10 Financial Resolutions for a New Year
Use the beginning of the year to set out your goals and strategies for 2017
The New Year is here, bringing with it fresh opportunities and challenges. Here are some financial resolutions to kick-start your small business in 2017.
1. Planning - Outline your plan for the year
Use a quiet week or two at the beginning of the year to set out your goals and strategies for 2017 before the hustle really begins. You can ask yourself the following questions:
- Do we want to target new customer segments?
- Should we replace our outdated tech with new software and computers?
- Is it to time to strengthen the team by hiring new people?
- Are we happy with our product and service lines?
- Are we pricing appropriately?
- Should we be looking at new business partnerships?
- Should we consider digital / e-commerce solutions to take my business to the next level?
Write down each goal, along with a deadline and a metric for success.
2. Financial year-end is looming
The tax year-end (28 February) is approaching. Avoid the rush by getting your documents in order and chasing clients with overdue accounts. Also, look at your profitability for the year — should you be investing some of your profits into your business before calculating your tax for the year? Or should you be doing something to optimise costs or improve sales before the start of the next financial period?
3. Forecasting your cash-flow
You should have a cash-flow forecast for at least the next 12 months, so that you can determine how your company is likely to grow. This will also make it easier to identify weak areas that may be losing money. You can do a comprehensive cash-flow forecast with nearly any good accounting software package.
4. Consider going paperless
The two most popular benefits to switch to a paperless office are the environment and saving costs. While these two are important, there are many hidden positives that tossing paper can do to help small businesses to reinvent and simplify their endeavour - leading to increased profitability. It isn’t simply cutting the spend on paper that is a benefit, but also saving on the purchasing cost of filing cabinets, paper and folders, the cost of the office space to store the filing cabinets and paying staff to maintain the often cumbersome system. This also includes no longer needing to purchase as many copiers, fax machines, printers and time wasted looking for paperwork that has been misfiled.
5. Outsourcing your payroll?
The growing complexity of South African labour law and tax regulations, paired with a tight economy, means that many Small & Medium Businesses see great benefit in outsourcing the management of their payrolls and certain human resources (HR) functions. By working with a specialist, you can be sure that your payroll is accurate and that you are compliant with the latest tax laws and tax calculations. Another benefit is that the payroll outsourcing service provider will have the processes and discipline to better manage the risks of leaking employee information.
6. Get automated: Find a good software accounting tool
Good accounting software that can grow with a business, preferably from a supplier that also started small and understands the challenges of this market, helps a business owner keep a finger on the financial pulse of the entity.
The introduction of cloud-based accounting software has also made the costs of this service more financially viable. Technology has the ability to automate and speed up the calculations of business expenses such as tax and payroll and ensure that these are accurate. By automating accounting processes, this will free up time for staff to focus on other activities.
7. Get in touch with people that matter to your business
The beginning of the year is a great time to get in touch with clients, suppliers and other stakeholders. A personal phone call or email to wish them well for the New Year is a good way to get on their radar early in the year. The quiet first few weeks of the year are also a great time to meet your contacts to discuss how you can work together over the months to come.
8. Turbocharge your marketing
If you haven’t refreshed your business’s look, feel and marketing strategy for a while, the New Year is a good opportunity for a revamp. Why not change the look and feel of your website or your business cards? It is a good way to get people talking about your company.
9. Put on those trainers
Don’t let the fast pace of change leave your business behind. For example, invest in training your employees in new technologies and skills. Don’t forget to upgrade your own knowledge and expertise—make some time for seminars or courses to stay up to date with marketing trends, new tax and labour laws, and so on. Remember to include a training cost when adjusting your budget for the year.
10. Plan for a rainy day
Even the best-run businesses have occasional months where they experience an unexpected gap between the money they need to pay their bills and the money that comes into their bank accounts. Unforeseen events such as productivity lost because of strikes and power outages, expensive machines that break, or a big customer missing a payment date can cause a temporary cash crunch for healthy business.
Here are some ways to handle the situation:
- Even if your business is doing well, set up a line of credit for your business to bridge any future cash shortfalls. For example, an overdraft can keep your business running smoothly if your customer is five days late with the payment for the month.
- Look at your most important invoices and settle them first. SARS should be first on your list because the taxman won’t wait for payment. Your payroll and your critical suppliers should be next.
- Get on the phone to any customers whose accounts are overdue. If they have exceeded 60 or 90 days, you might offer them a discount to settle quickly.
- Be proactive and speak to any creditors you can’t pay on time - they’ll be more understanding if you keep them up to date with your situation.
- If you have old inventory that is losing value (for example, food products with a looming sell-by date or computer equipment), consider selling it at a discount. It might be worth absorbing the loss to make critical payments on time.
Entrepreneurs take risks to follow their dreams and pursue their passions and, on this, global prosperity is built. What better time for you to think about how you will turn your dream business ideas into reality than the start of a year?
About the author: Anton van Heerden is Executive Vice-President, Africa & Middle East at Sage.