It is not too late to set your business finances up for success in 2023. Often, the best way to determine where you want to go is to understand where you are starting. Take stock of your 2022 results. What worked for you? What did not? What can you learn from those instances? Then, look forward and plan for a successful 2023:
1. Set a budget and communicate it. Budget your revenue and expenses for the year, as well as significant capital purchases. Consider creating different budget scenarios to understand how different circumstances such as an economic downturn, launching a new product or service line, or opening a new location could affect your business.
Budget items to look at:
- What are your most profitable markets?
- Do you need to reprice or exit unprofitable markets?
- Where can you reduce expenses?
- Do you need to downsize?
- Should you consider outsourcing?
Once the budget has been set, be sure to communicate it with your leadership team.
2. Determine how you will monitor your business and gauge your success. Decide which Key Performance Indicators (KPIs) you will monitor throughout to year to track your progress against your budget.
KPIs to think about:
- What are your sales by product, service, location, or key customer?
- What is your budget to actual cost comparison?
- How many days of accounts receivables do you have outstanding from your customers?
- What does your cash flow look like?
- How much inventory are you holding?
3. Streamline your processes. Timely, accurate financial information is key to business success. You need to keep good records! Saving time is often saving money.
A few ways to streamline:
- Consider technology and automation tools
- Streamline bill payment
- Use cloud-based services
4. Evaluate your team. You need the right people in the right roles to make your business successful.
Things to evaluate:
- Do you have enough people to meet your business goals?
- Are there roles that can or should be outsourced?
- Are your employees performing to the desired level or do they need training and coaching?
5. Consider your vendor relationships.
- Review expenses and negotiate with vendors and suppliers. Sometimes even your long-term vendor relationships will renegotiate to keep your business.
- Consider the value you are receiving vs. the price you are paying for professional services such as banking, insurance, accounting, credit card processing, etc.
- Take a good look at Cyber and IT services. There are so many changes in the market to think about, and your business should be protected. A good team will be on the offensive to guard your assets.
Rea & Associate’s Client Advisory Services team has professionals ready to help you make your business successful, please contact us.
by Kate Matz, CPA, Principal (Amherst office)