As the year draws to a close, it is a good idea for business owners to set aside time to do business planning. A yearly review is certainly important as it covers accomplishments achieved in the current year and prospects for the future. The following are some year-end tips for business owners to help your business as we progress into a New Year.
Determine the current position of your business
Analyse Your Business’ Finances and Cash Flow
Examine the standard financial statements to get a clear understanding of how well your business is operating financially.
The Balance Sheet summarises your business’s financial health at a particular point in time. It shows your business’s assets, liabilities and equity.
The Profit and Loss Statement gives an overview of your business’s profitability at a particular point in time by itemising revenue and expenses.
The Cash Flow Statement summarises the amount of cash and cash equivalents entering and leaving a company for a particular period. To improve your cash flow, why not take a look at how Invoice Finance can help boost your working capital with a few simple steps.
Analysing ratios such as your business’s current ratio, total debt ratio and profit margin are useful in influencing end-of-year decision making. If the profits are greater than anticipated, diving into investments may be appropriate for your business. On the contrary, if profits are lesser than expected, it is time to adjust the budget for the following year.
Setting New Year Business Goals
Review and reflect upon the goals set last year by looking at last year’s business plans or action plans. Did the business achieve what was being set out for the year? What was done correctly and what could have been done differently to achieve the goals not accomplished?
Give these questions some thoughts and perhaps have an open discussion with your team to put everyone on the same page. The valuable insight you gain from this process can mean the difference between success and failure.
Create a Plan for the Upcoming Year
Moving into a new year ahead, goals and expectations should be laid. Now that you know the performance of your business in the last 12 months, pen down realistic expectations you have for your business over the next fiscal year.
Start off first by deciding on a few high-level strategic priorities and set specific targets for each strategic priority. For each of the strategic goals, determine the metrics that will help you measure the milestones and success.
Evidently, these year-end tips help your business become more prepared and ready for next year’s upcoming challenges. While we are concluding the year, it is a good time to reflect on and analyse your business. It is also the perfect time of the year to prepare for changes, to start the New Year driven with a relatively clean state.