Like all things, this pandemic will eventually come to an end. But that does not mean businesses, large and small, have not learned some important lessons. Especially when it comes to beneficial financial items that could have been more helpful to have, had we known what was coming. These Money Habits Your Business Should Start This Coming Year will be great things to implement, based on lessons learned. Make sure you can weather any future storms that may come your way!
1. Build an Emergency Fund
This is not only important in our personal lives, it’s also important to build an emergency fund for your business. Make sure you can cover expenses and payables for a few months, in the event sales go down or you must change your business model suddenly. We have witnessed, firsthand, many businesses being adversely impacted by the change COVID brought, so building that emergency fund is crucial.
2. Make Reviewing Finances a Habit
We all know how many roles and responsibilities you have as a business owner, but it is crucial to do a detailed review of your business finances monthly, or even weekly. It is imperative to your business’ well-being that it is being closely monitored so you have a good handle on your flow of income and expenses. This will help you make better decisions concerning spending and budgeting over the course of the year, as well as help you know where changes may need to be made to continue growing.
3. Plan for Tax Season
Be sure to plan ahead so you aren’t surprised by a huge tax bill. You can use your previous year’s taxes to predict what you may owe and regularly make sure you are setting it aside throughout the year. Also, make sure you work with a professional to avoid costly mistakes. They can help ensure that you are taking advantage of tax deductions and benefits your business may be entitled to!
4. Create a Budget
Creating a budget may not be hard to do but sticking to it is vital. Knowing what is coming in and going out of your business financially will help you understand whether you have the ability to make purchases, or if you have the money to set aside additional funds to pay down debt. Do you know what your cash flow looks like when it comes to knowing if you can expand? To be successful, create that budget, but also follow and execute the budget as you planned. And remember… no rounding! The effort is well worth the time involved to get it right.
5. Adjust Services (or Inventory) to Meet Immediate Needs
You will be ready for anything when you can successfully manage your customer’s needs. During this past year, many businesses learned how to adjust how they offered their services to meet their client’s needs and stay open. Think of how you can be flexible and can potentially adapt your practices that could help you grow, even when an unexpected bump occurs.
6. Pay Down Debt
Once you do routine checks of your financials and set up a strong budgeting process, you should be able to identify unnecessary debt your business may be carrying. Once you do that, make it a priority to reduce it. And make sure to include these set payments in your budget! This will help to positively impact your ability to leverage debt in the future, when you may need it.
Financial management is a crucial skill for anyone who is running a business and it is so important to do successfully for future growth. These Money Habits Your Business Should Start This Coming Year will also help to implement these into long-term habits to achieve your goals! Please reach out if you have questions. We are here to help!