Do you lack financial clarity for your small business? If so, you have company.
About 60 percent of small business owners aren’t confident in finance and accounting. Many experience confusion understanding their cash flow, managing receivables, and dealing with paperwork.
As a new year gets underway, it’s a good time to get on top of your financials. It doesn’t have to be a struggle. If you’re not sure where to start, there are steps you can take to manage your numbers in the easiest way possible, increase your financial clarity, and effectively track your performance all the way through the year.
Take the Time To Reflect on Your Current Financial State
By now you’ve closed the books on 2021. As part of the year-end process, you’ve reconciled the numbers and, while doing so, you may have noted opportunities for improvement. Now’s the time to step back and think about what those numbers really mean for you and your business.
What do you like about the way 2021 went, and what could have gone better?
Was poor record-keeping holding you back?
Are your processes outdated and no longer getting the job done?
Are you disappointed in the consistency of your sales numbers?
Did you miss the mark when it came to managing your expenses?
It’s possible to improve. It takes setting clear goals and laying out the action steps to get there. It takes a commitment to track how well you’re doing against those goals.
Track the Right Data
The best decision-making is always based on accurate and timely data. The proper use of the correct data helps you create stronger, more specific goals. You can then use that data to understand how well you’re on track in achieving them.
However, don’t track numbers just for the sake of keeping track. Track only the data that’s relevant to your goals.
As an example, suppose a key goal is to improve cash flow. To accomplish this, you need to track all your expenses. You'll have to know how quickly you’re collecting your receivables and how well you’re managing against your payables as they come due. You’ll want to understand which sales channels are most effective in bringing in revenue relative to expenses. With the right metrics, you’ll be able to see where you can make changes in any of these areas to improve your overall cash flow.
Manage Your Books Throughout the Year
In a sense, record-keeping is like homework was in your school days. Things go a lot better if you do a certain amount every day. You have a lot on your plate, and it’s easy to let review and reconciliation slide. After all, you started your business to meet a customer need and to build your dream, not to hassle with numbers. However, the extra bookkeeping work you do each day will save you time in the long run.
Update your transactions every day or at least every week, and reconcile your accounts every month. When year-end rolls around, you’ll thank yourself for making it so much easier to close the books.
This also gives you up-to-date numbers that can be used any time you’re faced with a critical decision about the direction of your business.
Focus on the Future
Are you looking backward or looking forward? The past is important, of course, but the fun and excitement of business lie in what might be possible in the future. Sometimes what needs to happen next week or next month occupies all your attention. However, taking the time to map out goals for this year, for next year, and even for three to five years down the road will help you develop the strategies that offer success in the long run.
The future isn’t just about dreaming. It’s about numbers as well. It’s about developing a mindset.
A focus on the future means:
You take metrics seriously.
You rely on a detailed budget.
You’re diligent about tracking.
You’re making the financial management of your business a priority.
You do what you can to reach your business goals.
Work with a Trusted Accounting Partner
Setting financial goals and choosing the right metrics can be challenging. Putting the systems and processes in place to measure progress is a significant task that requires some expertise.
The good news is that you don’t have to do it alone. A trusted accounting partner such as SIMPLY Financials PLUS can help you clarify and refine your processes. We’ll take a hard look at your KPIs, your processes, your reporting, your cash flow, and your reconciliation. We’ll help you put together a relevant plan and develop the procedures to track that plan.
Approach the new year with financial clarity. Contact SIMPLY Financials PLUS and get assistance developing a plan that’s specific to your company, your needs, and your budget. The road to financial clarity is only a phone call away.