As you make your list of New Year’s Resolutions for your business, make sure your finances get center stage.
A new year is a great time to recenter your focus on goals for both the short and long term. Here are a few goals (or resolutions, if you like) you should add to your list.
Short-term financial goals for your business
What do you want to accomplish in the next three months? Six? Twelve? It's just as important to think about what's coming up soon that you can work on to improve your business's financial health as it is to aspire to longer-term scenarios.
1. Improve your business credit.
Did you realize that, just like with your personal credit, you have a business credit score? A high score ensures that you qualify for low interest rates should you ever want to take out a loan or a business line of credit.
You can increase your score by keeping your debt-to-credit ratio low (meaning you have much more credit available than you're using), paying your bills on time and opening credit accounts with your vendors. Monitor your business credit report to ensure there are no discrepancies, and if there are, report them to the agency immediately. Have a separate business bank account for your transactions rather than using your personal account.
2. Increase revenue in the coming months.
Naturally, every business wants to boost revenues, both in the short and long term. To increase them relatively soon, try a few different strategies.
If it's been a while since you raised prices, consider increasing rates for new customers or notifying existing ones of a small bump up in price. With existing clients, you risk them going elsewhere for better pricing, so consider how strong your reputation is and whether they'll stay, even if they have to pay more.
You can also amp up your marketing efforts to make more sales. Hire a salesperson to work new territories, invest in social media ads or create incentives for existing customers to buy more from you.
Editor's note: Looking for help with social media for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
Long-term financial goals for your business
Now that you've taken care of the upcoming months, consider what you want your business to look like in the next three, five and 10 years. It may seem silly to start planning so far ahead, but every action you take now will impact the future.
3. Plan your business's expansion.
Maybe you've dreamed of opening a second location, hiring your first full-time employee or stepping back from the day-to-day operations. All of these are great goals because they indicate that your business is thriving. But they will take work to achieve.
Plan out what you'll need financially to achieve your goal. If you want to open another location, you may need to take out financing, so do some rough projections to determine how long it will take for you to recoup the initial expenses. If you want to step back from the day-to-day, you need to hire and train someone to take over your responsibilities.
4. Prep your exit strategy.
If you plan on selling your business, handing it down to a family member or simply closing up shop to retire, now is the time to map out your strategy.
If you want to sell it, you need to ensure that not only is your business financially appealing to potential buyers but also that your financial records are in order. If you aren't using accounting software, start using it so you have a record of all expenses and financial reports.
If you want to pass your business on, bring family members into the business now so they can acclimate themselves to how it is run. It may take a while before they are ready to take the helm, so the more time they have to prepare, the better.
If you simply want to close your business, focus on increasing revenues now so you have a nice nest egg to take with you into retirement.
Financial goals can be large and small, near and far, but whatever the goal, make sure you take the steps to ensure your success. Break down each goal into steps, such as "hire a sales manager" or "put 20 percent of revenue in savings for the new office."
While you should keep your financial goals in mind, be flexible, because those goals may change over time. Be willing to adapt as your business needs change. Just keep forging ahead to make them come true!