This year, resolve to take control of your business finances and use them to help you get what you want out of the new year. Below are five financial strategy tips to help your organization prepare for the new year.
Take a Look at Your Financial Forecast
If you only choose to do one thing on this list, pick this one. Financial forecasts are not only a detailed roadmap for how to get from where you are to where you want to be–it also helps minimize wasted time and resources, and makes it a heck of a lot easier to make financial decisions. If you haven’t dived into your financial forecast lately, then now is the time. Dig it out and see how you’re progressing toward your goals. Make adjustments based on your current trajectory and call in an expert if you don’t feel like getting into the weeds. One of the most influential things your organization can do concerning its finances in 2021 to minimize waste and maximize growth and profits is to revisit your financial strategy. If you’ve never created a financial forecast before, then now is the time.
Analyze Your Spending
If you haven’t dug into your expenses in the past year or so, then it’s probably a good idea to take a look. While you probably don’t want to take the time to analyze each expense from the past year, reviewing spending trends may reveal some ways you can be more strategic in the new year. You may notice opportunities to cut costs, places you can renegotiate contracts, or unnecessary expenditures you can eliminate. You may also notice areas of the organization where budgetary updates might provide more opportunities for growth.
Systems are the tools that keep an organization running and growing. It’s important to remember (but easy to forget) that the same systems that got you where you are today aren’t the same systems that will help you achieve your long-term goals. As a company grows, it also becomes more complex. Take time to analyze your systems at the beginning of this year to make sure they are properly supporting your trajectory and able to scale with the business. And be sure to consider all the tools your team needs to succeed–including financial systems, CRM, manufacturing, warehouse management, reporting & analytics, etc. The right tool for the right job can make a huge difference.
Know Your Benchmarks
Do you know anything about how much your competitors spend on marketing or how much they charge for their services or products? This can be incredibly useful information when analyzing your own finances. While industry benchmarks aren’t the end-all-be-all, they are a good gauge of how your organization is (or is not) competing in your industry. Make a financial resolution this year to have a better pulse on how your company stacks up and where improvements–such as renegotiating vendor contracts, optimizing spending, or growing profit margins–might be possible.
Get Your Books in Order
This one probably goes without saying, but even though we all know it’s important, it’s also a “should do” that is pushed aside more often than it should be. Remember, your financial records aren’t just a formality; they are an essential part of making critical decisions in your organization. Without a clear understanding of where your company currently stands, you are most likely wasting money, missing opportunities, and will take more time to reach your goals than if that information was organized and optimized. If your books are regularly behind or inaccurate–or if they’re just flat out “a mess”–consider hiring a team to clean things up and help put systems in place to keep your financial records more up-to-date. Most outsourced CFOs (including our team at Preferred CFO) can organize your books quickly and can help find systems and train staff in methods to better execute record keeping.