As a small business owner, it’s always a good idea to take a moment to reflect on the previous year, considering what went well and what could have gone better. Oftentimes, the biggest frustration is another year of poorly managed cash flow. Yet, it’s a necessary part of being in business. According to the Small Business Administration, “Effective financial management gives you tools to chart your course into the future, adjust your direction when needed, and help you find your way through challenging times.”
Running a profitable business requires careful planning and projecting, but it can also be beneficial to set some goals at the start of each year to improve a negative cash flow – the leading cause of business failure.
What’s on your New Year’s cash flow resolutions for your small business? Is there a small business loan in your future to support these goals?
RESOLUTION #1 – PERFORMING A CASH FLOW ANALYSIS.
Every small business owner needs to know exactly where he or she stands at any given time in the year. Now is a good time to perform a cash flow analysis to determine money coming in, going out, and projections for the next 90 days. According to Joe Dager, President of Business901, “A cash flow analysis can indicate if the daily operations of the business has generated adequate cash to meet obligations and can also provide insight about outflows vs. inflows.”
RESOLUTION #2 – PROJECTING MONTHLY INCOME.
It should be a regular practice, but for many small business owners, nailing down a regular time each month to conduct a cash flow analysis that includes income projections can be difficult. However, as the market fluctuates, it’s important to know where you stand. This can also be a good time to plan new ideas for upselling services and new product lines.
RESOLUTION #3 – EXPLORING A SMALL BUSINESS LOAN.
Cash flow can be improved by taking out a small business loan. Not only can the funds be used to purchase new equipment, expand operations, or just pay down some long-term debts, but having an extra source of money ready in an account to cover unexpected expenses can bring peace of mind. The good news is that United Capital Source can put you in touch with a small business loan that’s right for your business goals.
RESOLUTION #4 – GETTING MORE FINANCIAL EDUCATION.
Everyone in business needs to stay ahead of trends and learn about managing business finances better. There are many ways to get more education in this area, through reading small business financial blogs to taking in a workshop or two. Check your community library and small business networking groups for upcoming small business classes.
RESOLUTION #5 – STICKING TO A BUDGET.
This can be a tough resolution to keep, particularly in the early stages of a business. However, it’s I important to set a resolution that you will be careful about all business expenses that reduce profits. Even small expenses can add up like unused professional memberships and administrative costs for dealing with the banks to office supplies. Create a system for tracking all your small business expenses and maintain it all year long.
RESOLUTION #6 – IMPROVING RECEIVABLES.
Another often overlooked area of small business finance that needs your attention in 2017 is the way you manage your customer receivables. Many business owners get into the habit of extending credit to their clients which can delay payment for as much as 45 to 60 days from the date of services or goods received. This is never a good business practice, so focus on eliminating any further credit and collecting on all past due accounts once they near 30 days. Take out factoring small business loans against payables as often as you can.
RESOLUTION #7 – PAYING YOURSELF FIRST.
When you pay yourself first, as a small business owner, this can increase your cash flow exponentially. Get down payments from new customers in advance. Take out a merchant cash advance instead of waiting for money to come in for months, then repay over time with credit card processing. There are many creative ways to pay yourself first in the New Year and the practice puts your business in a better place cash flow wise.
RESOLUTION #8 – IMPROVE YOUR SMALL BUSINESS CREDIT STANDING.
If you take it upon yourself to achieve at least two of the above small business resolutions, you will be improving not only your cash flow status, but also your business credit score. Lenders look at FICO scores to determine creditworthiness. Vendors may also consider this before doing business with you. If your business credit score is poor or bad currently, don’t worry because United Capital Source has special low interest small business loans and other cash flow products that can help you rebuild your credit.
RESOLUTION #9 – THANKING YOUR CUSTOMERS.
It’s so easy to get caught up in the day to day grind of running a business that one forgets to be grateful for customers. However, it’s important to increase positive relationships with customers because they are a lifeline to referrals and repeat business that can increase cash flows. Take the time to send a thank you note to a customer at least once a week, or invite a customer for lunch. Hold a customer appreciation day and let all your loyal customers know just how much they mean to you.
Whether you utilize small business loans, a strong customer relationship building strategy, or you have been considering alternative business funding sources to boost cash flow, there’s no time like the present to start out fresh with a better small business financial plan. Stick with the above resolutions for at least a month to start seeing positive results. Look to United Capital Source as your partner for success in 2017 and beyond.