The start of a new year is always an exciting time for businesses. On one hand, they’re excited for what the year will hold. However, a new year means that a company needs to meet new business goals. From small to large businesses, all of them need to effectively plan their next steps. However, setting goals over 12 months can be quite overwhelming for small-business owners.
This is because large firms have different departments for different tasks. On the other hand, most of the pressure for creating these goals falls on the shoulds of the owners. Firstly, these businesses often operate within highly fragmented industries such as wholesaling, retailing, services, and manufacturing. These industries are characterized by numerous competitors who frequently resort to price-cutting strategies to boost their revenues.
Small businesses don't have the pleasure of hiring a team to help. If you find yourself in a somewhat similar position, you might find something useful here. Over the course of this guide, you will learn about any goals that you should be setting for yourself. But you might be wondering why I require a financial goal.
Why Require a Financial Goal for Small Businesses?
Most small focus on their immediate financial goals, often focusing on scraping past the current month. This can result in your business making financial decisions that might be good in the short term, but could have negative consequences in the long term. Not only does this affect you, but it can also affect those who are associated with the business.
But investing in financial education for both you and your team is a good investment. A knowledgeable team is better prepared to make better financial choices, effectively manage their resources, and contribute to the overall success of a business.
Setting Financial Goals for Small Companies:
To achieve financial success, it is crucial to begin by assessing your present financial situation and establish attainable goals for the upcoming year. As you start planning your financial goals for 2024, here are some steps that you should follow;
Know Your Future:
Before diving into any strategic plan, it is crucial to examine the long-term vision and goals of your business. By carefully analyzing your vision, you give yourself the opportunity to take a step back and determine the necessary adjustments your business needs to make in order to achieve its goals, rather than solely focusing on quick fixes.
This involves looking into policies of your city and country, and then adjusting how your business will run. Luckily, you can only do this through research, that you can gather from online or local government offices. You can also discuss your questions with an accountant. A good accountant can also provide you with guidance on planning strategies to minimize your tax burden.
As we approach 2024, reflecting on the lessons learned from the unexpected challenges of the pandemic is crucial. In late 2019, many businesses, like yours, might have had robust plans that were quickly overturned. To prepare for the future, take a moment to review your past financial decisions. Look at how certain strategies impacted your business during these unpredictable times. Analyze your financial statements, noting what led to growth or setbacks. Discuss these insights with financial advisors or accountants to better understand how to adapt your strategies. This will not only help in identifying effective patterns but also in avoiding past mistakes, allowing for a more resilient and flexible approach for the upcoming year.
Creating a Budget:
This is an important step that many small businesses do not focus on. Since they do not have a future budget plan, many small firms face financial issues. Creating a budget means mainly analyzing your cash flows. You need to consider the money coming in the business and money leaving your business. If your cash inflows are higher than your outflows means your company is doing well financially. But if your inflows are lower than your outflows, then you need to find a solution to this problem.
When it comes to budgeting, it's crucial to consider all potential outcomes. What is the best-case scenario I can expect, and what is the worst-case scenario? By asking these two straightforward questions, you can create a flexible budget that can adapt to unexpected situations and help you in the future.
If you have a supplier, contact them and ask them about their new year plans. You especially want to see how they can benefit your business financially and how you can help them. By having a some aspects of your business, it can be a lot easier for you to make your budget.
Reduce your Business Debts:
Most businesses take on debt with varying interest rates. Debts play a crucial role in affecting small businesses both negatively and positively. Over time, debt tends to grow. By prioritizing debt payments, you can save money by paying less interest. Additionally, this will help improve your business credit score, making it easier for you to borrow more funds in the future.
If you find yourself facing tough times and struggling to make your debt payments on time, it's possible that you could be facing a financial crisis. However, there is hope! By being careful and disciplined, you can reduce and eventually eliminate your business debt. The first step is to evaluate your business debt. Make a list of all the debts you owe and then calculate your debt-income ratio. This will help you determine if you have enough working capital to keep up with your debt obligations.
