For small business owners the start of the year is a great time to reflect on the past twelve months and prepare for the year ahead. Our personal New Year’s resolution can often focus on living a more healthy life, but keeping your business in shape is just as important.
A good place to start is to look at your financial health and see where improvements can be made. Darren Upson, Director of Small Business at Xero has compiled the below tips to help small business owners reflect on the past year, and get a clear understanding of what success looks like in 2018:
1. Review your finances
It might not be the end of your financial year, but that shouldn’t mean that you wait until then to get your finances in order. If you haven’t already, go through your sales receipts and invoices now, and check your bank accounts to make sure the figures add up. Good quality accounting software makes this easy to do and will do most of the work for you.
2. Talk to your accountant
Getting your accounts in order now means you can share them with your accountant for checking. Some accountants might not want to look at the detailed figures until later on in the financial year. For those that do, they may be able to give you a rough idea of what your tax bill will be. Doing this will ensure you save the right amount of money and avoid any unpleasant surprises.
3. Review growth, revenue and sales goals
Take some time to reflect on the past year and ask some important questions: Did your business grow? How did your revenues and profits compare with the previous year? Are your sales trending up? Does your expenditure over the past 12 months give any cause for concern?
In short, try to understand how your business has changed since the end of the previous year. If you haven’t already, now might be a good time to get professional advice from an accountant. They can help with financial planning to keep you on the right track.
4. Stay up-to-date with tax law and filing deadlines
Tax laws and regulations change on a regular basis. Talk to your accountant to make sure you are up-to-date and understand how any changes may affect your business. Also, ensure you know when to file and pay taxes.
5. Update your payroll
Be sure to update internal systems, such as online payroll. Items to consider include: handing out bonuses, paying employees electronically and paying your employees by direct deposit to save everyone time, money and resources. In addition, check the status of all employees and make sure you know the difference between an employee and an independent contractor or consultant. Getting this wrong will result in a penalty from the Government.
6. Get your accounting software up-to-date
It’s hard to take a step back and evaluate your accounting software when you’re busy using it on a daily basis. So a quieter period of the year is a good time to consider whether it’s working for you. The benefits of online accounting are huge; it makes it easy to access business accounts from anywhere, at any time. It will also reduce IT costs, because software maintenance and upgrades are handled for you. Online or cloud accounting is also secure, with powerful encryption and remote backups.
7. List your goals for the coming year
Make a shortlist of your main business goals for the year and put them somewhere visible. These might include sales targets, revenue figures, opening new stores, taking on more staff, or improving business relationships with existing clients. Ensure these goals are achievable and work towards them during the year. Check them each month to remind yourself where you’re going.
8. Keep your accounts in mind
A well-run business has well-managed accounts. With the right financial tools, you’ll be aware of the financial well-being of your business at any time. This will help you make the right decisions both daily and the long-term strategic ones too.
9. Find out what customers think
Getting feedback from customers is a great way to improve any product or service. Think about asking customers what could be done better or differently and why they may have chosen to use that particular service or product. Consider sharing findings with key customers and tell let them know of any plans to improve the offering.
10. Track your finances efficiently
Learn from the past year and figure out how to track finances more efficiently. For example, consider keeping a digital copy of receipts and getting a seperate credit card and bank account for business expenses. Finally, always keep track of money coming in and money going out. For many small businesses the cost of staff is one of your highest costs, so make sure to examine employment costs and the output of employees carefully.
If you only make one business-related new year’s resolution this year, make one that counts. Resolve to manage your accounts well and plan your business finances carefully. Get help from an accountant or financial advisor if you need to, so you can map out a financial plan. And make use of smart accounting tools to help keep tabs on the money flowing into and out of your business.