring new markets or customer segments. You may want to introduce new products or services that align with your business. You may also want to check out the competition to see what they are offering.
Focus more on customer retention
The bottom line is, retaining existing customers is easier than gaining new customers. Of course you always need to be building more customers but it’s important to focus on retention. You can do this by improving the customer experience, implementing new customer loyalty programs as well as identify opportunities for upselling to your existing customers.
Integrate new technologies where needed
Implementing new technology can ultimately help your small business become more profitable. Everything from accounting software to help with accounts receivables as well as debt collection, technology to streamline processes and in the end reduce operational costs. Can you upgrade your CRM or even implement easier ways for customers to purchase your products or services? If you want to become more profitable in the coming year, you’ll need to explore how your small business utilizes the latest technology.
Create an emergency fund for your small business
It was heartbreaking to see so many small businesses suffer during the COVID-19 pandemic. Many businesses were shut down however, many small businesses lacked the proper funding to get through those tough times. If this has taught the business community one thing, it’s that having funds in the bank to weather the ups and downs of business is mission critical. You should have an emergency fund for the ebbs and flows of business, unexpected expenses and other financial setbacks.