A new year allows owners of start-ups and small businesses to reflect on the previous year’s achievements and pitfalls, and plan for how to grow their business success in future. The key component to get right, is your finances. With accurate insights, costs can be reduced, and revenue and profitability increased in the years ahead.
The opposite is also true: if you don’t have a firm grasp on your business finances, you could incur unnecessary costs and losses, get into trouble with tax authorities, and miss out on potentially rewarding business opportunities.
Here are a few tips on how to improve your financial insights and prepare your business for success in 2020:
Invest in growing your financial skills and knowledge
When you have your own business, you will be the person who carries the ultimate responsibility for financial decisions and outcomes. Even if you enlist the help of a trusted accounting partner, you’ll need to understand how to manage cashflow, read an income statement and balance sheet, and generate forecasts and budgets. Having this knowledge will go a long way in helping you to make informed decisions, and in knowing which questions to ask if you get stuck.
To get a grasp of the fundamentals, consider taking an introductory accounting course. Many business schools offer a variety of short finance courses. Alternatively, you could try online resources like Udemy. Payroll and accounting software vendors like Sage also offer seminars that will keep you updated on the latest tax laws and regulations.
Make sure you have the right software platform
The beginning of a new year is a great time to move away from paper and spreadsheets, and to shop around for an accounting and payroll software solution. Automated software ensures accurate data and financial records are captured, and means you won’t spend loads of time gathering receipts for your accountant.
It will also provide real-time tracking of your financial metrics, which means you’ll have a better handle on revenues, costs, and cash flow. Look for an easy-to-use solution, but also one that will grow with your business. Cloud-based software can be acquired as a monthly subscription and will make managing admin and finances a breeze.
Sage Business Cloud Accounting
With Sage Business Cloud Accounting, you spend less time on admin and more time growing your business.
Start planning and forecasting
Use the first couple of weeks of the year to set your goals and strategies for 2020. Having an accounting software solution in place will help you easily generate a cash flow forecast for the coming year, which will assist you in your planning.
You’d be able to, for example, make growth forecasts for the year, and look at areas in which to optimise your profits. You’ll be able to see if you can afford to grow your teams, whether you need to invest in new product lines or expansion, or if you need to cut back on some expenses.
Use a professional accountant
If you’ve been doing your accounting yourself for a while, you might only have engaged an accountant when you needed to prepare your annual financial statements in order to file your tax return. It is, however, incredibly beneficial to get professional financial advice to support your decision-making at crucial points in your business lifecycle.
An accountant can help you draw up a business plan when you’re looking to expand. They can help you prepare financial statements to present to a bank or investor when you need to raise capital. An accountant can also help you create realistic budgets and forecasts for your business plans.
The right financial track
Small businesses can benefit greatly from getting the right financial insights. This means investing in the right people, processes, and systems to help them get onto the right financial track. This is key to improving returns on investment, growing your business, and ensuring its sustainability for the future.