5 Financial Tips For a Prosperous New Year
Every year, millions of people make New Year’s resolutions, hoping to improve some aspect of their lives or the lives of others. As a business owner, you probably have many ideas about how to improve your finances in 2020. But with so many opportunities, where should you begin? Start by reading up on these 5 financial tips for a prosperous 2020!
1 | Set Measurable Financial Goals
2020 is the year to think big for your business. What do you want to achieve this year? Setting measurable financial goals is the first step toward ensuring your business is prosperous in 2020. The best goals are “S.M.A.R.T.” – specific, measurable, attainable, relevant, and time-based. Instead of setting a general goal such as “I’ll increase my profit in 2020”, try “I’ll increase my profit 10% by December 31, 2020”.
2 | Have a Financial Plan to Achieve Your Goals
Wondering how you’ll achieve the financial goals you just set? Whether you want to maximize profit, expand operations to a new location, pay down debt, or hire new employees, a financial plan is the key to your success.
Think of it as GPS for your business. A well-crafted plan charts the course to your desired destination and helps you navigate roadblocks you may encounter along the way. It provides the road map for achieving your goals and the yardstick for measuring whether your performance is on or off track. When you compare your monthly financial results to your plan, you can spot warning signs of a potential problem and take corrective action to avoid unfavorable results. And if analysis reveals that you’re achieving or exceeding your goals, you’ll have a reason to celebrate!
3 | Review and Understand Your Numbers
It’s critically important for business owners to review and understand their financial results. Timely, accurate, and meaningful financial reporting and analysis provides the information you need to successfully manage your business finances. Was there a profit or loss last month? Why? What needs to change to ensure you achieve your profitability goals? Having insight into your numbers gives you opportunities to truly understand and improve your business finances.
4 | Have a Backup Source of Cash
Ongoing cash deficits are the #1 reason businesses fail. And aside from the obvious jeopardy your business will be in without steady cash flow, you’ll surely feel stressed and anxious about the future.
How do you avoid that risk and discomfort? Savvy business owners plan for seasonal cash shortages. Build cash reserves, obtain a working capital line of credit, ensure your customers are paying on time, and maintain a cash forecast that predicts your future bank account balance. Today’s balance doesn’t give you visibility into your cash balance at the end of this month, next month, or six months from now. Engage a financial professional to develop a cash flow forecast and corrective recommendations so you can enjoy peace of mind.
5 | Know When to Ask for Help
If you’re like me, you may sometimes be reluctant to ask for help. I personally don’t want to inconvenience anyone and sometimes feel like I should be able to do it all myself. But no one can be an expert at everything, and I’ve learned that people enjoy and feel fulfilled by helping others. I know I do.
It takes tenacity and perseverance to build a business. But as your business grows, so do the financial responsibilities, decisions, and demands for your time. As an educated and intelligent business owner, you might feel overwhelmed or embarrassed about your never-ending financial to-do list or challenges. Believing that you “should” be able to manage your business finances on your own won’t change the situation, and going it alone could result in compounding problems.
It’s okay to ask for help! Focus on doing what you do best, and outsource responsibilities that are outside your area of expertise or comfort zone. I have 20+ years of finance experience, but I’m no expert when it comes marketing. Creating marketing materials would take me days, but a marketing expert would do a better, more efficient job. If you’re struggling with your finances, ask for help. Outsourcing to an expert makes the best use of your time and yields better, faster results.
About Momentum CFO
Momentum CFO is a boutique firm specializing in outsourced Chief Financial Officer services for small to mid-size businesses. We bring the benefits of Fortune 500 financial expertise to your business without the expense of hiring a full-time CFO.