Increase Your Revenue:
Many businesses focus on marketing through social media to help bring in new customers and then increase their revenue. Platforms like FaceBook, Instagram, and so on, can help your business target new potential customers. If your business doesn't have a social media presence, having one can significantly help your business grow. Besides, using Google Maps to help customers find your business is another effective way to bring in new customers. Digital marketing is known to be cost-efficient for smaller businesses. Digital marketing can help you succeed in achieving your financial goals.
But getting new customers isn’t the only way that you can bring in new customers. Instead, it can be achieved by maximizing the potential of your existing customer base. Take a close look at your sales data to determine which products or services can generate the highest profits, and concentrate your efforts on them to make them your business's potential strength.
Additionally, implementing cross-selling techniques or enhancing upselling tactics can further improve your revenue.
Emphasize Cash at the End of the Year:
Plenty of businesses prefer to trade in credit since it is much more convenient. Despite being a lot more convenient, they tend to receive cash/revenue after a specific period of time. This results in many credit businesses facing financial challenges.
In order to counter this issue, give discounts to those who give cash near the end of the current year. This might lead to having less revenue than initial revenue but it will lead to having a cash inflow, which can support your business financially.
Also, make sure to strengthen your credit policies, provide incentives such as discounts for prompt payments, and explore the integration of technology to automate your invoicing processes.
Complete Crucial End-of-Year Business Purchases:
This means that you can make significant purchases like purchases from suppliers. If they have a special discount for the end of year purchase. Not only will this help you with excessive inventory that might be helpful for your business in the coming year, but it also might cost less than the normal period purchases.
Additionally, you can purchase software that might benefit your business and the way it functions.. Tools for accounting, customer relationship management (CRM), or project management could greatly improve efficiency. You can find such software through various online platforms like Microsoft Office 365 for productivity tools, Salesforce for CRM, or QuickBooks for financial management. Local software retailers or industry-specific vendors might also offer solutions tailored to your business needs. Making these purchases before the end of 2023 can also be strategically beneficial, as they may qualify for tax deductions on your business expenses. Be sure to keep records of these purchases, as they can be valuable when filing your taxes in the spring of 2023, potentially reducing your taxable income.
Increase Website Conversions:
Digital marketing is a powerful tool for small businesses, offering cost-effective ways to expand your reach and increase sales. By setting up an online store on your website or platforms like Amazon, you can access customers far beyond your physical location. Many small businesses have witnessed substantial growth by embracing online trade. However, the key to success lies in attracting and converting new customers effectively.
To increase traffic to your website and improve conversion rates, invest in Search Engine Optimization (SEO). SEO involves optimizing your website content to rank higher in search engine results, making it easier for potential customers to find you.
In addition to SEO, focus on improving your website's user experience. Ensure it's easy to navigate, mobile-friendly, and offers a seamless checkout process. Integrating customer reviews and clear trust signals can build credibility and confidence in your brand.
Complement these efforts with targeted digital marketing strategies like social media marketing and email campaigns to drive more traffic to your site. Use analytics tools to monitor performance and customer behavior, which will allow you to refine your approach for better results.
By combining these digital marketing techniques, you can increase your website's traffic and conversion rates, leading to higher sales and boosting your business's overall profitability.
As you set your small business’s financial goals for 2024, remember that thorough planning is more than a time investment; it's about precision and strategy. Addressing your current financial status is crucial, encompassing effective cash flow management, debt reduction, and engaging with your customers. A well-planned budget and a robust online presence are indispensable strategies for thriving in the 2024 business landscape.
Idea Financial stands ready to support your goals. Our flexible lines of credit can be a pivotal tool in your financial arsenal. With access to up to $275,000, you have the freedom to manage cash flow, invest in growth opportunities, or cushion against unforeseen expenses. Our quick approval process ensures that the financial support you need is just a few steps away, providing the agility your business needs to adapt and succeed in a dynamic economic environment. With Idea Financial, you're not just preparing for the future; you're actively shaping it for your business, yourself, and your team.
To learn more, click here.